WADDELL & REED FINANCIAL INC, S-8 POS, 2000-07-28

WADDELL & REED FINANCIAL INC
S-8 POS, 2000-07-28
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES

Previous: LINCOLN LIFE & ANNUITY FLEXIBLE PREM VARI LIFE ACCT M, 485BPOS, EX-99.7, 2000-07-28

Next: WADDELL & REED FINANCIAL INC, S-8 POS, EX-23.2, 2000-07-28

<PAGE>

As filed with the Securities and Exchange Commission on July 28, 2000.
Registration No. 333-65827
----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

POST EFFECTIVE AMENDMENT NO. 2 TO
FORM S-8

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933

WADDELL & REED FINANCIAL, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware 51-0261715
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

6300 Lamar Avenue
OVERLAND PARK, KANSAS
66202
(913) 236-2000

(Address of Principal Executive Offices, including Zip Code)

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

1998 EXECUTIVE DEFERRED COMPENSATION STOCK OPTION PLAN, AS
AMENDED AND RESTATED,
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN AND
1998 STOCK INCENTIVE PLAN, AS AMENDED AND RESTATED

(Full Title of the Plans)

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

DANIEL C. SCHULTE COPY TO:
SECRETARY GLEN J. HETTINGER
WADDELL & REED FINANCIAL, INC. HUGHES & LUCE, L.L.P.
6300 LAMAR AVENUE 1717 MAIN STREET, SUITE 2800
OVERLAND PARK, KANSAS 66202 DALLAS, TEXAS 75201
(913) 236-2000 (214) 939-5500

(Name, Address, and Telephone Number,
including Area Code, of Agent for Service)

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

<PAGE>

PROSPECTUS

WADDELL & REED FINANCIAL, INC.
10,773,884 SHARES
CLASS A COMMON STOCK, $.01 PAR VALUE ACQUIRED
PURSUANT TO THE WADDELL & REED FINANCIAL, INC.
1998 EXECUTIVE DEFERRED COMPENSATION STOCK OPTION PLAN AS AMENDED AND
RESTATED,
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN AND
1998 STOCK INCENTIVE PLAN AS AMENDED AND RESTATED

Our stockholders identified below under the caption "Selling Stockholders"
may offer to sell up to 10,773,884 shares of our Class A Common Stock.

We have already issued to the selling stockholders the shares being offered
by the selling stockholders, or we will issue the shares being offered by the
selling stockholders prior to the sale of the shares. This offering is not part
of the original issuance of the shares of Class A Common Stock. We will not
receive any of the proceeds from the selling stockholders' sale of their shares.
The selling stockholders may offer the shares in transactions on the New York
Stock Exchange, in negotiated transactions, or through a combination of these
methods. The selling stockholders may offer the shares at prices relating to the
prevailing market prices or at negotiated prices.

The Class A Common Stock is quoted on the New York Stock Exchange under the
symbol WDR. On July 27, 2000 the last sale price of the Class A Common Stock, as
reported on the New York Stock Exchange, was $32.50 per share. Our principal
executive offices are located at 6300 Lamar Ave., Overland Park, Kansas 66202
(telephone number: (913) 236-2000).

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

INVESTING IN THE CLASS A COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD PURCHASE ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS"
BEGINNING ON PAGE 3.

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

The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities, or determined if the prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

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

You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different from that contained in this Prospectus. The
selling stockholders may offer to sell, and seek offers to buy, shares of Class
A Common Stock only in jurisdictions where offers and sales are permitted. The
information contained in this Prospectus is accurate only as of the date of this
Prospectus, regardless of the time of delivery of this Prospectus or of any sale
of the Class A Common Stock. All share number information in this Prospectus
gives effect to a three-for-two stock split we effected as a stock dividend and
paid on April 7, 2000.

This Prospectus is dated July 28, 2000.

<PAGE>

AVAILABLE INFORMATION

We are subject to the informational reporting requirements of the
Securities Exchange Act of 1934 and, in accordance with that Act, file reports
and other information with the Securities and Exchange Commission. Reports,
proxy statements, information statements, and other information may be inspected
without charge at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549-1004 and at the following regional offices of the SEC:
New York Regional Office, Seven World Trade Center, Suite 1300, New York, New
York 10048; and Chicago Regional Office, Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60606. Copies of these filing
materials may be obtained from the Public Reference Room of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Information on the
operation of the Public Reference Section is available by calling the SEC at
1-800-SEC-0330. Reports, proxy statements, information statements, and other
information can also be inspected at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005. The SEC maintains a Web site that
contains information filed with the SEC. The SEC's Web site address is
http://www.sec.gov.

We intend to furnish our stockholders with annual reports containing
audited financial statements and such other periodic reports as we may determine
to furnish or as may be required by law.

We have filed with the SEC a Registration Statement on Form S-8, with
exhibits thereto, under the Securities Act of 1933 with respect to the shares of
Class A Common Stock offered by this Prospectus. This Prospectus does not
contain all information set forth in the Registration Statement. Certain parts
of the Registration Statement have been omitted in accordance with the rules and
regulations of the SEC. For further information, reference is made to the
Registration Statement which can be inspected at the public reference rooms at
the offices of the SEC.

1
<PAGE>

DOCUMENTS INCORPORATED BY REFERENCE

We will provide, without charge, to each person to whom a copy of this
Prospectus is delivered, including any beneficial owner, upon the written or
oral request of that person, a copy of any or all of the documents incorporated
by reference into this Prospectus (other than exhibits to those documents,
unless the exhibits are specifically incorporated by reference into the
information that this Prospectus incorporates). Requests should be directed to:

Waddell & Reed Financial, Inc.
6300 Lamar Avenue
Overland Park, Kansas 66202
Attn: Secretary
(913) 236-2000

The following documents previously filed with the SEC pursuant to the
Securities Act of 1933 and the Securities Exchange Act of 1934 are incorporated
into this Prospectus by reference and are deemed a part of this Prospectus:

(a) Our Annual Report on Form 10-K for the year ended December 31, 1999;

(b) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2000;

(d) Our Current Report on Form 8-K filed with the SEC on March 7, 2000;

(e) Our Current Report on Form 8-K filed with the SEC on April 14, 2000
and the amendment to that Current Report filed with the SEC on Form 8-K/A on
June 12, 2000;

(f) The description of our Class A Common Stock contained in our
Registration Statement on Form 8-A, filed with the SEC on February 27, 1998,
including any amendment or report filed for the purpose of updating such
description; and

(g) All reports filed by us pursuant to Sections 13(a) or 15(d) of the
Securities Exchange Act of 1934, since the filing of the above referenced Form
8-A on February 27, 1998.

