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Ivy Funds Inc · 485BPOS · On 6/26/01

Filed On 6/26/01 1:07pm ET   ·   SEC Files 33-45961, 811-06569   ·   Accession Number 1105607-1-500015

  in   Show  and 
  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 6/26/01  Ivy Funds Inc                     485BPOS     6/26/01   10:170                                    Prepress Graphic..Inc/FA

Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 485BPOS     Main Part                                           HTML  1,636K 
 2: EX-99.B(A)WRARTAMEND  Articles of Amendment, Effective October  HTML     13K 
                          2, 2000                                                
 3: EX-99.B(A)WRARTAMEND  Articles of Amendment, Filed March1,      HTML     18K 
                          2001                                                   
 4: EX-99.B(B)WRBYLAWAME  Amendment to Bylaws, Dated May 17, 2000   HTML     11K 
 5: EX-99.B(H)WRASAAMEND  Amendment to Accounting Services          HTML      9K 
                          Agreement, Effecs                                      
 6: EX-99.B(H)WRSSAEXB  Compensation Table (Exhibit B) to           HTML     10K 
                          Shareholder Serc                                       
 7: EX-99.B(I)WRLEGOPN  Opinion and Consent of Counsel              HTML      7K 
 8: EX-99.B(J)WRCONSNT  Consent of Independent Accountants          HTML      7K 
 9: EX-99.B(M)WRDSPCA  Distribution and Service Plan for Class A    HTML     14K 
                          Shares,                                                
10: EX-99.B(P)WRCOE  Code of Ethics, Effective November 17, 2000    HTML     59K 


485BPOS   ·   Main Part
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page
"If shares are redeemed at end of period
"If shares are not redeemed at end of period
"To Open an Account
"Taxes
"Financial Highlights
"Average Annual Total Returns as of December 31, 2000 (%)
"Total
"Municipal Bond
"Accounting services fee
"Cdsc
"Other Information

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                                                         File No. 33-45961
                                                         File No. 811-6569

                    SECURITIES AND EXCHANGE COMMISSION

                         Washington, D. C.  20549

                                 Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933     X

                     Pre-Effective Amendment No. ____
                     Post-Effective Amendment No. 17

                                  and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940                                                     X

                             Amendment No. 17

W&R FUNDS, INC.
---------------------------------------------------------------------------
                  (Exact Name as Specified in Charter)

6300 Lamar Avenue, Shawnee Mission, Kansas             66202-4200
---------------------------------------------------------------------------
        (Address of Principal Executive Office)       (Zip Code)

Registrant's Telephone Number, including Area Code  (913) 236-2000
---------------------------------------------------------------------------

Kristen A. Richards, P. O. Box 29217, Shawnee Mission, Kansas  66201-9217
---------------------------------------------------------------------------
                 (Name and Address of Agent for Service)

It is proposed that this filing will become effective

         _____  immediately upon filing pursuant to paragraph (b)
         __X__  on June 28, 2001 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

    ==================================================================

                DECLARATION REQUIRED BY RULE 24f-2 (a) (1)

     The issuer has registered an indefinite amount of its securities under
the Securities Act of 1933 pursuant to Rule 24f-2(a)(1). Notice for the
Registrant's fiscal year ended March 31, 2001 will be filed on or about
June 28, 2001.

W&R Funds, Inc.

EQUITY, GROWTH & INCOME AND ASSET ALLOCATION FUNDS

Asset Strategy Fund
Core Equity Fund
International Growth Fund
Large Cap Growth Fund
Mid Cap Growth Fund
Science and Technology Fund
Small Cap Growth Fund
Tax-Managed Equity Fund

The Securities and Exchange Commission has not approved
or disapproved the Fund's securities, or determined whether
this Prospectus is accurate or adequate. It is a criminal offense
to state otherwise.

Prospectus
June 28, 2001

CONTENTS

3 An Overview of the Funds
3 Asset Strategy Fund
10 Core Equity Fund
16 International Growth Fund
22 Large Cap Growth Fund
26 Mid Cap Growth Fund
30 Science and Technology Fund
36 Small Cap Growth Fund
42 Tax-Managed Equity Fund
46 The Investment Principles of the Funds
55 Your Account
76 The Management of the Funds
81 Financial Highlights

AN OVERVIEW OF THE FUND

GOAL

W&R Asset Strategy Fund
seeks high total return over the long term.

Principal Strategies

Asset Strategy Fund seeks to achieve its goal by allocating its assets among
stocks, bonds and short-term instruments.

* The stock class includes equity securities of all types, although Waddell
  & Reed Investment Management Company (WRIMCO), the Fund's investment
  manager, typically emphasizes a blend of value and growth potential in
  selecting stocks. Value stocks are those that WRIMCO believes are currently
  selling below their true worth. Growth stocks are those whose earnings
  WRIMCO believes are likely to grow faster than the economy. The Fund may
  invest in the securities of any size company.

* The bond class includes all varieties of fixed-income instruments, such as
  corporate or U.S. Government debt securities, with remaining maturities of
  more than three years. This asset class may include a significant amount of
  junk bonds, up to 35% of the Fund's total assets, which include bonds rated
  BB and below by Standard & Poor's (S&P) and Ba and below by Moody's
  Corporation (Moody's) or unrated bonds deemed by WRIMCO to be of comparable
  quality.

* The short-term class includes all types of short-term instruments with
  remaining maturities of three years or less, including high-quality money
  market instruments.

* Within each of these classes, the Fund may invest in both domestic and
  foreign securities.

The Fund selects a mix which represents the way the Fund's investments will
generally be allocated over the long term as indicated in the box below.
This mix will vary over shorter time periods as WRIMCO changes the Fund's
holdings based on its current outlook for the different markets. These
changes may be based on such factors as interest rate changes, security
valuation levels and a rise in the potential for growth stocks.

Portfolio Mix

Stocks 70% (can range from 0-100%)
Bonds 25% (can range from 0-100%)
Short-term 5% (can range from 0-100%)

Principal Risks of Investing in the Fund

Because Asset Strategy Fund owns different types of investments, a variety
of factors can affect its investment performance, such as:

* WRIMCO's skill in allocating the Fund's assets among different types of
  investments

* the mix of securities in the Fund's portfolio, particularly the relative
  weightings in, and exposure to, different sectors of the economy

* an increase in interest rates, which may cause the value of the Fund's
  fixed-income securities, especially bonds with longer maturities, to decline

* prepayment of higher-yielding bonds held by the Fund

* the earnings performance, credit quality and other conditions of the
  companies whose securities the Fund holds

* adverse stock and bond market conditions, sometimes in response to general
  economic or industry news, that may cause the prices of the Fund's holdings
  to fall as part of a broad market decline

Market risk for small or medium sized companies may be greater than that for
large companies. Smaller companies are more likely to have limited financial
resources and inexperienced management. Additionally, stock of smaller
companies may experience volatile trading and price fluctuations.

Investments by the Fund in junk bonds are more susceptible to the risk
of non-payment or default, and their prices may be more volatile, than
higher-rated bonds.

As well, the Fund may invest a significant portion of its assets in foreign
securities. Foreign securities present additional risks such as currency
fluctuations and political or economic conditions affecting the foreign
countries.

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.

Who May Want to Invest

Asset allocation funds are designed for investors who want to diversify
among stocks, bonds and short-term instruments, in one fund. If you are
looking for an investment that uses this technique in pursuit of high total
return, this Fund may be appropriate for you. You should consider whether
the Fund fits your particular investment objectives.

PERFORMANCE

Asset Strategy 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 C and
  shows how performance has varied from year to year.

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

* The performance table shows Class C and Class Y average annual total
  returns and compares them to the market indicators listed. Cumulative return
  information is provided for Class A and Class B shares since these classes
  do not have annual returns for at least one calendar year.

* 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 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.

Because of ongoing market volatility, the Fund's performance may be subject
to substantial short-term fluctuation and current performance may be less
than the results shown herein. Please check the Waddell & Reed web site at
www.waddell.com for more current performance information.

CHART OF YEAR-BY-YEAR RETURNS
as of December 31 each year (%)[1]
1996           3.92%
1997          10.84%
1998           8.64%
1999          21.22%
2000          20.66%

In the period shown in the chart, the highest quarterly return was 15.58%
(the first quarter of 2000) and the lowest quarterly return was -4.97% (the
first quarter of 1997). The Class C return for the year through March 31,
2001 was -8.25%.

[1]The returns shown are based on the performance of the Fund's prior Class B.
   On March 24, 2000, that Class B was combined with and redesignated as Class
   C, which had commenced operations on October 4, 1999.

Average Annual Total Returns

as of December 31, 2000 (%)            1 Year    5 Years     Life of Class[2]

Class A Shares of Asset Strategy Fund                          -0.98%

S&P 500 Index                                                  -7.29%

Salomon Brothers Broad
Investment Grade Index                                          6.41%

Salomon Brothers Short-Term Index
for 1 Month Certificates of Deposit                             2.79%

Lipper Flexible Portfolio Funds
Universe Average                                               -0.74%

Class B Shares of Asset Strategy Fund                           0.30%

S&P 500 Index                                                 -7.29%

Salomon Brothers Broad
Investment Grade Index                                          6.41%

Salomon Brothers Short-Term Index
for 1 Month Certificates of Deposit                             2.79%

Lipper Flexible Portfolio Funds
Universe Average                                               -0.74%

Class C Shares of Asset Strategy Fund[1]  20.66%     12.85%     11.72%

S&P 500 Index                             -9.18%     18.35%     20.12%

Salomon Brothers Broad
Investment Grade Index                    11.59%      6.45%      7.68%

Salomon Brothers Short-Term Index
for 1 Month Certificates of Deposit        6.53%      5.75%      5.78%

Lipper Flexible Portfolio Funds
Universe Average                           0.29%     11.54%      13.13%

Class Y Shares of Asset Strategy Fund     21.75%     13.84%      13.80%

S&P 500 Index                             -9.18%     18.35%      18.35%

Salomon Brothers Broad
Investment Grade Index                    11.59%      6.45%       6.45%

Salomon Brothers Short-Term Index
for 1 Month Certificates of Deposit        6.53%      5.75%       5.75%

Lipper Flexible Portfolio Funds
Universe Average                           0.29%     11.54%       11.54%

The indexes shown are broad-based, securities market indexes that are
unmanaged. The Lipper average is a composite of mutual funds with goals
similar to the goal of the Fund.

