N-14/A

Registration No. 333-106545

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-14

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

x Pre-Effective Amendment No.    2    o Post-Effective Amendment No.                    

(Check appropriate box or boxes)

Exact name of Registrant as Specified in Charter:

W&R Target Funds, Inc.

6300 Lamar Avenue
Shawnee Mission, Kansas 66202

Registrant’s Telephone Number: (913) 236-2000

Name and Address of Agent for Service:
Kristen A. Richards
6300 Lamar Avenue
Shawnee Mission, Kansas 66202

Copy to:

Kathleen L. Prudhomme
Dorsey & Whitney LLP
50 South Sixth Street, Suite 1500
Minneapolis, MN 55402 R. Darrell Mounts
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue N.W.
Washington, DC 20036

Approximate Date of Proposed Public Offering:
As soon as possible following the effective date of this Registration Statement.

The title of the securities being registered is shares of Common Stock, par value $0.001.

No filing fee is required because an indefinite number of shares of the Registrant have previously been registered on Form N-1A (SEC File Number 033-11466) pursuant to Rule 24f-2 under the Investment Company Act of 1940. The Registrant’s Rule 24f-2 Notice for the fiscal year ended December 31, 2002 was filed on March 7, 2003. Pursuant to Rule 429 under the Securities Act of 1933, this Registration Statement relates to the shares previously registered on the aforesaid Registration Statement on Form N-1A.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said section 8(a), may determine.

ADVANTUS SERIES FUND, INC.

Advantus Asset Allocation Portfolio

Advantus Capital Appreciation Portfolio

Advantus Growth Portfolio

Advantus Core Equity Portfolio

Advantus Value Stock Portfolio

Advantus Small Company Growth Portfolio

Advantus International Stock Portfolio

Advantus Small Company Value Portfolio

Advantus Micro-Cap Growth Portfolio

July      , 2003

Dear Beneficial Owner:

      On September 19, 2003, a special meeting of the shareholders of the mutual funds listed above (each, an “Advantus Fund”) will be held at the offices of Advantus Capital Management, Inc. (“Advantus Capital”) in order to vote on the following two important proposals:

•  Shareholders of each Advantus Fund are being asked to approve an Agreement and Plan of Reorganization (the “Reorganization Plan”) that provides for the reorganization of their Fund into a comparable mutual fund in W&R Target Funds, Inc. (each, a “W&R Fund”) with similar investment objectives and strategies. If the Reorganization Plan is approved, the assets of each Advantus Fund will be acquired by a similar W&R Fund in exchange for newly issued W&R Fund shares. These W&R Fund shares then will be distributed to shareholders of the Advantus Fund, and the Advantus Fund will be liquidated.

•  Shareholders of Advantus Asset Allocation Portfolio, Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio, Advantus Core Equity Portfolio and Advantus Value Stock Portfolio are being asked to approve a definitive investment advisory agreement with Waddell & Reed Investment Management Company (“WRIMCO”). This will replace the interim investment advisory agreement with WRIMCO that has been in effect since May 1, 2003 and that expires on September 27, 2003. The definitive investment advisory agreement will remain in place until the reorganization of these Advantus Funds occurs.

      Each Advantus Fund is a portfolio of Advantus Series Fund, Inc. (“Advantus Series Fund”), which is an underlying investment vehicle used by variable annuity and variable life insurance contracts. As the owner of such a variable life insurance or variable annuity contract (a “Beneficial Owner”), you are an indirect participant in one or more of the Advantus Funds and are eligible to provide instructions on how to vote on these proposals.

      Both of the proposals have been thoroughly reviewed by the Advantus Funds’ Board of Directors, whose role is to protect the interests of shareholders. The Advantus Funds’ Board of Directors believes that the proposals are in the best interest of the each Advantus Fund and its shareholders and unanimously recommends that you vote FOR each proposal.

      Whether or not you plan to attend the meeting, please fill out, sign and return your voting instruction form in the envelope provided so that your vote may be counted. If you are a Beneficial Owner with respect to more than one Advantus Fund, you will receive more than one voting instruction form and will need to vote your shares of each Fund. Please read the entire proxy statement/ prospectus carefully before you vote.

      Thank you for your prompt attention and participation.

Sincerely,

/s/ DIANNE M. ORBISON

Dianne M. Orbison

President

TABLE OF CONTENTS

PROPOSAL ONE -- APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION
	Summary
	Comparison of Fund Expenses
	Comparison of Fund Investment Objectives, Strategies and Risks
	Comparison of Fund Performance
	Comparison of Operations
	Information About the Reorganizations
	Capitalization
	Shareholder Rights
PROPOSAL TWO -- APPROVAL OF A DEFINITIVE INVESTMENT ADVISORY AGREEMENT WITH WRIMCO
	Background
	The Interim Investment Advisory Agreement
	The Definitive Investment Advisory Agreement
	Additional Information About WRIMCO
	Board Considerations
INFORMATION ABOUT THE W&R FUNDS AND THE ADVANTUS FUNDS
	W&R Funds
	Advantus Funds
VOTING INFORMATION
	General Information
	Voting Rights and Required Vote
	Record Date and Outstanding Shares
	Security Ownership of Certain Beneficial Owners and Management
	Other Business
	Shareholder Proposals
	Board Recommendations
APPENDIX A — AGREEMENT AND PLAN OF REORGANIZATION
APPENDIX B — INVESTMENT ADVISORY AGREEMENT
APPENDIX C — W&R TARGET FUNDS MANAGER DISCUSSIONS
APPENDIX E — W&R TARGET FUNDS PROSPECTUS FOR INTERNATIONAL II, SMALL COMPANY VALUE AND MICRO-CAP GROWTH PORTFOLIOS
PART B
I. Additional Information About the W&R Funds and the Advantus Funds
II. Financial Information
III. Pro Forma Financial Statements
PART C
	Item 15. Indemnification.
	Item 16. Exhibits.
	Item 17. Undertakings.
SIGNATURES
EX-99.(14)(a) Consent of Deloitte & Touche LLP
EX-99.(14)(b) Consent of KPMG LLP
EX-99.(17)(e) Statement of Additional Information

QUESTIONS AND ANSWERS

      The following is important information to help you understand the proposals on which you are being asked to vote. Please read the entire proxy statement/prospectus.

      What am I being asked to vote on at the upcoming special shareholders meetings to be held on September 19, 2003?

      Shareholders of each Advantus Fund are being asked to approve the reorganization of their Advantus Fund into a W&R Fund with similar investment objectives and strategies. Your Board of Directors has determined that the reorganizations are in the best interests of the shareholders of each Advantus Fund and recommends that you vote for the reorganization of your Advantus Fund. As explained below, the reorganizations are expected to be tax free.

      Shareholders of Advantus Asset Allocation Portfolio, Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio, Advantus Core Equity Portfolio and Advantus Value Stock Portfolio also are being asked to approve a definitive investment advisory agreement between Advantus Series Fund, on their behalf, and WRIMCO. This definitive agreement will replace an interim investment advisory agreement between Advantus Series Fund and WRIMCO that has been in effect since May 1, 2003 and that expires on September 27, 2003. In April 2003, Advantus Capital and certain companies affiliated with Advantus Capital entered into a Strategic Alliance Agreement and a related Purchase Agreement with Waddell & Reed Financial, Inc. (“W&R”), a leading U.S. mutual fund firm, WRIMCO, and certain other companies affiliated with W&R. As a result of entering into these agreements, Advantus Capital no longer had the portfolio management resources necessary to actively manage non-real estate equity assets. Advantus Capital therefore resigned as the investment adviser for the Advantus Funds that are not managed by sub-advisers, and the Board of Directors approved an interim investment advisory agreement with WRIMCO relating to these Advantus Funds. This interim investment advisory agreement expires on September 27, 2003. Shareholders of these Advantus Funds are being asked to approve a definitive investment advisory agreement between Advantus Series Fund and WRIMCO that will remain in effect until the reorganizations.

      Why do I need to vote on a definitive investment advisory agreement with WRIMCO?

      Normally, a mutual fund’s investment advisory agreement must be approved by the fund’s shareholders in advance of the effective date of that agreement. However, federal securities laws allow an investment adviser to serve as the adviser to a mutual fund under an interim contract that has not been approved by shareholders if certain conditions are met. These conditions include the requirement that the interim agreement contain terms that are substantially identical to those of the investment advisory agreement previously in effect, that fees payable under the interim agreement be held in escrow until shareholders approve a definitive investment advisory agreement, and that the interim advisory agreement last no longer than 150 days. Because of this last requirement, the interim advisory agreement between Advantus Series Fund and WRIMCO will expire on September 27, 2003. Because the reorganizations may not occur before this date, shareholders need to approve a definitive investment advisory agreement.

      Why is the reorganization being proposed?

      Advantus Capital and its affiliates made a strategic business decision to exit the non-real estate equity management business and, in connection with that decision, entered into the Strategic Alliance Agreement and Purchase Agreement mentioned above. Under these agreements, Advantus Capital agreed to sell to WRIMCO its assets related to the Advantus Funds, which are all of the actively managed, non-real estate equity series of Advantus Series Fund. In order to integrate the Advantus Funds into the family of investment companies managed by WRIMCO and its affiliates, Advantus Capital has recommended to the Advantus Funds’ Board of Directors that each Advantus Fund be merged into a comparable mutual fund in W&R Target Funds, Inc. (“W&R Target Funds”), an investment company managed by WRIMCO. Each Advantus Fund will be merged into an existing portfolio of W&R Target Funds with similar investment objectives and strategies, or, where there is no similar portfolio, into a newly formed portfolio of W&R Target Funds.

      How do the investment objectives and strategies of the Advantus Funds compare to those of the W&R Funds?

      Five of the Advantus Funds — Advantus Asset Allocation Portfolio, Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio, Advantus Core Equity Portfolio and Advantus Value Stock Portfolio — have been managed by WRIMCO since May 1, 2003 using investment strategies that are substantially identical to those used by WRIMCO in managing the W&R Funds into which they will be reorganized. As a result, each of these Advantus Funds has investment objectives that are substantially similar and investment strategies that are substantially identical to those of its corresponding W&R Fund.

      Advantus International Stock Portfolio, Advantus Small Company Value Portfolio and Advantus Micro Cap Growth Portfolio will continue to be managed by the same sub-advisers following their reorganizations into W&R Funds. Each of these Advantus Funds therefore has investment objectives that are substantially similar and investment strategies that are substantially similar to those of its corresponding W&R Fund.

      Advantus Small Company Growth Portfolio is currently managed by a sub-adviser. The W&R Fund into which it will be reorganized is managed by WRIMCO. Thus, although the investment objectives and strategies of the Advantus Small Company Growth Portfolio and its corresponding W&R Fund are similar, there are some differences.

      Please see “Proposal One — Comparison of Fund Investment Objectives, Strategies and Risks,” beginning on page 6 of the attached proxy statement/prospectus for a detailed description of the investment objectives and strategies of the Advantus Funds and the W&R Funds.

      What are the advantages of the reorganization for Advantus Fund shareholders?

      Combining your Advantus Fund with a W&R Fund will allow you to continue your investment in a fund with a similar investment objective and similar investment strategies. Although the expense ratios for the W&R Funds are significantly higher than those of the Advantus Funds in most cases due to higher management fees, the expense structures of the W&R Funds are competitive and within industry norms. Also, despite these higher expenses, the performance of the W&R Funds compares favorably to that of the Advantus Funds (except in the case of the newly formed W&R Funds, which have no performance history). In addition, there will be greater and broader distribution opportunities for the combined funds, increasing the likelihood that the funds will grow and net expenses will decline over time. Your Board of Directors has determined that the expected advantages to shareholders more than outweigh the disadvantages, and that the reorganizations will be in the best interests of shareholders.

      When would the reorganization take place for my Advantus Fund?

      If approved by shareholders, the reorganization for each Advantus Fund is expected to occur on or about September 22, 2003.

      Will I receive new shares in exchange for my current shares?

      Yes. Upon approval of the reorganization, each W&R Fund will acquire all of the assets of its corresponding Advantus Fund in exchange for newly issued W&R Fund shares. These W&R Fund shares in turn will be distributed pro rata to Advantus Fund shareholders in complete liquidation of the Advantus Fund. Your participating insurance company, on your behalf, will receive shares of the W&R Fund with an aggregate value equal to the aggregate value of your Advantus Fund shares on the effective date of the reorganization.

      Is there anything I need to do to convert my shares?

      No. On the closing date of the reorganization, the Advantus Fund shares that fund benefits under your variable annuity or variable life insurance contract automatically will be exchanged for shares of the corresponding W&R Fund. The total value of the W&R Fund shares that a shareholder receives in the reorganization will be the same as the total value of the Advantus Fund shares held by the shareholder immediately before the reorganization.

      Can I redeem my Advantus Fund shares before the reorganization takes place?

      Yes. You can redeem your Advantus Fund shares before the reorganization takes place and select another fund that is available as an underlying investment for your variable annuity contract or variable life insurance policy. Your participating insurance company can provide you with more information about the consequences of redeeming your shares.

      Who will pay the costs of the reorganization?

      These expenses will be borne by Advantus Capital — not by shareholders of the Advantus Funds.

      Will I incur taxes as a result of the reorganization?

      The reorganization is expected to be tax-free for federal income tax purposes to both the insurance companies whose separate accounts hold Advantus Fund shares and to Beneficial Owners. Generally, neither shareholders nor Beneficial Owners will incur capital gains or losses on the exchange of W&R Fund shares for Advantus Fund shares. Furthermore, the cost basis of each investment will remain the same.

      Has the Board of Directors of the Advantus Funds approved the proposals?

      Yes. The Advantus Funds’ Board approved the proposals and recommends that you vote for each proposal.

      When should I vote?

      Please vote as soon as possible, by completing, signing and returning the enclosed voting instruction form(s). A postage-paid envelope is enclosed for this purpose.

ADVANTUS SERIES FUND, INC.

Advantus Asset Allocation Portfolio

Advantus Capital Appreciation Portfolio

Advantus Growth Portfolio

Advantus Core Equity Portfolio

Advantus Value Stock Portfolio

Advantus Small Company Growth Portfolio

Advantus International Stock Portfolio

Advantus Small Company Value Portfolio

Advantus Micro-Cap Growth Portfolio

400 Robert Street North

St. Paul, Minnesota 55101

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To Be Held On September 19, 2003

       Notice is hereby given that a Special Meeting of Shareholders of the Advantus Funds listed above (each an “Advantus Fund” and collectively, the “Advantus Funds”), will be held at the offices of Advantus Capital Management, Inc., 400 Robert Street North, St. Paul, Minnesota 55101, on September 19, 2003 at 10:00 a.m. Central time, for the purposes of considering the proposals set forth below.

      1. For shareholders of each Advantus Fund, to approve an Agreement and Plan of Reorganization providing for the transfer of all assets of each Advantus Fund to a comparable portfolio in W&R Target Funds, Inc., in exchange for shares of that comparable portfolio and the assumption by that portfolio of all of the applicable Advantus Fund’s liabilities. The shares so received will be distributed to shareholders of the applicable Advantus Fund, which will be terminated or dissolved as soon as practicable thereafter. A vote in favor of the Agreement and Plan of Reorganization will also be considered a vote in favor of an amendment to the articles of incorporation of Advantus Series Fund, Inc., which is required to effect the reorganization.

      2. For shareholders of the Advantus Asset Allocation Portfolio, Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio, Advantus Core Equity Portfolio and Advantus Value Stock Portfolio, to approve a definitive investment advisory agreement between Advantus Series Fund, Inc., on behalf of these Advantus Funds, and Waddell & Reed Investment Management Company.

      Shareholders of record of each Advantus Fund as of the close of business on July 24, 2003 are entitled to notice of, and to vote at, this meeting or any adjournment of this meeting.

      Each Advantus Fund issues and sells its shares to the separate accounts of Minnesota Life Insurance Company (“Minnesota Life”) and to the separate accounts of other life insurance companies, including but not limited to life insurance affiliates of Minnesota Life. The separate accounts hold shares of mutual funds, including the Advantus Funds, which fund benefits under variable annuity contracts or variable life insurance policies issued by Minnesota Life or the other insurance companies. As the owners of the assets held in the separate accounts, these insurance companies are the sole shareholders of the Advantus Funds and are entitled to vote all of the shares of each Advantus Fund. However, pursuant to applicable laws, contracts, or other arrangements, the insurance companies vote outstanding shares of the Advantus Funds in accordance with instructions received from the owners of the annuity and life insurance contracts (the “Beneficial Owners”). This Notice is being delivered to Beneficial Owners of one or more of the Advantus Funds as of the record date, so that they may instruct the insurance companies how to vote the shares of the Advantus Funds underlying their contracts. Beneficial Owners of each Advantus Fund will vote separately on each proposal. A proposal will be effected as to a particular Advantus Fund only if that Fund’s shareholders approve the proposal.

      Beneficial owners are requested to execute and return promptly the accompanying voting instruction card, which is being solicited by the Board of Directors of the Advantus Funds. You may execute the voting instruction card using the methods described therein. Instructions may be revoked at any time before they are exercised by submitting a written notice of revocation or a subsequently executed instruction card or by attending the meeting and voting in person.

By Order of the Board of Directors

/s/ MICHAEL J. RADMER

Michael J. Radmer

Secretary

Dated: July      , 2003

PROXY STATEMENT/ PROSPECTUS

Dated July      , 2003

RELATING TO THE ACQUISITION OF THE

FOLLOWING SERIES OF ADVANTUS SERIES FUND, INC.:

Advantus Asset Allocation Portfolio

Advantus Capital Appreciation Portfolio

Advantus Growth Portfolio

Advantus Core Equity Portfolio

Advantus Value Stock Portfolio

Advantus Small Company Growth Portfolio

Advantus International Stock Portfolio

Advantus Small Company Value Portfolio

Advantus Micro-Cap Growth Portfolio

400 Robert Street North

St. Paul, Minnesota 55101-2098

800-665-6005

BY AND IN EXCHANGE FOR SHARES OF THE

FOLLOWING SERIES OF W&R TARGET FUNDS, INC.:

W&R Balanced Portfolio

W&R Growth Portfolio

W&R Core Equity Portfolio

W&R Value Portfolio

W&R Small Cap Growth Portfolio

W&R International II Portfolio

W&R Small Cap Value Portfolio

W&R Micro Cap Growth Portfolio

6300 Lamar Avenue

Shawnee Mission, Kansas 66201-9217

888-WADDELL

      This Proxy Statement/ Prospectus is furnished in connection with the solicitation of proxies by the Board of Directors of Advantus Series Fund, Inc. for the Special Meeting of Shareholders of Advantus Asset Allocation Portfolio, Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio, Advantus Core Equity Portfolio, Advantus Value Stock Portfolio, Advantus Small Company Growth Portfolio, Advantus International Stock Portfolio, Advantus Small Company Value Portfolio and Advantus Micro-Cap Growth Portfolio (each an “Advantus Fund” and collectively the “Advantus Funds”), to be held on September 19, 2003 at 10:00 a.m. Central time, at the offices of Advantus Capital Management, Inc. (“Advantus Capital”), 400 Robert Street North, St. Paul, Minnesota 55101.

      Shareholders of each Advantus Fund, voting separately, will be asked to consider and approve an Agreement and Plan of Reorganization (the “Reorganization Plan”), pursuant to which all of the assets and liabilities of each Advantus Fund would be acquired by a series of W&R Target Funds, Inc. with similar investment objectives and strategies (each a “W&R Fund” and collectively the “W&R Funds”) in return for shares of that W&R Fund.

      Shareholders of Advantus Asset Allocation Portfolio, Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio, Advantus Core Equity Portfolio, and Advantus Value Stock Portfolio, voting separately, also will be asked to approve a definitive investment advisory agreement (the “Definitive Agreement”) between Advantus Series Fund and Waddell & Reed Investment Management Company (“WRIMCO”). The Definitive Agreement will replace an interim investment advisory agreement pursuant to which WRIMCO currently serves as investment adviser to these Advantus Funds.

      The following table illustrates which proposals are to be voted on by shareholders of an Advantus Fund:

Advantus Fund	Proposal
	Approve Agreement and		Approve Definitive Investment
	Plan of Reorganization		Advisory Agreement With WRIMCO
Asset Allocation Portfolio		X		X
Capital Appreciation Portfolio		X		X
Growth Portfolio		X		X
Core Equity Portfolio		X		X
Value Stock Portfolio		X		X
Small Company Growth Portfolio		X
International Stock Portfolio		X
Small Company Value Portfolio		X
Micro-Cap Growth Portfolio		X

      Shares of the Advantus Funds are sold only in connection with investments in and payments under variable annuity contracts and variable life insurance policies issued by Minnesota Life Insurance Company (“Minnesota Life”) and other life insurance companies, including but not limited to life insurance affiliates of Minnesota Life. Individual contract owners (“Beneficial Owners”) are not the “shareholders” of the Advantus Funds. Rather, the insurance companies and their separate accounts are the shareholders. Each insurance company will offer to Beneficial Owners the opportunity to instruct it as to how it should vote shares held by it and the separate accounts on the items to be considered at the meeting. This Proxy Statement/ Prospectus is therefore furnished to Beneficial Owners entitled to give voting instructions with regard to the Advantus Funds.

      THE BOARD OF DIRECTORS OF THE ADVANTUS FUNDS UNANIMOUSLY RECOMMENDS APPROVAL OF THE REORGANIZATION PLAN AND THE DEFINITIVE AGREEMENT.

      This Proxy Statement/ Prospectus sets forth concisely the information that a Beneficial Owner should know before giving instructions on the proposals and should be retained for future reference. Additional Information is set forth in the Statement of Additional Information dated July      , 2003, relating to this Proxy Statement/ Prospectus, which is incorporated herein by reference. A copy of the Statement of Additional Information has been filed with the Securities and Exchange Commission (“SEC”) and is available upon request and without charge by calling or writing the W&R Funds at the address and telephone number shown above.

      The following documents, which include more information about the Advantus Funds and the W&R Funds, also are incorporated by reference into this Proxy Statement/ Prospectus. These documents have been filed with the SEC and are available without charge by writing or calling the Advantus Funds or W&R Funds at the address and telephone numbers shown above:

•  Prospectus dated May 1, 2003, as supplemented July 21, 2003, of W&R Target Funds, Inc. relating to all of the W&R Funds other than W&R International II Portfolio, W&R Micro Cap Growth Portfolio and W&R Small Cap Value Portfolio (SEC File Nos. 811-5017/33-11466). A copy of the prospectus is included as Appendix D to this Proxy Statement/ Prospectus.

•  Prospectus dated July 24, 2003 of W&R Target Funds, Inc. relating to the W&R International II Portfolio, W&R Micro Cap Growth Portfolio and W&R Small Cap Value Portfolio (SEC File Nos. 811-5017/33-11466). A copy of the prospectus is included as Appendix E to this Proxy Statement/ Prospectus.

•  Prospectus dated May 1, 2003 of Advantus Series Fund, Inc. (SEC File Nos. 811-4279/2-96990).

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•  Advantus Series Fund, Inc. Annual Report for the fiscal year ended December 31, 2002, filed with the Securities and Exchange Commission on February 28, 2003 (SEC File No. 811-4279).

      This Proxy Statement/ Prospectus, the Notice of Special Meetings and voting instruction card(s) are expected to be sent to Beneficial Owners beginning on or about                     , 2003.

      THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/ PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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TABLE OF CONTENTS

PROPOSAL ONE — APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION		1
	Summary	1
	Comparison of Fund Expenses	2
	Comparison of Fund Investment Objectives, Strategies and Risks	6
	Comparison of Fund Performance	17
	Comparison of Operations	26
	Information About the Reorganizations	29
	Capitalization	32
	Shareholder Rights	33
PROPOSAL TWO — APPROVAL OF A DEFINITIVE INVESTMENT ADVISORY AGREEMENT WITH WRIMCO		37
	Background	37
	The Interim Investment Advisory Agreement	37
	The Definitive Investment Advisory Agreement	38
	Additional Information About WRIMCO	40
	Board Considerations	41
INFORMATION ABOUT THE W&R FUNDS AND THE ADVANTUS FUNDS		42
	W&R Funds	42
	Advantus Funds	42
VOTING INFORMATION		43
	General Information	43
	Voting Rights and Required Vote	43
	Record Date and Outstanding Shares	44
	Security Ownership of Certain Beneficial Owners and Management	44
	Other Business	44
	Shareholder Proposals	44
	Board Recommendations	44
APPENDIX A — AGREEMENT AND PLAN OF REORGANIZATION		A-1
APPENDIX B — DEFINITIVE INVESTMENT ADVISORY AGREEMENT		B-1
APPENDIX C — W&R TARGET FUNDS MANAGER DISCUSSIONS		C-1
APPENDIX D — W&R TARGET FUNDS PROSPECTUS		D-1
APPENDIX E — W&R TARGET FUNDS PROSPECTUS FOR INTERNATIONAL II, SMALL CAP VALUE AND MICRO CAP GROWTH PORTFOLIOS		E-1

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PROPOSAL ONE  —

APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION

Summary

      This summary is qualified in its entirety by reference to the additional information contained elsewhere in, or incorporated by reference into, this Proxy Statement/ Prospectus, and the Reorganization Plan, which is attached to this Proxy Statement/ Prospectus as Appendix A.

About the Proposed Reorganization

      The Board of Directors of Advantus Series Fund has voted to recommend approval of the Reorganization Plan to the shareholders of each Advantus Fund. The Reorganization Plan provides that each Advantus Fund will transfer all of its assets and liabilities to the corresponding W&R Fund listed opposite its name in the following chart:

Advantus Fund	W&R Fund
Advantus Asset Allocation Portfolio	W&R Balanced Portfolio
Advantus Capital Appreciation Portfolio	W&R Growth Portfolio
Advantus Growth Portfolio	W&R Growth Portfolio
Advantus Core Equity Portfolio	W&R Core Equity Portfolio
Advantus Value Stock Portfolio	W&R Value Portfolio
Advantus Small Company Growth Portfolio	W&R Small Cap Growth Portfolio
Advantus International Stock Portfolio	W&R International II Portfolio*
Advantus Small Company Value Portfolio	W&R Small Cap Value Portfolio*
Advantus Micro-Cap Growth Portfolio	W&R Micro Cap Growth Portfolio*

*  A newly formed W&R Fund that will not have any assets prior to the Reorganization.

      In exchange for the transfer of these assets and liabilities, each W&R Fund will issue shares to the corresponding Advantus Fund listed above, in an amount equal in value to the aggregate net assets of the Advantus Fund. These asset transfers and share issuances (the “Reorganizations”) are expected to occur on or about September 22, 2003 (the “Closing Date”), based on the value of each Advantus Fund’s assets as of the close of the regular trading session on the New York Stock Exchange (normally, 3:00 p.m. Central time) on the business day immediately prior to the Closing Date (the “Effective Time”). As soon as practicable after the transfer of all of an Advantus Fund’s assets and liabilities, that Advantus Fund will make a liquidating distribution to its shareholders of the W&R Fund shares that it received, so that a holder of shares in an Advantus Fund at the Effective Time of the Reorganization will receive a number of shares of the corresponding W&R Fund with the same aggregate value as the shareholder had in the Advantus Fund at the Effective Time. On the Closing Date, shareholders of each Advantus Fund will become shareholders of the corresponding W&R Fund. Each Advantus Fund will then be terminated as soon as practicable thereafter. The closing of each Reorganization (each a “Closing”) is contingent upon the approval of the Reorganization Plan by the shareholders of the applicable Advantus Fund.

      As a result of the Reorganizations, Beneficial Owners of an Advantus Fund will become Beneficial Owners of the corresponding W&R Fund. Beneficial Owners of each Advantus Fund will vote separately on the Reorganization of their Fund, with each Reorganization separate and distinct from the other. The Reorganization of each Advantus Fund is not contingent upon the Reorganization of any other Advantus Fund.

      The Reorganization of each Fund is intended to qualify as a tax-free reorganization for federal income tax purposes. If it so qualifies, neither the Advantus Funds nor the insurance companies or separate accounts holding Advantus Fund shares will recognize taxable gain or loss as a result of the Reorganizations. Generally, neither shareholders nor Beneficial Owners will incur capital gains or losses on

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the exchange of W&R Fund shares for Advantus Fund shares. Furthermore, the cost basis of each investment will remain the same.

Advantus Series Fund and W&R Target Funds

      Advantus Series Fund, Inc., which was organized as a Minnesota corporation on February 22, 1985, is an open-end management investment company consisting of various investment portfolios or series, each of which is a separate mutual fund. Each of the Advantus Funds is a series of the Advantus Series Fund.

      W&R Target Funds, Inc., which was organized as a Maryland corporation on December 2, 1986, also is an open-end management investment company consisting of various investment portfolios or series. Each of the W&R Funds is a series of W&R Target Funds.

      The investment objectives and strategies of each Advantus Fund are similar to those of its corresponding W&R Fund. Both the Advantus Funds and the W&R Funds offer a single class of shares only to the separate accounts of insurance companies to fund variable life insurance policies and variable annuity contracts issued by those companies. The shares of both the Advantus Funds and the W&R Funds are offered without a front-end or contingent deferred sales charge. Shares of both the Advantus Funds and the W&R Funds are subject to Rule 12b-1 fees equal, on an annual basis, to .25% of average net assets.

Comparison of Fund Expenses

      The Advantus Funds and the W&R Funds, like all mutual funds, incur certain expenses in their operations and shareholders pay these expenses indirectly. These expenses include management fees as well as the costs of maintaining accounts, administration, and other activities. The following tables (a) compare the fees and expenses as of December 31, 2002 for each Advantus Fund and its corresponding W&R Fund (except for the newly formed W&R Funds, W&R International II Portfolio, W&R Micro Cap Growth Portfolio and W&R Small Cap Value Portfolio, which were not in existence on that date) and (b) show the estimated fees and expenses for the W&R Funds on a pro forma basis as of that date after giving effect to the Reorganization. The tables do not reflect the fees and expenses associated with the variable annuity and variable life insurance contracts for which the Advantus Funds and the W&R Funds serve as investment vehicles.

Annual Fund Operating Expenses (As a Percentage of Average Net Assets)

For the Fiscal Year Ended December 31, 2002 (Unaudited)

							W&R Balanced
	W&R			Advantus Asset			Estimated
Annual Fund Operating Expenses	Balanced			Allocation			Combined
Fees Paid Directly From Your Investment
Management Fees		0.70	%		0.35	%		0.70	%
Distribution and/or Service (12b-1) Fees		0.25	%		0.25	%		0.25	%
Other Expenses		0.06	%		0.05	%		0.04	%
Total Annual Operating Expenses		1.01	%		0.65	%		0.99	%

				Advantus						W&R Growth
	W&R			Capital			Advantus			Estimated
Annual Fund Operating Expenses	Growth			Appreciation			Growth			Combined(1)
Fees Paid Directly From Your Investment
Management Fees		0.70	%		0.50	%		0.45	%		0.69	%
Distribution and/or Service (12b-1) Fees		0.25	%		0.25	%		0.25	%		0.25	%
Other Expenses		0.04	%		0.08	%		0.06	%		0.04	%
Total Annual Operating Expenses		0.99	%		0.83	%		0.76	%		0.98	%

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(1)  Assumes both Advantus Capital Appreciation Portfolio and Advantus Growth Portfolio are reorganized into W&R Growth Portfolio.

							W&R Growth
				Advantus Capital			Estimated
Annual Fund Operating Expenses	W&R Growth			Appreciation			Combined(1)
Fees Paid Directly From Your Investment
Management Fees		0.70	%		0.50	%		0.70	%
Distribution and/or Service (12b-1) Fees		0.25	%		0.25	%		0.25	%
Other Expenses		0.04	%		0.08	%		0.04	%
Total Annual Operating Expenses		0.99	%		0.83	%		0.99	%

(1)  Assumes only Advantus Capital Appreciation Portfolio is reorganized into W&R Growth Portfolio.

							W&R Growth
				Advantus			Estimated
Annual Fund Operating Expenses	W&R Growth			Growth			Combined(1)
Fees Paid Directly From Your Investment
Management Fees		0.70	%		0.45	%		0.70	%
Distribution and/or Service (12b-1) Fees		0.25	%		0.25	%		0.25	%
Other Expenses		0.04	%		0.06	%		0.04	%
Total Annual Operating Expenses		0.99	%		0.76	%		0.99	%

(1)  Assumes only Advantus Growth Portfolio is reorganized into W&R Growth Portfolio.

							W&R Core
	W&R Core			Advantus Core			Equity Estimated
Annual Fund Operating Expenses	Equity			Equity(1)			Combined
Fees Paid Directly From Your Investment
Management Fees		0.70	%		0.50	%		0.70	%
Distribution and/or Service (12b-1) Fees		0.25	%		0.25	%		0.25	%
Other Expenses		0.04	%		0.51	%		0.04	%
Total Annual Operating Expenses		0.99	%		1.26	%		0.99	%

(1)  Advantus Capital is currently absorbing “other expenses,” excluding management fees and 12b-1 fees, in excess of 0.32% of the average net assets of Advantus Core Equity Portfolio. After such absorption, the ratio of total operating expenses to average net assets is 1.07%. Advantus Capital reserves the right to discontinue such absorption at any time in its sole discretion.

							W&R Value
				Advantus Value			Estimated
Annual Fund Operating Expenses	W&R Value			Stock			Combined
Fees Paid Directly From Your Investment
Management Fees		0.70	%		0.50	%		0.70	%
Distribution and/or Service (12b-1) Fees		0.25	%		0.25	%		0.25	%
Other Expenses		0.09	%		0.08	%		0.05	%
Total Annual Operating Expenses		1.04	%		0.83	%		1.00	%

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				Advantus Small
	W&R			Company			W&R Small Cap Growth
Annual Fund Operating Expenses	Small Cap Growth			Growth			Estimated Combined
Fees Paid Directly From Your Investment
Management Fees		0.85	%		0.65	%		0.85	%
Distribution and/or Service (12b-1) Fees		0.25	%		0.25	%		0.25	%
Other Expenses		0.09	%		0.08	%		0.05	%
Total Annual Operating Expenses		1.15	%		0.98	%		1.15	%

							W&R
				Advantus			International II
	W&R			International			Estimated
Annual Fund Operating Expenses	International II(1)			Stock			Combined
Fees Paid Directly From Your Investment
Management Fees		0.85	%		0.60	%		0.85	%
Distribution and/or Service (12b-1) Fees		0.25	%		0.25	%		0.25	%
Other Expenses		0.09	%		0.14	%		0.09	%
Total Annual Operating Expenses		1.19	%		0.99	%		1.19	%

(1)  This is a newly organized shell W&R Fund. The management fees are the fees payable by the W&R Fund pursuant to the investment management agreement approved by the W&R Target Funds Board of Directors, including a majority of the disinterested directors, at a special meeting held by telephone on June 24, 2003, subject to re-approval by the W&R Target Funds Board of Directors, and at least a majority of the disinterested directors, at the regular, in-person meeting scheduled for August 20, 2003. Since the June Board meeting no circumstances have arisen, and no circumstances are anticipated to arise, that would be likely to result in the failure of the investment management agreement to receive re- approval by the Board and by a majority of the disinterested directors at the August Board meeting. “Other expenses” for the shell W&R Fund are estimated, since it has not yet commenced operations.

							W&R Small Cap
	W&R Small			Advantus Small			Value Estimated
Annual Fund Operating Expenses	Cap Value(1)			Company Value(2)			Combined
Fees Paid Directly From Your Investment
Management Fees		0.85	%		0.70	%		0.85	%
Distribution and/or Service (12b-1) Fees		0.25	%		0.25	%		0.25	%
Other Expenses		0.17	%		0.22	%		0.17	%
Total Annual Operating Expenses		1.27	%		1.17	%		1.27	%

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(1)

This is a newly organized shell W&R Fund. The management fees are the fees payable by the W&R Fund pursuant to the investment management agreement approved by the W&R Target Funds Board of Directors, including a majority of the disinterested directors, at a special meeting held by telephone on June 24, 2003, subject to re-approval by the W&R Target Funds Board of Directors, and at least a majority of the disinterested directors, at the regular, in-person meeting scheduled for August 20, 2003. Since the June Board meeting no circumstances have arisen, and no circumstances are anticipated to arise, that would be likely to result in the failure of the investment management agreement to receive re- approval by the Board and by a majority of the disinterested directors at the August Board meeting. “Other expenses” for the shell W&R Fund are estimated, since it has not yet commenced operations.

(2)

Advantus Capital is currently absorbing “other expenses,” excluding management fees and 12b-1 fees, in excess of 0.15% of the average net assets of Advantus Small Company Value Portfolio. After such absorption, the ratio of total operating expenses to average net assets is 1.10%. Advantus Capital reserves the right to discontinue such absorption at any time in its sole discretion.

							W&R Micro Cap
	W&R Micro Cap			Advantus Micro-Cap			Growth Estimated
Annual Fund Operating Expenses	Growth(1)			Growth(2)			Combined
Fees Paid Directly From Your Investment
Management Fees		0.95	%		0.95	%		0.95	%
Distribution and/or Service (12b-1) Fees		0.25	%		0.25	%		0.25	%
Other Expenses		0.14	%		0.25	%		0.14	%
Total Annual Operating Expenses		1.34	%		1.45	%		1.34	%

(1)

This is a newly organized shell W&R Fund. The management fees are the fees payable by the W&R Fund pursuant to the investment management agreement approved by the W&R Target Funds Board of Directors, including a majority of the disinterested directors, at a special meeting held by telephone on June 24, 2003, subject to re-approval by the W&R Target Funds Board of Directors, and at least a majority of the disinterested directors, at the regular, in-person meeting scheduled for August 20, 2003. Since the June Board meeting no circumstances have arisen, and no circumstances are anticipated to arise, that would be likely to result in the failure of the investment management agreement to receive re- approval by the Board and by a majority of the disinterested directors at the August Board meeting. “Other expenses” for the shell W&R Fund are estimated, since it has not yet commenced operations.

(2)

Advantus Capital is currently absorbing “other expenses,” excluding management fees and 12b-1 fees, in excess of 0.14% of the average net assets of Advantus Micro-Cap Growth Portfolio. After such absorption, the ratio of total operating expenses to average net assets is 1.34%. Advantus Capital reserves the right to discontinue such absorption at any time in its sole discretion.

Examples

      The following examples help you compare the cost of investing in each Advantus Fund with the cost of investing in other mutual funds by showing what your costs may be over time. It uses the same assumptions that other funds use in their prospectuses:

•  $10,000 initial investment

•  5% return for each year

•  each Fund’s operating expenses remain the same for each period

•  redemption after the end of each period

•  reinvestment of all dividends and distributions

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Your actual costs may be higher or lower, so these examples should be used for comparison only. Based on these assumptions, your costs at the end of each time period would be:

Fund	1 Year		3 Years		5 Years		10 Years
W&R Balanced Portfolio	$	103	$	322	$	558	$	1,236
Advantus Asset Allocation Portfolio		66		208		362		810
Pro Forma Combined		101		315		547		1,213

Fund	1 Year		3 Years		5 Years		10 Years
W&R Growth Portfolio (Fund A)	$	101	$	315	$	547	$	1,213
Advantus Capital Appreciation Portfolio (Fund B)		85		265		460		1,025
Advantus Growth Portfolio (Fund C)		78		243		422		942
Pro Forma Combined Fund A + Fund B + Fund C		100		312		542		1,201
Pro Forma Combined Fund A + Fund B		101		315		547		1213
Pro Forma Combined Fund A + Fund C		101		315		547		1213

Fund	1 Year		3 Years		5 Years		10 Years
W&R Core Equity Portfolio	$	101	$	315	$	547	$	1,213
Advantus Core Equity Portfolio		128		400		692		1,523
Pro Forma Combined		101		315		547		1,213

Fund	1 Year		3 Years		5 Years		10 Years
W&R Value Portfolio	$	106	$	331	$	574	$	1,271
Advantus Value Stock Portfolio		85		265		460		1,025
Pro Forma Combined		102		318		552		1,225

Fund	1 Year		3 Years		5 Years		10 Years
W&R Small Cap Growth Portfolio	$	117	$	365	$	633	$	1,398
Advantus Small Company Growth Portfolio		100		312		542		1,201
Pro Forma Combined		117		365		633		1,398

Fund	1 Year		3 Years		5 Years		10 Years
W&R International II Portfolio	$	121	$	378	$	654	$	1,443
Advantus International Stock Portfolio		101		315		547		1,213
Pro Forma Combined		121		378		654		1,443

Fund	1 Year		3 Years		5 Years		10 Years
W&R Small Cap Value Portfolio	$	129	$	403	$	697	$	1,534
Advantus Small Company Value Portfolio		119		372		644		1,420
Pro Forma Combined		129		403		697		1,534

Fund	1 Year		3 Years		5 Years		10 Years
W&R Micro Cap Growth Portfolio	$	136	$	425	$	734	$	1,613
Advantus Micro-Cap Growth Portfolio		148		459		792		1,735
Pro Forma Combined		136		425		734		1,613

Comparison of Fund Investment Objectives, Strategies and Risks

      This section will help you compare the investment objectives, strategies and risks of each W&R Fund with its corresponding Advantus Fund. The investment objective of each Advantus Fund is fundamental

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and may not be changed without shareholder approval. The investment objectives of the W&R Funds may be changed by the Board of Directors of those Funds, without the approval of shareholders.

      Advantus Asset Allocation Portfolio, Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio, Advantus Core Equity Portfolio and Advantus Value Stock Portfolio have been managed by WRIMCO since May 1, 2003 using investment strategies that are substantially identical to those used by WRIMCO in managing the corresponding W&R Funds into which these Advantus Funds will be reorganized. In addition, the current sub-advisers for Advantus International Stock Portfolio, Advantus Small Company Value Portfolio and Advantus Micro-Cap Growth Portfolio will act as sub-advisers for the corresponding W&R Funds following the Reorganizations. As a result, each of these Advantus Funds has investment policies and risks that are substantially similar to those of its corresponding W&R Fund. Advantus Small Company Growth Fund is currently managed by a sub-adviser, but the W&R Fund into which it will be reorganized is managed by WRIMCO. Therefore, although the investment objectives and strategies of the Advantus Small Company Growth Fund and its corresponding W&R Fund are similar, there are some differences.

      Please be aware that this is only a brief discussion. More complete information may be found in the Advantus Funds’ and W&R Funds’ prospectuses.

Advantus Asset Allocation Portfolio/ W&R Balanced Portfolio

Investment Objectives

•  Advantus Asset Allocation Portfolio: As high a level of long-term total rate of return as is consistent with prudent investment risk.

•  W&R Balanced Portfolio: Current income to the extent that, in WRIMCO’s opinion, market and economic conditions permit. As a secondary goal, the Portfolio seeks long-term appreciation of capital.

Investment Strategies

      Advantus Asset Allocation Portfolio and W& R Balanced Portfolio are managed by WRIMCO using the same investment strategies. Each Portfolio invests primarily in a mix of stocks, debt securities and short-term instruments, depending on market conditions. In general, each Portfolio invests a portion of its total assets in either debt securities or preferred stocks, or both, in order to provide income and relative stability of capital. The Portfolios own common stocks in order to provide possible appreciation of capital and some dividend income. Each Portfolio ordinarily invests at least 25% of its total assets in fixed income securities.

      In its equity investments, the Portfolios invest primarily in medium to large, well-established companies, that typically issue dividend producing securities. The majority of the Portfolios’ debt holdings are either U.S. Government securities or investment grade corporate bonds, that include bonds rated BBB and higher by Standard & Poor’s Ratings Service or Baa and higher by Moody’s Investors Service, Inc. or, if unrated, deemed by WRIMCO to be of comparable quality. The Portfolios have no limitations on the range of maturities of debt securities in which they may invest. Each Portfolio may invest in foreign securities.

      WRIMCO may look at a number of factors in selecting securities for a Portfolio. For equity investments, WRIMCO may emphasize a blend of value and growth potential. For value securities, WRIMCO looks for undervalued companies whose asset value or earnings power is not reflected in the price of their stock. In selecting growth securities, WRIMCO seeks to identify securities whose earnings are likely to grow faster than the economy. In selecting debt securities for the Portfolios, WRIMCO seeks high-quality securities with minimal credit risk.

      Generally, in determining whether to sell an equity security, WRIMCO uses the same analysis that it uses in order to determine if the equity security is still undervalued or has ceased to offer the desired

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growth potential. In determining whether to sell a debt security, WRIMCO will consider whether the debt security continues to maintain its minimal credit risk. WRIMCO may also sell a security if the security ceases to produce income or otherwise to take advantage of attractive investment opportunities and/or to raise cash.

      When WRIMCO believes that a temporary defensive position is desirable, each Portfolio may invest up to all of its assets in debt securities that may be considered equivalent to owning cash because of their safety and liquidity. By taking a temporary defensive position, a Portfolio may not achieve its investment objective.

Investment Risks

      Because the investment strategies of Advantus Asset Allocation Portfolio and W&R Balanced Portfolio are the same, each Portfolio is subject to the same types of risk. An investment in either Portfolio may result in the loss of money, and may also be subject to various risks including the following principal risks:

•  Credit Risk — the risk that an issuer of a debt security or other fixed income obligation will not make payments on the security when due.

•  Income Risk — the risk that the Portfolio may experience a decline in its income due to falling interest rates.

•  Interest Rate Risk — the risk that the value of a debt security or other fixed income obligation will increase or decrease due to changes in market interest rates.

•  Market Risk — the risk that equity and debt securities are subject to adverse trends in equity and debt markets.

•  Portfolio Risk — the risk that Portfolio performance may not meet or exceed that of the market as a whole.

•  Manager Risk — the Portfolio’s performance will be affected by WRIMCO’s skill in allocating the Portfolio’s assets among different types of investments.

•  Foreign Securities Risk — the risk that the value of foreign securities may be subject to greater volatility than domestic securities due to factors such as currency fluctuations and political or economic conditions affecting the foreign country.

Advantus Capital Appreciation Portfolio and Advantus Growth Portfolio/ W&R Growth Portfolio

Investment Objectives

•  Advantus Capital Appreciation Portfolio: Growth of capital.

•  Advantus Growth Portfolio: Long-term accumulation of capital. Current income is a factor in the selection of securities, but is a secondary objective.

•  W&R Growth Portfolio: Capital growth, with current income as a secondary goal.

Investment Strategies

      Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio and W&R Growth Portfolio are managed by WRIMCO using the same investment strategies. Each Portfolio seeks to achieve its goals by investing primarily in common stocks of U.S. and, to a lesser extent, foreign companies. Generally, a Portfolio may invest in a wide range of marketable securities that, in WRIMCO’s opinion, offer the potential for growth. Each Portfolio typically invests in companies having a market capitalization of at least $1 billion, although they may invest in companies of any size. The Portfolios generally emphasize investments in the faster growing sectors of the economy, such as the technology, healthcare and consumer-oriented sectors.

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      In selecting securities for the Portfolios, WRIMCO utilizes a combination of quantitative and fundamental research. Quantitative research focuses on identifying companies with attractive growth, profitability and valuation measures. Fundamental research analyzes a specific company to examine its competitive position within its industry and to determine its growth expectations. A security may be sold when WRIMCO believes the company’s growth and/or profitability characteristics are deteriorating, it no longer maintains a competitive advantage or more attractive opportunities arise.

      When WRIMCO believes that a temporary defensive position is desirable, each Portfolio may invest up to all of its assets in cash or fixed-income securities or in common stocks chosen for their relative stability, rather than for their growth potential. By taking a defensive position, a Portfolio may not achieve its investment objectives.

Investment Risks

      Because the investment strategies of Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio and W&R Balanced Portfolio are the same, each Portfolio is subject to the same types of risk. An investment in any of these Portfolios may result in the loss of money, and may also be subject to various risks including the following principal risks:

•  Growth Stock Risk — the risk that if the assessment by the Portfolio’s investment adviser of a company’s prospective earnings growth or judgment of how other investors assess the company’s earnings growth is wrong, then the value of the company’s securities may decrease or not approach the value that the Portfolio’s investment adviser has placed on it.

•  Market Risk — the risk that equity securities are subject to adverse trends in equity markets.

•  Portfolio Risk — the risk that Portfolio performance may not meet or exceed that of the market as a whole.

•  Small Company Risk — the risk that equity securities of small capitalization companies are subject to greater price volatility due to, among other things, such companies’ small size, limited product lines, limited access to financing sources and limited management depth.

•  Manager Risk — the Portfolio’s performance will be affected by WRIMCO’s skill in evaluating and selecting securities for the Portfolio.

•  Foreign Securities Risk — the risk that the value of foreign securities may be subject to greater volatility than domestic securities due to factors such as currency fluctuations and political or economic conditions affecting the foreign country.

Advantus Core Equity Portfolio/ W&R Core Equity Portfolio

Investment Objectives

•  Advantus Core Equity Portfolio: High total return.

•  W&R Core Equity Portfolio: Capital growth and income.

Investment Strategies

      Advantus Core Equity Portfolio and W&R Core Equity Portfolio are managed by WRIMCO using the same investment strategies. Each Portfolio seeks to achieve its goal by primarily investing, during normal market conditions, in common stocks of large, high-quality U.S., and to a lesser extent foreign, companies that have the potential for capital appreciation, or that WRIMCO expects to resist market decline, and that are well known, have been consistently profitable and have dominant market positions in their industries. Advantus Core Equity Portfolio will, under normal market conditions, invest at least 80% of its net assets (exclusive of collateral received in connection with securities lending) in equity securities. Although the Portfolios typically invest in large companies, they may invest in securities of any size company.

9

      WRIMCO attempts to select securities with growth and income possibilities by looking at many factors including a company’s: (1) profitability record; (2) history of improving sales and profits; (3) management; (4) leadership position in its industry; (5) stock price value; and (6) 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 continued dividend payments. WRIMCO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

      When WRIMCO believes that a temporary defensive position is desirable, it may take certain steps with respect to all of a Portfolio’s assets, including any one or more of the following: (1) hold cash, commercial paper, certificates of deposit or other short-term investments; (2) invest in debt securities (including short-term U.S. Government securities); and (3) invest in convertible preferred stock. By taking a temporary defensive position a Portfolio may not achieve its investment objectives.

Investment Risks

      Because the investment strategies of Advantus Core Equity Portfolio and W&R Core Equity Portfolio are the same, each Portfolio is subject to the same types of risk. An investment in either Portfolio may result in the loss of money, and may also be subject to various risks including the following principal risks:

•  Large Company Risk — the risk that a portfolio of very large capitalization company securities may underperform the market as a whole.

•  Market Risk — the risk that equity securities are subject to adverse trends in equity markets.

•  Portfolio Risk — the risk that Portfolio performance may not meet or exceed that of the market as a whole.

•  Manager Risk — the Portfolio’s performance will be affected by WRIMCO’s skill in evaluating and selecting securities for the Portfolio.

•  Foreign Securities Risk — the risk that the value of foreign companies or foreign government securities may be subject to greater volatility than domestic securities due to additional factors related to investing in foreign securities.

Advantus Value Stock Portfolio/ W&R Value Portfolio

Investment Objectives

•  Advantus Value Stock Portfolio: Long-term accumulation of capital.

•  W&R Value Portfolio: Long-term capital appreciation.

Investment Strategies

      Advantus Value Stock Portfolio and W&R Value Portfolio are managed by WRIMCO using the same investment strategies. Each Portfolio seeks to achieve its goal by investing, for the long term, in the common stocks of large-cap U.S. and foreign companies. The Portfolios seek to invest in stocks that are, in the opinion of WRIMCO, undervalued relative to the true value of the company, and/or are out of favor in the financial markets but have a favorable outlook for capital appreciation. Although the Portfolios typically invests in large-cap companies, they may invest in securities of any size company.

      WRIMCO utilizes both fundamental research and quantitative analysis to identify securities for the Portfolios. The Portfolios will typically invest in core value stocks: stocks of companies in industries that have relatively lower price-to-earnings ratios than growth stocks. The Portfolios may also invest in growth stocks that are, in WRIMCO’s opinion, temporarily undervalued.

