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PRELIMINARY COPY
WADDELL & REED FUNDS, INC.
GLOBAL INCOME FUND
6300 Lamar Avenue, P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
April 12, 1995
To Shareholders:
Notice is hereby given that a Special Meeting of the shareholders of Global
Income Fund ("Fund"), a separate series of Waddell & Reed Funds, Inc.
("Company"), will be held at 6300 Lamar Avenue, Overland Park, Kansas, on the
12th day of April, 1995, at 10:00 a.m., local time, or any adjournment(s)
thereof, for the following purposes:
1. To change the investment goal of the Fund.
2. To amend the Fund's fundamental investment restriction concerning
diversification of its assets.
3. To amend the Fund's Investment Management Agreement to change the fee
paid by the Fund to Waddell & Reed Investment Management Company.
4. To ratify the selection of Price Waterhouse LLP as independent
accountants of the Fund for its current fiscal year.
5. To transact such other business as may properly come before the
Special Meeting or any adjournment(s) thereof.
The Board of Directors of the Fund has fixed the close of business on
February 23, 1995 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 meeting and any adjournment(s) thereof if you owned shares of the
Fund at the close of business on February 23, 1995. If you attend the meeting,
you may vote your shares in person. If you do not expect to attend the meeting,
please complete, date, sign and properly return the enclosed proxy card(s) in
the enclosed postage-paid envelope. If you do not sign and return your proxy
card(s), the Fund may incur the additional expense of subsequent mailings in
order to have a sufficient number of cards signed and returned.
You should retain this Notice and Proxy Statement. Please sign, date and
return any and all proxy cards that are mailed to you.
March 8, 1995 By Order of the Board of Directors
Sharon K. Pappas, Secretary
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WADDELL & REED FUNDS, INC.
GLOBAL INCOME FUND
6300 Lamar Avenue, P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
PROXY STATEMENT
INTRODUCTION
This document is a proxy statement with respect to Global Income Fund
("Fund"), a separate series of Waddell & Reed Funds, Inc. ("Company"), furnished
in connection with the solicitation of proxies by the Fund's Board of Directors
to be used at the Fund's special meeting of shareholders ("Meeting") or any
adjournment(s) thereof. The Meeting will be held on April 12, 1995, 10:00 a.m.
local time, at 6300 Lamar Avenue, Overland Park, Kansas, for the purposes set
forth in the attached Notice of the Meeting.
One third of the shares outstanding on the record date, February 23, 1995,
represented in person or by proxy, of the Fund must be present for the
transaction of business at the Fund's Meeting. In the event that 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 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.
For each Proposal, the favorable vote of the holders of a majority of the
outstanding shares of the Fund entitled to vote, either in person or by proxy at
the Meeting, provided a quorum is present, is required for approval as to the
Fund. Under the Investment Company Act of 1940, as amended ("1940 Act"), the
vote of the holders of a "majority" of the outstanding shares means the vote of
holders of the lesser of: (a) 67% or more of the Fund's shares present at the
Meeting or represented by proxy if holders of more than 50% of the Fund's
outstanding shares are so present or represented; or (b) more than 50% of the
outstanding shares of the Fund.
The individuals named as proxies (or their substitutes) in the enclosed
proxy card (or cards if you 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 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 your proxy card(s) with no specific
instructions as to the Proposals. If you properly execute your proxy and give
no voting instructions with respect to a Proposal, 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 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.
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 owner or person entitled to vote and the broker or
nominee does not have discretionary voting power.
You may revoke your proxy with respect to the Fund: (a) at any time prior
to its exercise by written notice of its revocation to the Secretary of the Fund
at the above address prior to the Meeting; (b) by the 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.
As discussed below, Waddell & Reed, Inc., the principal underwriter of the
Fund, and United Investors Life Insurance Company, an affiliate of Waddell &
Reed, Inc., own a substantial percentage of the outstanding shares of the Fund.
Waddell & Reed, Inc. and United Investors Life Insurance Company will vote their
shares FOR or AGAINST the Proposals in the same proportions as the Secretary of
the Fund is directed to vote the shares as to which instructions are received.
The principal solicitation of proxies will be by the mailing of this Proxy
Statement on or about March 8, 1995. Proxies may also be solicited by
telephone, telegraph, telecopier and personal interviews by representatives of
the Fund, regular employees and account representatives of Waddell & Reed, Inc.,
the principal underwriter of the Fund, affiliates of Waddell & Reed, Inc.,
certain broker-dealers (who may be specifically compensated for such services),
and representatives of any independent proxy solicitation service retained for
the Meeting. Brokerage firms, banks and others may be requested or required to
forward the Notice and this Proxy Statement to beneficial owners of shares so
that the owners may authorize the voting of these shares. The Fund will pay
these firms for its share of the out-of-pocket expenses for doing so. The Fund
will pay the costs of the Meeting, including the costs of solicitation.
As of February 23, 1995, the Fund had _________ shares outstanding, $0.01
par value.
BACKGROUND OF THIS PROXY STATEMENT
Waddell & Reed, Inc. ("Waddell & Reed"), the Company's principal
underwriter and distributor, has evaluated the investment opportunities
currently offered by the respective series of the Company and those which may in
the future be offered by new series of the Company. In particular, Waddell &
Reed has determined that it would be desirable to have an international growth
portfolio among the funds within the Company. Waddell & Reed also has assessed
the likelihood of volatility in the international fixed-income markets, as well
as the current status of the Fund and its likely role within Waddell & Reed
Funds, Inc. After considering a number of alternatives, including the creation
of a new series, Waddell & Reed recommended to the Board of Directors of the
Company that the Fund be restructured as an international growth fund.
The Board of Directors of the Company considered Waddell & Reed's proposal,
taking into account a number of factors, including but not limited to the
alternatives available, the likely prospects for future growth of the Fund and
the likely impact on Fund shareholders, both on the basis of the Fund as
currently operated and as it is proposed to be restructured. After careful
consideration, the Board of Directors determined that the proposed restructuring
of the Fund was in the best interests of the Fund and its shareholders. In
particular, the Board of Directors approved a proposed change in the goal of the
Fund from high income to long-term appreciation of capital and also approved
revising the Fund's investment policies to reflect the revised investment goal,
as described further below. The Board has approved all of the following
Proposals in this Proxy Statement and recommends that shareholders vote in favor
of all the following Proposals.