[1]The returns shown for Class C are based on the performance of the Fund's
   prior Class B. On March 24, 2000, that Class B was combined with and
   redesignated as Class C, which had commenced operations on October 4, 1999.
   The prior Class B's performance has been adjusted to reflect the current
   contingent deferred sales charge (CDSC) structure applicable to Class C.
   Accordingly, these returns reflect no CDSC since it only applies to Class C
   shares held for twelve months or less.

[2]Since July 10, 2000 for Class A shares, July 3, 2000 for Class B shares,
   April 20, 1995 for Class C shares (based on the prior Class B shares) and
   December 29, 1995 for Class Y shares. Because each class commenced
   operations on a date other than at the end of a month, and partial month
   calculations of the performance of the above indexes are not available,
   index performance for Class A shares, Class B shares, Class C shares and
   Class Y shares is calculated from July 31, 2000, July 31, 2000, April 30,
   1995 and December 31, 1995, respectively.

FEES AND EXPENSES

Asset Strategy 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)               Shares       Shares       Shares       Shares

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)               None[2]      5%          1%            None

Annual Fund Operating Expenses[3]

(expenses that are deducted    Class A      Class B       Class C     Class Y
from Fund assets)              Shares       Shares        Shares      Shares

Management Fees                 0.70%        0.70%         0.70%       0.70%

Distribution and Service
(12b-1) Fees                    0.25%        1.00%         1.00%       0.25%

Other Expenses                  0.43%        0.53%         0.45%       0.38%

Total Annual Fund
Operating Expenses              1.38%        2.23%         2.15%        1.33%

[1]The CDSC, which is imposed on the lesser of amount invested or redemption
   value of Class B shares, declines from 5% for redemptions made within the
   first year of purchase, to 4% for redemptions made within the second year,
   to 3% for redemptions made within the third and fourth years, to 2% for
   redemptions made within the fifth year, to 1% for redemptions made within
   the sixth year and to 0% for redemptions made after the sixth year. For
   Class C shares, a 1% CDSC applies to the lesser of amount invested or
   redemption value of Class C shares redeemed within twelve months after
   purchase. Solely for purposes of determining the number of months or years
   from the time of any payment for the purchase of shares, all payments during
   a month are totaled and deemed to have been made on the first day of the
   month.

[2]A 1% CDSC may be imposed on purchases of $2 million or more of Class A
   shares that are redeemed within twelve months of purchase.

[3]Other Expenses and Total Annual Fund Operating Expenses have been restated
   to reflect the change in accounting service fees and shareholder servicing
   fees effective September 1, 2000; otherwise, expense ratios are based on
   other Fund-level expenses for the fiscal year ended March 31, 2001. Actual
   expenses may be greater or less than those shown.

Example

This example is intended to help you compare the cost of investing in the
shares of the Fund with the cost of investing in other mutual funds. The
example assumes that (a) you invest $10,000 in the particular class of
shares for each time period specified, (b) your investment has a 5% return
each year, and (c) the expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed
at end of period:       1 Year      3 Years     5 Years     10 Years

Class A Shares          $707        $986        $1,285      $2,134

Class B Shares          $626        $998        $1,295      $2,348[1]

Class C Shares          $218        $673        $1,154      $2,483

Class Y Shares          $135        $421        $  729      $1,601

If shares are not redeemed
at end of period:       1 Year      3 Years     5 Years     10 Years

Class A Shares          $707        $986        $1,285      $2,134

Class B Shares          $226        $698        $1,195      $2,348[1]

Class C Shares          $218        $673        $1,154      $2,483

Class Y Shares          $135        $421        $ 729       $1,601

[1]Reflects annual operating expenses of Class A shares after conversion of
  Class B shares into Class A shares 8 years after the month in which the
  shares were purchased.

AN OVERVIEW OF THE FUND

GOALS

W&R Core Equity Fund
(formerly, W&R Total Return Fund) seeks to provide
capital growth and income.Principal Strategies

Core Equity Fund seeks to achieve its goals by investing primarily in common
stocks of large U.S. and foreign companies with dominant market positions in
their industries. In order to achieve its goals, the Fund invests in
securities that have the potential for capital appreciation or that WRIMCO
expects to resist market decline. Although the Fund typically invests in
large companies, it may invest in securities of any size company.

WRIMCO attempts to select securities with growth and income possibilities by
looking at many factors including the company's:

* profitability record

* history of improving sales and profits

* management

* leadership position in its industry

* stock price value

* dividend payment history

Generally, in determining whether to sell a security WRIMCO uses the same
type of analysis that it uses in buying securities in order to determine
whether the security has ceased to offer the prospect of significant growth
potential and/or the prospect of continued dividend payments. WRIMCO may
also sell a security to take advantage of more attractive investment
opportunities or to raise cash.

Principal Risks of Investing in the Fund

Because Core Equity Fund owns different types of securities, a variety of
factors can affect its investment performance, such as:

* adverse stock and bond market conditions, sometimes in response to general
  economic or industry news, that may cause the prices of the Fund's holdings
  to fall as part of a broad market decline

* the earnings performance, credit quality and other conditions of the
  companies whose securities the Fund holds

* an increase in interest rates, which may cause the value of the Fund's
  fixed-income securities, especially bonds with longer maturities, to decline

* WRIMCO's skill in evaluating and selecting securities for the Fund

Market risk for small or medium sized companies may be greater than that for
large companies. Stock of smaller companies, as well as stock of companies
with high-growth expectations reflected in their stock price, may experience
volatile trading and price fluctuations.

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.

Who May Want to Invest

Core Equity Fund is designed for investors who seek capital growth and
income. You should consider whether the Fund fits your particular investment
objectives.

PERFORMANCE

Core Equity 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 C and
  shows how performance has varied from year to year.

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

* The performance table shows Class C and Class Y average annual total
  returns and compares them to the market indicators listed. Cumulative return
  information is provided for Class A and Class B shares since these classes
  do not have annual returns for at least one calendar year.

* 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 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.

Because of ongoing market volatility, the Fund's performance may be subject
to substantial short-term fluctuation and current performance may be less
than the results shown herein. Please check the Waddell & Reed web site at
www.waddell.com for more current performance information.

CHART OF YEAR-BY-YEAR RETURNS
as of December 31 each year (%)[1]
1993     14.03%
1994     -2.07%
1995     29.65%
1996     18.12%
1997     24.61%
1998     20.73%
1999     12.15%
2000      8.54%

In the period shown in the chart, the highest quarterly return was 17.05%
(the second quarter of 1997) and the lowest quarterly return was -7.12%
(the third quarter of 1998). The Class C return for the year through
March 31, 2001 was -14.25%.

[1]The returns shown are based on the performance of the Fund's prior Class B.
   On March 24, 2000, that Class B was combined with and redesignated as Class
   C, which had commenced operations on October 4, 1999.

Average Annual Total Returns

as of December 31, 2000 (%)         1 Year      5 Years     Life of Class[2]

Class A Shares of
Core Equity Fund                                            -7.64%

S&P 500 Index                                               -7.29%

Lipper Large-Cap Core Funds
Universe Average                                            -6.59%

Class B Shares of
Core Equity Fund                                            -6.46%

S&P 500 Index                                               -7.29%

Lipper Large-Cap Core Funds
Universe Average                                            -6.59%

Class C Shares of
Core Equity Fund[1]                  8.54%      16.69%      15.53%

S&P 500 Index                       -9.18%      18.35%      17.33%

Lipper Large-Cap Core Funds
Universe Average                    -8.96%      16.62%      15.72%

Class Y Shares of
Core Equity Fund                    9.48%       17.91%      17.58%

S&P 500 Index                       -9.18%      18.35%      18.35%

Lipper Large-Cap Core Funds
Universe Average                    -8.96%      16.62%      16.62%

The index shown is a broad-based, securities market index that is unmanaged.
The Lipper average is a composite of mutual funds with goals similar to the
goals of the Fund.

[1]The returns shown for Class C are based on the performance of the Fund's
   prior Class B. On March 24, 2000, that Class B was combined with and
   redesignated as Class C, which had commenced operations on October 4, 1999.
   The prior Class B's performance has been adjusted to reflect the current
   CDSC structure applicable to Class C. Accordingly, these returns reflect no
   CDSC since it only applies to Class C shares held for twelve months or less.

[2]Since July 3, 2000 for Class A shares, July 11, 2000 for Class B shares,
   September 21, 1992 for Class C shares (based on the prior Class B shares)
   and December 29, 1995 for Class Y shares. Because each class commenced
   operations on a date other than at the end of a month, and partial month
   calculations of the performance of the above index are not available, index
   performance of Class A shares, Class B shares, Class C shares and Class Y
   shares is calculated from July 31, 2000, July 31, 2000, September 30, 1992
   and December 31, 1995, respectively.

FEES AND EXPENSES

Core Equity 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)                    Shares      Shares      Shares      Shares

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)                   None[2]     5%          1%          None

Annual Fund Operating Expenses[3]

(expenses that are deducted         Class A     Class B     Class C     Class Y
from Fund assets)                   Shares      Shares      Shares      Shares

Management Fees                     0.70%       0.70%       0.70%       0.70%

Distribution and Service
(12b-1) Fees                        0.25%       1.00%       1.00%        0.25%

Other Expenses                      0.29%       0.41%       0.27%       0.21%

Total Annual Fund
Operating Expenses                  1.24%        2.11%      1.97%       1.16%

[1]The CDSC, which is imposed on the lesser of amount invested or redemption
   value of Class B shares, declines from 5% for redemptions made within the
   first year of purchase, to 4% for redemptions made within the second year,
   to 3% for redemptions made within the third and fourth years, to 2% for
   redemptions made within the fifth year, to 1% for redemptions made within
   the sixth year and to 0% for redemptions made after the sixth year. For
   Class C shares, a 1% CDSC applies to the lesser of amount invested or
   redemption value of Class C shares redeemed within twelve months after
   purchase. Solely for purposes of determining the number of months or years
   from the time of any payment for the purchase of shares, all payments during
   a month are totaled and deemed to have been made on the first day of the
   month.