All documents filed with the SEC by us pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering relating to this Prospectus will be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of those documents. Any statement
incorporated or deemed to be incorporated by reference into this Prospectus will
be deemed to be modified, replaced, or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus or in any
other subsequently filed document, that also is or is deemed to be incorporated
by reference into this Prospectus modifies, replaces, or supersedes that
statement. Any statement so modified, replaced, or superseded will be deemed,
except as so modified, replaced or superseded, to constitute a part of this
Prospectus.

THE COMPANY

We were founded in 1937 and are the third oldest mutual fund complex in the
United States, having introduced the United family of funds (now the Waddell &
Reed Advisors Funds) in 1940. We focus on selling investment products to middle
income Americans through our sales force. We are the exclusive underwriter and
distributor of 41 mutual fund portfolios. Eighteen of these funds make up the
Waddell & Reed Advisors Group of Mutual Funds, twelve make up the W & R Funds,
Inc., and eleven make up the Target/United Funds, Inc. We also distribute
underwritten variable annuities and life

2
<PAGE>

insurance products of Torchmark Corporation to our customers. We sell front-end
loaded and contingent deferred sales charge mutual fund products.

We are a Delaware corporation with our principal offices located at 6300
Lamar Avenue, Overland Park, Kansas 66202 (telephone number 913-236-2000).

RISK FACTORS

You should carefully consider the following risk factors and warnings
before making an investment decision. The risks described below are not the only
ones that we face. Additional risks of which we do not yet know or that we
currently think are immaterial may also impair our business operations. If any
of the following risks actually occur, our business, financial condition, or
results of operations could be materially adversely affected. In such case, the
trading price of our Class A Common Stock could decline, and you may lose all or
part of your investment. You should also refer to the other information set
forth in this Prospectus.

This Prospectus contains or incorporates by reference certain
forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause our or our industry's actual
results, levels of activity, performance, or achievements to be materially
different from any future results, levels of activity, performance, or
achievements expressed or implied by such forward-looking statements. Those
risks include, among others, those listed under the risk factors set forth
below. In evaluating forward-looking statements, you should specifically
consider various factors, including the risks outlined below. Although we
believe that the expectations reflected in the forward-looking statements are
reasonable, these statements are only predictions and we cannot guarantee future
results, levels of activity, performance, or achievements. Actual events or
results may differ materially.

In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "expects," "anticipates," "plans," "believes,"
"estimates," "predicts," "potential," or "continue" or the negative of such
terms or other comparable terminology.

Moreover, neither we nor any other person assumes responsibility for the
accuracy and completeness of any forward-looking statements. We are under no
duty to update any of the forward-looking statements after the date of this
Prospectus in order to conform such statements to actual results.

THERE MAY BE ADVERSE EFFECTS ON OUR REVENUES, EARNINGS, AND PROSPECTS IF THE
SECURITIES MARKETS DECLINE.

Our results of operations are affected by certain economic factors,
including the level of the securities markets. The United States securities
markets performed well for the last seven years and the first quarter of 2000.
This performance attracted a substantial increase in the investments in the
securities markets, which benefited us and the funds. The United States
securities markets have, however, been highly volatile. Most equity market
indices declined significantly in April 2000. A decline in the securities
markets, failure of the securities markets to sustain their recent levels of
growth, or continued short-term volatility in the securities markets could
result in investors withdrawing from the markets or decreasing their rate of
investment, either of which could adversely affect our revenues, earnings, and
growth prospects. Because our revenues are, to a large extent, based on the
value of assets under management, a decline in the value of these assets would
adversely affect our revenues. Our growth is dependent to a significant degree
upon our ability to attract and retain mutual fund assets and in an adverse
economic environment, this may prove difficult. Our growth rate has varied from
year to year and there can be no assurance that the average growth rates
sustained in the recent past will continue.

THERE MAY BE ADVERSE EFFECTS ON OUR REVENUES AND EARNINGS IF OUR FUNDS'
PERFORMANCE DECLINES.

3
<PAGE>

Success in the investment management and mutual fund businesses is
dependent on the investment performance of client accounts. Good performance
stimulates sales of the funds' shares and tends to keep redemptions low. Sales
of the funds' shares in turn generate higher management fees and distribution
revenues. Good performance also attracts private institutional accounts.
Conversely, poor performance results in decreased sales, increased redemptions
of the funds' shares, and the loss of private institutional accounts, resulting
in decreases in revenues. Failure of our funds to perform well could, therefore,
have a material adverse effect on our revenues and earnings.

THERE MAY BE AN ADVERSE EFFECT ON OUR BUSINESS IF OUR INVESTORS REMOVE THE
ASSETS WE MANAGE ON SHORT NOTICE.

A substantial majority of our revenues are derived from investment
management agreements with our funds that are terminable on 60 days' notice.
Each investment management agreement must be approved and renewed annually by
the disinterested members of each fund's board or its shareholders. Some of
these investment management agreements may be terminated or not renewed, and new
agreements may be unavailable. In addition, mutual fund investors may redeem
their investments in the funds at any time without any prior notice. Investors
can terminate their relationship with us, reduce the aggregate amount of assets
under management, or shift their funds to other types of accounts with different
rate structures for any of a number of reasons, including investment
performance, changes in prevailing interest rates, and financial market
performance. The decrease in revenues that could result from any such event
could have a material adverse effect on our business.

WE FACE INCREASED COMPETITION IN HIRING AND RETAINING KEY PERSONNEL AND SALES
FORCE.

Our continued success depends to a substantial degree on our ability to
attract and retain qualified personnel to conduct our fund management and
investment advisory business. The market for qualified fund managers, investment
analysts, and financial advisors is extremely competitive and has grown more so
in recent periods because of the growth in the industry. We are dependent on our
sales force to sell our mutual funds and other investment products. Our growth
prospects will be directly affected by the quality and quantity of financial
advisors we are able to successfully recruit and retain. There can be no
assurances that we will be successful in our efforts to recruit and retain the
required personnel.

WE FACE STRONG COMPETITION FROM NUMEROUS AND SOMETIMES LARGER COMPANIES.

We compete with stock brokerage and investment banking firms, insurance
companies, banks, online and Internet investment sites, and other financial
institutions. Many of these companies not only offer mutual fund investments and
services but also offer other financial products and services. Many of our
competitors have more products and product lines, services, and may also have
substantially greater assets under management. Many larger mutual fund complexes
have developed relationships with brokerage houses with large distribution
networks, which may enable these fund complexes to reach broader client bases.
In recent years, there has been a trend of consolidation in the mutual fund
industry resulting in stronger competitors with greater financial resources than
us. There has also been a trend toward online Internet financial services. If
existing customers stop investing with us and instead invest with our
competitors, or if potential customers decide to invest with our competitors, it
would cause our market share, revenues, and income to decline.

