-- Exchange of Class A shares of any fund in the Waddell & Reed Advisors Funds or Waddell & Reed InvestEd Portfolios, Inc. and, for clients of Waddell & Reed and Legend, any fund in the Ivy Family of Funds if (i) a sales charge was previously paid on those shares, (ii) the shares were received in exchange for shares on which a sales charge was paid or (iii) the shares were acquired from reinvestment of dividends and distributions paid on such shares

-- One-Time Reinvestment of all or part of the proceeds of redemption of your Class A shares of a Fund in Class A shares of the Fund, if the reinvestment is made within 60 days of the Fund's receipt of your redemption request

-- Payments of Principal and Interest on Loans made pursuant to a 401(a) plan, if such loans are permitted by the plan and the plan may invest in shares of the Fund

(a)Total return calculated without taking into account the sales load deducted on an initial purchase.
(b)Annualized.
(c)Not shown due to rounding.

*Commencement of operations of the class.
(a)Total return calculated without taking into account the sales load deducted on an initial purchase.
(b)Annualized.
(c)Not shown due to rounding.
(d)For the fiscal year ended September 30, 2000.

(a)Total return calculated without taking into account the sales load deducted on an initial purchase.
(b)Annualized.
(c)Based on average weekly shares outstanding.

*Commencement of operations of the class.
(a)Total return calculated without taking into account the sales load deducted on an initial purchase.
(b)Annualized.

*Commencement of operations of the class.
(a)Total return calculated without taking into account the sales load deducted on an initial purchase.
(b)Because the Fund's net assets exceeded $25 million for the entire period, there was no waiver of expenses. Therefore, no ratio is provided.
(c)Not shown due to rounding.

(a)Not shown due to rounding.
(b)Total return calculated without taking into account the sales load deducted on an initial purchase.

(a)Total return calculated without taking into account the sales load deducted on an initial purchase.
(b)Annualized.

(a)Total return calculated without taking into account the sales load deducted on an initial purchase.

(a)Total return calculated without taking into account the sales load deducted on an initial purchase.
(b)Annualized.

(a)Total return calculated without taking into account the sales load deducted on an initial purchase.
(b)Not shown due to rounding.

*Commencement of operations of the class.
(a)Total return calculated without taking into account the sales load deducted on an initial purchase.
(b)Because the Fund's net assets exceeded $25 million, there was no waiver of expenses. Therefore, no ratio is provided.
(c)Annualized.

*Commencement of operations of the class.
(a)Total return calculated without taking into account the sales load deducted on an initial purchase.
(b)Annualized.
(c) For the fiscal year ended September 30, 2000.

Securities - General

Specific Securities and Investment Practices

Investment Restrictions and Limitations

Portfolio Turnover

Disclosure of Portfolio Holdings

Rating, Ranking and Research entities
Bloomberg
Lipper
Morningstar
Standard and Poors
Thompson Financial
Vickers
Wiesenberger
Ibbotson
Vestek

Directors and Officers

Committees of the Board of Directors

The following table provides information regarding shares of the Fund owned by each Director, as well as the aggregate dollar range of shares owned, by each Director, within the Fund Complex.

DISINTERESTED DIRECTORS


Director	Dollar Range of Fund Shares Owned	Aggregate Dollar Range of Fund Shares Owned in All Funds within the Fund Complex
James M. Concannon	$0	over $100,000
John A. Dillingham	$0	over $100,000
David P. Gardner	$0	$0
Linda K. Graves	$10,001 to $50,000	over $100,000
Joseph Harroz, Jr.	$0	$50,001 to $100,000
John F. Hayes	$0	over $100,000
Glendon E. Johnson	$0	over $100,000
Frank J. Ross, Jr.	$0	over $100,000
Eleanor B. Schwartz	$0	$0
Frederick Vogel III	$0	over $100,000

INTERESTED DIRECTORS

Director	Dollar Range of Fund Shares Owned	Aggregate Dollar Range of Fund Shares Owned in All Funds within the Fund Complex
Robert L. Hechler	$0	over $100,000
Henry J. Herrmann	$0	over $100,000

The non-affiliated Directors have deferred a portion of their annual compensation. The values of these deferred accounts are:


Director	Dollar Range of Fund Shares Deemed to be Owned	Aggregate Dollar Range of Shares Deemed to be Owned in all Funds within the Fund Complex
James M. Concannon	$0	$10,001 to $50,000
John A. Dillingham	$0	$10,001 to $50,000
David P. Gardner	$0	$50,001 to $100,000
Linda K. Graves	$0	$10,001 to $50,000
Joseph Harroz, Jr.	$0	over $100,000
John F. Hayes	$0	$10,001 to $50,000
Robert L. Hechler	$0	$10,001 to $50,000
Glendon E. Johnson	$0	$10,001 to $50,000
Frank J. Ross, Jr.	$0	over $100,000
Eleanor B. Schwartz	$0	$10,001 to $50,000
Frederick Vogel III	$0	$10,001 to $50,000

Compensation

The fees paid to the Directors are divided among the funds in the Advisors Fund Complex based on each fund's net assets. During the fiscal year ended June 30, 2005, the Directors received the following fees for service as a director:

Director	Aggregate Compensation From Fund		Total Compensation From Fund and Advisors Fund Complex¹
--------	------------		------------
Disinterested Directors:
James M. Concannon	$	1,782	$	86,750
John A. Dillingham		1,782		86,750
David P. Gardner		1,783		86,750
Linda K. Graves		1,782		86,750
Joseph Harroz, Jr.		1,783		86,750
John F. Hayes		1,782		86,750
Glendon E. Johnson		1,782		86,750
Frank J. Ross, Jr.		1,783		86,750
Eleanor B. Schwartz		1,782		86,750
Frederick Vogel III		2,140	104,250		²

Interested Directors:
Robert L. Hechler		2,142		82,500
Henry J. Herrmann		0		0

¹No pension or retirement benefits have been accrued as a part of Fund expenses.

²As of November, 2003, Mr. Vogel receives an additional $10,000 fee, annually, for his services as Lead Disinterested Director.

The officers, including Mr. Herrmann, are paid by WRIMCO and its affiliates.

The Board has created an honorary position of Director Emeritus, whereby an incumbent Director who has attained the age of 70 may, or if elected on or after May 31, 1993 and has attained the age of 75 must, resign his or her position as Director and, unless he or she elects otherwise, will serve as Director Emeritus provided the Director has served as a Director of the Fund for at least five years which need not have been consecutive. A Director Emeritus receives an annual fee in an amount equal to the annual retainer he or she was receiving at the time he or she resigned as a Director; however, a Director initially elected to a Board of Directors on or after May 31, 1993, receives such annual fee only for a period of three years commencing upon the date the Director began his or her service as Director Emeritus, or in an equivalent lump sum. A Director Emeritus receives fees in recognition of his or her past services whether or not services are rendered in his or her capacity as Director Emeritus, but he or she has no authority or responsibility with respect to the management of the Fund. Messrs. Henry L. Bellmon, Jay B. Dillingham, William T. Morgan, Ronald K. Richey and Paul S. Wise retired as Directors of the Fund and of each of the funds in the Advisors Fund Complex and Ivy Funds, Inc. that were in existence at the time of their retirement, and each serves as Director Emeritus. Each of the current Directors Emeritus was initially elected to a Board of Directors before May 31, 1993.

The fees paid to each Director Emeritus are allocated among the funds that were in existence at the time the Director elected Emeritus status, based on each fund's net assets at that time. The following table shows the fees paid to each Director Emeritus, and the portion of that fee paid by the Fund, for the fiscal year ended June 30, 2005.

Director Emeritus	Compensation from Fund		Total Compensation paid to Director Emeritus

Henry Bellmon	$	1,312	$	48,000
Jay B. Dillingham		1,328		44,000
William T. Morgan		1,288		65,500
Ronald K. Richey		1,244		48,000
Paul S. Wise		1,244		48,000

Code of Ethics

The Fund, WRIMCO and Waddell & Reed have adopted a Code of Ethics under Rule 17j-1 of the 1940 Act that permits their respective directors, officers and employees to invest in securities, including securities that may be purchased or held by the Fund. The Code of Ethics subjects covered personnel to certain restrictions that include prohibited activities, pre-clearance requirements and reporting obligations.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

The following table sets forth information with respect to the Fund, as of September 30, 2005, regarding the beneficial ownership of Fund shares.


Name and Address of Beneficial Owner	Class	Shares owned Beneficially or of Record	Percent
-------------------	-----	------------	-------
Waddell & Reed Financial Inc. 401(k) and Thrift Plan 6300 Lamar Avenue Overland Park KS 66201	Class Y	76,860	100.00%

As of September 30, 2005, all of the Directors and officers of the Fund, as a group, owned less than 1% of the outstanding shares of the Fund.

INVESTMENT ADVISORY AND OTHER SERVICES

The Management Agreement

The Fund has an Investment Management Agreement (the Management Agreement) with WRIMCO. Under the Management Agreement, WRIMCO is employed to supervise the investments of the Fund and provide investment advice to the Fund. The Agreement obligates WRIMCO to make investments for the account of the Fund in accordance with its best judgment and within the investment objectives and restrictions set forth in the Prospectus, the 1940 Act and the provisions of the Internal Revenue Code of 1986, as amended (the Code) relating to regulated investment companies, subject to policy decisions adopted by the Board. WRIMCO also determines the securities to be purchased or sold by the Fund and places the orders.

WRIMCO is a wholly owned subsidiary of Waddell & Reed. Waddell & Reed is a wholly owned subsidiary of Waddell & Reed Financial Services, Inc., a holding company which is a wholly owned subsidiary of Waddell & Reed Financial, Inc., a publicly held company. The address of these companies is 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217.

WRIMCO and/or its predecessor have served as investment manager to each of the registered investment companies in the Waddell & Reed Advisors Funds, W&R Target Funds, Inc. and Waddell & Reed InvestEd Portfolios, Inc. since each company's inception. WRIMCO had also served as investment manager for the funds in Ivy Funds, Inc. until June 30, 2003. Effective June 30, 2003, WRIMCO assigned its Investment Management Agreement with Ivy Funds, Inc. to Waddell & Reed Ivy Investment Company, an affiliate of WRIMCO. On March 7, 2005, Waddell & Reed Ivy Investment Company changed its name to Ivy Investment Management Company (IICO). Waddell & Reed serves as principal underwriter and distributor for each of the investment companies in the Waddell & Reed Advisors Funds and Waddell & Reed InvestEd Portfolios, Inc., and acts as principal underwriter and distributor for variable life insurance and variable annuity policies for which W&R Target Funds, Inc. is the underlying investment vehicle. Waddell & Reed had also served as the principal underwriter and distributor for Ivy Funds, Inc. until June 16, 2003. Effective June 16, 2003, Waddell & Reed assigned the Principal Underwriting Agreement with Ivy Funds, Inc. to Ivy Funds Distributor, Inc., an affiliate of Waddell & Reed.

The Management Agreement was renewed by the Board of Directors at the meeting held August 24, 2005, and will continue in effect for the period from October 1, 2005, through September 30, 2006, unless sooner terminated. The Management Agreement provides that it may be renewed year to year, provided that any such renewal has been specifically approved, at least annually, by (i) the Board of Directors, or by a vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the Fund, and (ii) the vote of a majority of the Directors who are not deemed to be "interested persons" (as defined in the 1940 Act) of the Fund or WRIMCO (the Disinterested Directors). The Management Agreement also provides that either party has the right to terminate it, without penalty, upon 60 days' written notice by the Fund to WRIMCO and 120 days' written notice by WRIMCO to the Fund, and that the Management Agreement automatically terminates in the event of its assignment (as defined in the 1940 Act).

Renewal of Investment Management Agreement

At their August 23 and 24, 2005 meeting, the Directors, including all of the Disinterested Directors, considered and approved the renewal of the existing Management Agreement between WRIMCO and the Fund. The Disinterested Directors of the Fund were assisted in their review by independent legal counsel and met with such counsel separately from representatives of WRIMCO. The Disinterested Directors also received and considered a memorandum from their independent legal counsel regarding the Disinterested Directors' responsibilities in evaluating the Management Agreement. This memorandum explained the regulatory requirements pertaining to the Disinterested Directors' evaluation of WRIMCO and the Management Agreement.

Prior to the Board meeting, independent legal counsel sent to WRIMCO a request for information to be provided to the Directors in connection with their consideration of the continuance of the Management Agreement. WRIMCO provided materials to the Directors that included responses to those requests and other information WRIMCO believed was useful in evaluating continuation of the Management Agreement. The Directors also received reports prepared by an independent consultant, Lipper Inc., relating to the Fund's performance and expenses compared to the performance and expenses of a peer group of comparable funds. At the meeting, the Directors received a presentation from representatives of WRIMCO regarding services provided by it and its affiliates (collectively, "W&R") to the Fund. In addition, during the course of the year, WRIMCO had provided information relevant to the Directors' consideration of the continuance of the Management Agreement.

Nature, Extent and Quality of Services Provided to the Fund

The Directors considered the nature, extent and quality of the services provided to the Fund pursuant to the Management Agreement and also the overall fairness of the Management Agreement.

The Directors considered WRIMCO's research and portfolio management capabilities and that W&R also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Directors also considered WRIMCO's practices regarding the selection and compensation of brokers and dealers that execute portfolio transactions for the Fund, those brokers' and dealers' provision of brokerage and research services to WRIMCO, and the benefits derived by the other funds in the Advisors Fund Complex and by other clients of WRIMCO from such services. The Directors also considered the favorable history, reputation, qualification and background of WRIMCO and W&R's extensive administrative, accounting and compliance infrastructure.

Fund Performance, Management Fee and Expense Ratio. The Directors considered the Fund's performance, both on an absolute basis and in relation to the performance of a peer group of comparable mutual funds, as selected by Lipper. The Fund's performance was also compared to relevant market indices and to a Lipper index, as applicable.

The Directors considered the management fees and total expenses of the Fund and also considered the Fund's management fees and total expenses in relation to the management fees and total expenses, respectively, of a peer group of comparable mutual funds. The Directors' review also included consideration of the Fund's management fees at various asset levels, which reflected breakpoints in the management fee structure and average account size information. In addition, the Directors considered that the Fund's investment management fees, if any, were the same as the fees paid to WRIMCO (or its affiliate) by other mutual funds managed by WRIMCO (or its affiliate) with similar investment objectives, policies and strategies as the Fund (Similar Funds). The Directors also considered the subadvisory fees, if any, paid to WRIMCO (or its affiliate) by other mutual funds advised by WRIMCO (or its affiliate), as well as the management fees, if any, paid by other client accounts managed by WRIMCO (or its affiliate), with similar investment objectives, policies and strategies as the Fund (Other Accounts).

Profitability and Economies of Scale

The Directors also considered that the Fund's management fee structure provides for a reduction of payments resulting from economies of scale. In concluding that the benefits accruing to WRIMCO and its affiliates by virtue of their relationship to the Fund were reasonable in comparison with the costs of providing the investment management services and the benefits accruing to the Fund, the Disinterested Directors considered specific data as to WRIMCO's profit or loss with respect to the Fund for a recent period. The Directors also considered WRIMCO's methodology for determining this data. In addition, the Directors considered the soft dollar arrangements with respect to the Fund's portfolio transactions.

In determining whether to approve the proposed continuance of the Management Agreement, the Directors considered the best interests of the Fund and the overall fairness of the proposed Management Agreement. The Directors considered the following factors to be of primary importance to their approval of the continuance of the Fund's Management Agreement, without any one factor being dispositive:

the performance of the Fund compared with the average performance of a peer group of comparable funds and with relevant indices;
the Fund's investment management fees and total expenses compared with the management fees and total expenses of a peer group of comparable funds;
the existence or appropriateness of breakpoints in the Fund's management fees;
the cost/profitability to WRIMCO and any actual or anticipated economies of scale in relation to the services it provides to the Fund;
the other benefits that accrue to WRIMCO as a result of its relationship to the Fund; and
the favorable history, reputation, qualification and background of WRIMCO as well as the qualifications of its personnel.

Based on the discussions, considerations and information described generally above, the Board determined that the Fund's Management Agreement is fair and reasonable and that continuance of the Management Agreement was in the best interests of the Fund. In reaching these determinations, the Board concluded that: the nature, extent and quality of the services provided by WRIMCO for the Fund are adequate and appropriate; the performance of the Fund was satisfactory; it retained confidence in WRIMCO's overall ability to manage the Fund; and the management fee paid to WRIMCO was reasonable in light of comparative management fee information, the breakpoints in the proposed management fee for the Fund, the services provided by WRIMCO, the costs of the services provided, and the profits realized and other benefits likely to be derived by WRIMCO from its relationship with the Fund.

The Directors considered that Waddell & Reed Advisors Continental Income Fund's total return performance was higher than the peer group median for most periods.

The Directors considered the range and average of the management fees and expense ratios of the peer group. They considered that the Fund's management fee was equal to the peer group median and that the overall expense ratio was higher than the peer group median on an unadjusted basis but that, when adjusted for the Fund's smaller average account size, the Fund's overall expense ratio was lower than its peer group median. They also considered that, with the breakpoints in the fee schedule, the Fund's effective management fees at various asset levels were higher than the asset-weighted average for its peer group.

The Directors also considered that the Similar Funds had advisory fee schedules that were the same as the Fund's advisory fee schedule and that the Other Accounts had average advisory fees that were higher than the management fee of the Fund. The Directors considered the relevance of the fee information provided for the Similar Funds and Other Accounts to evaluate the appropriateness and reasonableness of the Fund's management fee.

The Management Agreement permits WRIMCO, or an affiliate of WRIMCO, to enter into a separate agreement for transfer agency services (the Shareholder Servicing Agreement) and a separate agreement for accounting services (the Accounting Services Agreement) with the Funds. The Management Agreement contains detailed provisions as to the matters to be considered by the Board of Directors prior to approving any Shareholder Servicing Agreement or Accounting Services Agreement.

Shareholder Services

Under the Shareholder Servicing Agreement entered into between the Fund and Waddell & Reed Services Company (WRSCO), a subsidiary of Waddell & Reed, WRSCO performs shareholder servicing functions, including the maintenance of shareholder accounts, the issuance, transfer and redemption of shares, distribution of dividends and payment of redemptions, the furnishing of related information to the Fund and handling of shareholder inquiries. A new Shareholder Servicing Agreement, or amendments to the existing one, may be approved by the Board of Directors without shareholder approval.

Accounting Services

Under the Accounting Services Agreement entered into between the Fund and WRSCO, WRSCO provides the Fund with bookkeeping and accounting services and assistance and other administrative services, including maintenance of Fund records, pricing of Fund shares, preparation of prospectuses for existing shareholders, preparation of proxy statements and certain shareholder reports. A new Accounting Services Agreement, or amendments to an existing one, may be approved by the Board of Directors without shareholder approval.

Payments by the Fund for Management, Accounting and Shareholder Services

Under the Management Agreement, for WRIMCO's management services, the Fund pays WRIMCO a fee as described in the Prospectus. The Fund accrues and pays this fee daily. The management fees paid by the Fund to WRIMCO during the Fund's fiscal years ended June 30, 2005, June 30, 2004 and June 30, 2003 were $3,591,147, $3,462,617 and $3,093,821, respectively.

For purposes of calculating the daily fee, the Fund does not include money owed to it by Waddell & Reed for shares which it has sold but not yet paid the Fund.

Under the Shareholder Servicing Agreement, with respect to Class A, Class B and Class C shares the Fund pays WRSCO a monthly fee of $1.5792 for each shareholder account that was in existence at any time during the prior month. For Class Y shares, the Fund pays WRSCO a monthly fee equal to one-twelfth of .15 of 1% of the average daily net assets of that class for the preceding month. The Fund also pays certain out-of-pocket expenses of WRSCO, including long distance telephone communications costs; microfilm and storage costs for certain documents; forms, printing and mailing costs; charges of any sub-agent used by WRSCO in performing services under the Shareholder Servicing Agreement; and costs of legal and special services not provided by Waddell & Reed, WRIMCO or WRSCO.

Under the Accounting Services Agreement, the Fund pays WRSCO, effective July 1, 2003, a monthly fee shown in the following table, based on the average daily net assets during the prior month.

	Accounting Services Fee

Average Daily Net Assets for the Month							Monthly Fee
	$	0	-	$	10	million	$	0
	$	10	-	$	25	million	$	958
	$	25	-	$	50	million	$	1,925
	$	50	-	$	100	million	$	2,958
	$	100	-	$	200	million	$	4,033
	$	200	-	$	350	million	$	5,267
	$	350	-	$	550	million	$	6,875
	$	550	-	$	750	million	$	8,025
	$	750	-	$	1.0	billion	$	10,133
	$	1.0 billion and over					$	12,375

In addition, for each class of shares in excess of one, the Fund pays WRSCO a monthly per-class fee equal to 2.5% of the monthly base fee.

The Fund also pays monthly a fee paid at the annual rate of 0.01% or one basis point for the first $1 billion of assets with no fee charges for assets in excess of $1 billion. This fee may be voluntarily waived until Fund assets are at least $10 million.

Prior to July 1, 2003, the Fund paid to WRSCO a monthly fee shown in the following table, based on the average daily net assets during the prior month.