[2]A 1% CDSC may be imposed on purchases of $2 million or more of Class A
   shares that are redeemed within twelve months of purchase.

[3]Other Expenses and Total Annual Fund Operating Expenses have been restated
   to reflect the change in accounting service fees and shareholder servicing
   fees effective September 1, 2000; otherwise, expense ratios are based on
   other Fund-level expenses for the fiscal year ended March 31, 2001. Actual
   expenses may be greater or less than those shown.

Example

This example is intended to help you compare the cost of investing in the
shares of the Fund with the cost of investing in other mutual funds. The
example assumes that (a) you invest $10,000 in the particular class of
shares for each time period specified, (b) your investment has a 5% return
each year, and (c) the expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed
at end of period:                 1 Year      3 Years     5 Years     10 Years

Class A Shares                    $694        $946        $1,217      $1,989

Class B Shares                    $614        $960        $1,232      $2,215[1]

Class C Shares                    $200        $618        $1,062      $2,296

Class Y Shares                    $118        $368        $  638      $1,409

If shares are not redeemed
at end of period:                 1 Year      3 Years     5 Years     10 Years

Class A Shares                    $694        $946        $1,217      $1,989

Class B Shares                    $214        $660        $1,132      $2,215[1]

Class C Shares                    $200        $618        $1,062      $2,296

Class Y Shares                    $118        $368        $ 638       $1,409

[1]Reflects annual operating expenses of Class A shares after conversion of
   Class B shares into Class A shares 8 years after the month in which the
   shares were purchased.

AN OVERVIEW OF THE FUND

GOALS

W&R International Growth Fund
seeks, as a primary goal, long-term appreciation of capital. As a secondary
goal, the Fund seeks current income.

Principal Strategies

International Growth Fund seeks to achieve its goals by investing primarily
in common stocks of foreign companies that WRIMCO believes have the
potential for long-term growth represented by economic expansion within a
country or region, represented by the privatization and/or restructuring of
particular industries. The Fund emphasizes growth stocks, which are
securities of companies whose earnings WRIMCO believes are likely to grow
faster than the economy. The Fund primarily invests in issuers of developed
countries, and the Fund may invest in companies of any size.

WRIMCO may look at a number of factors in selecting securities for the
Fund's portfolio. These include:

* a company's growth and earnings potential

* management of the company

* industry position of the company

* strength of the industry

* applicable economic, market and political conditions of the country in
  which the company is located

Generally, in determining whether to sell a security, WRIMCO uses the same
type of analysis that it uses in buying securities of that type. For
example, WRIMCO may sell a security if it believes the security has ceased
to offer significant growth potential, if it believes the management of the
company has weakened, and/or there exists political or economic instability
in the issuer's country. WRIMCO may also sell a security to take advantage
of more attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Fund

Because International Growth Fund owns different types of securities, a
variety of factors can affect its investment performance, such as:

* changes in foreign exchange rates, which may affect the value of the
  securities the Fund holds

* adverse stock and bond market conditions, sometimes in response to general
  economic or industry news, that may cause the prices of the Fund's holdings
  to fall as part of a broad market decline

* the earnings performance, credit quality and other conditions of the
  issuers whose securities the Fund holds

* WRIMCO's skill in evaluating and selecting securities for the Fund

Investing in foreign securities presents additional risks, such as currency
fluctuations and political or economic conditions affecting the foreign
country. Accounting and disclosure standards also differ from country to
country, which makes obtaining reliable research information more difficult.
There is the possibility that, under unusual international monetary or
political conditions, the Fund's assets might be more volatile than would be
the case with other investments.

Market risk for small or medium sized companies may be greater than that for
large companies. For example, smaller companies are more likely to have
limited financial resources, limited product lines or inexperienced
management.

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.

Who May Want to Invest

International Growth Fund is designed for investors seeking long-term
appreciation of capital by investing primarily in securities issued by
foreign companies. You should consider whether the Fund fits your particular
investment objectives.

PERFORMANCE

International Growth 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 C and
  shows how performance has varied from year to year.

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

* The performance table shows Class C and Class Y average annual total
  returns and compares them to the market indicators listed. Cumulative return
  information is provided for Class A and Class B shares since these classes
  do not have annual returns for at least one calendar year.

* 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 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.

Because of ongoing market volatility, the Fund's performance may be subject
to substantial short-term fluctuation and current performance may be less
than the results shown herein. Please check the Waddell & Reed web site at
www.waddell.com for more current performance information.

CHART OF YEAR-BY-YEAR RETURNS
as of December 31 each year (%)[1]
1993      3.62%
1994      0.12%
1995      8.34%
1996     19.11%
1997     16.89%
1998     31.72%
1999     88.66%
2000    -24.49%

In the period shown in the chart, the highest quarterly return was 67.07%
(the fourth quarter of 1999) and the lowest quarterly return was -18.21%
(the third quarter of 1998). The Class C return for the year through March
31, 2001 was -14.14%.

[1]The returns shown are based on the performance of the Fund's prior Class B.
   On March 24, 2000, that Class B was combined with and redesignated as Class
   C, which had commenced operations on October 4, 1999.

Average Annual Total Returns

as of December 31, 2000 (%)              1 Year     5 Years    Life of Class[2]

Class A Shares of
International Growth Fund                                      -22.05%

Morgan Stanley Capital
International E.A.FE. Index                                    -6.62%

Lipper International
Funds Universe Average                                         -8.51%

Class B Shares of
International Growth Fund                                      -20.48%

Morgan Stanley Capital
International E.A.FE. Index                                     -6.62%

Lipper International
Funds Universe Average                                         -8.51%

Class C Shares of
International Growth Fund[1]               -24.49%     21.18%    13.30%

Morgan Stanley Capital
International E.A.FE. Index              -14.17%    7.13%      9.76%

Lipper International
Funds Universe Average                   -15.60%    9.09%      10.62%

Class Y Shares of
International Growth Fund                -23.83%    22.25%      22.28%

Morgan Stanley Capital
International E.A.FE. Index              -14.17%     7.13%     7.13%

Lipper International
Funds Universe Average                   -15.60%    9.09%      9.09%

The index shown is a broad-based, securities market index that is unmanaged.
The Lipper average is a composite of mutual funds with goals similar to the
goals of the Fund.

[1]The returns shown for Class C are based on the performance of the Fund's
   prior Class B. On March 24, 2000, that Class B was combined with and
   redesignated as Class C, which had commenced operations on October 4, 1999.
   The prior Class B's performance has been adjusted to reflect the current
   CDSC structure applicable to Class C. Accordingly, these returns reflect no
   CDSC since it only applies to Class C shares held for twelve months or less.

[2]Since July 3, 2000 for Class A shares, July 10, 2000 for Class B shares,
   September 21, 1992 for Class C shares (based on the prior Class B shares)
   and December 29, 1995 for Class Y shares. Because each class commenced
   operations on a date other than at the end of a month, and partial month
   calculations of the performance of the above index are not available, index
   performance for Class A shares, Class B shares, Class C shares and Class Y
   shares is calculated from July 31, 2000, July 31, 2000, September 30, 1992
   and December 31, 1995, respectively.

FEES AND EXPENSES

International Growth 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)                         Shares     Shares     Shares     Shares

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)                        None[2]    5%         1%         None

Annual Fund Operating Expenses[3]

(expenses that are deducted              Class A    Class B    Class C    Class Y
from Fund assets)                        Shares     Shares     Shares     Shares

Management Fees                          0.85%      0.85%      0.85%       0.85%

Distribution and Service
(12b-1) Fees                             0.25%      1.00%      1.00%      0.25%

Other Expenses                            0.66%     0.77%      0.52%      0.38%

Total Annual Fund
Operating Expenses                       1.76%      2.62%      2.37%       1.48%

[1]The CDSC, which is imposed on the lesser of amount invested or redemption
   value of Class B shares, declines from 5% for redemptions made within the
   first year of purchase, to 4% for redemptions made within the second year,
   to 3% for redemptions made within the third and fourth years, to 2% for
   redemptions made within the fifth year, to 1% for redemptions made within
   the sixth year and to 0% for redemptions made after the sixth year. For
   Class C shares, a 1% CDSC applies to the lesser of amount invested or
   redemption value of Class C shares redeemed within twelve months after
   purchase. Solely for purposes of determining the number of months or years
   from the time of any payment for the purchase of shares, all payments during
   a month are totaled and deemed to have been made on the first day of the
   month.

[2]A 1% CDSC may be imposed on purchases of $2 million or more of Class A
   shares that are redeemed within twelve months of purchase.

[3]Other Expenses and Total Annual Fund Operating Expenses have been restated
   to reflect the change in accounting service fees and shareholder servicing
   fees effective September 1, 2000; otherwise, expense ratios are based on
   other Fund-level expenses for the fiscal year ended March 31, 2001. Actual
   expenses may be greater or less than those shown.

Example

This example is intended to help you compare the cost of investing in the
shares of the Fund with the cost of investing in other mutual funds. The
example assumes that (a) you invest $10,000 in the particular class of
shares for each time period specified, (b) your investment has a 5% return
each year, and (c) the expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed
at end of period:      1 Year    3 Years    5 Years    10 Years

Class A Shares        $744       $1,098     $1,476     $2,532

Class B Shares        $665       $1,114     $1,490     $2,742[1]

Class C Shares        $240       $ 739      $1,265     $2,706

Class Y Shares        $151       $ 468      $  808     $1,768

If shares are not redeemed
at end of period:     1 Year     3 Years     5 Years   10 Years

Class A Shares        $744       $1,098     $1,476     $2,532

Class B Shares        $265       $ 814      $1,390     $2,742[1]

Class C Shares        $240       $ 739      $1,265     $2,706

Class Y Shares        $151       $ 468      $  808     $1,768

[1]Reflects annual operating expenses of Class A shares after conversion of
   Class B shares into Class A shares 8 years after the month in which the
   shares were purchased.

