UNITED INTERNATIONAL GROWTH FUND INC, PRES14A, 1999-03-05

UNITED INTERNATIONAL GROWTH FUND INC
PRES14A, 1999-03-05

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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

NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS

April 5, 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 Municipal Bond
Fund: To approve or disapprove amendment of the Fund's policy
regarding securities lending;
<PAGE>

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 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)
you may 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 5, 1999 By Order of the Boards of Directors

Kristen A. Richards, Assistant Secretary

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<PAGE>

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 5, 1999.

United Funds, Inc. is composed of four separate series, Waddell & Reed
Funds, Inc. is composed of eight separate series, and Target/United Funds, Inc.
is composed of eleven separate series. Each of a Company's series is referred to
herein as a "Fund." When the context makes it appropriate, the Companies listed
above are also referred to in this Proxy Statement collectively as the "Funds"
and, individually, as a "Fund." All Proposals apply to all Funds, except that
Proposal 4 is not relevant to United Municipal Bond Fund, Inc., United Municipal
High Income Fund, Inc. and Waddell & Reed Funds, Inc. Municipal Bond Fund.

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, Inc., one-third of the shares

1
<PAGE>

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" box. Alternatively, you may simply sign, date and return, or
electronically execute your proxy 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 owners or persons entitled to vote and the broker
or nominee does not have discretionary voting power.

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<PAGE>

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 a variable life insurance policy and a variable annuity contract
(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 votes attributable to that Investment Division. In connection
with its solicitation of voting instructions, it is understood and expected that
United Investors will furnish 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 the Record Date, 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.

Copies of each Fund's most recent annual and semiannual reports have
been sent to shareholders of that Fund on or before the mailing date of this
Proxy Statement. 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.

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<PAGE>

THE BOARD OF DIRECTORS UNANIMOUSLY APPROVED THESE PROPOSALS
AND RECOMMENDS THAT YOU VOTE IN FAVOR OF EACH OF THEM

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., 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 ("W&R"). 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 Waddell & Reed
Financial, Inc., 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 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.
Its address is the same as that for W&R. 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

4
<PAGE>

Waddell & Reed Financial, Inc.; 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, 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 W&R.

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.

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.

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 Waddell & Reed
Financial, Inc.; 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 Waddell & Reed Financial,
Inc.

5
<PAGE>

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 Waddell & Reed Financial, Inc.; 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 Waddell & Reed Financial, Inc.

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 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 W&R.

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.

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<PAGE>

YEARLY ATTENDANCE LIST
BOARD OF DIRECTORS' MEETINGS
FOR FISCAL YEAR ENDED 12/31/98
<TABLE>
<CAPTION>
- -------------------- ---------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
Name February May August November
- -------------------- ---------------- --------------- ------------- --------------
J. Concannon X X X X
- -------------------- ---------------- --------------- ------------- --------------
J. Dillingham X X X X
- -------------------- ---------------- --------------- ------------- --------------
D. Gardner* X X
- -------------------- ---------------- --------------- ------------- --------------
L. Graves X X X X
- -------------------- ---------------- --------------- ------------- --------------
J. Harroz, Jr.** X
- -------------------- ---------------- --------------- ------------- --------------
J. Hayes X X X X
- -------------------- ---------------- --------------- ------------- --------------
R. Hechler** X
- -------------------- ---------------- --------------- ------------- --------------
H. Herrmann** X
- -------------------- ---------------- --------------- ------------- --------------
G. Johnson X X X X
- -------------------- ---------------- --------------- ------------- --------------
W. Morgan X X X X
- -------------------- ---------------- --------------- ------------- --------------
R. Reimer** X
- -------------------- ---------------- --------------- ------------- --------------
F. Ross X X X X
- -------------------- ---------------- --------------- ------------- --------------
E. Schwartz X X X X
- -------------------- ---------------- --------------- ------------- --------------
K. Tucker X X X X
- -------------------- ---------------- --------------- ------------- --------------
F. Vogel X X X X
- -------------------- ---------------- --------------- ------------- --------------
</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

7
<PAGE>

Nominating Committee generally does not consider unsolicited Director
nominations recommended by Company shareholders.