Average Daily Net Assets for the Month (in millions)						Monthly Fee
	$	0	-	$	10	$	0
	$	10	-	$	25	$	917
	$	25	-	$	50	$	1,833
	$	50	-	$	100	$	2,750
	$	100	-	$	200	$	3,666
	$	200	-	$	350	$	4,583
	$	350	-	$	550	$	5,500
	$	550	-	$	750	$	6,417
	$	750	-	$	1,000	$	7,792
	$	1,000 and over				$	9,167

In addition, for each class of shares in excess of one, the Fund paid WRSCO a monthly per-class fee equal to 2.5% of the monthly base fee.

Fees paid to WRSCO for accounting services for the fiscal years ended June 30, 2005, June 30, 2004 and June 30, 2003 were $140,072, $88,688 and $70,950, respectively.

Since the Fund pays a management fee for investment supervision and an accounting services fee for accounting services as discussed above, WRIMCO and WRSCO, respectively, pay all of their own expenses, except as otherwise noted in the respective agreements, in providing these services. Amounts paid by the Fund under the Shareholder Servicing Agreement are described above. Waddell & Reed and its affiliates pay the Fund's Directors and officers who are affiliated with WRIMCO and its affiliates. The Fund pays the fees and expenses of the Fund's other Directors.

Waddell & Reed reallows to selling broker-dealers a portion of the sales charge paid for purchases of Class A shares as described in the section entitled Dealer Compensation below, and in the Prospectus. A major portion of the sales charge for Class A shares and the contingent deferred sales charge (CDSC) for Class B and Class C shares and for certain Class A shares may be paid to financial advisors and managers of Waddell & Reed and its affiliate, Legend Equities Corporation (Legend) and third-party selling broker-dealers. Waddell & Reed may compensate financial advisors as to purchases for which there is no front-end sales charge or CDSC.

The Fund pays all of its other expenses. These include the costs of materials sent to shareholders, audit and outside legal fees, taxes, brokerage commissions, interest, insurance premiums, custodian fees, fees payable by the Fund under Federal or other securities laws and to the Investment Company Institute and nonrecurring and extraordinary expenses, including litigation and indemnification relating to litigation.

Distribution Services

Under the Distribution and Service Plan (the Plan) for Class A shares adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act, the Fund may pay Waddell & Reed, the principal underwriter for the Fund, a fee not to exceed 0.25% of the Fund's average annual net assets attributable to Class A shares, paid monthly, to reimburse Waddell & Reed for its costs and expenses in connection with, either directly or through others, the distribution of the Class A shares, the provision of personal services to Class A shareholders and/or maintenance of Class A shareholder accounts.

Pursuant to the Principal Underwriting Agreement entered into between Waddell & Reed and the Fund, Waddell & Reed offers the Fund's shares through its financial advisors and sales managers and through other broker-dealers, banks and other appropriate intermediaries (the sales force). In distributing shares through its sales force, Waddell & Reed will pay commissions and incentives to the sales force at or about the time of sale and will incur other expenses including costs for prospectuses, sales literature, advertisements, sales office maintenance, processing of orders and general overhead with respect to its efforts to distribute the Fund's shares. The Class A Plan permits Waddell & Reed to receive reimbursement for these Class A-related distribution activities through the distribution fee, subject to the limit contained in the Plan. The Class A Plan also permits Waddell & Reed to be reimbursed for amounts it expends: in compensating, training and supporting registered financial advisors, sales managers and/or other appropriate personnel in providing personal services to Class A shareholders of the Fund and/or maintaining Class A shareholder accounts; increasing services provided to Class A shareholders of the Fund by office personnel located at field sales offices; engaging in other activities useful in providing personal service to Class A shareholders of the Fund and/or maintenance of Class A shareholder accounts; and in compensating broker-dealers and other third parties who may regularly sell Class A shares of the Fund, and may regularly provide shareholder services and/or maintain shareholder accounts with respect to Class A shares.

Service fees and distribution fees in the amounts of $1,188,104 and $33,269, respectively, were paid (or accrued) by the Fund under the Class A Plan for the fiscal year ended June 30, 2005.

The amount of unreimbursed expenses incurred under the Class A Plan in previous years and carried over to future years is $274,964, or 0.05% of the Fund's net assets as of June 30, 2005.

Under the Plans adopted by the Fund for Class B shares and Class C shares, respectively, the Fund may pay Waddell & Reed a service fee of up to 0.25% of the Fund's average annual net assets of the class, paid daily, to compensate Waddell & Reed for, either directly or through others, providing personal services to shareholders of that class and/or maintaining shareholder accounts of that class and a distribution fee of up to 0.75% of the Fund's average annual net assets of the class, paid daily, to compensate Waddell & Reed for, either directly or through others, distributing the shares of that class. The Class B Plan and the Class C Plan each permit Waddell & Reed to receive compensation, through the distribution fee and service fee, respectively, for its distribution activities for that class, which are similar to the distribution activities described with respect to the Class A Plan, and for its activities in providing personal services to shareholders of that class and/or maintaining shareholder accounts of that class, which are similar to the corresponding activities for which it is entitled to reimbursement under the Class A Plan.

Service fees and distribution fees in the amounts of $43,736 and $131,208, respectively, were paid (or accrued) by the Fund under the Class B Plan for the fiscal year ended June 30, 2005. Service fees and distribution fees in the amounts of $16,516 and $49,547, respectively, were paid (or accrued) by the Fund under the Class C Plan for the fiscal year ended June 30, 2005.

The only Directors or interested persons, as defined in the 1940 Act, of the Fund who have a direct or indirect financial interest in the operation of the Plans are the officers and Directors who are also officers of either Waddell & Reed or its affiliate(s) or who are shareholders of Waddell & Reed Financial, Inc., the indirect parent company of Waddell & Reed. Each Plan is anticipated to benefit the Fund and its shareholders of the affected class through Waddell & Reed's activities not only to distribute the shares of the affected class but also to provide personal services to shareholders of that class and thereby promote the maintenance of their accounts with the Fund. The Fund anticipates that shareholders of a particular class may benefit to the extent that Waddell & Reed's activities are successful in increasing the assets of the Fund, through increased sales or reduced redemptions, or a combination of these, and thereby reducing a shareholder's share of Fund and class expenses. Increased Fund assets may also provide greater resources with which to pursue the objectives of the Fund. Further, continuing sales of shares may also reduce the likelihood that it will be necessary to liquidate portfolio securities, in amounts or at times that may be disadvantageous to the Fund, to meet redemption demands. In addition, the Fund anticipates that the revenues from the Plans will provide Waddell & Reed with greater resources to make the financial commitments necessary to continue to improve the quality and level of services to the Fund and the shareholders of the affected class.

To the extent that Waddell & Reed incurs expenses for which reimbursement or compensation may be made under the Plans that relate to distribution and service activities also involving another fund in the Waddell & Reed Advisors Funds or Waddell & Reed InvestEd Portfolios, Inc., Waddell & Reed typically determines the amount attributable to the Fund's expenses under the Plans on the basis of a combination of the respective classes' relative net assets and number of shareholder accounts.

Each Plan was approved by the Board of Directors, including the Directors who are not interested persons of the Fund and who have no direct or indirect financial interest in the operations of the Plans or any agreement referred to in the Plans (hereafter, the Plan Directors). The Class A Plan was also approved by the affected shareholders of the Fund.

Among other things, each Plan provides that (1) Waddell & Reed will provide to the Directors of the Fund at least quarterly, and the Directors will review, a report of amounts expended under the Plan and the purposes for which such expenditures were made, (2) the Plan will continue in effect only so long as it is approved at least annually, and any material amendments thereto will be effective only if approved, by the Directors including the Plan Directors acting in person at a meeting called for that purpose, (3) payments under the Plan may not be materially increased without the vote of the holders of a majority of the outstanding shares of the affected class of the Fund, and (4) while the Plan remains in effect, the selection and nomination of the Directors who are Plan Directors will be committed to the discretion of the Plan Directors.

Dealer Compensation

All classes of the Fund are offered through Waddell & Reed and other broker-dealers. In addition to the dealer reallowance that may be applicable to Class A share purchases as described below, and in the Prospectus, Waddell & Reed may pay other broker-dealers a portion of the fees it receives under the respective Plans as well as other compensation in connection with the distribution of Fund shares, including the following: 1) for Class A shares purchased at net asset value (NAV) by clients of Waddell & Reed, Waddell & Reed (or its affiliate) may pay 0.50% of net assets invested; 2) for the purchase of Class B shares, Waddell & Reed (or its affiliate) may pay 4.00% of net assets invested; 3) for the purchase of Class C shares, Waddell & Reed (or its affiliate) may pay 1.00% of net assets invested; 4) for the purchase of Class Y shares, Waddell & Reed (or its affiliate) may pay 0.25% of net assets invested.

Sales Charges for Class A Shares

Class A shares are subject to an initial sales charge when purchased, based on the amount of investment, according to the following table:

Size of Purchase	Sales Charge as Percent of Offering Price¹			Sales Charge as Approx. Percent of Amount Invested			Reallowance to Dealers as Percent of Offering Price
--------	-----------			-----------			-----------
under $100,000		5.75	%		6.10	%		5.00	%
$100,000 to less than $200,000		4.75			4.99			4.00
$200,000 to less than $300,000		3.50			3.63			2.80
$300,000 to less than $500,000		2.50			2.56			2.00
$500,000 to less than $1,000,000		1.50			1.52			1.20
$1,000,000 and over²		0.00			0.00		see below

¹Due to the rounding of the NAV and the offering price of a fund to two decimal places, the actual sales charge percentage calculated on a particular purchase may be higher of lower than the percentage stated.

²No sales charge is payable at the time of purchase on investments of $1 million or more, although for such investments the Fund may impose a CDSC of 1% on certain redemptions made within twelve months of the purchase. The CDSC is assessed on an amount equal to the lesser of the then current market value or the cost of the shares being redeemed. Accordingly, no sales charge is imposed on increases in net asset value above the initial purchase price.

Waddell & Reed may pay Legend up to 1.00% on investments made in Class A shares with no initial sales charge, according to the following schedule:*

	1.00 % - Sales of $1.0 million to $1,999,999.99
	0.80 % - Sales of $2.0 million to $2,999,999.99
	0.50 % - Sales of $3.0 million to $49,999,999.99
	0.25 % - Sales of $50.0 million or more

*Waddell & Reed will pay Legend 1.00% for NAV purchases, at any asset level, made with the redemption proceeds from an unaffiliated fund.

Custodial and Auditing Services

The Fund's custodian is UMB Bank, n.a., and its address is 928 Grand Boulevard, Kansas City, Missouri. In general, the custodian is responsible for holding the Fund's cash and securities. Deloitte & Touche LLP, located at 1010 Grand Boulevard, Kansas City, Missouri, is the Fund's independent registered public accounting firm, audits the Fund's financial statements, and an affiliate prepares the Fund's tax returns.

Portfolio Manager

The following table provides information relating the Fund manager as of June 30, 2005:

Cynthia P. Prince-Fox

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	3	0	0
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$1,209	$0	$83.5
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Conflicts of Interest

Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one fund or account, such as the following:

The management of multiple funds and/or other accounts may result in a portfolio manager devoting unequal time and attention to the management of each fund and/or other account. WRIMCO seeks to manage such competing interests for the time and attention of portfolio managers by having a portfolio manager focus on a particular investment discipline. Most other accounts managed by a portfolio manager are managed using the same investment models that are used in connection with the management of the funds.

The portfolio manager might execute transactions for another fund or account that may adversely impact the value of securities held by the Fund. Securities selected for funds or accounts other than the Fund might outperform the securities selected for the Fund. WRIMCO seeks to manage this potential conflict by requiring all portfolio transactions to be allocated pursuant to WRIMCO's adopted Allocation Procedures.

In addition, WRIMCO and the Funds have adopted certain compliance procedures, including the Code of Ethics, which are designed to address certain types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.

Compensation

WRIMCO believes that, integral to the retention of investment professionals are: a) a competitive base salary, that is commensurate with the individual's level of experience and responsibility; b) an attractive bonus structure linked to investment performance, described below; c) eligibility for a stock incentive plan in shares of WDR that rewards teamwork (awards of equity-based compensation typically vest over time, so as to create an incentive to retain key talent); and d) to the extent a portfolio manager also manages institutional separate accounts, he or she will share in a percentage of the revenues earned, on behalf of such accounts, by WRIMCO.

Portfolio managers can receive significant annual performance-based bonuses. The better the pre-tax performance of the portfolio relative to an appropriate benchmark, the more bonus compensation the manager receives. The primary benchmark is the portfolio manager's percentile ranking against the performance of managers of the same investment style at other firms. The secondary benchmark is an index of securities matched to the same investment style. Half of a portfolio manager's bonus is based upon a three-year period and half is based upon a one year period. For truly exceptional results, bonuses can be several multiples of base salary. In cases where portfolio managers have more than one portfolio to manage, all the portfolios are similar in investment style and all are taken into account in determining bonuses. Thirty percent of annual performance-based bonuses are deferred for a three-year period. During that time, the deferred portion of bonuses is deemed invested in one or more mutual funds managed by WRIMCO (or its affiliate), with a minimum of 50% of the deferred bonus required to be invested in a mutual fund managed by the portfolio manager. In addition to the deferred portion of bonuses being deemed invested in mutual funds managed by WRIMCO (or its affiliate), WDR's 401(k) plan offers mutual funds managed by WRIMCO (or its affiliate) as investment options. No bonus compensation is based upon the amount of the mutual fund assets under management.

Ownership of Securities

As of June 30, 2005, the dollar range of shares of the Fund beneficially owned by Ms. Prince-Fox is over $100,000, and the dollar range of shares in the Fund Complex beneficially owned is over $100,000.

A portion of each portfolio manager's compensation is held in a deferred account, and deemed to be invested in funds within the Fund Complex. As of June 30, 2005, for Ms. Prince-Fox, the dollar range of shares of the Fund deemed owned is $10,001 to $50,000, and the dollar range of shares in the Fund Complex deemed owned is $10,001 to $50,000.

BROKERAGE ALLOCATION AND OTHER PRACTICES

One of the duties undertaken by WRIMCO pursuant to the Management Agreement is to arrange the purchase and sale of securities for the portfolio of the Fund. Transactions in securities other than those for which an exchange is the primary market are generally effected with dealers acting as principals or market makers. Brokerage commissions are paid primarily for effecting transactions in securities traded on an exchange and otherwise only if it appears likely that a better price or execution can be obtained. The individual who manages the Fund may manage other advisory accounts with similar investment objectives. It can be anticipated that the manager will frequently place concurrent orders for all or most accounts for which the manager has responsibility or WRIMCO and/or Ivy Investment Company (IICO), an affiliate of WRIMCO, may otherwise combine orders for the Fund with those of other funds in the Waddell & Reed Advisors Funds, W&R Target Funds, Inc. and Ivy Family of Funds or other accounts for which it has investment discretion, including accounts affiliated with WRIMCO and/or IICO. WRIMCO and/or IICO, at its discretion, may aggregate such orders. Under current written procedures, transactions effected pursuant to such combined orders are averaged as to price and allocated in accordance with the purchase or sale orders actually placed for each fund or advisory account, except where the combined order is not filled completely. In this case, for a transaction not involving an initial public offering (IPO), WRIMCO and/or IICO will ordinarily allocate the transaction pro rata based on the orders placed, subject to certain variances provided for in the written procedures. For a partially filled IPO order, subject to certain variances specified in the written procedures, WRIMCO and/or IICO generally allocates the shares as follows: the IPO shares are initially allocated pro rata among the included funds and/or advisory accounts grouped according to investment objective, based on relative total assets of each group; and the shares are then allocated within each group pro rata based on relative total assets of the included funds and/or advisory accounts, except that (a) within a group having a small cap-related investment objective, shares are allocated on a rotational basis after taking into account the impact of the anticipated initial gain on the value of the included fund or advisory account and (b) within a group having a mid-cap-related investment objective, shares are allocated based on the portfolio manager's judgment, including but not limited to such factors as investment strategies and policies of the fund or advisory account, cash availability, any minimum investment policy, liquidity, anticipated term of the investment and current securities positions.

In all cases, WRIMCO seeks to implement its allocation procedures to achieve a fair and equitable allocation of securities among its funds and other advisory accounts. Sharing in large transactions could affect the price the Fund pays or receives or the amount it buys or sells. As well, a better negotiated commission may be available through combined orders.

To effect the portfolio transactions of the Fund, WRIMCO is authorized to engage broker-dealers (brokers) which, in its best judgment based on all relevant factors, will implement the policy of the Fund to seek best execution (generally, prompt and reliable execution at the best price obtainable) for reasonable and competitive commissions. WRIMCO need not seek competitive commission bidding but is expected to minimize the commissions paid to the extent consistent with the interests and policies of the Fund. Subject to review by the Board of Directors, such policies include the selection of brokers which provide execution and/or research services and other services, including pricing or quotation services directly or through others (research and brokerage services) considered by WRIMCO to be useful or desirable for its investment management of the Fund and/or the other funds and accounts over which WRIMCO has investment discretion.

Research and brokerage services are, in general, defined by reference to Section 28(e) of the Securities Exchange Act of 1934 as including (1) advice, either directly or through publications or writings, as to the value of securities, the advisability of investing in, purchasing or selling securities and the availability of securities and purchasers or sellers; (2) furnishing analyses and reports; or (3) effecting securities transactions and performing functions incidental thereto (such as clearance, settlement and custody). Investment discretion is, in general, defined as having authorization to determine what securities shall be purchased or sold for an account, or making those decisions even though someone else has responsibility.

The commissions paid to brokers that provide such research and/or brokerage services may be higher than the commission another qualified broker would charge for effecting comparable transactions and are permissible if a good faith determination is made by WRIMCO that the commission is reasonable in relation to the research or brokerage services provided. No allocation of brokerage or principal business is made to provide any other benefits to WRIMCO. WRIMCO does not direct Fund brokerage to compensate brokers for the sale of Fund shares. The Funds have adopted a policy that prohibits WRIMCO from using Fund brokerage commissions to compensate broker-dealers for promotion or sale of Fund shares.

The investment research provided by a particular broker may be useful only to one or more of the other advisory accounts of WRIMCO, and investment research received for the commissions of those other accounts may be useful both to the Fund and one or more of such other accounts. To the extent that electronic or other products provided by such brokers to assist WRIMCO in making investment management decisions are used for administration or other non-research purposes, a reasonable allocation of the cost of the product attributable to its non-research use is made and this cost is paid by WRIMCO.

Such investment research (which may be supplied by a third party at the request of a broker) includes information on particular companies and industries as well as market, economic or institutional activity areas. In general, such investment research serves to broaden the scope and supplement the research activities of WRIMCO; serves to make available additional views for consideration and comparisons; and enables WRIMCO to obtain market information on the price of securities held in the Fund's portfolio or being considered for purchase. The Fund may also use its brokerage to pay for pricing or quotation services to value securities.

During the Fund's fiscal years ended June 30, 2005, June 30, 2004 and June 30, 2003, it paid brokerage commissions of $497,053, $450,246 and $545,991, respectively. These figures do not include principal transactions or spreads or concessions on principal transactions, i.e., those in which the Fund sells securities to a broker or buys from a broker securities owned by the broker.

During the Fund's fiscal year ended June 30, 2005, the transactions, other than principal transactions, which were directed to brokers who provided research services as well as execution totaled $311,326,990 on which $397,984 in brokerage commissions were paid. These transactions were allocated to these brokers by the internal allocation procedures described above.

As of June 30, 2005, the Fund owned Citigroup Inc. security in the aggregate amount of $9,722,169. Citigroup Inc. is the parent of Citigroup Global Markets Inc., a regular broker of the fund.

PROXY VOTING POLICY

The Funds have delegated all proxy voting responsibilities to their investment manager. WRIMCO has established guidelines that reflect what it believes are desirable principles of corporate governance.

Listed below are several reoccurring issues and WRIMCO's corresponding positions.

Board of Directors Issues:

WRIMCO generally supports proposals requiring that a majority of the Board consist of outside, or independent, directors.

WRIMCO generally votes against proposals to limit or eliminate liability for monetary damages for violating the duty of care.

WRIMCO generally votes against indemnification proposals that would expand coverage to more serious acts such as negligence, willful or intentional misconduct, derivation of improper personal benefit, absence of good faith, reckless disregard for duty, and unexcused pattern of inattention. The success of a corporation in attracting and retaining qualified directors and officers, in the best interest of shareholders, is partially dependent on its ability to provide some satisfactory level of protection from personal financial risk. WRIMCO will support such protection so long as it does not exceed reasonable standards.

WRIMCO generally votes against proposals requiring the provision for cumulative voting in the election of directors as cumulative voting may allow a minority group of shareholders to cause the election of one or more directors.

Corporate Governance Issues:

WRIMCO generally supports proposals to ratify the appointment of independent accountants/auditors unless reasons exist which cause it to vote against the appointment.

WRIMCO generally votes against proposals to restrict or prohibit the right of shareholders to call special meetings.

WRIMCO generally votes against proposals which include a provision to require a supermajority vote to amend any charter or bylaw provision, or to approve mergers or other significant business combinations.

WRIMCO generally votes for proposals to authorize an increase in the number of authorized shares of common stock.

WRIMCO generally votes against proposals for the adoption of a Shareholder Rights Plan (sometimes referred to as "Purchase Rights Plan"). It believes that anti-takeover proposals are generally not in the best interest of shareholders. Such a Plan gives the Board virtual veto power over acquisition offers which may well offer material benefits to shareholders.

