UNITED ASSET STRATEGY FUND, INC.
UNITED CASH MANAGEMENT, INC.
UNITED CONTINENTAL INCOME FUND, INC.
UNITED FUNDS, INC.
UNITED GOLD & GOVERNMENT FUND, INC.
UNITED GOVERNMENT SECURITIES FUND, INC.
UNITED HIGH INCOME FUND, INC.
UNITED HIGH INCOME FUND II, INC.
UNITED INTERNATIONAL GROWTH FUND, INC.
UNITED MUNICIPAL BOND FUND, INC.
UNITED MUNICIPAL HIGH INCOME FUND, INC.
UNITED NEW CONCEPTS FUND, INC.
UNITED RETIREMENT SHARES, INC.
UNITED VANGUARD FUND, INC.
WADDELL & REED FUNDS, INC.
TARGET/UNITED FUNDS, INC.
[WADDELL & REED LOGO]
6300 Lamar Avenue
Overland Park, Kansas 66202
<PAGE>
This Page Intentionally Left Blank
<PAGE>
Notice of Joint Special Meeting of Shareholders
April 15, 1999
To Shareholders:
Notice is hereby given that a Special Meeting of the shareholders of each
of the investment companies set forth above (each, a "Fund" and
collectively, the "Funds"), respectively, will be held jointly at 6300
Lamar Avenue, Overland Park, Kansas 66202, on June 22, 1999, at 10:00
a.m., local time, or any adjournment(s) thereof, for the following
purposes:
1. For each Fund: To elect the Board of Directors;
2. For each Fund: To ratify the selection of Deloitte & Touche LLP as
independent accountants for the Fund's current fiscal year;
3. For each Fund: To approve or disapprove an amendment to the Fund's
investment management agreement (the "Amendment") with Waddell & Reed
Investment Management Company to change the current fee schedule;
4. For each Fund except United Municipal Bond Fund, Inc., United Municipal
High Income Fund, Inc. and Waddell & Reed Funds, Inc. Municipal Bond
Fund: To approve or disapprove amendment of the Fund's policy regarding
securities lending;
5. For each Fund: To approve or disapprove amendment of the Fund's Articles
of Incorporation to change the par value of Fund shares to $0.001; and
6. To transact such other business as may properly come before the Special
Meeting or any adjournment(s) thereof.
The Board of Directors of each Fund has fixed the close of business on
March 25, 1999, as the record date for the determination of shareholders
entitled to notice of and to vote at the Special Meeting. You are
entitled to vote at the Special Meeting and any adjournment(s) thereof if
you owned shares of any of the Funds at the close of business on March
25, 1999. If you attend the meeting, you may vote your shares in
<PAGE>
Notice of Joint Special Meeting of Shareholders
April 15, 1999
person. If you do not expect to attend the meeting, you have the option
to: (1) complete, date, sign and properly return the enclosed proxy
card(s) in the enclosed postage paid envelope; or (2) execute your proxy
card electronically by following the electronic proxy instructions
included with this Proxy Statement. If you do not sign and return your
proxy card(s) by mail or execute them through electronic means, your
Fund(s) may incur the additional expense of subsequent mailings in order
to have a sufficient number of proxies voted.
Retain this Notice and Proxy Statement. This is a joint Notice and Proxy
Statement for the above-named Funds in the United Group of Mutual Funds,
Waddell & Reed Funds, Inc. and Target/United Funds, Inc. The shares you
own in a particular Fund may only be voted with respect to that Fund. If
you own shares in more than one of the Funds listed above, please vote
with respect to each Fund on the proxy cards provided. Please sign, date
and properly return any and all proxy cards that are mailed to you or
vote them electronically.
April 15, 1999 By Order of the Boards of Directors
Kristen A. Richards, Assistant Secretary
<PAGE>
UNITED ASSET STRATEGY FUND, INC.
UNITED CASH MANAGEMENT, INC.
UNITED CONTINENTAL INCOME FUND, INC.
UNITED FUNDS, INC.
UNITED GOLD & GOVERNMENT FUND, INC.
UNITED GOVERNMENT SECURITIES FUND, INC.
UNITED HIGH INCOME FUND, INC.
UNITED HIGH INCOME FUND II, INC.
UNITED INTERNATIONAL GROWTH FUND, INC.
UNITED MUNICIPAL BOND FUND, INC.
UNITED MUNICIPAL HIGH INCOME FUND, INC.
UNITED NEW CONCEPTS FUND, INC.
UNITED RETIREMENT SHARES, INC.
UNITED VANGUARD FUND, INC.
WADDELL & REED FUNDS, INC.
TARGET/UNITED FUNDS, INC.
6300 Lamar Avenue, Overland Park, Kansas 66202
PROXY STATEMENT
INTRODUCTION
This document is a joint proxy statement with respect to each of the
above-listed investment companies (each, a "Company" and collectively, the
"Companies") in connection with the solicitation of proxies by the Board of
Directors of each Company to be used at the Companies' joint Special Meeting of
shareholders or any adjournment(s) thereof ("Meeting"). The meeting will be held
on June 22, 1999, at 10:00 a.m., local time, at 6300 Lamar Avenue, Overland
Park, Kansas 66202, for the purposes set forth in the attached Notice of
Meeting. This Proxy Statement is being first mailed to shareholders on or about
April 15, 1999.
United Funds, Inc. is composed of four separate portfolios, Waddell & Reed
Funds, Inc. is composed of eight separate portfolios, and Target/United Funds,
Inc. is composed of eleven separate portfolios. Each of a Fund's portfolios is
referred to herein as a "Fund." When the context makes it appropriate, the Funds
listed above are also referred to in this Proxy Statement collectively as the
"Funds" and, individually, as a "Fund."
1
<PAGE>
The following table summarizes the proposals applicable to each Fund.
<TABLE>
<CAPTION>
FUND NAME PROPOSAL
- ----------------------------------------------------------------------------------------------------------------------------------
No. 1 No. 2 No. 3 No. 4 No. 5
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
United Asset Strategy (check mark) (check mark) (check mark) (check mark) (check mark)
United Cash Management (check mark) (check mark) (check mark) (check mark) (check mark)
United Continental Income (check mark) (check mark) (check mark) (check mark) (check mark)
United Funds, Inc. (check mark) (check mark) (check mark) (check mark) (check mark)
Income Fund (check mark) (check mark) (check mark) (check mark) (check mark)
Bond Fund (check mark) (check mark) (check mark) (check mark) (check mark)
Accumulative Fund (check mark) (check mark) (check mark) (check mark) (check mark)
Science and Technology Fund (check mark) (check mark) (check mark) (check mark) (check mark)
United Gold & Government (check mark) (check mark) (check mark) (check mark) (check mark)
United Government Securities (check mark) (check mark) (check mark) (check mark) (check mark)
United High Income (check mark) (check mark) (check mark) (check mark) (check mark)
United High Income II (check mark) (check mark) (check mark) (check mark) (check mark)
United International Growth (check mark) (check mark) (check mark) (check mark) (check mark)
United Municipal Bond (check mark) (check mark) (check mark) (check mark)
United Municipal High Income (check mark) (check mark) (check mark) (check mark)
United New Concepts (check mark) (check mark) (check mark) (check mark) (check mark)
United Retirement Shares (check mark) (check mark) (check mark) (check mark) (check mark)
United Vanguard (check mark) (check mark) (check mark) (check mark) (check mark)
Waddell & Reed Funds, Inc. (check mark) (check mark) (check mark) (check mark) (check mark)
Waddell & Reed Asset Strategy (check mark) (check mark) (check mark) (check mark) (check mark)
Waddell & Reed Growth (check mark) (check mark) (check mark) (check mark) (check mark)
Waddell & Reed High Income (check mark) (check mark) (check mark) (check mark) (check mark)
Waddell & Reed International Growth (check mark) (check mark) (check mark) (check mark) (check mark)
Waddell & Reed Limited-Term Bond (check mark) (check mark) (check mark) (check mark) (check mark)
Waddell & Reed Municipal Bond (check mark) (check mark) (check mark) (check mark)
Waddell & Reed Science and Technology (check mark) (check mark) (check mark) (check mark) (check mark)
Waddell & Reed Total Return (check mark) (check mark) (check mark) (check mark) (check mark)
Target/United Funds, Inc. (check mark) (check mark) (check mark) (check mark) (check mark)
Target/United Asset Strategy Portfolio (check mark) (check mark) (check mark) (check mark) (check mark)
Target/United Balanced Portfolio (check mark) (check mark) (check mark) (check mark) (check mark)
Target/United Bond Portfolio (check mark) (check mark) (check mark) (check mark) (check mark)
Target/United Growth Portfolio (check mark) (check mark) (check mark) (check mark) (check mark)
Target/United High Income Portfolio (check mark) (check mark) (check mark) (check mark) (check mark)
Target/United Income Portfolio (check mark) (check mark) (check mark) (check mark) (check mark)
Target/United International Portfolio (check mark) (check mark) (check mark) (check mark) (check mark)
Target/United Limited-Term Bond Portfolio (check mark) (check mark) (check mark) (check mark) (check mark)
Target/United Money Market Portfolio (check mark) (check mark) (check mark) (check mark) (check mark)
Target/United Science and Technology Portfolio (check mark) (check mark) (check mark) (check mark) (check mark)
Target/United Small Cap Portfolio (check mark) (check mark) (check mark) (check mark) (check mark)
</TABLE>
2
<PAGE>
For each Fund, other than those named in the following sentence, a majority of
the shares outstanding on the record date, March 25, 1999 ("Record Date"),
represented in person or by proxy, of a Fund must be present for the
transaction of business at that Fund's Special Meeting. For United New Concepts
Fund, United Gold & Government Fund, United Government Securities Fund, United
High Income Fund II, United Municipal High Income Fund, United Asset Strategy
Fund, and each of the Funds within Waddell & Reed Funds, Inc., one-third of the
shares outstanding on the Record Date, represented in person or by proxy, of
that Fund, must be present for the transaction of business at that Fund's
Meeting. In the event that a quorum is not present, or if a quorum is present
at the Meeting but sufficient votes to approve any one of the Proposals are not
received, the persons named as proxies (or their substitutes) may propose one
or more adjournments of the Meeting to permit the further solicitation of
proxies. Any such adjournment will require the affirmative vote of a majority
of those shares represented at the Meeting in person or by proxy. The persons
named as proxies will vote those proxies that they are entitled to vote "For"
such Proposal in favor of an adjournment and will vote those proxies required
to be voted "Against" such Proposal against such adjournment. A shareholder
vote may be taken on one or more of the Proposals described in this Proxy
Statement prior to any such adjournment if sufficient votes have been received
and it is otherwise appropriate.
The individuals named as proxies (or their substitutes) in the enclosed proxy
card (or cards if you own shares of more than one Fund or have multiple
accounts) will vote in accordance with your directions as indicated thereon if
your proxy is received properly executed. You may direct the proxy holders to
vote your Fund shares on a Proposal by checking the appropriate box "For" or
"Against," or instruct them not to vote those shares on the Proposal by
checking the "Abstain"
3
<PAGE>
box. Alternatively, you may simply sign, date and return, or electronically
execute, your proxy card (or cards) with no specific instructions as to the
Proposals. If you properly execute your proxy and give no voting instructions
with respect to a Proposal on which you are entitled to vote, your shares will
be voted "For" the Proposal. The duly appointed proxies may, in their
discretion, vote upon such other matters as may properly come before the
meeting.
Each full share of a Fund that is issued and outstanding on the Record Date is
entitled to one vote, and each fractional share issued and outstanding on the
Record Date is entitled to a proportionate share of one vote. All shareholders
of a Company, including all shareholders of the Funds constituting United
Funds, Inc., all shareholders of the Funds constituting Waddell & Reed Funds,
Inc., and all shareholders of the Funds constituting Target/United Funds, Inc.
vote together with respect to the election of Directors (Proposal 1), the
ratification of independent accountants (Proposal 2), and the approval of the
amendment of the Articles of Incorporation to change the par value of the
shares (Proposal 5) for their respective Companies. With respect to the
approval of the amendment to the investment management agreement (Proposal 3)
and the approval of the amendment to the securities lending policy (Proposal 4)
for their Fund, the shareholders of a Fund within United Funds, Inc., Waddell &
Reed Funds, Inc. or Target/United Funds, Inc. vote separately as to that Fund.
Abstentions and "broker non-votes" (as defined below) are counted for purposes
of determining whether a quorum is present, but do not represent votes cast
with respect to any Proposal. "Broker non-votes" are shares held by a broker or
nominee for which an executed proxy is received by the Fund, but are not voted
as to one or more Proposals because instructions have not been received from
the beneficial
4
<PAGE>
owners or persons entitled to vote and the broker or nominee does not have
discretionary voting power.
You may revoke your proxy with respect to a Fund anytime prior to its exercise:
(a) by written notice of its revocation to the Secretary of the Fund at the
above address prior to the Meeting; (b) by subsequent execution and return of
another proxy prior to the Meeting; or (c) by being present and voting in
person at the Meeting and giving oral notice of revocation to the Chairman of
the Meeting. Attendance at the Meeting will not in and of itself constitute
revocation of your proxy.
The shares of Target/United Funds, Inc. are currently sold only to variable
life insurance separate accounts and variable annuity separate accounts
(hereinafter collectively referred to as the "Variable Accounts") as a funding
vehicle for certain variable life insurance policies and certain variable
annuity contracts (collectively, the "Policies") offered by the Variable
Accounts of certain life insurance companies. As of the date of this Proxy
Statement, the only participating life insurance company is United Investors
Life Insurance Company ("United Investors"). Each of the Variable Accounts has
eleven Investment Divisions, the assets of which are invested in the
corresponding series of Target/United Funds, Inc. United Investors is the legal
owner of all Fund shares held by the Variable Accounts. In accordance with its
view of currently applicable law, United Investors is soliciting voting
instructions from the owners of the Policies ("Policyowners") with respect to
all matters to be acted upon at the Meeting. The Policyowners permitted to give
instructions for a Fund and the number of shares for which instructions may be
given will be determined as of the Record Date for the Meeting. The number of
votes which a Policyowner has the right to instruct will be calculated
separately for each Variable Account. That number will be determined by
applying the Policyowner's percentage interest, if any, in the Investment
Division holding shares of the Fund to the total number of
5
<PAGE>
votes attributable to that Investment Division. In connection with its
solicitation of voting instructions, it is understood and expected that United
Investors will pay the expenses associated with furnishing a copy of this Proxy
Statement to Policyowners. All shares held by the Variable Accounts will be
voted by United Investors in accordance with voting instructions received from
Policyowners. United Investors will vote shares attributable to the Policies as
to which no timely instructions are received, and any Fund shares held by
United Investors as to which Policyowners have no beneficial interest, in
proportion to the voting instructions, including abstentions, which are
received with respect to the Policies participating in that Fund.