AN OVERVIEW OF THE FUND

GOAL

W&R Large Cap Growth Fund
seeks the appreciation of your investment.

Principal Strategies

Large Cap Growth Fund seeks to achieve its goal by investing primarily in a
diversified portfolio of common stock issued by growth-oriented large to
medium sized U.S. and foreign companies that WRIMCO believes have
appreciation possibilities. Growth stocks are those whose earnings WRIMCO
believes are likely to grow faster than the economy. The Fund may invest in
companies of any size.

WRIMCO attempts to select securities with appreciation possibilities by
looking at many factors. These include:

* the company's market position, product line, technological position and
  prospects for increased earnings

* the management capability of the company being considered

* the short-term and long-term outlook for the industry being analyzed

* changes in economic and political conditions

WRIMCO may also analyze the demands of investors for the security relative
to its price. Securities may be chosen when WRIMCO anticipates a development
that might have an effect on the value of a security.

In general, WRIMCO may sell a security if it determines that the security no
longer presents sufficient appreciation potential; this may be caused by, or
be an effect of, changes in the industry of the issuer, loss by the company
of its competitive position, and/or poor use of resources. WRIMCO may also
sell a security to take advantage of more attractive investment
opportunities or to raise cash.

Principal Risks of Investing in the Fund

Because Large Cap Growth Fund owns different types of securities, a variety
of factors can affect its investment performance, such as:

* the earnings performance, credit quality and other conditions of the
  companies whose securities the Fund holds

* the mix of securities in the Fund's portfolio, particularly the relative
  weightings in, and exposure to, different sectors of the economy

* adverse stock and bond market conditions, sometimes in response to general
  economic or industry news, that may cause the prices of the Fund's holdings
  to fall as part of a broad market decline

* the skill of WRIMCO in evaluating and selecting securities for the Fund

Market risk for medium sized companies may be greater than the market risk
for large companies. Such companies are more likely to have limited
financial resources and inexperienced management. As well, stock of these
companies may experience volatile trading and price fluctuations.

The Fund may invest a portion of its assets in foreign securities. Foreign
securities present additional risks such as currency fluctuations and
political or economic conditions affecting the foreign countries.

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.

Who May Want to Invest

Large Cap Growth Fund is designed for investors seeking long-term investment
growth. You should consider whether the Fund fits your particular investment
objectives.

PERFORMANCE

Large Cap Growth Fund

The Fund has not been in operation for a full calendar year, therefore it
does not have performance information of at least one calendar year to
include a bar chart or performance table.

FEES AND EXPENSES

Large Cap Growth 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)                 Shares     Shares     Shares     Shares

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)                None[2]    5%         1%         None

Annual Fund Operating Expenses

(expenses that are deducted      Class A    Class B    Class C    Class Y
from Fund assets)                Shares     Shares     Shares     Shares

Management Fees[3]               0.70%      0.70%      0.70%      0.70%

Distribution and Service
(12b-1) Fees                     0.25%      1.00%      1.00%      0.25%

Other Expenses[4]                0.56%      1.08%      0.67%      0.55%

Total Annual Fund
Operating Expenses[4]            1.51%      2.78%      2.37%      1.50%

[1]The CDSC, which is imposed on the lesser of amount invested or redemption
   value of Class B shares, declines from 5% for redemptions made within the
   first year of purchase, to 4% for redemptions made within the second year,
   to 3% for redemptions made within the third and fourth years, to 2% for
   redemptions made within the fifth year, to 1% for redemptions made within
   the sixth year and to 0% for redemptions made after the sixth year. For
   Class C shares, a 1% CDSC applies to the lesser of amount invested or
   redemption value of Class C shares redeemed within twelve months after
   purchase. Solely for purposes of determining the number of months or years
   from the time of any payment for the purchase of shares, all payments during
   a month are totaled and deemed to have been made on the first day of the
   month.

[2]A 1% CDSC may be imposed on purchases of $2 million or more of Class A
   shares that are redeemed within twelve months of purchase.

[3]The expenses shown for Management Fees reflect the maximum annual fee
   payable; however, WRIMCO has voluntarily agreed to waive its investment
   management fee on any day if the Fund's net assets are less than $25
   million, subject to WRIMCO's right to change or terminate this waiver.

[4]Other Expenses and Total Annual Fund Operating Expenses have been restated
   to reflect the change in accounting service fees and shareholder servicing
   fees effective September 1, 2000; otherwise, expense ratios are based on
   other Fund-level expenses for the fiscal period ended March 31, 2001. Actual
   expenses may be greater or less than those shown.

Example

This example is intended to help you compare the cost of investing in the
shares of the Fund with the cost of investing in other mutual funds. The
example assumes that (a) you invest $10,000 in the particular class of
shares for each time period specified, (b) your investment has a 5% return
each year, and (c) the expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period:          1 Year    3 Years

Class A Shares                                    $720      $1,024

Class B Shares                                    $681      $1,162

Class C Shares                                    $240      $  739

Class Y Shares                                    $152      $  474

If shares are not redeemed at end of period:      1 Year    3 Years

Class A Shares                                    $720      $1,024

Class B Shares                                    $281      $  862

Class C Shares                                    $240      $  739

Class Y Shares                                    $152      $  474

AN OVERVIEW OF THE FUND

GOAL

W&R Mid Cap Growth Fund seeks the growth of your investment.

Principal Strategies

Mid Cap Growth Fund seeks to achieve its goal by investing primarily in
common stocks of U.S. and foreign companies whose market capitalizations are
within the range of capitalizations of companies comprising the Russell
Mid-Cap Growth Index (Russell Mid-Cap) and that WRIMCO believes offer
above-average growth potential.

In selecting companies, WRIMCO may look at a number of factors, such as:

* new or innovative products or services

* adaptive or creative management

* strong financial and operational capabilities to sustain growth

* market potential

* profit potential

Generally, in determining whether to sell a stock, WRIMCO uses the same type
of analysis that it uses when buying stocks. For example, WRIMCO may sell a
holding if the company no longer meets the desired capitalization range or
if the company position weakens in the industry or market. WRIMCO may also
sell a security to take advantage of more attractive investment
opportunities or to raise cash.

Principal Risks of Investing in the Fund

Because Mid Cap Growth Fund owns different types of investments, a variety
of factors can affect its investment performance, such as:

* the earnings performance, credit quality and other conditions of the
  companies whose securities the Fund holds

* adverse stock and bond market conditions, sometimes in response to general
  economic or industry news, that may cause the prices of the Fund's holdings
  to fall as part of a broad market decline

* the mix of securities in the Fund's portfolio, particularly the relative
  weightings in, and exposure to, different sectors of the economy

* the skill of WRIMCO in evaluating and selecting securities for the Fund

Market risk for medium sized companies may be greater than that for large
companies. Medium sized companies may have limited financial resources and
less experienced management compared to large companies. Stocks of medium
sized companies may experience volatile trading and price fluctuations.

Also, the Fund may invest, to a lesser extent, in foreign securities, which
present 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.

Who May Want to Invest

Mid Cap Growth Fund is designed for investors who are willing to accept
greater risks than are present with many other mutual funds. The Fund is not
intended for investors who desire assured income and conservation of
capital. You should consider whether the Fund fits your particular
investment objectives.

PERFORMANCE

Mid Cap Growth Fund

The Fund has not been in operation for a full calendar year, therefore it
does not have performance information of at least one calendar year to
include a bar chart or performance table.

FEES AND EXPENSES

Mid Cap Growth 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)              Shares    Shares    Shares    Shares

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)              None[2]  5%        1%        None

Annual Fund Operating Expenses

(expenses that are deducted   Class A   Class B   Class C   Class Y
from Fund assets)             Shares    Shares    Shares    Shares

Management Fees[3]            0.85%      0.85%    0.85%     0.85%

Distribution and Service
(12b-1) Fees                  0.25%     1.00%     1.00%     0.25%

Other Expenses[4]             0.90%     1.45%      1.06%    0.83%

Total Annual Fund
Operating Expenses[4]         2.00%     3.30%     2.91%     1.93%

[1]The CDSC, which is imposed on the lesser of amount invested or redemption
   value of Class B shares, declines from 5% for redemptions made within the
   first year of purchase, to 4% for redemptions made within the second year,
   to 3% for redemptions made within the third and fourth years, to 2% for
   redemptions made within the fifth year, to 1% for redemptions made within
   the sixth year and to 0% for redemptions made after the sixth year. For
   Class C shares, a 1% CDSC applies to the lesser of amount invested or
   redemption value of Class C shares redeemed within twelve months after
   purchase. Solely for purposes of determining the number of months or years
   from the time of any payment for the purchase of shares, all payments during
   a month are totaled and deemed to have been made on the first day of the
   month.

[2]A 1% CDSC may be imposed on purchases of $2 million or more of Class A
   shares that are redeemed within twelve months of purchase.

[3]The expenses shown for Management Fees reflect the maximum annual fee
   payable; however, WRIMCO has voluntarily agreed to waive its investment
   management fee on any day if the Fund's net assets are less than $25
   million, subject to WRIMCO's right to change or terminate this waiver.

[4]Other Expenses and Total Annual Fund Operating Expenses have been restated
   to reflect the change in accounting service fees and shareholder servicing
   fees effective September 1, 2000; otherwise, expense ratios are based on
   other Fund-level expenses for the fiscal period ended March 31, 2001. Actual
   expenses may be greater or less than those shown.