To implement the new goal of the Fund, if approved, Waddell & Reed
Investment Management Company ("Manager") plans to refocus its managerial and
advisory efforts by employing certain investment policies that are different
from those currently employed for the Fund. The Manager has extensive
experience advising other funds whose investment objective is to seek long-term
capital appreciation. Through its experience, the Manager has developed
investment policies meant to further such a fund's investment objective. The
Manager has used its experience to develop an investment program consistent with
the investment goal proposed in this Proxy Statement. See the further
discussion under "Changes in the Fund's Investment Policies and Other Issuer."
The Board of Directors has reviewed the program and believes that a change in
certain of the Fund's investment policies is integral to the successful pursuit
of the proposed investment goal of the Fund.
Implementation of the proposed restructuring of the Fund depends on
shareholder approval of Proposals 1, 2, and 3. None of these Proposals will be
implemented unless all are approved. If one of these Proposals is not approved,
the Board of Directors will consider such actions as may then be available to
it.
Provided Proposals 1, 2 and 3 are approved by shareholders, and after the
effectiveness of the necessary regulatory filings, the name of the Fund will be
changed from "Global Income Fund" to "International Growth Fund" to reflect the
restructuring of the Fund. In addition, if the proposed restructuring is
approved, the contingent deferred sales charge will be waived with respect to
redemptions of Fund shares occurring on or after April 12, 1995 and on or prior
to April 20, 1995.
PROPOSAL 1: CHANGE OF THE INVESTMENT GOAL OF THE FUND
Proposal
The Fund's current investment goal is to provide a high level of current
income consistent with safety of principal. The Fund seeks to achieve this goal
by investing primarily in a global portfolio of high quality debt securities
which are denominated in various currencies and multinational currency units and
that have remaining maturities of not more than five years; provided that the
average maturity of all debt securities in the Fund's portfolio will not exceed
three years at any time. The investment goal is a matter of fundamental policy
and may only be changed with the approval of the Fund's shareholders.
The Board of Directors proposes to modify the Fund's investment goal so
that the Fund would seek long-term appreciation as its primary goal and
realization of income as its secondary goal. Accordingly, if this Proposal is
approved, the Fund's primary emphasis will be to achieve long-term appreciation
rather than realization of a high level of current income. Realization of
income will remain a secondary objective of the Fund, as long as it is
consistent with the Fund's primary objective of long-term appreciation.
The Manager believes that emphasis on long-term appreciation is in the best
interests of the Fund and its shareholders and that there are an ample number of
international investment opportunities that have the potential for long-term
growth.
Changes in the Fund's Investment Policies and Other Issues
Modification of the Fund's goal will require a change in certain of the
Fund's investment policies. The investment policies to be changed are not
fundamental and may be changed by action of the Board of Directors without
shareholder approval.
The following describes the principal investment policies of the Fund under
its revised goal that would differ from the Fund's current policies:
Investments in Stocks
Under the Fund's current investment policies, the Fund invests primarily in
high quality debt securities. If Proposal 1 is approved, the Fund will modify
its investment policies so as to invest in common stocks and preferred stocks as
well as debt securities issued by companies or governments or any nation;
however, as a temporary measure, all of the Fund's assets could be invested in
either debt securities or preferred stock, or both, consistent with the revised
goal.
Foreign Securities
Currently, under normal circumstances, the Fund's assets will be invested
in obligations of, or issued by issuers located in, at least three different
countries, one of which may be the United States, although no more than 50% of
the Fund's assets may be invested in securities denominated in the U.S. dollar
and not more than 25% of its assets may be invested in securities denominated by
any other single currency. Under the Fund's goal as it is proposed to be
revised, all or a substantial amount of the Fund's assets may be invested in
foreign securities if, in the opinion of the Manager, doing so might assist in
achieving the Fund's goal; it is anticipated that normally at least 80% of the
Fund's assets will be invested in foreign securities, although, for defensive
purposes, the Fund may at times temporarily invest completely or substantially
in U.S. securities. Further, under the revised goal, in normal market
conditions, the Fund will have at least 65% of its assets invested in at least
three different countries outside the U.S., but may not purchase a particular
foreign security if as a result more than 75% of its assets would be invested in
securities of that country. (Under the revised goal as under its current goal,
the Fund will not invest more than 25% of its assets in the securities issued by
the government of any one foreign country.)
Pursuant to its revised goal, the Fund may purchase foreign securities only
if they: (i) are listed or admitted to trading on a domestic or foreign
securities exchange, with the exception of warrants, rights or restricted
securities which need not be so listed or admitted; (ii) are represented by
American Depositary Receipts (receipts issued against securities of foreign
issuers deposited or to be deposited with an American depositary) so listed or
admitted on a domestic securities exchange or traded in the United States over-
the-counter market; or (iii) are issued or guaranteed by any foreign government
or subdivision, agency or instrumentality thereof.
Options and Other Instruments
Pursuant to the Fund's current investment goal, the Fund may write or
purchase listed or over-the-counter options on domestic debt securities and
foreign currencies and may write or purchase listed options on foreign debt
securities. The Fund may also engage in a wide range of hedging and risk
management transactions such as forward currency contracts, options on foreign
currencies, foreign currency swap agreements and financial futures contracts and
options thereon. Pursuant to its revised goal, the Fund may write (i.e., sell)
only listed covered call options if not more than 10% of its assets are subject
to calls, and may purchase calls only to close call positions it has written.
Under its revised goal, the Fund may enter into forward foreign currency
exchange contracts, provided not more than 15% of its assets are committed to
such contracts, but will not engage in hedging and risk management transactions
in investments such as options on foreign currencies, foreign currency swap
agreements and financial futures contracts and options thereon.
Portfolio Manager
If the Fund is restructured as proposed, Mark L. Yockey will become
primarily responsible for the day-to-day management of the portfolio of the
Fund. Mr. Yockey is a Vice President of the Manager and Vice President of other
investment companies for which the Manager serves as investment manager. Mr.