Information as to the number of outstanding shares of each Fund, and class
thereof, as of March 19, 1999, is set forth in Exhibit A. A listing of the
owners of more than 5% of the shares of any Fund, as of March 19, 1999, is set
forth in Exhibit B. To the knowledge of each Fund's management, the executive
officers and Directors of each Fund, as a group, owned less than 1% of the
outstanding shares of that Fund as of March 19, 1999.
Shareholders of a Fund may obtain, free of charge, copies of that Fund's annual
and semiannual reports by writing the Fund at 6300 Lamar Avenue, P.O. Box
29217, Shawnee Mission, Kansas 66201-9217 or calling (800) 366-5465.
THE BOARD OF DIRECTORS UNANIMOUSLY APPROVED THESE PROPOSALS AND RECOMMENDS THAT
YOU VOTE IN FAVOR OF EACH OF THEM.
6
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
Relevant Companies: All Companies.
Discussion. The persons set forth below have been nominated for election as
Directors of each Company, and each has consented to his or her nomination and
agreed to serve if elected. Each nominee is currently a Director of each
Company. Each current Director serves pursuant to election by shareholders
except: David P. Gardner, who was elected by the other Directors on August 19,
1998; and Joseph Harroz, Jr., Robert L. Hechler, Henry J. Herrmann, and Ronald
C. Reimer, who were elected by the other Directors on November 18, 1998. If any
of the nominees should not be available for election, the persons named as
proxies (or their substitutes) may vote for other persons in their discretion.
Management has no reason to believe that any nominee will be unavailable for
election.
The names of each Company's Directors and nominees and its executive officers,
their respective offices and principal occupations during the last five years
are set forth below.
> Directors and Nominees of the Companies
As of the date of this Proxy Statement, six of each Company's Directors are
"interested persons," as defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), of Waddell & Reed Investment Management Company, the
investment manager of each Fund ("WRIMCO"), and Waddell & Reed, Inc. ("W&R"),
the principal underwriter for each of the Funds in the United Group of Mutual
Funds and Waddell & Reed Funds, Inc. and the distributor of the Policies issued
by United Investors. The Directors who are "interested persons" are indicated
as such by an asterisk. Messrs. Hechler, Herrmann, Morgan and Tucker are
interested persons because they are present or former officers, directors
and/or shareholders of WRIMCO and/or certain of its affiliates. Ms. Graves is
an interested person because of her ownership of shares of
7
<PAGE>
Waddell & Reed Financial, Inc. ("WDR"), which indirectly controls WRIMCO and
W&R. Mr. Ross is an interested person because he is a partner in a law firm
which has acted as legal counsel for W&R. Each of the Company's Directors is
also a Director of each of the other Companies in the Fund Complex, and each of
the Company's officers listed below is also an officer of each of the other
Companies in the Fund Complex. The term "Fund Complex" includes each of the
Funds, each of which is managed by WRIMCO. Waddell & Reed Services Company, an
affiliate of and having the same address as W&R and WRIMCO, is the accounting
services agent for each Fund and the shareholder servicing agent for each Fund
other than those within Target/United Funds, Inc. A table indicating each
Director's and nominee's ownership of Fund shares is attached hereto as Exhibit
C.
> KEITH A. TUCKER*
(Age 54) -- Director of each Company since July 17, 1991, or its inception,
whichever is later. Chairman of the Board of Directors of each Company;
Chairman of the Board of Directors, Chief Executive Officer, Principal
Financial Officer and Director of WDR; President, Chairman of the Board of
Directors and Chief Executive Officer of Waddell & Reed Financial Services,
Inc.; Chairman of the Board of Directors of WRIMCO, W&R, and Waddell & Reed
Services Company; formerly, President of each Company; formerly, Vice Chairman
of the Board of Directors of Torchmark Corporation, the former parent company
of W&R; formerly, Chairman of the Board of Directors of Waddell & Reed Asset
Management Company, a former affiliate of WDR.
> JAMES M. CONCANNON
(Age 51) -- Director of each Company since July 24, 1997. Dean and Professor of
Law, Washburn University School of Law; Director, AmVestors CBO II, Inc.
8
<PAGE>
> JOHN A. DILLINGHAM
(Age 60) -- Director of each Company since July 24, 1997. President, JoDill
Corp., an agricultural company; President and Director of Dillingham
Enterprises, Inc.; formerly, Director and consultant, McDougal Construction
Company; formerly, Instructor at Central Missouri State University; formerly,
Member of the Board of Police Commissioners, Kansas City, Missouri; formerly,
Senior Vice President-Sales and Marketing, Garney Companies, Inc., a specialty
utility contractor.
> DAVID P. GARDNER
(Age 66) -- Director of each Company since August 19, 1998. President of
Hewlett Foundation and Chairman of George S. and Delores Dori Eccles
Foundation; Director of First Security Corp., a bank holding company; and
Director of Fluor Corp., a company with interests in coal.
> LINDA K. GRAVES*
(Age 45) -- Director of each Company since July 12, 1995. First Lady of Kansas;
Partner, Levy and Craig, P.C., a law firm.
> JOSEPH HARROZ, JR.
(Age 32) -- Director of each Company since November 18, 1998. General Counsel
of the Board of Regents and Adjunct Professor of Law at the University of
Oklahoma College of Law; formerly, Vice President for Executive Affairs of the
University of Oklahoma; formerly, an attorney with Crowe & Dunlevy, a law firm.
> JOHN F. HAYES
(Age 79) -- Director of each Company since June 2, 1971, or its inception,
whichever is later. Director of Central Bank and Trust; Director of Central
Properties, Inc.; Chairman of the Board of Directors, Gilliland & Hayes, P.A.,
a law firm; formerly, President, Gilliland & Hayes, P.A.
9
<PAGE>
> ROBERT L. HECHLER*
(Age 62) -- Director of each Company since November 18, 1998. President and
Principal Financial Officer of each Company; Executive Vice President, Chief
Operating Officer and Director of WDR; Vice President, Chief Operating Officer,
Director and Treasurer of Waddell & Reed Financial Services, Inc.; Executive
Vice President, Principal Financial Officer, Director and Treasurer of WRIMCO;
President, Chief Executive Officer, Principal Financial Officer, Director and
Treasurer of W&R; President, Director and Treasurer of Waddell & Reed Services
Company; formerly, Vice President of each of the Companies; formerly, Director
and Treasurer of Waddell & Reed Asset Management Company, a former affiliate of
WDR.
> HENRY J. HERRMANN*
(Age 56) -- Director of each Company since November 18, 1998. Vice President of
each of the Companies; President, Chief Investment Officer, Treasurer and
Director of WDR; Vice President, Chief Investment Officer and Director of
Waddell & Reed Financial Services, Inc.; Director of W&R; President and Chief
Executive Officer, Chief Investment Officer and Director of WRIMCO; formerly,
President, Chief Executive Officer, Chief Investment Officer and Director of
Waddell & Reed Asset Management Company, a former affiliate of WDR.
> GLENDON E. JOHNSON
(Age 75) -- Director of each Company since June 2, 1971, or its inception,
whichever is later. Retired. Formerly, Director and Chief Executive Officer of
John Alden Financial Corporation and its subsidiaries.
> WILLIAM T. MORGAN*
(Age 70) -- Director of each Company since February 13, 1985, or its inception,
whichever is later. Retired; formerly, Chairman of the Board of Directors and
President of each Company (Mr. Morgan retired as Chairman of the Board of
10
<PAGE>
Directors and President of each Company on April 30, 1993); formerly,
President, Director and Chief Executive Officer of WRIMCO and W&R; formerly,
Chairman of the Board of Directors of Waddell & Reed Services Company;
formerly, Director of Waddell & Reed Asset Management Company and United
Investors Life Insurance Company, former affiliates of WDR.
> RONALD C. REIMER
(Age 64) -- Director of each Company since November 18, 1998. Retired.
Co-founder and teacher at Servant Leadership School of Kansas City; Director of
Network Rehabilitation Services; formerly, Employment Counselor and Director of
McCue-Parker Center.
> FRANK J. ROSS, JR.*
(Age 45) -- Director of each Company since October 16, 1996. Partner,
Polsinelli, White, Vardeman & Shalton, a law firm.
> ELEANOR B. SCHWARTZ
(Age 62) -- Director of each Company since July 12, 1995. Professor of Business
Administration, University of Missouri-Kansas City; formerly, Chancellor,
University of Missouri-Kansas City.
> FREDERICK VOGEL III
(Age 63) -- Director of each Company since June 2, 1971, or its inception,
whichever is later. Retired.
At the meeting of the Board of Directors on February 10, 1999, the Directors of
each Company, including the Directors who are not "interested persons" of the
Company, as defined in the 1940 Act ("Independent Directors"), unanimously
approved the nomination of the foregoing persons to continue to serve as
Directors and directed that the election of these nominees be submitted to each
Company's shareholders.
The Board of Directors of each Company met four times during that Company's
most recent fiscal year.
11
<PAGE>
> YEARLY ATTENDANCE LIST
BOARD OF DIRECTORS' MEETINGS
FOR CALENDAR YEAR ENDED 12/31/98
(check mark) shows attendance at the Board meeting.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Name February May August November
---- -------- --- ------ --------
<S> <C> <C> <C> <C>
J. Concannon (check mark) (check mark) (check mark) (check mark)
J. Dillingham (check mark) (check mark) (check mark) (check mark)
D. Gardner* (check mark) (check mark)
L. Graves (check mark) (check mark) (check mark) (check mark)
J. Harroz, Jr.** (check mark)
J. Hayes (check mark) (check mark) (check mark) (check mark)
R. Hechler** (check mark)
H. Herrmann** (check mark)
G. Johnson (check mark) (check mark) (check mark) (check mark)
W. Morgan (check mark) (check mark) (check mark) (check mark)
R. Reimer** (check mark)
F. Ross (check mark) (check mark) (check mark) (check mark)
E. Schwartz (check mark) (check mark) (check mark) (check mark)
K. Tucker (check mark) (check mark) (check mark) (check mark)
F. Vogel (check mark) (check mark) (check mark) (check mark)
</TABLE>
* Elected Director effective August 19, 1998.
** Elected Director effective November 18, 1998.
Each Company has an Audit Committee that reviews and evaluates the audit
function, including recommending to the Directors the independent public
accountants to be selected for the Company. The Audit Committee currently
consists of Messrs. Gardner, Hayes and Morgan and Ms. Graves. Each Company's
Audit Committee met four times during that Company's most recent fiscal year.
Each Company also has a Nominating Committee that is responsible for the
selection and nomination of the Independent Directors. The Nominating Committee
currently consists of Glendon E. Johnson, Eleanor B. Schwartz and Frederick
Vogel III. Each Company's Nominating Committee met two times during that
company's most recent fiscal year. The Nominating Committee generally does not
consider unsolicited Director nominations recommended by Company shareholders.
12
<PAGE>
Each of the Directors, except Messrs. Hechler, Herrmann and Tucker, receives an
annual retainer of $48,000 per year, plus $2,500 for each meeting of the Board
of Directors attended, plus reimbursement of expenses of attending such
meeting, as well as $500 for each committee meeting attended which is not in
conjunction with a Board of Directors meeting. The fees and reimbursed expenses
paid to the Directors are divided among each of the Funds in the Companies
based on their relative size.
The following table sets forth information relating to the compensation paid to
Directors during the last fiscal year of each Company:
13
<PAGE>
Compensation Table
<TABLE>
<CAPTION>
Board Member(1)
----------------------------------------------------------------------
Amounts Paid During
the Most Recent Fiscal year James M. John A. David P. Linda K. Joseph John F.
from Company to Director Concannon Dillingham Gardner Graves Harroz, Jr. Hayes
- ------------------------------ ----------- ------------ ---------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
United Continental Income 1,101 1,101 1,460 1,460
United Government Securities 255 255 345 345
United High Income 2,198 2,198 2,878 2,878
United New Concepts 1,246 1,246 1,625 1,625
Waddell & Reed Funds, Inc. 1,527 1,527 1,979 1,979
United Cash Management 1,314 1,314 1,314 1,314
United International Growth 2,692 2,692 2,692 2,692
United Retirement Shares 1,974 1,974 1,974 1,974
United Asset Strategy 76 76 76 76
United High Income II 1,093 1,093 1,093 1,093
United Municipal Bond 2,588 2,588 2,588 2,588
United Municipal High Income 1,279 1,279 1,279 1,279
United Vanguard 3,871 3,871 3,871 3,871
United Gold & Government 41 41 9 41 7 41
United Funds, Inc. 27,380 27,380 6,945 27,380 5,813 27,380
Target/United Funds, Inc. 5,334 5,334 1,379 5,334 1,161 5,334
Total Compensation
Paid to Board Members
From the Fund Complex
(a total of the Funds)
for the Year Ended
12/31/98 (2) 57,500 57,500 14,500 57,500 12,000 57,500
<CAPTION>
Board Member(1)
-------------------------------------------------------------------------
Amounts Paid During
the Most Recent Fiscal year Glendon E. William T. Ronald C. Frank J. Eleanor B. Frederick
from Company to Director Johnson Morgan Reimer Ross, Jr. Schwartz Vogel III
- ------------------------------ ------------ ------------ ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
United Continental Income 1,432 1,460 1,460 1,460 1,460
United Government Securities 338 345 345 345 345
United High Income 2,816 2,878 2,878 2,878 2,878
United New Concepts 1,593 1,625 1,625 1,625 1,625
Waddell & Reed Funds, Inc. 1,940 1,979 1,979 1,979 1,979
United Cash Management 1,288 1,314 1,314 1,314 1,314
United International Growth 2,643 2,692 2,692 2,692 2,692
United Retirement Shares 1,937 1,974 1,974 1,974 1,974
United Asset Strategy 75 76 76 76 76
United High Income II 1,073 1,093 1,093 1,093 1,093
United Municipal Bond 2,539 2,588 2,588 2,588 2,588
United Municipal High Income 1,255 1,279 1,279 1,279 1,279
United Vanguard 3,802 3,871 3,871 3,871 3,871
United Gold & Government 40 41 7 41 41 41
United Funds, Inc. 26,913 27,380 5,813 27,380 27,380 27,380
Target/United Funds, Inc. 5,244 5,334 1,161 5,334 5,334 5,334
Total Compensation
Paid to Board Members
From the Fund Complex
(a total of the Funds)
for the Year Ended
12/31/98 (2) 56,500 57,500 12,000 57,500 57,500 57,500
</TABLE>
- ----------
(1) Board members who are also affiliated persons, as defined by the 1940 Act,
of Waddell & Reed, Inc. receive no salary, fees or compensation from the
Companies.