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:

8
<PAGE>

Compensation Table

Board Member(1)
<TABLE>
<CAPTION>
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
United Government Securities
United High Income
United New Concepts
Waddell & Reed Funds, Inc.
Total Compensation Paid
to Board Members From
Companies and Fund
Complex for the Year
Ended 3/31/98(2)

United Cash Management
United International Growth
United Retirement Shares
Total Compensation Paid
to Board Members From
Companies and Fund
Complex for the Year
Ended 6/30/98(2)

United Asset Strategy
United High Income II
United Municipal Bond
United Municipal High Income
United Vanguard
Total Compensation Paid
to Board Members From
Companies and Fund
Complex for the Year
Ended 9/30/98(2)

United Gold & Government
United Funds, Inc.
Target/United Funds, Inc.
Total Compensation Paid
to Board Members From
Companies and Fund
Complex for the Year
Ended 12/31/98(2)

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

United Cash Management
United International Growth
United Retirement Shares
Total Compensation Paid
to Board Members From
Companies and Fund
Complex for the Year
Ended 6/30/98(2)

United Gold & Government
United Funds, Inc.
Target/United Funds, Inc.
Total Compensation Paid
to Board Members From
Companies and Fund
Complex for the Year
Ended 12/31/98(2)
</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 a part of Company
expenses.

9
<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 he or she was receiving 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 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.

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 54) - Vice President, Secretary and General Counsel of
each of the Funds; Secretary and General Counsel of Waddell & Reed Financial,
Inc.; 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.

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<PAGE>

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 the 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.

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 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 if a previously issued or subsequent audit report of 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.

11
<PAGE>

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 adviser. 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 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.

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 schedule as set forth in Exhibit D. However, if
the Amendments are approved, WRIMCO has indicated that is intends to waive the
fee for a Fund at any time that its net assets are less than

12
<PAGE>

$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
Waddell & Reed Fund is demonstrated by the following chart illustrating fees
under the current management fee structure and pro forma fees under the
Amendment.

<TABLE>
<CAPTION>
Effective Effective Difference
Annual Proposed in
Fee Rate Fee Rate Basis Points
Name of Fund (i) (ii) (ii-i)
- ------------ --------- --------- ------------
<S> <C> <C> <C>
United Asset Strategy Fund, Inc. 0.6933% 0.7000% 0.0067
United Cash Management, Inc. 0.3955% 0.4000% 0.0045
United Continental Income Fund, Inc. 0.5471% 0.7000% 0.1529
United Funds, Inc.
United Accumulative Fund 0.5432% 0.6786% 0.1354
United Bond Fund 0.4233% 0.5232% 0.0999
United Income Fund 0.5431% 0.5819% 0.0388
United Science and Technology Fund 0.5931% 0.8457% 0.2526
United Gold & Government Fund, Inc.* 0.6940% 0.0000% 0.6940
United Government Securities Fund, Inc. 0.3972% 0.5000% 0.1028
United High Income Fund, Inc. 0.5471% 0.6092% 0.0621
United High Income Fund II, Inc. 0.5438% 0.6250% 0.0812
United International Growth Fund, Inc. 0.6944% 0.8479% 0.1535
United Municipal Bond Fund, Inc. 0.4249% 0.5127% 0.0878
United Municipal High Income Fund, Inc. 0.4939% 0.5250% 0.0311
United New Concepts Fund, Inc. 0.7465% 0.8500% 0.1035
United Retirement Shares, Inc. 0.5448% 0.7000% 0.1552
United Vanguard Fund, Inc. 0.6942% 0.6831% (0.0111)
Waddell & Reed Funds, Inc.
Waddell & Reed Asset Strategy Fund 0.8075% 0.7000% (0.1075)
Waddell & Reed Growth Fund 0.8090% 0.8500% 0.0410
Waddell & Reed High Income Fund* 0.6470% 0.0000% (0.6470)
Waddell & Reed International Growth Fund 0.8082% 0.8500% 0.0418
Waddell & Reed Limited-Term Bond Fund* 0.5591% 0.0000% (0.5591)
Waddell & Reed Municipal Bond Fund 0.5592% 0.5250% (0.0342)
Waddell & Reed Science and Technology Fund 0.6958% 0.8500% 0.1542
Waddell & Reed Total Return Fund 0.7089% 0.7000% (0.0089)
Target/United Funds, Inc.
Target/United Asset Strategy Portfolio 0.7909% 0.7000% (0.0909)
Target/United Balanced Portfolio 0.5909% 0.7000% 0.1091
Target/United Bond Portfolio 0.5210% 0.5250% 0.0040
Target/United Growth Portfolio 0.6909% 0.7000% 0.0091
Target/United High Income Portfolio 0.6409% 0.6250% (0.0159)
</TABLE>