Yockey has been an employee of Waddell & Reed and the Manager since November
1986, and has served as the portfolio manager for other investment companies
managed by Waddell & Reed or the Manager since January 1990. Under the Fund's
revised goal, as under its current goal, other members of the Manager's
investment management department generally provide input on market outlook,
economic conditions, investment research and other considerations relating to
the Fund's investments.
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR PROPOSAL 1.
PROPOSAL 2: AMENDMENT OF THE FUND'S FUNDAMENTAL RESTRICTION CONCERNING
DIVERSIFICATION OF ITS ASSETS
If Proposal 1 is approved by shareholders, the Board also intends to change
the Fund from a "non-diversified" to a "diversified" fund. As a non-diversified
fund, the Fund may, as to 50% of its assets, invest up to 25% of its assets in
the securities of any one issuer. Because the Manager believes that under the
Fund's goal as proposed to be revised there is a sufficient universe of
potential investments, the Fund need not operate as a non-diversified company.
Instead, as a diversified fund, as to 75% of the Fund's total assets, no more
than 5% of the Fund's total assets will be invested in the securities of any one
issuer (other than U.S. Government Securities). Increased diversification is
likely to render the Fund's portfolio less subject to market volatility and
therefore less risky.
The Fund's current fundamental restriction regarding diversification of its
assets states:
"The Fund may not invest in a security if, as a result, it would own
more than 10% of the outstanding voting securities of an issuer, or
more than 5% of the Fund's total assets would be invested in
securities of that issuer, provided that U.S. Government Securities
are not subject to this limitation and up to 25% of the Fund's total
assets may be invested without regard to these restrictions; except
that the Fund may, with respect to 50% of its assets, invest up to 25%
of its assets in the securities of any one issuer." (Emphasis added.)
Because this is a fundamental policy, it may be changed only with the
approval of Fund shareholders. The Board of Directors recommends that the
Fund's shareholders vote to amend the above restriction by deleting the clause
"except that the Fund may, with respect to 50% of its assets, invest up to 25%
of its assets in the securities of any one issuer." Without this clause, the
amended restriction would be phrased in a manner requiring a diversified
portfolio.
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2.
PROPOSAL 3: AMENDMENT OF THE INVESTMENT MANAGEMENT AGREEMENT FOR THE FUND TO
CHANGE THE FEE PAID BY THE FUND TO THE MANAGER
The Manager currently serves as the investment manager to the Fund under
the Investment Management Agreement ("Management Agreement") dated August 31,
1992, between the Manager and the Company.
The Fund's shareholders are being asked to approve an amendment to the fee
schedule of its Management Agreement that will increase the fee payable by the
Fund as described below. The Management Agreement was last submitted to Fund
shareholders on June 10, 1992, in connection with the Management Agreement's
initial approval by shareholders, and continuance of the Management Agreement
was last approved by the Board of Directors on June 29, 1994.
As part of its approval of the restructuring of the Fund, on February 8,
1995, the Board of Directors of the Fund, including those Directors who are not
parties to the Fund's Management Agreement or "interested persons" (as such term
is defined in the 1940 Act) of any such party ("Independent Directors"),
unanimously approved, subject to the required shareholder approval described
herein, an amendment to the fee schedule of the Management Agreement to increase
the fee paid by the Fund to the Manager. As of the date of this Proxy
Statement, four of the Fund's Directors are interested persons of the Manager
and Waddell & Reed: John F. Hayes, William T. Morgan, Ronald K. Richey and
Keith A. Tucker. Each is an interested person because he is a present or former
officer, director and/or shareholder of the Manager and/or certain of its
affiliates.
Management Services and Current Fee Schedule
Under the Management Agreement, the Manager is employed to supervise the
investments of the Fund. The Manager is to regularly provide investment advice
to the Fund and furnish continuously an investment program for the Fund in
accordance with the Fund's investment policies and goals, subject to the
direction and control of the Directors of the Fund. The Manager also determines
what securities will be bought and sold and places purchase and sale orders
regarding these securities for the Fund. For these services, the Fund currently
pays the Manager a fee computed on the Fund's net asset value as of the close of
each business day at the annual rate of 0.66%. The fee is calculated daily and
paid in arrears whenever requested by the Manager. The total fee paid by the
Fund to the Manager for investment management services for the fiscal year ended
March 31, 1994 was $62,024.
The Proposed Fee Schedule
The Board of Directors has approved, and recommends that shareholders of
the Fund approve, a Proposal to amend the Management Agreement by adopting a
revised fee schedule. If shareholders of the Fund approve this Proposal, then
the Management Agreement fee schedule will be amended to increase the Fund's
investment management fee to 0.81%, on an annual basis, of the Fund's net asset
value.
Below is a table showing the current and proposed pro forma fees under the
Management Agreement.
COMPARATIVE FEE TABLE
Annual fund operating expenses (as a Existing Proposed
percentage of fee fee
average net assets) (percent) (percent)
Management fee .66% .81%
12b-1 fees* .88% .88%
Other expenses* .71% .71%
Total fund operating expenses 2.25% 2.40%
*Based on the year ended March 31, 1994.
Example
The following illustrates the expenses on a $1,000 investment under the
existing and proposed fees and the expenses stated above, assuming (1) a 5%*
annual return and (2) redemption at the end of each time period:
1 year 3 years 5 years 10 years
Existing investment
management fee $53 $80 $120 $258
Proposed investment
management fee $54 $85 $128 $274
The following illustrates the expenses on a $1,000 investment under the
existing and proposed fees and the expenses stated above, assuming (1) a 5%*
annual return and (2) no redemption at the end of each time period**:
1 year 3 years 5 years 10 years
Existing investment
management fee $23 $70 $120 $258
Proposed investment
management fee $24 $75 $128 $274
Had the proposed fee schedule been in effect during the Fund's fiscal year
ended March 31, 1994, the Manager would have been paid $76,120 by the Fund for
investment management services. The difference between the management fee paid
*This is an assumed return for illustration purposes only and not a
representation of the Fund's future performance, which may be greater or
lesser.