      WRIMCO utilizes both a top-down (assess the market environment) and a bottom-up (research individual issuers) analysis in its selection process. WRIMCO considers numerous factors in its analysis of

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issuers and stocks, including the following: (1) intrinsic value of the company not reflected in stock price; (2) historical earnings growth; (3) future expected earnings growth; (4) company’s position in its respective industry; (5) industry conditions; (6) competitive strategy; (7) management capabilities; and (8) free cash flow potential. A Portfolio will typically sell a stock when it reaches an acceptable price, its fundamental factors have changed or it has performed below WRIMCO’s expectations.

      When WRIMCO believes that a temporary defensive position is desirable, each Portfolio 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, a Portfolio may not achieve its investment objective.

Investment Risks

      Because the investment strategies of Advantus Value Stock Portfolio and W&R Value Portfolio are the same, each Portfolio is subject to the same types of risk. An investment in either Portfolio may result in the loss of money, and may also be subject to various risks including the following principal risks:

•  Market Risk — the risk that equity securities are subject to adverse trends in equity markets.

•  Portfolio Risk — the risk that Portfolio performance may not meet or exceed that of the market as a whole.

•  Value Stock Risk — the risk that the value of a security believed by the Portfolio’s investment adviser to be undervalued may never reach what such investment adviser believes is its full value, or that such security’s value may decrease.

•  Large Company Risk — the risk that a portfolio of large capitalization company securities may underperform the market as a whole.

•  Manager Risk — the Portfolio’s performance will be affected by WRIMCO’s skill in evaluating and selecting securities for the Portfolio.

•  Foreign Securities Risk — the risk that the value of foreign companies or foreign government securities may be subject to greater volatility than domestic securities due to additional factors related to investing in foreign securities.

Advantus Small Company Growth Portfolio/ W&R Small Cap Growth Portfolio

Investment Objective

•  Advantus Small Company Growth Portfolio: Long-term accumulation of capital.

•  W&R Small Cap Growth Portfolio: Growth of capital.

Investment Strategies

      Advantus Small Company Growth Portfolio: The Portfolio primarily invests in various types of equity securities of small capitalization growth companies at the time of purchase. The Portfolio primarily invests in common stocks but may also invest in preferred stocks and securities convertible into equity securities. In selecting equity securities, the Portfolio’s investment sub-adviser employs a growth investment style and looks for either developing or older companies in a growth stage or companies providing products or services with a high unit-volume growth rate.

      Under normal market conditions, the Portfolio will invest at least 80% of net assets plus any borrowings for investment purposes (exclusive of collateral received in connection with securities lending) in equity securities of small companies. The Portfolio considers a “small” company to be one whose market capitalization at the time of purchase is within the range of capitalizations of companies in the Russell 2000 Index.

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      In selecting equity securities of growth companies for the Portfolio, the Portfolio’s investment sub-adviser looks for: (1) companies still in the developmental stage; (2) older companies that appear to be entering a new stage of growth; and (3) companies providing products or services with a high unit-volume growth rate.

      The Portfolio may also invest in emerging-growth companies, which are small or medium-size companies that have passed their start-up phase, show positive earnings, and offer the potential for accelerated earnings growth. Emerging-growth companies generally stand to benefit from new products or services, technological developments, changes in management or other factors.

      In an attempt to respond to adverse market, economic, political or other conditions, the Portfolio may invest for temporary defensive purposes in various short-term cash and cash equivalent items, or as otherwise described above. When investing for temporary defensive purposes, the Portfolio may not always achieve its investment objective.

      W&R Small Cap Growth Portfolio: W&R Small Cap Growth Portfolio also invests primarily in small capitalization stocks, although it uses a different index than the corresponding Advantus Fund for determining whether a stock is a small capitalization stock. The Portfolio 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. The Portfolio 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. The Portfolio will, under normal market conditions, invest at least 80% of its net assets in small cap stocks.

      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 regarding a company, such as: (1) aggressive or creative management; (2) technological or specialized expertise; (3) new or unique products or services; and (4) entry into new or emerging industries.

      Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses in buying securities. For example, 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.

      When WRIMCO believes that a temporary defensive position is desirable, the Portfolio 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. The Portfolio may also invest in more established companies, those with longer operating histories than many small cap companies. By taking a temporary defensive position, the Portfolio may not achieve its investment objective.

Investment Risks

      Because the investment strategies of Advantus Small Company Growth Portfolio and W&R Small Cap Growth Portfolio are similar, each Portfolio generally is subject to the same types of risk. An investment in either Portfolio may result in the loss of money, and may also be subject to various risks including the following principal risks:

•  Growth Stock Risk — the risk that if the assessment by the Portfolio’s investment adviser or sub-adviser of a company’s prospective earnings growth or judgment of how other investors assess the company’s earnings growth is wrong, then the value of the company’s securities may decrease or not approach the value that the Portfolio’s investment adviser or sub-adviser has placed on it.

•  Market Risk — the risk that equity securities are subject to adverse trends in equity markets.

•  Portfolio Risk — the risk that Portfolio performance may not meet or exceed that of the market as a whole.

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•  Small Company Risk — the risk that equity securities of small companies are subject to greater price volatility due to, among other things, such companies’ small size, limited product lines, limited access to financing sources and limited management depth.

•  Manager Risk — the Portfolio’s performance will be affected by the adviser’s or sub-adviser’s skill in evaluating and selecting securities for the Portfolio.

      W&R Small Cap Growth Portfolio is also subject to the following type of principal risk:

•  Foreign Securities Risk — the risk that the value of foreign companies or foreign government securities may be subject to greater volatility than domestic securities due to additional factors related to investing in foreign securities.

Advantus International Stock Portfolio/ W&R International II Portfolio

Investment Objectives

•  Advantus International Stock Portfolio and W&R International II Portfolio: Long-term capital growth.

Investment Strategies

      Templeton Investment Counsel, LLC (“Templeton”), acts as the sub-adviser for Advantus International Stock Portfolio, and will act as the sub-adviser for W&R International II Portfolio following the Reorganization. As a result, the investment strategies of the Portfolios are substantially identical.

      Each Portfolio primarily invests in equity securities issued by small, mid and large capitalization foreign companies and governmental agencies. The Portfolios may invest in securities of companies or governments in developed foreign markets or in emerging markets. Under normal circumstances, Advantus International Portfolio will maintain investments in at least three foreign countries and W&R International II Portfolio will invest at least 65% of its total assets in issuers of at least three foreign countries. The Portfolios primarily invest in common stock but may also invest in foreign investment-grade debt securities.

      Equity securities generally entitle the holder to participate in a company’s general operating results and include common stock, preferred stock, warrants or rights to purchase such securities. In selecting equity securities for each Portfolio, Templeton performs a company-by-company analysis, rather than focusing on a specific industry or economic sector. Templeton concentrates on the market price of a company relative to its view regarding the company’s long-term earnings potential. Templeton typically also considers a company’s historical value measures, including price/earnings ratios, profit margins and liquidation value.

      Under normal circumstances, Advantus International Stock Portfolio invests at least 80% of its assets (exclusive of collateral received in connection with securities lending) in equity securities of small, mid and large capitalization foreign companies. W&R International II Portfolio invests at least 80% of its net assets (exclusive of collateral received in connection with securities lending) in equity securities under normal circumstances.

      When the sub-adviser believes that a temporary defensive position is desirable, Advantus International Stock Portfolio may invest in various short term cash and cash equivalent items. W&R International II Portfolio may invest up to all of its assets in debt securities including commercial paper or short-term U.S. Government securities and/or preferred stocks; it may avoid investment in volatile emerging markets and increase investments in more stable, developed countries and industries; it may use forward currency contracts to hedge specific foreign currencies; and it may invest up to all of its assets in domestic securities. By taking a defensive position, a Fund may not achieve its investment objective.

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Investment Risks

      Because the investment strategies of Advantus International Stock Portfolio and W&R International II Portfolio are substantially identical, each Portfolio is generally subject to the same types of risk. An investment in either Portfolio may result in the loss of money, and may also be subject to various risks including the following principal risks:

•  Currency Risk — the risk that changes in foreign currency exchange rates will increase or decrease the value of foreign securities or the amount of income or gain received on such securities.

•  Foreign Securities Risk — the risk that the value of foreign companies or foreign government securities may be subject to greater volatility than domestic securities due to additional factors related to investing in foreign securities.

•  Market Risk — the risk that equity securities are subject to adverse trends in equity markets.

•  Portfolio Risk — the risk that Portfolio performance may not meet or exceed that of the market as a whole.

•  Manager Risk — the Portfolio’s performance will be affected by the sub-adviser’s skill in evaluating and selecting securities for the Portfolio.

Advantus Small Company Value Portfolio/ W&R Small Cap Value Portfolio

Investment Objectives

•  Advantus Small Company Value Portfolio and W&R Small Cap Value Portfolio: Long-term accumulation of capital.

Investment Strategies

      State Street Research and Management Company (“State Street Research”), acts as the sub-adviser for Advantus Small Company Value Portfolio, and will act as the sub-adviser for W&R Small Cap Value Portfolio following the Reorganization. As a result, the investment strategies of the Portfolios are substantially similar.

      Both Portfolios invest primarily in the securities of small capitalization companies. The Advantus Small Company Value Portfolio primarily invests in various types of equity securities of companies whose market capitalizations are similar to the market capitalizations of companies in the Russell 2000® Value Index. The W&R Small Cap Value Portfolio invests primarily in various types of equity securities of companies whose market capitalizations are within the range of capitalizations of companies included in the Lipper, Inc. Small Cap Category. The W&R Small Cap Value Portfolio will, under normal market conditions, invest at least 80% of its net assets in small capitalization companies. Equity securities in which the Portfolios invest will consist primarily of common stocks, but may also include preferred stock and other securities convertible into equity securities. From time to time, each Portfolio will also invest a lesser portion of its assets in securities of mid and large capitalization companies (i.e., companies with a market capitalization larger than that defined above). Each Portfolio’s purchases of equity securities may include common stocks that are part of initial public offerings.

      In selecting equity securities, State Street Research searches for those companies that appear to be undervalued or trading below their true worth, and examines such features as a company’s financial condition, business prospects, competitive position and business strategy. State Street Research looks for companies that appear likely to come back into favor with investors, for reasons that may include, for example, good prospective earnings, strong management teams or new products or services.

      In selecting value stocks and other equity securities, State Street Research primarily looks to equity securities it believes are undervalued or trading below their true worth, but that appear likely to come back into favor with investors. Undervalued securities are securities that State Street Research believes: (a) are undervalued relative to other securities in the market or currently earn low returns with a potential for

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higher returns, (b) are undervalued relative to the potential for improved operating performance and financial strength, or (c) are issued by companies that have recently undergone a change in management or control, or developed new products or services, that may improve their business prospects or competitive position. In assessing relative value, State Street Research will consider factors such as a company’s ratio of market price to earnings, ratio of market price to book value, ratio of market price to assets, ratio of market price to cash flow, estimated earnings growth rate, cash flow, yield, liquidation value, product pricing, quality of management and competitive market position. As a secondary focus, State Street Research may also consider an investment’s potential to provide current income. In seeking to achieve its investment objectives, each Portfolio may also invest in equity securities of companies that State Street Research believes show potential for sustainable earnings growth above the average market growth rate.

      When State Street Research believes that a temporary defensive position is desirable, each Portfolio may invest up to all of its assets in various short-term cash and cash equivalent items. By taking a defensive position, a Portfolio may not achieve its investment objective.

Investment Risks

      Because the investment strategies of Advantus Small Company Value Portfolio and W&R Small Cap Value Portfolio are substantially identical, each Portfolio is generally subject to the same types of risk. An investment in either Portfolio may result in the loss of money, and may also be subject to various risks including the following principal risks:

•  Initial Public Offering Risk — the risk that the Portfolio will not be able to sustain the positive effect on performance that may result from investments in initial public offerings (IPOs). Favorable investments in IPOs have had a significant impact on the Portfolio’s performance in some periods. The effect of IPOs on the Portfolio’s total returns going forward may not be positive, either as a result of changes in the IPO market or growth of the Portfolio’s assets which may reduce its total return.

•  Market Risk — the risk that equity securities are subject to adverse trends in equity markets.

•  Portfolio Risk — the risk that Portfolio performance may not meet or exceed that of the market as a whole.

•  Small Company Risk — the risk that equity securities of small companies are subject to greater price volatility due to, among other things, such companies’ small size, limited product lines, limited access to financing sources and limited management depth.

•  Value Stock Risk — the risk that the value of a security believed by the Portfolio’s investment adviser to be undervalued may never reach what such investment adviser believes is its full value, or that such security’s value may decrease.

•  Manager Risk — the Portfolio’s performance will be affected by State Street Research’s skill in evaluating and selecting securities for the Portfolio.

Advantus Micro-Cap Growth Portfolio/ W&R Micro Cap Growth Portfolio

Investment Objectives

•  Advantus Micro-Cap Growth Portfolio and W&R Micro Cap Growth Portfolio: Long-term capital appreciation.

Investment Strategies

      Wall Street Associates acts as the sub-adviser for Advantus Micro-Cap Growth Portfolio, and will act as the sub-adviser for W&R Micro Cap Growth Portfolio following the Reorganizations. As a result, the investment strategies of the Portfolios are substantially similar.

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      Both Portfolios invest primarily in equity securities of micro-cap companies. The Advantus Portfolio invests primarily in equity securities of companies with a market capitalization of less than $300 million at the time of purchase. The W&R Portfolio invests primarily in equity securities of companies whose market capitalizations are within the range of capitalizations of companies included in the Russell 2000 Growth Index at the time of purchase. The Portfolios primarily invest in common stock but may also invest in preferred stock and securities convertible into equity securities. Each Portfolio’s purchases of equity securities may include common stocks that are part of initial public offerings. In selecting equity securities, the Portfolios invest in securities that Wall Street Associates believes show sustainable earnings growth potential and improving profitability.

      Under normal circumstances, the Advantus Portfolio will invest at least 80% of its net assets (exclusive of collateral received in connection with securities lending) in common stocks of companies which are micro-cap companies at the time of purchase. Similarly, the W&R Portfolio will invest at least 80% of its net assets in micro-cap companies. From time to time, each Portfolio may also invest a lesser portion of its assets in securities of larger capitalization companies.

      In selecting equity securities for the Portfolios, Wall Street Associates primarily looks to an investment’s potential for sustainable earnings growth and improving profitability. In selecting securities with earnings growth potential, Wall Street Associates considers factors such as a company’s competitive market position, quality of management, growth strategy, internal operating trends (such as profit margins, cash flows and earnings and revenue growth), overall financial condition, and ability to sustain current rate of growth. In seeking to achieve their investment objectives, the Portfolios may also invest in equity securities of companies that Wall Street Associates believes are temporarily undervalued or show promise of improved results due to new management, products, markets or other factors.

      When Wall Street Associates believes that a temporary defensive position is desirable, each Portfolio may invest up to all of its assets in various short-term cash and cash equivalent items. By taking a defensive position, a Portfolio may not achieve its investment objective.

Investment Risks

      Because the investment strategies of Advantus Micro-Cap Growth Portfolio and W&R Micro Cap Growth Portfolio are substantially identical, each Portfolio is generally subject to the same types of risk. An investment in either Portfolio may result in the loss of money, and may also be subject to various risks including the following principal risks:

•  Growth Stock Risk — the risk that if the assessment by the Portfolio’s investment sub-adviser of a company’s prospective earnings growth or judgment of how other investors assess the company’s earnings growth is wrong, then the value of the company’s securities may decrease or not approach the value that the Portfolio’s investment sub-adviser has placed on it.

•  Initial Public Offering Risk — the risk that the Portfolio will not be able to sustain the positive effect on performance that may result from investments in initial public offerings (IPOs). Favorable investments in IPOs have had a significant impact on the Portfolio’s performance in some periods. The effect of IPOs on the Portfolio’s total returns going forward may not be positive, either as a result of changes in the IPO market or growth of the Portfolio’s assets which may reduce its total return.

•  Market Risk — the risk that equity securities are subject to adverse trends in equity markets.

•  Micro-Cap Company Risk — the risk that equity securities of micro-cap companies are subject to greater price volatility due to, among other things, such companies’ small size, limited product lines, limited access to financing sources and limited management depth.

•  Portfolio Risk — the risk that Portfolio performance may not meet or exceed that of the market as a whole.

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•  Manager Risk — the Portfolio’s performance will be affected by Wall Street Associates’ skill in evaluating and selecting securities for the Portfolio.

Comparison of Fund Performance

      The bar charts and tables below compare the potential risks and rewards of investing in the Advantus Funds and the W&R Funds. Each bar chart provides an indication of the risks of investing in the respective Fund by showing changes in the Fund’s performance from year to year for the last ten years or since the Fund’s inception. The tables show how each Fund’s average annual total returns for one year, five years and ten years (or since inception) compare to the returns of a broad-based market index. Comparative performance information is only given for Reorganizations in which an Advantus Fund is being acquired by an existing (rather than a newly formed) W&R Fund. The performance of the Funds and the indices varies over time, and past performance is not necessarily indicative of future results. The Funds’ returns assume reinvestment of dividends and distributions and reflect Fund expenses. They do not, however, reflect charges and expenses deducted by your particular variable insurance contract or retirement plan, which would lower performance. Total returns for the indices do not reflect expenses. The indices are unmanaged and it is not possible to invest directly in an index. Please note that the average annual total return since a Fund’s inception is given only for those Funds that have been in existence for less than ten calendar years.

Advantus Asset Allocation Portfolio/ W&R Balanced Portfolio

Advantus Asset Allocation Portfolio

Best Quarter:	15.03% (quarter ended 12/31/98)
Worst Quarter:	-16.94% (quarter ended 3/31/01)

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W & R Balanced Portfolio

Best Quarter:	9.64% (quarter ended 9/30/97)
Worst Quarter:	-8.36% (quarter ended 9/30/02)

Average Annual Total Returns as of December 31, 2002

										Since
Fund	1 Year			5 Years			10 Years			Inception(1)
Advantus Asset Allocation Portfolio		(8.98	)%		(0.11	)%		5.74	%		N/A
W&R Balanced Portfolio		(8.41	)%		2.01	%		N/A			7.02	%
S&P 500 Index(2)(3)		(22.10	)%		(0.59	)%		9.33	%		9.96	%
Lehman Brothers Aggregate Bond Index(2)		10.27	%		7.54	%		7.51	%		8.02	%
Blended Index(2)		(9.80	)%		3.10	%		8.93	%		9.56	%
Citigroup Treasury/ Government Sponsored/ Credit Index(3)		10.81	%		7.61	%		N/A	(4)		8.02	%

(1)	As of May 3, 1994 (the portfolio’s inception date) for W&R Balanced Portfolio.
(2)	Benchmark indices for Advantus Asset Allocation Portfolio. The Blended Index is comprised of 60% S&P 500 Index and 40% Lehman Brothers Aggregate Bond Index.
(3)	Benchmark indices for W&R Balanced Portfolio.
(4)	This benchmark index has not been in existence for 10 years.

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Advantus Capital Appreciation Portfolio and Advantus Growth Portfolio/ W&R Growth Portfolio

Advantus Capital Appreciation Portfolio

Best Quarter:	29.80% (quarter ended 12/31/99)
Worst Quarter:	-22.97% (quarter ended 9/30/01)

Advantus Growth Portfolio

Best Quarter:	21.62% (quarter ended 12/31/98)
Worst Quarter:	-25.46% (quarter ended 3/31/01)

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W & R Growth Portfolio

Best Quarter:	16.54% (quarter ended 6/30/95)
Worst Quarter:	-16.39% (quarter ended 9/30/02)

Average Annual Total Returns as of December 31, 2002

Fund	1 Year			5 Years			10 Years
Advantus Capital Appreciation Portfolio		(31.54	)%		(5.92	)%		4.42	%
Advantus Growth Portfolio		(25.44	)%		(5.80	)%		4.28	%
W&R Growth Portfolio		(21.30	)%		3.18	%		9.95	%
S&P 500 Index(1)		(22.10	)%		(0.59	)%		9.33	%
Russell 1000 Growth Index(2)		(27.89	)%		(3.84	)%		6.71	%

(1)	The benchmark index for Advantus Capital Appreciation Portfolio and W&R Growth Portfolio.
(2)	The benchmark index for Advantus Growth Portfolio.

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Advantus Core Equity Portfolio/ W&R Core Equity Portfolio

Advantus Core Equity Portfolio

Best Quarter:	20.98% (quarter ended 12/31/98)
Worst Quarter:	-18.17% (quarter ended 9/30/02)

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W & R Core Equity Portfolio

Best Quarter:	16.54% (quarter ended 6/30/95)
Worst Quarter:	-16.40% (quarter ended 9/30/02)

Average Annual Total Returns as of December 31, 2002

										Since Inception
Fund	1 Year			5 Years			10 Years			Advantus Fund(1)
Advantus Core Equity Portfolio		(28.14	)%		(4.17	)%		N/A			(4.40	)%
W&R Core Equity Portfolio		(21.63	)%		(0.13	)%		8.64	%		N/A
S&P 500 Index(2)		(22.10	)%		(0.59	)%		9.34	%		0.01	%

(1)	October 15, 1997.
(2)	The benchmark index for Advantus Core Equity Portfolio and W&R Core Equity Portfolio.

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Advantus Value Stock Portfolio/ W&R Value Portfolio

Advantus Value Stock Portfolio

Best Quarter: 15.18% (quarter ended 12/31/98)

Worst Quarter: -18.44% (quarter ended 9/30/02)

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W & R Value Portfolio

Best Quarter: 7.41% (quarter ended 12/31/02)

Worst Quarter: -12.95% (quarter ended 9/30/02)

Average Annual Total Returns as of December 31, 2002

							Since Inception			Since Inception
Fund	1 Year			5 Years			Advantus Fund(1)			W&R Fund(2)
Advantus Value Stock Portfolio		(15.32	)%		(5.31	)%		6.16	%		N/A
W&R Value Portfolio		(12.70	)%		N/A			N/A			(6.70	)%
Russell 1000 Value Index(3)		(15.52	)%		1.16	%		10.74	%		(12.03	)%

(1)	May 2, 1994.
(2)	May 1, 2001.
(3)	The benchmark index for Advantus Value Stock Portfolio and W&R Value Portfolio.

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Advantus Small Company Growth Portfolio/ W&R Small Cap Growth Portfolio

Advantus Small Company Growth Portfolio

Best Quarter:   45.45% (quarter ended 12/31/99)

Worst Quarter: -27.87% (quarter ended 9/30/98)

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W & R Small Cap Growth Portfolio

Best Quarter:   38.46% (quarter ended 12/31/99)

Worst Quarter: -21.73% (quarter ended 9/30/01)

Average Annual Total Returns as of December 31, 2002

							Since Inception			Since Inception
Fund	1 Year			5 Years			Advantus Fund(1)			W&R Fund(2)
Advantus Small Company Growth Portfolio		(31.80	)%		(5.31	)%		3.82	%		N/A
W&R Small Cap Growth Portfolio		(21.79	)%		2.56	%		N/A			11.61	%
Russell 2000 Growth Index(3)		(30.26	)%		(6.59	)%		3.28	%		2.00	%

(1)	May 3, 1993.
(2)	May 3, 1994.
(3)	The benchmark index for Advantus Small Company Growth Portfolio and W&R Small Cap Growth Portfolio.

Comparison of Operations

Investment Advisers and Sub-Advisers

      WRIMCO is the investment adviser to the W&R Funds. As of May 1, 2003, WRIMCO began serving as investment adviser to the Advantus Asset Allocation Portfolio, Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio, Advantus Core Equity Portfolio and Advantus Value Stock Portfolio. WRIMCO is an indirect wholly owned subsidiary of Waddell & Reed Financial, Inc. (“W&R”), a publicly held company. The address of these companies is 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217.

      WRIMCO and its predecessor have served as investment manager to each of the registered investment companies in the Waddell & Reed Advisors Funds, W&R Target Funds, Inc. and Waddell & Reed InvestEd Portfolios, Inc. since 1940 or each company’s inception date, whichever is later. In addition, WRIMCO served as investment manager to W&R Funds, Inc. (now known as Ivy Funds, Inc.)

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until June 30, 2003, when WRIMCO assigned its investment management agreement to its affiliate, Waddell & Reed Ivy Investment Co.

      Prior to May 1, 2003, Advantus Capital had been the investment adviser to all of the Advantus Funds. Advantus Capital had acted in that capacity since May 1, 1997. Prior to that, the Advantus Funds had obtained advisory services from MIMLIC Asset Management Company, formerly the parent company of Advantus Capital. Advantus Capital continues to serve as investment adviser to the Advantus Small Company Growth Portfolio, Advantus International Stock Portfolio, Advantus Small Company Value Portfolio and Advantus Micro-Cap Growth Portfolio. Advantus Capital will serve as investment adviser to these funds until the Closing Date of the Reorganizations. The address of Advantus Capital is 400 Robert Street North, St. Paul, Minnesota 55101.

      Credit Suisse Asset Management, LLC (“CSAM”) serves as investment sub-adviser to the Advantus Small Company Growth Portfolio pursuant to an investment sub-advisory agreement with Advantus Capital. In connection with the Reorganization, CSAM will be terminated as sub-adviser to the Advantus Small Company Growth Portfolio.

      Templeton Investment Counsel, LLC (“Templeton”) serves as investment sub-adviser to the Advantus International Stock Portfolio pursuant to an investment sub-advisory agreement with Advantus Capital. Templeton will act as the sub-adviser to the corresponding W&R Fund after the Reorganization.

      Wall Street Associates serves as investment sub-adviser to the Advantus Micro-Cap Growth Portfolio pursuant to an investment sub-advisory agreement with Advantus Capital. Wall Street Associates will act as the sub-adviser to the corresponding W&R Fund after the Reorganization.

      State Street Research & Management Company (“State Street Research”) serves as investment sub-adviser to the Advantus Small Company Value Portfolio pursuant to an investment sub-advisory agreement with Advantus Capital. State Street Research will act as the sub-adviser to the corresponding W&R Fund after the Reorganization.

Portfolio Managers

      The same individuals who currently are primarily responsible for the day-to-day management of an Advantus Fund will also be responsible for the day-to-day management of the corresponding W&R Fund, except in the case of the reorganization of the Advantus Small Company Growth Portfolio into the W&R Small Cap Growth Portfolio. Grant P. Sarris is primarily responsible for the management of the W&R Small Cap Growth Portfolio. Mr. Sarris has held his responsibilities for W&R Small Cap Growth Portfolio since February 1999. He is Senior Vice President of WRIMCO, Vice President of W&R Target Funds and Vice President of other investment companies for which WRIMCO serves as investment manager. Mr. Sarris served as an investment analyst with WRIMCO and its predecessor from October 1991 to January 1996. From January 1996 to May 1998, Mr. Sarris served as an assistant portfolio manager for WRIMCO and since May 1998 he has served as a portfolio manager. Mr. Sarris has been an employee of WRIMCO and its predecessor since October 1991.

Other Service Providers

Distributor

      Securian Financial Services, Inc. (“Securian”), an affiliate of Advantus Capital, is the principal distributor of the Advantus Funds. The Advantus Funds have adopted a Rule 12b-1 Distribution Plan under which each Fund pays distribution fees equal to .25% per annum of the average daily net assets of the Fund. These fees are paid to Securian to pay for distribution related expenses and activities in connection with the distribution of the Funds’ shares. The address of Securian is 400 Robert Street North, St. Paul, Minnesota 55101.

      Waddell & Reed, Inc. (“WRI”), an affiliate of WRIMCO and W&R, is the distributor of the insurance policies for which the W&R Funds are the underlying investment vehicles. The W&R Funds

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have adopted a Rule 12b-1 Service Plan under which each W&R Fund may pay a daily fee to WRI in an amount not to exceed .25% of the Fund’s average annual net assets, to compensate WRI for amounts it expends in connection with the provision of personal services to policy owners. The address of WRI is 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217.

Administrative and Accounting Services

      Advantus Series Fund has entered into an agreement with Minnesota Life Insurance Company (“Minnesota Life”) under which Minnesota Life provides accounting oversight, financial reporting, legal and other administrative services to the Advantus Funds. Advantus Series Fund has also entered into separate agreements with State Street Bank and Trust Company under which State Street provides daily accounting and investment administration services for the Funds. Minnesota Life oversees State Street’s performance of these services.

      The W&R Funds have entered into an accounting services agreement with Waddell & Reed Services Company (“WRSCO”), a subsidiary of W&R, under which WRSCO provides the Funds with bookkeeping and accounting services and assistance including maintenance of the Funds’ records, pricing of the Funds’ shares, preparation of prospectuses for existing shareholders, preparation of proxy statements and certain shareholder reports.

Custodial and Auditing Services

      The custodian for the W&R Funds is UMB Bank, n.a. The custodian for the Advantus Funds is Bankers Trust Company for the Advantus International Stock Portfolio and Wells Fargo Bank Minnesota for the other Advantus Funds. In general, these custodians are responsible for holding the Funds’ cash and securities. Deloitte & Touche LLP acts as the W&R Funds’ independent auditors. KPMG LLP acts as the Advantus Funds’ independent auditors.

Buying, Selling and Exchanging Shares

      Neither Advantus Fund shares nor W&R Fund shares are offered directly to the public. Shares of both the Advantus Funds and the W&R Funds are offered to the separate accounts of insurance companies as investment options for certain variable life insurance policies and variable annuity contracts issued by those companies. Orders to purchase and redeem shares are based on, among other things, the amount of premium payments to be invested and the number of surrender and transfer requests to be effected on any day according to the terms of the variable life insurance policies and variable annuity contracts. In the case of both the Advantus Funds and the W&R Funds, shares of a Fund are sold at their net asset value (NAV) next determined after receipt of the order to purchase from the insurance company. No sales charge is required to be paid by the insurance company in connection with the purchase of either Advantus Fund or W&R Fund shares.

      Redemptions of both the Advantus Funds and the W&R Funds are made at the NAV per share of the Fund next determined after receipt of the request to redeem from the insurance company. Neither the Advantus Funds nor the W&R Funds charge a fee to shareholders upon the redemption of Fund shares.

      Owners of variable life insurance policies and variable annuity contracts may exchange shares only among those Funds which are indicated in the respective variable contract prospectus.

Net Asset Value

      NAV is generally calculated for both the Advantus Funds and the W&R Funds as of the close of normal trading on the New York Stock Exchange (“NYSE”) (typically 3:00 p.m. Central time), except that an option or futures contract held by a Portfolio may be priced at the close of the regular session of

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any other securities or commodities exchange on which that instrument is traded. In calculating the NAV per share of each Advantus Fund and each W&R Fund:

•  the securities in the Fund that are listed or traded on an exchange are valued primarily using market prices;

•  bonds are generally valued according to prices quoted by an independent pricing service;

•  short-term debt securities are valued at amortized cost, which approximates market value; and

•  other investment assets for which market prices are unavailable are valued at their fair value by or at the direction of the Fund’s Board of Directors.

      Certain of the Advantus Funds and the W&R Funds may invest in securities listed on foreign exchanges which may trade on Saturdays or on U.S. national business holidays when the NYSE is closed. Consequently, for both the Advantus Funds and the W&R Funds, the NAV of a Fund’s shares may be significantly affected on days when the Fund does not price its shares and when shareholders are not able to purchase or redeem the Fund’s shares. When market quotations are not readily available, securities, options, futures contracts and other assets are valued at fair value in a manner determined in good faith under procedures established by and under the general supervision and responsibility of the Board of Directors. Similarly, if events materially affecting the value of foreign investments or foreign currency exchange rates occur prior to the close of the regular session of trading on the NYSE, but after the time their values are otherwise determined, such investments or exchange rates will be valued at their fair value as determined in good faith by or under the direction of the Board of Directors.

Dividend Policies

      Both the Advantus Funds and the W&R Funds distribute substantially all of their net investment income and net capital gains each year. Dividends and net capital gains distributions, if any, are generally paid once a year. Distributions are reinvested in additional Advantus Fund or W&R Fund shares, as the case may be. Distributions of these additional shares are made at the NAV as of the payment date. For the W&R Funds and the Advantus Funds, ordinarily, dividends are paid on shares starting on the day after they are issued and through the day they are redeemed.

      From time to time, the Advantus Funds employ a practice known as “consent dividends.” Under this method of “distributing” income, the shareholders of the Advantus Funds consent to treat specified amounts as dividend income for tax purposes even though dividends are not actually paid (either in cash or by reinvestment in additional shares) by the Advantus Funds. The W&R Funds do not employ this practice.

Information About the Reorganizations

Reasons for the Proposed Reorganizations

      In April 2003, Advantus Capital and certain companies affiliated with Advantus Capital entered into a Strategic Alliance Agreement and a related Purchase Agreement with W&R, WRIMCO and certain other companies affiliated with W&R. These agreements were entered into in connection with a strategic business decision by Advantus Capital and its affiliates to exit the non-real estate equity management business. Under the agreements, Advantus Capital agreed to sell to WRIMCO its assets related to the Advantus Funds, which are all of the actively managed, non-real estate equity series of Advantus Series Fund. The Reorganizations are being proposed in order to integrate the Advantus Funds into W&R Target Funds, an investment company managed by WRIMCO. Like the Advantus Funds, the portfolios of W&R Target Funds are offered to the separate accounts of insurance companies as investment options for certain variable life insurance policies and variable annuity contracts issued by those companies. The proposed Reorganizations provide for the merger of each Advantus Fund into an existing portfolio of W&R Target Funds with similar investment objectives and strategies or, where there is no similar portfolio, into a newly formed portfolio of W&R Target Funds.

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Board Considerations

      In determining whether to approve the Reorganizations, the Board of Directors of Advantus Series Fund, including the Directors who are not interested persons of the Fund, as defined under Section 2(a)(19) of the Investment Company Act of 1940 (the “Independent Directors”), considered various materials provided by W&R and Advantus Capital and met with senior representatives of W&R and its affiliates. The Independent Directors were advised by independent legal counsel throughout this process.

      The Board of Directors was first advised of the possibility of a transaction between Advantus Capital and W&R at a meeting of the Board of Directors held January 30, 2003. Board members were provided with additional information regarding the proposed transaction at a meeting held February 6, 2003, and were advised by counsel at such meeting regarding their legal duties in connection with the proposed transaction. At such meeting, the Directors also reviewed and discussed an information request list that had been prepared by counsel, and instructed counsel to transmit this list to W&R and Advantus Capital on their behalf. At meetings held on February 21, March 6, March 21, April 8, April 17 and April 23, 2003, the Directors reviewed, analyzed and asked questions concerning information that was provided to them by W&R and Advantus Capital including, among other things, the following types of information:

•  general information concerning W&R and its affiliates, including W&R’s organization structure and senior personnel;

•  information on W&R’s operations;

•  information concerning the ethical profile and compliance history of W&R and its affiliates;

•  information regarding WRIMCO’s investment management process;

•  comparative style and performance information, expense information and asset size information with respect to each Advantus Fund and its corresponding W&R Fund; and

•  profitability information.

In addition, the directors met with certain senior officers of W&R and its affiliates at the meeting held February 13, 2003 and, during a due diligence trip to W&R’s headquarters on March 25, 2003, certain directors and their representatives also met, either telephonically or in person, with senior officers of W&R and its affiliates and with W&R Fund portfolio managers.

      The Board of Directors gave preliminary approval to the Reorganizations at its meeting held April 23, 2003, subject to, among other things, its discussions with independent directors of the W&R Target Funds and the Board’s review and approval of the Reorganization Plan. The directors met telephonically with certain independent directors of W&R Target Funds and other funds in the W&R fund family. At a meeting held June 25, 2003, the Board of Directors determined that the Reorganizations are in the best interests of the respective Advantus Funds and their shareholders and that the interests of the Advantus Funds will not be diluted as a result of the reorganizations. Therefore, the Board of Directors unanimously approved the Reorganizations and the Reorganization Plan, and recommended their approval by Advantus Fund shareholders. In approving the Reorganizations, the Board determined that participation in the Reorganizations is in the best interests of each Advantus Fund and that the interests of Advantus Fund shareholders would not be diluted as a result of the Reorganizations. In approving the Reorganization Plan, the Board considered the following factors:

•  The investment objectives and strategies of each Advantus Fund and its corresponding W&R Fund are similar. Thus, the Reorganizations will enable Advantus Fund shareholders to continue their current investment programs without substantial disruption.

•  The Reorganizations will result in each surviving Fund having a larger asset base (except in the case of Reorganizations into newly formed W&R Funds). In addition, there will be greater and broader distribution opportunities for the combined Funds. Thus, the Reorganizations should increase the likelihood that combined Funds will grow and net expenses will decline over time.

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•  Advantus Fund shareholders and Beneficial Owners will not have to pay any federal income tax solely as a result of the Reorganizations.

•  Advantus Capital, and not the Advantus Fund shareholders, will be responsible for the payment of the expenses related to consummating the Reorganizations.

•  The proposed Reorganizations will be effected on the basis of the relative net asset values of the W&R Funds and their corresponding Advantus Funds, so that Advantus Fund shareholders will receive W&R Fund shares having a total net asset value equal to the total net asset value of their Advantus Fund shares at the closing of the Reorganization.

•  The Board noted that W&R Fund expense ratios are significantly higher than those of the Advantus Funds in most cases due to higher management fees. The Board also noted, however, that the expense structures of the W&R Funds are competitive and within industry norms and that, despite higher expense ratios, the performance of the W&R Funds compared favorably to that of the Advantus Funds, and the Board determined that the expected benefits to Advantus Fund shareholders more than outweigh the increased expenses.

      The Board did not assign relative weights to the foregoing factors or deem any one or group of them to be controlling in and of themselves.

      The Board of Directors of the Advantus Funds recommends that shareholders of each Advantus Fund approve the Reorganization Plan for their Fund.

Description of the Reorganizations

      The following summary is qualified in its entirety by reference to the Reorganization Plan in Appendix A. The Reorganization Plan provides for the Reorganizations to occur on or about September 22, 2003.

      The Reorganization Plan provides that all of the assets and liabilities of each Advantus Fund will be transferred to the corresponding W&R Fund on the Closing Date of the Reorganizations. In exchange for the transfer of these assets and liabilities, the W&R Funds will simultaneously issue on the Closing Date of the Reorganizations a number of full and fractional shares of each Advantus Fund to the corresponding Advantus Fund equal in value to the aggregate net asset value of the corresponding Advantus Fund calculated at the Effective Time.

      Following the transfer of assets and liabilities in exchange for W&R Fund shares, each Advantus Fund will distribute, in complete liquidation, pro rata to its shareholders of record, all of the shares of the corresponding W&R Fund so received. Shareholders of each Advantus Fund owning shares at the Effective Time will receive a number of shares of the corresponding W&R Fund with the same aggregate value as such shareholder had in the Advantus Fund at the Effective Time. Such distribution will be accomplished by the establishment of accounts in the names of the Advantus Funds’ shareholders on the share records of the W&R Funds’. Each account will receive the respective pro rata number of full and fractional shares of the applicable W&R Fund due to the shareholders of the corresponding Advantus Fund. Each Advantus Fund then will be terminated or dissolved as soon as practicable thereafter. The W&R Funds will not issue share certificates to Advantus Fund shareholders in connection with the Reorganizations. Shares of the W&R Funds to be issued will have no preemptive or conversion rights.

      Each of the Advantus Funds is a series of Advantus Series Fund. Under Minnesota law, it is necessary for the shareholders of each Advantus Fund to approve an amendment to the articles of incorporation of Advantus Series Fund in order to effect the Reorganization of that Fund. This is necessary in order to bind all shareholders of the Advantus Fund to the Reorganization and, in particular, to bind them to the cancellation and retirement of their outstanding Advantus Fund shares. A vote in favor of the Reorganization also will be deemed a vote in favor of the amendment to the articles of incorporation of Advantus Series Fund, Inc. needed to effect the Reorganization. The form of such amendment is included as a schedule to the Reorganization Plan. It is a condition to the consummation of

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the Reorganization of each of the Advantus Funds that such amendment has been duly filed with the Minnesota Secretary of State. This condition cannot be waived.

      The Reorganization Plan contains customary representations, warranties and conditions. The Reorganization Plan provides that the consummation of the Reorganization with respect to each Advantus Fund and its corresponding W&R Fund is conditioned upon, among other things: (1) approval of the Reorganization by the Advantus Fund’s shareholders, and (2) the receipt by the Funds of a tax opinion to the effect that the Reorganization will be tax-free for federal income tax purposes to the Advantus Funds, their shareholders and the W&R Funds. The Reorganization Plan may be terminated by mutual agreement of the W&R Target Funds with respect to a W&R Fund or the Advantus Series Fund with respect to an Advantus Fund, or if, before the Closing Date, any of the required conditions has not been met or the representations and warranties are not true.

Costs of the Reorganizations

      Advantus Capital will bear the costs associated with the Advantus Funds’ participation in the Reorganizations, including the following: (a) expenses associated with the preparation and filing of this Proxy Statement/ Prospectus; (b) postage; (c) printing; (d) accounting fees; (e) legal fees incurred by each Fund (including fees of counsel to the Independent Board Members); (f) solicitation costs; (g) fees payable to the Independent Board Members for participation in any special meetings relating to the Reorganizations; and (h) other related administrative or operational costs. The Funds will not pay any of these expenses. The Advantus Funds will pay brokerage costs of any necessary rebalancing of their investment portfolios prior to the effective date of the Reorganizations, and the W&R Funds will pay the registration fees incurred in connection with issuing shares in the Reorganizations.

Federal Income Taxes

      Each Reorganization is intended to qualify for U.S. federal income tax purposes as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). If it so qualifies, neither the Advantus Funds nor their shareholders will recognize taxable gain or loss as a result of the Reorganizations; the tax basis of the W&R Fund shares received by shareholders will be the same in the aggregate as the basis of the Advantus Fund shares exchanged; and the holding period of the W&R Fund shares received will include the holding period of the Advantus Fund shares exchanged, provided that the shares exchanged were held as capital assets at the time of the Reorganizations. As a condition to the closing of the Reorganizations, the W&R Target Funds and the Advantus Series Fund will receive a tax opinion to that effect. No tax ruling from the Internal Revenue Service regarding the Reorganizations has been requested. The tax opinion is not binding on the Internal Revenue Service or a court and does not preclude the Internal Revenue Service from asserting or adopting a contrary position.

      The Advantus Funds will continue their investment operations while the Reorganizations are pending. Accordingly, they may realize taxable income and gains, which may have to be distributed to shareholders under the tax rules relating to mutual funds. After the closing, the W&R Funds may dispose of certain securities received from the corresponding Advantus Funds. These sales may result in transaction costs, and in capital gains (or losses) which may have to be distributed to shareholders. However, such income and capital gains distributions should not have any tax consequences to underlying Beneficial Owners.

Capitalization

      The following table sets forth, as of May 31, 2003, the capitalization of each W&R Fund, the capitalization of each Advantus Fund, and the unaudited pro forma combined capitalization of the

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W&R Funds assuming the Reorganizations have taken place. The capitalizations are likely to be different on the Closing Date as a result of daily share purchase and redemption activity.

			Net Asset
			Value		Shares
Fund	Net Assets		Per Share		Outstanding
	(Millions)				(Millions)
Advantus Asset Allocation Portfolio	$	384	$	1.4412		267
W&R Balanced Portfolio	$	181	$	6.5100		28
Pro Forma Combined	$	565	$	6.5100		87
Advantus Capital Appreciation Portfolio (Fund A)	$	159	$	1.1975		133
Advantus Growth Portfolio (Fund B)	$	211	$	1.2980		163
W&R Growth Portfolio (Fund C)	$	750	$	7.1895		104
Pro Forma Combined Fund A + Fund C	$	909	$	7.1895		126
Pro Forma Combined Fund B + Fund C	$	961	$	7.1895		134
Pro Forma Combined Fund A + Fund B + Fund C	$	1,120	$	7.1895		156
Advantus Core Equity Portfolio	$	21	$	0.7705		27
W&R Core Equity Portfolio	$	663	$	8.5393		78
Pro Forma Combined	$	684	$	8.5393		80
Advantus Value Stock Portfolio	$	119	$	1.3723		87
W&R Value Portfolio	$	88	$	4.6882		19
Pro Forma Combined	$	207	$	4.6882		44
Advantus Small Company Growth Portfolio	$	140	$	0.7769		180
W&R Small Cap Growth Portfolio	$	302	$	7.2423		42
Pro Forma Combined	$	442	$	7.2423		61
Advantus International Stock Portfolio	$	239	$	1.2072		198
W&R International II Portfolio	$	0	$	0		0
Pro Forma Combined	$	239	$	1.2072		198
Advantus Small Cap Value Portfolio	$	61	$	1.1332		54
W&R Small Company Value Portfolio	$	0	$	0		0
Pro Forma Combined	$	61	$	1.1332		54
Advantus Micro-Cap Growth Portfolio	$	28	$	1.0361		27
W&R Micro Cap Growth Portfolio	$	0	$	0		0
Pro Forma Combined	$	28	$	1.0361		27

Shareholder Rights

      The following is a summary of the major differences between the governing documents and laws applicable to the Advantus Funds prior to and after the Reorganizations. Except as otherwise noted below, the provisions of Minnesota law and the Articles of Incorporation (the “Advantus Articles”) and Bylaws (the “Advantus Bylaws”) which govern the Advantus Series Fund and the Advantus Funds are substantially similar to the provisions of Maryland law and the Articles of Incorporation and Bylaws (the “W&R Articles” and “W&R Bylaws”) that will govern the Advantus Funds following the Reorganization.

      Shares. The authorized capital of the Advantus Series Fund consists of one trillion shares of capital stock with a par value of $.01 per share; with authorized shares of 100,000,000,000 allocated to each Advantus Fund. The remaining shares may be allocated by the Board of Directors to any new or existing funds. Currently, Advantus Series Fund consists of eighteen separate investment series.

      W&R Target Funds is authorized to issue two billion shares of capital stock, with a par value of $.001 per share, from an unlimited number of series of shares. The Board may change the designation of any W&R Fund and may increase or decrease the numbers of shares of any W&R Fund but may not decrease the number of shares of any W&R Fund below the number of shares then outstanding. Currently, W&R Target Funds consists of fifteen separate investment series.

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      Shareholder Meetings. Advantus Series Fund does not hold periodically scheduled shareholder meetings. Minnesota corporate law does not require an annual meeting. Instead, it provides for the Board of Directors to convene shareholder meetings when it deems appropriate. In addition, if a regular meeting of shareholders has not been held during the immediately preceding fifteen months, a shareholder or shareholders holding three percent or more of the voting shares of an Advantus Fund may demand a regular meeting of shareholders of the Advantus Fund by written notice of demand given to the chief executive officer or the chief financial officer of the Advantus Fund. Within thirty days after receipt of the demand by one of those officers, the Board of Directors shall cause a regular meeting of shareholders to be called and held no later than ninety days after receipt of the demand, all at the expense of the Advantus Fund. A special meeting may also be called at any time by the chief executive officer, two or more directors, or a shareholder or shareholders holding ten percent of the voting shares of the Fund. At a meeting, called for the purpose, shareholders may remove any director by a vote of two-thirds of the outstanding shares. Additionally, the Investment Company Act of 1940 requires shareholder votes for all amendments to fundamental investment policies and restrictions, and for all investment advisory contracts and amendments thereto.

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

      Quorums. The Advantus Bylaws provide that a majority of the shares outstanding and entitled to vote shall constitute a quorum for the transaction of business at any regular or special meeting. In contrast, the W&R Bylaws provide that the presence in person or by proxy of the holders of record of one-third of the shares of the stock of the W&R Fund issued and outstanding and entitled to vote shall constitutes a quorum at all meetings of the stockholders.

      Number of Directors. The Advantus Articles and Bylaws provide that the initial number of directors of the Advantus Fund shall be five directors. Thereafter, the number of directors may be established by resolution of the shareholders (subject to the authority of the Board of Directors to increase the number of directors as permitted by law). There are currently four directors of Advantus Series Fund. The W&R Articles and Bylaws provide that the initial number of directors shall be twelve directors. Thereafter, the board of directors, by the vote of a majority of the entire Board, may increase the number of directors to a number not exceeding twenty. There are currently twelve directors of W&R Target Funds.

      Removal of Directors. The Advantus Articles and Bylaws provide that a director may be removed with or without cause at any time by the affirmative vote of the holders of a majority of the voting power of all shares entitled to vote on the election of directors. The W&R Articles and Bylaws provide that the removal of directors shall be governed by Maryland law, which provides that any director may be removed with or without cause at any meeting of shareholders at which a quorum is present by the affirmative vote of a majority of the votes entitled to be cast generally for the election of directors.

      Shareholder Liability. Minnesota law provides that a shareholder is under no obligation to the corporation or its creditors with respect to his or her shares, except to pay to the corporation the full consideration for which the shares were issued. However, a shareholder who receives a distribution made in violation of Minnesota law is liable to the extent that the distribution received by the shareholder exceeded the amount that could properly have been paid under Minnesota law. Under Maryland law, shareholders who have paid the subscription price for their stock have no personal liability for acts or obligations of the corporation, except to the extent that liability is imposed under any other provision of Maryland law.

      Board Member Indemnification. The Articles of Incorporation of Advantus Series Fund indemnify directors to the fullest extent permitted by Minnesota statutes, except to the extent that such liability cannot be limited as provided in the Investment Company Act of 1940 (which prohibits any provisions which purport to limit the liability of directors arising from such directors’ willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of their role as directors).

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Under Minnesota law, a corporation shall indemnify a person made or threatened to be made a party to a proceeding by reason of the person’s position with the corporation against liabilities arising from such proceeding if it is established that (i) the person acted in good faith, (ii) the person received no improper personal benefit, (iii) in the case of a criminal proceeding, the person had no reasonable cause to believe the act or omission was unlawful, (iv) the person had not otherwise been indemnified by another organization, and (v) the person reasonably believed that the conduct was in (or, in certain cases, not opposed to) the best interests of the corporation.

      Minnesota law also provides that indemnification is not payable by a corporation unless a determination has been made that the person has met the standard of conduct noted in the foregoing paragraph. Such determination may be made by (i) a vote of a majority of a quorum of directors consisting of directors not, at the time, parties to the proceedings, or, if such a quorum cannot be obtained, then by a majority vote of a committee of the board (designated by a majority of the board in which directors who are parties may participate) consisting solely of two or more directors not, at the time, parties to such proceedings, (ii) special legal counsel selected by the board or a committee as set forth in (i) above, or if the quorum of the full board cannot be obtained and the committee cannot be established, by a majority vote of the full board in which directors who are parties may participate, or (iii) the shareholders. With respect to persons who are not directors, officers, or controlling persons of a Fund, such determination may be made by a committee of the board of directors. If an adverse determination or no determination is made under the foregoing provisions, then the matter may be submitted to a court.

      Under Minnesota law, indemnification expenses may be paid in advance of the final disposition if (1) the applicable person provides (a) a written affirmation of his or her good faith belief that the standard of conduct necessary for indemnification has been met and (b) a written undertaking, which need not be secured, to repay the amount if it is determined that the standard of conduct has not been met and (2) a determination is made that the facts then known to those making the determination would not preclude indemnification under the statute. Under Minnesota law, any corporation that indemnifies or advances expenses to a person with regard to a proceeding by or on behalf of the corporation shall report that indemnification or advance to its shareholders no later than the next meeting of the shareholders.

      The directors of the W&R Funds generally are not liable for any obligation of the W&R Funds. W&R Target Funds will indemnify its directors against all liabilities and expenses, except for those arising from the director’s willful misfeasance, bad faith, gross negligence or reckless disregard of such director’s duties. Maryland law prescribes the circumstances under which a director may be indemnified. Agents may be indemnified and advanced expenses to the same extent as directors, as determined by the board.

      Under Maryland law, a corporation may indemnify any director against liabilities for acts incurred by reason of service to the corporation unless it is established that (i) the act or omission was material to the matter giving rise to the proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty, (ii) the director actually received an improper personal benefit or (iii) in the case of a criminal proceeding, the director had reasonable cause to believe the act or omission was unlawful. In addition, indemnification may not be made (i) in a proceeding by or in the right of the corporation where the director is found liable to the corporation (a “Corporate Liability”) or (ii) in a proceeding charging improper personal benefit where the director is found to be liable because such benefit was improperly received, whether or not involving action in the director’s official capacity (a “Personal Liability”).