13
<PAGE>
<TABLE>
<CAPTION>
Effective Effective Difference
Annual Proposed in
Fee Rate Fee Rate Basis Points
Name of Fund (i) (ii) (ii-i)
- ------------ --------- --------- ------------
<S> <C> <C> <C>
Target/United Income Portfolio 0.6909% 0.7000% 0.0091
Target/United International Portfolio 0.7909% 0.8500% 0.0591
Target/United Limited-Term Bond Portfolio* 0.5410% 0.0000% (0.5410)
Target/United Money Market Portfolio 0.4909% 0.4000% (0.0909)
Target/United Science and
Technology Portfolio* 0.6907% 0.0000% (0.6907)
Target/United Small Cap Portfolio 0.8409% 0.8500% 0.0091
</TABLE>

*If the management fee was not waived for funds with assets of $25 million of
less, the effective proposed fee rate for each Fund would be:

<TABLE>
<S> <C>
United Gold & Government Fund, Inc. 0.8500%
Waddell & Reed Funds, Inc. High Income Fund 0.6250%
Waddell & Reed Funds, Inc. Limited-Term Bond Fund 0.5000%
Target/United Funds, Inc. Limited-Term Bond Portfolio 0.5000%
Target/United Funds, Inc. Science and Technology Portfolio 0.8500%
</TABLE>

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 management 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 their meeting, the

14
<PAGE>

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 ratios of the Fund. At its regular meeting,
February 10, 1999, the Board of Directors for each Fund reviewed and unanimously
approved the proposed Amendment, subject to the approval of the shareholders,
and authorized its submittal 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 at the meeting, the present fee structure
under the current investment management agreement for each Fund will remain in
effect.

Other Information about WRIMCO and the Agreement

WRIMCO currently serves as the investment manager under an Agreement
("Agreement") with each Fund. The following chart sets forth the date of the
Agreement for each Fund and the date the continuation of the Agreement was last
approved by the Board of Directors.