Example

This example is intended to help you compare the cost of investing in the
shares of the Fund with the cost of investing in other mutual funds. The
example assumes that (a) you invest $10,000 in the particular class of
shares for each time period specified, (b) your investment has a 5% return
each year, and (c) the expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period:          1 Year    3 Years

Class A Shares                                    $767      $1,167

Class B Shares                                    $733      $1,317

Class C Shares                                    $294      $ 899

Class Y Shares                                    $196      $ 606

If shares are not redeemed at end of period:      1 Year    3 Years

Class A Shares                                    $767      $1,167

Class B Shares                                    $333      $1,017

Class C Shares                                    $294      $ 899

Class Y Shares                                    $196      $ 606

AN OVERVIEW OF THE FUND

GOAL

W&R Science and Technology Fund
seeks long-term capital growth.

Principal Strategies

Science and Technology Fund seeks to achieve its goal of growth by
concentrating its investments primarily in the equity securities of U.S. and
foreign science and technology companies. Science and technology companies
are companies whose products, processes or services, in the opinion of
WRIMCO, are being or are expected to be significantly benefited by the use
or commercial application of scientific or technological developments or
discoveries. The Fund may invest in companies of any size. WRIMCO typically
emphasizes growth potential in selecting stocks; that is, WRIMCO seeks
companies in which earnings are likely to grow faster than the economy.

WRIMCO may look at a number of factors in selecting securities for the
Fund's portfolio. These include the issuer's:

* growth potential

* earnings potential

* management

* industry position

* applicable economic and market conditions

Generally, in determining whether to sell a stock, WRIMCO uses the same type
of analysis that it uses in buying stocks in order to determine whether the
security has ceased to offer significant growth potential, has become
overvalued and/or whether the company prospects of the issuer have
deteriorated. WRIMCO may also sell a security to take advantage of more
attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of the Science
and Technology Fund. These include:

* the mix of securities in the Fund's portfolio, particularly the relative
  weightings in, and exposure to, different sectors of the science and
  technology industries

* the volatility of securities of science and technology companies due, in
  part, to the competitiveness of the industry

* rapid obsolescence of products or processes of companies in which the Fund
  invests

* government regulation in the science and technology industry

* the earnings performance, credit quality and other conditions of the
  companies whose securities the Fund holds

* adverse stock and bond market conditions, sometimes in response to general
  economic or industry news, that may cause the prices of the Fund's holdings
  to fall as part of a broad market decline

* WRIMCO's skill in evaluating and selecting securities for the Fund

Market risk for small to medium sized companies may be greater than that for
large companies. Smaller companies are more likely to have limited financial
resources and inexperienced management. As well, stocks of smaller companies
may experience volatile trading and price fluctuations.

The Fund may invest, to a lesser extent, in foreign securities. Investments
in foreign securities present 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.

Who May Want to Invest

Science and Technology Fund is designed for investors who seek long-term
capital growth by investing in an actively managed Fund that concentrates in
securities of science and technology companies. This Fund is not suitable
for all investors. You should consider whether the Fund fits your particular
investment objectives.

PERFORMANCE

Science and Technology Fund

The bar chart and performance table below provide some indication of the
risks of investing in the Fund by showing the Fund's performance 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 C and
  shows how performance has varied from year to year.

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

* The performance table shows the Class C and Class Y average annual total
  returns and compares them to the market indicators listed. Cumulative return
  information is provided for Class A and Class B shares since these classes
  do not have annual returns for a full calendar year.

* 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 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.

Because of ongoing market volatility, the Fund's performance may be subject
to substantial short-term fluctuation and current performance may be less
than the results shown herein. Please check the Waddell & Reed web site at
www.waddell.com for more current performance information.

CHART OF RETURNS
as of December 31 each year (%)[1]

1998     44.03%
1999    177.01%
2000    -26.31%

In the period shown in the chart, the highest quarterly return was 82.61%
(the fourth quarter of 1999) and the lowest quarterly return was -23.25%
(the second quarter of 2000). The Class C return for the year through March
31, 2001 was -20.79%.

[1]The returns shown are based on the performance of the Fund's prior Class B.
   On March 24, 2000, that Class B was combined with and redesignated as Class
   C, which had commenced operations on October 4, 1999.

[2]A substantial portion of the Fund's returns during this period is
   attributable to investments in initial public offerings (IPOs). No assurance
   can be given that the Fund will continue to be able to invest in IPOs to the
   same extent as it has in the past or that future IPOs in which the Fund
   invests will have as equally beneficial an impact on performance.

Average Annual Total Returns

as of December 31, 2000 (%)                 1 Year     Life of Class[2]

Class A Shares of
Science and Technology Fund                            -18.34%

Goldman Sachs Technology
Industry Composite Index                               -38.28%

Lipper Science & Technology
Funds Universe Average                                 -33.36%

Class B Shares of
Science and Technology Fund                            -16.94%

Goldman Sachs Technology
Industry Composite Index                               -38.28%

Lipper Science & Technology
Funds Universe Average                                 -33.36%

Class C Shares of
Science and Technology Fund[1]              -26.31%     36.85%

Goldman Sachs Technology
Industry Composite Index                    -37.84%     18.14%

Lipper Science & Technology
Funds Universe Average                      -33.81%     24.19%

Class Y Shares of
Science and Technology Fund                 -25.66%     42.89%

Goldman Sachs Technology
Industry Composite Index                    -37.84%     19.62%

Lipper Science & Technology
Funds Universe Average                      -33.81%     29.17%

The index shown is a broad-based, securities market index that is unmanaged.
The Lipper average is a composite of mutual funds with goals similar to the
goal of the Fund.

[1]The returns shown for Class C are based on the performance of the Fund's
   prior Class B. On March 24, 2000, that Class B was combined with and
   redesignated as Class C, which had commenced operations on October 4, 1999.
   The prior Class B's performance has been adjusted to reflect the current
   CDSC structure applicable to Class C. Accordingly, these returns reflect no
   CDSC since it only applies to Class C shares held for twelve months or less.

[2]Since July 3, 2000 for Class A and Class B shares, July 31, 1997 for Class
   C shares (based on the prior Class B shares) and June 9, 1998 for Class Y
   shares. Because Class A shares, Class B shares and Class Y shares commenced
   operations on a date other than at the end of a month, and partial month
   calculations of the performance of the above index are not available, index
   performance is calculated from July 31, 2000, July 31, 2000 and June 30,
   1998, respectively.

FEES AND EXPENSES

Science and Technology 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)              Shares    Shares    Shares    Shares

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)             None[2]   5%        1%        None

Annual Fund Operating Expenses[3]

(expenses that are deducted   Class A   Class B   Class C   Class Y
from Fund assets)             Shares    Shares    Shares    Shares

Management Fees               0.85%     0.85%      0.85%     0.85%

Distribution and Service
(12b-1) Fees                  0.25%     1.00%     1.00%     0.25%

Other Expenses                0.62%     0.69%     0.43%     0.28%

Total Annual Fund
Operating Expenses            1.72%     2.54%     2.28%     1.38%

[1]The CDSC, which is imposed on the lesser of amount invested or redemption
   value of Class B shares, declines from 5% for redemptions made within the
   first year of purchase, to 4% for redemptions made within the second year,
   to 3% for redemptions made within the third and fourth years, to 2% for
   redemptions made within the fifth year, to 1% for redemptions made within
   the sixth year and to 0% for redemptions made after the sixth year. For
   Class C shares, a 1% CDSC applies to the lesser of amount invested or
   redemption value of Class C shares redeemed within twelve months after
   purchase. Solely for purposes of determining the number of months or years
   from the time of any payment for the purchase of shares, all payments during
   a month are totaled and deemed to have been made on the first day of the
   month.

[2]A 1% CDSC may be imposed on purchases of $2 million or more of Class A
   shares that are redeemed within twelve months of purchase.

[3]Other Expenses and Total Annual Fund Operating Expenses have been restated
   to reflect the change in accounting service fees and shareholder servicing
   fees effective September 1, 2000; otherwise, expense ratios are based on
   other Fund-level expenses for the fiscal year ended March 31, 2001. Actual
   expenses may be greater or less than those shown.

Example

This example is intended to help you compare the cost of investing in the
shares of the Fund with the cost of investing in other mutual funds. The
example assumes that (a) you invest $10,000 in the particular class of
shares for each time period specified, (b) your investment has a 5% return
each year, and (c) the expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed
at end of period:             1 Year    3 Years   5 Years   10 Years

Class A Shares                $740      $1,087    $1,457    $2,492

Class B Shares                $657      $1,091    $1,451    $2,674[1]

Class C Shares                $231      $  712    $1,220    $2,615

Class Y Shares                $140      $  437    $  755    $1,657

If shares are not redeemed
at end of period:             1 Year    3 Years   5 Years   10 Years

Class A Shares                $740      $1,087    $1,457    $2,492

Class B Shares                $257      $  791    $1,351    $2,674[1]

Class C Shares                $231      $  712    $1,220    $2,615

Class Y Shares                $140      $  437    $  755    $1,657

[1]Reflects annual operating expenses of Class A shares after conversion of
   Class B shares into Class A shares 8 years after the month in which the
   shares were purchased.

AN OVERVIEW OF THE FUND

GOAL

W&R Small Cap Growth Fund
seeks growth of capital.

Principal Strategies

Small Cap Growth Fund seeks to achieve its goal by investing primarily in
common stocks of domestic and foreign companies whose market capitalizations
are within the range of capitalizations of companies included in the Lipper,
Inc. Small Cap Category (small cap stocks). The Fund emphasizes relatively
new or unseasoned companies in their early stages of development or smaller
companies positioned in new or emerging industries where there is
opportunity for rapid growth.

In selecting companies, WRIMCO seeks companies whose earnings, it believes,
are likely to grow faster than the economy. WRIMCO may look at a number of
factors relating to a company, such as:

* aggressive or creative management

* technological or specialized expertise

* new or unique products or services

* entry into new or emerging industries

In general, WRIMCO may sell a security if it determines that the stock no
longer offers significant growth potential, which may be due to a change in
the business or management of the company or a change in the industry of the
company. WRIMCO may also sell a security to take advantage of more
attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Fund

A variety of factors can affect the investment performance of Small Cap
Growth Fund. These include:

* the earnings performance, credit quality and other conditions of the
  companies whose securities the Fund holds

* the mix of securities in the Fund, particularly the relative weightings
  in, and exposure to, different sectors and industries

* adverse stock and bond market conditions, sometimes in response to general
  economic or industry news, that may cause the prices of the Fund's holdings
  to fall as part of a broad market decline

* WRIMCO's skill in evaluating and selecting securities for the Fund

Market risk for small to medium sized companies may be greater than that for
large companies. Smaller companies are more likely to have limited financial
resources and inexperienced management. Stock of smaller companies may also
experience volatile trading and price fluctuations.