(2) No pension or retirement benefits have been accrued as part of Company
expenses.
14
<PAGE>
The Board of Directors of each Company has created an honorary position of
Director Emeritus. The Director Emeritus policy currently provides that an
incumbent Director who has attained the age of 70 may, or if initially elected
as a Director on or after May 31, 1993 and has attained the age of 75 must,
resign his or her position as Director and, unless he or she elects otherwise,
will serve as Director Emeritus provided that the Director has served as a
Director of one or more of the Companies for at least five years, which need
not have been consecutive. A Director Emeritus receives an annual fee from the
Company in an amount equal to the annual retainer at the time he or she
resigned as a Director; provided that a Director initially elected to a Board
of Directors on or after May 31, 1993, receives such annual fee only for a
period of three years commencing upon the date the Director began his or her
service as a Director Emeritus, or in an equivalent lump sum. A Director
Emeritus receives these fees in recognition of his or her past services,
whether or not services are rendered in his or her capacity as Director
Emeritus, but he or she has no authority or responsibility with respect to
management of the Funds. Messrs. Henry L. Bellmon, Jay B. Dillingham, Doyle
Patterson, Ronald K. Richey and Paul S. Wise currently serve as Directors
Emeritus.
If elected, the Directors will hold office without limit in time except (a) any
Director may resign, (b) any Director may be removed by shareholders upon an
affirmative vote of a majority of all the shares entitled to be cast for the
election of Directors, and (c) in connection with the Director Emeritus policy
described above.
> Executive Officers of the Companies
The executive officers of each Company, other than those who serve as
Directors, are set forth below. Each executive officer, as such, is an
"interested person" of each Company. Each executive officer set forth below
holds the same position with each of the Companies in the Fund Complex.
15
<PAGE>
Theodore W. Howard (Age 56) -- Vice President, Treasurer and Principal
Accounting Officer of each Company; Vice President of Waddell & Reed Services
Company.
Helge K. Lee (Age 53) -- Vice President, Secretary and General Counsel of each
of the Funds; Secretary and General Counsel of WDR; Vice President, Secretary,
General Counsel and Director of Waddell & Reed Financial Services, Inc.; Senior
Vice President, Secretary and General Counsel of WRIMCO and W&R; Senior Vice
President, Secretary, General Counsel and Director of Waddell & Reed Services
Company; formerly, Executive Vice President, Secretary and Chief Compliance
Officer of LGT Asset Management, Inc. and affiliates; formerly, Senior Vice
President, General Counsel and Secretary of Strong Capital Management, Inc. and
affiliates.
Required Vote:
The election of Directors of a Company requires the favorable vote of the
holders of a plurality of the shares cast in person or by proxy of that
Company, provided a quorum is present.
THE BOARDS OF DIRECTORS RECOMMEND THAT YOU VOTE FOR PROPOSAL 1.
PROPOSAL 2: RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE
COMPANY'S INDEPENDENT ACCOUNTANTS
Relevant Companies: All Companies.
Discussion: Deloitte & Touche LLP has been selected by each Company's Board of
Directors, with the approval of its Audit Committee, as that Company's
independent accountants for the current fiscal year. The shareholders of each
Company are entitled to vote for or against the ratification of the selection
of Deloitte & Touche LLP for their Company.
16
<PAGE>
Deloitte & Touche LLP has advised each Company that neither it nor any of its
partners has any direct or indirect financial interest or connection (other
than as independent accountants) in or with the Funds or any of their
affiliates. Deloitte & Touche LLP has been given the opportunity to make a
statement at the Meeting if it so desires. Deloitte & Touche LLP is not
expected to have a representative present at the Meeting but will be available
should any matter arise requiring its presence.
Deloitte & Touche LLP audited the Funds' financial statements for the preceding
fiscal year and certain prior periods. On November 5, 1996, Price Waterhouse
LLP, the then independent accountants of the Funds, resigned as the independent
accountants of the Funds. Price Waterhouse LLP audited the Funds' financial
statements during each Company's fiscal year ending in 1995 and ending on or
before September 30, 1996, and for the period from October 1, 1996 through
November 5, 1996. During such periods, the Funds did not have any disagreements
with Price Waterhouse LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement if not resolved to the satisfaction of Price Waterhouse LLP would
have caused them to make reference thereto in their report on the financial
statements for such periods.
Price Waterhouse LLP did not at any time during each Company's fiscal year
ending in 1995 and ending on or before September 30, 1996, and for the period
from October 1, 1996 through November 5, 1996, and any subsequent interim
period, advise the Company (i) that internal controls necessary for the Company
to develop reliable financial statements did not exist, (ii) that it received
information that led it to no longer be able to rely on management's
representations that made it unwilling to be associated with the financial
statements prepared by management, (iii) of the need to expand
17
<PAGE>
significantly the scope of its audit or that it had received information that
if further investigated may materially impact the fairness or reliability of a
previously issued or subsequent audit report or the underlying financial
statements or cause it to be unwilling to rely on management's representations
or be associated with the financial statements prepared by management, or (iv)
that it had received information that it concluded materially impacted the
fairness or reliability of a previously issued or subsequent audit report on
the underlying financial statements. Price Waterhouse LLP did not so expand any
such audit or conduct further investigation, and no issues existed which were
not resolved to the accountants' satisfaction prior to resignation.
Required Vote:
Approval of this Proposal 2 as to a Company requires the affirmative vote of a
majority of outstanding securities of that Company, provided a quorum is
present.
THE BOARDS OF DIRECTORS RECOMMEND THAT YOU VOTE FOR PROPOSAL 2.
PROPOSAL 3: APPROVAL OF AMENDMENT TO THE FUND'S INVESTMENT MANAGEMENT AGREEMENT
WITH WRIMCO
Relevant Companies: All Companies.
Discussion: Shareholders of each Fund are being asked to approve an amendment
("Amendment") to the Fund's current Investment Management Agreement with
WRIMCO, the Funds' investment manager. If approved by shareholders, the
Amendment would: (i) for each Fund in the United Group of Mutual Funds and for
each Fund in Target/United Funds, Inc., replace the current fee, by which each
Fund is charged a specific fee plus its pro rata share of a group fee, with a
fee schedule based
18
<PAGE>
on the assets of that individual Fund only; and (ii) for each Fund within
Waddell & Reed Funds, Inc., revise the current fee rate. No other change is
proposed to the Fund's current Investment Management Agreement ("Agreement").
Description of the Existing and Proposed Fee Structures
United Group of Mutual Funds and Target/United Funds, Inc.
The existing investment management fee structure for the United Group of Mutual
Funds consists of a specific fee for each constituent Fund based on its net
assets and each Fund's pro rata share of a group fee based on the aggregate net
assets of all the Funds in the United Group of Mutual Funds. This group fee
structure has been in effect since 1983. Similarly, the existing investment
management fee structure for Target/United Funds, Inc. consists of a specific
fee for each constituent Fund based on its net assets and each Fund's pro rata
share of a group fee based on the aggregate net assets of all the Funds
comprising Target/United Funds, Inc. The group fee structure for Target/
United Funds, Inc. has been in effect since 1990. Currently, the prevalent
practice within the industry is a fee based on assets of individual funds.
Management has concluded that a fee based solely on a Fund's net assets is
preferable to a group fee arrangement. While the group fee initially provided
for reduced fees as aggregate assets grew, it resulted in variances from fee
rates paid by other funds with similar investment objectives. The proposed new
fee schedule is intended to give shareholders of each Fund (other than United
Cash Management and Target/United Money Market Portfolio) the benefit of
reduced fees at higher asset levels. Therefore, as a Fund's net assets increase
beyond certain levels, the effective fee rate will decrease.
Accordingly, management has proposed, and the Board of Directors for the
affected Fund has approved, subject to shareholder approval, an Amendment for
each Fund to effect a new fee
19
<PAGE>
schedule as set forth in Exhibit D. However, if the Amendments are approved,
WRIMCO has indicated that it intends to waive the fee for a Fund at any time
that its net assets are less than $25 million, subject to WRIMCO's right to
terminate any such waiver upon notice to the Board of Directors of the affected
Fund.
The impact of the Amendment on investment management fees for the affected
Funds is demonstrated by the following chart illustrating the fees paid during
the Fund's most recent fiscal year ended in 1998 under the current management
fee structure and, on a pro forma basis, the fees that would have been paid
under the Amendment for the same period at the same asset level.
20
<PAGE>
<TABLE>
<CAPTION>
Current
Fee
Structure Proposed
(Fiscal Year Fee Percentage
Name of Fund 1998) Structure Difference
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United Asset Strategy Fund 208,147 210,172 0.97%
United Cash Management 2,047,383 2,070,483 1.13%
United Continental Income Fund 3,092,587 3,956,723 27.94%
United Funds, Inc.
United Accumulative Fund 9,490,941 11,857,269 24.93%
United Bond Fund 2,284,751 2,823,903 23.60%
United Income Fund 39,808,311 42,649,496 7.14%
United Science and Technology Fund 7,557,688 10,777,047 42.60%
United Gold & Government Fund* 103,627 126,914 22.47%*
United Government Securities Fund 516,182 649,808 25.89%
United High Income Fund 5,773,843 6,429,190 11.35%
United High Income Fund II 2,302,825 2,646,669 14.93%
United International Growth Fund 7,746,698 9,458,911 22.10%
United Municipal Bond Fund 4,183,289 5,054,715 20.83%
United Municipal High Income Fund 2,461,306 2,616,139 6.29%
United New Concepts Fund 4,863,292 5,537,402 13.86%
United Retirement Shares 4,229,070 5,433,466 28.48%
United Vanguard Fund 10,495,461 10,327,572 -1.60%
Waddell & Reed Funds, Inc.
Waddell & Reed Asset Strategy Fund 127,507 110,527 -13.32%
Waddell & Reed Growth Fund 2,041,002 2,144,391 5.07%
Waddell & Reed High Income Fund* 24,352 35,191 44.51%*
Waddell & Reed International Growth Fund 553,692 582,311 5.17%
Waddell & Reed Limited-Term Bond Fund* 101,985 91,209 -10.57%*
Waddell & Reed Municipal Bond Fund 216,501 203,259 -6.12%
Waddell & Reed Science and Technology Fund 17,585 32,137 82.75%
Waddell & Reed Total Return Fund 2,837,414 2,801,744 -1.26%
Target/United Funds, Inc.
Target/United Asset Strategy Portfolio* 91,048 80,586 -11.50%*
Target/United Balanced Portfolio 471,708 558,792 18.46%
Target/United Bond Portfolio 547,604 551,859 0.78%
Target/United Growth Portfolio 4,903,762 4,968,126 1.31%
Target/United High Income Portfolio 801,018 781,087 -2.49%
Target/United Income Portfolio 5,015,935 5,081,734 1.31%
Target/United International Portfolio 1,168,796 1,256,161 7.47%
Target/United Limited-Term Bond Portfolio* 22,936 21,198 -7.58%*
Target/United Money Market Portfolio 223,299 181,950 -18.52%
Target/United Science and Technology Portfolio 126,390 155,549 23.07%
Target/United Small Cap Portfolio 1,395,302 1,410,343 1.08%
</TABLE>
21
<PAGE>
* As currently proposed, the management fee for these Funds, if net assets are
less than $25 million, will be waived:
<TABLE>
<CAPTION>
Current
Fee
Structure Proposed
(Fiscal Year Fee Percentage
Name of Fund 1998) Structure Difference
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
United Gold & Government Fund $103,627 -0- -100%
Waddell & Reed High Income Fund 24,352 -0- -100%
Waddell & Reed Limited-Term Bond Fund 101,985 -0- -100%
Target/United Asset Strategy Portfolio 91,048 -0- -100%
Target/United Limited-Term Bond Portfolio 22,936 -0- -100%
</TABLE>
The following tables provide information concerning each Fund's management fees
and expenses, by class where applicable, as a percentage of average net assets
for the most recently completed fiscal year ended in 1998 under the Agreement
and if the Amendment had been in effect during the same period.
22
<PAGE>
<TABLE>
<CAPTION>
Class A/Class B Current Proposed Current Proposed
FUND NAME Shares* Agreement Amendment Class Y Shares Agreement Amendment
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United Asset Strategy Management Fee 0.69% 0.70% Management Fee 0.69% 0.70%
Distribution (12b-1) Fee 0.24% 0.24% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.69% 0.69% Other Expenses 0.49% 0.49%
Total Annual Fund Total Annual Fund
Operating Expenses 1.62% 1.63% Operating Expenses 1.18% 1.19%
United Cash Management Management Fee 0.40% 0.40% Management Fee** 0.40% 0.40%
Distribution (12b-1) Fee 0.00% 0.00% Distribution (12b-1) Fee 0.99% 0.99%
Other Expenses 0.50% 0.00% Other Expenses 0.27% 0.27%
Total Annual Fund Total Annual Fund
Operating Expenses 0.90% 0.90% Operating Expenses 1.66% 1.66%
United Continental Income Management Fee 0.55% 0.70% Management Fee 0.55% 0.70%
Distribution (12b-1) Fee 0.16% 0.16% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.20% 0.20% Other Expenses 0.20% 0.20%
Total Annual Fund Total Annual Fund
Operating Expenses 0.91% 1.06% Operating Expenses 0.75% 0.90%
United Funds, Inc.