**The contingent deferred sales charge, which is imposed on redemption
proceeds, declines from 3% of the amount invested during the first calendar
year to 0% after 4 years (declining 1% annually).
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to the Manager for the Fund's fiscal year ended March 31, 1994 ($62,024) and the
fee that would have been paid under the proposed fee schedule ($76,120) is
22.73% of the actual fee paid for fiscal 1994.
No change is proposed to any other provision of the Management Agreement.
If the shareholders do not approve this Proposal, then the current fee schedule
will remain in effect.
The Manager
The Manager is a wholly-owned subsidiary of Waddell & Reed, the principal
underwriter of the Fund. Waddell & Reed is a wholly-owned subsidiary of Waddell
& Reed Financial Services, Inc., a holding company, which is a wholly-owned
subsidiary of United Investors Management Company, a holding company. United
Investors Management Company is wholly-owned by Torchmark Corporation, a
publicly held company. The address of the Manager, Waddell & Reed and Waddell &
Reed Financial Services, Inc., is 6300 Lamar Avenue, P.O. Box 29217, Shawnee
Mission, Kansas 66201-9217. The address of Torchmark Corporation and United
Investors Management Company is 2001 Third Avenue South, Birmingham, Alabama
35233.
The Manager serves as the investment adviser to funds other than the Fund.
The following chart sets forth each of the international or global funds having
an investment objective similar to the Fund's goal as it is proposed to be
revised and for which the Manager also serves as investment adviser, the
approximate size of the fund, as of January 31, 1995, and the rate of
compensation payable by the fund to the Manager:
Annual Fee
Name of the Fund and Approximate Size as % of Net Assets
TMK/United Funds, Inc. International Portfolio 0.81%
[$28,314,000] 3
United International Growth Fund, Inc. (0.66% - 0.81% )
[$606,870,000]
The Directors and the principal executive officers of the Manager and their
principal occupations are as follows:
Keith A. Tucker--Chairman of the Board of Directors of the Manager, Waddell &
Reed, Waddell & Reed Services Company, Waddell & Reed Asset Management Company,
and Torchmark Distributors, Inc.; Director and President of each of the funds
within the United Group of Mutual Funds, TMK/United Funds, Inc., Waddell & Reed
Funds, Inc., Torchmark Government Securities Fund, Inc., and Torchmark Insured
Tax-Free Fund, Inc.; President, Chief Executive Officer, and Director of Waddell
& Reed Financial Services, Inc.; Vice Chairman of the Board of Directors, Chief
Executive Officer and President of United Investors Management Company; and Vice
Chairman of the Board of Directors of Torchmark Corporation.
Robert L. Hechler--Executive Vice President, Principal Financial Officer,
Treasurer, and Director of the Manager; Vice President and Principal Financial
3The management fee for this fund consists of two elements: (i) a "Specific"
fee computed on the fund's net asset value as of the close of business each day
at the annual rate of 0.30% of net assets and (ii) a pro rata participation
based on the relative net asset size of the fund in a "Group" fee computed each
day on the combined net asset values of all the funds in the United Group of
Mutual Funds at annual rates which range from 0.51% to 0.36% depending on the
Group net asset level. For this fund's fiscal year ended June 30, 1994, the
total fee was 0.72% of its net assets.
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Officer of each of the funds within the United Group of Mutual Funds, TMK/United
Funds, Inc., Waddell & Reed Funds, Inc., Torchmark Government Securities Fund,
Inc., and Torchmark Insured Tax-Free Fund, Inc.; Vice President, Chief
Operations Officer, Treasurer, and Director of Waddell & Reed Financial
Services, Inc.; President, Chief Executive Officer, Principal Financial Officer,
Treasurer, and Director of Waddell & Reed; Director and Treasurer of Waddell &
Reed Asset Management Company; President, Treasurer, and Director of Waddell &
Reed Services Company; and Vice President, Treasurer, and Director of Torchmark
Distributors, Inc.
Henry J. Herrmann_President, Chief Executive Officer, Chief Investment Officer,
and Director of the Manager and Waddell & Reed Asset Management Company; Vice
President of each of the funds within the United Group of Mutual Funds,
TMK/United Funds, Inc., Waddell & Reed Funds, Inc., Torchmark Government
Securities Fund, Inc., and Torchmark Insured Tax-Free Fund, Inc.; Vice
President, Chief Investment Officer, and Director of Waddell & Reed Financial
Services, Inc.; Director of Waddell & Reed; and Senior Vice President and Chief
Investment Officer of United Investors Management Company.
Sharon K. Pappas_Senior Vice President, Secretary and General Counsel of the
Manager and Waddell & Reed; Senior Vice President, Secretary, General Counsel,
and Director of Waddell & Reed Services Company; Vice President, Secretary and
General Counsel of Waddell & Reed Financial Services, Inc. and Torchmark
Distributors, Inc.; Secretary, General Counsel, and Director of Waddell & Reed
Asset Management Company; and Vice President, Secretary, and General Counsel of
each of the funds within the United Group of Mutual Funds, TMK/United Funds,
Inc., Waddell & Reed Funds, Inc., Torchmark Government Securities Fund, Inc.,
and Torchmark Insured Tax-Free Fund, Inc.
In addition, the following are officers of the Company as well as of the
Manager: James C. Cusser, John M. Holliday, Mark G. Seferovich, W. Patrick
Sterner, John E. Sundeen, Jr., and Russell E. Thompson. The address of each
officer and director of the Manager is 6300 Lamar Avenue, P.O. Box 29217,
Shawnee Mission, Kansas 66201-9217.
Additional Terms of the Management Agreement
The Management Agreement terminates automatically in the event of its
"assignment" (as defined in the 1940 Act). The Management Agreement provides
for termination upon a minimum of 60 days' advance notice by the Fund and
requires 120 days' advance notice of termination from the Manager of the Fund.