POTENTIAL MISUSE OF FUNDS AND INFORMATION IN THE POSSESSION OF OUR ADVISORS
COULD RESULT IN LIABILITY TO OUR CLIENTS.

Our financial advisors handle a significant amount of funds and financial
and personal information for our clients. Although we have implemented a system
of controls to minimize the risk of fraudulent taking or misuse of funds and
information, there can be no assurance that our controls will be adequate or
that a taking or misuse by our employees can be prevented. We could have
liability in the event of a taking or misuse by our employees and we could also
be subject to regulatory sanctions. Although we believe that

4
<PAGE>

we have adequately insured against these risks, there can be no assurance that
our insurance will be maintained or that it will be adequate to meet any future
liability.

THERE ARE NO ASSURANCES THAT WE WILL PAY FUTURE DIVIDENDS.

Our Board of Directors currently intends to continue to declare quarterly
dividends on both our Class A Common Stock and our Class B Common Stock. The
declaration and payment of dividends is subject to the discretion of our Board
of Directors. Any determination as to the payment of dividends, as well as the
level of such dividends, will depend on, among other things:

- general economic and business conditions,
- our strategic plans,
- our financial results and condition,
- contractual, legal, and regulatory restrictions on the payment of
dividends by us or our subsidiaries, and
- such other factors as our Board of Directors may consider to be
relevant.

We are a holding company and, as such, our ability to pay dividends is
subject to the ability of our subsidiaries to provide us cash. There can be no
assurance that the current quarterly dividend level will be maintained or that
we will pay any dividends in any future period.

REGULATORY RISK IS SUBSTANTIAL IN OUR BUSINESS.

Our investment management business is heavily regulated. Noncompliance with
applicable laws or regulations could result in sanctions being levied against
us, including fines and censures, suspension, or expulsion from a certain
jurisdiction or market or the revocation of licenses. Noncompliance with
applicable laws or regulations would adversely effect our reputation, prospects,
revenues, and earnings. In addition, changes in current laws or regulations or
in governmental policies could adversely affect our operations, revenues, and
earnings.

PROVISIONS OF OUR ORGANIZATIONAL DOCUMENTS COULD DETER TAKEOVER ATTEMPTS.

Under our certificate of incorporation, our Board of Directors has the
authority, without action by our stockholders, to fix certain terms and issue
shares of our Preferred Stock, par value $1.00 per share. Actions of our Board
of Directors pursuant to this authority may have the effect of delaying,
deterring, or preventing a change in control of our company. Other provisions in
our certificate of incorporation and in our bylaws impose procedural and other
requirements that could be deemed to have anti-takeover effects, including
replacing incumbent directors. In addition, our Board of Directors is divided
into three classes, each of which is to serve for a staggered three-year term
after the initial classification and election and, incumbent directors may not
be removed without cause, all of which may make it more difficult for a third
party to gain control of our Board of Directors.

As a Delaware corporation we are subject to Section 203 of the Delaware
General Corporation Law. With certain exceptions, Section 203 imposes
restrictions on mergers and other business combinations between us and any
holder of 15% or more of our voting stock.

OUR STOCKHOLDERS RIGHTS PLAN COULD DETER TAKEOVER ATTEMPTS.

In 1999 we adopted a stockholders rights plan pursuant to which rights
attached to each share of our then outstanding Class A Common Stock and Class B
Common Stock. The rights generally are exercisable only if a person or group
acquires 15% or more of the voting power as represented by our Class A and Class
B Common Stock. Under certain conditions, the rights entitle the holders to
receive shares of our Class A Common Stock having a value equal to two times the
exercise price of the right. Our stockholders rights plan could impede the
completion of a merger, tender offer, or other takeover attempt even though some
or a majority of our stockholders might believe that a merger, tender offer, or
takeover is

5
<PAGE>

in their best interests and even if such transactions could result in our
stockholders receiving a premium for their shares of our stock over the then
current market price of our stock.

THE TERMS OF OUR CREDIT FACILITY IMPOSE RESTRICTIONS ON OUR OPERATIONS. THERE
ARE NO ASSURANCES WE WILL BE ABLE TO RAISE ADDITIONAL CAPITAL.

We have entered into a loan agreement for a $220 million, expandable to
$330 million, 364-day revolving line of credit facility with various lenders. At
July 14, 2000, there was $215 million outstanding under this line of credit. The
terms and conditions of the revolving credit facility impose restrictions that
affect, among other things, our ability to incur debt, make capital
expenditures, merge, sell assets, make distributions, or create or incur liens.
Availability of our credit facility is also subject to certain financial
covenants. Our ability to comply with the covenants can be affected by events
beyond our control and there can be no assurance that we will achieve operating
results that comply with the provisions of the credit agreement. A breach of any
of these covenants could result in a default under our credit facility. In the
event of a default, the banks could elect to declare the outstanding principal
amount of our credit facility, all interest thereon, and all other amounts
payable under our credit facility to be immediately due and payable.

Our ability to satisfy our debt obligations will depend upon our future
operating performance, which will be affected by prevailing economic, financial,
and business conditions and other factors, some of which are beyond our control.
We anticipate that borrowings from our existing revolving credit facility, or
the refinancing of our revolving credit facility, and cash provided by operating
activities, will provide sufficient funds to finance anticipated development
plans, meet our operating expenses, and service our debt requirements as they
become due. However, in the event that we require additional capital, there can
be no assurance that we will be able to raise such capital when needed or on
satisfactory terms, if at all. Also, there can be no assurance that we will be
able to refinance our current credit facility upon its maturity or on favorable
terms.

SYSTEMS FAILURE MAY DISRUPT OUR BUSINESS.

Our business is highly dependent on communications and information systems,
including our mutual fund transfer agency system maintained by a third-party
service provider. We are highly dependent on our ability to process a large
number of transactions on a daily basis and also on the proper functioning of
computer systems of third parties. We rely heavily on financial, accounting, and
other data processing systems. If any of these do not function properly, we
could suffer financial loss, business disruption, liability to clients,
regulatory intervention, or damage to our reputation. If our systems are unable
to accommodate an increasing volume of transactions, our ability to expand could
be affected. Although we have back-up systems in place, we cannot be sure that
any systems failure or interruption, whether caused by a fire, other natural
disaster, power or telecommunications failure, act of war, or otherwise will not
occur, or that back-up procedures and capabilities in the event of any failure
or interruption will be adequate.