Accumulative Fund Management Fee 0.54% 0.68% Management Fee 0.54% 0.68%
Distribution (12b-1) Fee 0.22% 0.22% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.12% 0.12% Other Expenses 0.20% 0.20%
Total Annual Fund Total Annual Fund
Operating Expenses 0.88% 1.02% Operating Expenses 0.74% 0.88%
United Funds, Inc.
Bond Fund Management Fee 0.42% 0.52% Management Fee 0.42% 0.52%
Distribution (12b-1) Fee 0.23% 0.23% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.18% 0.18% Other Expenses 0.18% 0.18%
Total Annual Fund Total Annual Fund
Operating Expenses 0.83% 0.93% Operating Expenses 0.60% 0.70%
</TABLE>
* Class A shares of each Fund in the United Group of Mutual Funds and Class B
shares of each Fund within Waddell & Reed Funds, Inc.
** United Cash Management, Inc. does not offer Class Y shares. These numbers
reflect the expenses of the Class B shares of United Cash Management, Inc.
23
<PAGE>
<TABLE>
<CAPTION>
Class A/Class B Current Proposed Current Proposed
FUND NAME Shares* Agreement Amendment Class Y Shares Agreement Amendment
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United Funds, Inc.
Income Fund Management Fee 0.54% 0.58% Management Fee 0.54% 0.58%
Distribution (12b-1) Fee 0.22% 0.22% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.13% 0.13% Other Expenses 0.16% 0.16%
Total Annual Fund Total Annual Fund
Operating Expenses 0.89% 0.93% Operating Expenses 0.70% 0.74%
United Funds, Inc. Science
and Technology Fund Management Fee 0.59% 0.85% Management Fee 0.59% 0.85%
Distribution (12b-1) Fee 0.24% 0.24% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.22% 0.22% Other Expenses 0.20% 0.20%
Total Annual Fund Total Annual Fund
Operating Expenses 1.05% 1.31% Operating Expenses 0.79% 1.05%
United Gold & Government Management Fee 0.69% 0.85% Management Fee 0.69% 0.85%
Distribution (12b-1) Fee 0.25% 0.25% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 1.52% 1.52% Other Expenses 1.16% 1.16%
Total Annual Fund Total Annual Fund
Operating Expenses 2.46% 2.62% Operating Expenses 1.85% 2.01%
United Government Securities Management Fee 0.40% 0.50% Management Fee 0.40% 0.50%
Distribution (12b-1) Fee 0.15% 0.15% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.34% 0.34% Other Expenses 0.26% 0.26%
Total Annual Fund Total Annual Fund
Operating Expenses 0.89% 0.99% Operating Expenses 0.66% 0.76%
United High Income Management Fee 0.55% 0.61% Management Fee 0.55% 0.61%
Distribution (12b-1) Fee 0.14% 0.14% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.15% 0.15% Other Expenses 0.22% 0.22%
Total Annual Fund Total Annual Fund
Operating Expenses 0.84% 0.90% Operating Expenses 0.77% 0.83%
</TABLE>
* Class A shares of each Fund in the United Group of Mutual Funds and Class B
shares of each Fund within Waddell & Reed Funds, Inc.
24
<PAGE>
<TABLE>
<CAPTION>
Class A/Class B Current Proposed Current Proposed
FUND NAME Shares* Agreement Amendment Class Y Shares Agreement Amendment
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United High Income II Management Fee 0.54% 0.63% Management Fee 0.54% 0.63%
Distribution (12b-1) Fee 0.22% 0.22% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.21% 0.21% Other Expenses 0.20% 0.20%
Total Annual Fund Total Annual Fund
Operating Expenses 0.97% 1.06% Operating Expenses 0.74% 0.83%
United International Growth Management Fee 0.69% 0.85% Management Fee 0.69% 0.85%
Distribution (12b-1) Fee 0.21% 0.21% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.33% 0.33% Other Expenses 0.28% 0.28%
Total Annual Fund Total Annual Fund
Operating Expenses 1.23% 1.39% Operating Expenses 0.97% 1.13%
United Municipal Bond Management Fee 0.42% 0.51% Management Fee 0.42% 0.51%
Distribution (12b-1) Fee 0.19% 0.19% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.10% 0.10% Other Expenses 0.18% 0.18%
Total Annual Fund Total Annual Fund
Operating Expenses 0.71% 0.80% Operating Expenses 0.60% 0.69%
United Municipal High Income Management Fee 0.49% 0.53% Management Fee 0.49% 0.53%
Distribution (12b-1) Fee 0.20% 0.20% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.12% 0.12% Other Expenses 0.20% 0.20%
Total Annual Fund Total Annual Fund
Operating Expenses 0.81% 0.85% Operating Expenses 0.69% 0.73%
United New Concepts Management Fee 0.75% 0.85% Management Fee 0.75% 0.85%
Distribution (12b-1) Fee 0.18% 0.18% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.32% 0.32% Other Expenses 0.21% 0.21%
Total Annual Fund Total Annual Fund
Operating Expenses 1.25% 1.35% Operating Expenses 0.96% 1.06%
United Retirement Shares Management Fee 0.54% 0.70% Management Fee 0.54% 0.70%
Distribution (12b-1) Fee 0.21% 0.21% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.19% 0.19% Other Expenses 0.24% 0.24%
Total Annual Fund Total Annual Fund
Operating Expenses 0.94% 1.10% Operating Expenses 0.78% 0.94%
</TABLE>
* Class A shares of each Fund in the United Group of Mutual Funds and Class B
shares of each Fund within Waddell & Reed Funds, Inc.
25
<PAGE>
<TABLE>
<CAPTION>
Class A/Class B Current Proposed Current Proposed
FUND NAME Shares* Agreement Amendment Class Y Shares Agreement Amendment
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United Vanguard Management Fee 0.69% 0.68% Management Fee 0.69% 0.68%
Distribution (12b-1) Fee 0.22% 0.22% Distribution (12b-1) Fee 0.00% 0.00%
Other Expenses 0.18% 0.18% Other Expenses 0.17% 0.17%
Total Annual Fund Total Annual Fund
Operating Expenses 1.09% 1.08% Operating Expenses 0.86% 0.85%
Waddell & Reed Funds, Inc.
Waddell & Reed Asset Strategy Management Fee 0.81% 0.70% Management Fee 0.81% 0.70%
Distribution (12b-1) Fee 1.00% 1.00% Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.63% 0.63% Other Expenses 0.52% 0.52%
Total Annual Fund Total Annual Fund
Operating Expenses 2.44% 2.33% Operating Expenses 1.58% 1.47%
Waddell & Reed Growth Management Fee 0.81% 0.85% Management Fee 0.81% 0.85%
Distribution (12b-1) Fee 0.99% 0.99% Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.33% 0.33% Other Expenses 0.24% 0.24%
Total Annual Fund Total Annual Fund
Operating Expenses 2.13% 2.17% Operating Expenses 1.30% 1.34%
Waddell & Reed High Income Management Fee 0.65% 0.63% Management Fee 0.65% 0.63%
Distribution (12b-1) Fee 1.00% 1.00% Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.89% 0.89% Other Expenses 0.83% 0.83%
Total Annual Fund Total Annual Fund
Operating Expenses 2.53% 2.51% Operating Expenses 1.72% 1.70%
Waddell & Reed International
Growth Management Fee 0.81% 0.85% Management Fee 0.81% 0.85%
Distribution (12b-1) Fee 0.98% 0.98% Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.56% 0.56% Other Expenses 0.45% 0.45%
Total Annual Fund Total Annual Fund
Operating Expenses 2.35% 2.39% Operating Expenses 1.51% 1.55%
</TABLE>
* Class A shares of each Fund in the United Group of Mutual Funds and Class B
shares of each Fund within Waddell & Reed Funds, Inc.
26
<PAGE>
<TABLE>
<CAPTION>
Class A/Class B Current Proposed Current Proposed
FUND NAME Shares* Agreement Amendment Class Y Shares Agreement Amendment
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Waddell & Reed Limited-Term
Bond Management Fee 0.56% 0.50% Management Fee 0.56% 0.50%
Distribution (12b-1) Fee 0.98% 0.98% Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.58% 0.58% Other Expenses 0.51% 0.51%
Total Annual Fund Total Annual Fund
Operating Expenses 2.12% 2.06% Operating Expenses 1.32% 1.26%
Waddell & Reed Municipal Bond Management Fee 0.56% 0.53% Management Fee 0.56% 0.53%
Distribution (12b-1) Fee 0.98% 0.98% Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.35% 0.35% Other Expenses 0.35% 0.35%
Total Annual Fund Total Annual Fund
Operating Expenses 1.89% 1.86% Operating Expenses 1.16% 1.13%
Waddell & Reed Science and
Technology Management Fee 0.71% 0.85% Management Fee 0.71% 0.85%
Distribution (12b-1) Fee 1.00% 1.00% Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 1.47% 1.47% Other Expenses 1.13% 1.13%
Total Annual Fund Total Annual Fund
Operating Expenses 3.18% 3.32% Operating Expenses 2.09% 2.23%
Waddell & Reed Total Return Management Fee 0.71% 0.70% Management Fee 0.71% 0.70%
Distribution (12b-1) Fee 0.99% 0.99% Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.22% 0.22% Other Expenses 0.24% 0.24%
Total Annual Fund Total Annual Fund
Operating Expenses 1.92% 1.91% Operating Expenses 1.20% 1.19%
</TABLE>
* Class A shares of each Fund in the United Group of Mutual Funds and Class B
shares of each Fund within Waddell & Reed Funds, Inc.
27
<PAGE>
<TABLE>
<CAPTION>
Classes
not Current Proposed
FUND NAME applicable Agreement Amendment
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Target/United Funds, Inc.
Target/United Asset
Strategy Portfolio Management Fee 0.79% 0.70%
Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.19% 0.19%
Total Annual Fund
Operating Expenses 1.23% 1.14%
Target/United Balanced
Portfolio Management Fee 0.59% 0.70%
Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.06% 0.06%
Total Annual Fund
Operating Expenses 0.90% 1.01%
Target/United Bond
Portfolio Management Fee 0.52% 0.53%
Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.06% 0.06%
Total Annual Fund
Operating Expenses 0.83% 0.84%
Target/United Growth
Portfolio Management Fee 0.69% 0.70%
Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.02% 0.02%
Total Annual Fund
Operating Expenses 0.96% 0.97%
Target/United High
Income Portfolio Management Fee 0.64% 0.63%
Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.05% 0.05%
Total Annual Fund
Operating Expenses 0.94% 0.93%
Target/United Income
Portfolio Management Fee 0.69% 0.70%
Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.03% 0.03%
Total Annual Fund
Operating Expenses 0.97% 0.98%
Target/United
International Portfolio Management Fee 0.79% 0.85%
Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.15% 0.15%
Total Annual Fund
Operating Expenses 1.19% 1.25%
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Classes
not Current Proposed
FUND NAME applicable Agreement Amendment
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Target/United Limited-
Term Bond Portfolio Management Fee 0.54% 0.50%
Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.17% 0.17%
Total Annual Fund
Operating Expenses 0.96% 0.92%
Target/United Money
Market Portfolio Management Fee 0.49% 0.40%
Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.09% 0.09%
Total Annual Fund
Operating Expenses 0.83% 0.74%
Target/United Science
and Technology
Portfolio Management Fee 0.69% 0.85%
Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.12% 0.12%
Total Annual Fund
Operating Expenses 1.06% 1.22%
Target/United Small Cap
Portfolio Management Fee 0.84% 0.85%
Distribution (12b-1) Fee 0.25% 0.25%
Other Expenses 0.04% 0.04%
Total Annual Fund
Operating Expenses 1.13% 1.14%
</TABLE>
29
<PAGE>
EXAMPLE: The following illustrates the costs of investing in a Fund, including
the maximum front-end sales charge or contingent deferred sales charge, as
applicable, under the current Agreement and the proposed Amendment assuming (a)
you invest $10,000 in the Fund for each time period specified, (b) your
investment has a 5% return each year, and (c) the applicable expenses remain
the same.