Executive/Employee Issues:

WRIMCO will generally vote for proposals to establish an Employee Stock Ownership Plan (ESOP) as long as the size of the ESOP is reasonably limited.

Political Activity:

WRIMCO will generally vote against proposals relating to corporate political activity or contributions, or to require the publication of reports on political activity or contributions made by political action committees (PACs) sponsored or supported by the corporation. PAC contributions are generally made with funds contributed voluntarily by employees, and provide positive individual participation in the political process of a democratic society. In addition, Federal and most state laws require full disclosure of political contributions made by PACs. This is public information and available to all interested parties.

Conflicts of Interest Between WRIMCO and the Funds:

WRIMCO will use the following three-step process to address conflicts of interest: (1) WRIMCO will attempt to identify any potential conflicts of interest; (2) WRIMCO will then determine if the conflict as identified is material; and (3) WRIMCO will follow the procedures established below to ensure that its proxy voting decisions are based on the best interests of the Funds and are not the product of a material conflict.

I. Identifying Conflicts of Interest: WRIMCO will evaluate the nature of its relationships to assess which, if any, might place its interests, as well as those of its affiliates, in conflict with those of the Fund's shareholders on a proxy voting matter. WRIMCO will review any potential conflicts that involve the following four general categories to determine if there is a conflict and if so, if the conflict is material:

Business Relationships - WRIMCO will review any situation for a material conflict where WRIMCO manages money for a company or an employee group, manages pension assets, administers employee benefit plans, leases office space from a company, or provides brokerage, underwriting, insurance, banking or consulting services to a company or if it is determined that WRIMCO (or an affiliate) otherwise has a similar significant relationship with a third party such that the third party might have an incentive to encourage WRIMCO to vote in favor of management.
Personal Relationships - WRIMCO will review any situation where it (or an affiliate) has a personal relationship with other proponents of proxy proposals, participants in proxy contests, corporate directors, or candidates for directorships to determine if a material conflict exists.
Familial Relationships - WRIMCO will review any situation where it (or an affiliate) has a known familial relationship relating to a company (e.g., a spouse or other relative who serves as a director of a public company or is employed by the company) to determine if a material conflict exists.

WRIMCO will designate an individual or committee to review and identify proxies for potential conflicts of interest on an ongoing basis.

II. "Material Conflicts": WRIMCO will review each relationship identified as having a potential conflict based on the individual facts and circumstances. For purposes of this review, WRIMCO will attempt to detect those relationships deemed material based on the reasonable likelihood that they would be viewed as important by the average shareholder.

In considering the materiality of a conflict, WRIMCO will take a two-step approach:

Financial Materiality - A relationship will be considered presumptively non-material unless the relationship represents 5% or more of WRIMCO's annual revenue. If the relationship involves an affiliate, the "material" benchmark will be 15% or more of WRIMCO's annual revenue.
Non-Financial Materiality - WRIMCO will review all known relationships of portfolio managers and senior management for improper influence.

III. Procedures to Address Material Conflicts: WRIMCO will use the following techniques to vote proxies that have been determined to present a "Material Conflict."

Use a Proxy Voting Service for Specific Proposals - As a primary means of voting material conflicts, WRIMCO will vote per the recommendation of an independent proxy voting service (Institutional Shareholder Services (ISS) or another independent third party if a recommendation from ISS is unavailable).
Client directed - If the Material Conflict arises from WRIMCO's management of a third party account and the client provides voting instructions on a particular vote, WRIMCO will vote according to the directions provided by the client.
Use a Predetermined Voting Policy - If no directives are provided by either ISS or the client, WRIMCO may vote material conflicts pursuant to the pre-determined Proxy Voting Policies, established herein, should such subject matter fall sufficiently within the identified subject matter. If the issue involves a material conflict and WRIMCO chooses to use a predetermined voting policy, WRIMCO will not be permitted to vary from the established voting policies established herein.
Seek Board Guidance - If the Material Conflict does not fall within one of the situations referenced above, WRIMCO may seek guidance from the Funds' Board of Directors on matters involving a conflict. Under this method, WRIMCO will disclose the nature of the conflict to the Fund Board and obtain the Board's consent or direction to vote the proxies. WRIMCO may use the Board guidance to vote proxies for its non-mutual fund clients.

PROXY VOTING RECORD

Information regarding how the proxies for the Fund were voted during the most recent 12-month period ended June 30, 2005, is available on the Funds' website, www.waddell.com, and on the SEC's website at http://www.sec.gov.

CAPITAL STOCK

The Shares of the Fund

The shares of the Fund represent an interest in the Fund's securities and other assets and in its profits or losses. Each fractional share of a class has the same rights, in proportion, as a full share of that class.

The Fund offers four classes of its shares: Class A, Class B, Class C and Class Y. Each class of the Fund represents an interest in the same assets of the Fund and differ as follows: each class of shares has exclusive voting rights on matters appropriately limited to that class; Class A shares are subject to an initial sales charge and to an ongoing distribution and/or service fee and certain Class A shares are subject to a CDSC; Class B and Class C shares are subject to a CDSC and to ongoing distribution and service fees; Class B shares that have been held by a shareholder for eight years will convert, automatically, eight years after the month in which the shares were purchased, to Class A shares of the Fund, and such conversion will be made, without charge or fee, on the basis of the relative NAV of the two classes; and Class Y shares, which are designated for institutional investors, have no sales charge nor ongoing distribution and/or service fee; each class may bear differing amounts of certain class-specific expenses; and each class has a separate exchange privilege. The Fund does not anticipate that there will be any conflicts between the interests of holders of the different classes of shares of the Fund by virtue of those classes. On an ongoing basis, the Board of Directors will consider whether any such conflict exists and, if so, take appropriate action. Each share of the Fund is entitled to equal voting, dividend, liquidation and redemption rights, except that due to the differing expenses borne by the four classes, dividends and liquidation proceeds of Class B shares and Class C shares are expected to be lower than for Class A shares of the Fund. Shares are fully paid and nonassessable when purchased.

The Fund does not hold annual meetings of shareholders; however, certain significant corporate matters, such as the approval of a new investment advisory agreement or a change in a fundamental investment policy, which require shareholder approval, will be presented to shareholders at a meeting called by the Board of Directors for such purpose.

Special meetings of shareholders may be called for any purpose upon receipt by the Fund of a request in writing signed by shareholders holding not less than 25% of all shares entitled to vote at such meeting, provided certain conditions stated in the Bylaws are met. There will normally be no meeting of the shareholders for the purpose of electing directors until such time as less than a majority of directors holding office have been elected by shareholders, at time which the directors then in office will call a shareholders' meeting for the election of directors. To the extent that Section 16(c) of the 1940 Act applies to the Fund, the directors are required to call a meeting of shareholders for the purpose of voting upon the question of removal of any director when requested in writing to do so by the shareholders of record of not less than 10% of the Fund's outstanding shares.

Each share of the Fund (regardless of class) has one vote. All shares of the Fund vote together as a single class, except as to any matter for which a separate vote of any class is required by the 1940 Act, and except as to any matter which affects the interests of one or more particular classes, in which case only the shareholders of the affected classes are entitled to vote, each as a separate class.

PURCHASE, REDEMPTION AND PRICING OF SHARES

Purchase of Shares

Minimum Initial and Subsequent Investments

For Class A, Class B and Class C shares, initial investments must be at least $500 with the exceptions described in this paragraph. A $100 minimum initial investment pertains to certain exchanges of shares from another fund in the Waddell & Reed Advisors Funds (or, for clients of Waddell & Reed and Legend, a fund in the Ivy Family of Funds). A $50 minimum initial investment pertains to purchases for accounts for which an investor has arranged, at the time of initial investment, to make subsequent purchases for the account by having regular monthly withdrawals of $25 or more made from a bank account or through a payroll deduction. Shareholders purchasing through payroll deductions may invest any amount. Except with respect to certain exchanges and automatic withdrawals from a bank account, a shareholder may make subsequent investments of any amount. See, Exchanges for Shares of Other Funds in the Waddell & Reed Advisors Funds and Waddell & Reed InvestEd Portfolios, Inc.

For Class Y shares, investments by government entities or authorities or by corporations must total at least $10 million within the first twelve months after initial investment. There is no initial investment minimum for other eligible Class Y investors.

Reduced Sales Charges (Applicable to Class A shares only)

Lower sales charges on the purchase of Class A shares are available by:

Rights of Accumulation: combining the value of additional purchases of shares of any of the funds in Waddell & Reed Advisors Funds and/or Waddell & Reed InvestEd Portfolios, Inc. with the NAV of Class A, Class B or Class C shares already held in your account or in an account eligible for grouping with your account (see "Account Grouping" below). To be entitled to Rights of Accumulation, you must inform Waddell & Reed that you are entitled to a reduced sales charge and provide Waddell & Reed with the name and number of the existing account(s) with which your purchase may be combined. The reduced sales charge is applicable only to the new purchase. It is not retroactive to shares already held in your account or in an account eligible for grouping with your account.
Letter of Intent: grouping all purchases of the funds referenced above, made during a thirteen-month period pursuant to a Letter of Intent (LOI). By signing a LOI, which is available from Waddell & Reed, you indicate an intention to invest, over a thirteen-month period, a dollar amount sufficient to qualify for a reduced sales charge. In determining the amount which you must invest in order to qualify for a reduced sales charge under the LOI, your Class A, Class B or Class C shares already held in the same account in which the purchase is being made or in any account eligible for grouping with that account, as described in "Account Grouping" below, will be included.
Account Grouping: grouping purchases by certain related persons. For the purpose of taking advantage of the lower sales charges available for large purchases, a purchase of Class A shares in any account that you own may be grouped with the current account value of purchased Class A, Class B and/or Class C shares in any other account that you may own, or in accounts of household members of your immediate family (spouse and children under 21). Please note that grouping is allowed only for a) accounts of the owner that have the same address or Tax ID number, and b) accounts of family members living (or maintaining a permanent address) in the same household as the owner. For purposes of account grouping, an individual's domestic partner may be treated as his or her spouse.

With respect to purchases under retirement plans:


	1.	All purchases of Class A shares made for a participant in a multi-participant Keogh plan may be grouped only with other purchases made under the same plan.

	2.	All purchases of Class A shares made under an employee benefit plan described in Section 401 of the Internal Revenue Code of 1986, as amended (the Code) (a "qualified plan") that is maintained by a corporate employer and all plans of any one employer or affiliated employers will also be grouped. All qualified plans of an employer who is a franchisor and those of its franchisee(s) may also be grouped.

	3.	All purchases of Class A shares made under a simplified employee pension plan (SEP), payroll deduction plan or similar arrangement adopted by an employer or affiliated employers may be grouped. Additionally, the purchases made by individual employees under such plan may also be grouped with the other accounts of the individual employees if such grouping would be more beneficial to an individual.

	4.	All purchases of Class A shares made by you or your spouse for your respective individual retirement account (IRA), salary reduction plan account under Section 457 of the Code may be grouped, provided that such purchases are subject to a sales charge (see "Sales Charge Waivers for Certain Investors" and "Sales Charge Waivers for Certain Transactions" below; if your purchase qualifies for NAV eligibility pursuant to these sections, you may not group that investment), tax-sheltered annuity account (TSA) or Keogh plan account, provided that you and your spouse are the only participants in the Keogh plan.

In order for an eligible purchase to be grouped, you must advise Waddell & Reed at the time the purchase is made that it is eligible for grouping and identify the accounts with which it may be grouped.

Shares of Waddell & Reed Advisors Cash Management, Inc. are not eligible for either Rights of Accumulation or Letter of Intent privileges, unless such shares have been acquired by exchange for Class A shares on which a sales charge was paid, or as a dividend or distribution on such acquired shares.

If you are investing $1 million or more, either as a lump sum or through one of the sales charge reduction features described above, you may be eligible to buy Class A shares without a sales charge. However, you may be charged a CDSC of 1.00% on any shares purchased without a sales charge that you sell within the first 12 months of owning them. This CDSC may be waived under certain circumstances, as noted in this prospectus. Your financial advisor or a Client Services representative can answer your questions and help you determine if you are eligible.

For clients of Waddell & Reed and Legend, the grouping privileges described above also apply to the corresponding classes of shares of funds in the Ivy Family of Funds.

Other Funds in the Waddell & Reed Advisors Funds and Waddell & Reed InvestEd Portfolios, Inc.

Reduced sales charges for larger purchases of Class A shares apply to purchases of any of the Class A shares of any of the funds in the Waddell & Reed Advisors Funds and Waddell & Reed InvestEd Portfolios, Inc. subject to a sales charge. A purchase of Class A shares, or Class A shares held, in any of the funds in the Waddell & Reed Advisors Funds and/or Waddell & Reed InvestEd Portfolios, Inc. subject to a sales charge will be treated as an investment in the Fund in determining the applicable sales charge. For these purposes, Class A shares of Waddell & Reed Advisors Cash Management, Inc. that were acquired by exchange of another Waddell & Reed Advisors Fund or Waddell & Reed InvestEd Portfolios, Inc. Class A shares on which a sales charge was paid, plus the shares paid as dividends on those acquired shares, are also taken into account.

For clients of Waddell & Reed, Inc. and Legend, the grouping privileges described above also apply to the corresponding classes of shares of the funds in the Ivy Family of Funds, except shares of Ivy Money Market Fund (unless acquired by exchange of Class A shares of another Ivy Family Fund on which a sales charge was paid, plus the shares paid as dividends on those acquired shares).

Net Asset Value Purchases of Class A Shares

Class A shares of the Fund may be purchased at NAV by the Directors and officers of the Fund or of any affiliated entity of Waddell & Reed, employees of Waddell & Reed or of any of its affiliates, financial advisors of Waddell & Reed and its affiliates and the spouse, children, parents, children's spouses and spouse's parents of each such Director, officer, employee and financial advisor. Child includes stepchild; parent includes stepparent. Purchases of Class A shares in an IRA sponsored by Waddell & Reed established for any of these eligible purchasers may also be at NAV. Purchases of Class A shares in any tax-qualified retirement plan under which the eligible purchaser is the sole participant may also be made at NAV. Trusts under which the grantor and the trustee or a co-trustee are each an eligible purchaser are also eligible for NAV purchases of Class A shares. Employees include retired employees. A retired employee is an individual separated from service from Waddell & Reed, or from an affiliated company with a vested interest in any Employee Benefit plan sponsored by Waddell & Reed or any of its affiliated companies. Financial advisors include retired financial advisors. A retired financial advisor is any financial advisor who was, at the time of separation from service from Waddell & Reed, a Senior Financial Advisor. A custodian under UGMA or UTMA purchasing for the child or grandchild of any employee or financial advisor may purchase Class A shares at NAV whether or not the custodian himself is an eligible purchaser.

Shares may be issued at NAV in a merger, acquisition or exchange offer made pursuant to a plan of reorganization to which the Fund is a party.

Purchases of Class A shares in a 401(k) plan or a 457 plan having 100 or more eligible employees, and the shares are held in individual plan participant accounts on the Fund's records, may be made at NAV.

Purchases of Class A shares in a 401(a) plan having 100 or more eligible employees, and the shares are held in individual plan participant accounts on the Fund's records and segregated from any other retirement plan assets, may be made at NAV.

Purchases of Class A shares in retirement plan accounts held in the Waddell & Reed Advisors Retirement Plan, offered and distributed by Nationwide Investment Services Corporation through Nationwide Trust Company, FSB retirement programs, may be made at NAV.

Purchases of Class A shares by clients investing via a Managed Allocation Portfolio (MAP) or Strategic Portfolio Allocation (SPA) program available through Waddell & Reed, Inc., may be made at NAV.

Direct Rollovers from the Waddell & Reed Advisors Retirement Plan may be made at NAV.

Holders of an uncompleted United Continental Income Investment Program (Program) on May 30, 1996, with a face amount of less than $12,000 may purchase Class A shares of the Fund at NAV, up to the amount representing the unpaid balance of the Program, if the purchase order is so designated.

Reasons for Differences in the Public Offering Price of Class A Shares

As described herein and in the Prospectus, there are a number of instances in which the Fund's Class A shares are sold or issued on a basis other than at the maximum public offering price, that is, the NAV plus the highest sales charge. Some of these instances relate to lower or eliminated sales charges for larger purchases of Class A shares, whether made at one time or over a period of time as under an LOI or Rights of Accumulation. See the table of breakpoints in sales charges in the Prospectus and in this SAI for the Class A shares. The reasons for these quantity discounts are, in general, that (1) they are traditional and have long been permitted in the industry and are therefore necessary to meet competition as to sales of shares of other funds having such discounts, (2) certain quantity discounts are required by rules of the National Association of Securities Dealers, Inc. (as is elimination of sales charges on the reinvestment of dividends and other distributions), and (3) they are designed to avoid an unduly large dollar amount of sales charge on substantial purchases in view of reduced selling expenses. Quantity discounts are made available to certain related persons for reasons of family unity and to provide a benefit to tax-exempt plans and organizations.

In general, the reasons for the other instances in which there are reduced or eliminated sales charges for Class A shares are as follows. Exchanges at NAV are permitted because a sales charge has already been paid on the shares exchanged, except that exchanges from Class A shares of Waddell & Reed Advisors Cash Management, Inc. are subject to any sales charge applicable to the Fund being exchanged into, unless the Waddell & Reed Advisors Cash Management, Inc. shares were previously acquired by an exchange from Class A shares of another Waddell & Reed Advisors Fund for which a sales charge was paid. Sales of Class A shares without a sales charge are permitted to Directors, officers and certain others due to reduced or eliminated selling expenses and since such sales may aid in the development of a sound employee organization, encourage responsibility and interest in a Fund and an identification with its aims and policies. Limited reinvestments of redemptions of Class A shares at no sales charge are permitted to attempt to protect against mistaken or not fully informed redemption decisions. Class A shares may be sold without a sales charge in plans of reorganization due to reduced or eliminated sales expenses and since, in some cases, such shares are exempted by the 1940 Act from the otherwise applicable requirements as to sales charges. Class A shares may be sold without a sales charge to persons who have an existing relationship with Waddell & Reed (or any of its affiliates), as well as to persons who purchase such shares through certain advisory programs, due to reduced selling expenses incurred by Waddell & Reed. Reduced or eliminated sales charges may also be used for certain short-term promotional activities by Waddell & Reed. In no case in which there is a reduced or eliminated sales charge are the interests of existing Class A shareholders adversely affected since, in each case, the Fund receives the NAV per share of all shares sold or issued.

Systematic Withdrawal Plan for Class A, Class B and Class C Shareholders

If you qualify, you may arrange to receive through the Systematic Withdrawal Plan (Service) regular monthly, quarterly, semiannual or annual payments by redeeming on an ongoing basis Class A, Class B or Class C shares that you own of any of the funds in the Waddell & Reed Advisors Funds, and, for clients of Waddell & Reed and Legend, any of the funds in the Ivy Family of Funds. It would be a disadvantage to an investor to make additional purchases of Class A shares while the Service is in effect because it would result in duplication of sales charges. Effective November 1, 2003, Class B and Class C shares, and certain Class A shares to which the CDSC otherwise applies, that are redeemed under the Service are not subject to a CDSC provided the amount withdrawn does not exceed, annually, 12% of the account value. Prior to November 1, 2003, Class B and Class C shares, and certain Class A shares to which the CDSC otherwise applied, that were redeemed under the Service were not subject to a CDSC provided the amount withdrawn did not exceed, annually, 24% of the account value. For shareholders who had established the Service prior to November 1, 2003, the 24% maximum continues to apply. Applicable forms to start the Service are available through WRSCO.

The maximum amount of the withdrawal for monthly, quarterly, semiannual and annual withdrawals is 1%, 3%, 6% and 12%, respectively, of the value of your account at the time the Service is established. (For shareholders who had established the Service prior to November 1, 2003, the maximum amount of the withdrawal on an annual basis is equal to 24% of the value of your account.) As noted above, the withdrawal proceeds are not subject to the CDSC, but only within these percentage limitations. The minimum withdrawal is $50. The Service, and this exclusion from the CDSC, do not apply to a one-time withdrawal.

To qualify for the Service, you must have invested at least $10,000 in Class A, Class B or Class C shares which you still own of any of the funds in the Waddell & Reed Advisors Funds, and, for clients of Waddell & Reed and Legend, any of the funds in the Ivy Family of Funds; or, you must own Class A, Class B or Class C shares having a value of at least $10,000. The value for this purpose is the value at the current offering price.

You can choose to have shares redeemed to receive:


	1.	a monthly, quarterly, semiannual or annual payment of $50 or more;

	2.	a monthly payment, which will change each month, equal to one-twelfth of a percentage of the value of the shares in the Account; (you select the percentage); or

	3.	a monthly or quarterly payment, which will change each month or quarter, by redeeming a number of shares fixed by you (at least five shares).

Shares are redeemed on either the 5th day or the 20th day of the month in which the payment is to be made, or on the prior business day if the 5th or 20th is not a business day. Payments are made within five days of the redemption.

If you have a share certificate for the shares you want to make available for the Service, you must enclose the certificate with the form initiating the Service.

The dividends and other distributions on shares of a class you have made available for the Service are paid in additional shares of that class. All payments under the Service are made by redeeming shares, which may involve a gain or loss for tax purposes. To the extent that payments exceed dividends and other distributions, the number of shares you own will decrease. When all of the shares in an account are redeemed, you will not receive any further payments. Thus, the payments are not an annuity, an income or a return on your investment.