      Maryland law also provides that indemnification is not payable by a corporation unless a determination has been made that the director has met the standard of conduct noted in the foregoing paragraph. Such determination may be made by (i) a vote of a majority of a quorum of directors consisting of directors not, at the time, parties to the proceedings, or, if such a quorum cannot be obtained, then by a majority vote of a committee of the board (designated by a majority of the board in which directors who are parties may participate) consisting solely of two or more directors not, at the time, parties to such proceedings, (ii) special legal counsel selected by the board or a committee as set forth in (i) above, or if the quorum of the full board cannot be obtained and the committee cannot be established,

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by a majority vote of the full board in which directors who are parties may participate, or (iii) the shareholders. Upon the application of a director, a court may order indemnification if it determines that (i) such director is entitled to reimbursement because such director has been successful, on the merits or otherwise, in the defense of a proceeding in which such director has been determined to have met the applicable standards of conduct or (ii) whether or not the director has met the applicable standards of conduct, the director is entitled to indemnification in view of all the relevant circumstances, provided that the indemnification payment shall be limited to the director’s expenses in cases involving Corporate Liability or Personal Liability.

      Under Maryland law, indemnification expenses may be paid in advance of the final disposition if a director provides (i) a written affirmation of his good faith belief that the standard of conduct necessary for indemnification has been met and (ii) a written undertaking to repay the amount if it is determined that the standard of conduct has not been met. This undertaking need not be secured.

      Personal Liability of Directors and Officers. The Advantus Articles provide that, to the fullest extent permitted by the Minnesota Business Corporation Act and the Investment Company Act of 1940, a director of an Advantus Fund shall not be liable to the Fund or its shareholders for monetary damages for breach of fiduciary duty as a director. Under Minnesota law, a director may not be excused from personal liability (1) for breach of the director’s duty of loyalty to the Fund or its shareholders, (2) for acts or omissions not in good faith or that involve intentional misconduct or knowing violation of law, (3) for any transaction in which the director derived a personal benefit, or (4) for his or her violation of certain Minnesota securities laws or participation or acquiescence in a distribution that was illegal under Minnesota law. Under the 1940 Act, a director or officer may not be excused from personal liability for willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office. Minnesota law does not permit a corporation to excuse its officers from personal liability for breach of fiduciary duty.

      Under Maryland law, a director or officer may not be excused from personal liability for a fiduciary breach (1) where he or she is proved to have actually received an improper benefit or profit in money, property, or services actually received or (2) to the extent that an adverse judgment or other final adjudication is entered in a proceeding against such director or officer based on a finding in the proceeding that such person’s action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding.

      Dissolution. Under Minnesota law, a corporation may be dissolved at a meeting of the shareholders by vote of the majority of the shares entitled to vote. However, this provision is not available to dissolve a separate series of a Minnesota corporation without dissolving the corporation itself, which would be the case if one or more other series of the corporation remained or might remain outstanding after the dissolution of the series in question. Under Maryland law, a W&R Fund may be dissolved, upon submission of a resolution by the majority of the board of directors at a meeting of the shareholders, by the affirmative vote of two-thirds of all the votes entitled to be cast on such resolution.

      Amendments. Pursuant to Minnesota law, the Advantus Articles may be amended upon approval, by the affirmative vote of the holders of the greater of (1) a majority of the voting power of the shares present and entitled to vote or (2) a majority of the voting power of the minimum number of the shares entitled to vote that would constitute a quorum for the transaction of business at the meeting, of a resolution (a) proposed by the affirmative vote of a majority of the directors present at a meeting of the board of directors, or (b) proposed by a shareholder or shareholders holding 3% or more of the voting power of the shares entitled to vote; provided, however, that if the articles provide for a larger proportion or number to transact a specified type of business at a meeting, the affirmative vote of that larger proportion or number is necessary to amend the articles to decrease the proportion or number necessary to transact business. The Advantus Bylaws may be amended by the shareholders (upon a proposal by a shareholder or shareholders holding 3% or more of the shares entitled to vote) or by the board of directors (unless reserved to the shareholders by the Advantus Bylaws or by Minnesota law), subject to the power of the shareholders to repeal such an amendment.

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      In contrast, the W&R Articles may only be amended upon adoption of a resolution to that effect by the board of directors and approval of such resolution by the holders of a majority of the shares entitled to vote. Maryland law, however, permits the directors to amend the W&R Articles without shareholder approval to (1) increase or decrease the aggregate number of shares of stock, or the number of shares of stock of any class, that a W&R Fund has authority to issue, or (2) to change a W&R Fund’s name or aggregate par value, or the name or par value of any series or class of a W&R Fund. The W&R Bylaws may be amended by a majority of the board of directors or, at a meeting of the shareholders, by the holders of a majority of the shares entitled to vote.

      The foregoing is only a summary of certain rights of shareholders of the W&R Funds and the Advantus Funds under their governing charter documents, bylaws and state law and is not a complete description of provisions contained in those sources. Shareholders should refer to the provisions of those documents and state law directly for a more thorough description.

PROPOSAL TWO  —

APPROVAL OF A DEFINITIVE INVESTMENT ADVISORY AGREEMENT WITH WRIMCO

Background

      Proposal Two applies only to Beneficial Owners of the Advantus Asset Allocation Portfolio, Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio, Advantus Core Equity Portfolio and Advantus Value Stock Portfolio. For purposes of this section of the Proxy Statement/ Prospectus, these Advantus Funds will be referred to as the “Funds.”

      As a result of entering into the Strategic Alliance Agreement and Purchase Agreement, Advantus Capital no longer had the portfolio management resources necessary to manage the Funds. The Board of Directors of the Funds therefore determined that it would be in shareholders’ best interests to appoint WRIMCO to act as the investment adviser to the Funds prior to the Reorganizations, and approved the interim investment advisory agreement between Advantus Series Fund, on behalf of the Funds, and WRIMCO that is described below (the “Interim Agreement”). The Board of Directors also approved, and is recommending that Fund shareholders approve, a definitive investment advisory agreement between Advantus Series Fund, on behalf of each Fund, and WRIMCO (the “Definitive Agreement”). If approved by shareholders, the Definitive Agreement, which is described below, will replace the Interim Agreement and will remain in effect until the Reorganizations.

Advantus Investment Advisory Agreement

      Advantus Capital formerly acted as investment advisor and manager of the Funds under an Investment Advisory Agreement dated May 1, 2000 (the “Advantus Agreement”). The Advantus Agreement amended an agreement previously in place between Advantus Capital and Advantus Series Fund by changing the schedule of advisory fees payable by certain Funds, deleting a provision requiring Advantus Capital to pay distribution-related expenses of the Funds, and modifying the agreement’s amendment provision. Fund shareholders approved the Advantus Agreement on April 17, 2000. The Advantus Agreement was last approved by the Board of Directors of Advantus Series Fund on January 30, 2003. The terms of the Advantus Agreement, including the investment advisory fees payable thereunder, were substantially identical to those of the Definitive Agreement, which are described below.

The Interim Investment Advisory Agreement

      WRIMCO currently acts as investment adviser to the Funds pursuant to an Interim Agreement dated as of May 1, 2003. The Interim Agreement was approved by the Funds’ Board of Directors at a meeting held April 23, 2003. Normally, a mutual fund’s investment advisory agreement also must be approved by the fund’s shareholders in advance of the effective date of such agreement. However, pursuant to

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Rule 15a-4 under the Investment Company Act of 1940, an investment adviser may serve as the adviser to a mutual fund under an interim contract that has not been approved by shareholders provided the conditions of the rule have been met. As required by Rule 15a-4, the Interim Agreement contains terms substantially identical to those of the investment advisory agreement previously in effect between Advantus Series Fund and Advantus Capital, except for the dates of execution and termination and other non-material changes, and except that advisory fees payable to WRIMCO by each Fund under the Interim Agreement are required to be held in escrow until shareholders of that Fund approve the Definitive Agreement. If shareholders of a Fund do not approve the Definitive Agreement within 150 days of the effective date of the Interim Agreement, WRIMCO will be paid by the Fund the lesser of (i) any costs incurred by WRIMCO in performing the Interim Agreement with respect to that Fund, plus interest on that amount while in escrow, and (ii) the total amount in the escrow account (plus interest earned). The Interim Agreement will remain in effect with respect to a Fund until shareholders of that Fund approve the Definitive Agreement, provided that, as required by Rule 15a-4, each Interim Agreement will automatically terminate on September 27, 2003.

      The Interim Agreement is substantially identical to the Definitive Agreement, which is described below, except for the dates of execution and termination and except that the Definitive Agreement does not require that investment advisory fee payments be held in escrow. Fees payable to WRIMCO under the Interim Agreement and the Definitive Agreement are identical to fees previously payable to Advantus Capital by the Funds.

The Definitive Investment Advisory Agreement

      It is possible that a Fund’s Reorganization will not be approved by shareholders or that, even if such Reorganization is approved, it will not be consummated prior to the automatic termination of the Interim Agreement on September 27, 2003. To avoid the possibility of a Fund being without an investment adviser due to this automatic termination, at a meeting held April 23, 2003, the Funds’ Board of Directors approved the Definitive Agreement, and recommended that shareholders of each Fund approve the Definitive Agreement. A form of the Definitive Agreement is included with this Proxy Statement/ Prospectus as Appendix B.

      Under the Definitive Agreement, WRIMCO will act as the investment adviser for, and will manage the affairs, business, and the investment of the assets of the respective Fund. Within the framework of the investment objective and the investment policies and restrictions of a Fund, and subject to the supervision of the Fund’s Board of Directors, WRIMCO will have the sole and exclusive responsibility for the management of the Fund’s portfolio and the making and execution of all investment decisions for the Fund. The Definitive Agreement provides, however, that WRIMCO may, at its own expense, employ one or more sub-advisers or enter into such service agreements as it deems appropriate in connection with the performance of its duties and obligations under the agreement (subject, in the case of any sub-advisory agreement, to the approval of the Board of Directors and shareholders of the Fund as required by the Investment Company Act of 1940).

      The Definitive Agreement provides that WRIMCO will furnish to the Funds office space and all necessary office facilities, equipment and personnel for servicing the investments of the Funds, and will pay the salaries and fees of all officers and directors of the Funds who are affiliated with WRIMCO. Each Fund pays all expenses not expressly assumed by WRIMCO or by the Fund’s distributor under its agreement with Advantus Series.

      The Definitive Agreement will be executed upon or shortly after its approval by shareholders and will terminate automatically in the event of its assignment. In addition, the Definitive Agreement is terminable at any time, without penalty, by the Board of Directors of the Funds or, with respect to any Fund, by vote of a majority of that Fund’s outstanding voting securities on not more than 60 days’ written notice to WRIMCO, and by WRIMCO on 60 days’ written notice to Advantus Series Fund. Unless sooner terminated, the Definitive Agreement shall continue in effect for more than two years after its execution only so long as such continuance is specifically approved at least annually by either the Board of Directors

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of the Funds or by a vote of a majority of each Fund’s outstanding voting securities, provided that in either event such continuance is also approved by the vote of a majority of the directors who are not parties to the definitive advisory agreement, or interested persons of such parties, cast in person at a meeting called for the purpose of voting on such approval.

      The Definitive Agreement provides that each Fund will pay WRIMCO an advisory fee equal on an annual basis to a percentage of the Fund’s average daily net assets as set forth in the following table:

Fund	Advisory Fee (as a Percentage of Average Daily Net Assets)
Advantus Asset Allocation Portfolio	0.35% of assets to $1 billion
	0.30% of assets exceeding $1 billion
Advantus Capital Appreciation Portfolio	0.50% of assets to $1 billion
	0.45% of assets exceeding $1 billion
Advantus Growth Portfolio	0.45% of assets to $1 billion
	0.40% of assets exceeding $1 billion
Advantus Core Equity Portfolio	0.50%
Advantus Value Stock Portfolio	0.50% of assets to $500 million
	0.45% of assets exceeding $500 million to $1 billion
	0.40% of assets exceeding $1 billion

      The Funds did not pay any investment advisory fees or make any other material payments to WRIMCO or its affiliates during the fiscal year ended December 31, 2002. The investment advisory fees paid to Advantus Capital by each Fund during such fiscal year under the former investment advisory agreements were as follows:

	Advisory Fees Paid
Fund	to Advantus Capital
Advantus Asset Allocation Portfolio	$	1,488,198
Advantus Capital Appreciation Portfolio	$	965,815
Advantus Growth Portfolio	$	1,090,867
Advantus Core Equity Portfolio	$	115,952	*
Advantus Value Stock Portfolio	$	645,492

*  Before the voluntary absorption of $50,401 in expenses by Advantus Capital.

      The Funds did not pay any commissions to any affiliated brokers during the past fiscal year.

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Additional Information About WRIMCO

      The name and principal occupation of the principal executive officer and each director of WRIMCO are set forth below. The address of each such individual is that of WRIMCO and W&R.

Name	Position with WRIMCO	Principal Occupation
Keith A. Tucker	Chairman and Director	Chairman of the Board, Chief Executive Officer and Director of W&R; Chairman of the Board and Director of WRI, WRIMCO and Waddell & Reed Services Company; President, Chairman of the Board, Chief Executive Officer and Director of Waddell & Reed Financial Services, Inc.
Henry J. Herrmann	Director, Chief Investment Officer, President and Chief Executive Officer	President, Chief Investment Officer and Director of W&R; Chairman of the Board, Chief Executive Officer and President of Waddell & Reed Ivy Investment Company; President, Chief Executive Officer and Chief Investment Officer of WRIMCO; Executive Vice President and Chief Investment Officer of Waddell & Reed Financial Services, Inc.; Director of Austin, Calvert and Flavin, Inc., (a WRIMCO subsidiary)
John E. Sundeen, Jr.	Senior Vice President, Treasurer, Director and Principal Financial Officer	Senior Vice President, Chief Financial Officer and Treasurer of Waddell & Reed Financial, Inc.; Senior Vice President and Treasurer of Waddell & Reed, Inc.; Director, Treasurer and Chief Operating Officer of Waddell & Reed Financial Services

      None of the officers or directors of the Advantus Funds are officers, directors or employees of WRIMCO or any of its affiliates.

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      The table below sets forth information regarding mutual funds for which WRIMCO acts as investment adviser that have investment objectives similar to the investment objectives of Advantus Asset Allocation Portfolio, Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio, Advantus Core Equity Portfolio or Advantus Value Stock Portfolio. WRIMCO and Waddell & Reed Ivy Investment Co. (“WRIICO”) have not waived, reduced or otherwise agreed to reduce contractual fees for the funds listed below.

			Approximate
			Net Assets as
		Comparable	of June 24,		Rate of Compensation Payable to WRIMCO or WRIICO (as a
Advantus Portfolio		Portfolio	2003		Percent of Average Daily Net Assets)
	Asset Allocation	W&R Balanced Portfolio	$	185,586,139	0.70% of net assets up to $1 billion
		Waddell & Reed Advisors			0.65% of net assets over $1 billion and up to $2 billion
		Continental Income Fund,   Inc.	$	458,277,280	0.60% of net assets over $2 billion and up to $3 billion
					0.55% of net assets over $3 billion
Capital Appreciation/ Growth		W&R Growth Portfolio	$	760,792,602	0.70% of net assets up to $1 billion
		Waddell & Reed Advisors			0.65% of net assets over $1 billion and up to $2 billion
		Accumulative Fund	$	1,905,949,162	0.60% of net assets over $2 billion and up to $3 billion
		Ivy Large Cap Growth Fund*	$	31,555,051	0.55% of net assets over $3 billion
		(formerly, W&R Funds,   Inc. Large Cap Growth   Fund)
	Core Equity	W&R Core Equity Portfolio	$	669,055,388	0.70% of net assets up to $1 billion
		Waddell & Reed Advisors			0.65% of net assets over $1 billion and up to $2 billion
		Core Investment Fund	$	4,569,382,062	0.60% of net assets over $2 billion and up to $3 billion
		Ivy Core Equity Fund*	$	274,539,920	0.55% of net assets over $3 billion
		(formerly, W&R Funds,   Inc. Core Equity   Fund)
	Value Stock	W&R Value Portfolio	$	90,712,816	0.70% of net assets up to $1 billion
		Waddell & Reed Advisors			0.65% of net assets over $1 billion and up to $2 billion
		Value Fund, Inc.	$	341,291,164	0.60% of net assets over $2 billion and up to $3 billion
					0.55% of net assets over $3 billion
	Small Company Growth	W&R Small Cap Growth Portfolio	$	300,133,411	0.85% of net assets up to $1 billion
		Waddell & Reed Advisors			0.83% of net assets over $1 billion and up to $2 billion
		Small Cap Fund, Inc.	$	686,165,211	0.80% of net assets over $2 billion and up to $3 billion
		Ivy Small Cap Growth Fund*	$	406,356,156	0.76% of net assets over $3 billion
		(formerly, W&R Funds,   Inc. Small Cap Growth   Fund)

*  Funds managed by WRIICO

Board Considerations

      In determining whether to approve the Interim Agreement and the Definitive Agreement, the Board of Directors, including the Independent Directors, considered various materials provided by W&R and Advantus Capital and met with senior representatives of W&R and its affiliates, as described above under “Proposal One — Information About the Reorganizations — Board Considerations.”

      In addition to considering that information, the Board gave weight in the course of its deliberations to the fact that the terms of the Interim Agreement and the Definitive Agreement were substantially identical to those of the investment advisory agreement between Advantus Capital and Advantus Series Fund, as those terms pertain to the Funds, that investment advisory fees paid by each Fund would remain unchanged, and that expense absorptions for Advantus Core Equity Portfolio would continue at their current level until the Portfolio’s reorganization.

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      Based on its review, the Board of Directors approved the Interim Agreement and the Definitive Agreement, concluding, among other things, that the scope and quality of services to be provided under the Interim Agreement and the Definitive Agreement would be at least equivalent to the scope and quality of the services provided under the investment advisory agreement with Advantus Capital, and that the terms of the Interim Agreement and the Definitive Agreement were fair and reasonable and in the best interest of shareholders of the Funds.

      The Board of Directors recommends that the shareholders of Advantus Asset Allocation Portfolio, Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio, Advantus Core Equity Portfolio and Advantus Value Stock Portfolio approve the Definitive Agreement.

INFORMATION ABOUT THE W&R FUNDS AND THE ADVANTUS FUNDS

W&R Funds

      A discussion of the performance of each of the W&R Funds during the fiscal year ended December 31, 2002 (other than W&R International II Portfolio, W&R Small Cap Value Portfolio and W&R Micro Cap Growth Portfolio, which were not yet in existence) is included in this Proxy Statement/ Prospectus as Appendix C.

      The W&R Funds are subject to the informational requirements of the Securities Act of 1933, as amended (the “1933 Act”), the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the 1940 Act and in accordance therewith file reports and other information with the SEC. Reports, proxy and information statements, charter documents and other information filed by the W&R Target Funds can be obtained by calling or writing the W&R Target Funds at 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217, 888-WADDELL.

      Copies can also be inspected and copied by the public at the following locations of the SEC:

Public Reference Room
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549 Midwest Regional Office
Citicorp Center, Suite 1400
500 West Madison Street
Chicago, Illinois 60661

      Copies of the information also may be obtained by mail from the Public Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington, D.C., at prescribed rates. Further information on the operations of the public reference facilities may be obtained by calling 1-800-SEC-0330. In addition, the SEC maintains an Internet site that contains copies of the information. The address of the site is http://www.sec.gov.

Advantus Funds

      The Advantus Funds are subject to the informational requirements of the 1933 Act, the 1934 Act and the 1940 Act and in accordance therewith file reports and other information with the SEC. Reports, proxy and information statements, charter documents and other information filed by the Advantus Funds can be obtained by calling or writing the Advantus Funds at 400 Robert Street North, St. Paul, Minnesota 55101-2098, 800-665-6005.

      Copies can also be inspected at the public reference facilities maintained by the SEC or obtained at prescribed rates at the addresses listed in the previous section or from the SEC’s Internet site at http://www.sec.gov.

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VOTING INFORMATION

General Information

      This solicitation is being made primarily by the mailing of this Proxy Statement/ Prospectus and the accompanying voting instruction card. Supplementary solicitations may be made by mail, telephone, telegraph, facsimile, electronic means or by personal interview by representatives of Advantus Capital. The cost of preparing, printing and mailing the Proxy Statement/ Prospectus, and all other costs incurred in connection with the solicitation of proxies will be paid by Advantus Capital. Advantus Capital also will reimburse brokerage firms and other financial intermediaries for their reasonable expenses in forwarding solicitation materials to the Beneficial Owners of shares.

Voting Rights and Required Vote

      Shareholders of each Advantus Fund are entitled to one vote for each full share held and are entitled to fractional votes for fractional shares. Any shareholder giving a proxy may revoke it at any time before it is exercised by submitting to the Secretary of the Advantus Funds a written notice of revocation or a subsequently executed proxy or by attending the Meeting and voting in person.

      Due to the pass-through voting structure of variable insurance contracts, the insurance companies will vote shares in the separate account(s). However, they are required by law to request voting instructions from Beneficial Owners and must vote shares in the separate account(s) on behalf of the Beneficial Owner(s), including shares for which no instructions have been received, in proportion to the voting instructions received.

      In order for the shareholder meeting to go forward for a Fund, there must be a quorum. This means that at least a majority of that Fund’s shares must be represent at the meeting, either in person or by proxy. Because Minnesota Life holds 100% of the shares of each Advantus Fund, their presence at the meeting in person or by proxy will meet the quorum requirement. If sufficient votes to approve a proposal are not obtained for any Fund, the proxies may propose one or more adjournments of the meeting with respect to that Fund to permit further solicitation of voting instructions. Any adjournment will require a vote in favor of the adjournment by the holders of a majority of the shares present in person or by proxy at the meeting (or any adjournment of the meeting).

      For each Advantus Fund, approval of the Reorganization Plan requires the affirmative vote, in person or by proxy, of a majority of the outstanding shares on the record date. For Advantus Asset Allocation Portfolio, Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio, Advantus Core Equity Portfolio and Advantus Value Stock Portfolio, approval of the Definitive Agreement requires the affirmative vote of the lesser of (1) 67% of the outstanding shares of that Fund present at the meeting if more than 50% of the shares of the Fund outstanding on the record date are present in person or by proxy or (2) more than 50% of the shares of the Fund outstanding on the record date.

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Record Date and Outstanding Shares

      Only shareholders of record of the Advantus Funds at the close of business on July 24, 2003 are entitled to notice of and to vote at the meeting and any postponement or adjournment thereof. On that date, each Advantus Fund had the following number of shares outstanding and entitled to vote:

	Total Number of
	Shares
Name of Fund	Outstanding
Advantus Asset Allocation Portfolio		92,528,656
Advantus Capital Appreciation Portfolio		63,075,929
Advantus Growth Portfolio		61,609,211
Advantus Core Equity Portfolio		12,138,944
Advantus Value Stock Portfolio		41,091,216
Advantus Small Company Growth Portfolio		86,667,654
Advantus International Stock Portfolio		78,728,587
Advantus Small Company Value Portfolio		17,363,135
Advantus Micro-Cap Growth Portfolio		12,386,237

Security Ownership of Certain Beneficial Owners and Management

      The officers and directors of the Advantus Funds cannot directly own shares of the portfolios without purchasing an insurance contract through a participating insurance company. As a result, as of the record date, the officers and directors of the Advantus Funds as a group beneficially owned less than 1% of the outstanding shares of each Advantus Fund. As of the record date, Minnesota Life owned 100% of the shares of each of the Advantus Funds.

Other Business

      The Board of Directors of the Advantus Funds knows of no other business to be brought before the meeting. However, if any other matters come before the meeting, it is the intention that voting instruction forms that do not contain specific restrictions to the contrary will be voted on such matters in accordance with the judgment of the persons named in the enclosed voting instruction form.

Shareholder Proposals

      Neither the Advantus Funds nor the W&R Funds hold annual or other regular meetings of shareholders. Since the Funds do not hold regular meetings of shareholders, the anticipated date of the next shareholder meeting of the Advantus Funds or the W&R Funds cannot be provided. To be considered for inclusion in the proxy statement for any subsequent meeting of shareholders, a shareholder proposal must be submitted a reasonable time before the proxy statement for that meeting is mailed. Whether a proposal is included in the proxy statement will be determined in accordance with applicable federal and state laws. The timely submission of a proposal does not guarantee its inclusion.

Board Recommendations

      After carefully considering the issues involved, the Board of Directors of the Advantus Funds has unanimously concluded that the proposed Reorganizations are in the best interests of the shareholders of each Advantus Fund and recommends that you vote to approve the Reorganization Plan. The Board of Directors also recommends that shareholders of Advantus Asset Allocation Portfolio, Advantus Capital Appreciation Portfolio, Advantus Growth Portfolio, Advantus Core Equity Portfolio and Advantus Value

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Stock Portfolio vote to approve the Definitive Agreement. Whether or not you expect to attend the meeting, you are urged to promptly sign, fill in and return the enclosed voting instruction form.

By Order of the Board of Directors,

/s/ MICHAEL J. RADMER

Michael J. Radmer

Secretary

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APPENDIX A

AGREEMENT AND PLAN OF REORGANIZATION

      THIS AGREEMENT AND PLAN OF REORGANIZATION (“Agreement”) is made as of                     , 2003, between W&R Target Funds, Inc., a Maryland corporation (“W&R”), on behalf of each segregated portfolio of assets thereof (“series”) listed on Schedule A to this Agreement (“Schedule A”) (each, an “Acquiring Fund”), and Advantus Series Fund, Inc., a Minnesota corporation (“Advantus”), on behalf of each series thereof listed on Schedule A (each, a “Target Fund”). (Each Acquiring Fund and Target Fund is sometimes referred to herein individually as a “Fund” and collectively as the “Funds,” and W&R and Advantus are sometimes referred to herein individually as an “Investment Company” and collectively as the “Investment Companies.”) All agreements, representations and warranties, actions, and obligations described herein made or to be taken or undertaken by a Fund are made and shall be taken or undertaken by W&R on behalf of each Acquiring Fund and by Advantus on behalf of each Target Fund.

      The Investment Companies wish to effect nine separate reorganizations, each described in section 368(a)(1) of the Internal Revenue Code of 1986, as amended (“Code”), and intend this Agreement to be, and adopt it as, a “plan of reorganization” within the meaning of the regulations under section 368 of the Code (“Regulations”). Each Target Fund and each Acquiring Fund has a single class of shares. Each reorganization will involve the transfer of the assets of a Target Fund to the corresponding Acquiring Fund listed on Schedule A, in exchange solely for shares of common stock of such Acquiring Fund (“Acquiring Fund Shares”) and the assumption by such Acquiring Fund of such Target Fund’s liabilities, followed by the constructive distribution of those shares pro rata to the holders of shares of such Target Fund (“Target Fund Shares”), all on the terms and conditions set forth herein. (All such transactions involving each Target Fund and its corresponding Acquiring Fund are referred to herein as a “Reorganization.”) For convenience, the balance of this Agreement refers only to a single Reorganization, one Acquiring Fund, and one Target Fund, but the provisions of this Agreement shall apply separately to each Reorganization and the Funds participating therein. The consummation of one Reorganization shall not be contingent on the consummation of any other Reorganization.

      In consideration of the mutual promises contained herein, the parties agree as follows:

1.     PLAN OF REORGANIZATION

      1.1.     Subject to the requisite approval by Target Fund shareholders and to the other terms and conditions set forth herein and on the basis of the representations and warranties contained herein, Target Fund agrees to assign, sell, convey, transfer, and deliver all of its assets described in paragraph 1.2 (“Assets”) to Acquiring Fund and Acquiring Fund agrees in exchange therefor (a) to assume all of the liabilities of Target Fund described in paragraph 1.3 (“Liabilities”), and (b) to issue and deliver to Target Fund the number of full and fractional (rounded to the third decimal place) Acquiring Fund Shares determined by dividing the value of the Assets of Target Fund less the Liabilities of Target Fund by the net asset value (“NAV”) of an Acquiring Fund Share (all computed as set forth in paragraph 2.1). Such transactions shall take place at the Closing (as defined in paragraph 3.1).

      1.2.     The Assets shall include all cash, cash equivalents, securities, receivables (including interest and dividends receivable), claims and rights of action, rights to register shares under applicable securities laws, books and records, deferred and prepaid expenses shown as assets on Target Fund’s books, and other property owned by Target Fund at the Effective Time (as defined in paragraph 3.1).

      1.3.     The Liabilities shall include all liabilities, debts, obligations, and duties of whatever kind or nature of Target Fund at the Effective Time, whether absolute, accrued, contingent, or otherwise, whether or not arising in the ordinary course of business, and whether or not specifically referred to in this Agreement, including any obligation to indemnify the directors of Advantus, acting in their capacities as such, to the fullest extent permitted by law and the amended and restated articles of incorporation (“Articles of Incorporation”) and bylaws of Advantus.

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      1.4.     In order to bind all holders of Target Fund shares to the transactions contemplated hereby, and in particular in order to bind them to the cancellation and retirement of the outstanding Target Fund shares held by them, Advantus shall, prior to the Effective Time, (a) obtain approval pursuant to Minnesota law of an amendment to its Articles of Incorporation substantially in the form attached hereto as Schedule B (“Amendment”), and (b) file the Amendment with the Secretary of State of the State of Minnesota.

      1.5.     At or immediately before the Effective Time, Target Fund shall declare and pay to its shareholders a dividend and/or other distribution in an amount large enough so that it will have distributed all of its investment company taxable income (as defined in section 852(b)(2) of the Code but computed without regard to any deduction for dividends paid) and substantially all of its net capital gain (within the meaning of section 852(b)(3) of the Code, but computed without regard to any deduction for capital gain dividends paid) for the current taxable year through the Effective Time.

      1.6.     At the Effective Time (or as soon thereafter as is reasonably practicable), Target Fund shall distribute the Acquiring Fund Shares it receives pursuant to paragraph 1.1 to Target Fund’s shareholders of record, determined as of the Effective Time (each, a “Shareholder”), in constructive exchange for their Target Fund Shares. Such distribution shall be accomplished by W&R’s transfer agent’s opening accounts on Acquiring Fund’s share transfer books in the Shareholders’ names and transferring such Acquiring Fund Shares thereto. Each Shareholder’s account shall be credited with the respective pro rata number of full and fractional (rounded to the third decimal place) Acquiring Fund Shares due that Shareholder. All outstanding Target Fund Shares, including any represented by certificates, shall simultaneously be canceled on Target Fund’s share transfer books. Acquiring Fund shall not issue certificates representing the Acquiring Fund Shares issued in connection with the Reorganization.

      1.7.     As soon as reasonably practicable after distribution of the Acquiring Fund Shares pursuant to paragraph 1.6, Advantus shall wind up the affairs of Target Fund and shall file any required final regulatory reports, including but not limited to any Form N-SAR and Rule 24f-2 filings with respect to Target Fund.

      1.8.     Any transfer taxes payable on issuance of Acquiring Fund Shares in a name other than that of the registered holder on Target Fund’s books of the Target Fund Shares constructively exchanged therefor shall be paid by the person to whom such Acquiring Fund Shares are to be issued, as a condition of such transfer.

2.     VALUATION

      For purposes of paragraph 1.1(b), the value of the Assets, the amount of the Liabilities and the NAV of an Acquiring Fund Share shall be computed as of the close of business on the date of the Closing (“Valuation Time”). The NAV of an Acquiring Fund Share shall be computed using the valuation procedures set forth in Acquiring Fund’s then-current prospectus and statement of additional information (“SAI”). The value of the Assets and the amount of the Liabilities shall be computed using the valuation procedures set forth in Target Fund’s then-current prospectus and SAI, subject to adjustment by the amount, if any, agreed to by the Investment Companies. The Investment Companies agree to use all commercially reasonable efforts to resolve, before the Valuation Time, any material differences between the value of the Assets and the amount of the Liabilities determined in accordance with the respective valuation procedures of the Funds

3.     CLOSING AND EFFECTIVE TIME

      3.1.     The Reorganization, together with related acts necessary to consummate the same (“Closing”), shall occur at the offices of Dorsey & Whitney LLP, 50 South Sixth Street, Minneapolis, Minnesota 55402, on or about                     , 2003, or at such other place and/or on such other date as to which the Investment Companies may agree. All acts taking place at the Closing shall be deemed to take place simultaneously as of the close of business on the date thereof or at such other time as to which the Investment Companies may agree (“Effective Time”). If, immediately before the Valuation Time, (a) the

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New York Stock Exchange is closed to trading or trading thereon is restricted or (b) trading or the reporting of trading on that exchange or elsewhere is disrupted, so that accurate appraisal of the value of the Assets, the amount of the Liabilities and the NAV of an Acquiring Fund Share is impracticable, the Effective Time shall be postponed until the first business day after the day when such trading has fully resumed and such reporting has been restored.

      3.2.     Advantus shall deliver to W&R at the Closing a schedule of the Assets and Liabilities as of the Effective Time, which shall set forth for all portfolio securities included therein and all other Assets, their adjusted basis and holding period, by lot, for federal income tax purposes. Advantus’ custodian shall deliver at the Closing a certificate of an authorized officer stating that (a) the Assets held by the custodian will be transferred to Acquiring Fund at the Effective Time and (b) all necessary taxes in conjunction with the delivery of the Assets, including all applicable federal and state stock transfer stamps, if any, have been paid or provision for payment has been made.

      3.3.     Advantus’ transfer agent shall deliver to W&R at the Closing a statement of an authorized officer thereof certifying that its records contain the names and addresses of the Shareholders and the number and percentage ownership of outstanding Target Fund Shares owned by each Shareholder, all as of the Effective Time. W&R’s transfer agent shall deliver at the Closing a certificate as to the opening on Acquiring Fund’s share transfer books of accounts in the Shareholders’ names. W&R shall issue and deliver a confirmation to Advantus evidencing the Acquiring Fund Shares to be credited to Target Fund at the Effective Time or provide evidence satisfactory to Advantus that such Acquiring Fund Shares have been credited to Target Fund’s account on Acquiring Fund’s books. At the Closing, each Investment Company shall deliver to the other bills of sale, checks, assignments, stock certificates, receipts, or other documents the other Investment Company or its counsel reasonably requests.

      3.4.     Each Investment Company shall deliver to the other at the Closing a certificate executed in its name by its President or a Vice President in form and substance satisfactory to the recipient and dated the Effective Time, to the effect that the representations and warranties it made in this Agreement are true and correct at the Effective Time except as they may be affected by the transactions contemplated by this Agreement.

4.     REPRESENTATIONS AND WARRANTIES

      4.1.     Advantus represents and warrants as follows:

      4.1.1.     Advantus is a corporation that is duly organized, validly existing, and in good standing under the laws of the State of Minnesota; and its Articles of Incorporation are on file with the Secretary of the State of the State of Minnesota;

      4.1.2.     Advantus is duly registered as an open-end management investment company under the Investment Company Act of 1940, as amended (“1940 Act”), and such registration is in full force and effect;

      4.1.3.     Target Fund is a duly established and designated series of Advantus; and all Target Fund Shares outstanding at the Effective Time will have been duly authorized and duly and validly issued and outstanding shares of Target Fund, fully paid and non-assessable;

      4.1.4.     At the Closing, Target Fund will have good and marketable title to the Assets and full right, power, and authority to sell, assign, transfer, and deliver the Assets free of any liens or other encumbrances; and on delivery and payment for the Assets, Acquiring Fund will acquire good and marketable title thereto;

      4.1.5.     Target Fund’s current prospectus and SAI conform in all material respects to the applicable requirements of the Securities Act of 1933, as amended (“1933 Act”), and the 1940 Act and the rules and regulations thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

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      4.1.6.     Target Fund is not in violation of, and the execution and delivery of this Agreement and consummation of the transactions contemplated hereby will not conflict with or violate, applicable law or any provision of Advantus’ Articles of Incorporation or bylaws or of any agreement, instrument, lease, or other undertaking to which Target Fund is a party or by which it is bound or result in the acceleration of any obligation, or the imposition of any penalty, under any agreement, judgment, or decree to which Target Fund is a party or by which it is bound, except as otherwise disclosed in writing to and accepted by W&R;

      4.1.7.     Except as otherwise disclosed in writing to and accepted by W&R, all material contracts and other commitments of or applicable to Target Fund (other than this Agreement and investment contracts, including options, futures, and forward contracts) will be terminated, or provision for discharge of any liabilities of Target Fund thereunder will be made, at or prior to the Effective Time, without either Fund’s incurring any liability or penalty with respect thereto and without diminishing or releasing any rights Target Fund may have had with respect to actions taken or omitted or to be taken by any other party thereto prior to the Closing;

      4.1.8.     Except as otherwise disclosed in writing to and accepted by W&R, no litigation, administrative proceeding, or investigation of or before any court or governmental body is presently pending or (to Advantus’ knowledge) threatened against Advantus or any of its properties or assets that, if adversely determined, would materially and adversely affect Target Fund’s financial condition or the conduct of its business; and Advantus knows of no facts that might form the basis for the institution of any such litigation, proceeding, or investigation and is not a party to or subject to the provisions of any order, decree, or judgment of any court or governmental body that materially or adversely affects its business or its ability to consummate the transactions contemplated hereby;

      4.1.9.     The execution, delivery, and performance of this Agreement have been duly authorized, and the Amendment shall have been duly approved, as of the date hereof by all necessary action on the part of Advantus’ board of directors; and, subject to approval by Target Fund’s shareholders, this Agreement constitutes a valid and legally binding obligation of Target Fund, enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and similar laws relating to or affecting creditors’ rights and by general principles of equity;

      4.1.10.     At the Effective Time, the performance of this Agreement shall have been duly authorized and the Amendment shall have been duly approved by all necessary action by Target Fund’s shareholders;

      4.1.11.     No governmental consents, approvals, authorizations, or filings are required under the 1933 Act, the Securities Exchange Act of 1934, as amended (“1934 Act”), the 1940 Act, or applicable state securities laws for the execution or performance of this Agreement by Advantus, except for (a) the filing with the Securities and Exchange Commission (“SEC”) of a registration statement by W&R on Form N-14 relating to the Acquiring Fund Shares issuable hereunder, and any supplement or amendment thereto (“Registration Statement”), including therein a prospectus/proxy statement (“Proxy Statement”), and (b) such consents, approvals, authorizations, and filings as have been made or received or as may be required subsequent to the Effective Time;

      4.1.12.     On the effective date of the Registration Statement, at the time of the shareholders’ meeting referred to in paragraph 5.2, and at the Effective Time, the Proxy Statement will (a) comply in all material respects with the applicable provisions of the 1933 Act, the 1934 Act, and the 1940 Act and the rules and regulations thereunder and (b) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not misleading; provided that the foregoing shall not apply to statements in or omissions from the Proxy Statement made in reliance on and in conformity with information furnished by W&R for use therein;

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      4.1.13.     There are no Liabilities (for purposes of this paragraph, as defined in paragraph 1.3 but excluding “at the Effective Time”) other than Liabilities disclosed or provided for in Advantus’ financial statements referred to in paragraph 4.1.16 and Liabilities incurred by Target Fund in the ordinary course of its business subsequent to December 31, 2002, or otherwise previously disclosed to W&R, none of which has been materially adverse to the business, assets, or results of Target Fund’s operations;

      4.1.14.     Target Fund is a “fund” as defined in section 851(g)(2) of the Code; it qualified for treatment as a regulated investment company under Subchapter M of the Code (“RIC”) for each past taxable year since it commenced operations and will continue to meet all the requirements for such qualification for its current taxable year; the assets of the Target Fund will be invested at all times through the Effective Time in a manner that ensures compliance with the foregoing; and Target Fund has no earnings and profits accumulated in any taxable year in which the provisions of Subchapter M did not apply to it;

      4.1.15.     Target Fund’s federal income tax returns, and all applicable state and local tax returns, for all taxable years through and including the taxable year ended December 31, 2001, have been timely filed and all taxes payable pursuant to such returns have been timely paid; and

      4.1.16.     Advantus’ financial statements for the year ended December 31, 2002, as set forth in its annual report on Form N-30D, fairly represent Target Fund’s financial position as of such date and the results of its operations and changes in its net assets for the period then ended.

      4.2.     W&R represents and warrants as follows:

      4.2.1.     W&R is a corporation that is duly organized, validly existing, and in good standing under the laws of the State of Maryland; and its articles of incorporation (“Articles of Incorporation”) are on file with the Secretary of State of the State of Maryland;

      4.2.2.     W&R is duly registered as an open-end management investment company under the 1940 Act, and such registration is in full force and effect;

      4.2.3.     Acquiring Fund is a duly established and designated series of W&R;

      4.2.4.     No consideration other than Acquiring Fund Shares (and Acquiring Fund’s assumption of liabilities) will be issued in exchange for the Assets in the Reorganization;

      4.2.5.     The Acquiring Fund Shares to be issued and delivered to Target Fund hereunder will have been duly authorized at the Effective Time and, when issued and delivered as provided herein, will be duly and validly issued and outstanding shares of Acquiring Fund, fully paid and non-assessable;

      4.2.6.     Acquiring Fund’s current prospectus and SAI conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

      4.2.7.     Acquiring Fund is not in violation of, and the execution and delivery of this Agreement and consummation of the transactions contemplated hereby will not conflict with or violate, applicable law or any provision of W&R’s articles of incorporation or bylaws or of any agreement, instrument, lease, or other undertaking to which Acquiring Fund is a party or by which it is bound or result in the acceleration of any obligation, or the imposition of any penalty, under any agreement, judgment, or decree to which Acquiring Fund is a party or by which it is bound, except as otherwise disclosed in writing to and accepted by Advantus;

      4.2.8.     Except as otherwise disclosed in writing to and accepted by Advantus, no litigation, administrative proceeding, or investigation of or before any court or governmental body is presently pending or (to W&R’s knowledge) threatened against W&R or any of its properties or assets that, if

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adversely determined, would materially and adversely affect Acquiring Fund’s financial condition or the conduct of its business; and W&R knows of no facts that might form the basis for the institution of any such litigation, proceeding, or investigation and is not a party to or subject to the provisions of any order, decree, or judgment of any court or governmental body that materially or adversely affects its business or its ability to consummate the transactions contemplated hereby;

      4.2.9.     The execution, delivery, and performance of this Agreement have been duly authorized as of the date hereof by all necessary action on the part of W&R’s board of directors (together with Advantus’ board of directors, the “Boards”); no approval of this Agreement by Acquiring Fund’s shareholders is required under W&R’s articles of incorporation or bylaws, or applicable law; and this Agreement constitutes a valid and legally binding obligation of Acquiring Fund, enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and similar laws relating to or affecting creditors’ rights and by general principles of equity;

      4.2.10.     No governmental consents, approvals, authorizations, or filings are required under the 1933 Act, the 1934 Act, the 1940 Act, or applicable state securities laws for the execution or performance of this Agreement by W&R, except for (a) the filing with the SEC of the Registration Statement and (b) such consents, approvals, authorizations, and filings as have been made or received or as may be required subsequent to the Effective Time;

      4.2.11.     On the effective date of the Registration Statement, at the time of the shareholders’ meeting referred to in paragraph 5.2, and at the Effective Time, the Proxy Statement will (a) comply in all material respects with the applicable provisions of the 1933 Act, the 1934 Act, and the 1940 Act and the rules and regulations thereunder and (b) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not misleading; provided that the foregoing shall not apply to statements in or omissions from the Proxy Statement made in reliance on and in conformity with information furnished by Advantus for use therein;

      4.2.12.     Acquiring Fund is a “fund” as defined in section 851(g)(2) of the Code; it qualified for treatment as a RIC for each past taxable year since it commenced operations and will continue to meet all the requirements for such qualification for its current taxable year; Acquiring Fund intends to continue to meet all such requirements for the next taxable year; and it has no earnings and profits accumulated in any taxable year in which the provisions of Subchapter M of the Code did not apply to it;

      4.2.13.     Acquiring Fund’s federal income tax returns, and all applicable state and local tax returns, for all taxable years through and including the taxable year ended December 31, 2001, have been timely filed and all taxes payable pursuant to such returns have been timely paid; and

      4.2.14.     W&R’s financial statements for the year ended December 31, 2002, as set forth in its annual report on Form N-30D, fairly represent Acquiring Fund’s financial position as of that date and the results of its operations and changes in its net assets for the year then ended.

      4.3.     Each Investment Company represents and warrants to the other as follows:

      4.3.1.     The fair market value of the Acquiring Fund Shares received by each Shareholder will be approximately equal to the fair market value of its Target Fund Shares constructively surrendered in exchange therefor;

      4.3.2.     The Shareholders will pay their own expenses, if any, incurred in connection with the Reorganization;

      4.3.3.     There is no intercompany indebtedness between the Funds that was issued or acquired, or will be settled, at a discount.

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5.     COVENANTS

      5.1.     Each Fund covenants to operate its respective business in the ordinary course between the date hereof and the Closing, it being understood that such ordinary course will include declaring and paying customary dividends and other distributions (including the dividend and/or other distribution referred to in paragraph 1.4) and changes in operations contemplated by each Fund’s normal business activities.

      5.2.     Target Fund covenants to call a shareholders’ meeting to consider and act on this Agreement and the Amendment and to take all other action necessary to obtain approval of the transactions contemplated hereby.

      5.3.     Target Fund covenants that the Acquiring Fund Shares to be delivered hereunder are not being acquired for the purpose of making any distribution thereof, other than in accordance with the terms hereof.

      5.4.     Target Fund covenants that it will assist W&R in obtaining information W&R reasonably requests concerning the beneficial ownership of Target Fund Shares.

      5.5.     Target Fund covenants that its books and records (including all books and records required to be maintained under the 1940 Act and the rules and regulations thereunder) will be turned over to W&R at the Closing.

      5.6.     Each Fund covenants to cooperate in preparing the Proxy Statement in compliance with applicable federal and state securities laws.

      5.7.     Each Fund covenants that it will, from time to time, as and when requested by the other Fund, execute and deliver or cause to be executed and delivered all such assignments and other instruments, and will take or cause to be taken such further action, as the other Fund may deem necessary or desirable in order to vest in, and confirm to, (a) Acquiring Fund, title to and possession of all the Assets, and (b) Target Fund, title to and possession of the Acquiring Fund Shares to be delivered hereunder, and otherwise to carry out the intent and purpose hereof.

      5.8.     Acquiring Fund covenants to use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act, and state securities laws it deems appropriate to continue its operations after the Effective Time.

      5.9.     Subject to this Agreement, each Fund covenants to take or cause to be taken all actions, and to do or cause to be done all things, reasonably necessary, proper, or advisable to consummate and effectuate the transactions contemplated hereby.

6.     CONDITIONS PRECEDENT

      Each Fund’s obligations hereunder shall be subject to (a) performance by the other Fund of all its obligations to be performed hereunder at or before the Effective Time, (b) all representations and warranties of the other Fund contained herein being true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated hereby, as of the Effective Time, with the same force and effect as if made at and as of the Effective Time, and (c) the following further conditions that, at or before the Effective Time:

      6.1.     This Agreement and the transactions contemplated hereby shall have been duly adopted and approved by each Board and shall have been approved by Target Fund’s shareholders in accordance with Advantus’ Articles of Incorporation and bylaws and applicable law.

      6.2.     The Amendment shall have been duly approved by Advantus’ board of directors and shall have been approved by Target Fund’s shareholders in accordance with Advantus’ Articles of Incorporation and bylaws and applicable law, and the Amendment shall have been duly filed with the Minnesota Secretary of State.

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      6.3.     All necessary filings shall have been made with the SEC and state securities authorities, and no order or directive shall have been received that any other or further action is required to permit the parties to carry out the transactions contemplated hereby. The Registration Statement shall have become effective under the 1933 Act, no stop orders suspending the effectiveness thereof shall have been issued, and the SEC shall not have issued an unfavorable report with respect to the Reorganization under section 25(b) of the 1940 Act nor instituted any proceedings seeking to enjoin consummation of the transactions contemplated hereby under section 25(c) of the 1940 Act. All consents, orders, and permits of federal, state, and local regulatory authorities (including the SEC and state securities authorities) deemed necessary by either Investment Company to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain same would not involve a risk of a material adverse effect on either Fund’s assets or properties, provided that either Investment Company may for itself waive any of such conditions.

      6.4.     At the Effective Time, no action, suit, or other proceeding shall be pending before any court or governmental agency in which it is sought to restrain or prohibit, or to obtain damages or other relief in connection with, the transactions contemplated hereby.

      6.5.     Advantus shall have received an opinion of Kirkpatrick & Lockhart LLP, counsel to W&R substantially to the effect that:

      6.5.1.     Acquiring Fund is a duly established series of W&R, a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Maryland with power under its articles of incorporation to own all its properties and assets and, to the knowledge of such counsel, to carry on its business as described in its currently effective Registration Statement on Form N-1A;

      6.5.2.     This Agreement has been duly authorized, executed, and delivered by W&R on behalf of Acquiring Fund; no approval of this Agreement by Acquiring Fund’s shareholders is required under W&R’s articles or incorporation or bylaws or applicable law; and assuming due authorization, execution, and delivery of this Agreement by Advantus on behalf of Target Fund, this Agreement is a valid and legally binding obligation of W&R with respect to Acquiring Fund, enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and similar laws relating to or affecting creditors’ rights and by general principles of equity;

      6.5.3.     The Acquiring Fund Shares to be issued and distributed to the Shareholders under this Agreement have been duly authorized and, assuming their issuance and due delivery as contemplated by this Agreement, will be validly issued, fully paid and non-assessable;

      6.5.4.     The execution and delivery of this Agreement did not, and the consummation of the transactions contemplated hereby will not, violate W&R’s articles of incorporation or bylaws or any provision of any agreement (listed on a schedule to such opinion) to which W&R (with respect to Acquiring Fund) is a party or by which it is bound or (to the knowledge of such counsel, without any independent inquiry or investigation) result in the acceleration of any obligation, or the imposition of any penalty, under any such agreement, or, to our knowledge, any judgment, or decree to which W&R (with respect to Acquiring Fund) is a party or by which it is bound, except as set forth in such opinion or as otherwise disclosed in writing to and accepted by Advantus;

      6.5.5.     No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by W&R (on behalf of Acquiring Fund) of the transactions contemplated herein, except those obtained under the 1933 Act, the 1934 Act, and the 1940 Act and those that may be required under state securities laws;

      6.5.6.     W&R is registered with the SEC as an investment company, and to the knowledge of such counsel no order has been issued or proceeding instituted to suspend such registration; and

      6.5.7.     To the knowledge of such counsel (without any independent inquiry or investigation), (a) no litigation, administrative proceeding, or investigation of or before any court or governmental

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body is pending or threatened as to W&R (with respect to Acquiring Fund) or any of its properties or assets attributable or allocable to Acquiring Fund and (b) W&R (with respect to Acquiring Fund) is not a party to or subject to the provisions of any order, decree, or judgment of any court or governmental body that materially and adversely affects Acquiring Fund’s business, except as set forth in such opinion or as otherwise disclosed in writing to and accepted by Advantus.

In rendering such opinion, such counsel may (1) rely, as to matters governed by the laws of the State of Maryland, on an opinion of competent Maryland counsel, (2) make assumptions regarding the authenticity, genuineness, and/or conformity of documents and copies thereof without independent verification thereof, (3) limit such opinion to applicable federal and state law, and (4) define the word “knowledge” and related terms to mean the knowledge of attorneys then with such counsel who have devoted substantive attention to matters directly related to this Agreement and the Reorganization.