Pursuant to the Management Agreement, the Manager provides investment
advice and supervises the investments of the Fund. Under the terms of the
Management Agreement, the Manager has no obligation to provide accounting,
shareholder servicing and related services. The Management Agreement authorizes
the Fund to enter into an Accounting Services Agreement and/or Shareholder
Servicing Agreement with the Manager or an affiliate of the Manager under the
terms and provisions stated in the Management Agreement. The Fund has entered
into an Accounting Services Agreement with Waddell & Reed Services Company
("WARSCO"), a subsidiary of Waddell & Reed, pursuant to which agreement the Fund
paid WARSCO $5,833 during the Fund's fiscal year ended March 31, 1994. The
services provided under the Accounting Services Agreement will continue after
the Management Agreement has been modified.
The Fund has also entered into a Shareholder Servicing Agreement with
WARSCO pursuant to which agreement the Fund paid WARSCO $17,286 during the
Fund's fiscal year ended March 31, 1994. The services provided under the
Shareholder Servicing Agreement will continue after the Management Agreement has
been modified. The Fund also pays out-of-pocket expenses including: long
distance telephone communications costs; microfilm and storage costs for certain
documents; forms, printing and mailing costs; and costs of legal and special
services not provided by the Manager or WARSCO.
The Fund has entered into an Underwriting Agreement with Waddell & Reed.
Under a Distribution and Service Plan adopted by the Fund pursuant to Rule 12b-1
under the 1940 Act, the Fund paid Waddell & Reed $82,689 during the Fund's
fiscal year ended March 31, 1994. The respective services provided by Waddell &
Reed under the Underwriting Agreement and the Distribution and Service Plan will
continue after the Management Agreement has been modified.
Recommendation of Board of Directors
At its meeting on February 8, 1995, the Board of Directors of the Fund,
including a majority of the Independent Directors, authorized submission of the
proposed revision of the Fund's fee schedule to the shareholders of the Fund.
In connection with their consideration of the proposed revision as described
above, the Directors were advised by independent counsel to the Fund that are
not counsel to the Manager or Waddell & Reed.
In their consideration of the proposed revision of the fee schedule, the
Directors reviewed a number of factors that they deemed relevant, including but
not limited to: the nature, quality and scope of the services provided by the
Manager under the Management Agreement; how such services would be impacted and
the Manager's responsibilities increased if the Proposals recommended by the
Board in this Proxy Statement are adopted by shareholder vote; management fees
paid to other managers by funds that are comparable in terms of investment
objective and policies to those proposed ("Comparable Funds"); the pro forma
effect of the proposed revision of the fee schedule on the Fund's overall
expense ratio and industry data regarding the overall expense ratios of
Comparable Funds; the revenues, expenses and profitability (actual and
projected) of the Manager and Waddell & Reed as to the Fund and with respect to
all the funds managed by the Manager; and the indirect benefits afforded to the
Manager and its affiliates because of the Manager's relationship to the Fund.
After full and extensive consideration of these and other factors, the Board of
Directors, including a majority of the Independent Directors, approved the
proposed revision in the fee structure for the Fund.
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR PROPOSAL 3.
PROPOSAL 4: RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP AS THE FUND'S
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP has been selected by the Board of Directors as the
Fund's independent public accountants for the Fund's current fiscal year ending
March 31, 1995, subject to approval by the shareholders of the Fund.
Price Waterhouse LLP has advised the Fund that neither it nor any of its
partners has any direct or indirect financial interest or connection (other than
as independent accountants) in the Fund or any of its affiliates. Price
Waterhouse LLP has been given the opportunity to make a statement at the Meeting
if it so desires. Price Waterhouse LLP is not expected to have a representative
present at the Meeting but will be available should any matter arise requiring
its presence.
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR PROPOSAL 4.
SECURITIES OWNERSHIP
The following table sets forth information with respect to the Fund, as of
January 31, 1995, regarding the beneficial ownership of the Fund's shares by
shareholders owning more than 5% of the Fund's shares, all directors, the Fund's
chief executive officer, and named executive officers. As of that date, all
directors and officers of the Fund as a group owned less than 1% of the Fund's
outstanding shares.
Name and Address Shares Beneficially Owned
of Beneficial Owner Number Percent
PRINCIPAL SHAREHOLDERS
United Investors Life Insurance
Company
2001 Third Avenue South
Birmingham Alabama 35233
Waddell & Reed, Inc.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
DIRECTORS
Ronald K. Richey
2001 Third Avenue South
Birmingham, Alabama 35233
Keith A. Tucker*
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
Henry L. Bellmon
Route 1
Red Rock, Oklahoma 74651
Dodds I. Buchanan
University of Colorado
Campus Box 419
Boulder, Colorado 80309
Jay B. Dillingham
926 Livestock Exchange Building
Kansas City, Missouri 64102
John F. Hayes
335 N. Washington
P. O. Box 2977
Hutchinson, Kansas
67504-2977
*As President of the Fund, Mr. Tucker is the Fund's Chief Executive Officer.
<PAGE>
Glendon E. Johnson
7300 Corporate Center Drive
Miami, Florida 33126-1208
William T. Morgan
1799 Westridge Road
Los Angeles, California 90049
Doyle Patterson
1030 West 56th Street
Kansas City, Missouri 64113
Frederick Vogel, III
1805 West Bradley Road
Milwaukee, Wisconsin
53217
Paul S. Wise
P. O. Box 5448
8648 Silver Saddle Drive
Carefree, Arizona 85377
Leslie S. Wright
Samford University
800 Lakeshore Drive
Birmingham, Alabama 35209
NAMED EXECUTIVE OFFICERS
Robert L. Hechler
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas
66201-9217
Theodore W. Howard
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas
66201-9217
FURTHER INFORMATION REGARDING THE FUND
The Fund, which is located at 6300 Lamar Avenue, P.O. Box 29217, Shawnee
Mission, Kansas 66201-9217, telephone number (913) 236-2000, is an open-end
management investment company incorporated under the laws of the State of
Maryland.
RECEIPT OF SHAREHOLDER PROPOSALS
As a general matter, the Fund does not hold regular annual or other
meetings of shareholders. Any shareholder who wishes to submit proposals to be
considered at a special meeting of the Fund's shareholders should send such
proposals to the Fund at 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission,
Kansas 66201-9217.
ANNUAL REPORT
The Fund's annual report for the fiscal year ended March 31, 1994, which is
incorporated herein by reference, has been sent to shareholders of the Fund.