THERE MAY BE AN ADVERSE EFFECT ON THE VALUE OF OUR CLASS A COMMON STOCK DUE TO
THE DISPARATE VOTING RIGHTS OF OUR CLASS A COMMON STOCK AND OUR CLASS B COMMON
STOCK.

The holders of our Class A Common Stock and our Class B Common Stock have
identical rights except that (1) holders of our Class A Common Stock are
entitled to one vote per share while holders of our Class B Common Stock are
entitled to five votes per share on all matters to be voted on by our
stockholders and (2) holders of our Class A Common Stock are not eligible to
vote on any alteration of the powers, preferences, or special rights of our
Class B Common Stock that would not adversely affect our Class A Common Stock
and vice versa. For example, holders of our Class A Common Stock would not be
entitled to vote on proposals to decrease the voting power of the Class B Common
Stock, to decrease the right of Class B Common Stock to receive dividends, or to
diminish the rights of our Class B Common Stock in liquidation, and vice versa.
The differential in the voting rights could adversely affect the value of the
Class A Common Stock to the extent that investors or any potential future
purchaser of our company views

6
<PAGE>

the superior voting rights of the Class B Common Stock to have value. The
existence of two separate classes of common stock could result in less liquidity
for either class of common stock than if we had only one class of common stock.

WE MAY HAVE DIFFICULTY EXECUTING OUR ACQUISITION STRATEGY.

We have adopted a strategy to selectively pursue acquisitions and alliances
that will add new products or alternative distribution systems. There can be no
assurance that we will find suitable acquisition candidates at acceptable
prices, have sufficient capital resources to realize our acquisition strategy,
or be successful in entering into definitive agreements for desired
acquisitions. In addition, we have limited experience in finding, acquiring, and
integrating other companies and we may not be successful in the integration of
acquired companies. An acquisition may not prove to add new products or
distribution systems or otherwise be advantageous to us.

WE MAY NOT BE ABLE TO SELL AND LEASE-BACK OUR HOME OFFICE PROPERTIES.

In connection with our decision to sell certain of our investments in real
estate, we are attempting to sell and lease-back our home office properties.
There can be no assurances that we will be successful in our efforts to sell and
lease-back our home office properties on acceptable terms or be successful in
entering into definitive agreements for such a sale and lease-back.

THE RESTRUCTURING OF OUR MUTUAL FUND PRODUCTS TO ENHANCE OUR COMPETITIVENESS AND
DISTRIBUTION CHANNELS MAY NOT BE SUCCESSFUL.

In October 1999, we restructured our mutual fund products by offering
additional classes of mutual fund shares and closing non-industry standard
classes in an effort to enhance our competitiveness and strategic distribution
alternatives and favorably impact our distribution margin. We anticipate that
the product restructuring will result in our product line (1) being more
consistent with the industry, (2) providing our clients with more choices and
greater value, and (3) accommodating additional changes for strategic
distribution flexibility. There can be no assurances that the restructuring of
our mutual fund products will enhance our competitiveness and distribution
channels or that it will favorably impact our distribution margin.

7
<PAGE>

SELLING STOCKHOLDERS

The table below sets forth information with respect to the beneficial
ownership of the Class A Common Stock of Waddell & Reed Financial, Inc. by the
selling stockholders immediately prior to this offering. Of the selling
stockholders, only Keith A. Tucker, Henry J. Herrmann, Robert L. Hechler and
R.K. Richey own or have the right to acquire through exercise of stock options,
on the date hereof, in excess of one percent of the outstanding Class A Common
Stock. All information with respect to the beneficial ownership has been
furnished by the selling stockholders. All information with respect to numbers
of shares either beneficially owned by the selling stockholders or covered by
options held by the selling stockholders gives effect to a three-for-two stock
split we effected as a stock dividend and paid on April 7, 2000. The number of
shares which may be sold by each selling stockholder from time to time will be
updated in supplements to this Prospectus, which will be filed with the SEC in
accordance with Rule 424(b) of the Securities Act of 1933.

<TABLE>
<CAPTION>
CLASS A COMMON
RELATIONSHIP TO WADDELL & STOCK OWNED AS OF
NAME REED FINANCIAL, INC. JULY 14, 2000 (1) SHARES TO BE SOLD(2)
<S> <C> <C> <C>
Keith A. Tucker Chairman of the Board, Chief 2,447,534 270,000 (3)
Executive Officer and Director 197,604 (4)
828,611 (5)
406,488 (6)
511,212 (7)
698,534 (8)
246,150 (9)
139,500(10)
429,423(11)
216,000(12)
107,913(13)

Keith A. Tucker Children's 261,037 170,892(11)
Trust Agreement dated 96,306(14)
February 21, 2000

Henry J. Herrmann President, Chief Investment 1,181,329 516,900 (3)
Officer and Director 49,401 (4)
60,974 (5)
137,580 (5)
112,566 (6)
389,603 (8)
184,650 (9)
209,250(10)
377,501(11)
162,000(12)
80,934(13)
</TABLE>

8
<PAGE>

<TABLE>
<CAPTION>
CLASS A COMMON
RELATIONSHIP TO WADDELL & STOCK OWNED AS OF
NAME REED FINANCIAL, INC. JULY 14, 2000 (1) SHARES TO BE SOLD(2)
<S> <C> <C> <C>
Robert L. Hechler Executive Vice President, Chief 707,498 438,300 (3)
Operating Officer and Director 49,401 (4)
75,044 (5)
50,030 (6)
217,314 (8)
153,900 (9)
139,500(10)
246,668(11)
135,000(12)
67,446(13)

David L. Boren Director 18,021 9,000 (3)
1,058(11)
9,054(15)
2,717(16)
4,500(17)
4,500(18)

Joseph M. Farley Director 68,657 9,000 (3)
24,627 (5)
28,113(11)
2,717(16)
4,500(17)
4,500(18)
13,823(19)
12,000(20)
9,657(21)

Joseph L. Lanier, Jr. Director 83,524 9,000 (3)
28,791 (5)
32,807(11)
2,717(16)
4,500(17)
4,500(18)
16,839(19)
14,688(20)
12,072(21)
8,837(22)
8,225(23)
818(24)

William L. Rogers Director 24,780 4,500(17)
4,500(18)
16,400(19)
13,998(21)
12,420(25)
15,000(26)
</TABLE>

9
<PAGE>

<TABLE>
<CAPTION>
CLASS A COMMON
RELATIONSHIP TO WADDELL & STOCK OWNED AS OF
NAME REED FINANCIAL, INC. JULY 14, 2000 (1) SHARES TO BE SOLD(2)
<S> <C> <C> <C>
James M. Raines Director 19,115 4,500(17)
4,500(18)
14,220(20)
12,072(21)
15,000(27)
18,461(28)