      6.6.     W&R shall have received an opinion of Dorsey & Whitney LLP, counsel to Advantus, substantially to the effect that:

      6.6.1.     Target Fund is a duly established series of Advantus, a corporation duly organized, validly existing, and in good standing under the laws of the State of Minnesota with power under its Articles of Incorporation to own all its properties and assets and, to the knowledge of such counsel, to carry on its business as described in its currently effective Registration Statement on Form N-1A.;

      6.6.2.     This Agreement (a) has been duly authorized, executed, and delivered by Advantus on behalf of Target Fund and (b) assuming due authorization, execution, and delivery of this Agreement by W&R on behalf of Acquiring Fund, is a valid and legally binding obligation of Advantus with respect to Target Fund, enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and similar laws relating to or affecting creditors’ rights and by general principles of equity;

      6.6.3.     The execution and delivery of this Agreement did not, and the consummation of the transactions contemplated hereby will not, violate Advantus’ Articles of Incorporation or By-Laws or any provision of any agreement (known to such counsel, without any independent inquiry or investigation) to which Advantus (with respect to Target Fund) is a party or by which it is bound or (to the knowledge of such counsel, without any independent inquiry or investigation) result in the acceleration of any obligation, or the imposition of any penalty, under any agreement, judgment, or decree to which Advantus (with respect to Target Fund) is a party or by which it is bound, except as set forth in such opinion or as previously disclosed in writing to and accepted by W&R;

      6.6.4.     No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by Advantus (on behalf of Target Fund) of the transactions contemplated herein, except those obtained under the 1933 Act, the 1934 Act, and the 1940 Act and those that may be required under state securities laws;

      6.6.5.     Advantus is registered with the SEC as an investment company, and to the knowledge of such counsel no order has been issued or proceeding instituted to suspend such registration; and

      6.6.6.     To the knowledge of such counsel (without any independent inquiry or investigation), (a) no litigation, administrative proceeding, or investigation of or before any court or governmental body is pending or threatened as to Advantus (with respect to Target Fund) or any of its properties or assets attributable or allocable to Target Fund and (b) Advantus (with respect to Target Fund) is not a party to or subject to the provisions of any order, decree, or judgment of any court or governmental body that materially and adversely affects Target Fund’s business, except as set forth in such opinion or as otherwise disclosed in writing to and accepted by W&R.

In rendering such opinion, such counsel may (1) make assumptions regarding the authenticity, genuineness, and/or conformity of documents and copies thereof without independent verification thereof, (2) limit such opinion to applicable federal and state law, and (3) define the word “knowledge” and

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related terms to mean the knowledge of attorneys then with such counsel who have devoted substantive attention to matters directly related to this Agreement and the Reorganization.

      6.7.     Each Investment Company shall have received an opinion of Dorsey & Whitney LLP, addressed to and in form and substance reasonably satisfactory to it, as to the federal income tax consequences mentioned below (“Tax Opinion”). In rendering the Tax Opinion, such counsel may rely as to factual matters, exclusively and without independent verification, on the representations and warranties made in this Agreement, which such counsel may treat as representations and warranties made to it, and in separate letters addressed to such counsel and the certificates delivered pursuant to paragraph 3.4. The Tax Opinion shall be substantially to the effect that, based on the facts and assumptions stated therein and conditioned on consummation of the Reorganization in accordance with this Agreement, for federal income tax purposes:

      6.7.1.     Acquiring Fund’s acquisition of the Assets in exchange solely for Acquiring Fund Shares and its assumption of Target Fund’s liabilities, followed by Target Fund’s distribution of those shares pro rata to the Shareholders in exchange for their Target Fund Shares, will qualify as a reorganization within the meaning of section 368(a)(1) of the Code, and each Fund will be “a party to a reorganization” within the meaning of section 368(b) of the Code;

      6.7.2.     Target Fund will recognize no gain or loss on the transfer of the Assets to Acquiring Fund in exchange solely for Acquiring Fund Shares and Acquiring Fund’s assumption of Target Fund’s liabilities or on the subsequent distribution of those shares to the Shareholders in exchange for their Target Fund Shares;

      6.7.3.     Acquiring Fund will recognize no gain or loss on its receipt of the Assets in exchange solely for Acquiring Fund Shares and the assumption by Acquiring Fund of the liabilities of Target Fund;

      6.7.4.     Acquiring Fund’s basis in the Assets will be the same as Target Fund’s basis therein immediately before the Reorganization, and Acquiring Fund’s holding period for the Assets will include Target Fund’s holding period therefor;

      6.7.5.     A Shareholder will recognize no gain or loss on the exchange of all its Target Fund Shares solely for Acquiring Fund Shares pursuant to the Reorganization. Shareholders subject to taxation will recognize income upon receipt of any net investment income or net capital gains of Target Fund which are distributed by Target Fund prior to the Closing;

      6.7.6.     A Shareholder’s aggregate basis in the Acquiring Fund Shares to be received by it in the Reorganization will be the same as the aggregate basis in its Target Fund Shares to be constructively surrendered in exchange for those Acquiring Fund Shares, and its holding period for those Acquiring Fund Shares will include its holding period for those Target Fund Shares, provided the Shareholder held them as capital assets at the Effective Time; and

      6.7.7.     Acquiring Fund will succeed to and take into account the items of Target Fund described in Section 381(c) of the Code. Acquiring Fund will, in each instance, take these items into account subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and the Regulations thereunder.

Notwithstanding subparagraphs 6.7.2 and 6.7.4, the Tax Opinion may state that no opinion is expressed as to the effect of the Reorganization on the Funds or any Shareholder with respect to any asset as to which any unrealized gain or loss is required to be recognized for federal income tax purposes at the end of a taxable year (or on the termination or transfer thereof) under a mark-to-market system of accounting.

At any time before the Closing, either Investment Company may waive any of the foregoing conditions (except those set forth in paragraphs 6.1 and 6.2) if, in the judgment of its Board, such waiver will not have a material adverse effect on its Fund’s shareholders’ interests.

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7.     BROKERAGE FEES

      Each Investment Company represents and warrants to the other that there are no brokers or finders entitled to receive any payments in connection with the transactions provided for herein.

8.     EXPENSES; INDEMNIFICATION

      8.1     The parties hereto understand and agree that the cost of the transactions contemplated by this Agreement are being borne by Advantus Capital Management, Inc.

      8.2     Acquiring Fund agrees to indemnify and hold harmless Advantus, Target Fund and each of Advantus’ directors and officers from and against any and all losses, claims, damages, liabilities or expenses (including the payment of reasonable legal fees and reasonable costs of investigation) to which, jointly or severally, Advantus, Target Fund or any of Advantus’ directors or officers may become subject, insofar as any such loss, claim, damage, liability or expense (or actions with respect thereto) arises out of or is based on any breach by W&R or Acquiring Fund of any of their representations, warranties, covenants or agreements set forth in this Agreement.

      8.3     Target Fund agrees to indemnify and hold harmless W&R, Acquiring Fund and each of W&R’s directors and officers from and against any and all losses, claims, damages, liabilities or expenses (including the payment of reasonable legal fees and reasonable costs of investigation) to which, jointly or severally, W&R, Acquiring Fund or any of W&R’s directors or officers may become subject, insofar as any such loss, claim, damage, liability or expense (or actions with respect thereto) arises out of or is based on any breach by the Advantus or Target Fund of any of its representations, warranties, covenants or agreements set forth in this Agreement.

9.     ENTIRE AGREEMENT; NO SURVIVAL

      Neither party has made any representation, warranty, or covenant not set forth herein, and this Agreement constitutes the entire agreement between the parties. The representations, warranties, and covenants contained herein or in any document delivered pursuant hereto or in connection herewith shall not survive the Closing.

10.     TERMINATION OF AGREEMENT

      This Agreement may be terminated at any time at or prior to the Effective Time, whether before or after approval by Target Fund’s shareholders:

      10.1.     By either Fund (a) in the event of the other Fund’s material breach of any representation, warranty, or covenant contained herein to be performed at or prior to the Effective Time, (b) if a condition to its obligations has not been met and it reasonably appears that such condition will not or cannot be met, or (c) if the Closing has not occurred on or before December 31, 2003; or

      10.2.     By the parties’ mutual agreement.

      In the event of termination under paragraphs 10.1(c) or 10.2, there shall be no liability for damages on the part of either Fund to the other Fund.

11.     AMENDMENT

      This Agreement may be amended, modified, or supplemented at any time, notwithstanding approval thereof by Target Fund’s shareholders, in any manner mutually agreed on in writing by the parties; provided that following such approval no such amendment may have the effect of changing the provisions for determining the number of Acquiring Fund Shares to be issued to Target Fund shareholders under this Agreement to the detriment of such shareholders without their further approval.

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12.     MISCELLANEOUS

      12.1.     This Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota; provided that, in the case of any conflict between such laws and the federal securities laws, the latter shall govern.

      12.2.     Nothing expressed or implied herein is intended or shall be construed to confer upon or give any person, firm, trust, or corporation other than the parties and their respective successors and assigns any rights or remedies under or by reason of this Agreement.

      12.3.     This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been executed by each Investment Company and delivered to the other party hereto. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

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      IN WITNESS WHEREOF, each party has caused this Agreement to be executed and delivered by its duly authorized officers as of the day and year first written above.

W&R TARGET FUNDS, INC.

on behalf of its series,

W&R Balanced Portfolio

W&R Growth Portfolio

W&R Core Equity Portfolio

W&R Value Portfolio

W&R Small Cap Growth Portfolio

W&R International II Portfolio

W&R Small Cap Value Portfolio

W&R Micro Cap Growth Portfolio

By:

Its: President

ADVANTUS SERIES FUND, INC.

on behalf of its series,

Advantus Asset Allocation Portfolio

Advantus Capital Appreciation Portfolio

Advantus Growth Portfolio

Advantus Core Equity Portfolio

Advantus Value Stock Portfolio

Advantus Small Company Growth Portfolio

Advantus International Stock Portfolio

Advantus Small Company Value Portfolio

Advantus Micro-Cap Growth Portfolio

By:

Its: President

Agreed and accepted as to paragraph 8.1 only

ADVANTUS CAPITAL MANAGEMENT, INC.

By:

Its: President

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SCHEDULE A

Target Funds	Corresponding Acquiring Funds
Advantus Asset Allocation Portfolio	W&R Balanced Portfolio
Advantus Capital Appreciation Portfolio	W&R Growth Portfolio
Advantus Growth Portfolio	W&R Growth Portfolio
Advantus Core Equity Portfolio	W&R Core Equity Portfolio
Advantus Value Stock Portfolio	W&R Value Portfolio
Advantus Small Company Growth Portfolio	W&R Small Cap Growth Portfolio
Advantus International Stock Portfolio	W&R International II Portfolio
Advantus Small Company Value Portfolio	W&R Small Cap Value Portfolio
Advantus Micro-Cap Growth Portfolio	W&R Micro Cap Growth Portfolio

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SCHEDULE B

ARTICLES OF AMENDMENT

TO

AMENDED AND RESTATED ARTICLES OF INCORPORATION

OF

ADVANTUS SERIES FUND, INC.

      The undersigned officer of Advantus Series Fund, Inc. (the “Corporation”), a Minnesota corporation which is subject to the provisions of Minnesota Statutes, Chapter 302A, hereby certifies that the following amendment to the Corporation’s amended and restated articles of incorporation has been adopted by the Board of Directors and by the requisite vote of shareholders of the Corporation pursuant to said Chapter 302A:

WHEREAS, the Corporation is registered as an open-end management investment company (i.e., a mutual fund) under the Investment Company Act of 1940 and offers its shares to the public in several series, each of which represents a separate and distinct portfolio of assets.

WHEREAS, it is desirable and in the best interests of the holders of each of the series of Common Shares of the Corporation set forth in the table below (each series hereinafter an “Acquired Fund”) that the assets belonging to such Acquired Fund be sold to the corresponding series of W&R Target Funds, Inc. set forth in such table (each an “Acquiring Fund”), in exchange for common shares of the respective Acquiring Fund, which shares will be distributed pro rata to the former shareholders of the Acquired Funds:

Series of Common Shares of the Corporation	Corresponding Series of W&R Target Funds, Inc.
Series A (“Growth Portfolio”)	W&R Growth Portfolio
Series D (“Asset Allocation Portfolio”)	W&R Balanced Portfolio
Series G (“Capital Appreciation Portfolio”)	W&R Growth Portfolio
Series H (“International Stock Portfolio”)	W&R International II Portfolio
Series I (“Small Company Growth Portfolio”)	W&R Small Cap Growth Portfolio
Series N (“Value Stock Portfolio”)	W&R Value Portfolio
Series O (“Core Equity Portfolio”)	W&R Core Equity Portfolio
Series Q (“Small Company Value Portfolio”)	W&R Small Cap Value Portfolio
Series S (“Micro-Cap Growth Portfolio”)	W&R Micro Cap Growth Portfolio

WHEREAS, the Corporation and W&R Target Funds, Inc. have entered into an Agreement and Plan of Reorganization dated                     , 2003 (the “Reorganization Agreement”) providing for the foregoing transactions.

WHEREAS, the Reorganization Agreement requires that, in order to bind all holders of shares of the respective series of the Corporation to the foregoing transactions, and in particular to bind such holders to the cancellation and retirement of their outstanding shares of the Corporation, it is necessary to adopt an amendment to the Corporation’s amended and restated articles of incorporation.

NOW, THEREFORE, BE IT RESOLVED, that the Corporation’s amended and restated articles of incorporation be, and the same hereby are, amended to add the following Article IVA immediately following Article IV thereof:

      IVA. (a) For purposes of this Article IVA, the following terms shall have the following meanings:

      “Acquired Funds” means the Series A, Series D, Series G, Series H, Series I, Series N, Series O, Series Q and Series S shares of the Corporation (also known as “Growth Portfolio,” “Asset

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Allocation Portfolio,” “Capital Appreciation Portfolio,” “International Stock Portfolio,” “Small Company Growth Portfolio,” “Value Stock Portfolio,” “Core Equity Portfolio,” “Small Company Value Portfolio” and “Micro-Cap Growth Portfolio,” respectively).

      “Acquiring Funds” means the following series of W&R Target Funds, Inc., a Maryland corporation: W&R Growth Portfolio, with respect to the Series A and Series G Common Shares of the Corporation; W&R Balanced Portfolio, with respect to the Series D Common Shares of the Corporation; W&R International II Portfolio, with respect to the Series H Common Shares of the Corporation; W&R Small Cap Growth Portfolio, with respect to the Series I Common Shares of the Corporation; W&R Value Portfolio, with respect to the Series N Common Shares of the Corporation; W&R Core Equity Portfolio, with respect to the Series O Common Shares of the Corporation; W&R Small Cap Value Portfolio, with respect to the Series Q Common Shares of the Corporation; and W&R Micro Cap Growth Portfolio, with respect to the Series S Common Shares of the Corporation.

      “Effective Time” has the meaning set forth in the Reorganization Agreement.

      “Reorganization Agreement” means the Agreement and Plan of Reorganization dated                     , 2003, between the Corporation and W&R Target Funds, Inc.

      (b) At the Effective Time, the assets belonging to each Acquired Fund and the liabilities belonging to such Acquired Fund, shall be transferred to the corresponding Acquiring Fund listed in the Reorganization Agreement in exchange for shares of such Acquiring Fund, all as set forth in the Reorganization Agreement. Such Acquiring Fund shares shall be distributed to Acquired Fund shareholders as set forth in (c) below. For purposes of the foregoing, the terms “assets belonging to” and “liabilities belonging to” have the meanings assigned to them in Articles IV(C)(1) and IV(C)(2) of the Corporation’s amended and restated articles of incorporation.

      (c) At the Effective Time, each issued and outstanding Common Share of each Acquired Fund shall be, without further action, exchanged for that number of common shares of the corresponding Acquiring Fund determined in accordance with Section 1.1 of the Reorganization Agreement, and such Acquired Fund Common Shares shall be cancelled and retired. The distribution of such Acquiring Fund shares to Acquired Fund shareholders shall be accomplished in the manner set forth in Section 1.6 of the Reorganization Agreement.

      (d) From and after the Effective Time, the Acquired Fund shares cancelled and retired pursuant to (c) above shall have the status of authorized and unissued shares of the Corporation, without designation as to series or class.

      IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed these Articles of Amendment on behalf of the Corporation on                     , 2003.

ADVANTUS SERIES FUND, INC.

By 

Its Secretary

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APPENDIX B

INVESTMENT ADVISORY AGREEMENT

      THIS AGREEMENT, made this      day of                     , 2003, by and between Advantus Series Fund, Inc., a Minnesota corporation (the “Fund”) and Waddell & Reed Investment Management Company, a Kansas corporation (“Adviser”).

WITNESSETH:

      WHEREAS, the Fund is engaged in business as a diversified open-end management investment company registered as such under the Investment Company Act of 1940 (the “Investment Company Act”) and offers for sale distinct series of shares of common stock, each of which series pursues its investment objectives through separate policies;

      WHEREAS, the Adviser is engaged in rendering investment advisory services and is registered as an investment adviser under the Investment Advisers Act of 1940; and

      WHEREAS, the Fund desires to appoint the Adviser to provide investment advisory and management services to each series of the Fund set forth in Exhibit A hereto (each such series a “Portfolio” and together the “Portfolios”) in the manner and on the terms hereinafter set forth, and the Adviser is willing to furnish such services.

      NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties do hereby agree as follows:

SECTION 1.     Appointment of Adviser

      The Fund appoints the Adviser to act as the investment adviser to and manager of the Portfolios, to manage the investment and reinvestment of the assets of the Portfolios and to administer each Portfolio’s affairs subject to the supervision of the Board of Directors of the Fund on the terms and conditions set forth in this Agreement. The Adviser accepts such appointment and agrees to render the services and to assume the obligations set forth in this Agreement.

      The Adviser will for all purposes provided in this Agreement be deemed to be an independent contractor and will have no authority to act for or represent the Fund in any way or otherwise be deemed an agent of the Fund, unless otherwise expressly provided or authorized either in this Agreement or in another writing by the Fund. The Fund retains the ultimate responsibility and authority for direction and control of the services provided by the Adviser pursuant to this Agreement.

SECTION 2.     Duties of the Adviser

      The investment of the assets of the Portfolios shall at all times be subject to the applicable provisions of the Articles of Incorporation, the Bylaws, the Registration Statement, the current Prospectus and the Statement of Additional Information of the Fund and shall conform to the investment objectives, policies and restrictions of the Portfolios as set forth in such documents and as interpreted from time to time by the Board of Directors of the Fund. Within the framework of the investment objectives, policies and restrictions of the Portfolios, the Adviser shall have the sole and exclusive responsibility for the management of the Portfolios and the making and execution of all investment decisions for the Portfolios.

      In carrying out its obligations to manage the investments and reinvestments of the assets of the Portfolios, the Adviser shall: (1) obtain and evaluate pertinent economic, statistical, financial and other information affecting the economy generally and individual companies or industries the securities of which are included in the Portfolios or are under consideration for inclusion therein; (2) formulate and implement a continuous investment program for each Portfolio consistent with the investment objective and related investment policies for each such Portfolio as set forth in the Fund’s registration statement, as

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amended; and (3) take such steps as are necessary to implement the aforementioned investment programs by purchase and sale of securities including the placing of orders for such purchases and sales.

      The Adviser shall report to the Board of Directors of the Fund regularly at such times and in such detail as the Board may from time to time determine to be appropriate in order to permit the Board to determine the adherence of the Adviser to the investment objectives, policies and restrictions of the Portfolios.

      The Adviser shall, at its own expense, furnish the Fund office space and all necessary office facilities, equipment and personnel for servicing the investments of the Portfolios. The Adviser shall arrange for officers or employees of the Adviser to serve without compensation from the Fund as directors, officers or employees of the Fund if duly elected or appointed to such positions by the shareholders, directors or officers of the Fund.

      The Adviser shall maintain all records necessary in the operation of the Portfolios including records pertaining to each Portfolio’s shareholders and investments. The Adviser hereby acknowledges that all such records are the property of the Fund, and in the event that a transfer of management or investment advisory services to someone other than the Adviser should ever occur, the Adviser will promptly and at its own cost, take all steps necessary to segregate such records and deliver them to the Fund.

SECTION 3.     Compensation for Services

      In payment for the investment advisory services to be rendered by the Adviser hereunder, the Fund shall pay to the Adviser as full compensation for all services hereunder a fee computed separately for each Portfolio at an annual rate, as set forth in Schedule A to this Agreement.

      The amount of the fees as set forth in Schedule A hereto will be deducted on each business day from the value of each Portfolio prior to determining the Portfolio’s net asset value for the day and it shall be transmitted or credited to the Adviser. The fee shall be based on the net asset values of all of the issued and outstanding shares of such Portfolio as determined as of the close of each business day pursuant to the Articles of Incorporation, Bylaws and currently effective Prospectus and Statement of Additional Information of the Fund.

SECTION 4.     Allocation of Expenses

      In addition to the fee described in Section 3 hereof, the Fund shall pay all its costs and expenses which are not assumed by the Adviser. These Fund expenses include, by way of example, but not by way of limitation, all expenses incurred in the operation of the Fund including, among others, interest, taxes, brokerage fees and commissions, fees of the directors who are not employees of the Adviser or any of its affiliates, expenses of the directors’ and shareholders’ meetings, including the cost of printing and mailing proxies, expenses of insurance premiums for fidelity and other coverage, association membership dues, charges of custodians, auditing and legal expenses. The Fund will also pay the fees and bear the expense of registering and maintaining the registration of the Fund and its shares with the Securities and Exchange Commission and registering or qualifying its shares under state or other securities laws and the expense of preparing and mailing prospectuses and reports to shareholders.

      Each Portfolio will bear all expenses that may be incurred with respect to its individual operation, including but not limited to transaction expenses, advisory fees, brokerage, interest, taxes and the charges of the custodian. The Fund will pay all other expenses not attributable to a specific Portfolio or other series of the Fund, but those expenses will be allocated among such Portfolios and series on the basis of the size of their respective net assets unless otherwise allocated by the Board of Directors of the Fund.

SECTION 5.     Freedom to Deal with Third Parties

      The Adviser shall be free to render services to others, including other investment companies, similar to those rendered under this Agreement or of a different nature except as such services may conflict with the services to be rendered or the duties to be assumed hereunder. It is understood and agreed that the

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officers, directors and employees of the Adviser are not prohibited from engaging in any other business activity or from rendering services to any other person, or from serving as partners, officers, directors or employees of any other firm or corporation, including other investment companies.

SECTION 6.     Conflicts of Interest

      It is understood that directors, officers, agents and stockholders of the Fund are or may be interested in the Adviser as directors, officers, stockholders, or otherwise; that directors, officers, agents and stockholders of the Adviser are or may be interested in the Fund as directors, officers, stockholders or otherwise; that the Adviser may be interested in the Fund; and that the existence of any such dual interest shall not affect the validity hereof or of any transactions hereunder except as otherwise provided in the Articles of Incorporation of the Fund and the Adviser, respectively, or by specific provision of applicable law.

SECTION 7.     Regulation

      The Adviser shall submit to all regulatory and administrative bodies having jurisdiction over the services provided pursuant to this Agreement any information, reports or other material which any such body by reason of this Agreement may request or require pursuant to applicable laws and regulations.

SECTION 8.     Effective Date, Duration and Termination of Agreement

      This Agreement shall become effective with respect to each Portfolio on the date of its execution first written above.

      Unless sooner terminated as hereinafter provided, this Agreement shall continue in effect for a period of more than two years from the date of its execution only so long as such continuance is specifically approved at least annually by the Board of Directors of the Fund, or, with respect to each Portfolio, by the vote of a majority of the outstanding voting securities of such Portfolio, provided that in either event such continuance shall also be approved by the vote of a majority of the directors who are not interested persons of the Adviser or the Fund, cast in person at a meeting called for the purpose of voting on such approval.

      This Agreement may be terminated at any time with respect to a Portfolio, without the payment of any penalty, by the Directors of the Fund or by the vote of a majority of the outstanding voting securities of the Portfolio, or by the Adviser, upon sixty days’ written notice to the other party. This Agreement will automatically terminate, without the payment of any penalty, in the event of its assignment (as defined in the Investment Company Act).

      Wherever referred to in this Agreement, the vote or approval of the holders of a majority of the outstanding voting securities of a Portfolio shall mean the vote of 67% or more of such securities if the holders of more than 50% of such securities are present in person or by proxy or the vote of more than 50% of such securities, whichever is the lesser.

SECTION 9.     Amendments to the Agreement

      This Agreement may be amended by the parties only if such amendment is specifically approved by the vote of a majority of the outstanding voting securities of the Fund and by the vote of a majority of the directors of the Fund who are not interested persons of any party to this Agreement cast in person at a meeting called for the purpose of voting on such approval. The required shareholder approval shall be effective with respect to any Portfolio to which this Agreement relates if a majority of the outstanding voting securities of the capital stock of that Portfolio vote to approve the amendment, notwithstanding that the amendment may not have been approved by a majority of the outstanding voting securities of the Fund. Notwithstanding the foregoing, this Agreement may be amended without shareholder approval to the extent such is permitted under then-current regulatory interpretations of the Investment Company Act.

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SECTION 10.     Notice of Information

      Each party hereto shall advise the others promptly of (a) any action of the Securities and Exchange Commission or any authorities of any state or territory, of which it has knowledge, affecting registration or qualification of the Fund, and (b) the happening of any event which makes untrue any statement, or which requires the making of any change, in the registration statement or prospectus in order to make the statements therein not misleading.

SECTION 11.     Entire Agreement

      This Agreement contains the entire understanding and agreement of the parties.

SECTION 12.     Headings

      The headings in the sections of this Agreement are inserted for convenience of reference only and shall not constitute a part hereof.

SECTION 13.     Receipt of Notices

      Any notice under this Agreement shall be in writing, addressed, delivered or mailed, postage prepaid, to the other party at such address as such other party may designate in writing for the receipt of such notice.

      IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to be executed by their duly authorized officers as of the day and year first above written.

ADVANTUS SERIES FUND, INC.

By 

Dianne M. Orbison

President

WADDELL & REED INVESTMENT MANAGEMENT COMPANY

By 

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SCHEDULE A

TO THE

INVESTMENT ADVISORY AGREEMENT

                    , 2003

      As compensation for the services to be rendered and the charges and expenses to be assumed and paid by the Adviser, each Portfolio shall pay the Adviser an annual fee based on the average daily net asset value of the respective Portfolio in accordance with Section 3 of the Investment Advisory Agreement and the following schedule:

Portfolio	Fee Rate
Growth Portfolio	0.45% on the first $1 billion in assets
	0.40% on all assets in excess of $1 billion in assets
Asset Allocation Portfolio	0.35% on the first $1 billion in assets
	0.30% on all assets in excess of $1 billion in assets
Capital Appreciation Portfolio	0.50% on the first $1 billion in assets
	0.45% on all assets in excess of $1 billion in assets
Value Stock Portfolio	0.50% on the first $500 million in assets
	0.45% on the next $500 million in assets
	0.40% on all assets in excess of $1 billion in assets
Small Company Value Portfolio	0.70% on the first $1 billion in assets
	0.65% on all assets in excess of $1 billion in assets
Core Equity Portfolio	0.50%

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APPENDIX C

MANAGER’S DISCUSSION
     December 31, 2002

     An interview with Cynthia P. Prince-Fox, portfolio manager of W&R Target Funds, Inc. - Balanced Portfolio

This report relates to the operation of W&R Target Funds, Inc. - Balanced Portfolio for the fiscal year ended December 31, 2002. The following discussion, graphs and tables provide you with information regarding the Portfolio’s performance during that period. Please note that the Portfolio’s performance data does not take into account any expenses or charges associated with owning a variable life or annuity policy invested in the W&R Target Funds, Inc.

How did the Portfolio perform during the last fiscal year?

The Portfolio outperformed its stock benchmark index, but underperformed its bond benchmark index. The Portfolio’s one-year return declined 8.41 percent, compared with the S&P 500 Index (reflecting the performance of securities that generally represent the stock market), which declined 22.10 percent for the year, the Salomon Brothers Treasury/Government Sponsored/Credit Index (generally reflecting the performance of funds in the bond market), which increased 10.81 percent for the year, and the Lipper Variable Annuity Balanced Funds Universe Average (reflecting the universe of funds with similar investment objectives), which declined 10.34 percent for the period. Multiple indexes are presented because the Portfolio invests in both stocks and bonds. The Salomon Brothers Treasury/Government Sponsored/Credit Index replaces the Salomon Brothers Treasury/Government Sponsored/Corporate Index in this year’s report. We believe that the new index provides a more accurate basis for comparing the Portfolio’s performance to the types of securities in which the Portfolio invests. Both indexes are presented in this year’s report for comparison purposes.

What factors affected the Portfolio’s performance during the fiscal year?

Several factors played into overall performance. First and foremost was the contribution from the fixed income portion of the Portfolio, which significantly outperformed the equity portion, in addition to outperforming its fixed income benchmark. The primary reason for this, we feel, is that the fixed income securities held in the portfolio were primarily high quality, government-issued Treasury bonds. U.S. Treasuries outperformed most other fixed income instruments because they became a safe haven as corporate bonds experienced declines when concerns about the overall recovery in the economy came into question. On the other side of the Portfolio, our equity holdings posted declines, although the declines were not as significant as those experienced by the S&P 500 Index. Many of our defensive holdings performed well, despite a difficult economic environment. Additionally, we maintained a meaningful level of cash during the period, which also helped performance.

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MANAGER’S DISCUSSION (Continued)
     December 31, 2002

What other market conditions or events influenced the Portfolio’s performance during the fiscal year?

This marked the third consecutive year of declines for the broad equity markets. Equity investments were simply a difficult place to be, as the S&P 500 Index experienced its sharpest decline since 1974, while the technology-laden Nasdaq Composite Index lost nearly a third of its value. Nearly every industry classification in the S&P 500 saw negative returns during the year. As a result, high quality fixed income instruments were one of the few positive places to invest during most of the year.

What strategies and techniques did you employ that specifically affected the Portfolio’s performance?

We attempted to maintain a high quality fixed income portfolio and kept some cash holdings. In addition, we attempted to further protect the downside in the Portfolio by focusing our equity positions in companies with balance sheets that we felt could withstand protracted weakness in the overall economy. Our strategy of maintaining a relatively defensive equity portfolio during the year was based on our belief that equity valuations were still somewhat high and were unsustainable, given the potential for a slower economic environment.

What industries or sectors did you emphasize during the fiscal year, and what looks attractive to you going forward?

Areas of emphasis during the year were in aerospace/defense, health care and energy. We continue to believe that these sectors offer further upside in 2003. However, we remain optimistic about an economic recovery and a rebound in the financial markets. Thus we will likely shift our emphasis to companies that could benefit from a better economic environment as the year progresses.

Respectfully,

Cynthia P. Prince-Fox
Manager
Balanced Portfolio

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Comparison of Change in Value of $10,000 Investment

=====	W&R Target Balanced Portfolio(1)	$	18,007
- - - - -	S&P 500 Index(2)	$	22,768
+++++	Salomon Brothers Treasury/Government Sponsored/Corporate Index(2)	$	19,495
. . . . .	Salomon Brothers Treasury/Government Sponsored/Credit Index(2)	$	19,531
*****	Lipper Variable Annuity Balanced Funds Universe Average(2)	$	18,669

					Salomon		Salomon		Lipper
					Brothers		Brothers		Variable
					Treasury/		Treasury/		Annuity
					Government		Government		Balanced
	W&R Target		S&P		Sponsored/		Sponsored/		Funds
	Balanced		500		Corporate		Credit		Universe
	Portfolio		Index		Index		Index		Average
05/03/94 Purchase	$	10,000	$	10,000	$	10,000	$	10,000	$	10,000
12/31/94		9,963		10,398		10,046		10,046		10,028
12/31/95		12,374		14,306		11,978		11,978		12,524
12/31/96		13,758		17,591		12,327		12,327		14,197
12/31/97		16,301		23,447		13,535		13,535		16,910
12/31/98		17,714		30,176		14,814		14,814		19,310
12/31/99		19,510		36,533		14,514		14,514		21,035
12/31/00		20,903		33,178		16,219		16,219		21,488
12/31/01		19,661		29,227		17,613		17,626		20,822
12/31/02		18,007		22,768		19,495		19,531		18,669

(1)	The value of the investment in the Fund is impacted by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.
(2)	Because the Fund commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the above indexes (including income) are not available, investment in the indexes was effected as of April 30, 1994.
	Please note that the performance of the Salomon Brothers Treasury/Government Sponsored/Credit Index (Credit Index) is substantially similar to the performance of the Salomon Brothers Treasury/Government Sponsored/Corporate Index (Corporate Index). The Credit Index was introduced by Salomon Brothers in April of 2001. In creating the performance history for the Credit Index, Salomon Brothers used the performance history of the Corporate Index for the period prior to April of 2001.

Average Annual Total Return⁽³⁾

1-year period ended 12-31-02	-8.41	%
5-year period ended 12-31-02	2.01	%
8+ year period ended 12-31-02(4)	7.02	%

(3)	Performance data quoted represents past performance. Investment return and principal value will fluctuate and an investor’s shares, when redeemed, may be worth more or less than their original cost.
(4)	5-3-94 (the initial offering date) through 12-31-02.
	Past performance is not necessarily indicative of future performance. Indexes are unmanaged. Performance data quoted does not take into account any expenses or charges associated with owning a variable life or annuity policy invested in the W&R Target Funds, Inc.

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MANAGER’S DISCUSSION
     December 31, 2002

     An interview with Philip J. Sanders, portfolio manager of W&R Target Funds, Inc. - Growth Portfolio

This report relates to the operation of W&R Target Funds, Inc. - Growth Portfolio for the fiscal year ended December 31, 2002. The following discussion, graphs and tables provide you with information regarding the Portfolio’s performance during that period. Please note that the Portfolio’s performance data does not take into account any expenses or charges associated with owning a variable life or annuity policy invested in the W&R Target Funds, Inc.

How did the Portfolio perform during the last fiscal year?

The fiscal year represented the third consecutive year of broad stock market declines. In the face of this ongoing challenging market, the Portfolio posted a negative return. Nonetheless, it compared favorably with its peer group of large cap growth funds and outperformed its benchmark index. The Portfolio declined 21.30 percent over the fiscal year, compared with the S&P 500 Index (reflecting the performance of securities that generally represent the stock market), which declined 22.10 percent during the period, and the Lipper Variable Annuity Large-Cap Growth Funds Universe Average (reflecting the universe of funds with similar investment objectives), which declined 28.64 percent during the period.

What helped the Portfolio outperform its benchmark index during the fiscal year?

The Portfolio’s slight outperformance relative to its benchmark can be attributed to several factors. First, we maintained a slightly overweighted position in the energy sector throughout the year. This proved beneficial, as energy stocks benefited from rising oil and natural gas prices. The sector also benefited from increased investor interest in stocks possessing defensive investment characteristics. In addition, we feel that the Portfolio benefited from exposure to the aerospace/defense sector, which gained favor as the country’s war on terrorism moved to the forefront. We maintained minimal exposure to the poor performing telecommunications service sector, which also helped performance somewhat.

What other market conditions or events influenced the Portfolio’s performance during the fiscal year?

The Portfolio’s return was negatively influenced by a myriad of economic, fundamental and geopolitical issues. A mostly sluggish economic environment resulted in persistent downward pressure on corporate profits throughout the year. A steady stream of corporate layoffs and several high-profile accounting scandals also affected investor sentiment. Further complicating matters was a significant rise in Middle East tensions and growing prospects for war. Notwithstanding a fourth quarter rally, the environment during the course of the fiscal year resulted in broad-based market weakness throughout the period.

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MANAGER’S DISCUSSION (Continued)
     December 31, 2002

What strategies and techniques did you employ that specifically affected the Portfolio’s performance?

Our investment philosophy is based on the belief that premium long-term valuations are awarded to those companies that can generate superior levels of profitability and growth on an ongoing basis. Consequently, we continued to focus on what we feel are high quality, industry-leading companies that possess sustainable competitive advantages and are well-positioned to benefit from secular trends in the marketplace. Macroeconomic considerations and individual stock valuations also were taken into account when evaluating prices for particular securities. While we believe our investment approach is sound, it has not been enough to overcome the negative market environment in absolute terms. We believe our high quality, growth orientation will be rewarded when the investment environment improves. Many of the companies in which we invest have greatly enhanced their unique competitive positions during the economic downturn, while weaker competitors have struggled. We feel our approach likely will bring positive results when the corporate profit recovery gains momentum.

What industries or securities did you emphasize during the fiscal year, and what looks attractive to you going forward?

During 2002, primary areas of emphasis included health care, technology, financial services and, to a lesser extent, energy. For the time being, the Portfolio is relatively balanced between defensive growth (i.e., health care, consumer staples) and cyclical growth (technology, retail) issues. However, we expect to take on an increasingly cyclical bias as the year progresses. Once the economic recovery takes a firmer hold, technology, consumer cyclical and industrial issues are likely to receive increased investor attention. Most of these companies currently are experiencing below-average levels of profitability and are poised to show a significant acceleration in earnings when market demand improves. Given the relatively low levels of inventory in the system, along with improved balance sheets and cost structures, we believe that the positive earnings leverage for these companies should become increasingly attractive relative to more stable, defensive growth companies. Also, our exposure to financial services holdings is likely to be reduced, as we feel that meaningful interest rate declines are unlikely. We anticipate that our focus will continue to be on high quality companies that possess sustainable competitive advantages (that is, strong barriers to entry, such as proprietary technology and patents, economies of scale, and product differentiation).

Respectfully,

Philip J. Sanders
Manager
Growth Portfolio

C-5

Comparison of Change in Value of $10,000 Investment

- - - - -	W&R Target Growth Portfolio(1)	$	25,825
+++++	S&P 500 Index	$	24,420
*****	Lipper Variable Annuity Large-Cap Growth Funds Universe Average	$	19,840

					Lipper
					Variable
					Annuity
					Large-Cap
	W&R Target		S&P		Growth Funds
	Growth		500		Universe
	Portfolio		Index		Average
12/31/92 Purchase	$	10,000	$	10,000	$	10,000
12/31/93		11,402		11,007		11,212
12/31/94		11,674		11,153		11,031
12/31/95		16,176		15,344		14,784
12/31/96		18,183		18,867		17,689
12/31/97		22,083		25,148		22,189
12/31/98		28,114		32,366		29,851
12/31/99		37,772		39,185		41,437
12/31/00		38,306		35,586		35,521
12/31/01		32,814		31,348		27,804
12/31/02		25,825		24,420		19,840

(1) The value of the investment in the Fund is impacted by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

Average Annual Total Return⁽²⁾

1-year period ended 12-31-02	-21.30	%
5-year period ended 12-31-02	3.18	%
10-year period ended 12-31-02	9.95	%

(2)	Performance data quoted represents past performance. Investment return and principal value will fluctuate and an investor’s shares, when redeemed, may be worth more or less than their original cost.
	Past performance is not necessarily indicative of future performance. Indexes are unmanaged. Performance data quoted does not take into account any expenses or charges associated with owning a variable life or annuity policy invested in the W&R Target Funds, Inc.

C-6

MANAGER’S DISCUSSION
     December 31, 2002

     An interview with James D. Wineland, portfolio manager of W&R Target Funds, Inc. - Core Equity Portfolio

This report relates to the operation of W&R Target Funds, Inc. - Core Equity Portfolio for the fiscal year ended December 31, 2002. The following discussion, graphs and tables provide you with information regarding the Portfolio’s performance during that period. Please note that the Portfolio’s performance data does not take into account any expenses or charges associated with owning a variable life or annuity policy invested in the W&R Target Funds, Inc.

How did the Portfolio perform during the last fiscal year?

The Portfolio performed fairly well on a relative basis, as it slightly outperformed the benchmark index, although it had a negative return for the fiscal year. The Portfolio’s one-year return declined 21.63 percent during the period, compared with the S&P 500 Index (reflecting the performance of securities that generally represent the stock market), which declined 22.10 percent for the year, and the Lipper Variable Annuity Large Cap Core Funds Universe Average (reflecting the universe of funds with similar investment objectives), which declined 23.41 percent during the period.

What helped the Portfolio outperform its benchmark index during the fiscal year?

We positioned the Portfolio rather defensively for most of the period, as we had several concerns about the condition of the U.S. economy. Whether warranted or not, a steady erosion of corporate debt ratings by primary rating agencies (including Standard & Poor’s and Moody’s Corporation) created a growing perception that corporations generally were facing a meaningful decline in financial strength. In addition to our primarily defensive positioning, we believe that our holdings in the aerospace/defense sector and some of our pharmaceutical positions made important positive contributions to the Portfolio’s performance during the year.

What other market conditions or events influenced the Portfolio’s performance during the fiscal year?

It was a very difficult year for stock investors, as several factors weighed on the market, put pressure on performance and impacted consumer confidence. Potential for a war between the U.S. and Iraq kept a cloud of uncertainty over the global financial markets. In the U.S., financial news was often dominated by corporate scandals, as investor psychology was eroded by the steady stream of reports of violations of corporate accounting and ethical standards. Earnings expectations for U.S. companies continued to be lowered during much of the year, and hopes for a resilient U.S. economy in the second half of 2002 became more subdued as the year progressed.

C-7

MANAGER’S DISCUSSION (Continued)
     December 31, 2002

Finally, concern began to build regarding the strength of the U.S. consumer. While zero percent auto financing and generations-low mortgage rates provided some incentive for consumers to spend, rising rates of unemployment and very high levels of consumer debt relative to disposable income seemed to foretell a slowing rate of U.S. consumption. Global economic problems also weighed heavily on financial markets, as problems in Argentina, Brazil, Japan and Europe all contributed to a rather somber investment environment.

What strategies and techniques did you employ that specifically affected the Portfolio’s performance?

As mentioned, we kept the Portfolio positioned rather defensively in the face of difficult market conditions. Preservation of capital was a key objective in this very uncertain time. Financial strength, sustainability of earnings, and market dominance are three characteristics we continue to seek in our investment selections.

What industries or sectors did you emphasize during the fiscal year, and what looks attractive to you going forward?

In the difficult environment, we emphasized a few key sectors, including aerospace/defense, energy, health care and pharmaceuticals, electric utilities and financial services. We believe that valuations and earnings prospects in these sectors are reasonable, given the economic challenges. We do expect the U.S. and global economies to recover as 2003 progresses. However, we also expect market returns to be modest when compared to some of the tremendous growth years we generally have experienced since 1982. Going forward, we intend to continue to invest in what we believe are high quality, large cap companies that are leaders in their respective industries.

Respectfully,

James D. Wineland
Manager
Core Equity Portfolio

C-8

Comparison of Change in Value of $10,000 Investment

- - - - -	W&R Target Core Equity Portfolio(1)	$	22,896
+++++	S&P 500 Index	$	24,420
*****	Lipper Variable Annuity Large-Cap Core Funds Universe Average	$	21,263

					Lipper
					Variable
					Annuity
					Large-Cap
	W&R Target		S&P		Core Funds
	Core Equity		500		Universe
	Portfolio		Index		Average
12/31/92 Purchase	$	10,000	$	10,000	$	10,000
12/31/93		11,730		11,007		11,252
12/31/94		11,597		11,153		11,206
12/31/95		15,257		15,344		14,939
12/31/96		18,270		18,867		18,161
12/31/97		23,049		25,148		23,250
12/31/98		27,921		32,366		28,788
12/31/99		31,418		39,185		34,749
12/31/00		34,334		35,586		32,250
12/31/01		29,216		31,348		27,763
12/31/02		22,896		24,420		21,263

(1) The value of the investment in the Fund is impacted by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.

Average Annual Total Return⁽²⁾

1-year period ended 12-31-02	-21.63	%
5-year period ended 12-31-02	-0.13	%
10-year period ended 12-31-02	8.64	%

(2)	Performance data quoted represents past performance. Investment return and principal value will fluctuate and an investor’s shares, when redeemed, may be worth more or less than their original cost.
	Past performance is not necessarily indicative of future performance. Indexes are unmanaged. Performance data quoted does not take into account any expenses or charges associated with owning a variable life or annuity policy invested in the W&R Target Funds, Inc.

C-9

MANAGERS’ DISCUSSION
     December 31, 2002

     An interview with Harry M. Flavin and Cynthia P. Prince-Fox, portfolio managers of W&R Target Funds, Inc. - Value Portfolio

This report relates to the operation of W&R Target Funds, Inc. - Value Portfolio for the fiscal period ended December 31, 2002. The following discussion, graphs and tables provide you with information regarding the Portfolio’s performance during that period. Please note that the Portfolio’s performance data does not take into account any expenses or charges associated with owning a variable life or annuity policy invested in the W&R Target Funds, Inc.

How did the Portfolio perform during the last fiscal year?

Although it did show a negative return for the year, the Portfolio performed relatively well, as it outperformed its benchmark index. The Portfolio declined 12.70 percent during the period, compared with the Russell 1000 Value Index (reflecting the performance of securities that generally represent the value sector of the stock market), which declined 15.52 percent during the period, and the Lipper Variable Annuity Multi-Cap Value Funds Universe Average (generally reflecting the performance of the universe of funds with similar investment objectives), which declined 18.73 percent during the same period.

What helped the Portfolio outperform its benchmark index during the fiscal year?

Our comparatively better results were, we feel, primarily due to our emphasis on defensive stocks, such as food and aerospace/defense. In addition, we maintained significant levels of cash throughout most of the year. Overall, we believe that we have remained successful in finding good businesses trading at discounts to their intrinsic value.

What other market conditions or events influenced the Portfolio’s performance during the fiscal year?

This marked the third consecutive year of declines for the broad equity markets. Equity investments were simply a difficult place to be, as the S&P 500 Index experienced its sharpest decline since 1974, while the technology-laden Nasdaq Composite Index lost nearly a third of its value. Nearly every industry classification in the S&P 500 saw negative returns during the year. As a result, cash was a safe haven during the year.

C-10

MANAGER’S DISCUSSION (Continued)
     December 31, 2002

What strategies and techniques did you employ that specifically affected the Portfolio’s performance?

While one of our strategies was to position the Portfolio in more defensive names, we also placed a greater emphasis on stocks that we felt offered higher- than-market dividend yields. We did this because we felt that there was a strong possibility that there would be some form of relief on the double taxation of dividends. As a result, several companies that we currently hold experienced significant rallies during the final quarter of the fiscal year. We continue to believe that this will be an important theme as we move into 2003.

What industries or sectors did you emphasize during the fiscal year, and what looks attractive to you going forward?

During most of the year, we emphasized health care, energy and defense stocks. While energy and defense generally held most of their ground over the year, health care - particularly pharmaceuticals - experienced fairly significant declines, despite their purported defensive characteristics. We believe that the reason for the declines can be traced back to challenges within that industry, such as difficulties with the patent process and the broadening popularity of generic drugs, among others. While many of these issues remain, we continue to believe that pharmaceutical stocks offer attractive valuations, given the aging demographic profile in the United States.

Going forward, our weightings may change as new opportunities present themselves. We intend to continue to focus on value, earnings stability and above-average diversification as the year progresses.

Respectfully,

Harry M. Flavin
Cynthia P. Prince-Fox
Managers
Value Portfolio

Please note: Effective January 2002, Cynthia P. Prince-Fox was added as a co- manager of W&R Target Funds, Inc. - Value Portfolio. Prior to that time, Harry M. Flavin was the sole manager of the Portfolio.

C-11

Comparison of Change in Value of $10,000 Investment

=====	W&R Target Value Portfolio(1)	$	8,907
+++++	Russell 1000 Value Index(2)	$	8,074
- - - - -	Lipper Variable Annuity Multi-Cap Value Funds Universe Average(2)	$	7,902

					Lipper
					Variable
					Annuity
					Multi-Cap
			Russell		Value
	W&R Target		1000		Funds
	Value		Value		Universe
	Portfolio		Index		Average
5/1/01 Purchase		10,000		10,000		10,000
12/31/01		10,203		9,557		9,724
12/31/02		8,907		8,074		7,902

(1)	The value of the investment in the Fund is impacted by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.
(2)	Because the Fund commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the indexes (including income) are not available, investment in the indexes was effected as of April 30, 2001.

Average Annual Total Return⁽³⁾

1-year period ended 12-31-02	-12.70	%
1+ year period ended 12-31-02(4)	-6.70	%

(3)	Performance data quoted represents past performance. Investment return and principal value will fluctuate and an investor’s shares, when redeemed, may be worth more or less than their original cost.
(4)	5-1-01 (the initial offering date) through 12-31-02.
	Past performance is not necessarily indicative of future performance. Indexes are unmanaged. Performance data quoted does not take into account any expenses or charges associated with owning a variable life or annuity policy invested in the W&R Target Funds, Inc.

C-12

MANAGER’S DISCUSSION
     December 31, 2002

     An interview with Grant P. Sarris, portfolio manager of W&R Target Funds, Inc. - - Small Cap Portfolio

This report relates to the operation of W&R Target Funds, Inc. - Small Cap Portfolio for the fiscal year ended December 31, 2002. The following discussion, graphs and tables provide you with information regarding the Portfolio’s performance during that period. Please note that the Portfolio’s performance data does not take into account any expenses or charges associated with owning a variable life or annuity policy invested in the W&R Target Funds, Inc.

How did the Portfolio perform during the last fiscal year?

The Portfolio significantly outperformed its benchmark index for the year. Even so, given the difficult environment for stocks overall, it had a negative return for the year. The Portfolio declined 21.79 percent for the fiscal year, compared with the Russell 2000 Growth Index (reflecting the performance of securities that generally represent the small companies sector of the stock market), which declined 30.22 percent for the year, and the Lipper Variable Annuity Small-Cap Growth Funds Universe Average (reflecting the universe of funds with similar investment objectives), which declined 30.90 percent for the year.

What helped the Portfolio outperform its benchmark index during the fiscal year?

The Portfolio remains balanced across most sectors, with some relative emphasis on health care, consumer discretionary and energy. Also, we continue to be slightly underweight in technology and producer durables, which we believe helped our performance during the period.

What other market conditions or events influenced the Portfolio’s performance during the fiscal year?

Although the fiscal year overall was a difficult and disappointing time for small cap stocks, the market did rally a bit toward year-end. News from the economic and political fronts stopped getting worse, while corporate earnings grew modestly on a year-over-year basis. Generally, stocks that had suffered the worst up until the fourth calendar quarter of 2002 began to show the strongest growth during that quarter.

C-13

MANAGER’S DISCUSSION (Continued)
     December 31, 2002

What strategies and techniques did you employ that specifically affected the Portfolio’s performance?

The Portfolio remained quite defensive through much of the fiscal year, although by year-end we had begun to attempt to increase the risk profile. As mentioned above, we believe that our overall balance, along with our slightly underweight positions in selected sectors - such as technology - ultimately aided our performance. We have begun to gradually decrease the Portfolio’s cash position, as we feel that the market appears to be at least in a sideways trend, as opposed to the downward trend of the last three years.

What industries or sectors did you emphasize during the fiscal year, and what looks attractive to you going forward?

We are now attempting to position the Portfolio for a continued slow recovery in economic activity and corporate earnings. Our current expectation is that the market will increase at a rate very close to earnings growth, implying very little price-to-earnings ratio changes in the near future. We believe that small cap stocks should perform in-line with large caps until the recovery becomes more robust, at which point we would expect small caps to outperform. We anticipate continuing to slowly reduce the cash position of the Portfolio, while potentially increasing the number of holdings. Generally, we intend to continue to look for companies that have lowered their cost structures and that may have the opportunity for revenue growth.

Respectfully,

Grant P. Sarris
Manager
Small Cap Portfolio

Please note that, effective March 18, 2002, Grant P. Sarris became the sole portfolio manager for the Portfolio.

C-14

Comparison of Change in Value of $10,000 Investment

- - - - -	W&R Target Small Cap Portfolio(1)	$	25,908
. . . . .	Russell 2000 Growth Index(2)	$	11,870
*****	Lipper Variable Annuity Small-Cap Growth Funds Universe Average(2)	$	17,352

					Lipper Variable
					Annuity
					Small-Cap
	W&R Target		Russell 2000		Growth Funds
	Small Cap		Growth		Universe
	Portfolio		Index		Average
05/03/94 Purchase	$	10,000	$	10,000	$	10,000
12/31/94		12,091		10,137		10,747
12/31/95		15,999		13,274		14,064
12/31/96		17,360		14,756		16,593
12/31/97		22,834		16,663		19,188
12/31/98		25,315		16,869		20,097
12/31/99		38,537		24,136		32,162
12/31/00		33,779		18,738		28,821
12/31/01		33,126		17,011		25,111
12/31/02		25,908		11,870		17,352

(1)	The value of the investment in the Fund is impacted by the ongoing expenses of the Fund and assumes reinvestment of dividends and distributions.
(2)	Because the Fund commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the above indexes (including income) are not available, investment in the indexes was effected as of April 30, 1994.

Average Annual Total Return⁽³⁾

1-year period ended 12-31-02	-21.79	%
5-year period ended 12-31-02	2.56	%
8+ year period ended 12-31-02(4)	11.61	%

(3)	Performance data quoted represents past performance. Investment return and principal value will fluctuate and an investor’s shares, when redeemed, may be worth more or less than their original cost.
(4)	5-3-94 (the initial offering date) through 12-31-02.
	Past performance is not necessarily indicative of future performance. Indexes are unmanaged. Performance data quoted does not take into account any expenses or charges associated with owning a variable life or annuity policy invested in the W&R Target Funds, Inc.
	Investing in small cap stocks may carry more risk than investing in stocks of larger, more well-established companies.