You may, at any time, change the manner in which you have chosen to have shares redeemed to any of the other choices originally available to you. You may, at any time, redeem part or all of the shares in your account; if you redeem all of the shares, the Service is terminated. The Fund can also terminate the Service by notifying you in writing.

After the end of each calendar year, information on shares redeemed will be sent to you to assist you in completing your Federal income tax return.

Exchanges for Shares of Other Funds in the Waddell & Reed Advisors Funds, Waddell & Reed InvestEd Portfolios, Inc. and the Ivy Family of Funds

Class A Share Exchanges

Once a sales charge has been paid on Class A shares of a fund in the Waddell & Reed Advisors Funds or Waddell & Reed InvestEd Portfolios, Inc. and, for clients of Waddell & Reed and Legend, any fund in the Ivy Family of Funds (with the exceptions noted below), these shares and any shares added due to reinvested dividends or other distributions paid on those shares may be freely exchanged for Class A shares of another fund in the Waddell & Reed Advisors Funds or Waddell & Reed InvestEd Portfolios, Inc., and, for clients of Waddell & Reed and Legend, any fund in the Ivy Family of Funds. The shares you exchange must be worth at least $100 or you must already own shares of the fund into which you want to exchange.

You may exchange Class A shares you own in another fund in the Waddell & Reed Advisors Funds or Waddell & Reed InvestEd Portfolios, Inc. and, for clients of Waddell & Reed and Legend, any fund in the Ivy Family of Funds for Class A shares of the Fund without charge if (1) a sales charge was paid on these shares, or (2) the shares were received in exchange for shares for which a sales charge was paid, or (3) the shares were acquired from reinvestment of dividends and other distributions paid on such shares. There may be one or more such exchanges so long as a sales charge was paid on the shares originally purchased. Also, shares acquired without a sales charge because the purchase was $1 million or more will be treated the same, for this purpose, as shares on which a sales charge was paid.

Shares of Waddell & Reed Advisors Municipal Bond Fund, Inc., Waddell & Reed Advisors Fixed Income Funds, Inc. Government Securities Fund, Waddell & Reed Advisors Fixed Income Funds, Inc. Limited-Term Bond Fund, Waddell & Reed Advisors Municipal High Income Fund, Inc., Ivy Funds, Inc. Municipal Bond Fund and Ivy Funds, Inc. Limited-Term Bond Fund are the exceptions and special rules apply. Class A shares of any of these funds may be exchanged for Class A shares of any of the other funds in Waddell & Reed Advisors Funds and Waddell & Reed InvestEd Portfolios, Inc. and, for clients of Waddell & Reed and Legend, any fund in the Ivy Family of Funds only if (1) you received those shares as a result of one or more exchanges of shares on which a maximum sales charge was originally paid (currently, 5.75%), or (2) the shares have been held from the date of original purchase for at least six months.

Subject to the above rules regarding sales charges, you may have a specific dollar amount of Class A shares of Waddell & Reed Advisors Cash Management, Inc. automatically exchanged each month into Class A shares of the Fund (or into Class B or Class C shares of the Fund in certain situations, as noted below) or any other fund in the Waddell & Reed Advisors Funds, provided you already own Class A shares of that fund. The shares of Waddell & Reed Advisors Cash Management, Inc. which you designate for automatic exchange must be worth at least $100, which may be allocated among the Class A shares of different funds in the Waddell & Reed Advisors Funds so long as each fund receives a value of at least $25. Minimum initial investment and minimum balance requirements apply to such automatic exchange service.

Exchanges of shares from Waddell & Reed Advisors Cash Management, Inc. ("money market fund shares") are subject to any sales charge applicable to the Waddell & Reed Advisors Fund being exchanged into, unless the money market fund shares were previously acquired by an exchange from Class A shares of a non-money market fund upon which a sales charge has already been paid.

You may redeem your Class A shares of the Fund and use the proceeds to purchase Class Y shares of the Fund if you meet the criteria for purchasing Class Y shares.

Class B Share Exchanges

You may exchange Class B shares of the Fund for Class B shares of other funds in the Waddell & Reed Advisors Funds and/or Waddell & Reed InvestEd Portfolios, Inc. and, for clients of Waddell & Reed and Legend, any fund in the Ivy Family of Funds without charge.

The redemption of the Fund's Class B shares as part of an exchange is not subject to the CDSC. For purposes of computing the CDSC, if any, applicable to the redemption of the shares acquired in the exchange, those acquired shares are treated as having been purchased when the original redeemed shares were purchased.

You may have a specific dollar amount of Class A shares of Waddell & Reed Advisors Cash Management, Inc. automatically exchanged each month into Class B shares of the Fund or any other fund in the Waddell & Reed Advisors Funds, provided you already own Class B shares of that fund and meet other criteria. The shares of Waddell & Reed Advisors Cash Management, Inc. which you designate for automatic exchange must be worth at least $100, which may be allocated among different Funds so long as each Fund receives a value of at least $25. Minimum initial investment and minimum balance requirements apply to such automatic exchange service.

Class C Share Exchanges

You may exchange Class C shares of the Fund for Class C shares of other funds in the Waddell & Reed Advisors Funds and/or Waddell & Reed InvestEd Portfolios, Inc. and, for clients of Waddell & Reed and Legend, any fund in the Ivy Family of Funds without charge.

The redemption of the Fund's Class C shares as part of an exchange is not subject to the CDSC. For purposes of computing the CDSC, if any, applicable to the redemption of the shares acquired in the exchange, those acquired shares are treated as having been purchased when the original redeemed shares were purchased.

You may have a specific dollar amount of Class A shares of Waddell & Reed Advisors Cash Management, Inc. automatically exchanged each month into Class C shares of the Fund or any other fund in the Waddell & Reed Advisors Funds, provided you already own Class C shares of that fund. The shares of Waddell & Reed Advisors Cash Management, Inc. which you designate for automatic exchange must be worth at least $100, which may be allocated among different Funds so long as each Fund receives a value of at least $25. Minimum initial investment and minimum balance requirements apply to such automatic exchange service.

Class Y Share Exchanges

Class Y shares of the Fund may be exchanged for Class Y shares of any other fund in the Waddell & Reed Advisors Funds and, for clients of Waddell & Reed and Legend, any fund in the Ivy Family of Funds or for Class A shares of Waddell & Reed Advisors Cash Management, Inc.

General Exchange Information

You may exchange only into Funds that are legally permitted for sale in your state of residence. Currently, each Fund within Waddell & Reed Advisors Funds, Waddell & Reed InvestEd Portfolios, Inc. and the Ivy Family of Funds may be sold only within the United States and the Commonwealth of Puerto Rico, except that Ivy Cundill Global Value Fund, Ivy Global Natural Resources Fund and Ivy Pacific Opportunities Fund are not eligible for sale in the Commonwealth of Puerto Rico.

The exchange will be made at the NAVs next determined after receipt of your request in good order by the Fund. When you exchange shares, the total shares you receive will have the same aggregate NAV as the total shares you exchange.

The Fund reserves the right to terminate or modify these exchange privileges at any time. In exercising this right, the Fund may, for example, limit the frequency of exchanges by a shareholder and/or cancel a shareholder's exchange privilege.

Exchanges are considered taxable events and may result in a capital gain or a capital loss for tax purposes.

Redemption Fee

The Fund will deduct a redemption fee of 2.00% from any redemption or exchange proceeds if you sell or exchange any class of shares of the Fund after holding the shares less than 5 days. This fee also applies to Class A shares purchased without a sales charge. If you bought your shares on different days, the "first-in, first out" (FIFO) method is used to determine the holding period. Under this method, the shares you held longest will be redeemed first for purposes of determining whether the redemption fee applies. These fees are paid directly to the Fund.

The Fund's redemption fee will not be assessed against:


	1.	certain omnibus accounts and retirement plan accounts where the omnibus account holder or the retirement plan administrator does not have the capability to impose a redemption fee on its underlying customers' accounts; and certain intermediaries that do not have, or report to the Funds, sufficient information to impose a redemption fee on their customers' accounts

	2.	(i) premature distributions from retirement accounts due to the disability of the participant; (ii) minimum required distributions from retirement accounts; (iii) return of excess contributions in retirement accounts where the excess is reinvested into the Fund; (iv) redemptions resulting in the settlement of an estate due to the death of the shareholder; and (v) reinvested distributions (dividends and capital gains)

	3.	shareholder accounts participating in Strategic Portfolio Allocation (SPA), Managed Allocation Portfolio (MAP) and/or Strategic Asset Management (SAM) advisory services that may periodically rebalance mutual fund holdings at regular intervals or in response to prevailing economic, political and/or financial conditions, as determined by the investment advisor for the advisory service.

	4.	shareholder accounts participating in certain other asset allocation programs in which the sponsoring institution has agreed to monitor for frequent trading activity and, when operationally possible, to assess applicable redemption fees on the Funds' behalf.

In addition to these waivers, the Fund reserves the right to waive the redemption fee at its discretion where it believes such waiver is in the best interests of the Fund, including but not limited to when it determines that imposition of the redemption fee is not necessary to protect the Fund from the effects of excessive short-term trading. In addition, the Fund reserves the right to modify or eliminate the redemption fee or waivers at any time.

Certain intermediaries have agreed to charge the Fund's redemption fee on their customers' accounts. In this case, the amount of the fee and the holding period will generally be consistent with the Fund's criteria. However, due to operational requirements, the intermediaries' methods for tracking and calculating the fee may differ in some respects from the Fund's method. For Fund shares purchased through a financial intermediary, investors should contact their financial intermediary or refer to their plan documents for more information on how the redemption fee is applied to their shares.

Retirement Plans and Other Tax-Advantaged Savings Accounts

Your account may be set up as a funding vehicle for a retirement plan or other tax-advantaged savings account. For individual taxpayers meeting certain requirements, Waddell & Reed offers Custodial Account Agreements or prototype documents for the following retirement plans and other accounts. All of these accounts involve investment in shares of the Fund (or shares of certain other funds in the Waddell & Reed Advisors Funds or, for clients of Waddell & Reed and Legend, shares of certain other funds in the Ivy Family of Funds). Unless otherwise noted, the dollar limits specified below are for 2005 for Federal income tax purposes and may change for subsequent years.

Individual Retirement Accounts (IRAs). Investors having eligible earned income may set up a plan that is commonly called an IRA. Under a traditional IRA, an investor can contribute each year up to 100% of his or her earned income, up to the Annual Dollar Limit per year (provided the investor has not reached age 70 1/2). The Annual Dollar Limit is $4,000 for the tax years 2005 through 2007. For individuals who have attained age 50 by the last day of the calendar year for which the contribution is made, the Annual Dollar Limit also allows a catch-up contribution. The maximum annual catch-up contribution is $500 for 2005, and $1,000 for 2006 and after. For a married couple, the maximum annual contribution is the sum of their separate Annual Dollar Limits or, if less, the couple's combined earned income for the taxable year, even if one spouse had no earned income. Generally, the contributions are deductible unless: 1) the investor is an active participant in an employer-sponsored retirement plan; and 2) the investor's (or the couple's) adjusted gross income exceeds certain levels. A married investor who is not an active participant, who files jointly with his or her spouse and whose combined adjusted gross income does not exceed $150,000 is not affected by his or her spouse's active participant status.

An investor may also use a traditional IRA to receive a rollover contribution that is either (a) a direct rollover distribution from an employer's plan or (b) a rollover of an eligible distribution paid to the investor from an employer's plan or another IRA. To the extent a rollover contribution is made to a traditional IRA, the distribution will not be subject to Federal income tax until distributed from the IRA. A direct rollover generally applies to any distribution from an eligible employer's plan (including a custodial account under Section 403(b)(7) of the Code or a state or local governmental plan under Section 457 of the Code) other than certain periodic payments, required minimum distributions and other specified distributions. In a direct rollover, the eligible rollover distribution is paid directly to the IRA, not to the investor. If, instead, an investor receives payment of an eligible rollover distribution, all or a portion of that distribution generally may be rolled over to an IRA within 60 days after receipt of the distribution. Because mandatory Federal income tax withholding applies to any eligible rollover distribution that is not paid in a direct rollover, investors should consult their tax advisers or pension consultants as to the applicable tax rules. If you already have an IRA, you may have the assets in that IRA transferred directly to an IRA offered by Waddell & Reed.

Roth IRAs. Investors having eligible earned income and whose adjusted gross income (or combined adjusted gross income, if married) does not exceed certain levels may establish and contribute up to the Annual Dollar Limit per tax year to a Roth IRA (or to any combination of Roth and traditional IRAs). An individual's maximum Roth IRA contribution for a taxable year is reduced by the amount of any contributions that individual makes to a traditional IRA for that year. For a married couple, the annual maximum is the sum of their separate Annual Dollar Limits or, if less, the couple's combined earned income for the taxable year, even if one spouse had no earned income.

In addition, if your modified adjusted gross income is not more than $100,000, and you are not married filing a separate income tax return, you are eligible to convert all or any portion of your existing Traditional IRA(s) into your Roth IRA(s).

Contributions to a Roth IRA are not deductible; however, earnings accumulate tax-free in the Roth IRA, and withdrawals of earnings are not subject to Federal income tax if the account has been held for at least five years and the account holder has reached age 59 1/2 (or certain other conditions apply).

Coverdell Education Savings Accounts (formerly, Education IRAs). Although not technically for retirement savings, Coverdell Education Savings Accounts provide a vehicle for saving for a child's education. The total amount that may be contributed to any and all Coverdell ESAs on behalf of a Designated Beneficiary is $2,000 per year, excluding rollover and transfer contributions. Contributions are not deductible and may not be made after the beneficiary reaches age 18 (except that this age limit does not apply to a beneficiary with "special needs," as defined in the Code). Earnings accumulate tax-free, and withdrawals are not subject to tax if used to pay the qualified education expenses of the beneficiary (or certain members of his or her family). Special rules apply where the beneficiary is a special needs person.

Simplified Employee Pension (SEP) plans. Employers can make contributions to SEP-IRAs established for employees. Generally, an employer may contribute up to 25% of compensation, subject to certain maximums, per year for each employee.

Savings Incentive Match Plans for Employees (SIMPLE Plans). An employer with 100 or fewer eligible employees that does not sponsor another active retirement plan may establish a SIMPLE plan to contribute to its employees' retirement accounts. A SIMPLE plan can be in the form of either an IRA or a 401(k) plan. In general, an employer can choose to match employee contributions dollar-for-dollar (up to 3% of an employee's compensation) or may contribute to all eligible employees 2% of their compensation, whether or not they defer salary to their retirement plans. SIMPLE IRA plans involve fewer administrative requirements, generally, than traditional 401(k) or other qualified plans.

Owner-Only Keogh Plans. A Keogh plan, which is available to self-employed individuals and their spouses, or one or more partners and their spouses, is a defined contribution plan that may be either a money purchase plan or a profit-sharing plan. As a general rule, an investor under a defined contribution Keogh plan can contribute up to 100% of his or her annual earned income, with a maximum of $42,000 for 2005 and $44,000 for 2006.

457(b) Plans. If an investor is an employee of a state or local government or of certain types of tax exempt organizations, he or she may be able to enter into a deferred compensation arrangement in accordance with Section 457 of the Code.

403(b)/TSAs - Custodial Accounts and Title I Plans. If an investor is an employee of a public school system, a church or certain types of tax exempt organizations, he or she may be able to enter into a deferred compensation arrangement through a custodial account under Section 403(b)(7) of the Code. Some tax exempt organizations have adopted Title I plans, which are funded by employer contributions in addition to employee deferrals.

Pension and Profit-Sharing Plans, including 401(k) Plans. With a 401(k) plan, employees can make tax-deferred contributions to a plan to which the employer may also contribute, usually on a matching basis. An employee may defer each year the lesser of 100% of income or $14,000 of compensation for 2005 and $15,000 for 2006, which may be increased each year based on cost-of-living adjustments. An employee who has attained the age of 50 by the end of the year may also make a catch-up contribution of $4,000 for 2005, $5,000 for 2006.

More detailed information about these arrangements and applicable forms are available from Waddell & Reed. These tax-advantaged savings plans and other accounts may be treated differently under state tax law and may involve complex tax questions as to premature distributions and other matters. Investors should consult their tax adviser or pension consultant.

Redemptions

The Prospectus gives information as to redemption procedures. Redemption payments are made within seven days from receipt of a request in good order, unless delayed because of emergency conditions as determined by the SEC, when the NYSE is closed other than for weekends or holidays, or when trading on the NYSE is restricted. Payment is made in cash, although under extraordinary conditions redemptions may be made in portfolio securities. Payment for redemptions of shares of the Fund may be made in portfolio securities when the Board of Directors determines that conditions exist making cash payments undesirable. Redemptions made in securities will be made only in readily marketable securities. Securities used for payment of redemptions are valued at the price used in figuring NAV. There would be brokerage costs to the redeeming shareholder in selling such securities. The Fund, however, has elected to be governed by Rule 18f-1 under the 1940 Act, pursuant to which it is obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder.

Reinvestment Privilege

The Fund offers a one-time reinvestment privilege that allows you to reinvest without charge all or part of any amount of Class A shares you redeem from the Fund by sending to the Fund the amount you wish to reinvest. The amount you return will be reinvested in Class A shares at the NAV next calculated after the Fund receives the returned amount. Your written request to reinvest and the amount to be reinvested must be received within 60 days after your redemption request was received, and the Fund must be offering Class A shares of this Fund at the time your reinvestment request is received. You can do this only once as to Class A shares of the Fund. You do not lose this privilege by redeeming shares to invest the proceeds at NAV in a Keogh plan or an IRA.

There is also a reinvestment privilege for Class B and Class C shares and, where applicable, certain Class A shares under which you may reinvest in the Fund all or part of any amount of the shares you redeemed and have the corresponding amount of the CDSC, if any, which you paid restored to your account by adding the amount of that charge to the amount you are reinvesting in shares of the same class of this Fund. If Fund shares of that class are then being offered, you can put all or part of your redemption payment back into such shares at the NAV next calculated at the time your request is received. Your written request to do this must be received within 60 days after your redemption request was received. You can do this only once as to Class B and Class C shares of the Fund. For purposes of determining future CDSC, the reinvestment will be treated as a new investment. You do not lose this privilege by redeeming shares to invest the proceeds at NAV in a Keogh plan or an IRA.

Mandatory Redemption of Certain Small Accounts

The Fund has the right to compel the redemption of shares held under any account or any plan if the aggregate NAV of such shares (taken at cost or value as the Board of Directors may determine) is less than $500. The Board of Directors has no intent to compel redemptions in the foreseeable future. If it should elect to compel redemptions, shareholders who are affected will receive prior written notice and will be permitted 60 days to bring their accounts up to the minimum before this redemption is processed.

Determination of Offering Price

The NAV of each class of the shares of the Fund is the value of the assets of that class, less the liabilities of that class, divided by the total number of outstanding shares of that class.

Class A shares of the Fund are sold at their next determined NAV plus the sales charge described in the Prospectus. The sales charge is paid to Waddell & Reed, the Fund's underwriter. The price makeup as of June 30, 2005, which is the date of the most recent balance sheet incorporated into this SAI by reference, was as follows:


NAV per Class A share (Class A net assets divided by Class A shares outstanding)		$7.39
	Add: selling commission (5.75% of offering price)	.45
		-----
Maximum offering price per Class A share (Class A NAV divided by 94.25%)		$7.84
		====

The offering price of a Class A share is its NAV next calculated following acceptance of a purchase request, in good order, plus the sales charge, as applicable. The offering price of a Class B share, Class C share, Class Y share or certain Class A shares is the applicable class NAV next calculated following acceptance of a purchase request, in good order. The number of shares you receive for your purchase depends on the next offering price after Waddell & Reed, or an authorized third party, properly receives and accepts your order. Therefore, if your order is received in proper form by Waddell & Reed or an authorized third party before 4:00 p.m. Eastern time on a day in which the NYSE is open, you should generally receive that day's offering price. If your order is received in proper form by Waddell & Reed or an authorized third party after 4:00 p.m. Eastern time, you will receive the offering price as calculated as of the close of business of the NYSE on the next business day. You should consult that firm to determine the time by which it must receive your order for you to purchase shares of a Fund at that day's price. You will be sent a confirmation after your purchase (except for automatic transactions) which will indicate how many shares you have purchased.

Waddell & Reed need not accept any purchase order, and it or the Fund may determine to discontinue offering Fund shares for purchase.

The NAV and offering price per share are computed once on each day that the NYSE is open for trading as of the later of the close of the regular session of the NYSE or the close of the regular session of any other securities or commodities exchange on which an option or futures contract held by the Fund is traded. The NYSE annually announces the days on which it will not be open for trading. The most recent announcement indicates that the NYSE will not be open on the following days: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. However, it is possible that the NYSE may close on other days. The NAV will likely change every business day, since typically the value of the assets and the number of shares outstanding change every business day.

The securities in the portfolio of the Fund, except as otherwise noted, that are listed or traded on a stock exchange, are valued on the basis of the last sale on that day or, lacking any sales, at a price that is the mean between the closing bid and asked prices. Other securities that are traded over-the-counter are priced using the Nasdaq Stock Market, which provides information on bid and asked prices quoted by major dealers in such stocks. Bonds, other than convertible bonds, are valued using a third-party pricing system. Convertible bonds are valued using this pricing system only on days when there is no sale reported. Short-term debt securities are valued at amortized cost, which approximates market value. When market quotations are not readily available, securities and other assets are valued at fair value as determined in good faith under procedures established by, and under the general supervision and responsibility of, the Board of Directors.