George J. Records Director 38,693 9,000 (3)
7,787 (8)
5,724(11)
9,054(15)
2,717(16)
4,500(17)
4,500(18)
16,839(19)
14,688(20)
12,072(21)
8,810(22)
8,273(29)

Jerry W. Walton Director 4,500 15,000(30)

Louis T. Hagopian Director 165,397 31,055 (5)
29,928(11)
2,717(16)
4,500(17)
25,000(31)
9,000(32)
4,500(33)
17,279(34)
13,907(35)
13,998(36)
9,351(37)
8,186(38)

Harold T. McCormick Director 131,001 9,642 (8)
4,002(11)
2,717(16)
4,500(17)
25,000(31)
9,000(32)
4,500(33)
16,839(34)
13,998(36)
10,071(37)
8,273(38)
9,054(39)
15,182(40)
</TABLE>

10
<PAGE>

<TABLE>
<CAPTION>
CLASS A COMMON
RELATIONSHIP TO WADDELL & STOCK OWNED AS OF
NAME REED FINANCIAL, INC. JULY 14, 2000 (1) SHARES TO BE SOLD(2)
<S> <C> <C> <C>
R.K. Richey Director 463,733 279,761 (5)
188,361(11)
4,500(17)
9,000(32)
4,500(41)
11,558(42)

Richey Capital Partners, Ltd. 263,514 284,279 (5)
220,013(11)

R.K. Richey Children's Trust 33,318 38,978 (5)
33,318(11)

John E. Sundeen, Jr. Senior Vice President, Chief 94,671 87,150 (3)
Financial Officer and Treasurer 25,014 (6)
11,256 (8)
60,000 (9)
12,698(11)
60,000(12)
18,761(43)

Thomas W. Butch Senior Vice President and Chief 5,000 15,000(12)
Marketing Officer

Michael D. Strohm Senior Vice President 42,765 25,200 (3)
15,635 (6)
2,189 (8)
11,250 (9)
1,517(11)
45,000(12)
15,635(43)

Robert J. Williams, Jr. Senior Vice President 61,164 92,700 (3)
25,014 (6)
40,500 (9)
1,145(11)
40,500(12)

D. Tyler Towery Vice President 54,735 8,130 (5)
8,130 (6)
26,265 (8)
5,250 (9)
16,538(11)
5,250(12)

Daniel C. Schulte Vice President, General Counsel 0 2,250 (9)
and Secretary 3,000(12)

Wendy Hills Assistant Secretary 0 750 (9)
</TABLE>

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

11
<PAGE>

(1) In each case, the indicated number of shares of Class A Common Stock
include both the number of shares held on the date indicated and the number of
shares issuable upon exercise of stock options held by the selling stockholder
within the next sixty days. Indirect beneficial ownership includes shares (a)
owned by the director, executive officer or spouse as trustee of a trust or
executor of an estate, (b) held in a trust in which the director, executive
officer or a family member living in his home has a beneficial interest, (c)
owned by the spouse or a family member living in the director's, executive
officer's or nominee's home or (d) owned by the director or executive officer in
a personal corporation. Indirect beneficial ownership excludes 12,383 shares
held in the account of Keith A. Tucker in our 401(k) and Thrift Plan as of July
14, 2000. Indirect beneficial ownership for Mr. Tucker includes 605,325 shares
owned by a personal corporation and 1,805,771 currently exercisable options
owned by a revocable trust. Indirect beneficial ownership for Mr. Lanier
includes 1,408 shares owned by his spouse. Indirect beneficial ownership for Mr.
McCormick includes 2,236 shares owned by his spouse and a family trust. Indirect
beneficial ownership for Mr. Farley includes 409 shares held as a trustee of a
church endowment fund. Indirect beneficial ownership for Mr. Richey includes
7,611 shares owned by a trust.

(2) Assumes all the shares of Class A Common Stock that may be offered are
sold.

(3) All these options were granted on March 4, 1998 pursuant to the 1998 Stock
Incentive Plan. These options are exercisable in three increments of 33.33% each
commencing on March 4, 2000 and on each of the two anniversaries thereafter and
expire on March 5, 2008.

(4) All these options were granted on March 4, 1998 pursuant to the 1998
Executive Deferred Compensation Stock Option Plan. These options are exercisable
in ten increments of 10% each commencing on March 4, 1999 and on each of the
nine anniversaries thereafter and expire on March 3, 2009.

(5) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with our spin-off from Torchmark Corporation
and were exercised on August 2, 1999.

(6) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with our spin-off from Torchmark
Corporation. These options are immediately exercisable and expire on December
17, 2006. Of these options, Messrs. Tucker, Herrmann, Hechler, Williams and
Towery exercised options to purchase 25,511; 56,283; 25,016; 1,580 and 4,065
shares, respectively, on August 2, 1999.

(7) All these options were granted on November 6, 1998 pursuant to the 1998
Executive Deferred Compensation Plan in connection with our spin-off from
Torchmark Corporation. These options are exercisable in ten increments of 10%
each commencing on January 31, 1998 and on each of the nine anniversaries
thereafter and expire on January 30, 2008.

(8) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in connection with our spin-off from Torchmark Corporation,
are immediately exercisable and expire on September 26, 2007. Of these options,
Messrs. Herrmann, Hechler, Records, McCormick and Towery exercised options to
purchase 233,183; 203,708; 3,870; 1,878 and 9,182 shares, respectively, on
August 2, 1999. Further, of these options, Mr. McCormick exercised options to
purchase 2,986 shares on May 8, 2000.

(9) All these options were granted on December 16, 1998 pursuant to the 1998
Stock Incentive Plan. These options are exercisable in three increments of
33.33% each commencing on December 16, 2000 and on the two anniversaries
thereafter and expire on December 17, 2008.

(10) All these options were granted on December 16, 1998 pursuant to the 1998
Executive Deferred Compensation Stock Option Plan. These options are exercisable
in ten increments of 10% each commencing on December 16, 1999 and on each of the
nine anniversaries thereafter and expire on December 15, 2009.

12
<PAGE>

(11) All these options were granted on August 2, 1999 pursuant to the 1998 Stock
Incentive Plan, became exercisable on February 2, 2000 and expire on August 3,
2009.

(12) All these options were granted on December 10, 1999 pursuant to the 1998
Stock Incentive Plan. These options are exercisable in three increments of
33.33% each commencing on December 10, 2001 and on each of the two anniversaries
thereafter and expire on December 11, 2009.

(13) All these options were granted on December 10, 1999 pursuant to the 1998
Stock Incentive Plan. These options are exercisable in ten increments of 10%
each commencing on December 10, 2000 and on each of the nine anniversaries
thereafter and expire on December 9, 2010.