<TABLE>
<CAPTION>
FUND NAME 1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United Asset Strategy--Class A
Current Agreement $730 $1,057 $1,406 $2,386
Proposed Amendment $731 $1,060 $1,411 $2,397
United Asset Strategy--Class Y
Current Agreement $120 $ 375 $ 649 $1,432
Proposed Amendment $121 $ 378 $ 654 $1,443
United Cash Management--Class A
Current Agreement $ 92 $ 287 $ 498 $1,108
Proposed Amendment $ 92 $ 287 $ 498 $1,108
United Cash Management--Class B
Current Agreement $469 $ 623 $ 902 $1,761
Proposed Amendment $469 $ 623 $ 902 $1,761
United Continental Income--Class A
Current Agreement $662 $ 848 $1,050 $1,630
Proposed Amendment $677 $ 893 $1,126 $1,795
United Continental Income--Class Y
Current Agreement $ 77 $ 240 $ 417 $ 930
Proposed Amendment $ 92 $ 287 $ 498 $1,108
United Funds, Inc. Accumulative Fund--Class A
Current Agreement $660 $ 840 $1,035 $1,597
Proposed Amendment $673 $ 881 $1,105 $1,750
United Funds, Inc. Accumulative Fund--Class Y
Current Agreement $ 76 $ 237 $ 411 $ 918
Proposed Amendment $ 90 $ 280 $ 487 $1,083
United Funds, Inc. Bond Fund--Class A
Current Agreement $655 $ 825 $1,009 $1,541
Proposed Amendment $665 $ 855 $1,062 $1,656
United Funds, Inc. Bond Fund--Class Y
Current Agreement $ 61 $ 192 $ 335 $ 750
Proposed Amendment $ 72 $ 225 $ 391 $ 874
United Funds, Inc. Income Fund--Class A
Current Agreement $661 $ 843 $1,040 $1,608
Proposed Amendment $664 $ 854 $1,060 $1,652
United Funds, Inc. Income Fund--Class Y
Current Agreement $ 72 $ 224 $ 390 $ 871
Proposed Amendment $ 76 $ 237 $ 411 $ 918
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
FUND NAME 1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United Funds, Inc. Science and Technology Fund--Class A
Current Agreement $676 $ 890 $1,121 $1,784
Proposed Amendment $700 $ 965 $1,250 $2,059
United Funds, Inc. Science and Technology Fund--Class Y
Current Agreement $ 81 $ 252 $ 439 $ 978
Proposed Amendment $107 $ 333 $ 577 $1,278
United Gold & Government--Class A
Current Agreement $810 $1,297 $1,810 $3,210
Proposed Amendment $825 $1,343 $1,885 $3,359
United Gold & Government--Class Y
Current Agreement $188 $ 582 $1,001 $2,169
Proposed Amendment $204 $ 630 $1,083 $2,338
United Government Securities--Class A
Current Agreement $512 $ 697 $ 897 $1,474
Proposed Amendment $522 $ 727 $ 949 $1,586
United Government Securities--Class Y
Current Agreement $ 67 $ 211 $ 368 $ 822
Proposed Amendment $ 78 $ 243 $ 422 $ 942
United High Income--Class A
Current Agreement $656 $ 828 $1,014 $1,553
Proposed Amendment $662 $ 845 $1,045 $1,619
United High Income--Class Y
Current Agreement $ 79 $ 246 $ 428 $ 954
Proposed Amendment $ 85 $ 265 $ 460 $1,025
United High Income II--Class A
Current Agreement $668 $ 866 $1,080 $1,696
Proposed Amendment $676 $ 891 $1,124 $1,789
United High Income II--Class Y
Current Agreement $ 76 $ 237 $ 411 $ 918
Proposed Amendment $ 84 $ 263 $ 458 $1,019
United International Growth--Class A
Current Agreement $693 $ 943 $1,212 $1,978
Proposed Amendment $708 $ 989 $1,291 $2,145
United International Growth--Class Y
Current Agreement $ 99 $ 309 $ 536 $1,190
Proposed Amendment $115 $ 358 $ 621 $1,372
United Municipal Bond--Class A
Current Agreement $494 $ 642 $ 803 $1,270
Proposed Amendment $503 $ 670 $ 852 $1,376
United Municipal Bond--Class Y
Current Agreement $ 61 $ 192 $ 335 $ 750
Proposed Amendment $ 71 $ 222 $ 386 $ 862
United Municipal High Income--Class A
Current Agreement $504 $ 673 $ 856 $1,384
Proposed Amendment $508 $ 683 $ 874 $1,424
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
FUND NAME 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United Municipal High Income--Class Y
Current Agreement $ 70 $221 $ 384 $ 859
Proposed Amendment $ 74 $232 $ 403 $ 900
United New Concepts--Class A
Current Agreement $695 $949 $1,222 $1,999
Proposed Amendment $705 $978 $1,272 $2,105
United New Concepts--Class Y
Current Agreement $ 98 $306 $ 531 $1,178
Proposed Amendment $108 $337 $ 585 $1,294
United Retirement Shares--Class A
Current Agreement $665 $857 $1,065 $1,663
Proposed Amendment $681 $905 $1,146 $1,838
United Retirement Shares--Class Y
Current Agreement $ 80 $249 $ 433 $ 966
Proposed Amendment $ 96 $300 $ 520 $1,155
United Vanguard--Class A
Current Agreement $680 $902 $1,141 $1,827
Proposed Amendment $679 $900 $1,138 $1,820
United Vanguard--Class Y
Current Agreement $ 88 $274 $ 477 $1,061
Proposed Amendment $ 87 $272 $ 473 $1,053
Waddell & Reed Funds, Inc.
Waddell & Reed Asset Strategy--Class B
Current Agreement $547 $861 $1,301 $2,776
Proposed Amendment $536 $827 $1,245 $2,666
Waddell & Reed Asset Strategy--Class Y
Current Agreement $161 $499 $ 860 $1,878
Proposed Amendment $150 $465 $ 803 $1,757
Waddell & Reed Growth--Class B
Current Agreement $516 $767 $1,145 $2,463
Proposed Amendment $520 $779 $1,165 $2,505
Waddell & Reed Growth--Class Y
Current Agreement $132 $412 $ 712 $1,567
Proposed Amendment $136 $424 $ 734 $1,612
Waddell & Reed High Income--Class B
Current Agreement $556 $888 $1,347 $2,869
Proposed Amendment $554 $882 $1,336 $2,847
Waddell & Reed High Income--Class Y
Current Agreement $175 $543 $ 935 $2,033
Proposed Amendment $173 $536 $ 923 $2,010
Waddell & Reed International Growth--Class B
Current Agreement $538 $833 $1,255 $2,686
Proposed Amendment $542 $845 $1,275 $2,726
Waddell & Reed International Growth--Class Y
Current Agreement $154 $477 $ 824 $1,802
Proposed amendment $158 $490 $ 845 $1,845
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
FUND NAME 1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Waddell & Reed Limited-Term Bond--Class B
Current Agreement $515 $ 764 $1,139 $2,452
Proposed Amendment $509 $ 746 $1,108 $2,390
Waddell & Reed Limited-Term Bond--Class Y
Current Agreement $134 $ 418 $ 723 $1,590
Proposed Amendment $128 $ 400 $ 692 $1,523
Waddell & Reed Municipal Bond--Class B
Current Agreement $492 $ 694 $1,021 $2,212
Proposed Amendment $488 $ 683 $1,003 $2,174
Waddell & Reed Municipal Bond--Class Y
Current Agreement $118 $ 368 $ 638 $1,409
Proposed Amendment $115 $ 358 $ 620 $1,369
Waddell & Reed Science and Technology--Class B
Current Agreement $621 $1,081 $1,665 $3,487
Proposed Amendment $635 $1,122 $1,732 $3,614
Waddell & Reed Science and Technology--Class Y
Current Agreement $212 $ 654 $1,122 $2,838
Proposed Amendment $226 $ 696 $1,193 $2,561
Waddell & Reed Total Return--Class B
Current Agreement $495 $ 703 $1,037 $2,243
Proposed Amendment $494 $ 700 $1,032 $2,233
Waddell & Reed Total Return--Class Y
Current Agreement $122 $ 381 $ 660 $1,455
Proposed Amendment $121 $ 378 $ 654 $1,443
Target/United Asset Strategy Portfolio
Current Agreement $125 $ 390 $ 676 $1,489
Proposed Amendment $116 $ 362 $ 628 $1,386
Target/United Balanced Portfolio
Current Agreement $ 92 $ 287 $ 498 $1,108
Proposed Amendment $103 $ 322 $ 558 $1,236
Target/United Bond Portfolio
Current Agreement $ 85 $ 265 $ 460 $1,025
Proposed Amendment $ 85 $ 267 $ 463 $1,031
Target/United Growth Portfolio
Current Agreement $ 98 $ 306 $ 531 $1,178
Proposed Amendment $ 99 $ 309 $ 536 $1,190
Target/United High Income Portfolio
Current Agreement $ 96 $ 300 $ 520 $1,155
Proposed Amendment $ 94 $ 295 $ 512 $1,137
Target/United Income Portfolio
Current Agreement $ 99 $ 309 $ 536 $1,190
Proposed Amendment $100 $ 312 $ 542 $1,201
Target/United International Portfolio
Current Agreement $121 $ 378 $ 654 $1,443
Proposed Amendment $127 $ 397 $ 686 $1,511
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
FUND NAME 1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Target/United Limited-Term Bond Portfolio
Current Agreement $ 98 $ 306 $ 531 $1,178
Proposed Amendment $ 94 $ 293 $ 509 $1,131
Target/United Money Market Portfolio
Current Agreement $ 85 $ 265 $ 460 $1,025
Proposed Amendment $ 76 $ 237 $ 411 $ 918
Target/United Science and Technology Portfolio
Current Agreement $108 $ 337 $ 585 $1,294
Proposed Amendment $124 $ 387 $ 670 $1,477
Target/United Small Cap Portfolio
Current Agreement $115 $ 359 $ 622 $1,375
Proposed Amendment $116 $ 362 $ 628 $1,386
ASSUMING NO REDEMPTION AT END OF EACH PERIOD
United Cash Management--Class B
Current Agreement $169 $ 523 $ 902 $1,761
Proposed Amendment $169 $ 523 $ 902 $1,761
Waddell & Reed Funds, Inc.
Waddell & Reed Asset Strategy--Class B
Current Agreement $247 $ 761 $1,301 $2,776
Proposed Amendment $236 $ 727 $1,245 $2,666
Waddell & Reed Growth--Class B
Current Agreement $216 $ 667 $1,145 $2,463
Proposed Amendment $220 $ 679 $1,165 $2,505
Waddell & Reed High Income--Class B
Current Agreement $256 $ 788 $1,347 $2,869
Proposed Amendment $254 $ 782 $1,336 $2,847
Waddell & Reed International Growth--Class B
Current Agreement $238 $ 733 $1,255 $2,686
Proposed Amendment $242 $ 745 $1,275 $2,726
Waddell & Reed Limited-Term Bond--Class B
Current Agreement $215 $ 664 $1,139 $2,452
Proposed Amendment $209 $ 646 $1,108 $2,390
Waddell & Reed Municipal Bond--Class B
Current Agreement $192 $ 594 $1,021 $2,212
Proposed Amendment $188 $ 583 $1,003 $2,174
Waddell & Reed Science and Technology--Class B
Current Agreement $321 $ 981 $1,665 $3,487
Proposed Amendment $335 $1,022 $1,732 $3,614
Waddell & Reed Total Return--Class B
Current Agreement $195 $ 603 $1,037 $2,243
Proposed Amendment $194 $ 600 $1,032 $2,233
</TABLE>
The purpose of this example and the table is to assist investors in
understanding the various costs and expenses of investing in shares of a Fund.
The example above should not be considered a representation of past or future
expenses of the Funds. Actual expenses may vary from year to year and may be
higher or lower than those shown above.
34
<PAGE>
Reasons for and Impact of the Proposed Fee Structure
The proposed new fee arrangements for the respective Funds are intended to:
provide WRIMCO with additional revenues to manage the Funds, particularly to
attract additional experienced investment professionals as well as retain the
current staff and for investment in technology and related support; and result
in management fee rates that are more in line with the industry as measured by
industry medians. Under the Amendment, except with respect to the change in the
management fee, the terms and conditions of the current Agreement will not be
changed.
Consideration and Approval by the Board Of Directors
The Board of Directors for each Fund has determined that the compensation to be
paid to WRIMCO under the Amendment for that Fund is fair and reasonable and
provides a management fee comparable to those of competing funds. At the
regular joint meeting of the Boards of Directors on November 18, 1998, the
Directors received and considered information from WRIMCO regarding the Funds'
management fees, overall expense ratios, industry data and proposed revised
management fees for the Funds. The Independent Directors also met separately,
with counsel, on November 18, 1998, to discuss this information and the
management fee proposals. After discussion, the Independent Directors requested
that WRIMCO provide certain additional information, including further data on
fees paid by other comparable investment companies, profitability of WRIMCO and
other advisers, details regarding the benefits to the Funds anticipated to
result from the payment of increased management fees to WRIMCO, and possible
additional breakpoints and/or waivers for particular Funds.
On January 21, 1999, the Boards of Directors jointly, and the Independent
Directors separately with their counsel, held a special meeting at which they
considered the additional information provided by WRIMCO in response to the
Directors' request. At
35
<PAGE>
their meeting, the Independent Directors discussed, in particular, the proposed
fee changes and the additional breakpoints and waivers presented, industry
breakpoint schedules, WRIMCO's revenues, expenses and investment management
personnel, and anticipated trends in the Funds' expenses. The Independent
Directors also requested more information from WRIMCO as to the types and
quality of services that it plans to provide if the proposed fee changes are
approved. At the regular joint meeting of the Boards of Directors on February
10, 1999, the Independent Directors met separately, with counsel, to discuss
the proposed fee changes in light of the further information provided by
WRIMCO.
In unanimously approving the Amendment and recommending its approval by the
shareholders of the affected Fund, the Directors, including the Independent
Directors, took into account all factors they deemed relevant. The factors
considered by the Directors, including the Independent Directors, over the
course of their consideration of the proposed management fee for each Fund
included: the nature, quality and extent of services WRIMCO furnishes to the
Fund; the investment record of WRIMCO in managing the Fund's assets; the need
for WRIMCO to maintain and enhance its ability to attract and retain highly
qualified personnel to serve the Fund; the anticipated expenditures by WRIMCO
and its affiliates for new or upgraded systems and technology; the management
fee arrangements most commonly used by a majority of the mutual fund industry;
the management fee rates in the mutual fund industry as measured by industry
medians; WRIMCO's commitment to voluntarily waive fees for a Fund at any time
that its net assets are less than $25 million; and the effect of the proposed
management fee on the total expense ratio of the Fund. At its regular meeting
on February 10, 1999, the Board of Directors for each Fund reviewed and
unanimously approved the proposed Amendment, subject to the approval of the
Fund's shareholders, and authorized its submittal
36
<PAGE>
to the shareholders at the Meeting. Upon approval by the shareholders at the
Meeting, the fee structure under the Amendment is anticipated to become
effective on June 30, 1999. If the Amendment should fail to be approved by the
shareholders of a Fund at the meeting, the present fee structure under the
current Agreement for that Fund will remain in effect.
Other Information about WRIMCO and the Agreement
WRIMCO currently serves as the investment manager under the Agreement with each
Fund. The following chart sets forth: the date of the Agreement for each Fund;
the date the Agreement was last submitted to a vote of the Fund's shareholders
and the purpose for that submission; and the date the continuation of the
Agreement was last approved by the Board of Directors. With respect to any
Agreement in effect on January 8, 1992, W&R was then the investment manager
under the Agreement and on that date assigned its duties as investment manager
and its professional staff for investment management services to WRIMCO.
37
<PAGE>
<TABLE>
<CAPTION>
Date Agreement
Last Submitted
Fund Name Date of Agreement to Shareholders
- ------------------------------------- ------------------- -------------------
<S> <C> <C>
United Asset Strategy Fund March 9, 1995 February 23, 1995
United Cash Management August 1, 1990 June 29, 1990
United Continental Income Fund August 1, 1990 November 21, 1994
United Funds, Inc.