15
<PAGE>

<TABLE>
<CAPTION>
Date Agreement
Date Agreement was last approved
was last submitted by the Board of
Fund Name Date of Agreement to Shareholders Directors
- --------- ----------------- ------------------ -----------------
<S> <C> <C> <C>
United Science and Technology Fund July 1, 1990 June 29, 1990 August 19, 1998
United Gold & Government Fund, Inc. July 1, 1990 June 29, 1990 August 19, 1998
United Government Securities Fund, Inc. August 1, 1990 June 29, 1990 August 19, 1998
United High Income Fund, Inc. August 1, 1990 June 29, 1990 August 19, 1998
United High Income Fund II, Inc. August 1, 1990 June 29, 1990 August 19, 1998
United International Growth Fund, Inc. July 1, 1990 June 29, 1990 August 19, 1998
United Municipal Bond Fund, Inc. August 1, 1990 June 29, 1990 August 19, 1998
United Municipal High Income Fund, Inc. August 1, 1990 June 29, 1990 August 19, 1998
United New Concepts Fund, Inc. August 1, 1990 June 29, 1990 August 19, 1998
United Retirement Shares, Inc. August 1, 1990 June 29, 1990 August 19, 1998
United Vanguard Fund, Inc. August 1, 1990 June 29, 1990 August 19, 1998
Waddell & Reed Funds, Inc.
Waddell & Reed Total Return Fund August 31, 1992 June 29, 1990 August 19, 1998
Waddell & Reed Growth Fund August 31, 1992 June 29, 1990 August 19, 1998
Waddell & Reed Limited-Term Bond August 31, 1992 June 29, 1990 August 19, 1998
Waddell & Reed Municipal Bond Fund August 31, 1992 June 29, 1990 August 19, 1998
Waddell & Reed International Growth August 31, 1992 June 29, 1990 August 19, 1998
Waddell & Reed Asset Strategy Fund August 31, 1992 June 29, 1990 August 19, 1998
Waddell & Reed Science and Technology August 31, 1992 June 29, 1990 August 19, 1998
Waddell & Reed High Income Fund August 31, 1992 June 29, 1990 August 19, 1998
Target/United Funds, Inc.
Target/United Asset Strategy Portfolio July 1, 1990 N/A August 19, 1998
Target/United Balanced Portfolio July 1, 1990 N/A August 19, 1998
Target/United Bond Portfolio July 1, 1990 N/A August 19, 1998
Target/United Growth Portfolio July 1, 1990 N/A August 19, 1998
Target/United High Income Portfolio July 1, 1990 N/A August 19, 1998
Target/United Income Portfolio July 1, 1990 November 12, 1992 August 19, 1998
Target/United International Portfolio July 1, 1990 N/A August 19, 1998
Target/United Limited-Term Bond July 1, 1990 N/A August 19, 1998
Target/United Money Market Portfolio July 1, 1990 N/A August 19, 1998
Target/United Science and Technology July 1, 1990 N/A August 19, 1998
Target/United Small Cap Portfolio July 1, 1990 N/A August 19, 1998
</TABLE>

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, as applicable for transfer agency services.
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.

16
<PAGE>

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 Municipal Bond
Fund.

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 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, United Retirement Shares, Inc., United
Vanguard Fund, Inc., each of the Portfolios within Target/United Funds, Inc.
except Target/United Limited-Term Bond Portfolio, and Waddell & Reed 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 Limited-Term Bond Portfolio and Waddell & Reed 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 other than Municipal 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

17
<PAGE>

portfolio to the extent allowed under the 1940 Act -- 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 securities 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, or any increase thereof.
Capitalization fees are assessed under Maryland Code Ann. ss.1-204 based on the
following schedule:

<TABLE>
<CAPTION>
Aggregate Par Value of Capital Stock Fee

18
<PAGE>

<TABLE>
<S> <C>
Over $100,000 but not over $1,000,000 $20, plus $1 for each $5,000 or fractional part
of $5,000 that exceeds $100,000

Over $1,000,000 but not over $2,000,000 $200, plus $10 for each $100,000 or fractional
part of $100,000 that exceeds $1,000,000

Over $2,000,000 but not over $5,000,000 $300, plus $15 for each $500,000 or fractional
part of $500,000 that exceeds $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>

19
<PAGE>

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, Inc. $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 & 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
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 & 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 & 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.

20
<PAGE>

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.

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 following 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 _____________________.

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 5, 1999 By order of the Board of Directors,

Kristen A. Richards, Assistant Secretary

21
<PAGE>

INDEX TO EXHIBITS TO PROXY STATEMENT

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

22
<PAGE>

EXHIBIT A

NUMBER OF OUTSTANDING SHARES OF EACH FUND

<TABLE>
<CAPTION>
Shares Outstanding as of
Fund March 19, 1999
<S> <C>
United Asset Strategy Fund
Class A
Class Y
United Cash Management, Inc.
Class A
Class B
United Continental Income Fund
Class A
Class Y
United Funds, Inc.
United Accumulative Fund
Class A
Class Y
United Bond Fund
Class A
Class Y
United Income Fund
Class A
Class Y
United Science & Technology Fund
Class A
Class Y
United Gold & Government Fund
Class A
Class Y
United Government Securities Fund
Class A
Class Y
United High Income Fund
Class A
Class Y
United High Income Fund II
Class A
Class Y
United International Growth Fund
Class A
Class Y
United Municipal Bond Fund
Class A
Class Y
United Municipal High Income Fund
Class A
Class Y
United Retirement Shares, Inc.
Class A
Class Y
United New Concepts Fund
Class A
</TABLE>