(14) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in connection with our spin-off from Torchmark Corporation,
are immediately exercisable and expire on September 26, 2007. Of these options,
options to purchase 60,279 shares were exercised on August 2, 1999.

(15) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in connection with our spin-off from Torchmark Corporation.
These options are exercisable in ten increments of 10% each commencing on
December 18, 1997 and on each of the nine anniversaries thereafter and expire on
December 17, 2007. Of these options, Messrs. Boren and Records each exercised
options to purchase 1,637 and 1,811 shares, respectively, on August 2, 1999.

(16) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with our spin-off from Torchmark
Corporation, are immediately exercisable and expire on January 3, 2008. Of these
options, Messrs. Farley, Lanier and Hagopian each exercised options to purchase
2,717; 2,717 and 2,130 shares, respectively, on August 2, 1999.

(17) All these options were granted on January 4, 1999 pursuant to the 1998
Stock Incentive Plan, became exercisable on July 4, 1999 and expire on January
5, 2009. Of these options, Messrs. Farley, Lanier and Richey each exercised
options to purchase 4,500 shares on August 2, 1999.

(18) All these options were granted on January 3, 2000 pursuant to the 1998
Stock Incentive Plan, became exercisable on July 3, 2000 and expire on January
4, 2010.

(19) All these options were granted on April 23, 1998 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on April 23, 1999 and on each of the
nine anniversaries thereafter and expire on April 22, 2009.

(20) All these options were granted on January 4, 1999 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on January 4, 2000 and on each of the
nine anniversaries thereafter and expire on January 3, 2010.

(21) All these options were granted on January 3, 2000 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on January 3, 2001 and on each of the
nine anniversaries thereafter and expire on January 2, 2011.

(22) All these options were granted on March 4, 1998 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on March 4, 1999 and on each of the
nine anniversaries thereafter and expire on March 3, 2009. Of these options, Mr.
Lanier exercised options to purchase 884 shares on August 2, 1999.

(23) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive plan in conjunction with our spin-off from Torchmark
Corporation. These options are exercisable in ten annual increments of 10% each
commencing on January 2, 1998 and expire on January 1, 2008. Of these options,
Mr. Lanier exercised options to purchase 1,646 shares on August 2, 1999.

13
<PAGE>

(24) All these options were granted on August 2, 1999 pursuant to the 1998
Non-Employee Director Stock Option Plan, became exercisable on February 2, 2000
and expire on August 3, 2009.

(25) All these options were granted on December 23, 1999 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on December 23, 2000 and on each of the
nine anniversaries thereafter and expire on December 22, 2010.

(26) All these options were granted on April 15, 1998 pursuant to the 1998 Stock
Incentive Plan. These options are exercisable in three increments of 33.33% each
commencing on March 4, 2000 and on each of the two anniversaries thereafter and
expire on April 16, 2008.

(27) All these options were granted on July 22, 1998 pursuant to the 1998 Stock
Incentive Plan. These options are exercisable in three increments of 33.33% each
commencing on March 4, 2000 and on each of the two anniversaries thereafter and
expire on July 23, 2008.

(28) All these options were granted on August 5, 1998 pursuant to the 1998
Non-Employee Director Stock Option Plan. These options are exercisable in ten
annual increments of 10% each commencing on August 5, 1999 and on each of the
nine anniversaries thereafter and expire on August 4, 2009.

(29) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with our spin-off from Torchmark
Corporation. These options are exercisable in ten annual increments of 10% each
commencing on January 31, 1998 and expire on January 30, 2008. Of these options,
Mr. Records exercised options to purchase 1,655 shares on August 2, 1999.

(30) All these options were granted on May 1, 2000 pursuant to the 1998 Stock
Incentive Plan. The options are exercisable in three increments of 33.33% each
commencing on May 1, 2002 and on each of the two anniversaries thereafter and
expire on May 2, 2010.

(31) All these options were granted on May 4, 2000 pursuant to the 1998 Stock
Incentive Plan, are immediately exercisable and expire on May 5, 2010.

(32) All these options were granted on March 4, 1998 pursuant to the 1998 Stock
Incentive Plan, are immediately exercisable and expire on March 5, 2008.

(33) All these options were granted on January 3, 2000 pursuant to the 1998
Stock Incentive Plan, became exercisable on May 4, 2000 and expire on January 4,
2010.

(34) All these options were granted on April 23, 1998 pursuant to the 1998
Non-Employee Director Stock Option Plan, are immediately exercisable and expire
on April 22, 2009.

(35) All these options were granted on January 4, 1999 pursuant to the 1998
Non-Employee Director Stock Option Plan, are immediately exercisable and expire
on January 3, 2010.

(36) All these options were granted on January 3, 2000 pursuant to the 1998
Non-Employee Director Stock Option Plan, became exercisable on May 4, 2000 and
expire on January 2, 2011.

(37) All these options were granted on March 4, 1998 pursuant to the 1998
Non-Employee Director Stock Option Plan, are immediately exercisable and expire
on March 3, 2009. Of these options, Mr. McCormick exercised options to purchase
2,014 shares on May 8, 2000.

(38) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with our spin-off from Torchmark
Corporation, are immediately exercisable and expire on January 30, 2008. Of
these options, Messrs. Hagopian and McCormick each exercised options to purchase

14
<PAGE>

1,637 and 1,655 shares, respectively, on August 2, 1999. Further, of these
options, Mr. McCormick exercised options to purchase 827 shares on April 26,
2000.

(39) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in connection with our spin-off from Torchmark Corporation.
These options are immediately exercisable and expire on December 17, 2007. Of
these options, Mr. McCormick exercised options to purchase 1,811 shares on
August 2, 1999 and 905 shares on April 26, 2000.

(40) All these options were granted on January 19, 1999 pursuant to the 1998
Non-Employee Director Stock Option Plan, are immediately exercisable and expire
on January 18, 2010.

(41) All these options were granted on January 3, 2000 pursuant to the 1998
Stock Incentive Plan, became exercisable on April 26, 2000 and expire on January
4, 2010.

(42) All these options were granted on January 3, 2000 pursuant to the 1998
Non-Employee Director Stock Option Plan, became exercisable on April 26, 2000
and expire on January 2, 2011.

(43) All these options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with our spin-off from Torchmark
Corporation, are immediately exercisable and expire on December 21, 2005. Of
these options, Messrs. Sundeen and Strohm each exercised options to purchase
18,342 and 2,186 shares, respectively, on August 2, 1999.