C-15

APPENDIX D

W&R Target Funds, Inc.

     Supplement dated July 21, 2003 to the Prospectus dated May 1, 2003

1. The following information replaces the disclosure regarding the management of Value Portfolio in the Section entitled “Portfolio Management”:

Matthew T. Norris is primarily responsible for the management of Value Portfolio. He has held his responsibilities for Value Portfolio since July 2003. From January 2000 to June 2003, Mr. Norris was a Portfolio Manager for Advantus Capital Management, Inc. He joined Advantus Capital Management, Inc. in December 1997, first serving as an Analyst and later as a Senior Analyst. Prior to December 1997, Mr. Norris had been employed as an Equity Analyst and Portfolio Manger for Norwest Investment Management, Inc. He earned a BS degree from the University of Kansas, and an MBA from the University of Nebraska-Omaha. Mr. Norris is a Chartered Financial Analyst.

2. The name of Small Cap Portfolio is now Small Cap Growth Portfolio.

D-1

W&R TARGET FUNDS, INC.

PROSPECTUS

6300 Lamar Avenue
P. O. Box 29217

Shawnee Mission, Kansas 66201-9217

913-236-2000

888-WADDELL

May 1, 2003

W&R Target Funds, Inc. (Fund) is a management investment company, commonly known as a mutual fund, that has twelve separate Portfolios, each with separate goals and investment policies.

• Asset Strategy Portfolio seeks high total return over the long term.

• Balanced Portfolio seeks, as a primary goal, current income, with a secondary goal of long-term appreciation of capital.

• Bond Portfolio seeks a reasonable return with emphasis on preservation of capital.

• Core Equity Portfolio seeks capital growth and income.

• Growth Portfolio seeks capital growth, with a secondary goal of current income.

• High Income Portfolio seeks, as a primary goal, high current income, with a secondary goal of capital growth.

• International Portfolio seeks, as a primary goal, long-term appreciation of capital, with a secondary goal of current income.

• Limited-Term Bond Portfolio seeks a high level of current income consistent with preservation of capital.

• Money Market Portfolio seeks maximum current income consistent with stability of principal.

• Science and Technology Portfolio seeks long-term capital growth.

• Small Cap Portfolio seeks growth of capital.

• Value Portfolio seeks long-term capital appreciation.

This Prospectus contains concise information about the Fund of which you should be aware before applying for certain variable life insurance policies and variable annuity contracts (Policies) offered by Participating Insurance Companies. This Prospectus should be read together with the Prospectus for the particular Policy.

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

D-2

An Overview of the Portfolios

Asset Strategy Portfolio

Goal

     Asset Strategy Portfolio seeks high total return over the long term.

Principal Strategy

Asset Strategy Portfolio 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 Portfolio 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, up to 35% of the Portfolio’s total assets, of high yield/high risk bonds, or junk bonds, 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 Portfolio may invest in both domestic and foreign securities.

The Portfolio selects a mix which represents the way the Portfolio’s investments will generally be allocated over the long term as indicated below. This mix will vary over shorter time periods as WRIMCO changes the Portfolio’s holdings based on the 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 Portfolio

     A variety of factors can affect the investment performance of Asset Strategy Portfolio. These include:

• WRIMCO’s skill in allocating the Portfolio’s assets among different types of investments

• the mix of securities in the 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 Portfolio’s fixed-income securities, especially bonds with longer maturities, to decline

D-3

• prepayment of higher-yielding bonds held by the Portfolio

• the earnings performance, credit quality and other conditions of the companies whose securities the Portfolio holds

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

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

Investments by the Portfolio in high yield/high risk 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 Portfolio 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 Portfolio’s shares will change and you could lose money on your investment. An investment in the Portfolio 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 Portfolio may be appropriate for you. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

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

• The bar chart presents the average annual total returns since these shares were first offered and shows how performance has varied from year to year.

• The performance table shows average annual total returns and compares them to the market indicators listed.

• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio’s past performance does not necessarily indicate how it will perform in the future.

The Portfolio shares are sold only to insurance company separate accounts that fund certain variable annuity and variable life contracts. If the sales charges and expenses charged by these contracts were included, the total returns shown would be lower.

D-4

AVERAGE ANNUAL TOTAL RETURNS							Life of
as of December 31, 2002 (%)	1 Year			5 Years			Portfolio*
Shares of Asset Strategy Portfolio		3.28	%		9.03	%		8.69	%
S&P 500 Index		-22.10	%		-0.59	%		9.02	%
Citigroup Broad Investment Grade Index		10.09	%		7.53	%		8.10	%
Citigroup Short-Term Index for 1 Month Certificates of Deposit		1.79	%		4.68	%		5.04	%
Lipper Variable Annuity Flexible Portfolio Funds Universe Average		-10.32	%		1.66	%		7.35	%

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 Portfolio.

*Since May 1, 1995, the date on which the Portfolio commenced operations. Because the Portfolio commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the above indexes (including income) are not available, index performance is calculated from April 30, 1995.

FEES AND EXPENSES

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. The table and the example below do not reflect any fees and expenses imposed under the variable annuity or variable life insurance contracts through which this Portfolio is offered. See the contract prospectus for a description of those fees and expenses.

There are no fees or charges to buy and sell shares of the Portfolio, reinvest dividends or exchange into other Portfolios.

ANNUAL PORTFOLIO OPERATING EXPENSES
(expenses that are deducted from Portfolio assets)
Management Fees	0.70	%
Distribution and Service (12b-1) Fees	0.25	%
Other Expenses	0.09	%
Total Annual Portfolio Operating Expenses	1.04	%

D-5

EXAMPLE

This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1 Year	3 Years		5 Years		10 Years
$106	$	331	$	574	$	1,271

BALANCED PORTFOLIO

Goals

Balanced Portfolio seeks, as a primary goal, to provide current income to the extent that, in WRIMCO’s opinion, market and economic conditions permit. As a secondary goal, the Portfolio seeks long-term appreciation of capital.

Principal Strategies

Balanced Portfolio invests primarily in a mix of stocks, debt securities and short-term instruments, depending on market conditions. In its equity investments, the Portfolio invests primarily in medium to large, well-established companies, that typically issue dividend-producing securities. The majority of the Portfolio’s debt holdings are either U.S. Government securities or investment grade corporate bonds, that include bonds rated BBB and higher by S&P or Baa and higher by Moody’s or, if unrated, deemed by WRIMCO to be of comparable quality. The Portfolio has no limitations on the range of maturities of the debt securities in which it may invest.

WRIMCO may look at a number of factors in selecting securities for the Portfolio. For equity investments, WRIMCO may emphasize a blend of value and growth potential. For value securities, WRIMCO looks for undervalued companies whose asset value or earnings power is not reflected in the price of their stock. In selecting growth securities, WRIMCO seeks to identify securities whose earnings are likely to grow faster than the economy. In selecting debt securities for the Portfolio, WRIMCO seeks high-quality securities with minimal credit risk.

Generally, in determining whether to sell an equity security, WRIMCO uses the same analysis that it uses in order to determine if the equity security is still undervalued or has ceased to offer the desired growth potential. In determining whether to sell a debt security, WRIMCO will consider whether the debt security continues to maintain its minimal credit risk. WRIMCO may also sell a security if the security ceases to produce income or otherwise to take advantage of more attractive investment opportunities and/or to raise cash.

Principal Risks of Investing in the Portfolio

A variety of factors can affect the investment performance of Balanced Portfolio. These include:

• WRIMCO’s skill in allocating the Portfolio’s assets among different types of investments

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

• the credit quality, earnings performance and other conditions of the issuers whose securities the Portfolio holds

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

The Portfolio may also invest 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 Portfolio’s shares will change and you could lose money on your investment. An investment in the Portfolio 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

Balanced Portfolio is designed for investors seeking current income and the potential for long-term appreciation of capital. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

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

• The bar chart presents the average annual total returns since these shares were first offered and shows how performance has varied from year to year.

• The performance table shows average annual total returns and compares them to the market indicators listed.

• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio’s past performance does not necessarily indicate how it will perform in the future.

The Portfolio shares are sold only to insurance company separate accounts that fund certain variable annuity and variable life contracts. If the sales charges and expenses charged by these contracts were included, the total returns shown would be lower.

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AVERAGE ANNUAL TOTAL RETURNS							Life of
as of December 31, 2002 (%)	1 Year			5 Years			Portfolio*
Shares of Balanced Portfolio		-8.41	%		2.01	%		7.02	%
S&P 500 Index		-22.10	%		-0.59	%		9.96	%
Citigroup Treasury/ Government Sponsored/Credit Index		10.81	%		7.61	%		8.02	%
Lipper Variable Annuity Balanced Funds Universe Average		-10.17	%		1.92	%		7.71	%

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 goals of the Portfolio.

*Since May 3, 1994, the date on which the Portfolio commenced operations. Because the Portfolio commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the above indexes (including income) are not available, index performance is calculated from April 30, 1994.

FEES AND EXPENSES

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. The table and the example below do not reflect any fees and expenses imposed under the variable annuity or variable life insurance contracts through which this Portfolio is offered. See the contract prospectus for a description of those fees and expenses.

There are no fees or charges to buy and sell shares of the Portfolio, reinvest dividends or exchange into other Portfolios.

ANNUAL PORTFOLIO OPERATING EXPENSES
(expenses that are deducted from Portfolio assets)
Management Fees	0.70	%
Distribution and Service (12b-1) Fees	0.25	%
Other Expenses	0.06	%
Total Annual Portfolio Operating Expenses	1.01	%

EXAMPLE

This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1 Year	3 Years		5 Years		10 Years
$103	$	322	$	558	$	1,236

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BOND PORTFOLIO

Goal

Bond Portfolio seeks a reasonable return with emphasis on preservation of capital.

Principal Strategies

Bond Portfolio seeks to achieve its goal by investing primarily in domestic, and to a lesser extent foreign, debt securities usually of investment grade, including bonds rated BBB and higher by S&P and Baa and higher by Moody’s or, if unrated, deemed by WRIMCO to be of comparable quality. The Portfolio has no limitations regarding the maturity, duration or dollar weighted average of its holdings; the Portfolio may invest in debt securities with varying maturities and can invest in securities of companies of any size.

In selecting debt securities for the Portfolio, WRIMCO considers yield and relative safety and, in the case of convertible securities, the possibility of capital growth. WRIMCO may also look at many other factors. These include the issuer’s past, present and estimated future:

• financial strength

• cash flow

• management

• borrowing requirements

• responsiveness to changes in interest rates and business conditions

As well, WRIMCO considers the maturity of the obligation and the size or nature of the bond issue.

In general, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses in buying securities. For example, WRIMCO may sell a holding if the issuer’s financial strength weakens and/or the yield and relative safety of the security declines. WRIMCO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Portfolio

A variety of factors can affect the investment performance of Bond Portfolio. These include:

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

• prepayment of higher-yielding bonds held by the Portfolio

• the credit quality, earnings performance and other conditions of the companies whose securities the Portfolio holds

• changes in the maturities of bonds owned by the Portfolio

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

• WRIMCO’s skill in evaluating and managing the interest rate and credit risks of the Portfolio

• adverse bond and stock market conditions, sometimes in response to general market or industry news, that may cause the prices of the Portfolio’s holdings to fall as part of a broad market decline.

As with any mutual fund, the value of the Portfolio’s shares will change and you could lose money on your investment. An investment in the Portfolio 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

Bond Portfolio is designed for investors who primarily seek current income while also seeking to preserve investment principal. You should consider whether the Portfolio fits your particular investment objectives.

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PERFORMANCE

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

• The bar chart presents the average annual total returns and shows how performance has varied from year to year over the past ten calendar years.

• The performance table shows average annual total returns and compares them to the market indicators listed.

• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio’s past performance does not necessarily indicate how it will perform in the future.

The Portfolio shares are sold only to insurance company separate accounts that fund certain variable annuity and variable life contracts. If the sales charges and expenses charged by these contracts were included, the total returns shown would be lower.

AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 2002 (%)	1 Year			5 Years			10 Years
Shares of Bond Portfolio		8.98	%		6.36	%		7.01	%
Citigroup Broad Investment Grade Index		10.09	%		7.53	%		7.53	%
Lipper Variable Annuity Corporate Debt Funds Rated Universe Average		8.53	%		6.52	%		6.96	%

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 Portfolio.

FEES AND EXPENSES

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. The table and the example below do not reflect any fees and expenses imposed under the variable annuity or variable life insurance contracts through which this Portfolio is offered. See the contract prospectus for a description of those fees and expenses.

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There are no fees or charges to buy and sell shares of the Portfolio, reinvest dividends or exchange into other Portfolios.

ANNUAL PORTFOLIO OPERATING EXPENSES
(expenses that are deducted from Portfolio assets)
Management Fees	0.52	%
Distribution and Service (12b-1) Fees	0.25	%
Other Expenses	0.06	%
Total Annual Portfolio Operating Expenses	0.83	%

EXAMPLE

This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1 Year	3 Years		5 Years		10 Years
$85	$	265	$	460	$	1,025

CORE EQUITY PORTFOLIO

Goals

Core Equity Portfolio seeks capital growth and income.

Principal Strategies

Core Equity Portfolio 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. The Portfolio invests in securities that have the potential for capital appreciation, or that WRIMCO expects to resist market decline. Although the Portfolio 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 a 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 continued dividend payments. WRIMCO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

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Principal Risks of Investing in the Portfolio

A variety of factors can affect the investment performance of Core Equity Portfolio. These include:

• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio’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 Portfolio holds

• WRIMCO’s skill in evaluating and selecting securities for the Portfolio

Investments in foreign securities may 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 Portfolio’s shares will change and you could lose money on your investment. An investment in the Portfolio 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 Portfolio is designed for investors who seek capital growth and income. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

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

• The bar chart presents the average annual total returns and shows how performance has varied from year to year over the past ten calendar years.

• The performance table shows average annual total returns and compares them to the market indicators listed.

• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio’s past performance does not necessarily indicate how it will perform in the future.

The Portfolio shares are sold only to insurance company separate accounts that fund certain variable annuity and variable life contracts. If the sales charges and expenses charged by these contracts were included, the total returns shown would be lower.

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AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 2002 (%)	1 Year			5 Years			10 Years
Shares of Core Equity Portfolio		-21.63	%		-0.13	%		8.64	%
S&P 500 Index		-22.10	%		-0.59	%		9.34	%
Lipper Variable Annuity Large-Cap Core Funds Universe Average		-23.51	%		-2.13	%		7.28	%

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 Portfolio.

FEES AND EXPENSES

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. The table and the example below do not reflect any fees and expenses imposed under the variable annuity or variable life insurance contracts through which this Portfolio is offered. See the contract prospectus for a description of those fees and expenses.

There are no fees or charges to buy and sell shares of the Portfolio, reinvest dividends or exchange into other Portfolios.

ANNUAL PORTFOLIO OPERATING EXPENSES
(expenses that are deducted from Portfolio assets)
Management Fees	0.70	%
Distribution and Service (12b-1) Fees	0.25	%
Other Expenses	0.04	%
Total Annual Portfolio Operating Expenses	0.99	%

EXAMPLE

This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1 Year	3 Years		5 Years		10 Years
$101	$	315	$	547	$	1,213

GROWTH PORTFOLIO

Goals

Growth Portfolio seeks capital growth, with current income as a secondary goal.

Principal Strategies

Growth Portfolio seeks to achieve its goals by investing primarily in common stocks of U.S. and foreign companies. The Portfolio typically invests in companies having a market capitalization of at least $1 billion, although it may invest in companies of any size. The Portfolio generally emphasizes investments

12

D-13

in the faster growing sectors of the economy, such as the technology, healthcare, financial services and consumer-oriented sectors.

In selecting securities for the Portfolio, WRIMCO utilizes a combination of quantitative and fundamental research. Quantitative research focuses on identifying companies with attractive growth, profitability and valuation measures. Fundamental research analyzes a specific company to examine its competitive position within its industry and to determine its growth expectations. A security may be sold when WRIMCO believes the company’s growth and/or profitability characteristics are deteriorating, it no longer maintains a competitive advantage or more attractive investment opportunities arise.

Principal Risks of Investing in the Portfolio

     A variety of factors can affect the investment performance of Growth Portfolio. These include:

• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio’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 Portfolio holds

• the mix of securities in the Portfolio, particularly the relative weightings in, and exposure to, different sectors and industries

• WRIMCO’s skill in evaluating and selecting securities for the Portfolio

The Portfolio may invest, to a lesser degree, in foreign securities, which present additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

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

As with any mutual fund, the value of the Portfolio’s shares will change and you could lose money on your investment. An investment in the Portfolio 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

Growth Portfolio is designed for investors seeking long-term capital appreciation from investment in faster-growing companies and sectors of the economy. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

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

• The bar chart presents the average annual total returns and shows how performance has varied from year to year over the past ten calendar years.

• The performance table shows average annual total returns and compares them to the market indicators listed.

• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio’s past performance does not necessarily indicate how it will perform in the future.

The Portfolio shares are sold only to insurance company separate accounts that fund certain variable annuity and variable life contracts. If the sales charges and expenses charged by these contracts were included, the total returns shown would be lower.

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AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 2002 (%)	1 Year			5 Years			10 Years
Shares of Growth Portfolio		-21.30	%		3.18	%		9.95	%
S&P 500 Index		-22.10	%		-0.59	%		9.34	%
Lipper Variable Annuity Large-Cap Growth Funds Universe Average		-28.65	%		-2.80	%		6.45	%

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 Portfolio.

FEES AND EXPENSES

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. The table and the example below do not reflect any fees and expenses imposed under the variable annuity or variable life insurance contracts through which this Portfolio is offered. See the contract prospectus for a description of those fees and expenses.

There are no fees or charges to buy and sell shares of the Portfolio, reinvest dividends or exchange into other Portfolios.

ANNUAL PORTFOLIO OPERATING EXPENSES
(expenses that are deducted from Portfolio assets)
Management Fees	0.70	%
Distribution and Service (12b-1) Fees	0.25	%
Other Expenses	0.04	%
Total Annual Portfolio Operating Expenses	0.99	%

D-15

EXAMPLE

This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1 Year	3 Years		5 Years		10 Years
$101	$	315	$	547	$	1,213

HIGH INCOME PORTFOLIO

Goals

High Income Portfolio seeks, as its primary goal, a high level of current income. As a secondary goal, the Portfolio seeks capital growth when consistent with its primary goal.

Principal Strategies

High Income Portfolio seeks to achieve its goals by investing primarily in high-yield, high-risk, fixed-income securities of U.S. and foreign issuers, the risks of which are, in the judgment of WRIMCO, consistent with the Portfolio’s goals. The Portfolio invests primarily in lower quality bonds, commonly called junk bonds, which include bonds rated BB and below by S&P and Ba and below by Moody’s, or if unrated deemed by WRIMCO to be of comparable quality. The Portfolio may invest an unlimited amount of its total assets in junk bonds. The Portfolio may invest in bonds of any maturity and companies of any size.

The Portfolio may invest up to 20% of its total assets in common stocks in order to seek capital growth. The Portfolio emphasizes a blend of value and growth in its selection of common stock. Value stocks are those whose earnings 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.

WRIMCO may look at a number of factors in selecting securities for the Portfolio. These factors include the issuer’s past, current and estimated future:

• financial strength

• cash flow

• management

• borrowing requirements

• responsiveness to changes in interest rates and business conditions

Generally, in determining whether to sell a debt security, WRIMCO uses the same type of analysis that it uses in buying debt securities. For example, WRIMCO may sell a holding if the issuer’s financial strength declines, or is anticipated to decline, to an unacceptable level, or if management of the company weakens. WRIMCO may sell a security if the competitive conditions of a particular industry have increased and WRIMCO believes the Portfolio should, therefore, reduce its exposure to such industry. WRIMCO may also sell a security if, in its opinion, the price of the security has risen to fully reflect the issuer’s improved creditworthiness and other investments with greater potential exist. WRIMCO may choose to sell an equity security if the issuer’s growth potential has diminished. WRIMCO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

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Principal Risks of Investing in the Portfolio

     A variety of factors can affect the investment performance of High Income Portfolio. These include:

• the credit quality, earnings performance and other conditions of the companies whose securities the Portfolio holds

• the susceptibility of junk bonds to greater risks of nonpayment or default, price volatility, and lack of liquidity compared to higher-rated bonds

• an increase in interest rates, which may cause the value of a bond, especially bonds with longer maturities, held by the Portfolio to decline

• the mix of securities in the Portfolio, particularly the relative weightings in, and exposure to, different sectors and industries

• changes in the maturities of bonds owned by the Portfolio

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

• WRIMCO’s skill in evaluating and managing the interest rate and credit risks of the Portfolio

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

Investments in foreign securities also 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 Portfolio’s shares will change and you could lose money on your investment. An investment in the Portfolio 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

High Income Portfolio is designed for investors who primarily seek a level of current income that is higher than is normally available with securities in the higher rated categories and, secondarily, seek capital growth when consistent with the goal of income. The Portfolio is not suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

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

• The bar chart presents the average annual total returns and shows how performance has varied from year to year over the past ten calendar years.

• The performance table shows average annual total returns and compares them to the market indicators listed.

• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio’s past performance does not necessarily indicate how it will perform in the future.

The Portfolio shares are sold only to insurance company separate accounts that fund certain variable annuity and variable life contracts. If the sales charges and expenses charged by these contracts were included, the total returns shown would be lower.

D-17

AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 2002 (%)	1 Year			5 Years			10 Years
Shares of High Income Portfolio		-2.02	%		0.52	%		5.97	%
Citigroup High Yield Market Index		-1.53	%		0.64	%		6.08	%
Lipper Variable Annuity High Current Yield Funds Universe Average		-0.69	%		-1.12	%		5.10	%

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 Portfolio.

FEES AND EXPENSES

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. The table and the example below do not reflect any fees and expenses imposed under the variable annuity or variable life insurance contracts through which this Portfolio is offered. See the contract prospectus for a description of those fees and expenses.

There are no fees or charges to buy and sell shares of the Portfolio, reinvest dividends or exchange into other Portfolios.

ANNUAL PORTFOLIO OPERATING EXPENSES
(expenses that are deducted from Portfolio assets)
Management Fees	0.63	%
Distribution and Service (12b-1) Fees	0.25	%
Other Expenses	0.07	%
Total Annual Portfolio Operating Expenses	0.95	%

D-18

EXAMPLE

This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1 Year	3 Years		5 Years		10 Years
$97	$	303	$	525	$	1,166

INTERNATIONAL PORTFOLIO

Goals

International Portfolio seeks, as a primary goal, long-term appreciation of capital. As a secondary goal, the Portfolio seeks current income.

Principal Strategies

International Portfolio 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 and represented by the restructuring and/or privatization of particular industries. The Portfolio emphasizes growth stocks which are securities of companies whose earnings WRIMCO believes are likely to grow faster than the economy. The Portfolio primarily invests in issuers of developed countries, and may invest in companies of any size.

WRIMCO may look at a number of factors in selecting securities for the 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 no longer offers 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 Portfolio

     A variety of factors can affect the investment performance of International Portfolio. These include:

• changes in foreign exchange rates, which may affect the value of the securities the Portfolio holds

• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds

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

• WRIMCO’s skill in evaluating and selecting securities for the Portfolio

D-19

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, due to certain international monetary or political conditions, the Portfolio’s assets may be more volatile than other investment choices.

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

As with any mutual fund, the value of the Portfolio’s shares will change and you could lose money on your investment. An investment in the Portfolio 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 Portfolio is designed for investors seeking long-term appreciation of capital by investing primarily in securities issued by foreign companies. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

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

• The bar chart presents the average annual total returns since these shares were first offered and shows how performance has varied from year to year.

• The performance table shows average annual total returns and compares them to the market indicators listed.

• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio’s past performance does not necessarily indicate how it will perform in the future.

The Portfolio shares are sold only to insurance company separate accounts that fund certain variable annuity and variable life contracts. If the sales charges and expenses charged by these contracts were included, the total returns shown would be lower.

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AVERAGE ANNUAL TOTAL RETURNS							Life of
as of December 31, 2002 (%)	1 Year			5 Years			Portfolio*
Shares of International Portfolio		-18.15	%		1.50	%		5.24	%
Morgan Stanley Capital International E.A.FE. Index		-15.94	%		-2.89	%		0.40	%
Lipper Variable Annuity International Funds Universe Average		-16.53	%		-2.28	%		2.11	%

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 Portfolio.

*Since May 3, 1994, the date on which the Portfolio commenced operations. Because the Portfolio commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the above index (including income) are not available, index performance is calculated from April 30, 1994.

FEES AND EXPENSES

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. The table and the example below do not reflect any fees and expenses imposed under the variable annuity or variable life insurance contracts through which this Portfolio is offered. See the contract prospectus for a description of those fees and expenses.

There are no fees or charges to buy and sell shares of the Portfolio, reinvest dividends or exchange into other Portfolios.

ANNUAL PORTFOLIO OPERATING EXPENSES
(expenses that are deducted from Portfolio assets)
Management Fees	0.85	%
Distribution and Service (12b-1) Fees	0.25	%
Other Expenses	0.20	%
Total Annual Portfolio Operating Expenses	1.30	%

EXAMPLE

This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1 Year		3 Years		5 Years		10 Years
$	132	$	412	$	713	$	1,568

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LIMITED-TERM BOND PORTFOLIO

Goal

Limited-Term Bond Portfolio seeks to provide a high level of current income consistent with preservation of capital.

Principal Strategies

Limited-Term Bond Portfolio seeks to achieve its goal by investing primarily in investment-grade debt securities of U.S. issuers, including corporate bonds, mortgage-backed securities and U.S. Government securities. The Portfolio seeks to identify relative value opportunities between these sectors of the fixed-income market. The Portfolio maintains a dollar-weighted average portfolio maturity of not less than two years and not more than five years. The Portfolio may invest in companies of any size.

WRIMCO may look at a number of factors in selecting securities for the Portfolio. These include:

• the security’s current coupon

• the maturity of the security

• the relative value of the security

• the creditworthiness of the particular issuer (if not backed by the full faith and credit of the U.S. Treasury)

• prepayment risks for mortgage-backed securities and other debt securities with call provisions

Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses in buying securities. WRIMCO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Portfolio

A variety of factors can affect the investment performance of Limited-Term Bond Portfolio. These include:

• an increase in interest rates, which may cause the value of the Portfolio’s fixed-income securities to decline

• the credit quality, earnings performance and other conditions of the issuers whose securities the Portfolio holds

• prepayment of higher-yielding bonds and mortgage-backed securities held by the Portfolio

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

• WRIMCO’s skill in evaluating and managing the interest rate and credit risks of the Portfolio

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 Portfolio’s shares will change and you could lose money on your investment. An investment in the Portfolio 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

Limited-Term Bond Portfolio is designed for investors seeking a high level of current income consistent with preservation of capital. You should consider whether the Portfolio fits your particular investment objectives.

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PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in the Limited-Term Bond Portfolio by showing changes in the Portfolio’s performance from year to year and by showing how the Portfolio’s average annual total returns for the periods shown compare with those of a broad measure of market performance.

• The bar chart presents the average annual total returns since these shares were first offered and shows how performance has varied from year to year.

• The performance table shows average annual total returns and compares them to the market indicators listed.

• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio’s past performance does not necessarily indicate how it will perform in the future.

The Portfolio shares are sold only to insurance company separate accounts that fund certain variable annuity and variable life contracts. If the sales charges and expenses charged by these contracts were included, the total returns shown would be lower.

AVERAGE ANNUAL TOTAL RETURNS							Life of
as of December 31, 2002 (%)	1 Year			5 Years			Portfolio*
Shares of Limited-Term Bond Portfolio		5.43	%		6.32	%		6.50	%
Citigroup 1-5 Year Treasury/ Government Sponsored/ Credit Index		8.08	%		7.16	%		7.06	%
Lipper Variable Annuity Short-Intermediate Investment Grade Debt Funds Universe Average		5.82	%		6.05	%		6.17	%

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 Portfolio.

*Since May 3, 1994, the date on which the Portfolio commenced operations. Because the Portfolio commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the above index (including income) are not available, index performance is calculated from April 30, 1994.

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FEES AND EXPENSES

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. The table and the example below do not reflect any fees and expenses imposed under the variable annuity or variable life insurance contracts through which this Portfolio is offered. See the contract prospectus for a description of those fees and expenses.

There are no fees or charges to buy and sell shares of the Portfolio, reinvest dividends or exchange into other Portfolios.

ANNUAL PORTFOLIO OPERATING EXPENSES
(expenses that are deducted from Portfolio assets)
Management Fees	0.50	%
Distribution and Service (12b-1) Fees	0.25	%
Other Expenses	0.12	%
Total Annual Portfolio Operating Expenses	0.87	%

EXAMPLE

This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1 Year		3 Years		5 Years		10 Years
$	89	$	278	$	482	$	1,073

MONEY MARKET PORTFOLIO

Goal

Money Market Portfolio seeks maximum current income consistent with stability of principal.

Principal Strategies

Money Market Portfolio seeks to achieve its goal by investing in U.S. dollar-denominated, high-quality money market obligations and instruments. High quality indicates that the securities will be rated in one of the two highest categories by the requisite nationally recognized statistical rating organization (NRSRO), as defined in Rule 2a-7 of the Investment Company Act of 1940, as amended (Rule 2a-7), or if unrated, will be of comparable quality as determined by WRIMCO. The Portfolio seeks, as well, to maintain a net asset value (NAV) of $1.00 per share. The Portfolio maintains a dollar-weighted average maturity of 90 days or less, and the Portfolio invests only in securities with a remaining maturity of not more than 397 calendar days.

Principal Risks of Investing in the Portfolio

A variety of factors can affect the investment performance of Money Market Portfolio. These include:

• an increase in interest rates, which can cause the value of the Portfolio’s holdings, especially securities with longer maturities, to decline

• the credit quality and other conditions of the issuers whose securities the Portfolio holds

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• adverse bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio’s holdings to fall as part of a broad market decline

• the skill of WRIMCO in evaluating and managing the interest rate and credit risks of the Portfolio

An investment in the Portfolio is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Portfolio seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Portfolio.

Who May Want to Invest

Money Market Portfolio is designed for investors who are risk-averse and seek to preserve principal while earning current income and saving for short-term needs. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in the Money Market Portfolio by showing changes in the Portfolio’s performance from year to year and by showing the Portfolio’s average annual total returns for the periods shown.

• The bar chart presents the average annual total returns and shows how performance has varied from year to year over the past ten calendar years.

• The performance table shows average annual total returns.

• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio’s past performance does not necessarily indicate how it will perform in the future.

The Portfolio shares are sold only to insurance company separate accounts that fund certain variable annuity and variable life contracts. If the sales charges and expenses charged by these contracts were included, the total returns shown would be lower.

AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 2002 (%)	1 Year			5 Years			10 Years
Shares of Money Market Portfolio		1.12	%		4.05	%		4.22	%

As of December 31, 2002 the 7-day yield was equal to 0.77%. Yields are computed by annualizing the average daily dividend per share during the time period for which the yield is presented.

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FEES AND EXPENSES

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. The table and the example below do not reflect any fees and expenses imposed under the variable annuity or variable life insurance contracts through which this Portfolio is offered. See the contract prospectus for a description of those fees and expenses.

There are no fees or charges to buy and sell shares of the Portfolio, reinvest dividends or exchange into other Portfolios.

ANNUAL PORTFOLIO OPERATING EXPENSES
(expenses that are deducted from Portfolio assets)
Management Fees	0.40	%
Distribution and Service (12b-1) Fees	0.25	%
Other Expenses	0.10	%
Total Annual Portfolio Operating Expenses	0.75	%

EXAMPLE

This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1 Year		3 Years		5 Years		10 Years
$	77	$	240	$	417	$	930

SCIENCE AND TECHNOLOGY PORTFOLIO

Goal

Science and Technology Portfolio seeks long-term capital growth.

Principal Strategies

Science and Technology Portfolio seeks to achieve its goal 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. As well, the Fund may invest in companies that utilize science and/or technology to improve their existing business even though the business is not within the science and technology industries. The Portfolio 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 Portfolio. These include the issuer’s:

• growth potential

• earnings potential

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• management

• industry position

• applicable economic and market conditions

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 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 Portfolio

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

• the mix of securities in the 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 Portfolio invests

• government regulation in the science and technology industry

• the earnings performance, credit quality and other conditions of the companies whose securities the Portfolio holds

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

• WRIMCO’s skill in evaluating and selecting securities for the Portfolio

Market risk for small to medium sized companies may be greater than the market risk 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 Portfolio 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 Portfolio’s shares will change and you could lose money on your investment. An investment in the Portfolio 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 Portfolio is designed for investors who seek long-term capital growth by investing in a portfolio that concentrates in securities of science and technology companies. This Portfolio is not suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

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

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• The bar chart presents the average annual total returns since these shares were first offered and shows how performance has varied from year to year.

• The performance table shows average annual total returns and compares them to the market indicators listed.

• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio’s past performance does not necessarily indicate how it will perform in the future.

The Portfolio shares are sold only to insurance company separate accounts that fund certain variable annuity and variable life contracts. If the sales charges and expenses charged by these contracts were included, the total returns shown would be lower.

AVERAGE ANNUAL TOTAL RETURNS							Life of
as of December 31, 2002 (%)	1 Year			5 Years			Portfolio*
Shares of Science and Technology Portfolio		-23.99	%		16.19	%		16.98	%
Goldman Sachs Technology Industry Composite Index		-40.27	%		-3.26	%		1.36	%
Lipper Variable Annuity Specialty/Miscellaneous Funds Universe Average		-30.90	%		-1.20	%		0.95	%

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 Portfolio.

*Since April 4, 1997, the date on which the Portfolio commenced operations. Because the Portfolio 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 March 31, 1997.

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FEES AND EXPENSES

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. The table and the example below do not reflect any fees and expenses imposed under the variable annuity or variable life insurance contracts through which this Portfolio is offered. See the contract prospectus for a description of those fees and expenses.

There are no fees or charges to buy and sell shares of the Portfolio, reinvest dividends or exchange into other Portfolios.

ANNUAL PORTFOLIO OPERATING EXPENSES
(expenses that are deducted from Portfolio assets)
Management Fees	0.85	%
Distribution and Service (12b-1) Fees	0.25	%
Other Expenses	0.07	%
Total Annual Portfolio Operating Expenses	1.17	%

EXAMPLE

This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1 Year		3 Years		5 Years		10 Years
$	119	$	372	$	644	$	1,420

SMALL CAP PORTFOLIO

Goal

Small Cap Portfolio seeks growth of capital.

Principal Strategies

Small Cap Portfolio 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 Portfolio 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 regarding a company, such as:

• aggressive or creative management

• technological or specialized expertise

• new or unique products or services

• entry into new or emerging industries

• growth in earnings/growth in sales

• security size and liquidity

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Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses in buying securities. For example, 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 Portfolio

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

• the earnings performance, credit quality and other conditions of the companies whose securities the Portfolio holds

• the mix of securities in the Portfolio, 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 Portfolio’s holdings to fall as part of a broad market decline

• WRIMCO’s skill in evaluating and selecting securities for the Portfolio

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

The Portfolio may invest in foreign securities, which present additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

Due to the nature of the Portfolio’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 Portfolio 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 to lose favor with the public

As with any mutual fund, the value of the Portfolio’s shares will change and you could lose money on your investment. An investment in the Portfolio 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 Portfolio 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 income and conservation of capital. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

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

• The bar chart presents the average annual total returns since these shares were first offered and shows how performance has varied from year to year.

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• The performance table shows average annual total returns and compares them to the market indicators listed.

• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio’s past performance does not necessarily indicate how it will perform in the future.

The Portfolio shares are sold only to insurance company separate accounts that fund certain variable annuity and variable life contracts. If the sales charges and expenses charged by these contracts were included, the total returns shown would be lower.

AVERAGE ANNUAL TOTAL RETURNS							Life of
as of December 31, 2002 (%)	1 Year			5 Years			Portfolio*
Shares of Small Cap Portfolio		-21.79	%		2.56	%		11.61	%
Russell 2000 Growth Index		-30.22	%		-6.56	%		2.00	%
Lipper Variable Annuity Small-Cap Growth Funds Universe Average		-30.82	%		-3.27	%		4.14	%

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 Portfolio.

*Since May 3, 1994, the date on which the Portfolio commenced operations. Because the Portfolio 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 April 30, 1994.

FEES AND EXPENSES

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. The table and the example below do not reflect any fees and expenses imposed under the variable annuity or variable life insurance contracts through which this Portfolio is offered. See the contract prospectus for a description of those fees and expenses.

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There are no fees or charges to buy and sell shares of the Portfolio, reinvest dividends or exchange into other Portfolios.

ANNUAL PORTFOLIO OPERATING EXPENSES
(expenses that are deducted from Portfolio assets)
Management Fees	0.85	%
Distribution and Service (12b-1) Fees	0.25	%
Other Expenses	0.05	%
Total Annual Portfolio Operating Expenses	1.15	%

EXAMPLE

This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

	1 Year	3 Years		5 Years		10 Years
$	117	$	365	$	633	$	1,398

VALUE PORTFOLIO

Goal

Value Portfolio seeks long-term capital appreciation.

Principal Strategies

Value Portfolio seeks to achieve its goal by investing, for the long term, in the common stocks of large-cap U.S. and foreign companies. The Portfolio seeks to invest in stocks that are, in the opinion of WRIMCO, undervalued relative to the true value of the company, and/or are out of favor in the financial markets but have a favorable outlook for capital appreciation. Although the Portfolio typically invests in large-cap companies, it may invest in securities of any size company.

WRIMCO utilizes both fundamental research and quantitative analysis to identify securities for the Portfolio. The Portfolio will typically invest in core value stocks: stocks of companies in industries that have relatively lower price-to-earnings ratios than growth stocks. The Portfolio may also invest in growth stocks that are, in WRIMCO’s opinion, temporarily undervalued.

Principal Risks of Investing in the Portfolio

A variety of factors can affect the investment performance of Value Portfolio. These include:

• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio’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 Portfolio holds

• WRIMCO’s skill in evaluating and selecting securities for the Portfolio

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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 Portfolio’s shares will change, and you could lose money on your investment. An investment in the Portfolio 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

Value Portfolio is designed for investors who seek long-term capital appreciation. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in the Value Portfolio by showing changes in the Portfolio’s performance and by showing how the Portfolio’s average annual total return for the period shown compares with those of a broad measure of market performance.

• The bar chart presents the average annual total returns since these shares were first offered.

• The performance table shows average annual total returns and compares them to the market indicators listed.

• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio’s past performance does not necessarily indicate how it will perform in the future.

The Portfolio shares are sold only to insurance company separate accounts that fund certain variable annuity and variable life contracts. If the sales charges and expenses charged by these contracts were included, the total returns shown would be lower.

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AVERAGE ANNUAL TOTAL RETURNS
				Life of
as of December 31, 2002 (%)	1 Year			Portfolio*
Shares of Value Portfolio		-12.70	%		-6.70	%
Russell 1000 Value Index		-15.52	%		-12.03	%
Lipper Variable Annuity Multi-Cap Value Funds Universe Average		-18.97	%		-13.54	%

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 Portfolio.

*Since May 1, 2001, the date on which the Portfolio commenced operations. Because the Portfolio commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the above index (including income) are not available, index performance is calculated from April 30, 2001.

FEES AND EXPENSES

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Portfolio. The table and the example below do not reflect any fees and expenses imposed under the variable annuity or variable life insurance contracts through which this Portfolio is offered. See the contract prospectus for a description of those fees and expenses.

There are no fees or charges to buy and sell shares of the Portfolio, reinvest dividends or exchange into other Portfolios.

ANNUAL PORTFOLIO OPERATING EXPENSES
(expenses that are deducted from Portfolio assets)
Management Fees	0.70	%
Distribution and Service (12b-1) Fees	0.25	%
Other Expenses	0.09	%
Total Annual Portfolio Operating Expenses	1.04	%

EXAMPLE

This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1 Year		3 Years		5 Years		10 Years
$	106	$	331	$	574	$	1,271

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THE INVESTMENT PRINCIPLES OF THE PORTFOLIOS

INVESTMENT GOALS, PRINCIPAL STRATEGIES AND OTHER INVESTMENTS

Asset Strategy Portfolio

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

Allocating assets among different types of investments allows the Portfolio to take advantage of opportunities wherever they may occur, but also subjects the Portfolio 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 due to changes in interest rates and in the credit quality of the issuer.

WRIMCO regularly reviews the Portfolio’s allocation of assets and makes changes to favor investments that it believes provide the best opportunity to achieve the Portfolio’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 Portfolio.

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

Portfolio Mix	Range
Stock class — 70%		0-100	%
Bond class — 25%		0-100	%
Short-term class — 5%		0-100	%

WRIMCO tries to balance the Portfolio’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 Portfolio’s mix.

As a defensive measure, the Portfolio 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 Portfolio may utilize derivative instruments for both defensive and speculative purposes. The Portfolio may, as well, invest up to all of the Portfolio’s assets, for temporary defensive purposes, in:

• money market instruments rated A-1 by S&P, or Prime 1 by Moody’s, or unrated securities deemed by WRIMCO to be of comparable quality

• precious metals

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

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Balanced Portfolio

The primary goal of Balanced Portfolio is current income to the extent that, in WRIMCO’s opinion, market and economic conditions permit. As a secondary goal, the Portfolio seeks long-term capital appreciation. The Portfolio seeks to achieve these goals by investing primarily in a diversified mix of stocks, fixed-income securities and cash, depending on market conditions. There is no guarantee, however, that the Portfolio will achieve its goals.

In general, the Portfolio invests a portion of its total assets in either debt securities or preferred stocks, or both, in order to provide income and relative stability of capital. The Portfolio owns common stocks in order to provide possible appreciation of capital and some dividend income. The Portfolio may also invest in convertible securities. The Portfolio ordinarily invests at least 25% of its total assets in fixed-income senior securities.

When WRIMCO believes that a temporary defensive position is desirable, the Portfolio may invest up to all of its assets in debt securities that may be considered equivalent to owning cash because of their safety and liquidity. By taking a temporary defensive position, the Portfolio may not achieve its investment objectives.

Bond Portfolio

The goal of Bond Portfolio is a reasonable return with emphasis on preservation of capital. The Portfolio seeks to achieve this goal by investing primarily in a diversified portfolio of debt securities of high quality, and, to a lesser extent, non-investment grade securities, convertible securities and debt securities with warrants attached. The Portfolio may use various techniques, such as investing in put bonds, to manage the duration of its holdings. As a result, as interest rates rise the duration, or price sensitivity to rising interest rates, of the Portfolio’s holdings will typically decline. There is no guarantee, however, that the Portfolio will achieve its goal.

The Portfolio limits its acquisition of securities so that at least 90% of its total assets will consist of debt securities. These debt securities primarily include corporate bonds, mostly of investment grade, and securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities. The Portfolio may, however, invest in junk bonds, which 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 Portfolio can invest in foreign securities, which present additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

When WRIMCO believes that a defensive position is desirable, due to present or anticipated market or economic conditions, WRIMCO may take a number of actions. The Portfolio may sell longer-term bonds and invest the proceeds in shorter-term bonds or money market instruments.

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

Core Equity Portfolio

The goals of Core Equity Portfolio are to provide capital growth and income. The Portfolio seeks to achieve its goals by primarily investing, during normal market conditions, in common stocks of large, high-quality U.S., and to a lesser extent foreign, companies that are well known, have been consistently profitable and have dominant market positions in their industries. The Portfolio will, under normal market conditions, invest at least 80% of its net assets in equity securities, primarily common stocks and securities convertible into common stocks. There is no guarantee, however, that the Portfolio will achieve its goals.

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

• hold cash, commercial paper, certificates of deposit or other short-term investments

• invest in debt securities (including short-term U.S. Government securities)

• invest in convertible preferred stock

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By taking a temporary defensive position the Portfolio may not achieve its investment objectives.

Growth Portfolio

The primary goal of Growth Portfolio is capital growth. As a secondary goal, the Portfolio seeks current income. The Portfolio seeks to achieve these goals by investing primarily in a diversified portfolio of common stocks of U.S., and to a lesser extent foreign, companies. Generally, the Portfolio may invest in a wide range of marketable securities that, in WRIMCO’s opinion, offer the potential for growth. There is no guarantee, however, that the Portfolio will achieve its goals.

When WRIMCO believes that a temporary defensive position is desirable, the Portfolio may invest up to all of its assets in cash or fixed-income securities or in common stocks chosen for their relative stability rather than for their growth potential. By taking a defensive position, the Portfolio may not achieve its investment objective.

High Income Portfolio

The primary goal of High Income Portfolio is to earn a high level of current income. As a secondary goal, the Portfolio seeks capital growth when consistent with its primary goal. The Portfolio seeks to achieve these goals by investing primarily in a diversified portfolio of high-yield, high-risk, fixed-income securities, the risks of which are, in the judgment of WRIMCO, consistent with the Portfolio’s goals. The Portfolio may own bonds with varying maturities. There is no guarantee, however, that the Portfolio will achieve its goals.

The Portfolio primarily owns debt securities; however, it may also own, to a lesser degree, preferred stocks, common stocks and convertible securities. In general, the high income that the Portfolio seeks is paid by debt securities rated in the lower rating categories of the established rating services or unrated securities that are determined by WRIMCO to be of comparable quality; these include securities rated BBB or lower by S&P, or Baa or lower by Moody’s. Lower-quality debt securities (which include junk bonds) are considered to be speculative and involve greater risk of default or price changes due to changes in the issuer’s creditworthiness. The market prices of these securities may fluctuate more than higher-quality securities and may decline significantly in periods of general economic difficulty.

The Portfolio limits its acquisition of common stocks so that no more than 20% of its total assets will consist of common stocks and no more than 10% of its total assets will consist of non-dividend paying common stocks.

When WRIMCO believes that a full or partial temporary defensive position is desirable, due to present or anticipated market or economic conditions, it may take any one or more of the following steps with respect to the assets in the Portfolio:

• shorten the average maturity of the Portfolio’s debt holdings

• hold cash or cash equivalents (short-term investments, such as commercial paper and certificates of deposit)

• emphasize high-grade debt securities

By taking a temporary defensive position in any one or more of these manners, the Portfolio may not achieve its investment objectives.

International Portfolio

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

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Under normal market conditions, the Portfolio invests at least 80% of its net assets in foreign securities and at least 65% of its total assets in issuers of at least three foreign countries. The Portfolio generally limits its holdings so that no more than 75% of its total assets are invested in issuers of a single foreign country.

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

Limited-Term Bond Portfolio

The goal of Limited-Term Bond Portfolio is to provide a high level of current income consistent with preservation of capital. The Portfolio seeks to achieve its goal by investing primarily in a diversified portfolio of investment-grade, limited-term debt securities (securities with a dollar-weighted average maturity of two to five years) of U.S. issuers, including U.S. Government securities, which are securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities, collateralized mortgage obligations and other asset-backed securities. The Portfolio will invest at least 80% of its net assets in bonds with limited-term maturities. The Portfolio may also own, to a lesser extent, common stocks and convertible securities, including convertible preferred stocks in certain circumstances. There is no guarantee, however, that the Portfolio will achieve its goal.

The maturity of an asset-backed security is the estimated average life of the security, based on certain prescribed models or formulas used by WRIMCO. The maturity of other types of debt securities is the earlier of the call date or the maturity date, as appropriate.

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

• shorten the average maturity of its investments

• increase its holdings in short-term investments, cash or cash equivalents

• invest up to all of the Portfolio’s assets in U.S. Treasury securities

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

Money Market Portfolio

The goal of Money Market Portfolio is maximum current income consistent with stability of principal. The Portfolio seeks to achieve its goal by investing in a diversified portfolio of high-quality money market instruments in accordance with the requirements of Rule 2a-7. There is no guarantee, however, that the Portfolio will achieve its goal.

The Portfolio invests only in the following U.S. dollar-denominated money market obligations and instruments:

• U.S. government obligations (including obligations of U.S. government agencies and instrumentalities)

• bank obligations and instruments secured by bank obligations, such as letters of credit

• commercial paper

• corporate debt obligations, including variable rate master demand notes

• Canadian government obligations

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• certain other obligations (including municipal obligations) guaranteed as to principal and interest by a bank in whose obligations the Portfolio may invest or a corporation in whose commercial paper the Portfolio may invest

The Portfolio only invests in bank obligations if they are obligations of a bank subject to regulation by the U.S. Government, including foreign branches of these banks, or obligations of a foreign bank having total assets of at least $500 million, and instruments secured by any such obligation.

WRIMCO may look at a number of factors in selecting securities for the Portfolio. These include:

• the credit quality of the particular issuer or guarantor of the security

• the maturity of the security

• the relative value of the security

Generally, in determining whether to sell a security, WRIMCO uses the same analysis that it uses in buying securities to determine if the security no longer offers adequate return or no longer complies with Rule 2a-7. WRIMCO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Science and Technology Portfolio

The goal of Science and Technology Portfolio is long-term capital growth. The Portfolio seeks to achieve this goal by investing primarily in 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. As well, the Fund may invest in companies that utilize science and/or technology to improve their existing business even though the business, itself, is not within the science and technology industries. Under normal economic and market conditions, the Portfolio will invest at least 80% of its net assets in securities of science or technology companies or companies benefited by the application of science and technology innovations. There is no guarantee, however, that the Portfolio will achieve its goal.

The Portfolio may invest 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 and energy

• electronic media

• genomics

• internet and internet-related services

• medical devices and drugs

• medical and hospital supplies and services

• office equipment and supplies

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

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At times, when WRIMCO believes that a temporary defensive position is desirable, the Portfolio may invest up to all of its assets in U.S. Government securities or other debt securities, mostly of investment grade. The Portfolio may also invest in options and futures contracts for hedging purposes. By taking a temporary defensive position, the Portfolio may not achieve its investment objective.

Small Cap Portfolio

The goal of Small Cap Portfolio is growth of capital. The Portfolio seeks to achieve its goal by investing primarily in common stocks of small cap 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 Portfolio 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 Portfolio considers a company’s capitalization at the time the Portfolio acquires the company’s common stock. Common stock of a company whose capitalization exceeds the range of Lipper, Inc. Small Cap Category after purchase will not be sold solely because of its increased capitalization. The Portfolio will, under normal market conditions, invest at least 80% of its net assets in small cap stocks. There is no guarantee, however, that the Portfolio will achieve its goal.

In addition to common stocks, the Portfolio may also invest, to a lesser extent, in securities convertible into common stocks, in preferred stocks and debt securities, mostly of investment grade. The Portfolio may also invest up to 20% of its total assets in foreign securities.

When WRIMCO believes that a temporary defensive position is desirable, the Portfolio may invest up to all of its assets in debt securities including commercial paper, short-term U.S. Government securities and/or preferred stocks. The Portfolio may also invest in more established companies, those with longer operating histories than many small cap companies. As well, it may increase the number of issuers in which it invests and thereby limit the Fund’s position size in any particular security. By taking a temporary defensive position, the Portfolio may not achieve its investment objective.

Value Portfolio

The goal of Value Portfolio is to seek long-term appreciation of capital. The Portfolio seeks to achieve its goal by investing primarily in the stocks of large U.S. and foreign companies that are undervalued relative to the true worth of the company. The Portfolio may invest in foreign securities, primarily to provide additional opportunities to invest in quality overlooked growth stocks. There is no guarantee, however, that the Portfolio will achieve its goal.

WRIMCO utilizes both a top-down (assess the market environment) and a bottom-up (research individual issuers) analysis in its selection process. WRIMCO considers numerous factors in its analysis of issuers and stocks, including the following:

• intrinsic value of the company not reflected in stock price

• historical earnings growth

• future expected earnings growth

• company’s position in its respective industry

• industry conditions

• competitive strategy

• management capabilities

• free cash flow potential

The Portfolio will typically sell a stock when it reaches an acceptable price, its fundamental factors have changed or it has performed below WRIMCO’s expectations.