A-1
<PAGE>

<TABLE>
<CAPTION>
Shares Outstanding as of
Fund March 19, 1999
<S> <C>
Class Y
United Vanguard Fund
Class A
Class Y
Waddell & Reed Funds, Inc.
Waddell & Reed Asset Strategy Fund
Class B
Class Y
Waddell & Reed Growth Fund
Class B
Class Y
Waddell & Reed High Income Fund
Class B
Class Y
Waddell & Reed International Growth Fund
Class B
Class Y
Waddell & Reed Limited-Term Bond Fund
Class B
Class Y
Waddell & Reed Municipal Bond Fund
Class B
Class Y
Waddell & Reed Science and Technology Fund
Class B
Class Y
Waddell & Reed Total Return Fund
Class B
Class Y
Target/United Funds, Inc.
Target/United Asset Strategy Portfolio Target/United Balanced Portfolio
Target/United Bond Portfolio Target/United Growth Portfolio
Target/United High Income Portfolio Target/United Income Portfolio
Target/United International Portfolio Target/United Limited-Term Bond
Portfolio Target/United Money Market Portfolio Target/United Science and
Technology Portfolio
Target/United Small Cap Portfolio
</TABLE>

A-2
<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 Fund/Portfolio Shares Percent
- ------------------- -------------- ------ -------
<S> <C> <C> <C>
</TABLE>

B-1
<PAGE>

EXHIBIT C

DIRECTOR'S AND NOMINEE'S OWNERSHIP OF FUND SHARES

Number of Shares Held

as of

March 19, 1999(1)

<TABLE>
<CAPTION>
United Asset United Cash United United United Bond United Income
Name of Nominee Strategy Fund Management Continental Accumulative Fund Fund
Income Fund Fund
<S> <C> <C> <C> <C> <C> <C>
J. Concannon
J. Dillingham
D. Gardner
L. Graves
J. Harroz, Jr.
J. Hayes
R. Hechler
H. Herrmann
G. Johnson
W. Morgan
R. Reimer
E. Schwartz
K. Tucker
F. Vogel
</TABLE>

(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 Science United Gold & United United High United High United
Name of Nominee and Technology Government Government Income Fund Income Fund II International
Fund Fund Securities Fund Growth Fund
<S> <C> <C> <C> <C> <C> <C>
J. Concannon
J. Dillingham
D. Gardner
L. Graves
J. Harroz, Jr.
J. Hayes
R. Hechler
H. Herrmann
G. Johnson
W. Morgan
R. Reimer
E. Schwartz
K. Tucker
F. Vogel
</TABLE>

C-2
<PAGE>

<TABLE>
<CAPTION>
United Municipal United Municipal United United New United Vanguard Waddell & Reed
Name of Nominee Bond Fund High Income Retirement Shares Concepts Fund Fund Asset Strategy
Fund Fund
<S> <C> <C> <C> <C> <C> <C>
J. Concannon
J. Dillingham
D. Gardner
L. Graves
J. Harroz, Jr.
J. Hayes
R. Hechler
H. Herrmann
G. Johnson
W. Morgan
R. Reimer
E. Schwartz
K. Tucker
F. Vogel
</TABLE>

C-3
<PAGE>

<TABLE>
<CAPTION>
Waddell & Reed Waddell & Reed Waddell & Reed Waddell & Reed Waddell & Reed Waddell & Reed
Name of Nominee Growth Fund High Income International Limited-Term Municipal Bond Science and
Fund Growth Fund Bond Fund Fund Technology Fund
<S> <C> <C> <C> <C> <C> <C>
J. Concannon
J. Dillingham
D. Gardner
L. Graves
J. Harroz, Jr.
J. Hayes
R. Hechler
H. Herrmann
G. Johnson
W. Morgan
R. Reimer
E. Schwartz
K. Tucker
F. Vogel
</TABLE>