United Accumulative Fund July 1, 1990 November 21, 1994
United Bond Fund July 1, 1990 June 29, 1990
United Income Fund July 1, 1990 November 21, 1994
United Science and Technology Fund July 1, 1990 June 29, 1990
United Gold & Government Fund July 1, 1990 June 29, 1990
United Government Securities Fund August 1, 1990 June 29, 1990
United High Income Fund August 1, 1990 June 29, 1990
<CAPTION>
Date of
Agreement
Purpose of Last Approved by
Fund Name Submission Board of Directors
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
United Asset Strategy Fund To approve the Investment Management August 19, 1998
Agreement with WRIMCO
United Cash Management To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
United Continental Income Fund To change the "specific" fee paid by the August 19, 1998
Fund to WRIMCO
United Funds, Inc.
United Accumulative Fund To change the "specific" fee paid by the August 19, 1998
Fund to WRIMCO
United Bond Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
United Income Fund To change the "specific" fee paid by the August 19, 1998
Fund to WRIMCO
United Science and Technology Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
United Gold & Government Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
United Government Securities Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
United High Income Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Date Agreement
Last Submitted
Fund Name Date of Agreement to Shareholders
- --------------------------------------------------------------------------
<S> <C> <C>
United High Income Fund II August 1, 1990 June 29, 1990
United International Growth Fund July 1, 1990 June 29, 1990
United Municipal Bond Fund August 1, 1990 June 29, 1990
United Municipal High Income Fund August 1, 1990 June 29, 1990
United New Concepts Fund August 1, 1990 June 29, 1990
United Retirement Shares August 1, 1990 June 29, 1990
United Vanguard Fund August 1, 1990 June 29, 1990
Waddell & Reed Funds, Inc.
Waddell & Reed Asset Strategy Fund August 31, 1992 June 29, 1990
Waddell & Reed Growth Fund August 31, 1992 June 29, 1990
<CAPTION>
Date of
Agreement
Purpose of Last Approved by
Fund Name Submission Board of Directors
- --------------------------------------------------------------------------- -------------------
<S> <C> <C>
United High Income Fund II To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
United International Growth Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
United Municipal Bond Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
United Municipal High Income Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
United New Concepts Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
United Retirement Shares To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
United Vanguard Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
Waddell & Reed Funds, Inc.
Waddell & Reed Asset Strategy Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
Waddell & Reed Growth Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
Date Agreement
Last Submitted
Fund Name Date of Agreement to Shareholders
- ------------------------------------------------------------------------------
<S> <C> <C>
Waddell & Reed High Income Fund August 31, 1992 June 29, 1990
Waddell & Reed International Growth August 31, 1992 June 29, 1990
Fund
Waddell & Reed Limited-Term Bond August 31, 1992 June 29, 1990
Fund
Waddell & Reed Municipal Bond Fund August 31, 1992 June 29, 1990
Waddell & Reed Science and Technology August 31, 1992 June 29, 1990
Fund
Waddell & Reed Total Return Fund August 31, 1992 June 29, 1990
Target/United Funds, Inc.
Target/United Asset Strategy Portfolio May 1, 1995 July 7, 1987
Target/United Balanced Portfolio April 29, 1994 July 7, 1987
Target/United Bond Portfolio July 13, 1987 July 7, 1987
Target/United Growth Portfolio July 13, 1987 July 7, 1987
Target/United High Income Portfolio July 13, 1987 July 7, 1987
<CAPTION>
Date of
Agreement
Purpose of Last Approved by
Fund Name Submission Board of Directors
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Waddell & Reed High Income Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
Waddell & Reed International Growth To approve a proposed new Investment August 19, 1998
Fund Management Agreement with Waddell &
Reed, Inc.
Waddell & Reed Limited-Term Bond To approve a proposed new Investment August 19, 1998
Fund Management Agreement with Waddell &
Reed, Inc.
Waddell & Reed Municipal Bond Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
Waddell & Reed Science and Technology To approve a proposed new Investment August 19, 1998
Fund Management Agreement with Waddell &
Reed, Inc.
Waddell & Reed Total Return Fund To approve a proposed new Investment August 19, 1998
Management Agreement with Waddell &
Reed, Inc.
Target/United Funds, Inc.
Target/United Asset Strategy Portfolio To approve the Investment Management August 19, 1998
Agreement with Waddell & Reed, Inc.
Target/United Balanced Portfolio To approve the Investment Management August 19, 1998
Agreement with Waddell & Reed, Inc.
Target/United Bond Portfolio To approve the Investment Management August 19, 1998
Agreement with Waddell & Reed, Inc.
Target/United Growth Portfolio To approve the Investment Management August 19, 1998
Agreement with Waddell & Reed, Inc.
Target/United High Income Portfolio To approve the Investment Management August 19, 1998
Agreement with Waddell & Reed, Inc.
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Date Agreement
Last Submitted
Fund Name Date of Agreement to Shareholders
- -------------------------------------------------------------------------------
<S> <C> <C>
Target/United Income Portfolio July 16, 1991 November 12, 1992
Target/United International Portfolio April 29, 1994 July 7, 1987
Target/United Limited-Term Bond April 29, 1994 July 7, 1987
Portfolio
Target/United Money Market Portfolio July 13, 1987 July 7, 1987
Target/United Science and Technology April 14, 1997 July 7, 1987
Portfolio
Target/United Small Cap Portfolio April 29, 1994 July 7, 1987
<CAPTION>
Date of
Agreement
Purpose of Last Approved by
Fund Name Submission Board of Directors
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Target/United Income Portfolio To approve the Investment Management August 19, 1998
Agreement with Waddell & Reed, Inc.
Target/United International Portfolio To approve the Investment Management August 19, 1998
Agreement with Waddell & Reed, Inc.
Target/United Limited-Term Bond To approve the Investment Management August 19, 1998
Portfolio Agreement with Waddell & Reed, Inc.
Target/United Money Market Portfolio To approve the Investment Management August 19, 1998
Agreement with Waddell & Reed, Inc.
Target/United Science and Technology To approve the Investment Management August 19, 1998
Portfolio Agreement with Waddell & Reed, Inc.
Target/United Small Cap Portfolio To approve the Investment Management August 19, 1998
Agreement with Waddell & Reed, Inc.
</TABLE>
41
<PAGE>
The Agreement with WRIMCO permits WRIMCO, or an affiliate of WRIMCO, to enter
into a separate agreement with the Fund for accounting services and a separate
agreement with the Fund for transfer agency services, as applicable. The
amounts paid by each Fund to WRIMCO affiliates are set forth in Exhibit E.
WRIMCO is a wholly owned subsidiary of W&R, which is a direct, wholly owned
subsidiary of Waddell & Reed Financial Services, Inc. Waddell & Reed Financial
Services, Inc. is a wholly owned subsidiary of Waddell & Reed Financial, Inc.,
a publicly held company. The address of WRIMCO, W&R, Waddell & Reed Financial
Services, Inc. and Waddell & Reed Financial, Inc. is 6300 Lamar Avenue, P.O.
Box 29217, Shawnee Mission, Kansas 66201-9217.
Required Vote:
Approval of this Proposal 3 with respect to a Fund requires the affirmative
vote of a majority of the outstanding voting securities of that Fund, which for
this purpose means the affirmative vote of the lesser of (1) 67% or more of the
shares of the Fund present at the Meeting or represented by proxy if more than
50% of the outstanding shares of the Fund are so present or represented or (2)
more than 50% of the outstanding shares of the Fund.
THE BOARDS OF DIRECTORS RECOMMEND THAT YOU VOTE FOR PROPOSAL 3.
PROPOSAL 4: AMENDMENT OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING LENDING OF PORTFOLIO SECURITIES
Relevant Companies: All Companies, except United Municipal Bond Fund, Inc.,
United Municipal High Income Fund, Inc. and Waddell & Reed Funds,
Inc.--Municipal Bond Fund.
42
<PAGE>
Discussion: The primary purposes of Proposal 4 to revise each Fund's
fundamental investment restriction concerning portfolio lending are (1) to
allow the Fund to engage in portfolio lending to the full extent permitted
under the 1940 Act and/or (2) to conform to a policy that is expected to become
standard for all Funds managed by WRIMCO.
Generally, a securities lending arrangement is one in which a Fund lends its
securities to a broker-dealer or other financial institution and receives
collateral to secure the loan that, at all times, must at least equal the value
of the securities lent. A Fund typically has the right to terminate the loan
upon notice at any time and would do so, among other circumstances, to exercise
its right to vote on important matters affecting holders of the securities. A
Fund continues to own the securities on loan and to receive the dividends or
interest paid with respect to those securities. In addition, a Fund receives
additional income from the earnings on the collateral provided for the
securities. As with any extension of credit, there is the possibility of delay
of recovery and loss of rights in the securities lent if the borrower fails
financially. Accordingly, a Fund will only engage in securities lending with
counterparties deemed creditworthy by WRIMCO and on terms that WRIMCO believes
adequate to compensate the Fund for such risks.
Currently, each of the Funds (other than United Municipal Bond Fund, Inc.,
United Municipal High Income Fund, Inc. and Waddell & Reed Funds,
Inc.--Municipal Bond Fund) may engage in securities lending. For the following
Funds, there is a fundamental investment restriction limiting securities
lending to no more than 10% of the Fund's assets: United Asset Strategy Fund,
Inc., United Continental Income Fund, Inc., each of the Funds within United
Funds, Inc., United High Income Fund, Inc., United High Income Fund II, Inc.,
United International Growth Fund, Inc., United New Concepts Fund, Inc., United
Retirement Shares, Inc., United Vanguard
43
<PAGE>
Fund, Inc., each of the Portfolios within Target/United Funds, Inc. except
Target/United Funds, Inc.-- Limited-Term Bond Portfolio, and Waddell & Reed
Funds, Inc.--Asset Strategy Fund. Each of the following Funds has a fundamental
investment restriction limiting securities lending to no more than 30% of the
Fund's assets: United Gold & Government Fund, Inc., United Government
Securities Fund, Inc., Target/United Funds, Inc.--Limited-Term Bond Portfolio
and Waddell & Reed Funds, Inc.--Limited-Term Bond Fund. United Cash Management,
Inc.'s current fundamental investment limitation allows it to lend securities
up to one-third of its total assets. The Waddell & Reed Funds, Inc. other than
Limited-Term Bond Fund and Asset Strategy Fund may engage in securities lending
without a fundamental limit.
The Board of Directors recommends that the Fund's current fundamental
investment limitation concerning securities lending be amended to permit the
Fund to lend securities from its portfolio to the extent allowed under the 1940
Act--currently up to one-third of the value of the Fund's total assets at any
given time. All securities lending by a Fund would be made on a fully
collateralized basis and in accordance with other applicable regulatory
requirements. In particular, each Fund's current fundamental investment
restriction would be revised to state, in substance, that: "The Fund may lend
its portfolio securities to the extent allowed, and in accordance with the
requirements, under the 1940 Act."
A Fund's adoption of the proposed amended restriction on lending of portfolio
securities is not expected to have a material impact on the way the Fund is
managed or the types of securities or instruments in which it invests. A Fund's
use of securities lending will remain subject to, and be implemented only to
the extent consistent with, its goal(s) and other investment policies and
restrictions.
If this Proposal 4 is approved by the shareholders of a Fund, the Fund's
amended investment restriction regarding securi-
44
<PAGE>
ties lending will become effective when appropriate disclosure is made to
reflect the change. If this Proposal 4 is not approved by the shareholders of a
Fund, the Fund's current fundamental investment restriction will continue in
effect.
Required Vote:
Approval of this Proposal 4 with respect to a Fund requires the affirmative
vote of a majority of the outstanding voting securities of that Fund, which for
this purpose means the affirmative vote of the lesser of (1) 67% or more of the
shares of the Fund present at the Meeting or represented by proxy if more than
50% of the outstanding shares of the Fund are so present or represented or (2)
more than 50% of the outstanding shares of the Fund.
THE BOARDS OF DIRECTORS RECOMMEND THAT YOU VOTE FOR PROPOSAL 4.
PROPOSAL 5: AMENDMENT OF ARTICLES OF INCORPORATION TO CHANGE PAR VALUE OF FUND
SHARES
Relevant Companies: All Companies.
Discussion: Shareholders of each Company are being asked to approve the
amendment of the Company's Articles of Incorporation to change the par value of
all classes of all Company stock to $0.001 per share. The proposed change in
par value would be applicable to all authorized shares, whether issued or
unissued, and without regard to class, of the Company. The proposed change in
par value will have no effect on any existing rights of the shares; however,
the proposed change will reduce the fees that a Company would otherwise pay to
increase its authorized shares.
Maryland law requires that a Company pay a capitalization fee based on the
aggregate par value of the Company's capital stock,
45
<PAGE>
or any increase thereof. Capitalization fees are assessed under Maryland Code
Ann. [sec]1-204 based on the following schedule:
<TABLE>
<CAPTION>
Aggregate Par Value
of Capital Stock Fee
- ----------------------------------------------------------------
<S> <C>
Not over $100,000 $20
Over $100,000 $20, plus $1 for each $5,000 or fractional
but not over part of $5,000 that exceeds $100,000
$1,000,000
Over $1,000,000 $200, plus $10 for each $100,000 or
but not over fractional part of $100,000 that exceeds
$2,000,000 $1,000,000
Over $2,000,000 $300, plus $15 for each $500,000 or
but not over fractional part of $500,000 that exceeds
$5,000,000 $2,000,000
Over $5,000,000 $390, plus $20 for each $1,000,000 or
fractional part of $1,000,000 that exceeds
$5,000,000
</TABLE>
The following chart sets forth the current par value of each Fund.
<TABLE>
<CAPTION>
Fund Name Par Value
- --------------------------------------------------
<S> <C>
United Asset Strategy Fund $ 0.01
United Cash Management $ 0.01
United Continental Income Fund $ 1.00
United Funds, Inc.
United Accumulative Fund $ 1.00
United Bond Fund $ 1.00
United Income Fund $ 1.00
United Science and Technology Fund $ 1.00
United Gold & Government Fund $ 1.00
United Government Securities Fund $ 0.01
United High Income Fund $ 1.00
United High Income Fund II $ 1.00
United International Growth Fund $ 1.00
United Municipal Bond Fund $ 1.00
United Municipal High Income Fund $ 1.00
United New Concepts Fund $ 1.00
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
Fund Name Par Value
- -------------------------------------------------------------
<S> <C>
United Retirement Shares $ 1.00
United Vanguard Fund $ 1.00
Waddell & Reed Funds, Inc.