Options and futures contracts purchased and held by the Fund are valued at the last sales price thereof on the securities or commodities exchanges on which they are traded, or, if there are no transactions, at the mean between bid and asked prices. Ordinarily, the close of the regular session for options trading on national securities exchanges is 4:10 p.m. Eastern time and the close for the regular session for commodities exchanges is 4:15 p.m. Eastern time. Futures contracts will be valued with reference to established futures exchanges. The value of a futures contract purchased by the Fund will be either the closing price of that contract or the bid price. Conversely, the value of a futures contract sold by the Fund will be either the closing purchase price or the asked price.

When the Fund writes a put or call, an amount equal to the premium received is included in the Statement of Assets and Liabilities as an asset, and an equivalent deferred credit is included in the liability section. The deferred credit is marked-to-market (that is, treated as sold for its fair market value) to reflect the current market value of the put or call. If a call the Fund wrote is exercised, the proceeds received on the sale of the related investment are increased by the amount of the premium the Fund received. If the Fund exercised a call it purchased, the amount paid to purchase the related investment is increased by the amount of the premium paid. If a put written by the Fund is exercised, the amount that the Fund pays to purchase the related investment is decreased by the amount of the premium it received. If the Fund exercises a put it purchased, the amount the Fund receives from the sale of the related investment is reduced by the amount of the premium it paid. If a put or call written by the Fund expires, it has a gain in the amount of the premium; if the Fund enters into a closing purchase transaction, it will have a gain or loss depending on whether the premium was more or less than the cost of the closing transaction.

Foreign currency exchange rates are generally determined prior to the close of trading of the regular session of the NYSE. Occasionally events affecting the value of foreign investments and such exchange rates occur between the time at which they are determined and the close of the regular session of trading on the NYSE, which events will not be reflected in a computation of the Fund's NAV on that day. If events materially affecting the value of such investments or currency exchange rates occur during such time period, investments will be valued at their fair value as determined in good faith by or under the direction of the Board of Directors. The foreign currency exchange transactions of the Fund conducted on a spot (that is, cash) basis are valued at the spot rate for purchasing or selling currency prevailing on the foreign exchange market. This rate under normal market conditions differs from the prevailing exchange rate in an amount generally less than one-tenth of one percent due to the costs of converting from one currency to another.

Optional delivery standby commitments are valued at fair value under the general supervision and responsibility of the Fund's Board of Directors. They are accounted for in the same manner as exchange-listed puts.

TAXATION OF THE FUND

General

The Fund has qualified since its inception for treatment as a regulated investment company under the Code (RIC), so that it is relieved of Federal income tax on that part of its investment company taxable income (consisting generally of net investment income, the excess of net short-term capital gains over net long-term capital losses and net gains from certain foreign currency transactions, all determined without regard to any deduction for dividends paid), and net capital gain (the excess of net long-term capital gain over net short-term capital loss) that it distributes to its shareholders. To continue to qualify for treatment as a RIC, the Fund must distribute to its shareholders for each taxable year at least 90% of its investment company taxable income ("Distribution Requirement") and must meet several additional requirements. These requirements include the following: (1) the Fund must derive at least 90% of its gross income each taxable year from dividends, interest, payments with respect to securities loans and gains from the sale or other disposition of securities, or foreign currencies or other income (including gains from options, futures contracts or forward currency contracts) derived with respect to its business of investing in securities or those currencies ("Income Requirement"); (2) at the close of each quarter of the Fund's taxable year, at least 50% of the value of its total assets must be represented by cash and cash items, U.S. Government securities, securities of other RICs and other securities that are limited, in respect of any one issuer, to an amount that does not exceed 5% of the value of the Fund's total assets and that does not represent more than 10% of the issuer's outstanding voting securities; and (3) at the close of each quarter of the Fund's taxable year, not more than 25% of the value of its total assets may be invested in securities (other than U.S. Government securities or the securities of other RICs) of any one issuer.

If the Fund failed to qualify for treatment as a RIC for any taxable year, (1) it would be taxed as an ordinary corporation on the full amount of its taxable income for that year (even if it distributed that income to its shareholders) and (2) the shareholders would treat all distributions out of its earnings and profits, including distributions of net capital gains, as dividends (that is, as ordinary income or, if they are "qualified dividend income" as described in the Prospectus, at the long-term capital gain rate for individuals). In addition, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying for RIC treatment.

Dividends and other distributions the Fund declares in December of any year that are payable to its shareholders of record on a date in that month are deemed to have been paid by the Fund and received by the shareholders on December 31 even if the Fund pays them during the following January. Accordingly, those dividends and other distributions will be taxed to the shareholders for the year in which that December 31 falls.

If Fund shares are sold at a loss after being held for six months or less, the loss will be treated as a long-term, instead of short-term, capital loss to the extent of any capital gain distributions received on those shares. Investors also should be aware that if they purchase shares shortly before the record date for a dividend or other distribution, they will receive some portion of the purchase price back as a taxable distribution.

The Fund will be subject to a nondeductible 4% excise tax (Excise Tax) to the extent it fails to distribute, by the end of any calendar year, substantially all of its ordinary income for that year and capital gain net income for the one-year period ending on October 31 of that year, plus certain other amounts. For these purposes, the Fund may defer into the next calendar year net capital loss incurred between November 1 and the end of the current calendar year. It is the policy of the Fund to pay sufficient dividends and other distributions each year to avoid imposition of the Excise Tax.

Income from Foreign Securities

Dividends and interest the Fund receives, and gains it realizes, on foreign securities may be subject to income, withholding or other taxes imposed by foreign countries and U.S. possessions (collectively, foreign taxes) that would reduce the yield and/or total return on its securities. Tax conventions between certain countries and the United States may reduce or eliminate foreign taxes, however, and many foreign countries do not impose taxes on capital gains in respect of investments by foreign investors.

The Fund may invest in the stock of passive foreign investment companies (PFICs). A PFIC is any foreign corporation (with certain exceptions) that, in general, meets either of the following tests: (1) at least 75% of its gross income for the taxable year is passive or (2) an average of at least 50% of its assets produce, or are held for the production of, passive income. Under certain circumstances, the Fund will be subject to Federal income tax on a portion of any excess distribution it receives on the stock of a PFIC or of any gain on disposition of the stock (collectively, PFIC income), plus interest thereon, even if the Fund distributes the PFIC income as a taxable dividend to its shareholders. The balance of the PFIC income will be included in the Fund's investment company taxable income and, accordingly, will not be taxable to it to the extent it distributes that income to its shareholders. However, distributions of PFIC income to shareholders are not "qualified dividend income" (as described in the Prospectus).

If the Fund invests in a PFIC and elects to treat the PFIC as a qualified electing fund (QEF), then in lieu of the foregoing tax and interest obligation, the Fund will be required to include in income each year its pro rata share of the QEF's annual ordinary earnings and net capital gain -- which the Fund probably would have to distribute to satisfy the Distribution Requirement and avoid imposition of the Excise Tax -- even if the QEF did not distribute those earnings and gain to the Fund. In most instances it will be very difficult, if not impossible, to make this election because of certain requirements thereof.

The Fund may elect to mark to market its stock in any PFIC. Marking-to-market, in this context, means including in ordinary income each taxable year the excess, if any, of the fair market value of a PFIC's stock over the Fund's adjusted basis therein as of the end of that year. Pursuant to the election, the Fund also may deduct (as an ordinary, not capital, loss) the excess, if any, of its adjusted basis in PFIC stock over the fair market value thereof as of the taxable year-end, but only to the extent of any net mark-to-market gains with respect to that stock the Fund included in income for prior taxable years under the election (and under regulations proposed in 1992 that provided a similar election with respect to the stock of certain PFICs). The Fund's adjusted basis in each PFIC's stock with respect to which it makes this election will be adjusted to reflect the amounts of income included and deductions taken under the election.

Foreign Currency Gains and Losses

Section 988 of the Code generally treats as ordinary income or loss gains or losses (1) from the disposition of foreign currencies, including forward currency contracts, (2) except in certain circumstances, from options and forward contracts on foreign currencies (and on financial instruments involving foreign currencies) and from notional principal contracts (e.g., swaps, caps, floors and collars) involving payments denominated in foreign currencies, (3) on the disposition of each debt security denominated in a foreign currency that are attributable to fluctuations in the value of the foreign currency between the date of acquisition of the security and the date of its disposition and (4) that are attributable to fluctuations in exchange rates that occur between the time the Fund accrues interest, dividends or other receivables, or expenses or other liabilities, denominated in a foreign currency and the time the Fund actually collects the receivables or pays the liabilities, generally are treated as ordinary income or loss. These gains or losses may increase or decrease the amount of the Fund's investment company taxable income to be distributed to its shareholders as ordinary income, rather than affecting the amount of its net capital gain.

Income from Financial Instruments and Foreign Currencies

The use of hedging and option income strategies, such as writing (selling) and purchasing options and futures contracts and entering into forward currency contracts, involves complex rules that will determine for income tax purposes the amount, character and timing of recognition of the gains and losses the Fund realizes in connection therewith. Gains from the disposition of foreign currencies (except certain gains that may be excluded by future regulations), and gains from options, futures contracts and forward currency contracts the Fund derives with respect to its business of investing in securities, will be treated as qualifying income of a RIC under the Code.

Any income the Fund earns from writing options is treated as short-term capital gains. If the Fund enters into a closing purchase transaction, it will have a short-term capital gain or loss based on the difference between the premium it receives for the option it wrote and the premium it pays for the option it buys. If an option written by the Fund lapses without being exercised, the premium it receives also will be a short-term capital gain. If such an option is exercised and the Fund thus sells the securities subject to the option, the premium the Fund receives will be added to the exercise price to determine the gain or loss on the sale.

Certain futures contracts, forward currency contracts and non-equity options (that is, certain listed options, such as those on a broad-based securities index) in which the Fund may invest will be "Section 1256 contracts." Section 1256 contracts the Fund holds at the end of its taxable year, other than contracts subject to a mixed straddle election the Fund may make, are marked-to-market (that is, treated as sold at that time for their fair market value) for Federal income tax purposes, with the result that unrealized gains or losses are treated as though they were realized. Sixty percent of any net gains or losses recognized on these deemed sales, and 60% of any net realized gains or losses from any actual sales of Section 1256 contracts, are treated as long-term capital gains or losses, and the balance is treated as short-term capital gains or losses. Section 1256 contracts also may be marked-to-market for purposes of the Excise Tax. The Fund may need to distribute any mark-to-market gains to its shareholders to satisfy the Distribution Requirement and/or avoid imposition of the Excise Tax, even though it may not have closed the transactions and received cash to pay the distributions.

Code Section 1092 (dealing with straddles) also may affect the taxation of options, futures contracts and forward currency contracts in which the Fund may invest. That section defines a "straddle" as offsetting positions with respect to actively traded personal property; for these purposes, options, futures contracts and forward currency contracts are positions in personal property. Section 1092 generally provides that any loss from the disposition of a position in a straddle may be deducted only to the extent the loss exceeds the unrealized gain on the offsetting position(s) of the straddle. In addition, these rules may postpone the recognition of loss that would otherwise be recognized under the mark-to-market rules discussed above. The regulations under Section 1092 also provide certain wash sale rules, which apply to transactions where a position is sold at a loss and a new offsetting position is acquired within a prescribed period, and short sale rules applicable to straddles. If the Fund makes certain elections, the amount, character and timing of the recognition of its gains and losses from the affected straddle positions would be determined under rules that vary according to the elections made. Because only a few of the regulations implementing the straddle rules have been promulgated, the tax consequences of straddle transactions to the Fund are not entirely clear.

If the Fund has an appreciated financial position -- generally, an interest (including an interest through an option, futures or forward currency contract or short sale) with respect to any stock, debt instrument (other than straight debt) or partnership interest the fair market value of which exceeds its adjusted basis -- and enters into a constructive sale of the position, the Fund will be treated as having made an actual sale thereof, with the result that it will recognize gain at that time. A constructive sale generally consists of a short sale, an offsetting notional principal contract or a futures or forward currency contract the Fund or a related person enters into with respect to the same or substantially identical property. In addition, if the appreciated financial position is itself a short sale or such a contract, acquisition of the underlying property or substantially identical property will be deemed a constructive sale. The foregoing will not apply, however, to any transaction of the Fund during any taxable year that otherwise would be treated as a constructive sale if the transaction is closed within 30 days after the end of that year and the Fund holds the appreciated financial position unhedged for 60 days after that closing (i.e., at no time during that 60-day period is the Fund's risk of loss regarding that position reduced by reason of certain specified transactions with respect to substantially identical or related property, such as having an option to sell, being contractually obligated to sell, making a short sale or granting an option to buy substantially identical stock or securities).

Municipal OID Securities

The Fund may acquire zero coupon municipal bonds or other municipal securities issued with OID. As a holder of those securities, the Fund must account for the OID that accrues on them during the taxable year, even if the Fund receives no corresponding payment on the securities during the year. Because the Fund annually must distribute substantially all of its investment company taxable income and net tax-exempt income, including any accrued OID, to satisfy the Distribution Requirement, it may be required in a particular year to distribute as a dividend an amount that is greater than the total amount of cash it actually receives. Those distributions will be made from the Fund's cash assets or from the proceeds of sales of portfolio securities, if necessary. The Fund may realize capital gains or losses from those sales, which would increase or decrease its investment company taxable income and/or net capital gains.

Taxable Zero Coupon Securities

The Fund may acquire taxable zero coupon or other securities issued with OID. As a holder of those securities, the Fund must include in its income the portion of the OID that accrues on them during the taxable year, even if the Fund receives no corresponding payment on the securities during the year. Because the Fund annually must distribute substantially all of its investment company taxable income, including any accrued OID, to satisfy the Distribution Requirement and avoid imposition of the Excise Tax, it may be required in a particular year to distribute as a dividend an amount that is greater than the total amount of cash it actually receives. Those distributions will be made from the Fund's cash assets or from the proceeds of sales of portfolio securities, if necessary. The Fund may realize capital gains or losses from those sales, which would increase or decrease its investment company taxable income and/or net capital gains.

UNDERWRITER

Waddell & Reed acts as principal underwriter and distributor of the Fund's shares pursuant to an underwriting agreement entered into between Waddell & Reed and the Fund (the Underwriting Agreement). The Underwriting Agreement requires Waddell & Reed to use its best efforts to sell the shares of the Fund but is not exclusive, and permits and recognizes that Waddell & Reed also distributes shares of other investment companies and other securities. Shares are sold on a continuous basis. Waddell & Reed is not required to sell any particular number of shares, and sells shares only for purchase orders received. Under this agreement, Waddell & Reed pays the costs of sales literature, including the costs of shareholder reports used as sales literature.

The dollar amounts of underwriting commissions for Class A shares for the fiscal years ended June 30, 2005, June 30, 2004 and June 30, 2003 were $970,990, $1,399,559 and $1,006,132, respectively.

The dollar amounts of underwriting commissions for Class B shares for the fiscal years ended June 30, 2005, June 30, 2004 and June 30, 2003 were $35,026, $35,456 and $34,644, respectively.

The dollar amounts of underwriting commissions for Class C shares for the fiscal years ended June 30, 2005, June 30, 2004 and June 30, 2003 were $1,611, $1,456 and $1,012, respectively.

The amounts retained by Waddell & Reed for the fiscal years ended June 30, 2005, June 30, 2004 and June 30, 2003 were, in the aggregate, $379,960, $526,816 and $377,589, respectively.

FINANCIAL STATEMENTS

The Financial Statements, including notes thereto and the report of the independent registered public accounting firm, for the fiscal year ended June 30, 2005 are incorporated herein by reference. They are contained in the Fund's Annual Report to Shareholders, dated June 30, 2005, which is available upon request.

Quarterly Portfolio Holdings

A complete schedule of portfolio holdings for the first and third quarters of each fiscal year is filed with the SEC on the Fund's Form N-Q. This form may be obtained in the following ways:

On the SEC's website at http://www.sec.gov.
For review and copy at the SEC's Public Reference Room in Washington, D.C. Information on the operations of the Public Reference Room may be obtained by calling 1.800.SEC.0330.
Without charge, on the Fund's website at http://www.waddell.com.

APPENDIX A

The following are descriptions of some of the ratings of securities which the Fund may use. The Fund may also use ratings provided by other nationally recognized statistical rating organizations in determining the securities eligible for investment.

DESCRIPTION OF BOND RATINGS

Standard & Poor's, a division of The McGraw-Hill Companies, Inc. An S&P corporate bond rating is a current assessment of the creditworthiness of an obligor with respect to a specific obligation. This assessment of creditworthiness may take into consideration obligors such as guarantors, insurers or lessees.

The debt rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment as to market price or suitability for a particular investor.

The ratings are based on current information furnished to S&P by the issuer or obtained by S&P from other sources it considers reliable. S&P does not perform an audit in connection with any rating and may, on occasion, rely on unaudited financial information. The ratings may be changed, suspended or withdrawn as a result of changes in, or unavailability of, such information, or based on other circumstances.

The ratings are based, in varying degrees, on the following considerations:


	1.	Likelihood of default -- capacity and willingness of the obligor as to the timely payment of interest and repayment of principal in accordance with the terms of the obligation;

	2.	Nature of and provisions of the obligation;

	3.	Protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.

AAA -- Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.

AA -- Debt rated AA also qualifies as high quality debt. Capacity to pay interest and repay principal is very strong, and debt rated AA differs from AAA issues only in a small degree.

A -- Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.

BBB -- Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories.

BB, B, CCC, CC, C -- Debt rated BB, B, CCC, CC and C is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. BB indicates the lowest degree of speculation and C the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major exposures to adverse conditions.

BB -- Debt rated BB has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The BB rating category is also used for debt subordinated to senior debt that is assigned an actual or implied BBB- rating.

B -- Debt rated B has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The B rating category is also used for debt subordinated to senior debt that is assigned an actual or implied BB or BB- rating.

CCC -- Debt rated CCC has a currently indefinable vulnerability to default, and is dependent upon favorable business, financial and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial or economic conditions, it is not likely to have the capacity to pay interest and repay principal. The CCC rating category is also used for debt subordinated to senior debt that is assigned an actual or implied B or B- rating.

CC -- The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

C -- The rating C is typically applied to debt subordinated to senior debt which is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

CI -- The rating CI is reserved for income bonds on which no interest is being paid.

D -- Debt rated D is in payment default. It is used when interest payments or principal payments are not made on a due date even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace periods. The D rating will also be used upon a filing of a bankruptcy petition if debt service payments are jeopardized.

Plus (+) or Minus (-) -- To provide more detailed indications of credit quality, the ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

NR -- Indicates that no public rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy.

Debt Obligations of issuers outside the United States and its territories are rated on the same basis as domestic corporate and municipal issues. The ratings measure the creditworthiness of the obligor but do not take into account currency exchange and related uncertainties.

Bond Investment Quality Standards: Under present commercial bank regulations issued by the Comptroller of the Currency, bonds rated in the top four categories (AAA, AA, A, BBB, commonly known as investment grade ratings) are generally regarded as eligible for bank investment. In addition, the laws of various states governing legal investments may impose certain rating or other standards for obligations eligible for investment by savings banks, trust companies, insurance companies and fiduciaries generally.

Moody's Investors Service. A brief description of the applicable Moody's rating symbols and their meanings follows:

Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as gilt edge. Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.

Aa -- Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuations of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.

A -- Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.

Baa -- Bonds which are rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Some bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

NOTE: Bonds within the above categories which possess the strongest investment attributes are designated by the symbol 1 following the rating.

Ba -- Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during good and bad times over the future. Uncertainty of position characterizes bonds in this class.

B -- Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.

Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca -- Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C -- Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Description of preferred stock ratings

Standard & Poor's, a division of The McGraw-Hill Companies, Inc. An S&P preferred stock rating is an assessment of the capacity and willingness of an issuer to pay preferred stock dividends and any applicable sinking fund obligations. A preferred stock rating differs from a bond rating inasmuch as it is assigned to an equity issue, which issue is intrinsically different from, and subordinated to, a debt issue. Therefore, to reflect this difference, the preferred stock rating symbol will normally not be higher than the debt rating symbol assigned to, or that would be assigned to, the senior debt of the same issuer.

The preferred stock ratings are based on the following considerations:


	1.	Likelihood of payment - capacity and willingness of the issuer to meet the timely payment of preferred stock dividends and any applicable sinking fund requirements in accordance with the terms of the obligation;

	2.	Nature of, and provisions of, the issue;

	3.	Relative position of the issue in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.

AAA -- This is the highest rating that may be assigned by S&P to a preferred stock issue and indicates an extremely strong capacity to pay the preferred stock obligations.

AA -- A preferred stock issue rated AA also qualifies as a high-quality fixed income security. The capacity to pay preferred stock obligations is very strong, although not as overwhelming as for issues rated AAA.

A -- An issue rated A is backed by a sound capacity to pay the preferred stock obligations, although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions.

BBB -- An issue rated BBB is regarded as backed by an adequate capacity to pay the preferred stock obligations. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to make payments for a preferred stock in this category than for issues in the 'A' category.

BB, B, CCC -- Preferred stock rated BB, B, and CCC are regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay preferred stock obligations. BB indicates the lowest degree of speculation and CCC the highest degree of speculation. While such issues will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions.