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

ADDITIONAL INVESTMENT CONSIDERATIONS

The goal(s) and investment policies of each Portfolio may be changed by the Directors of the Fund without a vote of the Portfolio’s shareholders, unless a policy or restriction is otherwise described.

Each Portfolio may also invest in other types of securities and use certain other instruments in seeking to achieve its goal(s). For example, a Portfolio (other than Money Market Portfolio) may 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 in the Statement of Additional Information (SAI) about each Portfolio’s permitted investments and strategies, as well as the restrictions that apply to them.

RISK CONSIDERATIONS OF PRINCIPAL STRATEGIES AND OTHER INVESTMENTS

Risks exist in any investment. Each Portfolio is subject to equity risk 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 because of market factors, including changes in interest rates. The prices of common stocks and other equity securities generally fluctuate more than those of other investments. A Portfolio 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. 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 Portfolio will likely change as well.

• Financial risk is based on the financial situation of the issuer of the security. To the extent a Portfolio invests in debt securities, the Portfolio’s financial risk depends on the credit quality of the securities in which it invests. For an equity investment, a Portfolio’s financial risk may depend, for example, on the earnings performance of the company issuing the stock.

• 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 Portfolio’s authorized investments and strategies, such as foreign securities, junk bonds and derivative instruments, involve special risks. Depending on how much a Portfolio invests or uses these strategies, these special risks may become significant. For example, foreign investments may subject a Portfolio 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 Portfolio to greater volatility than an investment in a more traditional stock, bond or other security.

Because each Portfolio owns different types of investments, its performance will be affected by a variety of factors. The value of each Portfolio’s investments and the income it may generate will vary from day to day, generally reflecting changes in market conditions, interest rates and other company and economic news. Performance will also depend on WRIMCO’s skill in selecting investments.

Asset Strategy Portfolio, High Income Portfolio, International Portfolio and Science and Technology Portfolio 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 Portfolios.

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THE MANAGEMENT OF THE PORTFOLIOS

PORTFOLIO MANAGEMENT

The Portfolios are managed by WRIMCO, subject to the authority of the Fund’s Board of Directors. WRIMCO provides investment advice to each of the Portfolios and supervises each Portfolio’s investments. WRIMCO and/or its predecessor have served as investment manager to the Fund since its inception and to each of the registered investment companies in the Waddell & Reed Advisors Funds, W&R Funds, Inc. and Waddell & Reed InvestEd Portfolios, Inc. since their inception. WRIMCO is located at 6300 L Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217.

Michael L. Avery is primarily responsible for the management of the equity portion of the Asset Strategy Portfolio. Mr. Avery has held his responsibilities for the Asset Strategy Portfolio since January 1997. He is Senior Vice President of WRIMCO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO serves as investment manager. From March 1995 to March 1998, Mr. Avery was Vice President of, and the Director of Research for, Waddell & Reed Asset Management Company, a former affiliate of WRIMCO. Mr. Avery has served as the portfolio manager for investment companies managed by WRIMCO since February 1994, has served as the Director of Research for WRIMCO and its predecessor since August 1987, and has been an employee of such since June 1981.

Daniel J. Vrabac is primarily responsible for the management of the fixed-income portion of the Asset Strategy Portfolio. Mr. Vrabac has held his responsibilities for the Asset Strategy Portfolio since January 1997. He is Senior Vice President of WRIMCO, Vice President of the Fund and Vice President of other investment companies managed by WRIMCO. From May 1994 to March 1998, Mr. Vrabac was Vice President of, and a portfolio manager for, Waddell & Reed Asset Management Company. Mr. Vrabac has been an employee of WRIMCO since May 1994.

Cynthia P. Prince-Fox is primarily responsible for the management of the Balanced Portfolio. Ms. Prince-Fox has held her responsibilities for Balanced Portfolio since July 1994, the Portfolio’s inception. She is Senior Vice President of WRIMCO, Vice President of the Fund, Vice President of other investment companies for which WRIMCO serves as investment manager and Senior Vice President of Waddell & Reed Ivy Investment Company (“WRIICO”), an affiliate of WRIMCO. From January 1993 to March 1998, Ms. Prince-Fox was Vice President of, and a portfolio manager for, Waddell & Reed Asset Management Company. Ms. Prince-Fox is Co-Chief Investment Officer, Vice President and Portfolio Manager for Austin, Calvert & Flavin, Inc., an affiliate of WRIMCO. Ms. Prince-Fox has served as a portfolio manager for investment companies managed by WRIMCO since January 1993. From February 1983 to January 1993 Ms. Prince-Fox served as an investment analyst for WRIMCO and its predecessor.

James C. Cusser is primarily responsible for the management of the Bond Portfolio. Mr. Cusser has held his responsibilities for Bond Portfolio since August 1992. He is Senior Vice President of WRIMCO, Senior Vice President of WRIICO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO or WRIICO serves as investment manager. Mr. Cusser has been an employee of WRIMCO and has served as a portfolio manager for investment companies managed by WRIMCO since August 1992.

James D. Wineland is primarily responsible for the management of the Core Equity Portfolio. Mr. Wineland has held his responsibilities for Core Equity Portfolio since July 1997. He is Senior Vice President of WRIMCO, Senior Vice President of WRIICO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO or WRIICO serves as investment manager. From March 1995 to March 1998, Mr. Wineland was Vice President of, and a portfolio manager for, Waddell & Reed Asset Management Company. Mr. Wineland has served as a portfolio manager for investment companies managed by WRIMCO and its predecessor since January 1988 and has been an employee of such since November 1984.

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Philip J. Sanders is primarily responsible for the management of the Growth Portfolio. Mr. Sanders has held his responsibilities for Growth Portfolio since August 1998. He is Senior Vice President of WRIMCO and WRIICO and Vice President of the Fund. Mr. Sanders has been an employee of WRIMCO since August 1998. Mr. Sanders was formerly Lead Manager with Tradestreet Investment Associates.

William M. Nelson is primarily responsible for the management of the High Income Portfolio. Mr. Nelson has held his responsibilities for High Income Portfolio since January 1999. He is Vice President of WRIMCO and Vice President of the Fund. Mr. Nelson has been an employee of WRIMCO since January 1995.

Thomas A. Mengel is primarily responsible for the management of the International Portfolio. Mr. Mengel has been an employee of WRIMCO and has held his responsibilities for International Portfolio since May 1996. He is Senior Vice President of WRIMCO, Senior Vice President of WRIICO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO or WRIICO serves as investment manager.

W. Patrick Sterner is primarily responsible for the management of the Limited-Term Bond Portfolio. Mr. Sterner has held his responsibilities for Limited-Term Bond Portfolio since July 1994, the Portfolio’s inception. He is Senior Vice President of WRIMCO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO serves as investment manager. From August 1992 to March 1998, Mr. Sterner was Vice President of, and a portfolio manager for, Waddell & Reed Asset Management Company. Mr. Sterner has served as a portfolio manager for investment companies managed by WRIMCO since September 1992 and has been an employee of WRIMCO since August 1992.

Mira Stevovich is primarily responsible for the management of the Money Market Portfolio. Ms. Stevovich has held her responsibilities for Money Market Portfolio since May 1998. She is Vice President of WRIMCO, Senior Vice President of WRIICO, Vice President and Assistant Treasurer of the Fund and Vice President and Assistant Treasurer of other investment companies for which WRIMCO or WRIICO serves as investment manager. Ms. Stevovich has been an employee of WRIMCO and its predecessor since March 1987.

Zachary H. Shafran is primarily responsible for the management of the Science and Technology Portfolio. Mr. Shafran has held his responsibilities for Science and Technology Portfolio since February 2001. He is Senior Vice President of WRIMCO, Senior Vice President of WRIICO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO serves as investment manager. Mr. Shafran has served as the portfolio manager for investment companies managed by WRIMCO or WRIICO since January 1996. He served as an investment analyst with WRIMCO and its predecessor from June 1990 to January 1996.

Grant P. Sarris is primarily responsible for the management of the Small Cap Portfolio. Mr. Sarris has held his responsibilities for Small Cap Portfolio since February 1999. He is Senior Vice President of WRIMCO, Vice President of the Fund and Vice President of other investment companies for which WRIMCO serves as investment manager. Mr. Sarris served as an investment analyst with WRIMCO and its predecessor from October 1991 to January 1996. From January 1996 to May 1998, Mr. Sarris served as an assistant portfolio manager for WRIMCO and since May 1998 he has served as a portfolio manager. Mr. Sarris has been an employee of WRIMCO and its predecessor since October 1991.

Harry M. Flavin and Cynthia P. Prince-Fox are primarily responsible for the management of the Value Portfolio. Mr. Flavin has held his responsibilities for Value Portfolio since the Portfolio’s inception. He is Senior Vice President of WRIMCO, Senior Vice President of WRIICO, Vice President of the Fund and of another investment company managed by WRIMCO, and President, Co-Chief Investment Officer and Director of Austin, Calvert & Flavin, Inc.

Ms. Prince-Fox has held her responsibilities for Value Portfolio since January 2002.

Other members of WRIMCO’s investment management department provide input on market outlook, economic conditions, investment research and other considerations relating to the investments of the Portfolios.

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MANAGEMENT AND OTHER FEES

Like all mutual funds, the Portfolios pay fees related to their daily operations. Expenses paid out of each Portfolio’s assets are reflected in its share price or dividends; they are neither billed directly to shareholders nor deducted from shareholder accounts.

Each Portfolio pays a management fee to WRIMCO for providing investment advice and supervising its investments. Each Portfolio also pays other expenses, which are explained in the SAI.

The management fee is payable at the annual rates of:

for Asset Strategy Portfolio, 0.70% of net assets up to $1 billion, 0.65% of net assets over $1 billion and up to $2 billion, 0.60% of net assets over $2 billion and up to $3 billion, and 0.55% of net assets over $3 billion;

for Balanced Portfolio, 0.70% of net assets up to $1 billion, 0.65% of net assets over $1 billion and up to $2 billion, 0.60% of net assets over $2 billion and up to $3 billion, and 0.55% of net assets over $3 billion;

for Bond Portfolio, 0.525% of net assets up to $500 million, 0.50% of net assets over $500 million and up to $1 billion, 0.45% of net assets over $1 billion and up to $1.5 billion, and 0.40% of net assets over $1.5 billion;

for Core Equity Portfolio, 0.70% of net assets up to $1 billion, 0.65% of net assets over $1 billion and up to $2 billion, 0.60% of net assets over $2 billion and up to $3 billion, and 0.55% of net assets over $3 billion;

for Growth Portfolio, 0.70% of net assets up to $1 billion, 0.65% of net assets over $1 billion and up to $2 billion, 0.60% of net assets over $2 billion and up to $3 billion, and 0.55% of net assets over $3 billion;

for High Income Portfolio, 0.625% of net assets up to $500 million, 0.60% of net assets over $500 million and up to $1 billion, 0.55% of net assets over $1 billion and up to $1.5 billion, and 0.50% of net assets over $1.5 billion;

for International Portfolio, 0.85% of net assets up to $1 billion, 0.83% of net assets over $1 billion and up to $2 billion, 0.80% of net assets over $2 billion and up to $3 billion, and 0.76% of net assets over $3 billion;

for Limited-Term Bond Portfolio, 0.50% of net assets up to $500 million, 0.45% of net assets over $500 million and up to $1 billion, 0.40% of net assets over $1 billion and up to $1.5 billion, and 0.35% of net assets over $1.5 billion;

for Money Market Portfolio, 0.40% of net assets;

for Science & Technology Portfolio, 0.85% of net assets up to $1 billion, 0.83% of net assets over $1 billion and up to $2 billion, 0.80% of net assets over $2 billion and up to $3 billion, and 0.76% of net assets over $3 billion;

for Small Cap Portfolio, 0.85% of net assets up to $1 billion, 0.83% of net assets over $1 billion and up to $2 billion, 0.80% of net assets over $2 billion and up to $3 billion, and 0.76% of net assets over $3 billion; and

for Value Portfolio, 0.70% of net assets up to $1 billion, 0.65% of net assets over $1 billion and up to $2 billion, 0.60% of net assets over $2 billion and up to $3 billion, and 0.55% of net assets over $3 billion.

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WRIMCO has voluntarily agreed to waive its management fee for any day that a portfolio’s net assets are less than $25 million, subject to WRIMCO’s right to change or modify this waiver.

For the fiscal year ended December 31, 2002, management fees for each Portfolio as a percent of each such Portfolio’s average net assets are as follows:

	Management Fees
Asset Strategy Portfolio		0.70	%
Balanced Portfolio		0.70	%
Bond Portfolio		0.52	%
Core Equity Portfolio		0.70	%
Growth Portfolio		0.70	%
High Income Portfolio		0.63	%
International Portfolio		0.85	%
Limited-Term Bond Portfolio		0.50	%1
Money Market Portfolio		0.40	%
Science and Technology Portfolio		0.85	%
Small Cap Portfolio		0.85	%
Value Portfolio		0.70	%

¹ This reflects the maximum annual fee payable and excludes the voluntary waiver. Management fees for the Portfolio, including the voluntary waiver, for the fiscal year ended December 31, 2002 were 0.21%.

The Fund has adopted a Service Plan (Plan) pursuant to Rule 12b-1 of the Investment Company Act of 1940, as amended. Under the Plan, each Portfolio may pay daily a fee to Waddell & Reed, Inc., an affiliate of WRIMCO and the Distributor of the Policies for which the Fund is the underlying investment vehicle, in an amount not to exceed 0.25% of the Portfolio’s average annual net assets. The fee is to be paid to compensate Waddell & Reed, Inc. for amounts it expends in connection with the provision of personal services to Policyowners.

PURCHASES AND REDEMPTIONS

The separate accounts of the Participating Insurance Companies place orders to purchase and redeem shares of each Portfolio based on, among other things, the amount of premium payments to be invested and the number of surrender and transfer requests to be effected on any day according to the terms of the Policies. Shares of a Portfolio are sold at their NAV per share next determined after receipt of the order to purchase from the Participating Insurance Company. No sales charge is required to be paid by the Participating Insurance Company for purchase of shares.

D-45

Redemptions are made at the NAV per share of the Portfolio next determined after receipt of the request to redeem from the Participating Insurance Company. Payment is generally made within seven days after receipt of a proper request to redeem. No fee is charged to shareholders upon redemption of Portfolio shares. The Fund may suspend the right of redemption of shares of any Portfolio and may postpone payment for any period if any of the following conditions exist:

• the New York Stock Exchange (NYSE) is closed other than customary weekend and holiday closings or trading on the NYSE is restricted

• the Securities and Exchange Commission has determined that a state of emergency exists which may make payment or transfer not reasonably practicable

• the Securities and Exchange Commission has permitted suspension of the right of redemption of shares for the protection of the security holders of the Fund

• applicable laws and regulations otherwise permit the Fund to suspend payment on the redemption of shares

Redemptions are ordinarily made in cash.

Should any conflict between Policyowners arise which would require that a substantial amount of net assets be withdrawn from the Fund, orderly management of portfolio securities could be disrupted to the potential detriment of Policyowners.

NET ASSET VALUE

In the calculation of the NAV per share of each Portfolio:

• The securities in the Portfolio that are listed or traded on an exchange are valued primarily using market prices.

• Bonds are generally valued according to prices quoted by an independent pricing service.

• Short-term debt securities are valued at amortized cost, which approximates market value.

• Other investment assets for which market prices are unavailable are valued at their fair value by or at the direction of the Board of Directors.

The NAV per share of each Portfolio is normally computed daily as of the close of business of the NYSE, typically 4 p.m. Eastern time, except that an option or futures contract held by a Portfolio may be priced at the close of the regular session of any other securities or commodities exchange on which that instrument is traded.

Money Market Portfolio uses the amortized cost method for valuing its portfolio securities. You will find more information in the SAI about this method.

Certain of the Portfolios may invest in securities listed on foreign exchanges which may trade on Saturdays or on U.S. national business holidays when the NYSE is closed. Consequently, the NAV of Portfolio shares may be significantly affected on days when the Portfolio does not price its shares and when you are not able to purchase or redeem the Portfolio’s shares. When market quotations are not readily available, securities, options, futures contracts and other assets are valued at fair value in a manner determined in good faith under procedures established by and under the general supervision and responsibility of the Board of Directors. Similarly, if events materially affecting the value of foreign investments or foreign currency exchange rates occur prior to the close of the regular session of trading on the NYSE, but after the time their values are otherwise determined, such investments or exchange rates will be valued at their fair value as determined in good faith by or under the direction of the Board of Directors.

D-46

DIVIDENDS AND DISTRIBUTIONS

Each Portfolio distributes substantially all of its net investment income and net capital gains each year.

Dividends from Money Market Portfolio are declared and paid daily in additional full and fractional shares. Dividends declared for a particular day are paid to shareholders of record on the prior business day. However, dividends declared for Saturday and Sunday are paid to shareholders of record on the preceding Thursday. Dividends from Asset Strategy Portfolio, Balanced Portfolio, Bond Portfolio, Growth Portfolio, High Income Portfolio, Core Equity Portfolio, International Portfolio, Limited-Term Bond Portfolio, Science and Technology Portfolio, Small Cap Portfolio and Value Portfolio usually are declared and paid annually in December in additional full and fractional shares of that Portfolio. Ordinarily, dividends are paid on shares starting on the day after they are issued and through the day they are redeemed.

All distributions from net realized long-term or short-term capital gains of each Portfolio, if any, other than Money Market Portfolio, are declared and paid annually in December in additional full and fractional shares of the respective Portfolio. Short-term capital gains of Money Market Portfolio (it does not anticipate realizing any long-term capital gains) are declared and paid daily in additional full and fractional shares of that Portfolio.

You will find information in the SAI about Federal income tax considerations generally affecting the Portfolios.

Because the only shareholders of the Portfolios are the Participating Insurance Companies and their separate accounts, no discussion is included here as to the Federal income tax consequences to the Portfolios’ shareholders. For information concerning the Federal tax consequences to Policyowners, see the applicable prospectus for the Policy. Prospective investors are urged to consult with their tax advisers.

D-47

W&R Target Funds, Inc.

FINANCIAL HIGHLIGHTS

The following information is to help you understand the financial performance of each Portfolio’s shares for the fiscal periods shown. Certain information reflects financial results for a single Portfolio share. Total return shows how much your investment would have increased (or decreased) during each period, assuming reinvestment of all dividends and distributions. This information has been audited by Deloitte & Touche LLP, whose independent auditors’ report, along with the Portfolio’s financial statements for the fiscal year ended December 31, 2002, is included in the Fund’s Annual Report to Shareholders, which is available upon request.

ASSET STRATEGY PORTFOLIO
(For a share outstanding throughout each period)

		For the fiscal year ended December 31,
		2002			2001			2000			1999			1998
PER-SHARE DATA
Net asset value, beginning of period		$	6.2046		$	7.0540		$	6.2625		$	5.3868		$	5.1969
Income (loss) from investment operations:
	Net investment income		0.1005			0.1323			0.0908			0.1138			0.1391
	Net realized and unrealized gain (loss) on investments		0.1032			(0.8354	)		1.3211			1.1232			0.3779
Total from investment operations			0.2037			(0.7031	)		1.4119			1.2370			0.5170
Less distributions from:
	Net investment income		(0.1005	)		(0.1334	)		(0.0906	)		(0.1136	)		(0.1391	)
	Capital gains		(0.0000	)		(0.0129	)		(0.5298	)		(0.2477	)		(0.1880	)
Total distributions			(0.1005	)		(0.1463	)		(0.6204	)		(0.3613	)		(0.3271	)
Net asset value, end of period		$	6.3078		$	6.2046		$	7.0540		$	6.2625		$	5.3868
RATIOS/SUPPLEMENTAL DATA
Total return			3.28	%		-9.96	%		22.53	%		22.96	%		9.95	%
Net assets, end of period (in millions)		$	167		$	115		$	59		$	22		$	14
Ratio of expenses to average net assets			1.04	%		1.03	%		0.97	%		0.73	%		1.07	%
Ratio of net investment income to average net assets			1.90	%		2.63	%		1.97	%		2.18	%		2.97	%
Portfolio turnover rate			95.22	%		187.87	%		155.27	%		179.63	%		189.02	%

D-48

BALANCED PORTFOLIO
(For a share outstanding throughout each period)

		For the fiscal year ended December 31,
		2002			2001			2000			1999			1998
PER-SHARE DATA
Net asset value, beginning of period		$	6.7224		$	7.3258		$	7.3120		$	7.1081			6.7686
Income (loss) from investment operations:
	Net investment income		0.1145			0.1593			0.1873			0.1760			0.1865
	Net realized and unrealized gain (loss) on investments		(0.6801	)		(0.5955	)		0.3361			0.5446			0.4003
Total from investment operations			(0.5656	)		(0.4362	)		0.5234			0.7206			0.5868
Less distributions from:
	Net investment income		(0.1145	)		(0.1593	)		(0.1873	)		(0.1759	)		(0.1865	)
	Capital gains		(0.0000	)		(0.0079	)		(0.3223	)		(0.3408	)		(0.0608	)
Total distributions			(0.1145	)		(0.1672	)		(0.5096	)		(0.5167	)		(0.2473	)
Net asset value, end of period		$	6.0423		$	6.7224		$	7.3258		$	7.3120		$	7.1081
RATIOS/SUPPLEMENTAL DATA
Total return			-8.41	%		-5.94	%		7.14	%		10.14	%		8.67	%
Net assets, end of period (in millions)		$	168		$	178		$	158		$	117		$	92
Ratio of expenses to average net assets			1.01	%		1.00	%		1.01	%		0.95	%		0.74	%
Ratio of net investment income to average net assets			1.79	%		2.44	%		2.81	%		2.56	%		2.92	%
Portfolio turnover rate			58.18	%		38.82	%		42.32	%		62.90	%		54.62	%

D-49

BOND PORTFOLIO
(For a share outstanding throughout each period)

		For the fiscal year ended December 31,
		2002			2001			2000			1999			1998
PER-SHARE DATA
Net asset value, beginning of period		$	5.3615		$	5.2308		$	5.0497		$	5.4451		$	5.3686
Income (loss) from investment operations:
	Net investment income		0.2396			0.2585			0.3172			0.3173			0.3180
	Net realized and unrealized gain (loss) on investments		0.2417			0.1306			0.1811			(0.3954	)		0.0765
Total from investment operations			0.4813			0.3891			0.4983			(0.0781	)		0.3945
Less distributions from net investment income			(0.2396	)		(0.2584	)		(0.3172	)		(0.3173	)		(0.3180	)
Net asset value, end of period		$	5.6032		$	5.3615		$	5.2308		$	5.0497		$	5.4451
RATIOS/SUPPLEMENTAL DATA
Total return			8.98	%		7.47	%		9.83	%		-1.44	%		7.35	%
Net assets, end of period (in millions)		$	247		$	171		$	117		$	111		$	114
Ratio of expenses to average net assets			0.83	%		0.83	%		0.84	%		0.81	%		0.67	%
Ratio of net investment income to average net assets			4.92	%		5.49	%		6.08	%		5.73	%		5.99	%
Portfolio turnover rate			33.75	%		29.06	%		32.68	%		47.27	%		32.75	%

D-50

CORE EQUITY PORTFOLIO*
(For a share outstanding throughout each period)

		For the fiscal year ended December 31,
		2002			2001			2000			1999			1998
PER-SHARE DATA
Net asset value, beginning of period		$	10.3608		$	12.2027		$	12.9609		$	12.3351		$	11.9615
Income (loss) from investment operations:
	Net investment income		0.0476			0.0231			0.0376			0.1571			0.1752
	Net realized and unrealized gain (loss) on investments		(2.2888	)		(1.8418	)		1.1650			1.3879			2.3532
Total from investment operations			(2.2412	)		(1.8187	)		1.2026			1.5450			2.5284
Less distributions from:
	Net investment income		(0.0476	)		(0.0229	)		(0.0360	)		(0.1570	)		(0.1752	)
	Capital gains		(0.0000	)		(0.0003	)		(1.9248	)		(0.7622	)		(1.9796	)
Total distributions			(0.0476	)		(0.0232	)		(1.9608	)		(0.9192	)		(2.1548	)
Net asset value, end of period		$	8.0720		$	10.3608		$	12.2027		$	12.9609		$	12.3351
RATIOS/SUPPLEMENTAL DATA
Total return			-21.63	%		-14.91	%		9.28	%		12.52	%		21.14	%
Net assets, end of period (in millions)		$	650		$	913		$	1,084		$	941		$	811
Ratio of expenses to average net assets			0.99	%		0.98	%		0.98	%		0.96	%		0.80	%
Ratio of net investment income to average net assets			0.50	%		0.21	%		0.28	%		1.23	%		1.35	%
Portfolio turnover rate			38.37	%		30.50	%		49.11	%		70.20	%		62.84	%

*Core Equity Portfolio, formerly Income Portfolio, changed its name and investment objective effective October 16, 2000.

D-51

GROWTH PORTFOLIO
(For a share outstanding throughout each period)

		For the fiscal year ended December 31,
		2002			2001			2000			1999			1998
PER-SHARE DATA
Net asset value, beginning of period		$	8.3923		$	9.8831		$	10.8751		$	9.2989		$	7.5679
Income (loss) from investment operations:
	Net investment income		0.0009			0.0246			0.0163			0.0056			0.0456
	Net realized and unrealized gain (loss) on investments		(1.7882	)		(1.4417	)		0.1375			3.1886			2.0215
Total from investment operations			(1.7873	)		(1.4171	)		0.1538			3.1942			2.0671
Less distributions from:
	Net investment income		(0.0009	)		(0.0246	)		(0.0163	)		(0.0056	)		(0.0456	)
	Capital gains		(0.0000	)		(0.0491	)		(1.1295	)		(1.6124	)		(0.2905	)
Total distributions			(0.0009	)		(0.0737	)		(1.1458	)		(1.6180	)		(0.3361	)
Net asset value, end of period		$	6.6041		$	8.3923		$	9.8831		$	10.8751		$	9.2989
RATIOS/SUPPLEMENTAL DATA
Total return			-21.30	%		-14.34	%		1.41	%		34.35	%		27.31	%
Net assets, end of period (in millions)		$	705		$	995		$	1,256		$	1,163		$	825
Ratio of expenses to average net assets			0.99	%		0.97	%		0.96	%		0.96	%		0.80	%
Ratio of net investment income to average net assets			0.01	%		0.27	%		0.14	%		0.06	%		0.55	%
Portfolio turnover rate			40.58	%		50.70	%		56.52	%		65.82	%		75.58	%

D-52

HIGH INCOME PORTFOLIO
(For a share outstanding throughout each period)

		For the fiscal year ended December 31,
		2002			2001			2000			1999			1998
PER-SHARE DATA
Net asset value, beginning of period		$	3.3261		$	3.3542		$	4.1691		$	4.4143		$	4.7402
Income (loss) from investment operations:
	Net investment income		0.2602			0.3346			0.4107			0.4313			0.4185
	Net realized and unrealized gain (loss) on investments		(0.3275	)		(0.0281	)		(0.8149	)		(0.2452	)		(0.3259	)
Total from investment operations			(0.0673	)		0.3065			(0.4042	)		0.1861			0.0926
Less distributions from net investment income			(0.2602	)		(0.3346	)		(0.4107	)		(0.4313	)		(0.4185	)
Net asset value, end of period		$	2.9986		$	3.3261		$	3.3542		$	4.1691		$	4.4143
RATIOS/SUPPLEMENTAL DATA
Total return			-2.02	%		9.18	%		-9.73	%		4.22	%		1.95	%
Net assets, end of period (in millions)		$	128		$	116		$	102		$	121		$	126
Ratio of expenses to average net assets			0.95	%		0.93	%		0.96	%		0.92	%		0.77	%
Ratio of net investment income to average net assets			8.42	%		9.60	%		10.02	%		9.17	%		8.76	%
Portfolio turnover rate			85.17	%		193.71	%		118.96	%		87.84	%		63.64	%

D-53

INTERNATIONAL PORTFOLIO
(For a share outstanding throughout each period)

		For the fiscal year ended December 31,
		2002			2001			2000			1999			1998
PER-SHARE DATA
Net asset value, beginning of period		$	5.8536		$	7.8610		$	11.9354		$	7.8176		$	6.3842
Income (loss) from investment operations:
	Net investment income		0.0227			0.0498			0.0298			0.0032			0.0353
	Net realized and unrealized gain (loss) on investments		(1.0853	)		(1.7977	)		(2.8531	)		5.1235			2.1283
Total from investment operations			(1.0626	)		(1.7479	)		(2.8233	)		5.1267			2.1636
Less distributions from:
	Net investment income		(0.0227	)		(0.0419	)		(0.0186	)		(0.0000	)		(0.0353	)
	Capital gains		(0.0000	)		(0.2176	)		(1.2325	)		(1.0089	)		(0.6949	)
Total distributions			(0.0227	)		(0.2595	)		(1.2511	)		(1.0089	)		(0.7302	)
Net asset value, end of period		$	4.7683		$	5.8536		$	7.8610		$	11.9354		$	7.8176
RATIOS/SUPPLEMENTAL DATA
Total return			-18.15	%		-22.23	%		-23.66	%		65.58	%		33.89	%
Net assets, end of period (in millions)		$	139		$	187		$	266		$	300		$	169
Ratio of expenses to average net assets			1.30	%		1.25	%		1.23	%		1.21	%		1.02	%
Ratio of net investment income to average net assets			0.41	%		0.71	%		0.31	%		0.04	%		0.47	%
Portfolio turnover rate			116.21	%		99.52	%		116.84	%		118.71	%		88.84	%

D-54

LIMITED-TERM BOND PORTFOLIO
(For a share outstanding throughout each period)

		For the fiscal year ended December 31,
		2002			2001			2000			1999			1998
PER-SHARE DATA
Net asset value, beginning of period		$	5.4437		$	5.1666		$	5.0405		$	5.2292		$	5.1882
Income (loss) from investment operations:
	Net investment income		0.1327			0.1971			0.3155			0.2799			0.2935
	Net realized and unrealized gain (loss) on investments		0.1631			0.2771			0.1261			(0.1887	)		0.0522
Total from investment operations			0.2958			0.4742			0.4416			0.0912			0.3457
Less distributions from:
	Net investment income		(0.1327	)		(0.1971	)		(0.3155	)		(0.2799	)		(0.2935	)
	Capital gains		(0.0000	)		(0.0000	)		(0.0000	)		(0.0000	)		(0.0112	)
Total distributions			(0.1327	)		(0.1971	)		(0.3155	)		(0.2799	)		(0.3047	)
Net asset value, end of period		$	5.6068		$	5.4437		$	5.1666		$	5.0405		$	5.2292
RATIOS/SUPPLEMENTAL DATA
Total return			5.43	%		9.21	%		8.73	%		1.74	%		6.66	%
Net assets, end of period (in millions)		$	47		$	16		$	6		$	6		$	5
Ratio of expenses to average net assets including voluntary expense waiver			0.69	%		0.38	%		0.40	%		0.64	%		0.79	%
Ratio of net investment income to average net assets including voluntary expense waiver			3.97	%		5.52	%		6.33	%		5.63	%		5.65	%
Ratio of expenses to average net assets excluding voluntary expense waiver			0.87	%		0.88	%		0.90	%		0.91	%		—
Ratio of net investment income to average net assets excluding voluntary expense waiver			3.79	%		5.02	%		5.83	%		5.36	%		—
Portfolio turnover rate			27.36	%		22.43	%		47.32	%		22.81	%		47.11	%

D-55

MONEY MARKET PORTFOLIO
(For a share outstanding throughout each period)

	For the fiscal year ended December 31,
	2002			2001			2000			1999			1998
PER-SHARE DATA
Net asset value, beginning of period	$	1.0000		$	1.0000		$	1.0000		$	1.0000		$	1.0000
Net investment income		0.0113			0.0356			0.0571			0.0450			0.0492
Less dividends declared		(0.0113	)		(0.0356	)		(0.0571	)		(0.0450	)		(0.0492	)
Net asset value, end of period	$	1.0000		$	1.0000		$	1.0000		$	1.0000		$	1.0000
RATIOS/SUPPLEMENTAL DATA
Total return		1.12	%		3.62	%		5.87	%		4.62	%		5.04	%
Net assets, end of period (in millions)	$	103		$	99		$	52		$	64		$	54
Ratio of expenses to average net assets		0.75	%		0.73	%		0.75	%		0.77	%		0.68	%
Ratio of net investment income to average net assets		1.13	%		3.31	%		5.67	%		4.51	%		4.90	%

D-56

SCIENCE AND TECHNOLOGY PORTFOLIO
(For a share outstanding throughout each period)

		For the fiscal year ended December 31,
		2002			2001			2000			1999			1998
PER-SHARE DATA
Net asset value, beginning of period		$	12.4927		$	14.2542		$	22.4087		$	8.2750		$	5.7726
Income (loss) from investment operations:
	Net investment income (loss)		(0.0245	)		0.0584			0.1151			(0.0309	)		0.0032
	Net realized and unrealized gain (loss) on investments		(2.9720	)		(1.7571	)		(4.8532	)		14.4840			2.6551
Total from investment operations			(2.9965	)		(1.6987	)		(4.7381	)		14.4531			2.6583
Less distributions from:
	Net investment income		(0.0001	)		(0.0589	)		(0.1151	)		(0.0000	)		(0.0032	)
	Capital gains		(0.0000	)		(0.0039	)		(3.3013	)		(0.3194	)		(0.1527	)
Total distributions			(0.0001	)		(0.0628	)		(3.4164	)		(0.3194	)		(0.1559	)
Net asset value, end of period		$	9.4961		$	12.4927		$	14.2542		$	22.4087		$	8.2750
RATIOS/SUPPLEMENTAL DATA
Total return			-23.99	%		-11.91	%		-21.15	%		174.66	%		46.05	%
Net assets, end of period (in millions)		$	195		$	267		$	295		$	253		$	35
Ratio of expenses to average net assets			1.17	%		1.15	%		1.14	%		1.10	%		0.92	%
Ratio of net investment income (loss) to average net assets			-0.23	%		0.47	%		0.64	%		-0.38	%		0.07	%
Portfolio turnover rate			92.25	%		93.19	%		93.76	%		47.36	%		64.72	%

D-57

SMALL CAP PORTFOLIO
(For a share outstanding throughout each period)

		For the fiscal year ended December 31,
		2002			2001			2000			1999			1998
PER-SHARE DATA
Net asset value, beginning of period		$	7.9770		$	8.1345		$	11.6130		$	7.9019		$	8.3316
Income (loss) from investment operations:
	Net investment income (loss)		(0.0458	)		(0.0103	)		0.0717			0.0423			0.0798
	Net realized and unrealized gain (loss) on investments		(1.6924	)		(0.1471	)		(1.5051	)		4.0847			0.8255
Total from investment operations			(1.7382	)		(0.1574	)		(1.4334	)		4.1270			0.9053
Less distributions:
	From net investment income		(0.0000	)		(0.0000	)*		(0.0717	)		(0.0421	)		(0.0798	)
	From capital gains		(0.0000	)		(0.0001	)		(1.9734	)		(0.3738	)		(1.2027	)
	In excess of realized capital gains		(0.0000	)		(0.0000	)		(0.0000	)		(0.0000	)		(0.0525	)
Total distributions			(0.0000	)		(0.0001	)		(2.0451	)		(0.4159	)		(1.3350	)
Net asset value, end of period		$	6.2388		$	7.9770		$	8.1345		$	11.6130		$	7.9019
RATIOS/SUPPLEMENTAL DATA
Total return			-21.79	%		-1.93	%		-12.35	%		52.23	%		10.87	%
Net assets, end of period (in millions)		$	279		$	359		$	345		$	318		$	181
Ratio of expenses to average net assets			1.15	%		1.14	%		1.13	%		1.12	%		0.97	%
Ratio of net investment income (loss) to average net assets			-0.66	%		-0.14	%		0.68	%		0.53	%		0.94	%
Portfolio turnover rate			34.54	%		30.31	%		58.35	%		130.99	%		177.32	%

* Not shown due to rounding.

D-58

VALUE PORTFOLIO
(For a share outstanding throughout each period)

					For the
		For the			period from
		fiscal year			5/1/011
		ended			through
		12/31/02			12/31/01
PER-SHARE DATA
Net asset value, beginning of period		$	5.0815		$	5.0000
Income (loss) from investment operations:
	Net investment income		0.0348			0.0198
	Net realized and unrealized gain (loss) on investments		(0.6799	)		0.0815
Total from investment operations			(0.6451	)		0.1013
Less distributions from net investment income			(0.0348	)		(0.0198	)
Net asset value, end of period		$	4.4016		$	5.0815
RATIOS/SUPPLEMENTAL DATA
Total return			-12.70	%		2.03	%
Net assets, end of period (in millions)		$	75		$	44
Ratio of expenses to average net assets including voluntary expense waiver			1.04	%		0.84	%2
Ratio of net investment income to average net assets including voluntary expense waiver			0.92	%		1.39	%2
Ratio of expenses to average net assets excluding voluntary expense waiver			—	3		1.07	%2
Ratio of net investment income to average net assets excluding voluntary expense waiver			—	3		1.16	%2
Portfolio turnover rate			95.73	%		10.91	%

¹Commencement of operations.

²Annualized.

³Because the Portfolio’s net assets exceeded $25 million for the entire period, there was no waiver of expenses. Therefore, no ratio is provided.

D-59

W&R TARGET FUNDS, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217

PROSPECTUS

Custodian
	UMB Bank, n. a.
	928 Grand Boulevard
	Kansas City, Missouri 64106
Legal Counsel
	Kirkpatrick & Lockhart LLP
	1800 Massachusetts Avenue NW
	Washington, D. C. 20036
Independent Auditors
	Deloitte & Touche LLP
	1010 Grand Boulevard
	Kansas City, Missouri 64106-2232
Investment Manager
	Waddell & Reed Investment Management Company
	6300 Lamar Avenue
	P. O. Box 29217
	Shawnee Mission, Kansas 66201-9217
	913-236-2000
	888-WADDELL
Accounting Services Agent
	Waddell & Reed Services Company
	6300 Lamar Avenue
	P. O. Box 29217
	Shawnee Mission, Kansas 66201-9217
	913-236-2000
	888-WADDELL
Our INTERNET address is:
	http://www.waddell.com

TABLE OF CONTENTS
An Overview of the Portfolios	2
The Investment Principles of the Portfolios	34
The Management of the Portfolios	41
Purchases and Redemptions	44
Net Asset Value	45
Dividends and Distributions	46
Financial Highlights	47

D-60

W&R TARGET FUNDS, INC.
PROSPECTUS

You can get more information about the Portfolios in—

• the Statement of Additional Information (SAI), which contains detailed information about each Portfolio, particularly its investment policies and practices. You may not be aware of important information about a Portfolio unless you read both the Prospectus and the SAI. The current SAI is on file with the Securities and Exchange Commission (SEC) and it is incorporated into this Prospectus by reference (that is, the SAI is legally part of the Prospectus).

• the Annual and Semiannual Reports to Shareholders, which detail each Portfolio’s actual investments and include financial statements as of the close of the particular annual or semiannual period. The annual report also contains a discussion of the market conditions and investment strategies that significantly affected the Portfolios’ performance during the year covered by the report.

To request a copy of the current SAI or copies of the Portfolios’ most recent Annual and Semiannual reports, without charge, or for other inquiries, contact the Fund or Waddell & Reed, Inc. at the address and telephone number below. Copies of the SAI, Annual and/or Semiannual Report may also be requested at request@waddell.com.

Information about the Fund (including its current SAI and most recent Annual and Semiannual Reports) is available from the SEC’s web site at http://www.sec.gov and may also be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov or from the SEC’s Public Reference Room in Washington, D.C. You can find out about the operation of the Public Reference Room and applicable copying charges by calling 202-942-8090.

The Fund’s SEC file number is: 811-5017.

WADDELL & REED, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
913-236-2000
888-WADDELL

D-61

APPENDIX E

W&R TARGET FUNDS, INC.

6300 Lamar Avenue

P. O. Box 29217

Shawnee Mission, Kansas 66201-9217

913-236-2000
888-WADDELL

July 24, 2003

PROSPECTUS

     W&R Target Funds, Inc. (Fund) is a management investment company, commonly known as a mutual fund. This Prospectus offers three separate Portfolios of the Fund, each with a separate goal and investment policies.

International II Portfolio seeks long-term capital growth.

Micro Cap Growth Portfolio seeks long-term capital appreciation.

Small Company Value Portfolio seeks long-term accumulation of capital.

     Portfolio shares are not sold to you directly but rather are available to you only through certain variable life insurance policies and variable annuity contracts (Policies) offered by Participating Insurance Companies. This Prospectus contains concise information about the Portfolios of which you should be aware before applying for a Policy. This Prospectus should be read together with the Prospectus for the particular Policy.

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

E-1

An Overview of the Portfolios

International II Portfolio

Goal

International II Portfolio seeks long-term capital growth.

Principal Strategy

International II Portfolio seeks to achieve its goal by investing primarily in equity securities of small, mid and large capitalization foreign companies and governmental entities. The Portfolio primarily invests in common stock but may also invest in foreign investment-grade debt securities.

In selecting equity securities for the Portfolio, Templeton Investment Counsel, LLC, the Portfolio’s investment sub-advisor (Sub-Advisor), performs a company-by-company analysis, rather than focusing on a specific industry or economic sector. The Sub-Advisor concentrates on the market price of a company relative to its view regarding the company’s long-term earnings potential. The Sub-Advisor typically also considers a company’s historical value measures, including price/earnings ratios, profit margins and liquidation value.

Generally, in determining whether to sell a security, the Sub-Advisor uses the same type of analysis that it uses in buying securities. For example, the Sub-Advisor may sell a security if it determines that the issuer’s growth and/or profitability characteristics are deteriorating or the issuer no longer maintains a competitive advantage, more attractive investment opportunities arise, or to raise cash.

Principal Risks of Investing in the Portfolio

A variety of factors can affect the investment performance of International II Portfolio. These include:

*	changes in foreign exchange rates, which may affect the value of the securities the Portfolio holds
*	the earnings performance, credit quality and other conditions of the companies whose securities the Portfolio holds
*	adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio’s holdings to fall as part of a broad market decline
*	the Sub-Advisor’s skill in evaluating and selecting securities for the Portfolio

Investing in foreign securities presents additional risks, such as currency fluctuations and political or economic conditions affecting the foreign country. Accounting and disclosure standards differ from country to country, which makes obtaining reliable research information more difficult. There is the possibility that, due to certain international monetary or political conditions, the Portfolio’s assets may be more volatile than other investment choices.

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

As with any mutual fund, the value of the Portfolio’s shares will change and you could lose money on your investment. An investment in the Portfolio 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 II Portfolio is designed for investors seeking long-term capital growth by investing primarily in securities issued by foreign companies. You should consider whether the Portfolio fits your particular investment objectives.

Performance

International II Portfolio has not been in operation for a full calendar year; therefore, no performance information is provided in this section.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of International II Portfolio. The table and the example below do not reflect any fees and expenses imposed under the Policies through which the Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

E-2

There are no fees or charges to buy and sell shares of International II Portfolio, reinvest dividends or exchange into other Portfolios of the Fund.

Annual Portfolio Operating Expenses

(expenses that are deducted from Portfolio assets)

Management Fees	0.85	%
Distribution and Service	0.25	%
(12b-1) Fees
Other Expenses	0.09	%
Total Annual Portfolio	1.19	%
Operating Expenses

Example

This example is intended to help you compare the cost of investing in the shares of International II Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1 Year	3 Years
$121		$378

E-3

Micro Cap Growth Portfolio

Goal

Micro Cap Growth Portfolio seeks long-term capital appreciation.

Principal Strategy

Micro Cap Growth Portfolio seeks to achieve its goal by investing primarily in equity securities of domestic companies whose market capitalizations are within the range of capitalizations of companies included in the Russell 2000 Growth Index (micro cap companies) at the time of purchase. The Portfolio primarily invests in common stock but may also invest in preferred stock and securities convertible into equity securities.

In selecting equity securities for the Portfolio, Wall Street Associates, the Portfolio’s investment sub-advisor (Sub-Advisor), seeks to invest in securities of companies that it believes show sustainable earnings growth potential and improving profitability.

Generally, in determining whether to sell a security, the Sub-Advisor uses the same type of analysis that it uses in buying securities. For example, the Sub-Advisor may sell a security if it determines that the issuer’s growth and/or profitability characteristics are deteriorating or the issuer no longer maintains a competitive advantage, more attractive investment opportunities arise, or to raise cash.

Principal Risks of Investing in the Portfolio

A variety of factors can affect the investment performance of Micro Cap Growth Portfolio. These include:

*	potentially greater price volatility of the equity securities of micro cap companies held by the Portfolio
*	adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio’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 Portfolio holds
*	the mix of securities in the Portfolio, particularly the relative weightings in, and exposure to, different sectors and industries
*	the impact of the Portfolio’s investments in initial public offerings (IPOs)
*	the Sub-Advisor’s skill in evaluating and selecting securities for the Portfolio

Market risk for small-sized companies may be greater than that for medium or large companies due to, among other factors, such companies’ small size, limited product lines, limited access to financing sources and limited management depth. Stocks of smaller companies, as well as stocks of companies with high-growth expectations reflected in their stock price, may experience volatile trading and price fluctuations.

As with any mutual fund, the value of the Portfolio’s shares will change and you could lose money on your investment. An investment in the Portfolio 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

Micro Cap Growth Portfolio is designed for investors seeking long-term capital appreciation from investment in faster-growing companies. You should consider whether the Portfolio fits your particular investment objectives.

Performance

Micro Cap Growth Portfolio has not been in operation for a full calendar year; therefore, no performance information is provided in this section.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Micro Cap Growth Portfolio. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

E-4

There are no fees or charges to buy and sell shares of Micro Cap Growth Portfolio, reinvest dividends or exchange into other Portfolios.

Annual Portfolio Operating Expenses

(expenses that are deducted from Portfolio assets)

Management Fees	0.95	%
Distribution and Service	0.25	%
(12b-1) Fees
Other Expenses	0.14	%
Total Annual Portfolio	1.34	%
Operating Expenses

Example

This example is intended to help you compare the cost of investing in the shares of Micro Cap Growth Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1 Year	3 Years
$136		$425

E-5

Small Company Value Portfolio

Goal

Small Company Value Portfolio seeks long-term accumulation of capital.

Principal Strategy

Small Company Value Portfolio seeks to achieve its goal by investing primarily in various types of equity securities 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 companies). These equity securities will consist primarily of common stocks but may also include preferred stock and securities convertible into equity securities.

In selecting equity securities for the Portfolio, State Street Research & Management Company, the Portfolio’s investment sub-advisor (Sub-Advisor), searches for those companies that appear to be undervalued or trading below their true worth and examines such features as the company’s financial condition, business prospects, competitive position and business strategy. The Sub-Advisor looks for companies that appear likely to come back into favor with investors, for reasons that may include, for example, good prospective earnings, strong management teams or new products or services.

The Portfolio will typically sell a stock when it reaches an acceptable price, its fundamental factors have changed or it has performed below the Sub-Advisor’s expectations. The Sub-Advisor may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

Principal Risks of Investing in the Portfolio

A variety of factors can affect the investment performance of Small Company Value Portfolio. These include:

*	potentially greater price volatility of the equity securities of small companies held by the Portfolio
*	adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio’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 Portfolio holds
*	the mix of securities in the Portfolio, particularly the relative weightings in, and exposure to, different sectors and industries
*	the impact of the Portfolio’s investments in initial public offerings (IPOs)
*	the Sub-Advisor’s skill in evaluating and selecting securities for the Portfolio

Market risk for small-sized companies may be greater than that for medium or large companies due to, among other factors, such companies’ small size, limited product lines, limited access to financing sources and limited management depth. Stocks of smaller companies, as well as stocks of companies with high-growth expectations reflected in their stock price, may experience volatile trading and price fluctuations.

As with any mutual fund, the value of the Portfolio’s shares will change and you could lose money on your investment. An investment in the Portfolio 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 Company Value Portfolio is designed for investors seeking long-term accumulation of capital. You should consider whether the Portfolio fits your particular investment objectives.

Performance

Small Company Value Portfolio has not been in operation for a full calendar year; therefore, no performance information is provided in this section.

E-6

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Small Company Value Portfolio. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses. There are no fees or charges to buy and sell shares of Small Company Value Portfolio, reinvest dividends or exchange into other Portfolios.

Annual Portfolio Operating Expenses

(expenses that are deducted from Portfolio assets)

Management Fees	0.85	%
Distribution and Service	0.25	%
(12b-1) Fees
Other Expenses	0.17	%
Total Annual Portfolio	1.27	%
Operating Expenses

Example

This example is intended to help you compare the cost of investing in the shares of Small Company Value Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1 Year	3 Years
$129		$403

The Investment Principles of the Portfolios

Investment Goals, Principal Strategies and Other Investments

International II Portfolio

The goal of International II Portfolio is long-term capital growth. The Portfolio seeks to achieve this goal by investing primarily in equity securities of small, mid and large capitalization foreign companies and governmental entities. The Portfolio may invest in securities of companies or governments in developed foreign markets or in developing or emerging markets. Under normal market conditions, the Portfolio will invest at least 65% of its total assets in issuers of at least three foreign countries.

Equity securities generally entitle the holder to participate in a company’s general operating results and include common stock, preferred stock, warrants or rights to purchase such securities. Under normal market conditions, the Portfolio invests at least 80% of its net assets (exclusive of collateral received in connection with securities lending) in equity securities. There is no guarantee, however, that the Portfolio will achieve its goal.

In selecting equity securities for the Portfolio, the Sub-Advisor performs a company-by-company analysis, rather than focusing on a specific industry or economic sector. The Sub-Advisor concentrates primarily on the market price of a company’s securities relative to its view regarding the company’s long-term earnings potential. The Sub-Advisor typically also considers a company’s historical value measures, including price/earnings ratios, profit margins and liquidation value.

When the Sub-Advisor believes that a temporary defensive position is desirable, it may invest up to all of the Portfolio’s assets in debt securities including commercial paper or short-term U.S. Government securities and/or preferred stocks; it may avoid investment in volatile emerging markets and increase investments in more stable, developed countries and industries; it may use forward currency contracts to hedge specific foreign currencies; and it may also invest up to all of the Portfolio’s assets in domestic securities. By taking a defensive position, the Portfolio may not achieve its investment objective.

E-7

Micro Cap Growth Portfolio

The goal of Micro Cap Growth Portfolio is to seek long-term capital appreciation. The Portfolio seeks to achieve this goal by investing primarily in various types of equity securities of micro cap companies. The Portfolio may occasionally invest in equity securities of larger companies.

The Portfolio considers a company’s capitalization at the time the Portfolio acquires the company’s equity securities. Equity securities of a company whose capitalization exceeds the range of the Russell 2000 Growth Index after purchase will not be sold solely because of its increased capitalization. The Portfolio will, under normal market conditions, invest at least 80% of its net assets in micro cap companies. There is no guarantee, however, that the Portfolio will achieve its goal.

In selecting equity securities for the Portfolio, the Sub-Advisor primarily looks to a company’s potential for sustainable earnings growth and improving profitability. In selecting securities with earnings growth potential, the Sub-Advisor considers such factors as a company’s competitive market position, quality of management, growth strategy, internal operating trends (such as profit margins, cash flows and earnings and revenue growth), overall financial condition, and ability to sustain current rate of growth. In seeking to achieve its investment objective, the Portfolio may also invest in equity securities of companies that the Sub-Advisor believes are temporarily undervalued or show promise of improved results due to new management, products, markets or other factors.

The Portfolio’s investment in equity securities may include common stocks that are part of IPOs. In addition to common stocks, the Portfolio may invest, to a lesser extent, in preferred stocks and securities convertible into equity securities.

When the Sub-Advisor believes that a temporary defensive position is desirable, the Portfolio may invest up to all of its assets in various short-term cash and cash equivalent items. By taking a defensive position, the Portfolio may not achieve its investment objective.

Small Cap Value Portfolio

The goal of Small Cap Value Portfolio is to seek long-term accumulation of capital. The Portfolio seeks to achieve this goal by investing primarily in various types of equity securities of small cap companies. The Portfolio may occasionally invest in equity securities of mid and large cap companies, companies which fall outside the capitalization range of companies within the Lipper, Inc. Small Cap Category.