15
<PAGE>

PLAN OF DISTRIBUTION

The Class A Common Stock being offered by the selling stockholders pursuant
to this Prospectus may be sold from time to time by the selling stockholders, or
by pledgees, donees, transferees, or other successors in interest, regardless of
whether such successors in interest are successors in interest with respect to
the shares being offered. Such sales may be made on one or more exchanges, in
the over-the-counter markets, or otherwise, at prices and on terms then
prevailing, at prices related to the then-current market price of the Class A
Common Stock, or in negotiated transactions. In addition, any securities covered
by this Prospectus which qualify for sale pursuant to Rule 144 under the Act may
be sold under such rule rather than pursuant to this Prospectus.

In effecting sales, brokers or dealers engaged by the selling stockholders
may arrange for other brokers or dealers to participate. Brokers or dealers will
receive commissions or discounts from selling stockholders in amounts to be
negotiated immediately prior to the sale. The selling stockholders and agents
who execute orders on their behalf may be deemed to be underwriters as that term
is defined in Section 2(11) of the Securities Act of 1933 and a portion of any
proceeds or sales discounts, commissions, or other compensation may be deemed to
be underwriting compensation for purposes of that Act.

USE OF PROCEEDS

We will not receive any proceeds from this offering.

LEGAL MATTERS

The validity of the shares of Class A Common Stock offered by this
Prospectus has been passed upon for us by Hughes & Luce, L.L.P., Dallas, Texas.

EXPERTS

Our Consolidated Financial Statements as of December 31, 1998 and 1999, and
for each of the years in the three-year period ended December 31, 1999
incorporated by reference into this Prospectus have been so included in reliance
on the report of KPMG LLP, independent certified public accountants,
incorporated by reference elsewhere in this Prospectus, and upon the authority
of said firm as experts in accounting and auditing.

INDEMNIFICATION

Our certificate of incorporation provides that each person who was or is
threatened to be made a party to or is involved in any action, suit or
proceeding by reason of the fact that he or she, or a person of whom he or she
is the legal representative, is or was one of our directors or officers or is or
was serving at our request as a director or officer of another company,
partnership, joint venture, trust, or other enterprise, will be indemnified and
held harmless by us to the fullest extent authorized by the Delaware General
Corporation Law as the same exists or may be amended after the date of this
Prospectus (but, in the case of any amendment, only to the extent that amendment
permits us to provide broader indemnification rights than the Delaware General
Corporation Law permitted us to provide prior to that amendment), against all
expense, liability, and loss reasonably incurred or suffered by that person in
connection therewith and that indemnification will continue as to a person who
has ceased to be a director or officer and will inure to the benefit of his or
her heirs, executors, and administrators.

16
<PAGE>

misconduct or known violations of law; (iii) for the payment of unlawful
dividends or unlawful stock purchases or redemptions; or (iv) for transactions
in which the director received an improper personal benefit. In addition,
directors and officers are insured, at our expense, against certain liabilities
which might arise out of their employment.

Under Section 145 of the Delaware General Corporation Law, a corporation
may indemnify a director, officer, employee, or agent of the corporation against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him or her if he or she acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. In the case of an action brought by or in the right of a corporation,
the corporation may indemnify a director, officer, employee, or agent of the
corporation against expenses (including attorneys' fees) actually and reasonably
incurred by him or her if he or she acted in good faith and in a manner he or
she reasonably believed to be in the best interests of the corporation, except
that no indemnification may be made in respect of any claim, issue, or matter as
to which that person has been adjudged to be liable to the corporation unless a
court finds that, in view of all the circumstances of the case, that person is
fairly and reasonably entitled to indemnity for those expenses as the court
deems proper.

Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to our directors or officers or persons controlling us
pursuant to the foregoing provisions, we have been informed that in the opinion
of the SEC such indemnification is against public policy as expressed in the
Securities Act of 1933 and is therefore unenforceable.

17
<PAGE>

10,773,884 SHARES

WADDELL & REED FINANCIAL, INC.

CLASS A COMMON STOCK

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

PROSPECTUS

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information............................................... 1
Documents Incorporated by Reference................................. 2
The Company......................................................... 2
Risk Factors........................................................ 3
Selling Stockholders................................................ 8
Plan of Distribution................................................ 16
Use of Proceeds..................................................... 16
Legal Matters....................................................... 16
Experts............................................................. 16
Indemnification..................................................... 16
</TABLE>

July 28, 2000

<PAGE>

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

The following documents heretofore filed with the Securities and Exchange
Commission (the "Commission") by Waddell & Reed Financial, Inc. (the
"Registrant" or the "Company") are incorporated by reference into this
Registration Statement:

(a) The Registrant's Annual Report on Form 10-K for the year ended
December 31, 1999;

(b) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000;

(d) The Registrant's Current Report on Form 8-K filed with the SEC on
March 7, 2000;

(e) The Registrant's Current Report on Form 8-K filed with the SEC on
April 14, 2000 and the amendment to that Current Report filed with the SEC on
Form 8-K/A on June 12, 2000; and

(f) The description of the Registrant's Class A Common Stock contained in
our Registration Statement on Form 8-A, filed with the SEC on February 27, 1998,
including any amendment or report filed for the purpose of updating such
description; and

All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, after the date of the filing of
the initial Registration Statement and any amendments thereto and prior to the
filing of a post-effective amendment to this Registration Statement which
indicates that all of the shares of Common Stock offered have been sold or which
deregisters all of such shares then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents (such documents, and the documents
enumerated above, being hereinafter referred to as "Incorporated Documents").

Any statement contained in an Incorporated Document shall be deemed to be
modified, replaced or superseded for purposes of this Registration Statement to
the extent that a statement contained herein or in any other subsequently filed
Incorporated Document modifies, replaces or supersedes such statement. Any
statement so modified, replaced or superseded shall not be deemed, except as so
modified, replaced or superseded, to constitute a part of this Registration
Statement.

ITEM 4. DESCRIPTION OF SECURITIES.

Not applicable.

II-1
<PAGE>

ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.

Not applicable.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Registrant's certificate of incorporation provides that each person who
was or is threatened to be made a party to or is involved in any action, suit or
proceeding by reason of the fact that he or she, or a person of whom he or she
is the legal representative, is or was one of the Registrant's directors or
officers or is or was serving at the Registrant's request as a director or
officer of another company, partnership, joint venture, trust, or other
enterprise, will be indemnified and held harmless by the Registrant to the
fullest extent authorized by the Delaware General Corporation Law as the same
exists or may be amended after the date of this Prospectus (but, in the case of
any amendment, only to the extent that amendment permits us to provide broader
indemnification rights than the Delaware General Corporation Law permitted us to
provide prior to that amendment), against all expense, liability, and loss
reasonably incurred or suffered by that person in connection therewith and that
indemnification will continue as to a person who has ceased to be a director or
officer and will inure to the benefit of his or her heirs, executors, and
administrators.