CC -- The rating CC is reserved for a preferred stock issue in arrears on dividends or sinking fund payments but that is currently paying.

C -- A preferred stock rated C is a non-paying issue.

D -- A preferred stock rated D is a non-paying issue with the issuer in default on debt instruments.

NR -- This indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy.

Plus (+) or minus (-) -- To provide more detailed indications of preferred stock quality, the rating from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

A preferred stock rating is not a recommendation to purchase, sell or hold a security inasmuch as it does not comment as to market price or suitability for a particular investor. The ratings are based on current information furnished to S&P by the issuer or obtained by S&P from other sources it considers reliable. S&P does not perform an audit in connection with any rating and may, on occasion, rely on unaudited financial information. The ratings may be changed, suspended or withdrawn as a result of changes in, or unavailability of, such information or based on other circumstances.

Moody's Investors Service. Because of the fundamental differences between preferred stocks and bonds, a variation of Moody's familiar bond rating symbols is used in the quality ranking of preferred stock. The symbols are designed to avoid comparison with bond quality in absolute terms. It should always be borne in mind that preferred stock occupies a junior position to bonds within a particular capital structure and that these securities are rated within the universe of preferred stocks.

Note: Moody's applies numerical modifiers 1, 2 and 3 in each rating classification; the modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.

Preferred stock rating symbols and their definitions are as follows:

aaa -- An issue which is rated aaa is considered to be a top-quality preferred stock. This rating indicates good asset protection and the least risk of dividend impairment within the universe of preferred stocks.

aa -- An issue which is rated aa is considered a high-grade preferred stock. This rating indicates that there is a reasonable assurance the earnings and asset protection will remain relatively well-maintained in the foreseeable future.

a -- An issue which is rated a is considered to be an upper-medium grade preferred stock. While risks are judged to be somewhat greater than in the aaa and aa classification, earnings and asset protection are, nevertheless, expected to be maintained at adequate levels.

baa -- An issue which is rated baa is considered to be a medium-grade preferred stock, neither highly protected nor poorly secured. Earnings and asset protection appear adequate at present but may be questionable over any great length of time.

ba -- An issue which is rated ba is considered to have speculative elements and its future cannot be considered well assured. Earnings and asset protection may be very moderate and not well safeguarded during adverse periods. Uncertainty of position characterizes preferred stocks in this class.

b -- An issue which is rated b generally lacks the characteristics of a desirable investment. Assurance of dividend payments and maintenance of other terms of the issue over any long period of time may be small.

caa -- An issue which is rated caa is likely to be in arrears on dividend payments. This rating designation does not purport to indicate the future status of payments.

ca -- An issue which is rated ca is speculative in a high degree and is likely to be in arrears on dividends with little likelihood of eventual payments.

c -- This is the lowest rated class of preferred or preference stock. Issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

REGISTRATION STATEMENT

PART C

OTHER INFORMATION

23. Exhibits: Waddell & Reed Advisors Continental Income Fund, Inc.

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(a)	Articles of Incorporation, as amended, filed by EDGAR on June 29, 1998 as EX-99.B1-charter to Post-Effective Amendment No. 57 to the Registration Statement on Form N-1A*

	Articles Supplementary, filed by EDGAR on June 30, 1995 as EX-99.B1-ciartsup to Post Effective Amendment No. 54 to the Registration Statement on Form N-1A*

	Articles of Amendment filed by EDGAR on June 29,2000 as EX-99.B(a)ciartsup to Post-Effective Amendment No. 61 to the Registration Statement on Form N-1A*

(b)	By-Laws, filed by EDGAR on June 27, 1996 as EX-99.B2-cibylaw to Post Effective Amendment No. 55 to the Registration Statement on Form N-1A*

	Amendment to Bylaws filed by EDGAR on April 30, 1999 as EX-99.B(b)-cibylaw2 to Post-Effective Amendment No. 58 to the Registration Statement on Form N-1A*

	Amendment to Bylaws filed by EDGAR on December 14, 2000 as EX-99.B(b)cibylaw to Post Effective Amendment No. 62 to the Registration Statement on Form N-1A*

	Amendment to Bylaws dated November 19, 2003, filed by EDGAR on August 29, 2005 as EX-99.B(b)cibylawamend to Post-Effective Amendment No. 66 to the Registration Statement on Form N-1A*

(c)	Articles Fifth and Seventh of the Articles of Incorporation and Articles I and IV of the Bylaws each define the rights of shareholders.

(d)	Investment Management Agreement, as amended and restated, filed by EDGAR on October 15, 2002 as EX-99.B5-ciima to Post Effective Amendment No. 64 to the Registration Statement on Form N-1A*

(e)	Underwriting Agreement, filed by EDGAR on June 30, 1995 as EX-99.B6-ciua to Post Effective Amendment No. 54 to the Registration Statement on Form N-1A*

	Amendment to Underwriting Agreement, dated July 24, 2002, filed by EDGAR on October 15, 2002 as EX-99.B(e)ciuadel to Post Effective Amendment No. 64 to the Registration Statement on Form N-1A*

(f)	Not applicable

(g)	Custodian Agreement, as amended, filed by EDGAR on June 29, 2000 as EX-99.B(g)cica to Post-Effective Amendment No. 61 to the Registration Statement on Form N-1A*

	Amendment to Custodian Agreement, dated July 1, 2001, filed by EDGAR on July 26, 2001 as EX-99.B(g)cicaamend to 1940 Act Amendment No. 32 to the Registration Statement on Form N-1A*

	Appendix A to the Custodian Agreement, as revised and effective March 31, 2003, filed by EDGAR on October 31, 2003 as EX-99.B(g)cicustappa to Post-Effective Amendment No. 65 to the Registration Statement on Form N-1A*

	Delegation Agreement, dated March 31, 2003, filed by EDGAR on October 31, 2003 as EX-99.B(g)cicadel to Post-Effective Amendment No. 65 to the Registration Statement on Form N-1A*

(h)	Shareholder Servicing Agreement, as amended August 22, 2001, filed by EDGAR on October 25, 2001 as EX-99.B(h)cissa to Post Effective Amendment No. 63 to the Registration Statement on Form N-1A*

	Amendment to the Shareholder Servicing Agreement, dated July 24, 2002, filed by EDGAR on October 15, 2002 as EX-99.B(h)cissadel to Post Effective Amendment No. 64 to the Registration Statement on Form N-1A*

	Exhibit B, Compensation, to the Shareholder Servicing Agreement, effective December 1, 2001, filed by EDGAR on October 15, 2002 as EX-99.B(h)cissacomp to Post Effective Amendment No. 64 to the Registration Statement on Form N-1A*

	Exhibit C, Fidelity Bond, to the Shareholder Servicing Agreement, effective November 30, 2004, attached hereto as EX-99.B(h)ssaExC

	Class Y Letter of Understanding, filed by EDGAR on June 27, 1996 as EX-99.B9-cilou to Post Effective Amendment No. 55 to the Registration Statement on Form N-1A*

	Accounting Services Agreement, as amended and restated and effective July 1, 2003, filed by EDGAR on October 31, 2003 as EX-99.B(h)ciasa to Post-Effective Amendment No. 65 to the Registration Statement on Form N-1A*

	Service Agreement, filed by EDGAR on June 30, 1995 as EX-99.B9-cisa to Post Effective Amendment No. 54 to the Registration Statement on Form N-1A*

	Amendment to Service Agreement filed by EDGAR on September 30, 1994 as Exhibit (b)(9) to Post-Effective Amendment No. 52 to the Registration Statement on Form N-1A*

	Amendment to Service Agreement, filed by EDGAR on June 30, 1995 as EX-99.B9-cisaa to Post Effective Amendment No. 54 to the Registration Statement on Form N-1A*

(i)	Opinion and Consent of Counsel attached hereto as EX-99.B(i)cilegopn

(j)	Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm, attached hereto as EX-99.B(j)ciconsnt

(k)	Not applicable

(l)	Not applicable

(m)	Distribution and Service Plan for Class A shares filed by EDGAR on June 29, 1998 as EX-99.B15-cidsp to Post-Effective Amendment No. 57 to the Registration Statement on Form N-1A*

	Distribution and Service Plan for Class B shares filed by EDGAR on July 2, 1999 as EX-99.B(m)cidspb to Post-Effective Amendment No. 60 to the Registration Statement on Form N-1A*

	Distribution and Service Plan for Class C shares filed by EDGAR on July 2, 1999 as EX-99.B(m)cidspc to Post-Effective Amendment No. 60 to the Registration Statement on Form N-1A*

(n)	Not applicable

(o)	Multiple Class Plan, as revised May 21, 2003, filed by EDGAR on October 31, 2003 as EX-99.B(o)cimcp to Post-Effective Amendment No. 65 to the Registration Statement on Form N-1A*

(p)	Code of Ethics, as revised May 25, 2005, attached hereto as EX-99.B(p)code

	Code of Ethics pursuant to the Sarbanes-Oxley Act of 2002, filed by EDGAR on October 31, 2003 as EX-99.B(p)code-so to Post-Effective Amendment No. 65 to the Registration Statement on Form N-1A*

24. Persons Controlled by or under common control with Registrant

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

None

25. Indemnification

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

	Reference is made to Article SEVENTH paragraph 6(b) through (f) of the Articles of Incorporation of Registrant, as amended, filed by EDGAR on June 29, 1998 as EX-99.B1-charter to Post-Effective Amendment No. 57 to the Registration Statement on Form N-1A; Article IX of the Bylaws filed December 14, 2000 as EX-99.B(b)cibylaw to Post-Effective Amendment No. 62 to the Registration Statement on Form N-1A; and to Article IV of the Underwriting Agreement, filed June 30, 1995 as EX-99.B6-ciua to Post-Effective Amendment No. 54 to the Registration Statement on Form N-1A*; each of which provide indemnification. Also refer to Section 2-418 of the Maryland General Corporation Law regarding indemnification of directors, officers, employees and agents.

	Registrant undertakes to carry out all indemnification provisions of its Articles of Incorporation, Bylaws, and the above-described contracts in accordance with the Investment Company Act Release No. 11330 (September 4, 1980) and successor releases.

	Insofar as indemnification for liability arising under the 1933 Act, as amended, may be provided to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act 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 Act and will be governed by the final adjudication of such issue.

26. Business and Other Connections of Investment Manager

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

	Waddell & Reed Investment Management Company (WRIMCO) is the investment manager of the Registrant. Under the terms of an Investment Management Agreement between Waddell & Reed, Inc. and the Registrant, Waddell & Reed, Inc. is to provide investment management services to the Registrant. Waddell & Reed, Inc. assigned its investment management duties under this agreement to WRIMCO on January 8, 1992. WRIMCO is a corporation which is not engaged in any business other than the provision of investment management services to those registered investment companies described in Part A and Part B of this Post-Effective Amendment and to other investment advisory clients.

	Each director and executive officer of WRIMCO has had as his sole business, profession, vocation or employment during the past two years only his duties as an executive officer and/or employee of WRIMCO or its predecessors, except as to persons who are directors and/or officers of the Registrant and have served in the capacities shown in the Statement of Additional Information of the Registrant The address of the officers is 6300 Lamar Avenue, Shawnee Mission, Kansas 66202-4200.

	As to each director and officer of WRIMCO, reference is made to the Prospectus and SAI of this Registrant.

27. Principal Underwriter

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

(a)	Waddell & Reed, Inc. is the principal underwriter to the Registrant. It is also the principal underwriter to the following investment companies:

	Waddell & Reed Advisors Asset Strategy Fund, Inc.
	Waddell & Reed Advisors Cash Management, Inc.
	Waddell & Reed Advisors Fixed Income Funds, Inc.
	Waddell & Reed Advisors Funds, Inc.
	Waddell & Reed Advisors Global Bond Fund, Inc.
	Waddell & Reed Advisors High Income Fund, Inc.
	Waddell & Reed Advisors International Growth Fund, Inc.
	Waddell & Reed Advisors Municipal Bond Fund, Inc.
	Waddell & Reed Advisors Municipal High Income Fund, Inc.
	Waddell & Reed Advisors New Concepts Fund, Inc.
	Waddell & Reed Advisors Retirement Shares, Inc.
	Waddell & Reed Advisors Select Funds, Inc.
	Waddell & Reed Advisors Small Cap Fund, Inc.
	Waddell & Reed Advisors Tax-Managed Equity Fund, Inc.
	Waddell & Reed Advisors Vanguard Fund, Inc.
	W&R Target Funds, Inc.
	Waddell & Reed InvestEd Portfolios, Inc.

(b)	The information contained in the underwriter's application on Form BD as filed on October 17, 2005 SEC No. 8-27030, under the Securities Exchange Act of 1934, is herein incorporated by reference.

(c)	No compensation was paid by the Registrant to any principal underwriter who is not an affiliated person of the Registrant or any affiliated person of such affiliated person.

28. Location of Accounts and Records

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

The accounts, books and other documents required to be maintained by Registrant pursuant to Section 31(a) of the Investment Company Act and rules promulgated thereunder are under the possession of Mr. Theodore W. Howard and Ms. Kristen A. Richards, as officers of the Registrant, each of whose business address is 6300 Lamar Avenue, Post Office Box 29217, Shawnee Mission, Kansas 66201-9217.

29. Management Services

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

There is no service contract other than as discussed in Part A and B of this Post-Effective Amendment and listed in response to Items 23.(h) and 23.(m) hereof.

30. Undertakings

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

Not applicable

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

*Incorporated herein by reference

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, That each of the undersigned, WADDELL & REED ADVISORS ASSET STRATEGY FUND, INC., WADDELL & REED ADVISORS CASH MANAGEMENT, INC., WADDELL & REED ADVISORS CONTINENTAL INCOME FUND, INC., WADDELL & REED ADVISORS FIXED INCOME FUNDS, INC., WADDELL & REED ADVISORS FUNDS, INC., WADDELL & REED ADVISORS GLOBAL BOND FUND, INC., WADDELL & REED ADVISORS HIGH INCOME FUND, INC., WADDELL & REED ADVISORS INTERNATIONAL GROWTH FUND, INC., WADDELL & REED ADVISORS MUNICIPAL BOND FUND, INC., WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC., WADDELL & REED ADVISORS NEW CONCEPTS FUND, INC., WADDELL & REED ADVISORS RETIREMENT SHARES, INC., WADDELL & REED ADVISORS SELECT FUNDS, INC., WADDELL & REED ADVISORS SMALL CAP FUND, INC., WADDELL & REED ADVISORS TAX-MANAGED EQUITY FUND, INC., WADDELL & REED ADVISORS VANGUARD FUND, INC. AND WADDELL & REED INVESTED PORTFOLIOS, INC. (each hereinafter called the Corporation), and certain directors and officers for the Corporation, do hereby constitute and appoint HENRY J. HERRMANN, DANIEL C. SCHULTE and KRISTEN A. RICHARDS, and each of them individually, their true and lawful attorneys and agents to take any and all action and execute any and all instruments which said attorneys and agents may deem necessary or advisable to enable each Corporation to comply with the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, and any rules, regulations, orders or other requirements of the United States Securities and Exchange Commission thereunder, in connection with the registration under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, including specifically, but without limitation of the foregoing, power and authority to sign the names of each of such directors and officers in his/her behalf as such director or officer as indicated below opposite his/her signature hereto, to any Registration Statement and to any amendment or supplement to the Registration Statement filed with the Securities and Exchange Commission under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, and to any instruments or documents filed or to be filed as a part of or in connection with such Registration Statement or amendment or supplement thereto; and each of the undersigned hereby ratifies and confirms all that said attorneys and agents shall do or cause to be done by virtue hereof.

Date: August 24, 2005		/s/Henry J. Herrmann
		Henry J. Herrmann, President

/s/Henry J. Herrmann		Chairman of the Board, President and Director
Henry J. Herrmann

/s/Theodore W. Howard		Vice President, Treasurer, Principal Accounting Officer
Theodore W. Howard		and Principal Financial Officer

/s/James M. Concannon		Director
James M. Concannon

/s/John A. Dillingham		Director
John A. Dillingham

/s/David P. Gardner		Director
David P. Gardner

/s/Linda K. Graves		Director
Linda K. Graves

/s/Joseph Harroz, Jr.		Director
Joseph Harroz, Jr.

/s/John F. Hayes		Director
John F. Hayes

/s/Robert L. Hechler		Director
Robert L. Hechler

/s/Glendon E. Johnson		Director
Glendon E. Johnson

/s/Frank J. Ross, Jr.		Director
Frank J. Ross, Jr.

/s/Eleanor B. Schwartz		Director
Eleanor B. Schwartz

/s/Frederick Vogel III		Director
Frederick Vogel III

Attest:

/s/Kristen A. Richards
Kristen A. Richards
Secretary

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and/or the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Post-Effective Amendment pursuant to Rule 485(b) of the Securities Act of 1933 and has duly caused this Post-Effective Amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Overland Park, and State of Kansas, on the 28th day of October, 2005.

WADDELL & REED ADVISORS CONTINENTAL INCOME FUND, INC.

(Registrant)

By /s/ Henry J. Herrmann

Henry J. Herrmann, President

Pursuant to the requirements of the Securities Act of 1933, and/or the Investment Company Act of 1940, this Post-Effective Amendment has been signed below by the following persons in the capacities and on the date indicated.

Signatures	Title

/s/Henry J. Herrmann	President and Director
Henry J. Herrmann

/s/Theodore W. Howard	Vice President, Treasurer, Principal Financial Officer and
Theodore W. Howard	Principal Accounting Officer

/s/James M. Concannon*	Director
James M. Concannon

/s/John A. Dillingham*	Director
John A. Dillingham

/s/David P. Gardner*	Director
David P. Gardner

/s/Linda K. Graves*	Director
Linda K. Graves

/s/Joseph Harroz, Jr.*	Director
Joseph Harroz, Jr.

/s/John F. Hayes*	Director
John F. Hayes

/s/Robert L. Hechler*	Director
Robert L. Hechler

/s/Glendon E. Johnson*	Director
Glendon E. Johnson

/s/Frank J. Ross, Jr.*	Director
Frank J. Ross, Jr.

/s/Eleanor B. Schwartz*	Director
Eleanor B. Schwartz

/s/Frederick Vogel III*	Director
Frederick Vogel III

*By:/s/Kristen A. Richards

Kristen A. Richards

Attorney-in-Fact

ATTEST: /s/Megan E. Bray

Megan E. Bray

Assistant Secretary

_____	immediately upon filing pursuant to paragraph (b)
__X__	on October 31, 2005 pursuant to paragraph (b)
_____	60 days after filing pursuant to paragraph (a)(1)
_____	on (date) pursuant to paragraph (a)(1)
_____	75 days after filing pursuant to paragraph (a)(2)
_____	on (date) pursuant to paragraph (a)(2) of Rule 485
_____	this post-effective amendment designates a new effective date for a previously filed post-effective amendment

An investment in foreign securities presents additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

As with any mutual fund, the value of the Fund's shares will change, and you could lose money on your investment. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

For more information about the Fund's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

Who May Want to Invest
Waddell & Reed Advisors Accumulative Fund is designed for investors seeking long-term investment growth not by seeking to maximize the upside potential of the market but rather by seeking to reduce potential risk in a declining market. You should consider whether the Fund fits your particular investment objectives.

Performance

Waddell & Reed Advisors Accumulative Fund

The bar chart and performance table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's performance from year to year and by showing how the Fund's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

The bar chart presents the average annual total returns for Class A and shows how performance has varied from year to year over the past ten calendar years. The returns for the Fund's other classes of shares during these periods were different from those of Class A shares because of variations in their respective expense structures.

The bar chart does not reflect any sales charge that you may be required to pay upon purchase of the Fund's Class A shares. If the sales charge were included, the returns would be less than those shown.

The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future.

Note that the performance information in the bar chart and performance table is based on calendar-year periods, while the information shown in the Financial Highlights section of this Prospectus and in the Fund's shareholder reports is based on the Fund's fiscal year.

Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Please visit www.waddell.com for the Fund's most recent performance.

	Chart of Year-by-Year Returns
	as of December 31 each year

	1995	34.21%
	1996	12.18%
	1997	29.58%
	1998	22.62%
	1999	25.72%
	2000	20.16%
	2001	-15.45%
	2002	-22.95%
	2003	19.58%
	2004	7.35%

	In the period shown in the chart, the highest quarterly return was 24.90% (the fourth quarter of 1999) and the lowest quarterly return was -16.16% (the third quarter of 2002). The Class A return for the year through September 30, 2005 was 8.17%.