Due to the nature of the Fund's permitted investments, primarily the small
cap stocks of new and/or unseasoned companies, companies in their early
stages of development or smaller companies in new or emerging industries,
the Fund may be subject to the following additional risks:

* products offered may fail to sell as anticipated

* a period of unprofitability may be experienced before a company develops
  the expertise and clientele to succeed in an industry

* the company may never achieve profitability

* economic, market and technological factors may cause the new industry
  itself to lose favor with the public

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.

Who May Want to Invest

Small Cap Growth Fund is designed for investors willing to accept greater
risks than are present with many other mutual funds. It is not intended for
those investors who desire assured income and conservation of capital. You
should consider whether the Fund fits your particular investment objectives.

PERFORMANCE

Small Cap Growth 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 C and
  shows how performance has varied from year to year.

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

* The performance table shows Class C and Class Y average annual total
  returns and compares them to the market indicators listed. Cumulative return
  information is provided for Class A and Class B shares since these classes
  do not have annual returns for at least one calendar year.

* 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 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.

Because of ongoing market volatility, the Fund's performance may be subject
to substantial short-term fluctuation and current performance may be less
than the results shown herein. Please check the Waddell & Reed web site at
www.waddell.com for more current performance information.

CHART OF YEAR-BY-YEAR RETURNS
as of December 31 each year (%)[1]

1993     24.20%
1994     12.75%
1995     32.14%
1996      2.30%
1997     21.12%
1998     44.57%
1999     61.42%
2000    -16.22%

In the period shown in the chart, the highest quarterly return was 40.97%
(the fourth quarter of 1999) and the lowest quarterly return was -13.74%
(the third quarter of 1998). The Class C return for the year through March
31, 2001 was -14.57%.

[1]The returns shown are based on the performance of the Fund's prior Class B.
   On March 24, 2000, that Class B was combined with and redesignated as Class
   C, which had commenced operations on October 4, 1999.

Average Annual Total Returns

as of December 31, 2000 (%)             1 Year    5 Years   Life of Class[2]

Class A Shares of
Small Cap Growth Fund                                       -20.47%

Russell 2000 Growth Index                                   -16.17%

Lipper Small-Cap Growth
Funds Universe Average                                       -9.18%

Class B Shares of
Small Cap Growth Fund                                       -18.73%

Russell 2000 Growth Index                                   -16.17%

Lipper Small-Cap Growth
Funds Universe Average                                       -9.18%

Class C Shares of
Small Cap Growth Fund[1]                -16.22%   19.36%     22.14%

Russell 2000 Growth Index               -22.36%    7.14%     11.12%

Lipper Small-Cap Growth
Funds Universe Average                   -4.95%   14.40%     16.55%

Class Y Shares of
Small Cap Growth Fund -                  15.56%   20.32%     20.52%

Russell 2000 Growth Index               -22.36%    7.14%      7.14%

Lipper Small-Cap Growth
Funds Universe Average                   -4.95%   14.40%     14.40%

The index shown is a broad-based, securities market index that is unmanaged.
The Lipper average is a composite of mutual funds with goals similar to the
goal of the Fund.

[1]The returns shown for Class C are based on the performance of the Fund's
   prior Class B. On March 24, 2000, that Class B was combined with and
   redesignated as Class C, which had commenced operations on October 4, 1999.
   The prior Class B's performance has been adjusted to reflect the current
   CDSC structure applicable to Class C. Accordingly, these returns reflect no
   CDSC since it only applies to Class C shares held for twelve months or less.

[2]Since July 3, 2000 for Class A shares, July 6, 2000 for Class B shares,
   September 21, 1992 for Class C shares (based on the prior Class B shares)
   and December 29, 1995 for Class Y shares. Because each class commenced
   operations on a date other than at the end of a month, and partial month
   calculations of the performance of the above index are not available, index
   performance for Class A shares, Class B shares, Class C shares and Class Y
   shares is calculated from July 31, 2000, July 31, 2000, September 30, 1992,
   and December 31, 1995, respectively.

FEES AND EXPENSES

Small Cap Growth 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)              Shares    Shares    Shares    Shares

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)             None[2]   5%        1%        None

Annual Fund Operating Expenses[3]

(expenses that are deducted   Class A   Class B   Class C   Class Y
from Fund assets)             Shares    Shares    Shares    Shares

Management Fees               0.85%     0.85%     0.85%     0.85%

Distribution and Service
(12b-1) Fees                  0.25%     1.00%     1.00%     0.25%

Other Expenses                0.44%     0.47%     0.27%     0.21%

Total Annual Fund
Operating Expenses            1.54%     2.32%     2.12%     1.31%

[1]The CDSC, which is imposed on the lesser of amount invested or redemption
   value of Class B shares, declines from 5% for redemptions made within the
   first year of purchase, to 4% for redemptions made within the second year,
   to 3% for redemptions made within the third and fourth years, to 2% for
   redemptions made within the fifth year, to 1% for redemptions made within
   the sixth year and to 0% for redemptions made after the sixth year. For
   Class C shares, a 1% CDSC applies to the lesser of amount invested or
   redemption value of Class C shares redeemed within twelve months after
   purchase. Solely for purposes of determining the number of months or years
   from the time of any payment for the purchase of shares, all payments during
   a month are totaled and deemed to have been made on the first day of the
   month.

[2]A 1% CDSC may be imposed on purchases of $2 million or more of Class A
   shares that are redeemed within twelve months of purchase.

[3]Other Expenses and Total Annual Fund Operating Expenses have been restated
   to reflect the change in accounting service fees and shareholder servicing
   fees effective September 1, 2000; otherwise, expense ratios are based on
   other Fund-level expenses for the fiscal year ended March 31, 2001. Actual
   expenses may be greater or less than those shown.

Example

This example is intended to help you compare the cost of investing in the
shares of the Fund with the cost of investing in other mutual funds. The
example assumes that (a) you invest $10,000 in the particular class of
shares for each time period specified, (b) your investment has a 5% return
each year, and (c) the expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed
at end of period:             1 Year    3 Years   5 Years   10 Years

Class A Shares                $723      $1,033    $1,365    $2,302

Class B Shares                $635      $1,024    $1,340    $2,457[1]

Class C Shares                $215      $  664    $1,139    $2,452

Class Y Shares                $133      $  415    $  718    $1,579

If shares are not redeemed
at end of period:             1 Year    3 Years   5 Years   10 Years

Class A Shares                $723      $1,033    $1,365    $2,302

Class B Shares                $235      $  724    $1,240    $2,457[1]

Class C Shares                $215      $  664    $1,139    $2,452

Class Y Shares                $133      $  415    $  718    $1,579

[1]Reflects annual operating expenses of Class A shares after conversion of
   Class B shares into Class A shares 8 years after the month in which the
   shares were purchased.

AN OVERVIEW OF THE FUND

GOAL

W&R Tax-Managed Equity Fundseeks long-term growth of capital while
minimizing taxable gains and income to shareholders.Principal Strategies

Tax-Managed Equity Fund seeks to achieve its goal by investing primarily in
a diversified portfolio of common stocks of U.S. and foreign companies that
WRIMCO considers to be high in quality and attractive in their long-term
investment potential. The Fund seeks stocks that are favorably priced in
relation to their fundamental value and will likely grow over time. While
the Fund typically invests in the common stock of large to medium sized U.S.
companies, it may invest in companies of any size, any industry or any
country in order to achieve its goal.

WRIMCO manages the Fund using an investment strategy that is sensitive to
the potential impact of Federal income tax on shareholders' investment
returns. The Fund's tax-sensitive investment strategy is intended to lead to
lower distributions of income and realized capital gains than funds managed
without regard to Federal income tax consequences.

In selecting companies, WRIMCO typically invests for the long term and
chooses securities that it believes offer strong opportunities for long-term
growth of capital and that are attractively valued. While WRIMCO primarily
invests in growth stocks, it may also purchase value stocks. Value stocks
are those that WRIMCO believes are currently selling below their true worth.

When deciding to sell a security, WRIMCO considers the negative tax impact
of realizing capital gains and, if applicable, the positive tax impact of
realizing capital losses. However, WRIMCO may sell a security at a realized
gain if it determines that the potential tax cost is outweighed by the risk
of owning the security, or if more attractive investment opportunities are
available. In addition, redemptions by shareholders may force the Fund to
sell securities at an inappropriate time, potentially resulting in realized
gains.

Principal Risks of Investing in the Fund

Because Tax-Managed Equity Fund owns different types of securities, a
variety of factors can affect its investment performance, such as:

* the skill of WRIMCO in evaluating and selecting securities for the Fund

* the earnings performance, credit quality and other conditions of the
  companies whose securities the Fund holds

* the mix of securities in the Fund, particularly the relative weightings
  in, and exposure to, different sectors and industries that may result in
  performance less favorable than another investment mix might have produced

* adverse stock and bond market conditions, sometimes in response to general
  economic or industry news, that may cause the prices of the Fund's holdings
  to fall as part of a broad market decline

* the Fund's tax-sensitive investment strategy not limiting distributions of
  taxable income and net realized capital gains as contemplated

Market risk for small companies may be greater than that for medium and
large companies. Smaller companies are more likely to have limited financial
resources and inexperienced management. Stock of smaller companies, and
growth stock in general, may also experience volatile trading and price
fluctuations.

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.