C-4
<PAGE>

<TABLE>
<CAPTION>
Waddell & Reed Target/United Target/United Target/United Target/United Target/United
Name of Nominee Total Return Fund Asset Strategy Balanced Bond Portfolio Growth Portfolio High Income
Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C> <C>
J. Concannon
J. Dillingham
D. Gardner
L. Graves
J. Harroz, Jr.
J. Hayes
R. Hechler
H. Herrmann
G. Johnson
W. Morgan
R. Reimer
E. Schwartz
K. Tucker
F. Vogel
</TABLE>

C-5
<PAGE>

<TABLE>
<CAPTION>
Target/United Target/United Target/United Target/United Target/United Target/United
Income Portfolio International Limited-Term Money Market Science and Small Cap
Name of Nominee Portfolio Bond Portfolio Portfolio Technology Portfolio
Portfolio
<S> <C> <C> <C> <C> <C> <C>
J. Concannon
J. Dillingham
D. Gardner
L. Graves
J. Harroz, Jr.
J. Hayes
R. Hechler
H. Herrmann
G. Johnson
W. Morgan
R. Reimer
E. Schwartz
K. Tucker
F. Vogel
All Directors and
executive officers
as a group(2)
</TABLE>

(2) Less than 1% of the outstanding shares of the Fund.

C-6
<PAGE>

EXHIBIT D

PROPOSED MANAGEMENT FEES AND BREAKPOINTS

<TABLE>
<CAPTION>
United Group of Mutual Funds: Breakpoints/Net Assets Annual 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%

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%
</TABLE>

D-1
<PAGE>

<TABLE>
<S> <C> <C>
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%

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.: Breakpoints/Net Assets Annual Rate
- -------------------------- ---------------------- -----------
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-2
<PAGE>

<TABLE>
<S> <C> <C>
Target/United High Income Portfo 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 Up to $500 Million .500%
Portfolio 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 Up to $1 Billion .850%
Portfolio 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%

Waddell & Reed Funds, Inc.: Breakpoints/Net Assets Annual Rate
- --------------------------- ---------------------- -----------
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%
</TABLE>

D-3
<PAGE>

<TABLE>
<S> <C> <C>
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-4
<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 accepted pursuant to Rule 12b-1 under the 1940
Act.

<TABLE>
<CAPTION>
Accounting Shareholder
Service Fees Servicing
Paid to WRIMCO Fees Paid to 12b-1 Fees
FUND NAME WRIMCO Paid to W&R
<S> <C> <C> <C>
United Continental Income Fund, Inc.
United Government Securities Fund, Inc.
United High Income Fund, Inc.
United New Concepts Fund, Inc.
Waddell & Reed Funds, Inc.
For the Year Ended 3/31/98

United Cash Management, Inc.
United International Growth Fund, Inc.
United Retirement Shares, Inc.
For the Year Ended 6/30/98

United Asset Strategy Fund, Inc.
United High Income II Fund, Inc.
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United Vanguard Fund, Inc.
For the Year Ended 9/30/98

United Gold & Government Fund, Inc.
United Funds, Inc.
Target/United Funds, Inc.
For the Year Ended 12/31/98
</TABLE>

E-1
<PAGE>

UNITED GROUP OF MUTUAL FUNDS
WADDELL & REED FUNDS, INC.

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, as shown, using blue or
black ink or dark pencil. Do not use red ink. / /

NOTE: YOUR PROXY IS NOT VALID UNLESS IT IS SIGNED

Please fold and detach card at perforation. Return bottom portion only.

Please vote by filling in the boxes below.