Upon request, the Fund will furnish to shareholders, without charge, a copy of
the Fund's annual report for the fiscal year ended March 31, 1994, and its
semiannual report for the six-month period ended September 30, 1994. Requests
should be directed to Shareholder Services, 6300 Lamar Avenue, P. O. Box 29217,
Shawnee Mission, Kansas 66201-9217, telephone number 800-366-5465.
OTHER BUSINESS
The Fund knows of no 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 shares which the proxy cards entitle them to in accordance with their
judgment on such matter or matters. By signing and returning your proxy card,
you give the proxy holders discretionary authority as to any such matter or
matters.
March 8, 1995 By Order of the Board of Directors
Sharon K. Pappas, Secretary
<PAGE>
EXHIBIT A
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 31st day of August, 1992, by and between WADDELL & REED
FUNDS, INC. (hereinafter called "Fund"), and WADDELL & REED INVESTMENT
MANAGEMENT COMPANY.
WITNESSETH:
In consideration of the mutual promises and agreements herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and between the parties hereto as follows:
I. In General.
Waddell & Reed Investment Management Company agrees to act as
investment adviser to Fund with respect to the investment of its assets and in
general to supervise the investments of Fund, subject at all times to the
direction and control of the Board of Directors of Fund, all as more fully set
forth herein.
II. Duties of Waddell & Reed Investment Management Company with
respect to investment of assets of Fund.
A. Waddell & Reed Investment Management Company shall regularly
provide investment advice to Fund and shall, subject to the succeeding
provisions of this section, continuously supervise the investment and
reinvestment of cash, securities or other property comprising the assets of the
investment portfolios of Fund; and in furtherance thereof, Waddell & Reed
Investment Management Company shall:
1. obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or one or more of
the portfolios of Fund, and whether concerning the individual companies whose
securities are included in one or more of Fund's portfolios or the industries in
which they engage, or with respect to securities which Waddell & Reed Investment
Management Company considers desirable for inclusion in one or more of Fund's
portfolios;
2. furnish continuously an investment program for each of
the portfolios of Fund;
3. determine what securities shall be purchased or sold by
Fund;
4. take, on behalf of Fund, all actions which appear to
Waddell & Reed Investment Management Company necessary to carry into effect such
investment programs and supervisory functions as aforesaid, including the
placing of purchase and sale orders.
B. Waddell & Reed Investment Management Company shall make
appropriate and regular reports to the Board of Directors of Fund on the actions
it takes pursuant to Section II.A. above. Any investment programs furnished by
Waddell & Reed Investment Management Company under this section, or any
supervisory function taken hereunder by Waddell & Reed Investment Management
Company, shall at all times conform to and be in accordance with any
requirements imposed by:
1. the provisions of the Investment Company Act of 1940
and any rules or regulations in force thereunder;
2. any other applicable provision of law;
3. the provisions of the Articles of Incorporation of Fund
as amended from time to time;
4. the provisions of the Bylaws of Fund as amended from
time to time;
5. the terms of the registration statements of Fund, as
amended from time to time, under the Securities Act of 1933 and the Investment
Company Act of 1940.
C. Any investment programs furnished by Waddell & Reed
Investment Management Company under this section or any supervisory functions
taken hereunder by Waddell & Reed Investment Management Company shall at all
times be subject to any directions of the Board of Directors of Fund, its
Executive Committee, or any committee or officer of Fund acting pursuant to
authority given by the Board of Directors.
III. Allocation of Expenses.
The expenses of Fund and the expenses of Waddell & Reed
Investment Management Company in performing its functions under this Agreement
shall be divided into two classes, to wit: (i) those expenses which will be
paid in full by Waddell & Reed Investment Management Company, as set forth in
subparagraph "A" hereof, and (ii) those expenses which will be paid in full by
Fund, as set forth in subparagraph "B" hereof.
A. With respect to the duties of Waddell & Reed Investment
Management Company under Section II above, it shall pay in full, except as to
the brokerage and research services acquired through the allocation of
commissions as provided in Section IV hereinafter, for (a) the salaries and
employment benefits of all employees of Waddell & Reed Investment Management
Company who are engaged in providing these advisory services; (b) adequate
office space and suitable office equipment for such employees; and (c) all
telephone and communications costs relating to such functions. In addition,
Waddell & Reed Investment Management Company shall pay the fees and expenses of
all directors of Fund who are employees of Waddell & Reed Investment Management
Company or an affiliated corporation and the salaries and employment benefits of
all officers of Fund who are affiliated persons of Waddell & Reed Investment
Management Company.
B. Fund shall pay in full for all of its expenses which are not
listed above (other than those assumed by Waddell & Reed Investment Management
Company or one of its affiliates in its capacity as principal underwriter of the
shares of Fund, as Shareholder Servicing Agent or as Accounting Services Agent
for Fund), including (a) the costs of preparing and printing prospectuses and
reports to shareholders of Fund, including mailing costs; (b) the costs of
printing all proxy statements and all other costs and expenses of meetings of
shareholders of Fund (unless the Fund and WRIMCO shall otherwise agree); (c)
interest, taxes, brokerage commissions and premiums on fidelity and other
insurance; (d) audit fees and expenses of independent accountants and legal fees
and expenses of attorneys, but not of attorneys who are employees of Waddell &
Reed Investment Management Company or an affiliated company; (e) fees and
expenses of its directors; (f) custodian fees and expenses; (g) fees payable by
Fund under the Securities Act of 1933, the Investment Company Act of 1940, and
the securities or "Blue-Sky" laws of any jurisdiction; (h) fees and assessments
of the Investment Company Institute or any successor organization; (i) such
nonrecurring or extraordinary expenses as may arise, including litigation
affecting Fund, and any indemnification by Fund of its officers, directors,
employees and agents with respect thereto; and (j) the costs and expenses
provided for in any Shareholder Servicing Agreement or Accounting Services
Agreement, including amendments thereto, contemplated by subsection C of this
section III. In the event that any of the foregoing shall, in the first
instance, be paid by Waddell & Reed Investment Management Company, Fund shall
pay the same to Waddell & Reed Investment Management Company, on presentation of
a statement with respect thereto.