Average Annual Total Returns
as of December 31, 2004

				5 Years	10 Years
				(or Life	(or Life
			1 Year	of Class)	of Class)
			------	--------	--------
Class A
	Before Taxes		1.18%	-1.08%	11.03%
	After Taxes on Distributions		1.07%	-3.62%	6.88%
	After Taxes on Distributions
		and Sale of Fund Shares	0.93%	-1.82%	7.74%
Class Y (began on 7-11-1995)
	Before Taxes		7.51%	0.35%	10.44%
Class B (began on 10-4-1999)
	Before Taxes		2.10%	-1.14%	2.90%
Class C (began on 10-6-1999)
	Before Taxes		6.08%	-0.93%	2.86%
Indexes
	S&P 500 Index¹		10.88%	-2.32%	12.08%
	Lipper Multi-Cap Core
		Funds Universe Average²	11.05%	0.38%	11.16%

Shareholder Fees
(fees paid directly from			Class A	Class B	Class C	Class Y
your investment)			--------	--------	--------	--------

	Maximum Sales Charge (Load)
		Imposed on Purchases
		(as a percentage of offering price)	5.75%	None	None	None

	Maximum Deferred Sales Charge (Load)¹
		(as a percentage of lesser of amount
		invested or redemption value)	None²	5.00%	1.00%	None

	Redemption fee/exchange fee
		(as a percentage of amount
		redeemed, if applicable)³	2.00%	2.00%	2.00%	2.00%

Annual Fund Operating Expenses
	(expenses that are		Class A	Class B	Class C	Class Y
	deducted from Fund assets)		------	------	------	------

	Management Fees		0.68%	0.68%	0.68%	0.68%
	Distribution and
	Service (12b-1) Fees		0.25%	1.00%	1.00%	None
	Other Expenses		0.24%	0.61%	0.53%	0.20%
	Total Annual Fund
		Operating Expenses	1.17%	2.29%	2.21%	0.88%

If shares are redeemed
at end of period:	1 Year	3 Years	5 Years	10 Years
Class A Shares	$687	$ 925	$1,182	$1,914
Class B Shares	632	1,015	1,325	2,344¹
Class C Shares	224²	691	1,185	2,544
Class Y Shares	90	281	488	1,084

If shares are not redeemed
at end of period:	1 Year	3 Years	5 Years	10 Years
Class A Shares	$687	$925	$1,182	$1,914
Class B Shares	232	715	1,225	2,344¹
Class C Shares	224	691	1,185	2,544
Class Y Shares	90	281	488	1,084

Average Annual Total Returns
as of December 31, 2004

				5 Years	10 Years
				(or Life	(or Life
			1 Year	of Class)	of Class)
			------	--------	--------
Class A (began on 3-9-1995)
	Before Taxes		6.54%	5.75%	8.58%
	After Taxes on Distributions		6.03%	4.54%	6.86%
	After Taxes on Distributions
		and Sale of Fund Shares	4.81%	4.42%	6.60%
Class Y (began on 9-27-1995)
	Before Taxes		13.66%	7.46%	9.24%
Class C (began on 10-5-1999)
	Before Taxes		12.14%	6.15%	8.55%
Class B (began on 10-6-1999)
	Before Taxes		8.04%	5.94%	8.27%
Indexes
	S&P 500 Index¹		10.88%	-2.32%	11.34%²
	Citigroup Broad
		Investment Grade Index¹	4.48%	7.74%	7.40%²
	Citigroup Short-Term
		Index for 1 Month
		Certificates of Deposit¹	1.42%	2.99%	4.27%²
	Lipper Flexible Portfolio
		Funds Universe Average³	8.99%	1.67%	8.76%²

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

Fees and Expenses

Waddell & Reed Advisors Continental Income Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees
(fees paid directly from			Class A	Class B	Class C	Class Y
your investment)			--------	--------	--------	--------

	Maximum Sales Charge (Load)
		Imposed on Purchases
		(as a percentage of offering price)	5.75%	None	None	None

	Maximum Deferred Sales Charge (Load)¹
		(as a percentage of lesser of amount
		invested or redemption value)	None²	5.00%	1.00%	None

	Redemption fee/exchange fee
		(as a percentage of amount
		redeemed, if applicable)³	2.00%	2.00%	2.00%	2.00%

Annual Fund Operating Expenses
(expenses that are			Class A	Class B	Class C	Class Y
deducted from Fund assets)			------	------	------	------

Management Fees			0.70%	0.70%	0.70%	0.70%
Distribution and
	Service (12b-1) Fees		0.25%	1.00%	1.00%	None
Other Expenses			0.29%	0.52%	0.48%	0.24%
Total Annual Fund
	Operating Expenses		1.24%	2.22%	2.18%	0.94%

Average Annual Total Returns
as of December 31, 2004

				Life
			1 Year	of Class
			------	--------
Class A (began on 07-01-2003)
	Before Taxes		5.37%	10.73%
	After Taxes on Distributions		5.19%	10.57%
	After Taxes on Distributions
		and Sale of Fund Shares	3.78%	9.18%
Class B (began on 07-01-2003)
	Before Taxes		6.77%	11.67%
Class C (began on 07-01-2003)
	Before Taxes		10.80%	14.20%
Class Y (began on 07-01-2003)
	Before Taxes		12.22%	15.59%
Indexes
	Russell 1000 Index¹		11.40%	18.35%²
	Lipper Equity Income Funds
		Universe Average³	12.81%	18.62%²

¹After-tax returns may be better than before-tax returns due to an assumed tax benefit from losses on a sale of the Fund's shares at the end of the period.

²Reflects no deduction for fees, expenses or taxes.

³Net of fees and expenses.

Fees and Expenses

Waddell & Reed Advisors Vanguard Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund:

Shareholder Fees
(fees paid directly from			Class A	Class B	Class C	Class Y
your investment)			--------	--------	--------	--------

	Maximum Sales Charge (Load)
		Imposed on Purchases
		(as a percentage of offering price)	5.75%	None	None	None

	Maximum Deferred Sales Charge (Load)¹
		(as a percentage of lesser of amount
		invested or redemption value)	None²	5.00%	1.00%	None

	Redemption fee/exchange fee
		(as a percentage of amount
		redeemed, if applicable)³	2.00%	2.00%	2.00%	2.00%

Annual Fund Operating Expenses
	(expenses that are		Class A	Class B	Class C	Class Y
	deducted from Fund assets)		------	------	------	------

Management Fees			0.68%	0.68%	0.68%	0.68%
Distribution and
	Service (12b-1) Fees		0.25%	1.00%	1.00%	None
Other Expenses			0.30%	0.69%	0.57%	0.20%
Total Annual Fund
	Operating Expenses		1.23%	2.37%	2.25%	0.88%

	Fund	Management Fees Paid
	Waddell & Reed Advisors Accumulative Fund	0.68%
	Waddell & Reed Advisors Asset Strategy Fund	0.70%
	Waddell & Reed Advisors Continental Income Fund	0.70%
	Waddell & Reed Advisors Core Investment Fund	0.62%
	Waddell & Reed Advisors Dividend Income Fund	0.70%
	Waddell & Reed Advisors International Growth Fund	0.85%
	Waddell & Reed Advisors New Concepts Fund	0.85%
	Waddell & Reed Advisors Retirement Shares	0.70%
	Waddell & Reed Advisors Science and Technology Fund	0.84%
	Waddell & Reed Advisors Small Cap Fund	0.85%
	Waddell & Reed Advisors Tax-Managed Equity Fund	0.65%
	Waddell & Reed Advisors Value Fund	0.70%
	Waddell & Reed Advisors Vanguard Fund	0.68%

Class A	Class B	Class C
· Initial sales charge	· No initial sales charge	· No initial sales charge
· No deferred sales charge¹	· Deferred sales charge on shares you sell within six years after purchase	· A 1% deferred sales charge on shares you sell within 12 months after purchase
· Maximum distribution and service (12b-1) fees of 0.25%	· Maximum distribution and service (12b-1) fees of 1.00%	· Maximum distribution and service (12b-1) fees of 1.00%
	· Converts to Class A shares eight years after the month in which the shares were purchased, thus reducing future annual expenses	· Does not convert to Class A shares, so annual expenses do not decrease
· For an investment of $1 million or more, only Class A shares are available	· Shareholders investing $100,000 may not purchase Class B shares. Requests to purchase Class B shares by such shareholders will not be honored	· Shareholders investing $1 million may not purchase Class C shares. Requests to purchase Class C shares will automatically be treated as a request to purchase Class A shares

Calculation of Sales Charges on Class A Shares
		Sales Charge	Reallowance
		as Approx.	to Dealers
	Sales Charge	Percent of	as Percent
Size of	as Percent of	Amount	of Offering
Purchase	Offering Price¹	Invested	Price
--------	-----------	----------	-----------
under $100,000	5.75%	6.10%	5.00%
$100,000 to less than $200,000	4.75	4.99	4.00
$200,000 to less than $300,000	3.50	3.63	2.80
$300,000 to less than $500,000	2.50	2.56	2.00
$500,000 to less than $1,000,000	1.50	1.52	1.20
$1,000,000 and over²	0.00	0.00	see below

CDSC on Shares Sold Within Year	As % of Amount Subject to Charge
1	5.0%
2	4.0%
3	3.0%
4	3.0%
5	2.0%
6	1.0%
7+	0.0%

To Open an Account	$500 (per Fund)
For certain exchanges	$100 (per Fund)
For accounts opened with Automatic Investment Service	$50 (per Fund)
For accounts established through payroll deductions	Any amount

To Add to an Account	Any amount
For certain exchanges	$100 (per Fund)
For Automatic Investment Service	$25 (per Fund)

For Class Y:

To Open an Account
For a government entity or authority or for a corporation	$10 million
	(within first 12 months)
For other eligible investors	Any amount

To Add to an Account	Any amount

Account Type	Special Requirements
Individual or Joint Tenant	The written instructions must be signed by all persons required to sign for transactions, exactly as their names appear on the account.
Sole Proprietorship	The written instructions must be signed by the individual owner of the business.
UGMA, UTMA	The custodian must sign the written instructions indicating capacity as custodian.
Retirement Account	The written instructions must be signed by a properly authorized person.
Trust	The trustee must sign the written instructions indicating capacity as trustee. If the trustee's name is not in the account registration, provide a currently certified copy of the trust document.
Business or Organization	At least one person authorized by corporate resolution to act on the account must sign the written instructions.
Conservator, Guardian or Other Fiduciary	The written instructions must be signed by the person properly authorized by court order to act in the particular fiduciary capacity.

1.	Share Payment Option. Your dividends, capital gains and other distributions with respect to a class will be automatically paid in additional shares of the same class of the Fund. If you do not indicate a choice on your application, you will be assigned this option.

2.	Cash Option. You will be sent a check for your dividends, capital gains and other distributions if the total distribution is at least five dollars. If the distribution is less than five dollars, it will be automatically paid in additional shares of the same class of the Fund.

For retirement accounts and accounts participating in MAP or SPA, all distributions are automatically paid in additional shares.

Taxes

As with any investment, you should consider how your investment in a Fund will be taxed. If your account is not a retirement account or other tax-advantaged savings plan (or you are not otherwise exempt from income tax), you should be aware of the following tax implications:

Taxes on distributions. You may be subject to tax as a result of income generated at the Fund level, to the extent the Fund makes actual or deemed distributions of such income to you. Dividends from a Fund's investment company taxable income (which includes the excess of net short-term capital gain over net long-term capital loss and net gain from certain foreign currency transactions), if any, generally are taxable to you as ordinary income whether received in cash or paid in additional Fund shares, unless such dividends are "qualified dividend income" and eligible for the reduced rate of tax on long-term capital gains, as described below. Distributions of a Fund's net capital gains (the excess of net long-term capital gains over net short-term capital loss), when designated as such, are taxable to you as long-term capital gains, whether received in cash or paid in additional Fund shares and regardless of the length of time you have owned your shares. For Federal income tax purposes, long-term capital gains generally are taxed at a maximum rate of 15% for noncorporate shareholders. As a result of changes made by the Jobs and Growth Tax Relief Reconciliation Act of 2003, "qualified dividend income" received by noncorporate shareholders who satisfy certain holding period requirements with respect to their Fund shares is taxed as net capital gain. The portion of the dividends a Fund pays that is attributable to qualified dividend income received by the Fund will qualify for such treatment in the hands of noncorporate shareholders of the Fund who satisfy certain holding period requirements with respect to their Fund shares.

Each Fund notifies you after each calendar year-end as to the amounts of dividends and other distributions paid (or deemed paid) to you for that year.

A portion of the dividends paid by a Fund, whether received in cash or paid in additional Fund shares, may be eligible for the dividends-received deduction allowed to corporations. The eligible portion may not exceed the aggregate dividends received by a Fund from U.S. corporations. However, dividends received by a corporate shareholder and deducted by it pursuant to the dividends-received deduction are subject indirectly to the Federal alternative minimum tax.

Taxes on transactions. Your redemption of Fund shares will result in a taxable gain or loss to you, depending on whether the redemption proceeds are more or less than what you paid for the redeemed shares (which normally includes any sales charge paid).

An exchange of Fund shares for shares of any other fund in the Waddell & Reed Advisors Funds, Waddell & Reed InvestEd Portfolios, Inc. or Ivy Family of Funds generally will have similar tax consequences. However, special rules apply when you dispose of a Fund's Class A shares through a redemption or exchange within 90 days after your purchase and then reacquire Class A shares of that Fund or acquire Class A shares of another fund in the Waddell & Reed Advisors Funds, Waddell & Reed InvestEd Portfolios, Inc. or Ivy Family of Funds without paying a sales charge due to the 60-day reinvestment privilege or exchange privilege. See "Your AccountSelling Shares." In these cases, any gain on the disposition of the original Class A Fund shares will be increased, or loss decreased, by the amount of the sales charge you paid when those shares were acquired, and that amount will increase the adjusted basis of the shares you subsequently acquire. In addition, if you purchase shares of a Fund within 30 days before or after redeeming other shares of the Fund (regardless of class) at a loss, part or all of that loss will not be deductible and will increase the basis of the newly purchased shares.

Withholding. Each Fund must withhold a portion of all dividends and capital gains distributions and redemption proceeds payable to individuals and certain other noncorporate shareholders who do not furnish the Fund with a correct taxpayer identification number. Withholding is also required from dividends and capital gains distributions payable to shareholders who are otherwise subject to backup withholding.

State and local income taxes. The portion of the dividends a Fund pays that is attributable to interest earned on U.S. government securities generally is not subject to state and local income taxes, although distributions by any Fund to its shareholders of net realized gains on the sale of those securities are fully subject to those taxes. You should consult your tax adviser to determine the taxability in your state and locality of dividends and other distributions by the Funds.

The foregoing is only a summary of some of the important tax considerations generally affecting each Fund and its shareholders; you will find more information in each Fund's SAI. There may be other Federal, state or local tax considerations applicable to a particular investor. You are urged to consult your own tax adviser.

WADDELL & REED ADVISORS ACCUMULATIVE FUND


		Selected Per-Share Data

			Income (Loss) From Investment Operations									Less Distributions

For the Period From	Net Asset Value Beginning of Period		Net Investment Income (Loss)			Net Gain (Loss) on Investments (Realized and Unrealized)			Total from Investment Operations			From Net Investment Income			From Realized Gains			Total Distributions			Net Asset Value End of Period

Class A
7-1-04 to 6-30-05	$	5.79	$	0.04		$	0.49		$	0.53		$	(0.04	)	$	(0.00	)	$	(0.04	)	$	6.28
7-1-03 to 6-30-04	5.19		0.01			0.60			0.61			(0.01		)	(0.00		)	(0.01		)	5.79
7-1-02 to 6-30-03	5.63		0.03			(0.44		)	(0.41		)	(0.03		)	(0.00		)	(0.03		)	5.19
7-1-01 to 6-30-02	7.60		0.01			(1.11		)	(1.10		)	(0.02		)	(0.85		)	(0.87		)	5.63
1-1-01 to 6-30-01	8.50		0.02			(0.90		)	(0.88		)	(0.02		)	(0.00		)	(0.02		)	7.60
1-1-00 to 12-31-00	9.14		0.07			1.70			1.77			(0.07		)	(2.34		)	(2.41		)	8.50

Class B
7-1-04 to 6-30-05	$	5.59	$	(0.04	)	$	0.48		$	0.44		$	(0.00	)	$	(0.00	)	$	(0.00	)	$	6.03
7-1-03 to 6-30-04	5.06		(0.04		)	0.57			0.53			(0.00		)	(0.00		)	(0.00		)	5.59
7-1-02 to 6-30-03	5.52		(0.02		)	(0.44		)	(0.46		)	(0.00		)	(0.00		)	(0.00		)	5.06
7-1-01 to 6-30-02	7.53		(0.03		)	(1.13		)	(1.16		)	(0.00		)	(0.85		)	(0.85		)	5.52
1-1-01 to 6-30-01	8.44		(0.01		)	(0.90		)	(0.91		)	(0.00		)	(0.00		)	(0.00		)	7.53
1-1-00 to 12-31-00	9.12		0.00		^c	1.66			1.66			(0.00		)	(2.34		)	(2.34		)	8.44

Class C
7-1-04 to 6-30-05	$	5.61	$	(0.04	)	$	0.49		$	0.45		$	(0.00	)	$	(0.00	)	$	(0.00	)	$	6.06
7-1-03 to 6-30-04	5.07		(0.04		)	0.58			0.54			(0.00		)	(0.00		)	(0.00		)	5.61
7-1-02 to 6-30-03	5.52		(0.01		)	(0.44		)	(0.45		)	(0.00		)	(0.00		)	(0.00		)	5.07
7-1-01 to 6-30-02	7.52		(0.01		)	(1.14		)	(1.15		)	(0.00		)	(0.85		)	(0.85		)	5.52
1-1-01 to 6-30-01	8.43		(0.01		)	(0.90		)	(0.91		)	(0.00		)	(0.00		)	(0.00		)	7.52
1-1-00 to 12-31-00	9.12		0.00		^c	1.65			1.65			(0.00		)	(2.34		)	(2.34		)	8.43

Class Y
7-1-04 to 6-30-05	$	5.79	$	0.06		$	0.49		$	0.55		$	(0.05	)	$	(0.00	)	$	(0.05	)	$	6.29
7-1-03 to 6-30-04	5.20		0.03			0.59			0.62			(0.03		)	(0.00		)	(0.03		)	5.79
7-1-02 to 6-30-03	5.63		0.04			(0.43		)	(0.39		)	(0.04		)	(0.00		)	(0.04		)	5.20
7-1-01 to 6-30-02	7.60		0.03			(1.12		)	(1.09		)	(0.03		)	(0.85		)	(0.88		)	5.63
1-1-01 to 6-30-01	8.49		0.03			(0.89		)	(0.86		)	(0.03		)	(0.00		)	(0.03		)	7.60
1-1-00 to 12-31-00	9.14		0.08			1.70			1.78			(0.09		)	(2.34		)	(2.43		)	8.49


			Ratios and Supplemental Data

For the Period From	Total Return		Net Assets End of Period (in Millions)			Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income (Loss) to Average Net Assets		Portfolio Turnover Rate

Class A
7-1-04 to 6-30-05	9.11	% ^a	$	1,895		1.16	%	0.62	%	68	%
7-1-03 to 6-30-04	11.78	% ^a	1,971			1.17	%	0.23	%	483	%
7-1-02 to 6-30-03	-7.29	% ^a	1,836			1.18	%	0.54	%	412	%
7-1-01 to 6-30-02	-15.34	% ^a	1,923			1.10	%	0.22	%	414	%
1-1-01 to 6-30-01	-10.35	% ^a	2,277			1.04	% ^b	0.58	% ^b	185	%
1-1-00 to 12-31-00	20.16	% ^a	2,558			1.02	%	0.67	%	384	%

Class B
7-1-04 to 6-30-05	7.87	%	$	61		2.28	%	-0.50	%	68	%
7-1-03 to 6-30-04	10.47	%	63			2.30	%	-0.90	%	483	%
7-1-02 to 6-30-03	-8.33	%	53			2.36	%	-0.64	%	412	%
7-1-01 to 6-30-02	-16.29	%	46			2.21	%	-0.90	%	414	%
1-1-01 to 6-30-01	-10.78	%	29			2.12	% ^b	-0.54	% ^b	185	%
1-1-00 to 12-31-00	18.92	%	19			2.02	%	-0.23	%	384	%

Class C
7-1-04 to 6-30-05	8.02	%	$	0.02		2.20	%	-0.40	%	68	%
7-1-03 to 6-30-04	10.65	%	0.02			2.16	%	-0.76	%	483	%
7-1-02 to 6-30-03	-8.15	%	0.02			2.16	%	-0.43	%	412	%
7-1-01 to 6-30-02	-16.18	%	0.02			2.07	%	-0.77	%	414	%
1-1-01 to 6-30-01	-10.80	%	0.01			2.11	% ^b	-0.54	% ^b	185	%
1-1-00 to 12-31-00	18.81	%	0.00		^c	2.10	%	-0.31	%	384	%

Class Y
7-1-04 to 6-30-05	9.44	%	$	6		0.88	%	0.88	%	68	%
7-1-03 to 6-30-04	11.90	%	6			0.87	%	0.53	%	483	%
7-1-02 to 6-30-03	-6.82	%	6			0.89	%	0.84	%	412	%
7-1-01 to 6-30-02	-15.16	%	8			0.86	%	0.45	%	414	%
1-1-01 to 6-30-01	-10.26	%	7			0.83	% ^b	0.75	% ^b	185	%
1-1-00 to 12-31-00	20.39	%	6			0.84	%	0.85	%	384	%

WADDELL & REED ADVISORS ASSET STRATEGY FUND


	Selected Per-Share Data


			Income (Loss) From Investment Operations									Less Distributions


For thePeriod From	Net Asset Value Beginning of Period		Net Investment Income (Loss)			Net Gain (Loss) on Investments (Realized and Unrealized)			Total from Investment Operations			From Net Investment Income			From Realized Gains			In Excess of Capital Gains			Total Distributions			Net Asset Value End of Period