The Delaware General Corporation Law permits Delaware corporations to
include in their certificates of incorporation a provision eliminating or
limiting director liability for monetary damages arising from breaches of their
fiduciary duty. The only limitations imposed under the statute are that the
provision may not eliminate or limit a director's liability: (i) for breaches of
the director's duty of loyalty to the corporation or its stockholders; (ii) for
acts or omissions not in good faith or involving intentional misconduct or known
violations of law; (iii) for the payment of unlawful dividends or unlawful stock
purchases or redemptions; or (iv) for transactions in which the director
received an improper personal benefit. In addition, directors and officers are
insured, at the Registrant's expense, against certain liabilities which might
arise out of their employment.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.

Not applicable.

ITEM 8. EXHIBITS.

II-2
<PAGE>

4.2 1998 Executive Deferred Compensation Stock Option Plan
(filed as Exhibit 10.10 to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998 and
incorporated herein by reference).
4.3 1998 Non-Employee Director Stock Option Plan (filed as
Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998 and incorporated herein
by reference).
4.4 1998 Stock Incentive Plan (filed as Exhibit 4.4 to the
Company's Post-Effective Amendment No. 1 to the Registration
Statement on Form S-8 (Commission File No. 333-65827) and
incorporated herein by reference).
4.5 Form of Option Exchange Mailing Documents (filed as Exhibit
4.5 to the Company's Registration Statement on Form S-8
(Commission File No. 333-65827) and incorporated herein by
reference).
4.6 First Amendment to 1998 Executive Deferred Compensation
Stock Option Plan (filed as Exhibit 4.6 to the Company's
Post-Effective Amendment No. 1 to the Registration Statement
on Form S-8 (Commission File No. 333-65827) and incorporated
herein by reference).
4.7 1998 Executive Deferred Compensation Stock Option Plan, as
Amended and Restated (filed as Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March
31, 2000 and incorporated herein by reference).
4.8 1998 Stock Incentive Plan, as Amended and Restated (filed
as Exhibit 10.3 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 2000 and incorporated
herein by reference).
5.1 Opinion of Hughes & Luce, L.L.P. (filed as Exhibit 5.1 to
the Company's Registration Statement on Form S-8 (Commission
File No. 333-65827) and incorporated herein by reference).
23.1 Consent of Hughes & Luce, L.L.P. (contained in Exhibit 5.1
hereto).
23.2* Consent of KPMG LLP.
24.1 Powers of Attorney (filed as Exhibit 24.1 to the Company's
Registration Statement on Form S-8 (Commission File No.
333-65827) and incorporated herein by reference).
</TABLE>

----------------------
* Filed herewith

ITEM 9. UNDERTAKINGS.

(a) The Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered

II-3
<PAGE>

therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(b) The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(c) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.

(d) Insofar as indemnification by the Registrant for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant, the Registrant has been advised that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Post Effective
Amendment No. 2 to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Overland Park, State of
Kansas, on July 28, 2000.

WADDELL & REED FINANCIAL, INC.

/s/ JOHN E. SUNDEEN, JR.
---------------------------------------
John E. Sundeen, Jr.
Senior Vice President, Chief Financial
Officer and Treasurer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<S> <C> <C>
/s/ KEITH A. TUCKER Chairman of the Board, Chief July 28, 2000
-------------------------------- Executive Officer and Director
Keith A. Tucker

/s/ HENRY J. HERRMANN President, Chief Investment Officer July 28, 2000
-------------------------------- and Director
Henry J. Herrmann

/s/ ROBERT L. HECHLER Chief Operating Officer, Executive July 28, 2000
-------------------------------- Vice President and Director
Robert L. Hechler

/s/ JOHN E. SUNDEEN, JR. Senior Vice President, Chief July 28, 2000
-------------------------------- Financial Officer and Treasurer
John E. Sundeen, Jr. (Principal Financial Officer)

/s/ D. TYLER TOWERY Vice President and Controller July 28, 2000
-------------------------------- (Principal Accounting Officer)
D. Tyler Towery

II-5
<PAGE>

* Director July 28, 2000
--------------------------------
Joseph L. Lanier, Jr.

* Director July 28, 2000
--------------------------------
William L. Rogers

* Director July 28, 2000
--------------------------------
James M. Raines

* Director July 28, 2000
--------------------------------
George J. Records

* Director July 28, 2000
--------------------------------
David L. Boren

* Director July 28, 2000
--------------------------------
Joseph M. Farley
</TABLE>

*By: /s/ DANIEL C. SCHULTE July 28, 2000
----------------------
Daniel C. Schulte
Attorney-in-fact

II-6
<PAGE>

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
4.1 Specimen of Stock Certificate (filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-1 (Commission
File No. 333-43687) and incorporated herein by reference).
4.2 1998 Executive Deferred Compensation Stock Option Plan
(filed as Exhibit 10.10 to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998 and
incorporated herein by reference).
4.3 1998 Non-Employee Director Stock Option Plan (filed as
Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998 and incorporated herein
by reference).
4.4 1998 Stock Incentive Plan (filed as Exhibit 4.4 to the
Company's Post-Effective Amendment No. 1 to the Registration
Statement on Form S-8 (Commission File No. 333-65827) and
incorporated herein by reference).
4.5 Form of Option Exchange Mailing Documents (filed as Exhibit
4.5 to the Company's Registration Statement on Form S-8
(Commission File No. 333-65827) and incorporated herein by
reference).
4.6 First Amendment to 1998 Executive Deferred Compensation
Stock Option Plan (filed as Exhibit 4.6 to the Company's
Post-Effective Amendment No. 1 to the Registration Statement
on Form S-8 (Commission File No. 333-65827) and incorporated
herein by reference).
4.7 1998 Executive Deferred Compensation Stock Option Plan, as
Amended and Restated (filed as Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March
31, 2000 and incorporated herein by reference).
4.8 1998 Stock Incentive Plan, as Amended and Restated (filed
as Exhibit 10.3 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 2000 and incorporated
herein by reference).
5.1 Opinion of Hughes & Luce, L.L.P. (filed as Exhibit 5.1 to
the Company's Registration Statement on Form S-8 (Commission
File No. 333-65827) and incorporated herein by reference).
23.1 Consent of Hughes & Luce, L.L.P. (contained in Exhibit 5.1
hereto).
23.2* Consent of KPMG LLP.
24.1 Powers of Attorney (filed as Exhibit 24.1 to the Company's
Registration Statement on Form S-8 (Commission File No.
333-65827) and incorporated herein by reference).
</TABLE>

----------------------
* Filed herewith