Who May Want to Invest

Tax-Managed Equity Fund is designed for long-term taxable investors. If you
are investing for the short-term (less than one year), you may suffer
negative tax consequences. Market conditions may limit the Fund's ability to
realize capital losses or to avoid dividend income. While the Fund tries to
reduce the extent to which shareholders incur taxes on Fund distributions of
income and net realized gains, the Fund does expect to distribute taxable
income and/or net capital gains from time to time. Investors may realize
capital gains when they sell their shares. You should consider whether the
Fund fits your particular investment objectives.

PERFORMANCE

Tax-Managed Equity Fund

The Fund has not been in operation for a full calendar year; therefore, it
does not have performance information of at least one calendar year to
include a bar chart or performance table.

FEES AND EXPENSES

Tax-Managed Equity 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)               Shares    Shares    Shares    Shares

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)             None[2]   5%        1%        None

Annual Fund Operating Expenses

(expenses that are deducted         Class A     Class B    Class C    Class Y
from Fund assets)                    Shares      Shares     Shares      Shares

Management Fees[3]                   0.65%        0.65%     0.65%      0.65%

Distribution and Service
(12b-1) Fees                         0.25%        1.00%     1.00%      0.25%

Other Expenses[4]                    1.35%        1.65%     1.46%      1.44%

Total Annual Fund
Operating Expenses[4]                2.25%        3.30%     3.11%      2.34%

[1]The CDSC, which is imposed on the lesser of amount invested or redemption
   value of Class B shares, declines from 5% for redemptions made within the
   first year of purchase, to 4% for redemptions made within the second year,
   to 3% for redemptions made within the third and fourth years, to 2% for
   redemptions made within the fifth year, to 1% for redemptions made within
   the sixth year and to 0% for redemptions made after the sixth year. For
   Class C shares, a 1% CDSC applies to the lesser of amount invested or
   redemption value of Class C shares redeemed within twelve months after
   purchase. Solely for purposes of determining the number of months or years
   from the time of any payment for the purchase of shares, all payments during
   a month are totaled and deemed to have been made on the first day of the
   month.

[2]A 1% CDSC may be imposed on purchases of $2 million or more of Class A
   shares that are redeemed within twelve months of purchase.

[3]The expenses shown for Management Fees reflect the maximum annual fee
   payable; however, WRIMCO has voluntarily agreed to waive its investment
   management fee on any day if the Fund's net assets are less than $25
   million, subject to WRIMCO's right to change or terminate this waiver.

[4]Other Expenses and Total Annual Fund Operating Expenses have been restated
   to reflect the change in accounting service fees and shareholder servicing
   fees effective September 1, 2000; otherwise, expense ratios are based on
   other Fund-level expenses for the fiscal period ended March 31, 2001. Actual
   expenses may be greater or less than those shown.

Example

This example is intended to help you compare the cost of investing in the
shares of the Fund with the cost of investing in other mutual funds. The
example assumes that (a) you invest $10,000 in the particular class of
shares for each time period specified, (b) your investment has a 5% return
each year, and (c) the expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:

If shares are redeemed at end of period:           1 Year    3 Years

Class A Shares                                    $790      $1,239

Class B Shares                                    $733      $1,316

Class C Shares                                    $314      $  961

Class Y Shares                                    $237      $  730

If shares are not redeemed at end of period:      1 Year    3 Years

Class A Shares                                    $790      $1,239

Class B Shares                                    $333      $1,016

Class C Shares                                    $314      $  961

Class Y Shares                                    $237      $  730

THE INVESTMENT PRINCIPLES OF THE FUNDS

Investment Goals, Principal Strategies and Other Investments

W&R Asset Strategy Fund

The goal of Asset Strategy Fund is to seek high total return over the long
term. The Fund seeks to achieve its goal by allocating its assets among a
diversified portfolio of stocks, bonds, and short-term instruments. There is
no guarantee that the Fund will achieve its goal.

Allocating assets among different types of investments allows the Fund to
take advantage of opportunities wherever they may occur, but also subjects
the Fund to the risks of a given investment type. Stock values generally
fluctuate in response to the activities of individual companies and general
market and economic conditions. The values of bonds and short-term
instruments generally fluctuate based on changes in interest rates and in
the credit quality of the issuer.

WRIMCO regularly reviews the Fund's allocation of assets and makes changes
to favor investments that it believes provide the best opportunity to
achieve the Fund's goal. Although WRIMCO uses its expertise and resources in
choosing investments and in allocating assets, WRIMCO's decisions may not
always be beneficial to the Fund.

The mix of assets in the Fund will change from time to time depending on
WRIMCO's assessment of the market for each asset class. The allowable range
and approximate percentage of the mix for each asset class, as a percentage
of total assets of the Fund, are listed below. Some types of investments,
such as indexed securities, can fall into more than one asset class.

Portfolio Mix

Stocks 70% (can range from 0-100%)
Bonds 25% (can range from 0-100%)
Short-term 5% (can range from 0-100%)

WRIMCO tries to balance the Fund's investment risks against potentially
higher total returns by reducing the stock class allocation during stock
market down cycles and increasing the stock class allocation during periods
of strongly positive market performance. Typically, WRIMCO makes asset
shifts among classes gradually over time. WRIMCO considers various factors
when it decides to sell a security, such as an individual security's
performance and/or if it is an appropriate time to vary the Fund's mix.

As a defensive measure, the Fund may increase its holdings in the bond or
short-term classes when WRIMCO believes that there is a potential bear
market, prolonged downturn in stock prices or significant loss in stock
value. The Fund may use options and futures contracts for defensive
purposes. WRIMCO may also, as a temporary defensive measure, invest up to
all of the Fund's assets in:

* money market instruments rated A-1 by S&P or Prime 1 by Moody's, or
  unrated securities judged by WRIMCO to be of equivalent quality

* precious metals

Although WRIMCO may seek to preserve appreciation in the Fund by taking a
defensive position, doing so may prevent the Fund from achieving its
investment objective.

W&R Core Equity Fund

The goal of Core Equity Fund is to provide capital growth and income. The
Fund seeks to achieve its goals by investing, during normal market
conditions, primarily in a diversified portfolio of securities, typically
the stocks of large, high quality U.S. and foreign companies that are
well-known and have been consistently profitable. The Fund may invest a
limited amount of its assets in foreign securities. There is no guarantee
that the Fund will achieve its goals.

When WRIMCO believes that a temporary defensive position is desirable,
WRIMCO may take certain steps with respect to some or all of the Fund's
assets, including any one or more of the following:

* hold cash, commercial paper or other short-term investments

* invest in debt securities (including commercial paper or short-term U.S.
  Government securities)

* invest in convertible preferred stock

By taking a temporary defensive position the Fund may not achieve its
investment objective.

W&R International Growth Fund

The primary goal of International Growth Fund is long-term capital
appreciation, with current income as a secondary goal. The Fund seeks to
achieve these goals by investing primarily in a diversified portfolio of
common stocks of foreign issuers. There is no guarantee that the Fund will
achieve its goals.

The Fund may also invest, to a lesser extent, in preferred stocks and debt
securities. The debt securities may be of any maturity and will typically be
investment grade.

Under normal conditions, the Fund invests at least 80% of its total assets
in foreign securities and at least 65% of its total assets in issuers of at
least three foreign countries. The Fund generally limits its holdings so
that no more than 75% of its total assets are invested in issuers of a
single foreign country. As well, the Fund will invest at least 65% of its
total assets in growth securities (primarily in common stock) during normal
market conditions. Growth securities are those whose earnings, WRIMCO
believes, are likely to have strong growth over several years.

When WRIMCO believes that a temporary defensive position is desirable,
WRIMCO may invest up to all of the Fund's assets in debt securities
(including commercial paper or short-term U.S. Government securities) or
preferred stocks, or both, may avoid investment in volatile emerging markets
and increase investments in more stable, developed countries and industries,
may use forward currency contracts to hedge specific foreign currencies, and
may also invest up to all of the Fund's assets in U.S. securities. By taking
a temporary defensive position the Fund may not achieve its investment
objectives.

W&R Large Cap Growth Fund

The goal of Large Cap Growth Fund is the appreciation of your investment.
The Fund seeks to achieve this goal through a diversified holding of
securities, primarily those issued by large to medium sized U.S. and foreign
companies that WRIMCO believes have appreciation possibilities. The Fund
will, under normal market conditions, invest at least 65% of its total
assets in large cap growth securities. There is no guarantee that the Fund
will achieve its goal.

The Fund invests primarily in common stock but may also own, to a limited
extent, preferred stock and debt securities, typically of investment grade
and of any maturity. The Fund may also own convertible securities. As well,
the Fund may invest, to a lesser extent, in foreign securities.

At times, as a temporary defensive measure, the Fund may invest up to all of
its assets in either debt securities (which may include money market
instruments held as cash reserves) or preferred stocks or both. By taking a
temporary defensive position in either or both of these ways the Fund may
not achieve its investment objective.

W&R Mid Cap Growth Fund

The goal of Mid Cap Growth Fund is the growth of your investment. The Fund
seeks to achieve its goal by investing primarily in a diversified portfolio
of common stocks of U.S. and foreign companies whose market capitalizations
are within the range of capitalizations of companies comprising Russell
Mid-Cap and that WRIMCO believes offer above-average growth potential. For
this purpose, the Fund considers a company's capitalization at the time the
Fund acquires the company's securities, and the company need not be listed
in Russell Mid-Cap. Companies whose capitalization falls outside the range
of Russell Mid-Cap after purchase continue to be considered medium
capitalization companies for purpose of the Fund's investment policy. The
Fund will, under normal market conditions, invest at least 65% of its total
assets in mid cap securities. There is no guarantee that the Fund will
achieve its goal.

In addition to common stocks, the Fund may invest in convertible securities,
preferred stocks and debt securities of any maturity and mostly of
investment grade. The Fund may also invest up to 25% of its total assets in
foreign securities.

When WRIMCO believes that a temporary defensive position is desirable, the
Fund may invest up to all of its assets in debt securities (including
commercial paper, short-term securities issued by the U.S. Government or its
agencies or instrumentalities and other money market instruments) and/or
preferred stocks. The Fund may also use options and futures contracts for
defensive purposes. By taking a defensive position the Fund may not achieve
its investment objective.