1. To elect as Directors of the Fund:
J. Concannon;
J. Dillingham; D. Gardner;
L. Graves; J. Harroz, Jr.;
J. Hayes; R. Hechler;
H. Herrmann; G. Johnson;
W. Morgan; R. Reimer;
F. Ross; E. Schwartz;
K. Tucker; F. Vogel

/ / FOR ALL NOMINEES EXCEPT THOSE BELOW
/ / AGAINST or ABSTAIN AS TO ALL NOMINEES

*To withhold authority to vote for any individual nominee, please draw a line
through the name of the nominee(s).
- -------------------------------------------------------------------------------

2. To ratify the selection of Deloitte FOR AGAINST ABSTAIN
& Touche LLP as the Fund's / / / / / /
independent auditors for its
current fiscal year

3. To approve the Amendment to the FOR AGAINST ABSTAIN
Fund's investment management / / / / / /
agreement with Waddell & Reed
Investment Management Company

4. All Funds except United Municipal FOR AGAINST ABSTAIN
Bond Fund, United Municipal High / / / / / /
Income Fund and Waddell &
Reed Municipal Bond Fund:
To approve amendment of the Fund's
securities lending policy

5. To approve amendment of FOR AGAINST ABSTAIN
Articles of Incorporation / / / / / /
changing the par value of
Fund shares to $0.001

1
<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.

Please fold and detach at perforation. Return bottom portion only.

[NAME OF FUND] 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: _____________________________, 1999

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), Titles(s), if applicable

2
<PAGE>

Target/United Funds, Inc.
[Portfolio Name]
INSTRUCTION CARD FOR
SPECIAL MEETING OF SHAREHOLDERS - June 22, 1999

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 by 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.

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

------------------------
Signature (Joint)

-------------------
Date

1
<PAGE>

[Portfolio Name]

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.

Please vote by filling in the appropriate boxes below, as shown, using blue or
black ink or dark pencil. Do not use red ink. / /

NOTE: YOUR INSTRUCTION IS NOT VALID UNLESS IT IS SIGNED

Please fold and detach card at perforation. Return bottom portion only.

Please vote by filling in the boxes below.

/ / FOR ALL NOMINEES EXCEPT THOSE BELOW
/ / AGAINST or ABSTAIN AS TO ALL NOMINEES

*To withhold authority to vote for any individual nominee, please draw a line
through the name of the nominee(s).

- -----------------------------------------------------------------------------

2. To ratify the selection of Deloitte FOR AGAINST ABSTAIN
& Touche LLP as the Portfolio's / / / / / /
independent auditors for its
current fiscal year

3. To approve the Amendment to the FOR AGAINST ABSTAIN
Portfolio's investment management / / / / / /
agreement with Waddell & Reed
Investment Management Company

4. To approve amendment of the FOR AGAINST ABSTAIN
Portfolio's securities lending policy / / / / / /

5. To approve amendment of FOR AGAINST ABSTAIN
Articles of Incorporation / / / / / /
changing the par value of
Portfolio shares to $0.001

2
<PAGE>

TARGET/UNITED FUNDS, INC.

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, as shown, using blue or
black ink or dark pencil. Do not use red ink. / /

NOTE: YOUR PROXY IS NOT VALID UNLESS IT IS SIGNED

Please fold and detach card at perforation. Return bottom portion only.

Please vote by filling in the boxes below.

/ / FOR ALL NOMINEES EXCEPT THOSE BELOW
/ / AGAINST or ABSTAIN AS TO ALL NOMINEES

*To withhold authority to vote for any individual nominee, please draw a line
through the name of the nominee(s).

- --------------------------------------------------------------------------------

2. To ratify the selection of Deloitte FOR AGAINST ABSTAIN
& Touche LLP as the Portfolio's / / / / / /
independent auditors for its
current fiscal year

3. To approve the Amendment to the FOR AGAINST ABSTAIN
Portfolio's investment management / / / / / /
agreement with Waddell & Reed
Investment Management Company

4. To approve amendment of the FOR AGAINST ABSTAIN
Portfolio's securities lending policy / / / / / /

5. To approve amendment of FOR AGAINST ABSTAIN
Articles of Incorporation / / / / / /
changing the par value of
Portfolio shares to $0.001

1
<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.

Please fold and detach at perforation. Return bottom portion only.

[NAME OF PORTFOLIO] PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

Date: _____________________________, 1999

-------------------------------------------
/ /
/ /
/ /
-------------------------------------------
Signature(s), Titles(s), if applicable