Waddell & Reed Asset Strategy Fund $ 0.01
Waddell & Reed Growth Fund $ 0.01
Waddell & Reed High Income Fund $ 0.01
Waddell & Reed International Growth Fund $ 0.01
Waddell & Reed Limited-Term Bond Fund $ 0.01
Waddell & Reed Municipal Bond Fund $ 0.01
Waddell & Reed Science and Technology Fund $ 0.01
Waddell & Reed Total Return Fund $ 0.01
Target/United Funds, Inc.
Target/United Asset Strategy Portfolio $ 0.01
Target/United Balanced Portfolio $ 0.01
Target/United Bond Portfolio $ 0.01
Target/United Growth Portfolio $ 0.01
Target/United High Income Portfolio $ 0.01
Target/United Income Portfolio $ 0.01
Target/United International Portfolio $ 0.01
Target/United Limited-Term Bond Portfolio $ 0.01
Target/United Money Market Portfolio $ 0.01
Target/United Science and Technology Portfolio $ 0.01
Target/United Small Cap Portfolio $ 0.01
</TABLE>
The amount of capitalization fees that a Fund would have to pay to increase its
authorized shares will be reduced if the Fund's par value is changed to $0.001
per share. Therefore, management recommended, and the Board of Directors has
approved, the amendment of the Articles of Incorporation to change the par
value of all shares of the Company to $0.001 per share.
Required Vote:
Approval of this Proposal 5 as to a Company requires the affirmative vote of a
majority of outstanding securities of that Company, provided a quorum is
present.
THE BOARDS OF DIRECTORS RECOMMEND THAT YOU VOTE FOR PROPOSAL 5.
47
<PAGE>
> ADDITIONAL INFORMATION
The solicitation of proxies, the cost of which will be borne by the Funds, will
be made primarily by mail, oral communications, telephone, or other permissible
electronic means by representatives of W&R, W&R's affiliates, certain broker-
dealers (who may be specifically compensated for such services), or by
representatives of Management Information Services, a professional proxy
solicitor, retained by the Funds, who will be paid the approximate fees as set
forth below. Each Fund will pay this firm for its share of the fees and out-
of-pocket expenses for proxy solicitation. Each Fund will pay a portion of the
costs of the Meeting, including the costs of solicitation, allocated on the
basis of the number of shareholder accounts of each Fund. Total costs are
anticipated to be approximately $1.5 million.
> RECEIPT OF SHAREHOLDER PROPOSALS
As a general matter, the Funds do not hold regular annual or other meetings of
shareholders. Any shareholder who wishes to submit proposals to be considered
at a special meeting of a Fund's shareholders should send such proposals to the
Fund at 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217.
> OTHER BUSINESS
No Fund knows of any other business to be presented at the Meeting other than
the matters set forth in this Proxy Statement. If any other matter or matters
are properly presented for action at the Meeting, the proxy holders will vote
the share which the proxy cards entitle them to vote in accordance with their
judgment on such matter or matters. By signing and returning your proxy card or
electronically executing your proxy, you give the proxy holders discretionary
authority as to any such matter or matters.
April 15, 1999 By order of the Boards of Directors,
Kristen A. Richards, Assistant Secretary
48
<PAGE>
INDEX TO EXHIBITS TO PROXY STATEMENT
<TABLE>
<S> <C> <C>
Exhibit A Number of Outstanding Shares of Each Fund .................. A-1
Exhibit B Beneficial Ownership of Greater than 5% of Fund
Shares ..................................................... B-1
Exhibit C Director's and Nominee's Ownership of Fund Shares .......... C-1
Exhibit D Proposed Management Fees and Breakpoints ................... D-1
Exhibit E Fees Paid to WRIMCO Affiliates ............................. E-1
</TABLE>
49
<PAGE>
EXHIBIT A
NUMBER OF OUTSTANDING SHARES OF EACH FUND
<TABLE>
<CAPTION>
Shares Outstanding
Fund as of March 19, 1999
- ----------------------------------------------------------
<S> <C>
United Asset Strategy Fund
Class A 6,464,806
Class Y 47,864
United Cash Management
Class A 622,404,915
Class B 5,293,029
United Continental Income Fund
Class A 73,094,795
Class Y 135,887
United Funds, Inc.
United Accumulative Fund
Class A 223,969,311
Class Y 472,196
United Bond Fund
Class A 88,042,570
Class Y 356,814
United Income Fund
Class A 979,552,345
Class Y 51,296,877
United Science and Technology Fund
Class A 171,159,950
Class Y 699,262
United Gold & Government Fund
Class A 2,000,414
Class Y 15,836
United Government Securities Fund
Class A 24,755,057
Class Y 330,850
United High Income Fund
Class A 107,031,671
Class Y 264,107
United High Income Fund II
Class A 97,492,817
Class Y 711,259
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
Shares Outstanding
Fund as of March 19, 1999
- ----------------------------------------------------------
<S> <C>
United International Growth Fund
Class A 122,686,816
Class Y 856,416
United Municipal Bond Fund
Class A 131,859,801
Class Y 273
United Municipal High Income Fund
Class A 97,046,138
Class Y 365
United New Concepts Fund
Class A 101,669,149
Class Y 1,255,359
United Retirement Shares
Class A 90,819,961
Class Y 356,131
United Vanguard Fund
Class A 190,544,368
Class Y 613,023
Waddell & Reed Funds, Inc.
Waddell & Reed Asset Strategy Fund
Class B 2,681,152
Class Y 27,423
Waddell & Reed Growth Fund
Class B 28,643,011
Class Y 521,889
Waddell & Reed High Income Fund
Class B 2,504,891
Class Y 635
Waddell & Reed International Growth Fund
Class B 6,371,708
Class Y 39,139
Waddell & Reed Limited-Term Bond Fund
Class B 2,079,946
Class Y 25,775
Waddell & Reed Municipal Bond Fund
Class B 3,782,245
Class Y 179
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
Shares Outstanding
Fund as of March 19, 1999
- ----------------------------------------------------------------------
<S> <C>
Waddell & Reed Science and Technology Fund
Class B 2,433,325
Class Y 2,688
Waddell & Reed Total Return Fund
Class B 43,868,930
Class Y 117,265
Target/United Funds, Inc.
Target/United Asset Strategy Portfolio 2,766,358
Target/United Balanced Portfolio 13,464,680
Target/United Bond Portfolio 21,308,562
Target/United Growth Portfolio 89,227,468
Target/United High Income Portfolio 28,355,488
Target/United Income Portfolio 66,514,833
Target/United International Portfolio 22,062,950
Target/United Limited-Term Bond Portfolio 1,028,838
Target/United Money Market Portfolio 54,824,223
Target/United Science and Technology Portfolio 5,294,837
Target/United Small Cap Portfolio 23,310,494
</TABLE>
A-3
<PAGE>
EXHIBIT B
BENEFICIAL OWNERSHIP OF GREATER THAN 5% OF FUND SHARES
As of March 19, 1999
<TABLE>
<CAPTION>
Shares
Beneficially Owned
-------------------
Name and Address
of Beneficial Owner Portfolio Shares Percent
- ---------------------------------------------------------
<S> <C> <C> <C>
None
</TABLE>
B-1
<PAGE>
EXHIBIT C
DIRECTOR'S AND NOMINEE'S OWNERSHIP OF FUND SHARES
<TABLE>
<CAPTION>
Number of Shares Held as of March 19, 19991
United United
Asset United Continental United United United
Name of Strategy Cash Income Accumulative Bond Income
Nominee Fund Management Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. Concannon 0 0 0 0 0 4,478
J. Dillingham 0 0 260 233 320 0
D. Gardner 0 0 0 0 0 0
L. Graves 0 6,455 0 0 0 13,124
J. Harroz, Jr. 0 0 0 0 0 0
J. Hayes 0 0 0 0 0 39,076
R. Hechler 0 390,634 0 0 0 9,976
H. Herrmann 0 1,068,324 0 0 0 0
G. Johnson 0 0 0 0 0 0
W. Morgan 0 147 0 0 0 24,796
R. Reimer 0 0 0 0 0 0
F. Ross 768 0 0 369 0 2,559
E. Schwartz 0 0 0 0 0 0
K. Tucker 0 107,444 0 0 0 0
F. Vogel 0 73,381 0 4,884 2,816 5,986
- ----------------------------------------------------------------------------------------------------------
All Directors
and executive
officers as a
group* 768* 1,646,385* 260* 5,486* 3,136* 99,995*
</TABLE>
* Less than 1% of the outstanding shares of the Fund.
- --------------------
(1) Unless otherwise stated, as of the date indicated, each Director had sole
voting and investment power of shares owned.
C-1
<PAGE>
<TABLE>
<CAPTION>
United United United United United
Science and Gold & Government High High United
Name of Technology Government Securities Income Income International
Nominee Fund Fund Fund Fund Fund II Growth Fund
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. Concannon 715 0 0 0 0 512
J. Dillingham 298 0 343 0 0 187
D. Gardner 0 0 0 0 0 0
L. Graves 0 0 9,073 0 0 12,654
J. Harroz, Jr. 0 0 0 0 0 0
J. Hayes 0 0 0 0 0 0
R. Hechler 4,089 0 0 0 0 6,874
H. Herrmann 0 0 0 0 0 0
G. Johnson 0 0 0 0 0 0
W. Morgan 0 0 0 3,826 324,135 109,088
R. Reimer 0 0 0 0 0 0
F. Ross 0 0 0 0 0 356
E. Schwartz 0 0 0 0 0 0
K. Tucker 0 0 0 0 0 779
F. Vogel 2,242 0 19,533 0 0 1,655
- -------------------------------------------------------------------------------------------------
All Directors
and
executive
officers as a
group* 7,344* 0* 28,949* 3,826* 324,135* 132,105*
</TABLE>
* Less than 1% of the outstanding shares of the Fund.
C-2
<PAGE>
<TABLE>
<CAPTION>
United Waddell
Municipal United & Reed
United High United New United Asset
Name of Municipal Income Retirement Concepts Vanguard Strategy
Nominee Bond Fund Fund Shares Fund Fund Fund
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. Concannon 0 0 0 0 0 0
J. Dillingham 266 347 228 2,043 263 0
D. Gardner 0 0 0 0 0 0
L. Graves 31,958 36,701 0 0 12,545 0
J. Harroz, Jr. 0 0 0 0 0 0
J. Hayes 0 0 0 0 0 0
R. Hechler 14,126 0 0 4,774 3,245 0
H. Herrmann 0 0 0 0 3,909 0
G. Johnson 0 0 0 0 0 0
W. Morgan 0 166,374 0 0 0 0
R. Reimer 0 0 0 0 0 0
F. Ross 0 3,304 0 637 550 0
E. Schwartz 0 0 0 0 0 0
K. Tucker 0 0 0 0 0 0
F. Vogel 0 0 0 908 1,009 0
- ------------------------------------------------------------------------------------------------------
All Directors
and
executive
officers as a
group* 46,350* 206,726* 228* 8,362* 21,521* 0*
</TABLE>
* Less than 1% of the outstanding shares of the Fund.
C-3
<PAGE>
<TABLE>
<CAPTION>
Waddell
Waddell & Reed Waddell
Waddell & Reed Waddell Limited- Waddell & Reed
& Reed High & Reed Term & Reed Science and
Name of Growth Income International Bond Municipal Technology
Nominee Fund Fund Growth Fund Fund Bond Fund Fund
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. Concannon 0 0 0 0 0 0
J. Dillingham 0 0 0 0 0 0
D. Gardner 0 0 0 0 0 0
L. Graves 0 0 0 0 0 0
J. Harroz, Jr. 0 0 0 0 0 0
J. Hayes 0 0 0 0 0 0
R. Hechler 0 0 0 0 0 0
H. Herrmann 0 0 0 0 0 0
G. Johnson 0 0 0 0 0 0
W. Morgan 0 0 0 0 0 0
R. Reimer 0 0 0 0 0 0
F. Ross 0 0 0 0 0 0
E. Schwartz 0 0 0 0 0 0
K. Tucker 0 0 0 0 0 0
F. Vogel 376 0 0 89 0 0
- -----------------------------------------------------------------------------------------------------
All Directors
and
executive
officers as a
group* 376* 0* 0* 89* 0* 0*
</TABLE>
* Less than 1% of the outstanding shares of the Fund.
C-4
<PAGE>
<TABLE>
<CAPTION>
Name of Waddell & Reed
Nominee Total Return Fund
- ----------------------------------------
<S> <C>
J. Concannon 0
J. Dillingham 0
D. Gardner 0
L. Graves 0
J. Harroz, Jr. 0
J. Hayes 0
R. Hechler 0
H. Herrmann 0
G. Johnson 0
W. Morgan 0
R. Reimer 0
F. Ross 0
E. Schwartz 0
K. Tucker 0
F. Vogel 331
- ----------------------------------------
All Directors and
executive officers
as a group* 331*
</TABLE>
* Less than 1% of the outstanding shares of the Fund.
As of March 19, 1999 the Directors and Officers of the Target/United Funds,
Inc. did not own shares of any Portfolio.