W&R Science and Technology Fund

The goal of Science and Technology Fund is long-term capital growth. The
Fund seeks to achieve this goal by investing primarily in a diversified
portfolio of science and technology companies. Science and technology
companies are companies whose products, processes or services, in WRIMCO's
opinion, are being or are expected to be significantly benefited by the use
or commercial application of scientific or technological discoveries. There
is no guarantee that the Fund will achieve its goal.

The Fund invests in such areas as:

* aerospace and defense electronics

* biotechnology

* business machines

* cable and broadband access

* communications and electronic equipment

* computer software and services

* computer systems

* electronics

* electronic media

* internet and internet-related services

* medical devices and drugs

* medical and hospital supplies and services

* office equipment and supplies

The Fund primarily owns common stock; however, it may invest, to a lesser
extent, in preferred stock, debt securities and convertible securities. The
Fund may invest a limited amount of its assets in foreign securities.

Under normal economic and market conditions, the Fund will not invest more
than 20% of its total assets in securities other than those of science or
technology companies. When WRIMCO believes that a temporary defensive
position is desirable, the Fund may invest up to all of its assets in U.S.
Government securities or other debt securities, mostly of investment grade.
The Fund may also use options and futures contracts for hedging purposes. By
taking a temporary defensive position the Fund may not achieve its
investment objective.

W&R Small Cap Growth Fund

The goal of Small Cap Growth Fund is growth of capital. The Fund seeks to
achieve its goal by investing primarily in small cap common stocks of
companies that are relatively new or unseasoned, companies in their early
stages of development, or smaller companies positioned in new or emerging
industries where there is an opportunity for rapid growth. The Fund may
occasionally invest in securities of larger companies that, in WRIMCO's
opinion, are being fundamentally changed or revitalized, have a position
that is considered strong relative to the market as a whole or otherwise
offer unusual opportunities for above average growth.

The Fund considers a company's capitalization at the time the Fund acquires
the company's common stock. Common stock of a company whose capitalization
exceeds the range of the Lipper, Inc. Small Cap Category after purchase will
not be sold solely because of its increased capitalization. The Fund will,
under normal market conditions, invest at least 65% of its net assets in
small cap stocks. There is no guarantee that the Fund will achieve its goal.

In addition to common stocks, the Fund may also invest in securities
convertible into common stocks, preferred stocks and debt securities that
are mostly of investment grade. The Fund may also buy foreign securities;
however, it may not invest more than 10% of its total assets in foreign
securities.

When WRIMCO believes that a temporary defensive position is desirable, the
Fund may invest up to all of its assets in debt securities (including
commercial paper or short-term U.S. Government securities) or preferred
stocks, or both. By taking a temporary defensive position, the Fund may not
achieve its investment objective.

W&R Tax-Managed Equity Fund

The goal of Tax-Managed Equity Fund is long-term growth of capital while
minimizing taxable gains and income to shareholders. The Fund seeks to
achieve its goal by investing primarily in a diversified portfolio of common
stocks of U.S. and foreign companies that WRIMCO considers to be high in
quality and attractive in their long-term investment potential. The Fund
seeks stocks that are favorably priced in relation to their fundamental
value and will likely grow over time.

The Fund attempts to achieve high after-tax returns for its shareholders by
balancing investment considerations and tax considerations. The Fund seeks
to minimize income distributions and distributions of realized net
short-term gains (taxed as ordinary income), as well as distributions of
realized net
long-term gains. The Fund seeks to achieve returns primarily in the form of
price appreciation (not subject to current tax until shares are redeemed).
There is no guarantee that the Fund will achieve its goal.

WRIMCO ordinarily uses one or more of the following strategies in its
management of the Fund:

* a long-term, low turnover approach to investing

* an emphasis on lower-yielding securities to require distribution of
  little, if any, taxable income

* an attempt to avoid net realized short-term gains

* in the sale of portfolio securities, selection of the most tax-favored
  lots

* selective tax-advantaged hedging techniques as an alternative to taxable
  sales

The Fund will, under normal market conditions, invest at least 65% of its
total assets in equity securities, primarily common stocks. The Fund
emphasizes growth stocks; however, it may also invest in value stocks. In
addition to common stocks, the Fund may also invest in securities
convertible into common stocks, preferred stocks and debt securities that
are mostly of investment grade. The Fund may also invest up to 25% of its
total assets in foreign securities.

When WRIMCO believes that a temporary defensive position is desirable, the
Fund may invest up to all of its assets in debt securities (including
commercial paper or short-term U.S. Government securities) or preferred
stocks, or both. By taking a temporary defensive position, the Fund may not
achieve its investment objective.

Notwithstanding the Fund's use of tax-management investment strategies, the
Fund may have taxable income and may realize taxable capital gains from time
to time. In addition, investors purchasing Fund shares when the Fund has
large undistributed realized capital gains could receive a significant part
of the purchase price of their shares back as a taxable capital gain
distribution. Over time, securities with unrealized gains may comprise a
substantial portion of the Fund's assets. As well, state or Federal tax laws
or regulations may be amended at any time that could include adverse changes
to applicable tax rates or capital gains holding periods.

All Funds

Each Fund may also invest in and use certain other types of instruments in
seeking to achieve its goal(s). For example, each Fund is permitted to
invest in options, futures contracts, asset-backed securities and other
derivative instruments if it is permitted to invest in the type of asset by
which the return on, or value of, the derivative is measured.

You will find more information about each Fund's permitted investments and
strategies, as well as the restrictions that apply to them, in each Fund's
Statement of Additional Information (SAI).

Risk Considerations of Principal Strategies and Other Investments

Risks exist in any investment. Each Fund is subject to equity and other
market risk, financial risk and, in some cases, prepayment risk.

* Market risk is the possibility of a change in the price of the security.
  The prices of common stocks and other equity securities generally fluctuate
  more than those of other investments. A Fund may lose a substantial part, or
  even all, of its investment in a company's stock. Growth stocks may
  experience greater price volatility than value stocks. To the extent a Fund
  invests in fixed income securities, the price of a fixed income security may
  be affected by changes in interest rates. Bonds with longer maturities are
  more interest-rate sensitive. For example, if interest rates increase, the
  value of a bond with a longer maturity is more likely to decrease. Because
  of market risk, the share price of each Fund will likely change as well.

* Financial risk is based on the financial situation of the issuer of the
  security. The financial risk of a Fund may depend, for example, on the
  earnings performance of the issuer of stock held by the Fund. To the extent
  a Fund invests in debt securities, the financial risk of the Fund may also
  depend on the credit quality of the securities in which it invests.

* Prepayment risk is the possibility that, during periods of falling
  interest rates, a debt security with a high stated interest rate will be
  prepaid before its expected maturity date.

Certain types of each Fund's authorized investments and strategies, such as
foreign securities, junk bonds and derivative instruments, involve special
risks. Depending on how much a Fund invests or uses these strategies, these
special risks may become significant. For example, foreign investments may
subject a Fund to restrictions on receiving the investment proceeds from a
foreign country, to foreign taxes, and to potential difficulties in
enforcing contractual obligations, as well as fluctuations in foreign
currency values and other developments that may adversely affect a foreign
country. Junk bonds pose a greater risk of nonpayment of interest or
principal than higher-rated bonds. Derivative instruments may expose a Fund
to greater volatility than an investment in a more traditional stock, bond
or other security.

Because each Fund owns different types of investments, its performance will
be affected by a variety of factors. The value of a Fund's investments and
the income it generates will vary from day to day, generally reflecting
changes in interest rates, market conditions, and other company and economic
news. Performance will also depend on WRIMCO's skill in selecting
investments and, with respect to Asset Strategy Fund, on WRIMCO's skill in
allocating assets.

Asset Strategy Fund and International Growth Fund may each actively trade
securities in seeking to achieve its goals. Doing so may increase
transaction costs (which may reduce performance) and increase distributions
paid by the Fund, which would increase your taxable income.

YOUR ACCOUNT

Choosing a Share Class

Each Fund offers four classes of shares: Class A, Class B, Class C and Class
Y. Each class has its own sales charge, if any, and expense structure. The
decision as to which class of shares is best suited to your needs depends on
a number of factors that you should discuss with your financial advisor.
Some factors to consider are how much you plan to invest and how long you
plan to hold your investment. If you are investing a substantial amount and
plan to hold your shares for a long time, Class A shares may be the most
appropriate for you. Class B and Class C shares are not available for
investments of $2 million or more. If you are investing a lesser amount, you
may want to consider Class B shares (if investing for at least seven years)
or Class C shares (if investing for less than seven years). Class Y shares
are designed for institutional investors and others investing through
certain intermediaries.

Since your objectives may change over time, you may want to consider another
class when you buy additional Fund shares. All of your future investments in
a Fund will be made in the class you select when you open your account,
unless you inform the Fund otherwise, in writing, when you make a future
investment.

General Comparison of Class A, Class B and Class C Shares

Class A                   Class B                     Class C

Initial sales charge      No initial sales charge     No initial sales charge

No deferred sales         Deferred sales charge on    A 1% deferred sales
 charge[1]                shares you sell within six  charge on shares you
                          years after purchase        sell within twelve
                                                      months after purchase

Maximum distribution      Maximum distribution        Maximum distribution
and service (12b-1) fees  and service (12b-1) fees    and service (12b-1)
                          of 0.25% of 1.00%           fees of 1.00%

For an investment of      Converts to Class A shares  Does not convert to
$2 million or more,       8 years after the month     Class A shares, so
only Class A shares       in which the shares were    annual expenses do
are available             purchased, thus reducing    not decrease
                          future annual expenses

                          For an investment of $300,000
                          or more, your financial advisor
                          typically will recommend
                          purchase of Class A shares due
                          to a reduced sales charge and
                          lower annual expenses

[1]A 1% CDSC may apply to purchases of $2 million or more of Class A shares
   that are redeemed within twelve months of purchase.

Each Fund has adopted a Distribution and Service Plan (Plan) pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (Rule 12b-1) for each of
its Class A, Class B, Class C and Class Y