The Portfolio considers a company’s capitalization at the time the Portfolio acquires the company’s equity securities. Equity securities 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 Portfolio will, under normal market conditions, invest at least 80% of its net assets in small cap companies. There is no guarantee, however, that the Portfolio will achieve its goal.

In selecting value stocks and other equity securities, the Sub-Advisor primarily looks to equity securities it believes are undervalued or trading below their true worth, but that appear likely to come back into favor with investors. Undervalued securities are securities that Sub-Advisor believes: (a) are undervalued relative to other securities in the market or currently earn low returns with a potential for higher returns, (b) are undervalued relative to the potential for improved operating performance and financial strength, or (c) are issued by companies that have recently undergone a change in management or control, or developed new products or services, that may improve their business prospects or competitive position. In assessing relative value, the Sub-Advisor will consider factors such as a company’s ratio of market price to earnings, ratio of market price to book value, ratio of market price to assets, ratio of market price to cash flow, estimated earnings growth rate, cash flow, yield, liquidation value, product pricing, quality of management and competitive market position. As a secondary focus, the Sub-Advisor may also consider an investment’s potential to provide current income. In seeking to achieve its investment objectives, each Portfolio may also invest in equity securities of companies that the Sub-Advisor believes show potential for sustainable earnings growth above the average market growth rate.

The Portfolio’s purchases of equity securities may include common stocks that are part of IPOs. In addition to common stocks, the Portfolio may also invest, to a lesser extent, in preferred stocks and securities convertible into equity securities.

E-8

When the Sub-Advisor believes that a temporary defensive position is desirable, the Portfolio may invest up to all of its assets in various short-term cash and cash equivalent items. By taking a defensive position, the Portfolio may not achieve its investment objective.

Additional Investment Considerations

The goal and investment policies of each Portfolio may be changed by the Board of Directors of the Fund without a vote of the Portfolio’s shareholders, unless a policy or restriction is otherwise described.

Each Portfolio may also invest in other types of securities and use certain other instruments in seeking to achieve its goal. For example, a Portfolio may 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 in the Statement of Additional Information (SAI) about each Portfolio’s permitted investments and strategies, as well as the restrictions that apply to them.

Risk Considerations of Principal Strategies and Other Investments

Risks exist in any investment. Each Portfolio is subject to equity risk and other market risk, financial risk, sector risk, mid size company risk, and small cap company risk. The Portfolios are also subject to risks specific to their respective investment strategies that include, for International II Portfolio particularly, large company risk, foreign securities risk, emerging market risk, and currency risk, and for Micro Cap Growth Portfolio and Small Company Value Portfolio particularly, IPO risk and micro cap company risk.

*	Market risk is the possibility of a change in the price of the security because of market factors, including changes in interest rates. The prices of common stocks and other equity securities generally fluctuate more than those of other investments. A Portfolio 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. 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 Portfolio will likely change as well.
*	Financial risk is based on the financial situation of the issuer of the security. For an equity investment, a Portfolio’s financial risk may depend, for example, on the earnings performance of the company issuing the stock. To the extent a Portfolio invests in debt securities, the Portfolio’s financial risk depends on the credit quality of the securities in which it invests.
*	Sector risk is the possibility that securities of companies in specific industries or sectors of the economy perform differently than the overall market. Such different performance may, at times, be due to changes in the regulatory or competitive environment or in investor perception of a company or sector.
*	IPO risk is the risk that a Portfolio will not be able to sustain the positive effect on performance that may result from investments in IPOs. Investments in IPOs can have a significant positive impact on the Portfolio’s performance. The positive effect of investments of IPOs may not be sustainable because of a number of factors. The Portfolio may not be able to buy shares in some IPOs, or may be able to buy only a small number of shares. Also, the Portfolio may not be able to buy the shares at the commencement of the offering, and the general availability and performance of IPOs are dependent on market psychology and economic conditions. The relative performance impact of IPOs is also likely to decline as a Portfolio grows.
*	Large company risk is the risk that a portfolio of large capitalization company securities may underperform the market as a whole.
*	Mid size company risk is the risk that equity securities of mid capitalization companies may be more vulnerable to adverse developments than those of larger companies due to such companies’ limited product lines, limited markets and financial resources and dependence upon a relatively small management group.

E-9

*	Small and micro cap company risk is the risk that equity securities of small and micro cap companies, respectively, are more susceptible to market volatility than larger companies due to more limited management, resources, product lines and available markets. Such securities are also less frequently traded and more likely to experience wider price fluctuations, which could make them more difficult to sell.
*	Currency risk is the risk that changes in foreign currency exchange rates will increase or decrease the value of foreign securities or the amount of income or gain received on such securities. A strong U.S. dollar relative to these other currencies will adversely affect the value of the Portfolio. Attempts by the Portfolio to minimize the effects of currency fluctuations through the use of foreign currency hedging transactions may not be successful or the Portfolio’s hedging strategies may cause the Portfolio to be unable to take advantage of a favorable change in the value of foreign currencies.
*	Foreign securities risk is the risk that the value of foreign companies or foreign government securities held by the Portfolio may be subject to greater volatility than domestic securities. Risks of foreign securities include, among other things:

Political and Economic Risks. Investing in foreign securities is subject to the risk of political, social or economic instability in the country of the issuer of the security, the difficulty of predicting international trade patterns, the possibility of exchange controls, expropriation, limits on currency removal or nationalization of assets.

Foreign Tax Risk. The Portfolio’s income from foreign issuers may be subject to non-U.S. withholding taxes. In some countries, the Portfolio may be subject to taxes on trading profits and, on certain securities transactions, transfer or stamp duties. To the extent foreign income taxes are paid by the Portfolio, U.S. shareholders may be entitled to a credit or deduction for U.S. tax purposes.

Foreign Investment Restriction Risk. Some countries, particularly emerging market countries, restrict to varying degrees foreign investment in their securities markets. In some circumstances, these restrictions may limit or preclude investment in certain countries or may increase the cost of investing in securities of particular companies.

Foreign Securities Market Risk. Securities of many foreign companies may be less liquid and their prices more volatile than securities of domestic companies. Securities of companies traded outside the U.S. may be subject to further risks due to the inexperience of local brokers and financial institutions, the possibility of permanent or temporary termination of trading, and greater spreads between bid and asked prices for securities. Foreign stock exchanges and brokers are subject to less governmental regulation, and commissions may be higher than in the U.S. In addition, there may be delays in the settlement of foreign stock exchange transactions.

* Emerging markets risk is the risk that the value of securities issued by companies located in emerging market countries may be subject to greater volatility than foreign securities issued by companies in developed markets. Risks of investing in foreign securities issued by companies in emerging market countries include, among other things, greater social, political and economic instability, lack of liquidity and greater price volatility due to small market size and low trading volume, certain national policies that restrict investment opportunities and the lack of legal structures governing private and foreign investments and private property.

Certain types of each Portfolio’s authorized investments and strategies, such as foreign securities, junk bonds and derivative instruments, involve special risks. Depending on how much a Portfolio invests or uses these strategies, these special risks may become significant. For example, foreign investments may subject a Portfolio 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 Portfolio to greater volatility than an investment in a more traditional stock, bond or other security.

E-10

Because each Portfolio owns different types of investments, its performance will be affected by a variety of factors. The value of each Portfolio’s investments and the income it may generate will vary from day to day, generally reflecting changes in market conditions, interest rates and other company and economic news. Performance will also depend on the Sub-Advisor’s skill in selecting investments.

The Management of the Portfolios

Portfolio Management

The Portfolios are managed by Waddell & Reed Investment Management Company (WRIMCO), subject to the authority of the Fund’s Board of Directors. WRIMCO and/or its predecessor have served as investment manager to the Fund since its inception and to each of the registered investment companies in the Waddell & Reed Advisors Funds and Waddell & Reed InvestEd Portfolios, Inc. since their inception. WRIMCO is located at 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217. Prior to June 30, 2003, WRIMCO managed the Ivy Funds, Inc., which is currently managed by an affiliate of WRIMCO.

The investment sub-advisor of International II Portfolio is Templeton Investment Counsel, LLC (Templeton Counsel), 500 East Broward Boulevard, Fort Lauderdale, Florida 33394. Templeton Counsel provides investment advice to, and generally conducts the investment management program for, International II Portfolio. Edgerton Tucker Scott III is primarily responsible for the management of International II Portfolio and has held his responsibilities for the Portfolio since its inception. Mr. Scott is Vice President and Research Analyst, Templeton Counsel, and serves as the portfolio manager for International Stock Portfolio of Advantus Series Fund, Inc. (Advantus).

The investment sub-advisor of Micro Cap Growth Portfolio is Wall Street Associates (WSA), La Jolla Financial Building, Suite 100, 1200 Prospect Street, La Jolla, California 92037. WSA provides investment advice to, and generally conducts the investment management program for, Micro Cap Growth Portfolio. William Jeffery, III, Kenneth F. McCain and David A. Baratta are primarily responsible for the management of Micro Cap Growth Portfolio and have held their responsibilities for the Portfolio since its inception. Messrs. Jeffery and McCain are Principals and Portfolio Managers, WSA, and Mr. Baratta has been Principal and Portfolio Manager, WSA, since June 1999 and, prior to that, Portfolio Manager and Executive Vice President, Morgan Grenfell, Inc., New York, New York, from October 1994 to June 1999. Messrs. Jeffery, McCain and Baratta serves as the portfolio managers for Micro Cap Growth Portfolio of Advantus.

The investment sub-advisor of Small Company Value Portfolio is State Street Research & Management Company (State Street Research), One Financial Center, Boston, Massachusetts 02111. The Sub-Advisor provides investment advice to, and generally conducts the investment management program for, Small Company Value Portfolio. John Burbank, Paul Haagensen and Caroline Evascu are primarily responsible for the management of Small Company Value Portfolio and have held their responsibilities for the Portfolio since its inception. Mr. Burbank is Senior Vice President, State Street Research. Mr. Haagensen has been Senior Vice President, State Street Research, since 2002 and, prior to that, Portfolio Manager and Senior Analyst, Putnam Investments. Ms. Evascu has been Vice President, State Street Research, since 2001 and, prior to that, Vice President and Senior Analyst, SG Cowen Asset Management, and research associate at Donaldson, Lufkin & Jenrette. Messrs. Burbank and Haagensen serves as the portfolio managers, and Ms. Evascu serves as the associate portfolio manager, of Small Company Value Portfolio of Advantus.

Management and Other Fees

Like all mutual funds, the Portfolios pay fees related to their daily operations. Expenses paid out of each Portfolio’s assets are reflected in its share price or dividends; they are neither billed directly to shareholders nor deducted from shareholder accounts.

Each Portfolio pays a management fee to WRIMCO for providing investment advice and supervising its investments. Each Portfolio also pays other expenses, which are explained in the SAI.

E-11

The management fee is payable at the annual rates of:

for International II Portfolio, 0.85% of net assets up to $1 billion, 0.83% of net assets over $1 billion and up to $2 billion, 0.80% of net assets over $2 billion and up to $3 billion, and 0.76% of net assets over $3 billion;

for Micro Cap Growth Portfolio, 0.95% of net assets up to $1 billion, 0.93% of net assets over $1 billion and up to $2 billion, 0.90% of net assets over $2 billion and up to $3 billion, and 0.86% of net assets over $3 billion; and

for Small Company Value Portfolio, 0.85% of net assets up to $1 billion, 0.83% of net assets over $1 billion and up to $2 billion, 0.80% of net assets over $2 billion and up to $3 billion, and 0.76% of net assets over $3 billion.

WRIMCO uses a portion of the management fees it receives from a Portfolio to pay that Portfolio’s Sub-Advisor.

The Fund has adopted a Service Plan (Plan) pursuant to Rule 12b-1 of the Investment Company Act of 1940, as amended. Under the Plan, each Portfolio may pay daily a fee to Waddell & Reed, Inc., an affiliate of WRIMCO and the Distributor of the Policies for which the Fund is the underlying investment vehicle, in an amount not to exceed 0.25% of the Portfolio’s average annual net assets. The fee is to be paid to compensate Waddell & Reed, Inc. for amounts it expends in connection with the provision of personal services to Policyowners.

PURCHASES AND REDEMPTIONS

The separate accounts of the Participating Insurance Companies place orders to purchase and redeem shares of each Portfolio based on, among other things, the amount of premium payments to be invested and the number of surrender and transfer requests to be effected on any day according to the terms of the Policies. Shares of a Portfolio are sold at their net asset value (NAV) per share next determined after receipt of the order to purchase from the Participating Insurance Company. No sales charge is required to be paid by the Participating Insurance Company for purchase of shares.

Redemptions are made at the NAV per share of the Portfolio next determined after receipt of the request to redeem from the Participating Insurance Company. Payment is generally made within seven days after receipt of a proper request to redeem. No fee is charged to shareholders upon redemption of Portfolio shares. The Fund may suspend the right of redemption of shares of any Portfolio and may postpone payment for any period if any of the following conditions exist:

*	the New York Stock Exchange (NYSE) is closed other than customary weekend and holiday closings or trading on the NYSE is restricted
*	the Securities and Exchange Commission has determined that a state of emergency exists which may make payment or transfer not reasonably practicable
*	the Securities and Exchange Commission has permitted suspension of the right of redemption of shares for the protection of the security holders of the Fund
*	applicable laws and regulations otherwise permit the Fund to suspend payment on the redemption of shares

Redemptions are ordinarily made in cash.

Should any conflict between Policyowners arise which would require that a substantial amount of net assets be withdrawn from the Fund, orderly management of portfolio securities could be disrupted to the potential detriment of Policyowners.

E-12

NET ASSET VALUE

In the calculation of the NAV per share of each Portfolio:

*	The securities in the Portfolio that are listed or traded on an exchange are valued primarily using market prices.
*	Bonds are generally valued according to prices quoted by an independent pricing service.
*	Short-term debt securities are valued at amortized cost, which approximates market value.
*	Other investment assets for which market prices are unavailable are valued at their fair value by or at the direction of the Board of Directors.

The NAV per share of each Portfolio is normally computed daily as of the close of business of the NYSE, typically 4 p.m. Eastern time, except that an option or futures contract held by a Portfolio may be priced at the close of the regular session of any other securities or commodities exchange on which that instrument is traded.

Each Portfolio may invest in securities listed on foreign exchanges, which may trade on Saturdays or on U.S. national business holidays when the NYSE is closed. Consequently, the NAV of a Portfolio’s shares may be significantly affected on days when the Portfolio does not price its shares and when you are not able to purchase or redeem the Portfolio’s shares. When market quotations are not readily available, securities, options, futures contracts and other assets are valued at fair value in a manner determined in good faith under procedures established by and under the general supervision and responsibility of the Board of Directors. Similarly, if events materially affecting the value of foreign investments occur prior to the close of the regular session of trading on the NYSE, but after the time their values are otherwise determined, such investments will be valued at their fair value as determined in good faith by or under the direction of the Board of Directors.

DIVIDENDS AND DISTRIBUTIONS

Each Portfolio distributes substantially all of its net investment income and net capital gains each year.

Dividends from investment income for each of International II Portfolio, Micro Cap Growth Portfolio and Small Company Value Portfolio will usually be declared and paid annually in December. Dividends declared for a particular day are paid to shareholders of record on the prior business day. However, dividends declared for Saturday and Sunday are paid to shareholders of record on the preceding Thursday. Dividends from the Portfolios usually are declared and paid annually in December in additional full and fractional shares of that Portfolio. Ordinarily, dividends are paid on shares starting on the day after they are issued and through the day they are redeemed.

All distributions from net realized long-term or short-term capital gains of a Portfolio, if any, are declared and paid annually in December in additional full and fractional shares of the Portfolio.

You will find information in the SAI about Federal income tax considerations generally affecting the Portfolios.

Because the only shareholders of the Portfolios are the Participating Insurance Companies and their separate accounts, no discussion is included here as to the Federal income tax consequences to the Portfolios’ shareholders. For information concerning the Federal tax consequences to Policyowners, see the applicable prospectus for the Policy. Prospective investors are urged to consult with their tax advisers.

Financial Highlights

None of the Portfolios has been in operation prior to the date of this Prospectus; therefore, no financial highlights are provided in this section.

E-13

W&R TARGET FUNDS, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217

PROSPECTUS

Custodian
	UMB Bank, n. a. 928 Grand Boulevard Kansas City, Missouri 64106
Legal Counsel
	Kirkpatrick & Lockhart LLP 1800 Massachusetts Avenue NW Washington, D. C. 20036
Independent Auditors
	Deloitte & Touche LLP 1010 Grand Boulevard Kansas City, Missouri 64106-2232
Investment Manager
	Waddell & Reed Investment Management Company 6300 Lamar Avenue P. O. Box 29217 Shawnee Mission, Kansas 66201-9217 913-236-2000 888-WADDELL
Investment Sub-Advisors
	Templeton Investment Counsel, LLC 500 East Broward Boulevard Fort Lauderdale, Florida 33394
	Wall Street Associates La Jolla Financial Building, Suite 100 1200 Prospect Street La Jolla, California 92037
	State Street Research & Management Company One Financial Center Boston, Massachusetts 02111
Accounting Services Agent
	Waddell & Reed Services Company 6300 Lamar Avenue P. O. Box 29217 Shawnee Mission, Kansas 66201-9217 913-236-2000 888-WADDELL
Our INTERNET address is:
	http://www.waddell.com
W&R Target Funds, Inc. PROSPECTUS

You can get more information about the Portfolios in—

* the Statement of Additional Information (SAI), which contains detailed information about each Portfolio, particularly its investment policies and practices. You may not be aware of important information about a Portfolio unless you read both the Prospectus and the SAI. The Portfolios’ current SAI is on file with the Securities and Exchange Commission (SEC), and it is incorporated into this Prospectus by reference (that is, the SAI is legally part of the Prospectus).

To request a copy of the current SAI, without charge, or for other inquiries, contact the Fund or Waddell & Reed, Inc. at the address and telephone number below. Copies of the Portfolios’ SAI may also be requested at request@waddell.com.

Information about the Portfolios and the Fund (including the current SAIs and the Fund’s most recent Annual and Semiannual Reports) is available from the SEC’s web site at http://www.sec.gov and may also be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov, by writing the SEC’s Public Reference Section, Washington, D.C. 20549-0102, or from the SEC’s Public Reference Room in Washington, D.C. You can find out about the operation of the Public Reference Room and applicable copying charges by calling 202-942-8090.

The Fund’s SEC file number is: 811-5017.

WADDELL & REED, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
913-236-2000
888-WADDELL

E-14

PART B

STATEMENT OF ADDITIONAL INFORMATION
dated July __, 2003

Acquisition of the Assets of

ADVANTUS ASSET ALLOCATION PORTFOLIO
ADVANTUS CAPITAL APPRECIATION PORTFOLIO
ADVANTUS GROWTH PORTFOLIO
ADVANTUS CORE EQUITY PORTFOLIO
ADVANTUS VALUE STOCK PORTFOLIO
ADVANTUS SMALL COMPANY GROWTH PORTFOLIO
ADVANTUS INTERNATIONAL STOCK PORTFOLIO
ADVANTUS SMALL COMPANY VALUE PORTFOLIO
ADVANTUS MICRO-CAP GROWTH PORTFOLIO.

(each a series of Advantus Series Fund, Inc.)

400 Robert Street North
St. Paul, Minnesota 55101
Telephone: 1-800-995-3850

By and in Exchange for Shares of

W&R BALANCED PORTFOLIO
W&R GROWTH PORTFOLIO
W&R CORE EQUITY PORTFOLIO
W&R VALUE PORTFOLIO
W&R SMALL CAP GROWTH PORTFOLIO
W&R INTERNATIONAL II PORTFOLIO
W&R SMALL CAP VALUE PORTFOLIO
W&R MICRO CAP GROWTH PORTFOLIO
(each a series of W&R Target Funds, Inc.)

6300 Lamar Avenue
Shawnee Mission, Kansas 66202
Telephone: 1-888-WADDELL

     This Statement of Additional Information relates specifically to the reorganization of the nine series of Advantus Series Fund, Inc. referenced above (each an “Advantus Fund”) into the respective series of W&R Target Funds, Inc. referenced above (each a “W&R Fund”). Pursuant to this reorganization, each W&R Fund would acquire all of the assets of a corresponding Advantus Fund (or, in the case of W&R Growth Portfolio, of two corresponding Advantus Funds) that has similar investment objectives and strategies, except as described in the Prospectus/Proxy Statement dated July __, 2003, and W&R Fund shares would be distributed pro rata by each Advantus Fund to the holders of its shares, in complete liquidation of the Advantus Fund. For the name of the W&R Fund into which your Advantus Fund would be reorganized, see the Prospectus/Proxy Statement dated July __, 2003.

     This Statement of Additional Information is not a prospectus. A Prospectus/Proxy Statement dated July __, 2003, relating to the above-referenced matters may be obtained from the Advantus Funds at the address and telephone number shown above. This Statement of Additional Information should be read in conjunction with such Prospectus/Proxy Statement.

Table of Contents

I. Additional Information About the W&R Funds and the Advantus Funds	2
II. Financial Information	2
III. Pro Forma Financial Statements	4

     I.     Additional Information About the W&R Funds and the Advantus Funds

     This Statement of Additional Information is accompanied by the following documents which contain additional information about the W&R Funds and the Advantus Funds and which are incorporated by reference herein:

1.	The Statement of Additional Information dated May 1, 2003 of Advantus Series Fund, Inc. (“Advantus Series Fund”), in the form filed by the Advantus Series Fund with the Securities and Exchange Commission (the “SEC”) on May 8, 2003 pursuant to Rule 497 (SEC File Number 002-96990), EDGAR Accession Number 0000950134-03-007358.
2.	The Statement of Additional Information dated May 1, 2003 of W&R Target Funds, Inc. (“W&R Target Funds”) in the form filed by the W&R Target Funds with the SEC on May 1, 2003 pursuant to Rule 485(b) (SEC File Number 033-11466), EDGAR Accession Number 0001105607-03-000060.
3.	The Statement of Additional Information dated July 24, 2003 of the W&R Target Funds in the form filed by the W&R Target Funds with the SEC on July 23, 2003 pursuant to Rule 485(b) (SEC File Number 033-11466), EDGAR Accession Number 0001105607-03-000150.

     II.     Financial Information

     Historical financial information regarding the W&R Funds and the Advantus Funds is included in the following documents which accompany this Statement of Additional Information and which are incorporated by reference herein:

1.	The Advantus Series Fund’s Annual Report for the fiscal year ended December 31, 2002, in the form filed by the Advantus Series Fund with the SEC on February 28, 2003 (SEC File Number 811-04279), EDGAR Accession Number 0001047469-03-007295.
2.	The W&R Target Fund’s Annual Report for the fiscal year ended December 31, 2002, in the form filed by the W&R Target Fund with the SEC on February 27, 2003 (SEC File Number 811-05017), EDGAR Accession Number 0000810016-03-000001.

     III. Pro Forma Financial Statements

     Set forth on the following pages are pro forma financial statements which are presented to show the effect of the proposed acquisition of each Advantus Fund by the corresponding W&R Fund as if such acquisition had taken place as of the close of business on December 31, 2002. Pro forma financial statements are included for the following fund reorganizations: Advantus Asset Allocation Portfolio into W&R Balanced Portfolio, Advantus Capital Appreciation Portfolio into W&R Growth Portfolio, Advantus Growth Portfolio into W&R Growth Portfolio, Advantus Capital Appreciation Portfolio and Advantus Growth Portfolio into W&R Growth Portfolio, Advantus Value Stock Portfolio into W&R Value Portfolio, and Advantus Small Company Growth Portfolio into W&R Small Cap Growth Portfolio. Pursuant to Item 14(a)(2) of the instructions to Part B of Form N-14, pro forma financial statements are not included for the reorganization of Advantus Core Equity Portfolio into W&R Core Equity Portfolio because the net asset value of the fund being acquired does not exceed ten percent of the acquiring fund’s net asset value.

2

Pro forma financial statements are not included for the reorganization of Advantus International Stock Portfolio into W&R International II Portfolio, Advantus Small Company Value Portfolio into W&R Small Cap Value Portfolio, and Advantus Micro-Cap Growth Portfolio into W&R Micro Cap Growth Portfolio because the acquiring funds are newly formed W&R Funds that will not have any assets prior to the Reorganization.

3

W&R TARGET BALANCED PORTFOLIO
ADVANTUS ASSET ALLOCATION PORTFOLIO
PRO FORMA COMBINED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
(UNAUDITED)

The following unaudited Pro Forma Combined Statement of Assets and Liabilities, including the unaudited Pro Forma Combined Investments of W&R Target Balanced Portfolio and Advantus Asset Allocation Portfolio as of December 31, 2002 has been derived from the respective statements of assets and liabilities, including the schedules of investments, of W&R Target Balanced Portfolio and Advantus Asset Allocation Portfolio as of December 31, 2002.

Under the terms of the Agreement and Plan of Reorganization, the combination of Advantus Asset Allocation Portfolio and W&R Target Balanced Portfolio will be treated as a tax-free business combination and accordingly will be accounted for by a method of accounting for tax-free mergers of investment companies (sometimes referred to as the pooling without restatement method). The acquisition would be accomplished by an acquisition of the net assets of Advantus Asset Allocation Portfolio in exchange for shares of W&R Target Balanced Portfolio at net asset value. W&R Target Balanced Portfolio will be the accounting survivor for financial statement purposes.

As of July 23, 2003, all of the securities held by Advantus Asset Allocation Portfolio would comply with the compliance guidelines and/or investment restrictions of W&R Target Balanced Portfolio. All reorganization costs will be borne by Advantus Capital Management, Inc. and not by the funds.

The Pro Forma Combined Statement of Assets and Liabilities is presented for informational purposes only and does not purport to be indicative of the financial condition that would have resulted if the Reorganization had been consummated on December 31, 2002. The unaudited Pro Forma Financial Statements should be read in conjunction with the respective financial statements and related notes of W&R Target Balanced Portfolio and Advantus Asset Allocation Portfolio incorporated by reference in this Statement of Additional Information.

4

SHARES OR											(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION	VALUE
				W&R							W&R
				TARGET							TARGET
				BALANCED							BALANCED
				PORTFOLIO							PORTFOLIO
W&R TARGET		ADVANTUS		PRO			W&R TARGET		ADVANTUS		PRO
BALANCED		ASSET		FORMA			BALANCED		ASSET		FORMA
PORTFOLIO		ALLOCATION		COMBINED			PORTFOLIO		ALLOCATION		COMBINED
						COMMON STOCKS
						Air Transportation
			296,200		296,200	Northwest Airlines, Inc.*				2,174,108		2,174,108
	80,000				80,000	Southwest Airlines Co.		1,112,000				1,112,000
						Total		1,112,000		2,174,108		3,286,108
						Aircraft
	39,300		9,700		49,000	Lockheed Martin Corporation		2,269,575		560,175		2,829,750
	58,000				58,000	Raytheon Company		1,783,500				1,783,500
			19,900		19,900	United Technologies Corporation				1,232,606		1,232,606
						Total		4,053,075		1,792,781		5,845,856
						Banks
			75,900		75,900	Bank of America Corporation				5,280,363		5,280,363
			62,160		62,160	Charter One Financial, Inc				1,785,857		1,785,857
			168,500		168,500	CitiGroup, Inc.*				5,929,515		5,929,515
			32,800		32,800	Fleet Boston Financial Corporation				797,040		797,040
	74,900		162,800		237,700	U.S. Bancorp		1,589,378		3,454,616		5,043,994
			187,500		187,500	Wachovia Corporation				6,832,500		6,832,500
	48,500		91,600		140,100	Wells Fargo & Company		2,273,195		4,293,292		6,566,487
			26,300		26,300	Zion BanCorporation				1,034,879		1,034,879
						Total		3,862,573		29,408,062		33,270,635
						Beverages
	29,000				29,000	Anheuser-Busch Companies, Inc		1,403,600				1,403,600
	30,000		16,500		46,500	Coca-Cola Company (The)		1,314,600		723,030		2,037,630
						Total		2,718,200		723,030		3,441,230
						Broadcasting
			97,000		97,000	Clear Channel Communications, Inc.*				3,617,130		3,617,130
			80,514		80,514	Comcast Corporation*				1,858,123		1,858,123
	38,979				38,979	Cox Communications, Inc., Class A*		1,107,004				1,107,004
	64,800				64,800	Fox Entertainment Group, Inc., Class A*		1,680,264				1,680,264
			55,100		55,100	Viacom, Inc.*				2,245,876		2,245,876
						Total		2,787,268		7,721,129		10,508,397
						Business Equipment and Services
			63,631		63,631	Brookfield Properties Corporation				1,285,346		1,285,346
			42,000		42,000	Entegris, Inc.*				432,600		432,600
			30,100		30,100	First Data Corporation				1,065,841		1,065,841
	42,000				42,000	Genuine Parts Company		1,293,600				1,293,600
	55,000		77,800		132,800	Manpower Inc.		1,754,500		2,481,820		4,236,320
						Total		3,048,100		5,265,607		8,313,707
						Capital Equipment
	15,000				15,000	Caterpillar Inc.		685,800				685,800
	44,200				44,200	Cooper Cameron Corporation*		2,202,044				2,202,044
	28,300				28,300	Ingersoll-Rand Company Limited, Class A		1,218,598				1,218,598
						Total		4,106,442		0		4,106,442
						Chemicals — Petroleum and Inorganic
	30,000		70,400		100,400	Dow Chemical Company (The)		891,000		2,090,880		2,981,880
	21,100		101,600		122,700	du Pont (E.I.) de Nemours and Company		894,640		4,307,840		5,202,480

See Notes to Pro Forma Combined Financial Statements.

SHARES OR													(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION		VALUE
				W&R								W&R
				TARGET								TARGET
				BALANCED								BALANCED
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO			W&R TARGET			ADVANTUS		PRO
BALANCED		ASSET		FORMA			BALANCED			ASSET		FORMA
PORTFOLIO		ALLOCATION		COMBINED			PORTFOLIO			ALLOCATION		COMBINED
						Total			1,785,640		6,398,720			8,184,360
						Chemicals — Specialty
	30,000		33,600		63,600	Air Products and Chemicals, Inc.			1,282,500		1,436,400			2,718,900
						Communications Equipment
	80,000		168,400		248,400	Cisco Systems, Inc.*			1,047,600		2,206,040			3,253,640
	87,000				87,000	Nokia Corporation, Series A, ADR			1,348,500					1,348,500
			18,900		18,900	Qualcomm, Inc.*					687,771			687,771
						Total			2,396,100		2,893,811			5,289,911
						Computers — Main and Mini
			66,100		66,100	Hewlett-Packard Company					1,147,496			1,147,496
			50,700		50,700	International Business Machines Corporation					3,929,250			3,929,250
						Total			0		5,076,746			5,076,746
						Computers — Micro
	26,100		113,657		139,757	Dell Computer Corporation*			699,089		3,039,188			3,738,277
						Computers — Peripherals
			75,600		75,600	BEA Systems, Inc.*					867,132			867,132
			90,900		90,900	Brocade Communication Systems, Inc.*					376,326			376,326
	205,000				205,000	EMC Corporation*			1,258,700					1,258,700
	70,400		153,500		223,900	Microsoft Corporation*			3,641,088		7,935,950			11,577,038
			166,500		166,500	Oracle Systems*					1,798,200			1,798,200
			31,000		31,000	Peoplesoft, Inc.*					567,300			567,300
	55,000				55,000	SAP Aktiengesellschaft, ADR			1,072,500					1,072,500
			84,400		84,400	Siebel Systems, Inc.*					631,312			631,312
			349,800		349,800	Symbol Technologies, Inc					2,875,356			2,875,356
						Total			5,972,288		15,051,576			21,023,864
						Cosmetics and Toiletries
			34,400		34,400	Avon Products, Inc.					1,853,128			1,853,128
	50,000				50,000	Estee Lauder Companies Inc. (The), Class A			1,320,000					1,320,000
	36,700				36,700	Gillette Company (The)			1,114,212					1,114,212
						Total			2,434,212		1,853,128			4,287,340
						Electrical Equipment
	34,000				34,000	Emerson Electric Co.			1,728,900					1,728,900
			94,400		94,400	Tyco International, Ltd.					1,612,352			1,612,352
			54,600		54,600	WW Grainger, Inc.					2,814,630			2,814,630
						Total			1,728,900		4,426,982			6,155,882
						Electronic Components
	15,500				15,500	Analog Devices, Inc.*			369,985					369,985
			28,500		28,500	Cree, Inc.*					465,975			465,975
	95,000		68,300		163,300	Intel Corporation			1,479,625		1,063,431			2,543,056
			29,900		29,900	Intersil Corporation*					416,806			416,806
			155,300		155,300	LSI Logic Corporation*					896,081			896,081
			85,600		85,600	National Semiconductor Corporation*					1,284,856			1,284,856
	48,000		135,529		183,529	Texas Instruments Incorporated			720,480		2,034,290			2,754,770
			31,300		31,300	Xilinx, Inc.*					644,780			644,780
						Total			2,570,090		6,806,219			9,376,309

See Notes to Pro Forma Combined Financial Statements.

SHARES OR										(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION	VALUE
				W&R							W&R
				TARGET							TARGET
				BALANCED							BALANCED
				PORTFOLIO							PORTFOLIO
W&R TARGET		ADVANTUS		PRO				W&R TARGET	ADVANTUS		PRO
BALANCED		ASSET		FORMA				BALANCED	ASSET		FORMA
PORTFOLIO		ALLOCATION		COMBINED				PORTFOLIO	ALLOCATION		COMBINED
						Electronic Instruments
	82,400		50,300		132,700	Applied Materials, Inc.*		1,073,672	655,409		1,729,081
	50,000				50,000	Molex Incorporated, Class A		998,500			998,500
			15,600		15,600	Novellus Systems, Inc.*			438,048		438,048
						Total		2,072,172	1,093,457		3,165,629
						Food and Related
	51,100				51,100	ConAgra Foods, Inc.		1,278,011			1,278,011
	12,000				12,000	Dean Foods Company*		445,200			445,200
			55,000		55,000	Kraft Foods, Inc.			2,141,150		2,141,150
			83,700		83,700	Sara Lee Corporation			1,884,087		1,884,087
						Total		1,723,211	4,025,237		5,748,448
						Forest and Paper Products
	32,138				32,138	International Paper Company		1,123,866			1,123,866
	53,000				53,000	Sealed Air Corporation*		1,976,900			1,976,900
			26,800		26,800	Weyerhaeuser Company			1,318,828		1,318,828
						Total		3,100,766	1,318,828		4,419,594
						Furniture and Furnishings
	50,000				50,000	Leggett & Platt, Incorporated		1,122,000			1,122,000
						Gold and Precious Metals
	67,184				67,184	Barrick Gold Corporation		1,035,305			1,035,305
						Health Care — Drugs
			21,400		21,400	Abbott Laboratories			856,000		856,000
			69,200		69,200	Amgen, Inc.*			3,345,128		3,345,128
			35,800		35,800	Eli Lilly & Company			2,273,300		2,273,300
			14,300		14,300	Forest Laboratories, Inc.*			1,404,546		1,404,546
	79,850		255,425		335,275	Pfizer Inc.		2,441,015	7,808,342		10,249,357
	68,380				68,380	Pharmacia Corporation		2,858,284			2,858,284
						Total		5,299,299	15,687,316		20,986,615
						Health Care — General
	30,200		84,700		114,900	Johnson & Johnson		1,622,042	4,549,237		6,171,279
			71,500		71,500	St. Jude Medical, Inc.*			2,839,980		2,839,980
	28,000		66,800		94,800	Wyeth		1,047,200	2,498,320		3,545,520
			30,300		30,300	Zimmer Holdings, Inc.*			1,258,056		1,258,056
						Total		2,669,242	11,145,593		13,814,835
						Hospital Supply and Management
			24,500		24,500	Express Scripts, Inc.*			1,176,980		1,176,980
	35,500				35,500	HCA - The Healthcare Company		1,473,250			1,473,250
	90,000				90,000	Health Management Associates, Inc.,		1,611,000			1,611,000
	30,000				30,000	Medtronic, Inc.		1,368,000			1,368,000
						Total		4,452,250	1,176,980		5,629,230
						Hotels and Gaming
			169,200		169,200	Hilton Hotels			2,150,532		2,150,532
						Household — General Products
			71,400		71,400	Colgate-Palmolive Company			3,743,502		3,743,502
			43,800		43,800	Procter & Gamble Company			3,764,172		3,764,172

See Notes to Pro Forma Combined Financial Statements.

SHARES OR											(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION	VALUE
				W&R							W&R
				TARGET							TARGET
				BALANCED							BALANCED
				PORTFOLIO							PORTFOLIO
W&R TARGET		ADVANTUS		PRO			W&R TARGET		ADVANTUS		PRO
BALANCED		ASSET		FORMA			BALANCED		ASSET		FORMA
PORTFOLIO		ALLOCATION		COMBINED			PORTFOLIO		ALLOCATION		COMBINED
						Total		0		7,507,674		7,507,674
						Insurance – Property and Casualty
			84,500		84,500	Allstate Corporation				3,125,655		3,125,655
	26,000		60,700		86,700	American International Group, Inc.		1,504,100		3,511,495		5,015,595
	600				600	Berkshire Hathaway Inc., Class B*		1,453,800				1,453,800
	32,100				32,100	Chubb Corporation (The)		1,675,620				1,675,620
	23,700				23,700	Hartford Financial Services Group Inc. (The)		1,076,691				1,076,691
						Total		5,710,211		6,637,150		12,347,361
						Leisure Time Industry
			277,650		277,650	Brunswick Corporation				5,514,129		5,514,129
	80,800		195,800		276,600	Walt Disney Company (The)*		1,317,848		3,193,498		4,511,346
						Total		1,317,848		8,707,627		10,025,475
						Motion Pictures
			48,700		48,700	AOL Time Warner, Inc.*				637,970		637,970
						Motor Vehicle Parts
			14,600		14,600	Autozone, Inc.*				1,031,490		1,031,490
	20,000				20,000	Danaher Corporation		1,314,000				1,314,000
			18,000		18,000	Eaton Corporation				1,405,980		1,405,980
			21,400		21,400	Magna International, Inc.				1,201,610		1,201,610
						Total		1,314,000		3,639,080		4,953,080
						Multiple Industry
			35,100		35,100	3M Company				4,327,830		4,327,830
			81,900		81,900	Boardwalk Equities, Inc.				785,421		785,421
			43,200		43,200	Fisher Scientific International, Inc.*				1,299,456		1,299,456
			229,256		229,256	General Electric Company				5,582,384		5,582,384
			9,500		9,500	ITT Industries, Inc.				576,555		576,555
						Total		0		12,571,646		11,995,091
						Petroleum — Canada
	35,000		74,891		109,891	Nabors Industries Ltd.*		1,234,450		2,641,405		3,875,855
						Petroleum — Domestic
	58,200				58,200	Burlington Resources Inc.		2,482,230				2,482,230
			13,200		13,200	Devon Energy Corporation				605,880		605,880
						Total		2,482,230		605,880		3,088,110
						Petroleum — International
			18,800		18,800	Chevron Corporation				1,249,824		1,249,824
	57,746		262,300		320,046	Exxon Mobil Corporation		2,017,645		9,164,762		11,182,407
			14,500		14,500	Royal Dutch Petroleum Company				638,290		638,290
						Total		2,017,645		11,052,876		13,070,521
						Petroleum — Services
			67,400		67,400	Ensco International, Inc.				1,984,930		1,984,930
	9,000				9,000	Schlumberger Limited		378,810				378,810
			60,400		60,400	Smith International, Inc.*				1,970,248		1,970,248
			42,600		42,600	Veritas DGC, Inc.*				665,412		665,412
						Total		378,810		4,620,590		4,999,400

See Notes to Pro Forma Combined Financial Statements.

SHARES OR											(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION	VALUE
				W&R							W&R
				TARGET							TARGET
				BALANCED							BALANCED
				PORTFOLIO							PORTFOLIO
W&R TARGET		ADVANTUS		PRO			W&R TARGET		ADVANTUS		PRO
BALANCED		ASSET		FORMA			BALANCED		ASSET		FORMA
PORTFOLIO		ALLOCATION		COMBINED			PORTFOLIO		ALLOCATION		COMBINED
						Publishing
	30,000				30,000	New York Times Company (The), Class A		1,371,900				1,371,900
						Railroad
			23,700		23,700	Canadian National Railway Company				984,972		984,972
						Real Estate Investment Trust
			61,600		61,600	Developers Diversified Realty Corporation				1,354,584		1,354,584
			61,500		61,500	Prologis				1,546,725		1,546,725
			43,420		43,420	Winston Hotels, Inc.				338,676		338,676
						Total		0		3,239,985		3,239,985
						Restaurants
	53,400		39,300		92,700	McDonald’s Corporation		858,672		631,944		1,490,616
						Retail — Food Stores
			65,700		65,700	CVS Corporation				1,640,529		1,640,529
						Retail — General Merchandise
			66,400		66,400	Family Dollar Stores				2,072,344		2,072,344
			12,500		12,500	Kohl’s Corporation*				699,375		699,375
	54,600				54,600	Target Corporation		1,638,000				1,638,000
	16,000		93,400		109,400	Wal-Mart Stores, Inc.		808,160		4,717,634		5,525,794
						Total		2,446,160		7,489,353		9,935,513
						Retail — Specialty Stores
			51,200		51,200	Bed Bath & Beyond, Inc.*				1,767,936		1,767,936
			38,700		38,700	Lowes Companies, Inc.				1,451,250		1,451,250
						Total		0		3,219,186		3,219,186
						Security and Commodity Brokers
			74,500		74,500	American Express Company				2,633,575		2,633,575
	29,700		20,900		50,600	Fannie Mae		1,910,601		1,344,497		3,255,098
			14,600		14,600	Freddie Mac				862,130		862,130
	13,000		19,000		32,000	Goldman Sachs Group, Inc. (The)		885,300		1,293,900		2,179,200
			51,800		51,800	Merrill Lynch & Company				1,965,810		1,965,810
			33,500		33,500	Morgan Stanley				1,337,320		1,337,320
			46,200		46,200	T. Rowe Price Associates, Inc.				1,260,336		1,260,336
						Total		2,795,901		10,697,568		13,493,469
						Tobacco
			28,700		28,700	Phillip Morris Companies, Inc.				1,163,211		1,163,211
						Trucking and Shipping
			48,700		48,700	Expeditor Washington International, Inc.				1,590,055		1,590,055
	12,500				12,500	Hunt (J.B.) Transport Services, Inc.*		366,312				366,312
						Total		366,312		1,590,055		1,956,367
						Utilities — Electric
			21,400		21,400	Entergy Corporation				975,626		975,626
	25,000				25,000	Exelon Corporation		1,319,250				1,319,250
			161,200		161,200	Nisource, Inc.				3,224,000		3,224,000
			104,000		104,000	Pacific Gas and Electric Company*				1,445,600		1,445,600
			23,400		23,400	Public Service Enterprise Group, Inc.				751,140		751,140

See Notes to Pro Forma Combined Financial Statements.

SHARES OR											(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION	VALUE
				W&R							W&R
				TARGET							TARGET
				BALANCED							BALANCED
				PORTFOLIO							PORTFOLIO
W&R TARGET		ADVANTUS		PRO			W&R TARGET		ADVANTUS		PRO
BALANCED		ASSET		FORMA			BALANCED		ASSET		FORMA
PORTFOLIO		ALLOCATION		COMBINED			PORTFOLIO		ALLOCATION		COMBINED
						Total		1,319,250		6,396,366		7,715,616
						Utilities — Gas and Pipeline
			41,100		41,100	Firstenergy Corporation				1,355,067		1,355,067
						Utilities — Telephone
			24,800		24,800	AT&T Corporation				647,528		647,528
			102,100		102,100	AT&T Wireless Services, Inc.*				576,865		576,865
	26,700		89,100		115,800	BellSouth Corporation		690,729		2,305,017		2,995,746
	49,700		56,200		105,900	SBC Communications Inc.		1,347,367		1,523,582		2,870,949
			54,300		54,300	Sprint Corporation				786,264		786,264
			21,700		21,700	Telephone and Data Systems, Inc.				1,020,334		1,020,334
			100,800		100,800	Verizon Communications				3,906,000		3,906,000
	50,000				50,000	Vodafone Group Plc, ADR		906,000				906,000
						Total		2,944,096		10,765,590		13,709,686
						TOTAL COMMON STOCKS		88,588,207		238,461,154		327,049,361
						CORPORATE DEBT SECURITIES
						Agricultural Products
			1,350		1,350	Archer-Daniels-Midland Company
						7.0%, 2-1-31				1,554,455		1,554,455
			1,150		1,150	Cargill, Inc. 144A Issue
						6.375%, 6-1-12 (C)				1,287,555		1,287,555
						Total		0		2,842,010		2,842,010
						Air Transportation
	360				360	Southwest Airlines Co.,
						7.875%, 9-1-07		405,158				405,158
						Aircraft
	2,500				2,500	Raytheon Company,
						6.5%, 7-15-05		2,696,442				2,696,442
						Banks
			2,900		2,900	St. George Bank Capital Note 144A Issue,
						8.485%, 12-29-49 (B)				3,120,670		3,120,670
			1,250		1,250	Wells Fargo & Company,
						7.55%, 6-21-10				1,487,542		1,487,542
						Total		0		4,608,212		4,608,212
						Beverages
	500				500	Coca-Cola Enterprises Inc.,
						6.7%, 10-15-36		549,730				549,730
			1,150		1,150	Diageo Capital PLC
						3.5%, 11-19-07				1,155,860		1,155,860
						Total		549,730		1,155,860		1,705,590
						Business Equipment and Services
			1,500		1,500	Enterprise Rent-A-Car Company,
						7.5%, 6-15-03 (C)				1,533,175		1,533,175
						Broadcasting
			1,600		1,600	TCI Communications,

See Notes to Pro Forma Combined Financial Statements.

SHARES OR										(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)					DESCRIPTION	VALUE
			W&R							W&R
			TARGET							TARGET
			BALANCED							BALANCED
			PORTFOLIO							PORTFOLIO
W&R TARGET	ADVANTUS		PRO			W&R TARGET		ADVANTUS		PRO
BALANCED	ASSET		FORMA			BALANCED		ASSET		FORMA
PORTFOLIO	ALLOCATION		COMBINED			PORTFOLIO		ALLOCATION		COMBINED
					6.375%, 5-1-03				1,600,112		1,600,112
		1,500		1,500	USA Interactive,
					7.0%, 1-15-13				1,551,036		1,551,036
					Total		0		3,151,148		3,151,148
					Computers — Main and Mini
		1,250		1,250	International Business Machines Corporation
					5.875%, 11-29-32				1,236,876		1,236,876
					Construction Materials
		2,150		2,150	Vulcan Materials, Inc.
					6.4%, 2-1-06				2,376,823		2,376,823
					Finance Companies
		0		0	Asset Securitization Corporation,
					7.55%, 1-13-15 (D)				1,559,444		1,559,444
		1,616		1,616	Chase Mortgage Finance Corporation,
					6.75%, 2-25-25				1,653,360		1,653,360
		1,500		1,500	Citibank Credit Card Issuance Trust,
					1.856%, 12-15-05 (G)				1,499,373		1,499,373
		1,050		1,050	CitiCorporation Mortgage Securities, Inc.,
					6.5%, 10-25-23				1,086,221		1,086,221
		3,000		3,000	First Union-Lehman Brothers Company,
					6.65%, 1-18-08				3,358,191		3,358,191
		1,250		1,250	Fleet Credit Card Master Trust II
					1.56%, 4-15-10 (G)				1,250,605		1,250,605
		1,000		1,000	Fortress CBO Investments, Ltd. 144A Issue,
					7.85%, 7-25-38 (B)				1,107,020		1,107,020
		1,550		1,550	General Electric Capital Corporation,
					6.75%, 3-15-32				1,713,664		1,713,664
		1,200		1,200	General Motors Acceptance Corporation,
					6.125%, 8-28-07				1,214,243		1,214,243
		3,001		3,001	Park Avenue Finance Corporation 144A Issue,
					7.58%, 5-12-07 (C)				3,373,910		3,373,910
					Total		0		17,816,031		17,816,031
					Food and Related
		1,450		1,450	Unilever Capital Corporation,
					5.9%, 11-15-32				1,483,254		1,483,254
					Health Care — General
250				250	American Home Products Corporation,
					7.9%, 2-15-05		276,481				276,481
					Insurance
		1,400		1,400	American International Group,
					3.85%, 11-26-07 (C)				1,435,409		1,435,409
		1,100		1,100	MetLife, Inc.,
					6.5%, 12-15-32				1,141,719		1,141,719
		1,500		1,500	Principal Life Global 144A Issue
					6.25%, 2-15-12 (C)				1,589,986		1,589,986
		1,500		1,500	Prudential Insurance Company of America 144A Issue
					6.6%, 5-15-08 (C)				1,660,137		1,660,137
		1,375		1,375	Stancorp Financial Group, Inc.,

See Notes to Pro Forma Combined Financial Statements.

SHARES OR											(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION	VALUE
				W&R							W&R
				TARGET							TARGET
				BALANCED							BALANCED
				PORTFOLIO							PORTFOLIO
W&R TARGET		ADVANTUS		PRO			W&R TARGET		ADVANTUS		PRO
BALANCED		ASSET		FORMA			BALANCED		ASSET		FORMA
PORTFOLIO		ALLOCATION		COMBINED			PORTFOLIO		ALLOCATION		COMBINED
						6.875%, 10-1-12				1,408,572		1,408,572
						Total		0		7,235,823		7,235,823
						Multiple Industry
2,500					2,500	Household Finance Corporation,
						6.5%, 1-24-06		2,662,305				2,662,305
						Publishing
			1,350		1,350	Gannett Company, Inc.
						5.5%, 4-1-07				1,468,116		1,468,116
						Real Estate and Investment Trusts
			634,157		634,157	American Housing Trust,
						8.125%, 6-25-18				652,823		652,823
			1,500		1,500	Prologis,
						6.7%, 4-15-04				1,562,592		1,562,592
			1,400		1,400	Reckson Operating Partnership LP,
						7.4%, 3-15-04				1,467,063		1,467,063
			1,750		1,750	Vornado Realty Trust,
						5.625, 6-15-07				1,783,136		1,783,136
						Total		0		5,465,614		5,465,614
						Retail — Specialty Stores
			1,500		1,500	American Stores Company,
						7.2%, 6-9-03				1,530,372		1,530,372
						Security and Commodity Brokers
			1,450		1,450	Morgan Stanley
						6.75%, 4-15-11				1,611,340		1,611,340
						Utlities — Electric
			2,500		2,500	Georgia Power Company
						5.5%, 12-1-05				2,688,140		2,688,140
			1,500		1,500	Hydro-Quebec
						8.0%, 2-1-13				1,903,656		1,903,656
						Total		0		4,591,796		4,591,796
						Utilities — Telephone
	150				150	Southwestern Bell Telephone Company,
						5.77%, 10-14-03		154,623				154,623
						Whole Loan Mortgage-Backed
			317		317	Banco Hipotecario Nacional 144A Issue,
						7.916%, 7-25-09 (B)(E)				78,128		78,128
			2,136		2,136	Banco Hipotecario Nacional 144A Issue,
						8.0%, 3-31-11 (B)(E)				422,873		422,873
			1,344		1,344	GE Capital Mortgage Services, Inc.,
						6.5%, 4-25-13				1,378,765		1,378,765
			465		465	Mellon Residential Funding,
						6.75%, 6-26-28				481,267		481,267
			428		428	Paine Webber Mortgage Acceptance Corporation,
						6.938%, 2-25-24				432,342		432,342
			710		710	Paine Webber Mortgage Acceptance Corporation,
						7.0%, 10-25-23				718,430		718,430

See Notes to Pro Forma Combined Financial Statements.