C. Waddell & Reed Investment Management Company, or an
affiliate of Waddell & Reed Investment Management Company, may also act as
(i) transfer agent or shareholder servicing agent of Fund and/or as (ii)
accounting services agent of Fund if at the time in question there is a separate
agreement, "Shareholder Servicing Agreement" and/or "Accounting Services
Agreement," covering such functions between Fund and Waddell & Reed Investment
Management Company or such affiliate. The corporation, whether Waddell & Reed
Investment Management Company, or its affiliate, which is the party to either
such Agreement with Fund is referred to as the "Agent." Each such Agreement
shall provide in substance that it shall go into effect, or be amended, or a new
agreement covering the same topics between Fund and the Agent may be entered
into, only if the terms of such Agreement, such amendment or such new agreement
have been approved by the Board of Directors of Fund, including the vote of a
majority of the directors who are not "interested persons" as defined in the
Investment Company Act of 1940, of either party to the Agreement, such amendment
or such new agreement (considering Waddell & Reed Investment Management Company
to be such a party even if at the time in question the Agent is an affiliate of
Waddell & Reed Investment Management Company), cast in person at a meeting
called for the purpose of voting on such approval. Such a vote is referred to
as a "disinterested director" vote. Each such Agreement shall also provide in
substance for its continuance, unless terminated, for a specified period which
shall not exceed two years from the date of its execution and from year to year
thereafter only if such continuance is specifically approved at least annually
by a disinterested director vote, and that any disinterested director vote shall
include a determination that (i) the Agreement, amendment, new agreement or
continuance in question is in the best interests of Fund and its shareholders;
(ii) the services to be performed under the Agreement, the Agreement as amended,
new agreement or agreement to be continued are services required for the
operation of Fund; (iii) the Agent can provide services the nature and quality
of which are at least equal to those provided by others offering the same or
similar services; and (iv) the fees for such services are fair and reasonable in
light of the usual and customary charges made by others for services of the same
nature and quality. Any such Agreement may also provide in substance that any
disinterested director vote may be conditioned on the favorable vote of the
holders of a majority (as defined in or under the Investment Company Act of
1940) of the outstanding shares of each class or series of Fund. Each such
Agreement shall also provide in substance that it may be terminated by the Agent
at any time without penalty upon giving Fund one hundred twenty (120) days'
written notice (which notice may be waived by Fund) and may be terminated by
Fund at any time without penalty upon giving the Agent sixty (60) days' written
notice (which notice may be waived by the Agent), provided that such termination
by Fund shall be directed or approved by the vote of a majority of the Board of
Directors of Fund in office at the time or by the vote of the holders of a
majority (as defined in or under the Investment Company Act of 1940) of the
outstanding shares of each class or series of Fund.
IV. Brokerage.
(a) Waddell & Reed Investment Management Company may select
brokers to effect the portfolio transactions of Fund on the basis of its
estimate of their ability to obtain, for reasonable and competitive commissions,
the best execution of particular and related portfolio transactions. For this
purpose, "best execution" means prompt and reliable execution at the most
favorable price obtainable. Such brokers may be selected on the basis of all
relevant factors including the execution capabilities required by the
transaction or transactions, the importance of speed, efficiency, or
confidentiality, and the willingness of the broker to provide useful or
desirable investment research and/or special execution services. Waddell & Reed
Investment Management Company shall have no duty to seek advance competitive
commission bids and may select brokers based solely on its current knowledge of
prevailing commission rates.
(b) Subject to the foregoing, Waddell & Reed Investment
Management Company shall have discretion, in the interest of Fund, to direct the
execution of its portfolio transactions to brokers who provide brokerage and/or
research services (as such services are defined in Section 28(e) of the
Securities Exchange Act of 1934) for Fund and/or other accounts for which
Waddell & Reed Investment Management Company or one of its affiliates exercise
"investment discretion" (as that term is defined in Section 3(a)(35) of the
Securities Act of 1934); and in connection with such transactions, to pay
commission in excess of the amount another adequately qualified broker would
have charged if Waddell & Reed Investment Management Company determines, in good
faith, that such commission is reasonable in relation to the value of the
brokerage and/or research services provided by such broker, viewed in terms of
either that particular transaction or the overall responsibilities of Waddell &
Reed Investment Management Company and/or its investment advisory affiliates
with respect to the accounts for which they exercise investment discretion. In
reaching such determination, Waddell & Reed Investment Management Company will
not be required to attempt to place a specified dollar amount on the brokerage
and/or research services provided by such broker; provided that Waddell & Reed
Investment Management Company shall be prepared to demonstrate that such
determinations were made in good faith, and that all commissions paid by Fund
over a representative period selected by its Board of Directors were reasonable
in relation to the benefits to Fund.
(c) Subject to the foregoing provisions of this Paragraph "IV,"
Waddell & Reed Investment Management Company may also consider sales of Fund's
shares and shares of other investment companies distributed by Waddell & Reed,
Inc. or one of its affiliates, and portfolio valuation or pricing services as a
factor in the selection of brokers to execute brokerage and principal portfolio
transactions.
V. Compensation of Waddell & Reed Investment Management Company.
As compensation in full for services rendered and for the
facilities and personnel furnished under sections I, II, and IV of this
Agreement, Fund will pay to Waddell & Reed Investment Management Company for
each day the fees specified in Exhibit A hereto.
The amounts payable to Waddell & Reed Investment Management
Company shall be determined as of the close of business each day; shall, except
as set forth below, be based upon the value of net assets computed in accordance
with the Articles of Incorporation of Fund; and shall be paid in arrears
whenever requested by Waddell & Reed Investment Management Company. In
computing the value of the net assets of Fund, there shall be excluded the
amount owed to Fund with respect to shares which have been sold but not yet paid
to Fund by Waddell & Reed
Notwithstanding the foregoing, if the laws, regulations or
policies of any sate in which shares of Fund are qualified for sale limit the
operation and management expenses of Fund, Waddell & Reed Investment Management
Company will refund to Fund the amount by which such expenses exceed the lowest
of such state limitations.