Class A
7-1-04 to 6-30-05	$	6.82	$	0.06		$	1.08		$	1.14		$	(0.06	)	$	(0.10	)	$	(0.00	)	$	(0.16	)	$	7.80
7-1-03 to 6-30-04	6.41		0.04			0.44			0.48			(0.07		)	(0.00		)	(0.00		)	(0.07		)	6.82
7-1-02 to 6-30-03	6.27		0.07			0.14			0.21			(0.07		)	(0.00		)	(0.00		)	(0.07		)	6.41
7-1-01 to 6-30-02	6.34		0.11			(0.06		)	0.05			(0.12		)	(0.00		)	(0.00		)	(0.12		)	6.27
10-1-00 to 6-30-01	7.53		0.11			(0.44		)	(0.33		)	(0.11		)	(0.69		)	(0.06		)	(0.86		)	6.34
10-1-99 to 9-30-00	5.82		0.04			1.88			1.92			(0.03		)	(0.18		)	(0.00		)	(0.21		)	7.53

Class B
7-1-04 to 6-30-05	$	6.82	$	(0.00	)	$	1.07		$	1.07		$	(0.01	)	$	(0.10	)	$	(0.00	)	$	(0.11	)	$	7.78
7-1-03 to 6-30-04	6.40		(0.02		)	0.44			0.42			(0.00		)^c	(0.00		)	(0.00		)	(0.00		)^c	6.82
7-1-02 to 6-30-03	6.27		0.01			0.13			0.14			(0.01		)	(0.00		)	(0.00		)	(0.01		)	6.40
7-1-01 to 6-30-02	6.34		0.06			(0.06		)	0.00			(0.07		)	(0.00		)	(0.00		)	(0.07		)	6.27
10-1-00 to 6-30-01	7.50		0.06			(0.42		)	(0.36		)	(0.05		)	(0.69		)	(0.06		)	(0.80		)	6.34
10-6-99* to 9-30-00	5.89		0.01			1.79			1.80			(0.01		)	(0.18		)	(0.00		)	(0.19		)	7.50

Class C
7-1-04 to 6-30-05	$	6.82	$	(0.00	)	$	1.07		$	1.07		$	(0.01	)	$	(0.10	)	$	(0.00	)	$	(0.11	)	$	7.78
7-1-03 to 6-30-04	6.40		(0.01		)	0.44			0.43			(0.01		)	(0.00		)	(0.00		)	(0.01		)	6.82
7-1-02 to 6-30-03	6.27		0.01			0.13			0.14			(0.01		)	(0.00		)	(0.00		)	(0.01		)	6.40
7-1-01 to 6-30-02	6.34		0.06			(0.06		)	0.00			(0.07		)	(0.00		)	(0.00		)	(0.07		)	6.27
10-1-00 to 6-30-01	7.51		0.07			(0.43		)	(0.36		)	(0.06		)	(0.69		)	(0.06		)	(0.81		)	6.34
10-5-99* to 9-30-00	5.86		0.01			1.83			1.84			(0.01		)	(0.18		)	(0.00		)	(0.19		)	7.51

Class Y
7-1-04 to 6-30-05	$	6.82	$	0.09		$	1.08		$	1.17		$	(0.09	)	$	(0.10	)	$	(0.00	)	$	(0.19	)	$	7.80
7-1-03 to 6-30-04	6.41		0.07			0.44			0.51			(0.10		)	(0.00		)	(0.00		)	(0.10		)	6.82
7-1-02 to 6-30-03	6.27		0.09			0.14			0.23			(0.09		)	(0.00		)	(0.00		)	(0.09		)	6.41
7-1-01 to 6-30-02	6.34		0.13			(0.05		)	0.08			(0.15		)	(0.00		)	(0.00		)	(0.15		)	6.27
10-1-00 to 6-30-01	7.53		0.14			(0.45		)	(0.31		)	(0.13		)	(0.69		)	(0.06		)	(0.88		)	6.34
10-1-99 to 9-30-00	5.83		0.08			1.86			1.94			(0.06		)	(0.18		)	(0.00		)	(0.24		)	7.53

WADDELL & REED ADVISORS CORE INVESTMENT FUND


	Selected Per-Share Data


			Income (Loss) From Investment Operations									Less Distributions


For the Period From	Net Asset Value Beginning of Period		Net Investment Income (Loss)			Net Gain (Loss) on Investments (Realized and Unrealized)			Total from Investment Operations			From Net Investment Income			From Realized Gains			Total Distributions				Net Asset Value End of Period

Class A
7-1-04 to 6-30-05	$	5.22	$	0.02		$	0.56		$	0.58		$	(0.02	)	$	(0.00	)		$	(0.02	)	$	5.78
7-1-03 to 6-30-04	4.69		0.03			0.53			0.56			(0.03		)	(0.00		)		(0.03		)	5.22
7-1-02 to 6-30-03	4.95		0.03			(0.26		)	(0.23		)	(0.03		)	(0.00		)		(0.03		)	4.69
7-1-01 to 6-30-02	6.27		0.01			(1.06		)	(1.05		)	(0.01		)	(0.26		)		(0.27		)	4.95
1-1-01 to 6-30-01	7.08		0.00			(0.80		)	(0.80		)	(0.01		)	(0.00		)		(0.01		)	6.27
1-1-00 to 12-31-00	8.13		0.01			0.77			0.78			(0.01		)	(1.82		)		(1.83		)	7.08

Class B
7-1-04 to 6-30-05	$	5.01	$	(0.05	)	$	0.55		$	0.50		$	(0.00	)	$	(0.00	)		$	(0.00	)	$	5.51
7-1-03 to 6-30-04	4.54		(0.04		)	0.51			0.47			(0.00		)	(0.00		)		(0.00		)	5.01
7-1-02 to 6-30-03	4.82		(0.03		)	(0.25		)	(0.28		)	(0.00		)	(0.00		)		(0.00		)	4.54
7-1-01 to 6-30-02	6.16		(0.03		)	(1.05		)	(1.08		)	(0.00		)	(0.26		)		(0.26		)	4.82
1-1-01 to 6-30-01	6.99		(0.02		)	(0.81		)	(0.83		)	(0.00		)	(0.00		)		(0.00		)	6.16
1-1-00 to 12-31-00	8.13		(0.04		)	0.72			0.68			(0.00		)	(1.82		)		(1.82		)	6.99

Class C
7-1-04 to 6-30-05	$	5.02	$	(0.06	)	$	0.57		$	0.51		$	(0.00	)	$	(0.00	)		$	(0.00	)	$	5.53
7-1-03 to 6-30-04	4.55		(0.06		)	0.53			0.47			(0.00		)	(0.00		)		(0.00		)	5.02
7-1-02 to 6-30-03	4.82		(0.02		)	(0.25		)	(0.27		)	(0.00		)	(0.00		)		(0.00		)	4.55
7-1-01 to 6-30-02	6.16		(0.01		)	(1.07		)	(1.08		)	(0.00		)	(0.26		)		(0.26		)	4.82
1-1-01 to 6-30-01	6.99		(0.02		)	(0.81		)	(0.83		)	(0.00		)	(0.00		)		(0.00		)	6.16
1-1-00 to 12-31-00	8.13		(0.03		)	0.71			0.68			(0.00		)	(1.82		)		(1.82		)	6.99

Class Y
7-1-04 to 6-30-05	$	5.22	$	0.06		$	0.54		$	0.60		$	(0.04	)	$	(0.00	)		$	(0.04	)	$	5.78
7-1-03 to 6-30-04	4.69		0.04			0.53			0.57			(0.04		)	(0.00		)		(0.04		)	5.22
7-1-02 to 6-30-03	4.96		0.04			(0.27		)	(0.23		)	(0.04		)	(0.00		)		(0.04		)	4.69
7-1-01 to 6-30-02	6.27		0.03			(1.05		)	(1.02		)	(0.03		)	(0.26		)		(0.29		)	4.96
1-1-01 to 6-30-01	7.09		0.01			(0.81		)	(0.80		)	(0.02		)	(0.00		)		(0.02		)	6.27
1-1-00 to 12-31-00	8.13		0.03			0.77			0.80			(0.02		)	(1.82		)		(1.84		)	7.09

WADDELL & REED ADVISORS DIVIDEND INCOME FUND


	Selected Per-Share Data


			Income (Loss) From Investment Operations							Less Distributions


For the Period From	Net Asset Value Beginning of Period		Net Investment Income (Loss)			Net Gain (Loss) on Investments (Realized and Unrealized)		Total from Investment Operations		From Net Investment Income			From Realized Gains			Total Distributions			Net Asset Value End of Period

Class A
7-1-04 to 6-30-05	$	11.26	$	0.13		$	1.28	$	1.41	$	(0.13	)	$	(0.03	)	$	(0.16	)	$	12.51
7-1-03* to 6-30-04	10.00		0.07			1.25		1.32		(0.06		)	(0.00		)	(0.06		)	11.26

Class B
7-1-04 to 6-30-05	$	11.22	$	0.03		$	1.27	$	1.30	$	(0.03	)	$	(0.03	)	$	(0.06	)	$	12.46
7-1-03* to 6-30-04	10.00		(0.00		)^c	1.22		1.22		(0.00		)	(0.00		)	(0.00		)	11.22

Class C
7-1-04 to 6-30-05	$	11.23	$	0.04		$	1.26	$	1.30	$	(0.03	)	$	(0.03	)	$	(0.06	)	$	12.47
7-1-03* to 6-30-04	10.00		(0.00		)^c	1.23		1.23		(0.00		)	(0.00		)	(0.00		)	11.23

Class Y
7-1-04 to 6-30-05	$	11.26	$	0.18		$	1.28	$	1.46	$	(0.18	)	$	(0.03	)	$	(0.21	)	$	12.51
7-1-03* to 6-30-04	10.00		0.07			1.28		1.35		(0.09		)	(0.00		)	(0.09		)	11.26

WADDELL & REED ADVISORS INTERNATIONAL GROWTH FUND


	Selected Per-Share Data


			Income (Loss) From Investment Operations									Less Distributions


For the Period From	Net Asset Value Beginning of Period		Net Investment Income (Loss)			Net Gain (Loss) on Investments (Realized and Unrealized)			Total from Investment Operations			From Net Investment Income			From Realized Gains			Total Distributions				Net Asset Value End of Period

Class A
7-1-04 to 6-30-05	$	6.04	$	0.01		$	0.52		$	0.53		$	(0.03	)	$	(0.00	)		$	(0.03	)	$	6.54
7-1-03 to 6-30-04	5.16		0.00		^a	0.96			0.96			(0.08		)	(0.00		)		(0.08		)	6.04
7-1-02 to 6-30-03	5.76		0.03			(0.62		)	(0.59		)	(0.01		)	(0.00		)		(0.01		)	5.16
7-1-01 to 6-30-02	6.79		0.01			(1.01		)	(1.00		)	(0.03		)	(0.00		) ^a		(0.03		)	5.76
7-1-00 to 6-30-01	12.43		0.06			(3.31		)	(3.25		)	(0.03		)	(2.36		)		(2.39		)	6.79

Class B
7-1-04 to 6-30-05	$	5.79	$	(0.10	)	$	0.54		$	0.44		$	(0.00	)	$	(0.00	)		$	(0.00	)	$	6.23
7-1-03 to 6-30-04	4.94		(0.05		)	0.90			0.85			(0.00		)	(0.00		)		(0.00		)	5.79
7-1-02 to 6-30-03	5.59		(0.05		)	(0.60		)	(0.65		)	(0.00		)	(0.00		)		(0.00		)	4.94
7-1-01 to 6-30-02	6.65		(0.05		)	(1.01		)	(1.06		)	(0.00		)	(0.00		) ^a		(0.00		) ^a	5.59
7-1-00 to 6-30-01	12.34		(0.04		)	(3.29		)	(3.33		)	(0.00		)	(2.36		)		(2.36		)	6.65

Class C
7-1-04 to 6-30-05	$	5.90	$	(0.09	)	$	0.55		$	0.46		$	(0.00	)	$	(0.00	)		$	(0.00	)	$	6.36
7-1-03 to 6-30-04	5.01		(0.04		)	0.93			0.89			(0.00		)	(0.00		)		(0.00		)		5.90
7-1-02 to 6-30-03	5.64		(0.03		)	(0.60		)	(0.63		)	(0.00		)	(0.00		)		(0.00		)	5.01
7-1-01 to 6-30-02	6.68		(0.02		)	(1.02		)	(1.04		)	(0.00		)	(0.00		) ^a		(0.00		) ^a	5.64
7-1-00 to 6-30-01	12.36		(0.03		)	(3.29		)	(3.32		)	(0.00		)	(2.36		)		(2.36		)	6.68

Class Y
7-1-04 to 6-30-05	$	6.06	$	0.06		$	0.51		$	0.57		$	(0.07	)	$	(0.00	)		$	(0.07	)	$	6.56
7-1-03 to 6-30-04	5.18		0.02			0.97			0.99			(0.11		)	(0.00		)		(0.11		)	6.06
7-1-02 to 6-30-03	5.78		0.06			(0.62		)	(0.56		)	(0.04		)	(0.00		)		(0.04		)	5.18
7-1-01 to 6-30-02	6.79		0.04			(1.01		)	(0.97		)	(0.04		)	(0.00		) ^a		(0.04		)	5.78
7-1-00 to 6-30-01	12.46		0.09			(3.32		)	(3.23		)	(0.08		)	(2.36		)		(2.44		)	6.79

WADDELL & REED ADVISORS NEW CONCEPTS FUND


	Selected Per-Share Data


			Income (Loss) From Investment Operations									Less Distributions


For the Period From	Net Asset Value Beginning of Period		Net Investment Income (Loss)			Net Gain (Loss) on Investments (Realized and Unrealized)			Total from Investment Operations			Dividends From Net Investment Income			Distributions From Realized Gains			In Excess of Capital Gains			Total Distributions			Net Asset Value End of Period

Class A
7-1-04 to 6-30-05	$	8.35	$	(0.08	)	$	0.86		$	0.78		$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	9.13
7-1-03 to 6-30-04	6.71		(0.07		)	1.71			1.64			(0.00		)	(0.00		)	(0.00		)	(0.00		)	8.35
7-1-02 to 6-30-03	6.42		(0.05		)	0.34			0.29			(0.00		)	(0.00		)	(0.00		)	(0.00		)	6.71
7-1-01 to 6-30-02	8.73		(0.04		)	(2.26		)	(2.30		)	(0.00		)	(0.01		)	(0.00		)	(0.01		)	6.42
4-1-01 to 6-30-01	7.85		0.00			0.88			0.88			(0.00		)	(0.00		)	(0.00		)	(0.00		)	8.73
4-1-00 to 3-31-01	15.07		(0.06		)	(4.74		)	(4.80		)	(0.00		)	(1.68		)	(0.74		)	(2.42		)	7.85

Class B
7-1-04 to 6-30-05	$	7.84	$	(0.17	)	$	0.81		$	0.64		$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	8.48
7-1-03 to 6-30-04	6.38		(0.12		)	1.58			1.46			(0.00		)	(0.00		)	(0.00		)	(0.00		)	7.84
7-1-02 to 6-30-03	6.19		(0.13		)	0.32			0.19			(0.00		)	(0.00		)	(0.00		)	(0.00		)	6.38
7-1-01 to 6-30-02	8.52		(0.12		)	(2.20		)	(2.32		)	(0.00		)	(0.01		)	(0.00		)	(0.01		)	6.19
4-1-01 to 6-30-01	7.69		(0.02		)	0.85			0.83			(0.00		)	(0.00		)	(0.00		)	(0.00		)	8.52
4-1-00 to 3-31-01	14.98		(0.16		)	(4.71		)	(4.87		)	(0.00		)	(1.68		)	(0.74		)	(2.42		)	7.69

Class C
7-1-04 to 6-30-05	$	7.88	$	(0.14	)	$	0.79		$	0.65		$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	8.53
7-1-03 to 6-30-04	6.40		(0.07		)	1.55			1.48			(0.00		)	(0.00		)	(0.00		)	(0.00		)	7.88
7-1-02 to 6-30-03	6.20		(0.12		)	0.32			0.20			(0.00		)	(0.00		)	(0.00		)	(0.00		)	6.40
7-1-01 to 6-30-02	8.53		(0.10		)	(2.22		)	(2.32		)	(0.00		)	(0.01		)	(0.00		)	(0.01		)	6.20
4-1-01 to 6-30-01	7.70		(0.02		)	0.85			0.83			(0.00		)	(0.00		)	(0.00		)	(0.00		)	8.53
4-1-00 to 3-31-01	14.99		(0.16		)	(4.71		)	(4.87		)	(0.00		)	(1.68		)	(0.74		)	(2.42		)	7.70

Class Y
7-1-04 to 6-30-05	$	8.57	$	(0.02	)	$	0.86		$	0.84		$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	9.41
7-1-03 to 6-30-04	6.85		(0.05		)	1.77			1.72			(0.00		)	(0.00		)	(0.00		)	(0.00		)	8.57
7-1-02 to 6-30-03	6.51		0.02			0.32			0.34			(0.00		)	(0.00		)	(0.00		)	(0.00		)	6.85
7-1-01 to 6-30-02	8.82		0.01			(2.30		)	(2.29		)	(0.01		)	(0.01		)	(0.00		)	(0.02		)	6.51
4-1-01 to 6-30-01	7.93		0.00			0.89			0.89			(0.00		)	(0.00		)	(0.00		)	(0.00		)	8.82
4-1-00 to 3-31-01	15.14		(0.03		)	(4.76		)	(4.79		)	(0.00		)	(1.68		)	(0.74		)	(2.42		)	7.93

WADDELL & REED ADVISORS RETIREMENT SHARES


	Selected Per-Share Data


			Income (Loss) From Investment Operations									Less Distributions


For the Period From	Net Asset Value Beginning of Period		Net Investment Income (Loss)			Net Gain (Loss) on Investments (Realized and Unrealized)			Total from Investment Operations			From Net Investment Income			From Realized Gains				In Excess of Capital Gains			Total Distributions				Net Asset Valu End of Period

Class A
7-1-04 to 6-30-05	$	6.46	$	0.00		$	0.57		$	0.57		$	(0.00	)		$	(0.00	)	$	(0.00	)		$	(0.00	)	$	7.03
7-1-03 to 6-30-04	5.77		0.01			0.69			0.70			(0.01		)		(0.00		)	(0.00		)		(0.01		)	6.46
7-1-02 to 6-30-03	5.48		0.03			0.30			0.33			(0.04		)		(0.00		)	(0.00		)		(0.04		)	5.77
7-1-01 to 6-30-02	6.84		0.06			(1.35		)	(1.29		)	(0.06		)		(0.01		)	(0.00		)		(0.07		)	5.48
7-1-00 to 6-30-01	12.05		0.06			(2.52		)	(2.46		)	(0.06		)		(2.42		)	(0.27		)		(2.75		)	6.84

Class B
7-1-04 to 6-30-05	$	6.31	$(0.10		)	$	0.59		$	0.49		$	(0.00	)		$	(0.00	)	$	(0.00	)		$	(0.00	)	$	6.80
7-1-03 to 6-30-04	5.70		(0.06		)	0.67			0.61			(0.00		)		(0.00		)	(0.00		)		(0.00		)	6.31
7-1-02 to 6-30-03	5.42		(0.04		)	0.32			0.28			(0.00		)		(0.00		)	(0.00		)		(0.00		)	5.70
7-1-01 to 6-30-02	6.78		(0.01		)	(1.34		)	(1.35		)	(0.00		)		(0.01		)	(0.00		)		(0.01		)	5.42
7-1-00 to 6-30-01	12.00		(0.01		)	(2.52		)	(2.53		)	(0.00		)		(2.42		)	(0.27		)		(2.69		)	6.78

Class C
7-1-04 to 6-30-05	$	6.32	$(0.09		)	$	0.58		$	0.49		$	(0.00	)		$	(0.00	)	$	(0.00	)		$	(0.00	)	$	6.81
7-1-03 to 6-30-04	5.70		(0.03		)	0.65			0.62			(0.00		)		(0.00		)	(0.00		)		(0.00		)	6.32
7-1-02 to 6-30-03	5.42		(0.04		)	0.32			0.28			(0.00		)		(0.00		)	(0.00		)		(0.00		)	5.70
7-1-01 to 6-30-02	6.77		(0.01		)	(1.33		)	(1.34		)	(0.00		)		(0.01		)	(0.00		)		(0.01		)	5.42
7-1-00 to 6-30-01	12.00		(0.01		)	(2.53		)	(2.54		)	(0.00		)		(2.42		)	(0.27		)		(2.69		)	6.77

Class Y
7-1-04 to 6-30-05	$	6.47	$	0.02		$	0.58		$	0.60		$	(0.00	)		$	(0.00	)	$	(0.00	)		$	(0.00	)	$	7.07
7-1-03 to 6-30-04	5.78		0.03			0.68			0.71			(0.02		)		(0.00		)	(0.00		)		(0.02		)	6.47
7-1-02 to 6-30-03	5.48		0.06			0.30			0.36			(0.06		)		(0.00		)	(0.00		)		(0.06		)	5.78
7-1-01 to 6-30-02	6.84		0.07			(1.35		)	(1.28		)	(0.07		)		(0.01		)	(0.00		)		(0.08		)	5.48
7-1-00 to 6-30-01	12.05		0.09			(2.53		)	(2.44		)	(0.08		)		(2.42		)	(0.27		)		(2.77		)	6.84