C-5
<PAGE>
EXHIBIT D
PROPOSED MANAGEMENT FEES AND BREAKPOINTS
<TABLE>
<CAPTION>
United Group of Annual
Mutual Funds: Breakpoints/Net Assets Rate
- --------------------------------------------------------------------------
<S> <C> <C>
United Asset Strategy
Fund Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion 600%
Over $3 Billion .550%
United Cash
Management All Assets .400%
United Continental
Income Fund Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion 600%
Over $3 Billion .550%
United Funds, Inc.:
- ----------------------
United Accumulative
Fund Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
United Bond Fund Up to $500 Million .525%
Over $500 Million up to $1 Billion .500%
Over $1 Billion up to $1.5 Billion .450%
Over $1.5 Billion .400%
United Income Fund Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion 600%
Over $3 Billion up to $6 Billion .550%
Over $6 Billion .500%
United Science and
Technology Fund Up to $1 Billion .850%
Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
</TABLE>
D-1
<PAGE>
<TABLE>
<CAPTION>
United Group of Annual
Mutual Funds: Breakpoints/Net Assets Rate
- --------------------------------------------------------------------------
<S> <C> <C>
United Gold &
Government Fund Up to $1 Billion .850%
Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion 800%
Over $3 Billion .760%
United Government
Securities Fund Up to $500 Million .500%
Over $500 Million up to $1 Billion .450%
Over $1 Billion up to $1.5 Billion .400%
Over $1.5 Billion .350%
United High Income
Fund Up to $500 Million .625%
Over $500 Million up to $1 Billion .600%
Over $1 Billion up to $1.5 Billion .550%
Over $1.5 Billion .500%
United High Income II
Fund Up to $500 Million .625%
Over $500 Million up to $1 Billion .600%
Over $1 Billion up to $1.5 Billion .550%
Over $1.5 Billion .500%
United International
Growth Fund Up to $1 Billion .850%
Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
United Municipal Bond
Fund Up to $500 Million .525%
Over $500 Million up to $1 Billion .500%
Over $1 Billion up to $1.5 Billion .450%
Over $1.5 Billion .400%
United Municipal High
Income Fund Up to $500 Million .525%
Over $500 Million up to $1 Billion .500%
Over $1 Billion up to $1.5 Billion .450%
Over $1.5 Billion .400%
</TABLE>
D-2
<PAGE>
<TABLE>
<CAPTION>
United Group of Annual
Mutual Funds: Breakpoints/Net Assets Rate
- -------------------------------------------------------------------------------
<S> <C> <C>
United New Concepts
Fund Up to $1 Billion .850%
Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
United Retirement
Shares Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
United Vanguard Fund Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
Target/United Funds, Inc.:
Target/United Asset
Strategy Portfolio Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
Target/United Balanced
Portfolio Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
Target/United Bond
Portfolio Up to $500 Million .525%
Over $500 Million up to $1 Billion .500%
Over $1 Billion up to $1.5 Billion .450%
Over $1.5 Billion .400%
Target/United Growth
Portfolio Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
</TABLE>
D-3
<PAGE>
<TABLE>
<CAPTION>
Target/United Annual
Funds, Inc. Breakpoints/Net Assets Rate
- ---------------------------------------------------------------------------
<S> <C> <C>
Target/United High
Income Portfolio Up to $500 Million .625%
Over $500 Million up to $1 Billion .600%
Over $1 Billion up to $1.5 Billion .550%
Over $1.5 Billion .500%
Target/United Income
Portfolio Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
Target/United
International
Portfolio Up to $1 Billion .850%
Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
Target/United Limited-
Term Bond Portfolio Up to $500 Million .500%
Over $500 Million up to $1 Billion .450%
Over $1 Billion up to $1.5 Billion .400%
Over $1.5 Billion .350%
Target/United Money
Market Portfolio All Assets .400%
Target/United Science
and Technology
Portfolio Up to $1 Billion .850%
Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
Target/United Small
Cap Portfolio Up to $1 Billion .850%
Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
</TABLE>
D-4
<PAGE>
<TABLE>
<CAPTION>
Waddell & Reed Annual
Funds, Inc. Breakpoints/Net Assets Rate
- ----------------------------------------------------------------------
<S> <C> <C>
W&R Asset Strategy
Fund Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
W&R Growth Fund Up to $1 Billion .850%
Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
W&R High Income
Fund Up to $500 Million .625%
Over $500 Million up to $1 Billion .600%
Over $1 Billion up to $1.5 Billion .550%
Over $1.5 Billion .500%
W&R International
Growth Fund Up to $1 Billion .850%
Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
W&R Limited-Term
Bond Fund Up to $500 Million .500%
Over $500 Million up to $1 Billion .450%
Over $1 Billion up to $1.5 Billion .400%
Over $1.5 Billion .350%
W&R Municipal Bond
Fund Up to $500 Million .525%
Over $500 Million up to $1 Billion .500%
Over $1 Billion up to $1.5 Billion .450%
Over $1.5 Billion .400%
W&R Science and
Technology Fund Up to $1 Billion .850%
Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
W&R Total Return
Fund Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
</TABLE>
D-5
<PAGE>
EXHIBIT E
FEES PAID TO WRIMCO AFFILIATES
During its most recent fiscal year, each Fund paid the following fees to
Waddell & Reed Services Company ("WRSCO") for shareholder servicing and/or
accounting services and to Waddell & Reed, Inc. ("W&R") for services under its
Distribution and Service Plan adopted pursuant to Rule 12b-1 under the 1940
Act.
<TABLE>
<CAPTION>
Accounting Shareholder
Service Servicing 12b-1 Fees
Fees Paid Fees Paid Paid to
to WRSCO to WRSCO W&R
FUND NAME (000 omitted) (000 omitted) (000 omitted)
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
United Continental Income
Fund, Inc. 68 875 874
United Government
Securities Fund, Inc. 40 289 198
United High Income Fund,
Inc. 99 1,261 1.501
United New Concepts
Fund, Inc. 70 1,730 1,139
Waddell & Reed Funds, Inc. 182 1,541 7,901
For the Year Ended 3/31/98
United Cash Management,
Inc. 63 2,006 28
United International
Growth
Fund, Inc. 100 2,283 2,288
United Retirement Shares,
Inc. 80 1,052 1,573
For the Year Ended 6/30/98
United Asset Strategy Fund,
Inc. 20 82 73
United High Income II
Fund, Inc. 60 617 907
United Municipal Bond
Fund, Inc. 86 670 1,910
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
Accounting Shareholder
Service Servicing 12b-1 Fees
Fees Paid Fees Paid Paid to
to WRSCO to WRSCO W&R
FUND NAME (000 omitted) (000 omitted) (000 omitted)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
United Municipal High
Income Fund, Inc. 60 374 997
United Vanguard Fund, Inc. 100 2,403 3,347
For the Year Ended 9/30/98
United Gold &
Government
Fund, Inc. 10 117 37
United Funds, Inc. 362 12,859 23,399
Target/United Funds, Inc. 381 0 1,812
For the Year Ended 12/31/98
</TABLE>
E-2
<PAGE>
This Page Intentionally Left Blank
<PAGE>
This Page Intentionally Left Blank
<PAGE>
YOUR VOTE IS IMPORTANT!
TO AVOID THE EXPENSE OF ADJOURNING THE MEETING TO A SUBSEQUENT DATE,
PLEASE SIGN, DATE AND RETURN ALL PROXIES RECEIVED IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------
IF YOU PREFER TO VOTE BY PHONE, CALL TOLL-FREE 1-888-221-0697.
TO VOTE VIA THE INTERNET, ACCESS WWW.PROXYWEB.COM.
- --------------------------------------------------------------------------------
SEE THE ENCLOSED INSERT FOR FURTHER INSTRUCTIONS ON VOTING BY PHONE OR INTERNET.
*** CONTROL NUMBER : 999 999 999 999 99 ***
If voting by mail, please detach at perforation. Return bottom portion only.
FUND NAME PRINTS HERE
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Keith A. Tucker and Helge K. Lee, or either of
them (or their substitutes), as attorneys and proxies of the undersigned with
full power of substitution to represent and direct the voting interest of the
undersigned held as of the record date at the Joint Special Meeting of
Shareholders on June 22, 1999, at 10:00 a.m., local time, at 6300 Lamar Avenue,
Overland Park, Kansas 66202, and any adjournment(s) thereof, and revoking all
proxies heretofore given, as designated on the reverse side of the card. As to
any other matter that may properly come before the meeting, the attorneys and
proxies shall be authorized to represent and direct the voting interest in
accordance with their best judgment. This proxy shall remain in effect for a
period of one year from its date. Receipt of the PRoxy Statement is hereby
acknowledged.
Date: _________________________________
SIGN BELOW. Please sign exactly as your name appears hereon. If shares are
registered in more than one name, all should sign, but if one signs, it binds
the others. When signing as attorney, executor, administrator, agent, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by an authorized person. If a partnership, please sign in
partnership name by an authorized person.
Signature(s) Title(s), if applicable
WR99
<PAGE>
NOTE: YOUR PROXY IS NOT VALID UNLESS IT IS SIGNED.
Please fold and detach at perforation. Return bottom portion only.
WHEN PROPERLY SIGNED, THE VOTING INTEREST WILL BE DIRECTED IN THE MANNER
INDICATED BELOW. IF NO INDICATION IS GIVEN, VOTING WILL BE DIRECTED FOR THE
PROPOSAL STATED BELOW.
Please vote by filling in the appropriate boxes below.
<TABLE>
<CAPTION>
FOR ALL AGAINST or
NOMINEES ABSTAIN AS TO
EXCEPT THOSE ALL NOMINEES
BELOW
<S> <C> <C>
1. To elect as Directors of the Fund:
(01) J. Concannon; (02) J. Dillingham; (03) D. Gardner; (04) L. Graves; (05) J. Harroz, Jr.; [ ] [ ]
(06) J. Hayes; (07) R. Hechler; (08) H. Herrmann; (09) G. Johnson; (10) W. Morgan;
(11) R. Reimer; (12) F. Ross; (13) E. Schwartz; (14) K. Tucker; (15) F. Vogel
</TABLE>
*To withhold authority to vote for any individual nominee(s), write that
nominee(s) name(s) in the space provided below.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's independent [ ] [ ] [ ]
auditors for its current fiscal year
3. To approve the Amendment to the Fund's investment management agreement with [ ] [ ] [ ]
Waddell & Reed Investment Management Company
4. All Funds except United Municipal Bond Fund, United Municipal High INcome [ ] [ ] [ ]
Fund and Waddell & Reed Funds, Inc. -- Municipal Bond Fund:
To approve amendment of the Fund's securities lending policy
5. To approve amendment of Articles of Incorporation changing the par value of [ ] [ ] [ ]
Fund shares to $0.001
</TABLE>
WR99
<PAGE>
TARGET/UNITED FUNDS, INC.
INSTRUCTION CARD FOR SPECIAL MEETING OF SHAREHOLDERS
JUNE 22, 1999
- --------------------------------------------------------------------------------
IF YOU PREFER TO VOTE BY PHONE, CALL TOLL-FREE 1-888-221-0698.
TO VOTE VIA THE INTERNET, ACCESS WWW.PROXYWEB.COM.
- --------------------------------------------------------------------------------
SEE THE ENCLOSED INSERT FOR FURTHER INSTRUCTIONS ON VOTING BY PHONE OR INTERNET.
*** CONTROL NUMBER: 999 999 999 999 99 ***
If voting by mail, please detach at perforation. Return bottom portion only.
PORTFOLIO NAME PRINTS HERE
This voting instruction is to direct United Investors Life Insurance Company
("United Investors") how to vote the shares of the Portfolio(s) of Target/United
Funds, Inc. attributable to your variable annuity contract or variable life
insurance policy issued to United Investors at the Special Meeting of
Shareholders of Target/United Funds, Inc. to be held at 10:00 a.m. local time,
on June 22, 1999, at 6300 Lamar Avenue, Overland Park, Kansas 66202, and any
adjournment(s) thereof ("Meeting"). The voting interest represented by this card
will be voted as instructed. Unless indicated to the contrary, this voting
instruction shall be deemed to grant authority to vote "FOR" all proposals
relating to the Portfolio with discretionary power to vote upon such other
business as may properly come before the Meeting.
Your vote is important. Please date and sign this voting instruction below and
return it in the enclosed postage paid envelope. This voting instruction will
not be voted unless the voting instruction card is dated and signed exactly as
instructed below.
Date: _____________________________________
Please sign your name exactly as it appears on this card. For joint Contract
Owners, either party may sign, but the name of the party signing should conform
exactly to the name shown on this card. For all other Contract Owners, the name
and capacity of the individual signing should be indicated unless it is
reflected in the form of registration shown on the card.
Sign exactly as name appears hereon.
Signature(s) Title(s), if applicable
T/U99
<PAGE>
Please fold and detach at perforation. Return bottom portion only.
WHEN PROPERLY SIGNED, THE VOTING INTEREST REPRESENTED BY THIS CARD WILL BE
DIRECTED AS INSTRUCTED BELOW. IF NO INSTRUCTION IS GIVEN FOR A PROPOSAL, VOTING
WILL BE DIRECTED "FOR" THAT PROPOSAL.
NOTE: YOUR INSTRUCTION IS NOT VALID UNLESS IT IS SIGNED
Please vote by filling in the appropriate boxes below.
<TABLE>
<CAPTION>
FOR ALL AGAINST or
NOMINEES ABSTAIN AS TO
EXCEPT THOSE ALL NOMINEES
BELOW
<S> <C> <C>
1. To elect as Directors of the Fund:
(01) J. Concannon; (02) J. Dillingham; (03) D. Gardner; (04) L. Graves; (05) J. Harroz, Jr.; [ ] [ ]
(06) J. Hayes; (07) R. Hechler; (08) H. Herrmann; (09) G. Johnson; (10) W. Morgan;
(11) R. Reimer; (12) F. Ross; (13) E. Schwartz; (14) K. Tucker; (15) F. Vogel
</TABLE>
*To withhold authority to vote for any individual nominee(s), write that
nominees(s) name(s) in the space provided below.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Portfolio's [ ] [ ] [ ]
independent auditors for its current fiscal year
3. To approve the Amendment to the Portfolio's investment management agreement [ ] [ ] [ ]
with Waddell & Reed Investment Management Company
4. To approve amendment of the Portfolio's securities lending policy [ ] [ ] [ ]
5. To approve amendment of Articles of Incorporation changing the par value of [ ] [ ] [ ]
Portfolios shares to $0.001
</TABLE>
T/U99
<PAGE>
3 Three easy ways to vote your proxy
----------------------------------
The accompanying proxy statement discusses important matters affecting the
United Group of Mutual Funds, the Waddell & Reed Funds, Inc. and the
Target/United Funds, Inc. Please take time to read the proxy statement, then
cast your vote. There are three easy ways to vote -- choose the method that's
most convenient for you. Please vote all proxy cards received.
[TELEPHONE ICON] 1. Vote by telephone. Just call our dedicated proxy voting
number -- 1-888-221-0697. This is a toll-free number.
It's available 24 hours a day, 7 days a week. For each
proxy, enter the control number printed on the upper
portion of the card and follow the voice prompts to
record your vote.
[COMPUTER ICON] 2. Vote by Internet. Visit the web site, www.proxyweb.com
and, enter your control number. Then follow the voting
instructions that will appear. Vote each card received
separately.
[MAILBOX ICON] 3. Vote by mail. Simply fill out the proxy cards and
return them to us in the enclosed postage paid
envelope. Please do not return your cards if you vote
by phone or Internet.
Remember -- your vote matters. Please vote today!
[WADDELL & REED LOGO]