VI. Undertakings of Waddell & Reed Investment Management Company
Liabilities.
Waddell & Reed Investment Management Company shall give the Fund
the benefit of its best judgment, efforts and facilities in rendering advisory
services hereunder.
Waddell & Reed Investment Management Company shall at all times
be guided by and be subject to Fund's investment policies, the provisions of its
Articles of Incorporation and Bylaws as each shall from time to time be amended,
and to the decision and determination of Fund's Board of Directors.
This Agreement shall be performed in accordance with the
requirements of the Investment Company Act of 1940, the Investment Advisers Act
of 1940, the Securities Act of 1933, and the Securities Exchange Act of 1934, to
the extent that the subject matter of this Agreement is within the purview of
such Acts. Insofar as applicable to Waddell & Reed Investment Management
Company, as an investment adviser and affiliated person of Fund, Waddell & Reed
Investment Management Company shall comply with the provisions of the Investment
Company Act of 1940, the Investment Advisers Act of 1940 and the respective
rules and regulations of the Securities and Exchange Commission thereunder.
In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of Waddell & Reed Investment Management Company, it shall not be subject to
liability to Fund or to any stockholder or Fund for any act or omission in the
course of or connected with rendering services thereunder or for any losses that
may be sustained in the purchase, holding or sale or any security.
VII. Duration of this Agreement.
This Agreement shall become effective at the start of business on
the date hereof and shall continue in effect, unless terminated as hereinafter
provided, for a period of one year and from year-to-year thereafter only if such
continuance is specifically approved at least annually by the Board of
Directors, including the vote of a majority of the directors who are not parties
to this Agreement or "interested persons" (as defined in the Investment Company
Act of 1940) of any such party, cast in person at a meeting called for the
purpose of voting on such approval, or by the vote of the holders of a majority
(as so defined) of the outstanding voting securities of each class or series of
Fund and by the vote of a majority of the directors who are not parties to this
Agreement or "interested persons" (as so defined) of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
VIII. Termination.
This Agreement may be terminated by Waddell & Reed Investment
Management Company at any time without penalty upon giving Fund one hundred
twenty (120) days' written notice (which notice may be waived by Fund) and may
be terminated by Fund at any time without penalty upon giving Waddell & Reed
Investment Management Company sixty (60) days' written notice (which notice may
be waived by Waddell & Reed Investment Management Company), provided that such
termination by Fund shall be directed or approved by the vote of a majority of
the Board of Directors of Fund in office at the time or by the vote of a
majority (as defined in the Investment Company Act of 1940) of the outstanding
voting securities of Fund. This Agreement shall automatically terminate in the
event of its assignment, the term "assignment" for this purpose having the
meaning defined in Section 2(a)(4) of the Investment Company Act of 1940 and the
rules and regulations thereunder.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to
be executed by their duly authorized officers and their corporate seal to be
hereunto affixed, all as of the day and year first above written.
(Seal) WADDELL & REED FUNDS, INC.
By: /s/Rodney O. McWhinney
Rodney O. McWhinney
Vice President
ATTEST:
/s/Sharon K. Pappas
Sharon K. Pappas
Secretary
(SEAL) WADDELL & REED INVESTMENT
MANAGEMENT COMPANY
By: /s/Robert L. Hechler
Robert L. Hechler
Executive Vice President
ATTEST:
/s/Rodney O. McWhinney
Rodney O. McWhinney
Secretary
<PAGE>
EXHIBIT A TO INVESTMENT MANAGEMENT AGREEMENT
WADDELL & REED FUNDS, INC.
FEE SCHEDULE
[as proposed to be revised with revisions underscored]
A cash fee computed each day on net asset value for the series of Fund and at
the annual rates listed below:
Total Return Fund .71%
Growth Fund .81%
Limited-Term Bond Fund .56%
Municipal Bond Fund .56%
International Growth Fund .81%
------------------------- ----
<PAGE>
Preliminary Copy
PLEASE NOTE
PLEASE BE SURE TO SIGN AND RETURN ALL PROXIES RECEIVED.
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED.
IF NO DIRECTION IS MADE FOR A PROPOSAL, THE SHARES WILL BE VOTED "FOR" THAT
PROPOSAL. Receipt of the Proxy Statement is hereby acknowledged.
Proposal 1. To change the investment goal FOR _ AGAINST _ ABSTAIN _
of the Fund.
Proposal 2. To amend the Fund's fundamental FOR _ AGAINST _ ABSTAIN _
investment restriction
concerning diversification of
its assets.
Proposal 3. To amend the Fund's Investment FOR _ AGAINST _ ABSTAIN _
Management Agreement to change
the fee paid by the Fund to
Waddell & Reed Investment
Management Company.
Proposal 4. To ratify the selection of FOR _ AGAINST _ ABSTAIN _
Price Waterhouse LLP as
independent accountants of the
Fund for its current fiscal
year.
To avoid the expense of adjourning the meeting to a subsequent date,
please sign, date and return this proxy in
the enclosed post-paid envelope.
NOTE: YOUR PROXY IS NOT VALID UNLESS IT IS SIGNED.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Keith A. Tucker and Sharon K. Pappas, or
either of them (or their substitutes), as attorneys and proxies of the
undersigned, with full power of substitution to represent and vote all of the
shares of Waddell & Reed Funds, Inc. Global Income Fund in which the undersigned
own shares and which are entitled to be voted at the Special Meeting of
Shareholders of Waddell & Reed Funds, Inc. Global Income Fund to be held
April 12, 1995 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 this card. As to any
other matter, the attorneys and proxies shall be authorized to vote in
accordance with their best judgment. This proxy shall remain in effect for a
period of one year from its date.
SIGN BELOW - Please sign exactly as your name appears
hereon. If shares are registered in more than one
name, all should sign but if one signs, it binds the
others. When signing as attorney, executor,
administrator, agent, trustee or guardian, please give
full title as such. If a corporation, please sign in
full corporate name by an authorized person. If a
partnership, please sign in partnership name by an
authorized person.
Dated:________________________________, 1995
Signature:_____________________________
Signature:_____________________________