SHARES OR
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION			VALUE		(Unaudited)
			W&R								W&R
			TARGET								TARGET
			BALANCED								BALANCED
			PORTFOLIO								PORTFOLIO
W&R TARGET	ADVANTUS		PRO				W&R TARGET		ADVANTUS		PRO
BALANCED	ASSET		FORMA				BALANCED		ASSET		FORMA
PORTFOLIO	ALLOCATION		COMBINED				PORTFOLIO		ALLOCATION		COMBINED
		1,030		1,030	Prudential Home Mortgage Securities 144A Issue, 6.582%, 4-28-24 (C)					1,045,692		1,045,692
		1,371		1,371	Residential Funding Mortgage Securities 7.0%, 10-25-23					1,414,333		1,414,333
						Total		0		5,971,830		5,971,830
					TOTAL CORPORATE DEBT SECURITIES			6,744,739		64,078,280		70,823,019
					S&P DEPOSITORY RECEIPT
		22,400		22,400	S&P Depository Receipt			0		1,977,696		1,977,696
					UNITED STATES GOVERNMENT SECURITIES
					Agency Obligations
5,000				5,000	Federal Home Loan Mortgage Corporation,
						7.0%, 2-15-03		5,033,965				5,033,965
				1,100		5.5%, 12-1-17				1,142,797		1,142,797
					Federal National Mortgage Association:
750				750		6.51%, 5-6-08		762,228				762,228
500				500		6.19%, 7-7-08		511,131				511,131
1,000				1,000		7.25%, 1-15-10		1,211,720				1,211,720
		1,820		1,820		4.0%, 4-25-22				1,834,926		1,834,926
		2,559		2,559		6.0%, 9-1-17				2,678,146		2,678,146
		270		270		6.0%, 10-1-32				279,846		279,846
		993		993		6.0%, 10-1-32				1,027,883		1,027,883
		228		228		6.0%, 11-1-32				235,503		235,503
		1,667		1,667		6.23%, 1-1-08				1,839,605		1,839,605
		1,740		1,740		6.5%, 10-1-28				1,827,640		1,827,640
		1,569		1,569		6.5%, 2-1-29				1,647,447		1,647,447
		1,135		1,135		6.5%, 12-1-31				1,182,703		1,182,703
		4,167		4,167		6.5%, 2-1-32				4,340,681		4,340,681
		1,416		1,416		6.5%, 4-1-32				1,474,943		1,474,943
		1,533		1,533		6.5%, 7-1-32				1,596,450		1,596,450
		1,867		1,867		6.5%, 8-1-32				1,944,439		1,944,439
		493		493		6.5%, 9-1-32				513,069		513,069
		942		942		6.5%, 9-1-32				981,779		981,779
		1,756		1,756		7.0%, 7-1-31				1,858,237		1,858,237
		1,454		1,454		7.0%, 9-1-31				1,538,933		1,538,933
		1,368		1,368		7.0%, 9-1-31				1,438,858		1,438,858
		371		371		7.0%, 11-1-31				390,407		390,407
		2,182		2,182		7.0%, 2-1-32				2,309,056		2,309,056
		1,770		1,770		7.0%, 2-1-32				1,861,578		1,861,578
		1,013		1,013		7.0%, 3-1-32				1,071,489		1,071,489
		1,447		1,447		7.0%, 6-1-32				1,522,203		1,522,203
		2,054		2,054		7.0%, 7-1-32				2,159,912		2,159,912
		802		802		7.5%, 4-1-31				857,037		857,037
					Government National Mortgage Association:
		441		441		6.0%, 8-15-28				460,650		460,650
		1,346		1,346		6.5%, 11-15-28				1,415,145		1,415,145
		733		733		6.5%, 6-15-32				769,410		769,410
		368		368		6.5%, 7-15-32				386,682		386,682
		1,149		1,149		7.0%, 5-15-26				1,223,574		1,223,574
		182		182		7.5%, 5-15-24				195,760		195,760
		25		25		7.5%, 6-15-28				26,323		26,323
						Total		7,519,044		44,033,111		51,552,155

See Notes to Pro Forma Combined Financial Statements.

SHARES OR
PRINCIPAL AMOUNT (000 OMITTED)					DESCRIPTION				VALUE		(Unaudited)
			W&R								W&R
			TARGET								TARGET
			BALANCED								BALANCED
			PORTFOLIO								PORTFOLIO
W&R TARGET	ADVANTUS		PRO				W&R TARGET		ADVANTUS		PRO
BALANCED	ASSET		FORMA				BALANCED		ASSET		FORMA
PORTFOLIO	ALLOCATION		COMBINED				PORTFOLIO		ALLOCATION		COMBINED
					Mortgage-Backed Obligations
6,359				6,359	Federal Home Loan Mortgage Corporation Fixed Rate Participation Certificates, 6.0%, 5-1-16			6,658,207			6,658,207
750				750	Federal National Mortgage Association Fixed Rate Pass-Through Certificates, 7.0%, 9-1-25			793,608			793,608
792				792	Government National Mortgage Association Fixed Rate Pass-Through Certificates, 6.5%, 8-15-28			832,255			832,255
		521		521	Vendee Mortgage Trust, United States Department of Veterans Affiars, 8.293%, 12-15-26					581,792	581,792
						Total		8,284,070		581,792	8,865,862
					Treasury Obligations
					United States Treasury Bonds:
4,000				4,000		7.25%, 8-15-22		5,205,780			5,205,780
5,250				5,250		6.25%, 8-15-23		6,167,931			6,167,931
3,000				3,000		6.75%, 8-15-26		3,753,399			3,753,399
		2,975		2,975		3.375%, 1-15-07 (F)				3,211,412	3,211,412
		2,150		2,150		5.25%, 2-15-29				2,246,666	2,246,666
		900		900		5.375%, 2-15-31				981,140	981,140
		2,500		2,500		5.5%, 8-15-28				2,701,172	2,701,172
		3,550		3,550		6.125%, 8-15-29				4,167,643	4,167,643
					United States Treasury Notes:
2,250				2,250		7.5%, 2-15-05		2,522,988			2,522,988
4,000				4,000		6.5%, 8-15-05		4,474,064			4,474,064
						Total		22,124,162		13,308,033	35,432,195
					Treasury Inflation Protected Obligation
1,000				1,000	United States Treasury Note, 3.0%, 7-15-12 (A)			1,062,656			1,062,656
					TOTAL UNITED STATES GOVERNMENT SECURITIES			38,989,932		57,922,936	96,912,868
					SHORT-TERM SECURITIES
					Banks
5,000				5,000	Wells Fargo & Company, 1.29%, 1-16-03			4,997,313			4,997,313
		200		200	Wells Fargo & Company – Cash Investment Fund, current rate 1.326%					199,912	199,912
						Total		4,997,313		199,912	5,197,225
					Chemicals — Petroleum and Inorganic
4,825				4,825	du Pont (E.I.) de Nemours and Company, 1.30036%, Master Note			4,825,000			4,825,000
					Food and Related
		1,200		1,200	Conagra, Inc., 2.12%, 9-10-03 (G)					1,202,756	1,202,756
4,461				4,461	General Mills, Inc., 1.53%, Master Note			4,461,000			4,461,000

See Notes to Pro Forma Combined Financial Statements.

SHARES OR
PRINCIPAL AMOUNT (000 OMITTED)					DESCRIPTION				VALUE		(Unaudited)
			W&R								W&R
			TARGET								TARGET
			BALANCED								BALANCED
			PORTFOLIO								PORTFOLIO
W&R TARGET	ADVANTUS		PRO			W&R TARGET			ADVANTUS		PRO
BALANCED	ASSET		FORMA			BALANCED			ASSET		FORMA
PORTFOLIO	ALLOCATION		COMBINED			PORTFOLIO			ALLOCATION		COMBINED
5,000				5,000	Sara Lee Corporation,
					1.48%, 1-6-03		4,998,972					4,998,972
					Total		9,459,972			1,202,756		10,662,728
					Health Care -– Drugs
4,000				4,000	Merck & Co., Inc.,
					1.3%, 1-9-03		3,998,844					3,998,844
4,000				4,000	Pfizer Inc.,
					1.29%, 1-16-03		3,997,850					3,997,850
					Total		7,996,694					7,996,694
					Health Care — General
3,500				3,500	Johnson & Johnson,
					1.27%, 2-3-03		3,495,925					3,495,925
					Multiple Industry
		7,243		7,243	Dreyfus Funds – Cash Management Plus,
					current rate 1.266%					7,243,498		7,243,498
		5,706		5,706	Federated Money Market Obligations Trust – Prime
					Obligations Fund,
					current rate 1.37%					5,706		5,706
					Total		0			7,249,204		7,249,204
					Petroleum — International
2,128				2,128	BP America Inc.,
					1.2%, 1-2-03		2,127,929					2,127,929
		1,500		1,500	Conoco, Inc.,
					2.625%, 4-15-03 (G)					1,502,574		1,502,574
					Total		2,127,929			1,502,574		3,630,503
					Utilities — Telephone
907				907	BellSouth Corporation,
					1.28%, 1-23-03		906,291					906,291
					TOTAL SHORT-TERM SECURITIES		33,809,124			10,154,446		43,963,570
					TOTAL INVESTMENT SECURITIES		168,132,002			372,594,512		540,726,514
					LIABILITIES, NET OF CASH AND OTHER ASSETS		(222,491	)		1,673,405		1,450,914
					NET ASSETS		167,909,511			374,267,917		542,177,428
					Notes to Schedule of Investments
					*No dividends were paid during the preceding 12 months.
					(A)The interest rate for this security is a stated rate, but the interest payments are determined by multiplying the inflation-adjusted principal by one half of the stated rate for each semiannual interest payment date.
					(B)Illiquid security.
					(C)Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2002, the total value of these securities amounted to $11,925,804 or 3.2% of net assets.
					(D)Interest only security.
					(E)Non-income producing as the issuer has either missed its most recent interest payment or declared bankruptcy.
					(F)U.S. Treasury inflation-protected security.
					(G)Floating rate bond.

See Notes to Pro Forma Combined Financial Statements.

			Advantus Asset Allocation Portfolio		W&R Target Balanced Portfolio		Pro Forma Adjustments			W&R Target Balanced Portfolio Pro Forma Combined
Statement of Assets and Liabilities (in thousands)
Assets
	Investment Securities		$	372,595	$	168,132	$	—		$	540,727
	Cash			76		1					77
	Dividends and Interest Receivable			1,388		996					2,384
	Receivable for Investment Securities Sold			1,586		—					1,586
	Receivable for Fund Shares Sold			99		54					153
	Other Assets					2					2
	Collateral for securities loaned			25,138		—					25,138
		Total Assets		400,882		169,185		—			570,067
Liabilities
	Payable for Fund Shares Repurchased			120		91					211
	Payable for Investment Securities Purchased			1,146		1,168					2,314
	Payable to Affiliates			210		8					218
	Other Payables					8					8
	Payable Upon Return of Securities Loaned			25,138		—					25,138
		Total Liabilities		26,614		1,275		—			27,889
Net Assets			$	374,268	$	167,910	$	—		$	542,178
Net Assets			$	374,268	$	167,910	$	—		$	542,178
Shares Outstanding				282,796		27,789		(220,855	)		89,730
Net Asset Value per Share			$	1.3235	$	6.0423	$	—		$	6.0423

See Notes to Pro Forma Combined Financial Statements.

The following unaudited Pro Forma Combined Statement of Operations for W&R Target Balanced Portfolio and Advantus Asset Allocation Portfolio has been derived from the Statements of Operations of W&R Target Balanced Portfolio and Advantus Asset Allocation Portfolio for the fiscal year ended December 31, 2002. Such information has been adjusted to give effect to the Reorganization as if it had occurred on January 1, 2002, and reflects Pro Forma adjustments that are directly attributable to the transaction and are expected to have a continuing impact.

The unaudited Pro Forma Statement of Operations is presented for informational purposes only and does not purport to be indicative of the results of operations that would have occurred if the Reorganization had been consummated on January 1, 2002. The unaudited Pro Forma Financial Statements should be read in conjunction with the financial statements and related notes of the respective funds incorporated by reference in this Statement of Additional Information.

												W&R
												Target
			Advantus			W&R						Balanced
			Assets			Target						Portfolio
			Allocation			Balanced			Pro Forma			Pro Forma
			Portfolio			Portfolio			Adjustments			Combined
Statement of Operations (in thousands)
Investment Income
	Dividends		$	4,065		$	1,247		$	—		$	5,312
	Interest & Other			9,136			3,634			—			12,770
		Total Investment Income		13,201			4,881			—			18,082
Expenses
	Investment Advisory Fees			1,488			1,219			1,488			4,195
	Rule 12b-1 Fees			1,063			435			—			1,498
	Other Expenses			212			104			(86	)		230
		Total Expenses		2,763			1,758			1,402			5,923
Net Investment Income (Loss)				10,438			3,123			(1,402	)		12,159
Realized and Unrealized Gain (Loss)
	Realized net loss on securities			(8,991	)		(14,068	)		—			(23,059	)
	Net change in unrealized appreciation (depreciation)
		on investments		(42,776	)		(4,705	)		—			(47,481	)
		Net gain (loss) on investments		(51,767	)		(18,773	)		—			(70,540	)
Net increase (decrease) in net assets resulting from operations			$	(41,329	)	$	(15,650	)	$	(1,402	)	$	(58,381	)

See Notes to Pro Forma Combined Financial Statements.

W&R TARGET BALANCED PORTFOLIO AND ADVANTUS ASSET ALLOCATION PORTFOLIO
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
December 31, 2002
(Unaudited)

NOTE 1 — Significant Accounting Policies

W&R Target Balanced Portfolio and Advantus Asset Allocation Portfolio (the “Funds”) are registered under the Investment Company Act of 1940 as diversified, open-end management investment companies. W&R Target Balanced Portfolio’s investment objective is to seek current income, with a secondary goal of long-term appreciation of capital. Advantus Asset Allocation Portfolio’s investment objective is to seek as high a level of long-term total rate of return as is consistent with prudent investment risk. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of the pro forma combined financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America.

A.

Security valuation — Each stock and convertible bond is valued at the latest sale price thereof on each business day of the fiscal period as reported by the principal securities exchange on which the issue is traded or, if no sale is reported for a stock, the average of the latest bid and asked prices. Bonds, other than convertible bonds, are valued using a pricing system provided by a pricing service or dealer in bonds. Convertible bonds are valued using this pricing system only on days when there is no sale reported. Stocks which are traded over-the-counter are priced using the Nasdaq Stock Market, which provides information on bid and asked prices quoted by major dealers in such stocks. Gold bullion is valued at the last settlement price for current delivery as calculated by the Commodity Exchange, Inc. as of the close of that exchange. Restricted securities and securities for which quotations are not readily available are valued as determined in good faith in accordance with procedures established by and under the general supervision of the Fund’s Board of Directors. Short-term debt securities are valued at amortized cost, which approximates market value.

B.

Security transactions and related investment income — Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Securities gains and losses are calculated on the identified cost basis. Premium and discount on the purchase of bonds are amortized for both financial and tax reporting purposes.

	Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded as soon as the Fund is informed of the ex-dividend date. Interest income is recorded on the accrual basis.
C.	Foreign currency translations — All assets and liabilities denominated in foreign currencies are translated into U.S. dollars daily. Purchases and sales of investment securities and accruals of income and expenses are translated at the rate of exchange prevailing on the date of the transaction. For assets and liabilities other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. The Fund combines fluctuations from currency exchange rates and fluctuations in market value when computing net realized and unrealized gain or loss from investments.
D.	Federal income taxes — It is the Fund’s policy to distribute all of its taxable income and capital gains to its shareholders and otherwise qualify as a regulated investment company under the Internal Revenue Code. Accordingly, provision has not been made for Federal income taxes.
E.	Dividends and distributions — Dividends and distributions to shareholders are recorded by each Fund on the record date. Net investment income distributions and capital gains distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences are due to differing treatments for items such as deferral of wash sales and post-October losses, foreign currency transactions, net operating losses and expiring capital loss carryovers.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

NOTE 2 — Investment Management And Payments To Affiliated Persons

Waddell & Reed Investment Management Company (“WRIMCO”), a wholly owned subsidiary of Waddell & Reed, Inc. (“W&R”), serves as the Fund’s investment manager. The Fund pays a fee for investment management services. The fee is computed daily based

on the net asset value at the close of business. The fee is payable by the Fund at the following annual rates:

	Annual
Fund	Net Asset Breakpoints	Rate
Balanced Portfolio	Up to $1 Billion		0.700	%
	Over $1 Billion up to $2 Billion		0.650	%
	Over $2 Billion up to $3 Billion		0.600	%
	Over $3 Billion		0.550	%

The Fund accrues and pays this fee daily. The Fund also reimburses WRIMCO for certain expenses, including additional Fund-related security costs incurred by WRIMCO as a result of the September 11, 2001 terrorist activities. The amount reimbursed represents the Fund’s share of incremental security-related costs including the cost of using private transportation for WRIMCO’s personnel in lieu of commercial transportation, certain security-related personnel and facilities costs. At December 31, 2002, additional security costs amounted to $11,577, which is included in other expenses.

WRIMCO, the Fund’s investment manager, has agreed to waive a Portfolio’s management fee on any day that the Portfolio’s net assets are less than $25 million, subject to its right to change or modify this waiver.

The Fund has an Accounting Services Agreement with Waddell & Reed Services Company (“WRSCO”), a wholly owned subsidiary of W&R. Under the agreement, WRSCO acts as the agent in providing bookkeeping and accounting services and assistance to the Fund, including maintenance of Fund records, pricing of Fund shares, preparation of prospectuses for existing shareholders, preparation of proxy statements and certain shareholder reports. For these services, each Portfolio pays WRSCO a monthly fee of one-twelfth of the annual fee shown in the following table.

Accounting Services Fee
Average
Net Asset Level			Annual Fee
(all dollars in millions)		Rate for Each Portfolio
From $0     to $10			$	0
From $10   to $25			$	11,000
From $25   to $50			$	22,000
From $50   to$100			$	33,000
From $100 to $200			$	44,000
From $200 to $350			$	55,000
From $350 to $550			$	66,000
From $550 to $750			$	77,000
From $750 to $1,000			$	93,500
	$1,000 and Over		$	110,000

The Fund has adopted a Service Plan pursuant to Rule 12b-1 of the 1940 Act. Under the Plan, each Portfolio may pay a fee to W&R in an amount not to exceed 0.25% of the Portfolio’s average annual net assets. The fee is to be paid to compensate W&R for amounts it expends in connection with the provision of personal services to Policyowners and/or maintenance of Policyowner accounts.

The Fund paid Directors’ fees of $8,008, which is included in other expenses.

W&R is a subsidiary of Waddell & Reed Financial, Inc., a public holding company, and a direct subsidiary of Waddell & Reed Financial Services, Inc., a holding company.

W&R TARGET GROWTH PORTFOLIO
ADVANTUS CAPITAL APPRECIATION PORTFOLIO
PRO FORMA COMBINED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
(UNAUDITED)

The following unaudited Pro Forma Combined Statement of Assets and Liabilities, including the unaudited Pro Forma Combined Investments of W&R Target Growth Portfolio and Advantus Capital Appreciation Portfolio as of December 31, 2002 has been derived from the respective statements of assets and liabilities, including the schedules of investments, of W&R Target Growth Portfolio and Advantus Capital Appreciation Portfolio as of December 31, 2002.

Under the terms of the Agreement and Plan of Reorganization, the combination of Advantus Capital Appreciation Portfolio and W&R Target Growth Portfolio will be treated as a tax-free business combination and accordingly will be accounted for by a method of accounting for tax-free mergers of investment companies (sometimes referred to as the pooling without restatement method). The acquisition would be accomplished by an acquisition of the net assets of Advantus Capital Appreciation Portfolio in exchange for shares of W&R Target Growth Portfolio at net asset value. W&R Target Growth Portfolio will be the accounting survivor for financial statement purposes.

As of July 23, 2003, all of the securities held by Advantus Capital Appreciation Portfolio would comply with the compliance guidelines and/or investment restrictions of W&R Target Growth Portfolio. All reorganization costs will be borne by Advantus Capital Management, Inc. and not by the funds.

The Pro Forma Combined Statement of Assets and Liabilities is presented for informational purposes only and does not purport to be indicative of the financial condition that would have resulted if the Reorganization had been consummated on December 31, 2002. The unaudited Pro Forma Financial Statements should be read in conjunction with the respective financial statements and related notes of W&R Target Growth Portfolio and Advantus Capital Appreciation Portfolio incorporated by reference in this Statement of Additional Information.

SHARES OR											(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION	VALUE
				W&R								W&R
				TARGET								TARGET
				GROWTH								GROWTH
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO			W&R TARGET		ADVANTUS		PRO
GROWTH		CAPITAL		FORMA			GROWTH		CAPITAL		FORMA
PORTFOLIO		APPRECIATION		COMBINED			PORTFOLIO		APPRECIATION		COMBINED
						COMMON STOCKS
						Aircraft
	390,400				390,400	Lockheed Martin Corporation		22,545,600				22,545,600
	185,000				185,000	Raytheon Company		5,688,750				5,688,750
			45,200		45,200	United Technologies Corporation				2,799,688		2,799,688
						Total		28,234,350		2,799,688		31,034,038
						Banks
	75,200		24,600		99,800	Bank of America Corporation		5,231,664		1,711,422		6,943,086
			59,125		59,125	Charter One Financial, Inc				1,698,662		1,698,662
	350,100				350,100	Citigroup Inc		12,320,019				12,320,019
	150,000				150,000	Mellon Financial Corporation		3,916,500				3,916,500
	250,200		81,100		331,300	Wells Fargo & Company		11,726,874		3,801,157		15,528,031
						Total		33,195,057		7,211,241		40,406,298
						Beverages
	230,000		74,600		304,600	Anheuser-Busch Companies, Inc		11,132,000		3,610,640		14,742,640
	200,000				200,000	Coca-Cola Company (The)		8,764,000				8,764,000
			58,300		58,300	Pepsi Bottling Group, Inc				1,498,310		1,498,310
			70,900		70,900	Pepsico, Inc				2,993,398		2,993,398
						Total		19,896,000		8,102,348		27,998,348
						Broadcasting
	145,000		98,200		243,200	Clear Channel Communications, Inc.*		5,407,050		3,661,878		9,068,928
			95,400		95,400	Comcast Corporation*				2,155,086		2,155,086
			97,500		97,500	Fox Entertainment Group, Inc.*				2,528,175		2,528,175
	210,000				210,000	Fox Entertainment Group, Inc., Class A*		5,445,300				5,445,300
			113,880		113,880	Liberty Media Corporation*				1,018,087		1,018,087
			148,017		148,017	Viacom Inc.*				6,033,173		6,033,173
	258,442				258,442	Viacom Inc., Class B*		10,534,096				10,534,096
						Total		21,386,446		15,396,399		36,782,845
						Business Equipment and Services
	708,000				708,000	Accenture Ltd, Class A*		12,736,920				12,736,920
	250,000				250,000	BearingPoint, Inc.*		1,725,000				1,725,000
	225,000				225,000	Manpower Inc		7,177,500				7,177,500
			40,500		40,500	Omnicom Group				2,616,300		2,616,300
	390,200				390,200	Staples, Inc.*		7,134,807				7,134,807
						Total		28,774,227		2,616,300		31,390,527
						Capital Equipment
	210,200				210,200	Cooper Cameron Corporation*		10,472,164				10,472,164
	180,000				180,000	Parker Hannifin Corporation		8,303,400				8,303,400
						Total		18,775,564		0		18,775,564
						Chemicals — Specialty
	200,000				200,000	Air Products and Chemicals, Inc		8,550,000				8,550,000
	85,000				85,000	Praxair, Inc		4,910,450				4,910,450
						Total		13,460,450		0		13,460,450

See Notes to Pro Forma Combined Financial Statements.

SHARES OR											(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION	VALUE
				W&R								W&R
				TARGET								TARGET
				GROWTH								GROWTH
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO			W&R TARGET		ADVANTUS		PRO
GROWTH		CAPITAL		FORMA			GROWTH		CAPITAL		FORMA
PORTFOLIO		APPRECIATION		COMBINED			PORTFOLIO		APPRECIATION		COMBINED
						Communications Equipment
	1,541,900		188,300		1,730,200	Cisco Systems, Inc.*		20,191,181		2,466,730		22,657,911
			98,100		98,100	Harris Corporation				2,580,030		2,580,030
	475,000				475,000	Nokia Corporation, Series A, ADR		7,362,500				7,362,500
						Total		27,553,681		5,046,760		32,600,441
						Computers — Micro
	300,200		96,300		396,500	Dell Computer Corporation*		8,040,857		2,575,062		10,615,919
						Computers — Peripherals
	600,300				600,300	BEA Systems, Inc.*		6,888,442				6,888,442
	1,259,200				1,259,200	EMC Corporation*		7,731,488				7,731,488
			45,200		45,200	Intuit, Inc.*				2,120,784		2,120,784
	494,400		153,600		648,000	Microsoft Corporation*		25,570,368		7,941,120		33,511,488
	475,600				475,600	Oracle Corporation*		5,141,236				5,141,236
	675,200		26,000		701,200	SAP Aktiengesellschaft, ADR		13,166,400		507,000		13,673,400
						Total		58,497,934		10,568,904		69,066,838
						Cosmetics and Toiletries
			78,900		78,900	Estee Lauder Company, Inc. (The)				2,082,960		2,082,960
	350,400		34,200		384,600	Gillette Company (The)		10,638,144		1,038,312		11,676,456
						Total		10,638,144		3,121,272		13,759,416
						Defense
	60,000				60,000	General Dynamics Corporation		4,762,200				4,762,200
						Electrical Equipment
			157,400		157,400	Tyco International, Ltd				2,688,392		2,688,392
						Electronic Components
	260,000				260,000	Altera Corporation*		3,218,800				3,218,800
	210,200		99,800		310,000	Analog Devices, Inc.*		5,017,474		2,382,226		7,399,700
			260,400		260,400	Intel Corporation				4,054,428		4,054,428
	135,000				135,000	Maxim Integrated Products, Inc		4,459,050				4,459,050
	375,200				375,200	Microchip Technology Incorporated		9,177,392				9,177,392
	150,000		127,200		277,200	Texas Instruments Incorporated		2,251,500		1,909,272		4,160,772
	160,000				160,000	Xilinx, Inc.*		3,286,400				3,286,400
						Total		27,410,616		8,345,926		35,756,542
						Electronic Instruments
	482,600				482,600	Applied Materials, Inc.*		6,288,278				6,288,278
			52,800		52,800	Novellus Systems, Inc.*				1,482,624		1,482,624
			83,200		83,200	Teradyne, Inc.*				1,082,432		1,082,432
						Total		6,288,278		2,565,056		8,853,334
						Food and Related
	255,200				255,200	Kraft Foods Inc		9,934,936				9,934,936
						Health Care — Drugs
	100,000				100,000	AmerisourceBergen Corporation		5,431,000				5,431,000
	190,400				190,400	Amgen Inc.*		9,206,792				9,206,792

See Notes to Pro Forma Combined Financial Statements.

SHARES OR											(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION	VALUE
				W&R								W&R
				TARGET								TARGET
				GROWTH								GROWTH
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO			W&R TARGET		ADVANTUS		PRO
GROWTH		CAPITAL		FORMA			GROWTH		CAPITAL		FORMA
PORTFOLIO		APPRECIATION		COMBINED			PORTFOLIO		APPRECIATION		COMBINED
	110,300		14,500		124,800	Forest Laboratories, Inc.*		10,833,666		1,424,190		12,257,856
			66,700		66,700	Genentech, Inc.*				2,211,772		2,211,772
	100,000		50,800		150,800	Gilead Sciences, Inc.*		3,391,500		1,727,200		5,118,700
			50,400		50,400	Medimmune, Inc.*				1,369,368		1,369,368
	1,027,725		222,275		1,250,000	Pfizer Inc		31,417,553		6,794,947		38,212,500
	280,250				280,250	Pharmacia Corporation		11,714,450				11,714,450
						Total		71,994,961		13,527,477		85,522,438
						Health Care — General
	180,000		125,400		305,400	Biomet, Inc		5,164,200		3,593,964		8,758,164
	213,800		87,696		301,496	Johnson & Johnson		11,483,198		4,710,152		16,193,350
			78,700		78,700	Wyeth				2,943,380		2,943,380
	195,000				195,000	Zimmer Holdings, Inc.*		8,096,400				8,096,400
						Total		24,743,798		11,247,496		35,991,294
						Hospital Supply and Management
			36,900		36,900	Anthem, Inc.*				2,321,010		2,321,010
	100,000		51,500		151,500	HCA — The Healthcare Company		4,150,000		2,137,250		6,287,250
	935,700				935,700	Health Management Associates, Inc., Class A		16,749,030				16,749,030
	235,400		108,300		343,700	Medtronic, Inc		10,734,240		4,938,480		15,672,720
						Total		31,633,270		9,396,740		41,030,010
						Hotels and Gaming
	75,000				75,000	International Game Technology*		5,694,000				5,694,000
						Household — General Products
	126,800				126,800	Procter & Gamble Company (The)		10,897,192				10,897,192
						Insurance — Property and Casualty
	108,812		101,500		210,312	American International Group, Inc		6,294,774		5,871,775		12,166,549
			1,380		1,380	Berkshire Hathaway, Inc.*				3,343,740		3,343,740
						Total		6,294,774		9,215,515		15,510,289
						Leisure Time Industry
			52,100		52,100	Carnival Corporation				1,299,895		1,299,895
						Motion Pictures
			194,250		194,250	AOL Time Warner, Inc.*				2,544,675		2,544,675
						Motor Vehicle Parts
	145,200				145,200	AutoZone, Inc.*		10,258,380				10,258,380
	60,000		71,100		131,100	Danaher Corporation		3,942,000		4,671,270		8,613,270
						Total		14,200,380		4,671,270		18,871,650
						Motor Vehicles
	190,800				190,800	Harley-Davidson, Inc		8,814,960				8,814,960
						Multiple Industry
			164,200		164,200	General Electric Company				3,998,270		3,998,270
						Petroleum — Domestic

See Notes to Pro Forma Combined Financial Statements.

SHARES OR											(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION	VALUE
				W&R								W&R
				TARGET								TARGET
				GROWTH								GROWTH
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO			W&R TARGET		ADVANTUS		PRO
GROWTH		CAPITAL		FORMA			GROWTH		CAPITAL		FORMA
PORTFOLIO		APPRECIATION		COMBINED			PORTFOLIO		APPRECIATION		COMBINED
	235,200				235,200	Anadarko Petroleum Corporation		11,266,080				11,266,080
	290,000				290,000	Burlington Resources Inc		12,368,500				12,368,500
						Total		23,634,580		0		23,634,580
						Petroleum — International
	310,000				310,000	Exxon Mobil Corporation		10,831,400				10,831,400
						Petroleum — Services
	255,000				255,000	Baker Hughes Incorporated		8,208,450				8,208,450
	130,200				130,200	Smith International, Inc.*		4,247,124				4,247,124
			31,900		31,900	Transocean Offshore, Inc				740,080		740,080
			22,800		22,800	Weatherford International, Ltd.*				910,404		910,404
						Total		12,455,574		1,650,484		14,106,058
						Publishing
			30,300		30,300	Gannett Company, Inc				2,175,540		2,175,540
						Restaurants
			58,000		58,000	Wendys International, Inc				1,570,060		1,570,060
						Retail — General Merchandise
	180,000				180,000	Kohl’s Corporation*		10,071,000				10,071,000
	385,300		88,200		473,500	Target Corporation		11,559,000		2,646,000		14,205,000
			63,700		63,700	Wal-Mart Stores, Inc				3,217,487		3,217,487
						Total		21,630,000		5,863,487		27,493,487
						Retail — Specialty Stores
	300,100		114,797		414,897	Home Depot, Inc. (The)		7,190,396		2,750,536		9,940,932
	240,400				240,400	Lowe’s Companies, Inc		9,015,000				9,015,000
						Total		16,205,396		2,750,536		18,955,932
						Security and Commodity Brokers
	330,400				330,400	Charles Schwab Corporation (The)		3,584,840				3,584,840
	233,800				233,800	Fannie Mae		15,040,354				15,040,354
	240,200		28,100		268,300	Freddie Mac		14,183,810		1,659,305		15,843,115
	190,200				190,200	Goldman Sachs Group, Inc. (The)		12,952,620				12,952,620
	240,200				240,200	Prudential Financial, Inc		7,623,948				7,623,948
			32,700		32,700	SLM Corporation				3,396,222		3,396,222
						Total		53,385,572		5,055,527		58,441,099
						Trucking and Shipping
			70,100		70,100	United Parcel Service, Inc				4,421,908		4,421,908
						Utilities — Telephone
	200,000				200,000	Vodafone Group Plc, ADR		3,624,000				3,624,000
						TOTAL COMMON STOCKS		632,888,597		150,426,228		783,314,825
						SHORT-TERM SECURITIES
						Commercial Paper
						Banks

See Notes to Pro Forma Combined Financial Statements.

SHARES OR												(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION	VALUE
				W&R									W&R
				TARGET									TARGET
				GROWTH									GROWTH
				PORTFOLIO									PORTFOLIO
W&R TARGET		ADVANTUS		PRO			W&R TARGET			ADVANTUS		PRO
GROWTH		CAPITAL		FORMA			GROWTH			CAPITAL		FORMA
PORTFOLIO		APPRECIATION		COMBINED			PORTFOLIO			APPRECIATION		COMBINED
	10,000				10,000	Bank One Corporation, 1.25%, 1-22-03		9,992,708					9,992,708
						Wells Fargo & Company — Cash Investment Fund
			2,987,763		2,987,763	current rate 1.326%					2,987,763		2,987,763
						Total		9,992,708			2,987,763		12,980,471
						Food and Related
						ConAgra Foods, Inc.,
	6,895				6,895	1.42%, 1-13-03		6,891,737					6,891,737
						General Mills, Inc.,
	1,214				1,214	1.53%, Master Note		1,214,000					1,214,000
						Total		8,105,737			0		8,105,737
						Forest and Paper Products
						Sonoco Products Co.,
	4,000				4,000	1.38%, 1-16-03		3,997,700					3,997,700
						Health Care — Drugs
						Alcon Finance PLC (Nestle S.A.),
	7,000				7,000	1.33%, 1-17-03		6,995,862					6,995,862
						Pfizer Inc.,
	7,000				7,000	1.31%, 1-23-03		6,994,396					6,994,396
						Pharmacia Corporation:
	5,000				5,000	1.32%, 1-21-03		4,996,334					4,996,334
	10,000				10,000	1.35%, 1-21-03		9,992,500					9,992,500
						Total		28,979,092			0		28,979,092
						Health Care — General
						Johnson & Johnson:
	4,500				4,500	1.27%, 2-3-03		4,494,761					4,494,761
	5,000				5,000	1.26%, 2-5-03		4,993,875					4,993,875
						Total		9,488,636			0		9,488,636
						Household — General Products
						Procter & Gamble Company (The),
	7,000				7,000	1.3%, 2-10-03		6,989,889					6,989,889
						Utilities — Telephone
						SBC International Inc.,
	4,500				4,500	1.32%, 1-16-03		4,497,525					4,497,525
						Total Commercial Paper		72,051,287			2,987,763		75,039,050
						United States Government Security
	5,000				5,000	United States Treasury Bill,
						1.24%, 5-8-03		4,978,216					4,978,216
						TOTAL SHORT-TERM SECURITIES		77,029,503			2,987,763		80,017,266
						TOTAL INVESTMENT SECURITIES		709,918,100			153,413,991		863,332,091
						LIABILITIES, NET OF CASH AND OTHER ASSETS		(5,274,053	)		73,903		(5,200,150	)
						NET ASSETS		704,644,047			153,487,894		858,131,941
						Notes to Schedule of Investments

* No income dividends were paid during the preceding 12 months.

See Notes to Pro Forma Combined Financial Statements.

										W&R
										Target
					W&R					Growth
			Advantus		Target					Portfolio
			Capital Apprec.		Growth		Pro Forma			Pro Forma
			Portfolio		Portfolio		Adjustments			Combined
Statement of Assets and Liabilities (in thousands)
Assets
	Investment Securities		$	153,414	$	709,918	$	—		$	863,332
	Cash					1					1
	Dividends and Interest Receivable			209		184					393
	Receivable for Investment Securities Sold					2,721					2,721
	Receivable for Fund Shares Sold			81		110					191
	Other Assets					8					8
	Collateral for securities loaned			2,764		—					2,764
		Total Assets		156,468		712,942		—			869,410
Liabilities Payable for Fund Shares Repurchased				111		261					372
	Payable for Investment Securities Purchased					7,980					7,980
	Payable to Affiliates			105		25					130
	Other Payables					32					32
	Payable Upon Return of Securities Loaned			2,764		—					2,764
		Total Liabilities		2,980		8,298		—			11,278
Net Assets			$	153,488	$	704,644	$	—		$	858,132
Net Assets			$	153,488	$	704,644	$	—		$	858,132
Shares Outstanding				140,304		106,698		(117,063	)		129,939
Net Asset Value per Share			$	1.0940	$	6.6041	$	—		$	6.6041

See Notes to Pro Forma Combined Financial Statements.

The following unaudited Pro Forma Combined Statement of Operations for W&R Target Growth Portfolio and Advantus Capital Appreciation Portfolio has been derived from the Statements of Operations of W&R Target Growth Portfolio and Advantus Capital Appreciation Portfolio for the fiscal year ended December 31, 2002. Such information has been adjusted to give effect to the Reorganization as if it had occurred on January 1, 2002, and reflects Pro Forma adjustments that are directly attributable to the transaction and are expected to have a continuing impact.

The unaudited Pro Forma Statement of Operations is presented for informational purposes only and does not purport to be indicative of the results of operations that would have occurred if the Reorganization had been consummated on January 1, 2002. The unaudited Pro Forma Financial Statements should be read in conjunction with the financial statements and related notes of the respective funds incorporated by reference in this Statement of Additional Information.

												W&R
												Target
						W&R						Growth
						Target						Portfolio
			Capital Apprec.			Growth			Pro Forma			Pro Forma
			Portfolio			Portfolio			Adjustments			Combined
Statement of Operations (in thousands)
Investment Income
	Dividends		$	1,350		$	6,981		$	—		$	8,331
	Interest & Other			184			1,434			—			1,618
		Total Investment Income		1,534			8,415			—			9,949
Expenses
	Investment Advisory Fees			966			5,891			369			7,226
	Rule 12b-1 Fees			483			2,104			—			2,587
	Other Expenses			145			328			(49	)		424
		Total Expenses		1,594			8,323			320			10,237
Net Investment Income (Loss)				(60	)		92			(320	)		(288	)
Realized and Unrealized Gain (Loss)
	Realized net loss on securities			(45,440	)		(81,247	)		—			(126,687	)
	Net change in unrealized appreciation (depreciation) on investments			(32,193	)		(126,019	)		—			(158,212	)
		Net gain (loss) on investments		(77,633	)		(207,266	)		—			(284,899	)
Net increase (decrease) in net assets resulting from operations			$	(77,693	)	$	(207,174	)	$	(320	)	$	(285,187	)

See Notes to Pro Forma Combined Financial Statements.

W&R TARGET GROWTH PORTFOLIO AND ADVANTUS CAPITAL APPRECIATION PORTFOLIO
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS

December 31, 2002
(Unaudited)

NOTE 1 — Significant Accounting Policies

W&R Target Growth Portfolio and Advantus Capital Appreciation Portfolio (the “Funds”) are registered under the Investment Company Act of 1940 as diversified, open-end management investment companies. W&R Target Growth Portfolio’s investment objective is to seek capital growth, with a secondary goal of current income. Advantus Capital Appreciation Portfolio’s investment objective is to seek growth of capital. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of the pro forma combined financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America.

A. Security valuation — Each stock and convertible bond is valued at the latest sale price thereof on each business day of the fiscal period as reported by the principal securities exchange on which the issue is traded or, if no sale is reported for a stock, the average of the latest bid and asked prices. Bonds, other than convertible bonds, are valued using a pricing system provided by a pricing service or dealer in bonds. Convertible bonds are valued using this pricing system only on days when there is no sale reported. Stocks which are traded over-the-counter are priced using the Nasdaq Stock Market, which provides information on bid and asked prices quoted by major dealers in such stocks. Restricted securities and securities for which quotations are not readily available are valued as determined in good faith in accordance with procedures established by and under the general supervision of the Fund’s Board of Directors. Short-term debt securities are valued at amortized cost, which approximates market value.

B. Security transactions and related investment income — Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Securities gains and losses are calculated on the identified cost basis. Premium and discount on the purchase of bonds are amortized for both financial and tax reporting purposes. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded as soon as the Fund is informed of the ex-dividend date. Interest income is recorded on the accrual basis.

C. Foreign currency translations — All assets and liabilities denominated in foreign currencies are translated into U.S. dollars daily. Purchases and sales of investment securities and accruals of income and expenses are translated at the rate of exchange prevailing on the date of the transaction. For assets and liabilities other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. The Fund combines fluctuations from currency exchange rates and fluctuations in market value when computing net realized and unrealized gain or loss from investments.

D. Federal income taxes — It is the Fund’s policy to distribute all of its taxable income and capital gains to its shareholders and otherwise qualify as a regulated investment company under the Internal Revenue Code. Accordingly, provision has not been made for Federal income taxes.

E. Dividends and distributions — Dividends and distributions to shareholders are recorded by each Fund on the record date. Net investment income distributions and capital gains distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences are due to differing treatments for items such as deferral of wash sales and post-October losses, foreign currency transactions, net operating losses and expiring capital loss carryovers.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

NOTE 2 — Investment Management And Payments To Affiliated Persons

Waddell & Reed Investment Management Company (“WRIMCO”), a wholly owned subsidiary of Waddell & Reed, Inc. (“W&R”), serves as the Fund’s investment manager. The Fund pays a fee for investment management services. The fee is computed daily based on the net asset value at the close of business. The fee is payable by the Fund at the following annual rates:

	Annual
Fund	Net Asset Breakpoints	Rate
Growth Portfolio	Up to $1 Billion		0.700	%
	Over $1 Billion up to $2 Billion		0.650	%
	Over $2 Billion up to $3 Billion		0.600	%
	Over $3 Billion		0.550	%

The Fund accrues and pays this fee daily. The Fund also reimburses WRIMCO for certain expenses, including additional Fund-related security costs incurred by WRIMCO as a result of the September 11, 2001 terrorist activities. The amount reimbursed represents the Fund’s share of incremental security-related costs including the cost of using private transportation for WRIMCO’s personnel in lieu of commercial transportation, certain security-related personnel and facilities costs. At December 31, 2002, additional security costs amounted to $57,486, which is included in other expenses.

WRIMCO, the Fund’s investment manager, has agreed to waive a Portfolio’s management fee on any day that the Portfolio’s net assets are less than $25 million, subject to its right to change or modify this waiver.

The Fund has an Accounting Services Agreement with Waddell & Reed Services Company (“WRSCO”), a wholly owned subsidiary of W&R. Under the agreement, WRSCO acts as the agent in providing bookkeeping and accounting services and assistance to the Fund, including maintenance of Fund records, pricing of Fund shares, preparation of prospectuses for existing shareholders, preparation of proxy statements and certain shareholder reports. For these services, each Portfolio pays WRSCO a monthly fee of one-twelfth of the annual fee shown in the following table.

Accounting Services Fee
Average
Net Asset Level		Annual Fee
(all dollars in millions)		Rate for Each Portfolio
From $0 to $10		$	0
From $10 to $25		$	11,000
From $25 to $50		$	22,000
From $50 to $100		$	33,000
From $100 to $200		$	44,000
From $200 to $350		$	55,000
From $350 to $550		$	66,000
From $550 to $750		$	77,000
From $750 to $1,000		$	93,500
	$1,000 and Over	$	110,000

The Fund has adopted a Service Plan pursuant to Rule 12b-1 of the 1940 Act. Under the Plan, each Portfolio may pay a fee to W&R in an amount not to exceed 0.25% of the Portfolio’s average annual net assets. The fee is to be paid to compensate W&R for amounts it expends in connection with the provision of personal services to Policyowners and/or maintenance of Policyowner accounts.

The Fund paid Directors’ fees of $40,421, which is included in other expenses.

W&R is a subsidiary of Waddell & Reed Financial, Inc., a public holding company, and a direct subsidiary of Waddell & Reed Financial Services, Inc., a holding company.

W&R TARGET GROWTH PORTFOLIO
ADVANTUS GROWTH PORTFOLIO
PRO FORMA COMBINED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
(UNAUDITED)

The following unaudited Pro Forma Combined Statement of Assets and Liabilities, including the unaudited Pro Forma Combined Investments of W&R Target Growth Portfolio and Advantus Growth Portfolio as of December 31, 2002 has been derived from the respective statements of assets and liabilities, including the schedules of investments, of W&R Target Growth Portfolio and Advantus Growth Portfolio as of December 31, 2002.

Under the terms of the Agreement and Plan of Reorganization, the combination of Advantus Growth Portfolio and W&R Target Growth Portfolio will be treated as a tax-free business combination and accordingly will be accounted for by a method of accounting for tax-free mergers of investment companies (sometimes referred to as the pooling without restatement method). The acquisition would be accomplished by an acquisition of the net assets of Advantus Growth Portfolio in exchange for shares of W&R Target Growth Portfolio at net asset value. W&R Target Growth Portfolio will be the accounting survivor for financial statement purposes.

As of July 23, 2003, all of the securities held by Advantus Growth Portfolio would comply with the compliance guidelines and/or investment restrictions of W&R Target Growth Portfolio. All reorganization costs will be borne by Advantus Capital Management, Inc. and not by the funds.

The Pro Forma Combined Statement of Assets and Liabilities is presented for informational purposes only and does not purport to be indicative of the financial condition that would have resulted if the Reorganization had been consummated on December 31, 2002. The unaudited Pro Forma Financial Statements should be read in conjunction with the respective financial statements and related notes of W&R Target Growth Portfolio and Advantus Growth Portfolio incorporated by reference in this Statement of Additional Information.

SHARES OR												(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION		VALUE
				W&R								W&R
				TARGET								TARGET
				GROWTH								GROWTH
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO				W&R TARGET		ADVANTUS		PRO
GROWTH		GROWTH		FORMA				GROWTH		GROWTH		FORMA
PORTFOLIO		PORTFOLIO		COMBINED				PORTFOLIO		PORTFOLIO		COMBINED
						COMMON STOCKS
						Aircraft
	390,400		11,500		401,900	Lockheed Martin Corporation			22,545,600		664,125		23,209,725
	185,000				185,000	Raytheon Company			5,688,750				5,688,750
			18,600		18,600	United Technologies Corporation					1,152,084		1,152,084
							Total		28,234,350		1,816,209		30,050,559
						Banks
	75,200		14,300		89,500	Bank of America Corporation			5,231,664		994,851		6,226,515
	350,100		43,700		393,800	Citigroup Inc.*			12,320,019		1,537,803		13,857,822
			43,900		43,900	Fifth Third BanCorporation					2,570,345		2,570,345
			60,300		60,300	MBNA Corporation					1,146,906		1,146,906
	150,000				150,000	Mellon Financial Corporation			3,916,500				3,916,500
			13,900		13,900	State Street Corporation					542,100		542,100
	250,200		31,000		281,200	Wells Fargo & Company			11,726,874		1,452,970		13,179,844
			16,300		16,300	Zion BanCorporation					641,389		641,389
							Total		33,195,057		8,886,364		42,081,421
						Beverages
	230,000		38,000		268,000	Anheuser-Busch Companies, Inc			11,132,000		1,839,200		12,971,200
	200,000		72,400		272,400	Coca-Cola Company (The)			8,764,000		3,172,568		11,936,568
			70,790		70,790	Pepsico, Inc					2,988,754		2,988,754
							Total		19,896,000		8,000,522		27,896,522
						Broadcasting
	145,000		60,000		205,000	Clear Channel Communications, Inc.*			5,407,050		2,237,400		7,644,450
	210,000				210,000	Fox Entertainment Group, Inc., Class A*			5,445,300				5,445,300
	258,442		42,000		300,442	Viacom Inc., Class B*			10,534,096		1,711,920		12,246,016
							Total		21,386,446		3,949,320		25,335,766
						Business Equipment and Services
	708,000				708,000	Accenture Ltd, Class A*			12,736,920				12,736,920
	250,000				250,000	BearingPoint, Inc.*			1,725,000				1,725,000
			30,500		30,500	Entegris, Inc.*					314,150		314,150
			85,100		85,100	First Data Corporation					3,013,391		3,013,391
	225,000				225,000	Manpower Inc			7,177,500				7,177,500
			64,300		64,300	Robert Half International, Inc.*					1,035,873		1,035,873
	390,200				390,200	Staples, Inc.*			7,134,807				7,134,807
			12,777		12,777	Sungard Data Systems, Inc.*					301,026		301,026
							Total		28,774,227		4,664,440		33,438,667
						Capital Equipment
	210,200				210,200	Cooper Cameron Corporation*			10,472,164				10,472,164
	180,000				180,000	Parker Hannifin Corporation			8,303,400				8,303,400
							Total		18,775,564		0		18,775,564
						Chemicals — Specialty
	200,000		29,700		229,700	Air Products and Chemicals, Inc			8,550,000		1,269,675		9,819,675
	85,000				85,000	Praxair, Inc			4,910,450				4,910,450
							Total		13,460,450		1,269,675		14,730,125

See Notes to Pro Forma Combined Financial Statements.

SHARES OR												(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION		VALUE
				W&R								W&R
				TARGET								TARGET
				GROWTH								GROWTH
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO				W&R TARGET		ADVANTUS		PRO
GROWTH		GROWTH		FORMA				GROWTH		GROWTH		FORMA
PORTFOLIO		PORTFOLIO		COMBINED				PORTFOLIO		PORTFOLIO		COMBINED
						Communications Equipment
	1,541,900		360,084		1,901,984	Cisco Systems, Inc.*			20,191,181		4,717,100		24,908,281
	475,000				475,000	Nokia Corporation, Series A, ADR			7,362,500				7,362,500
			85,900		85,900	Nokia Oyj					1,331,450		1,331,450
			67,900		67,900	Qualcomm, Inc.*					2,470,881		2,470,881
							Total		27,553,681		8,519,431		36,073,112
						Computers — Main and Mini
			40,100		40,100	International Business Machines Corporation					3,107,750		3,107,750
						Computers — Micro
	300,200		110,140		410,340	Dell Computer Corporation*			8,040,857		2,945,144		10,986,001
						Computers — Peripherals
	600,300		37,800		638,100	BEA Systems, Inc.*			6,888,442		433,566		7,322,008
			38,500		38,500	Brocade Communication Systems, Inc.*					159,390		159,390
	1,259,200		56,800		1,316,000	EMC Corporation*			7,731,488		348,752		8,080,240
			5,602		5,602	Electronic Arts, Inc.*					278,812		278,812
	494,400		197,500		691,900	Microsoft Corporation*			25,570,368		10,210,750		35,781,118
	475,600		189,600		665,200	Oracle Corporation*			5,141,236		2,047,680		7,188,916
			12,700		12,700	Peoplesoft, Inc.*					232,410		232,410
	675,200				675,200	SAP Aktiengesellschaft, ADR			13,166,400				13,166,400
			14,400		14,400	Symantec Corporation*					582,480		582,480
			109,800		109,800	Symbol Technologies, Inc					902,556		902,556
							Total		58,497,934		15,196,396		73,694,330
						Cosmetics and Toiletries
	350,400				350,400	Gillette Company (The)			10,638,144				10,638,144
						Defense
	60,000				60,000	General Dynamics Corporation			4,762,200				4,762,200
						Electrical Equipment
			68,100		68,100	Tyco International, Ltd					1,163,148		1,163,148
			34,700		34,700	WW Grainger, Inc					1,788,785		1,788,785
							Total		0		2,951,933		2,951,933
						Electronic Components
	260,000		24,200		284,200	Altera Corporation*			3,218,800		298,628		3,517,428
	210,200		15,732		225,932	Analog Devices, Inc.*			5,017,474		375,523		5,392,997
			214,490		214,490	Intel Corporation					3,339,609		3,339,609
			14,597		14,597	Linear Technology Corporation					375,435		375,435
	135,000		14,172		149,172	Maxim Integrated Products, Inc.*			4,459,050		468,243		4,927,293
	375,200		18,096		393,296	Microchip Technology Incorporated			9,177,392		442,447		9,619,839
	150,000		133,857		283,857	Texas Instruments Incorporated			2,251,500		2,009,194		4,260,694
	160,000		16,000		176,000	Xilinx, Inc.*			3,286,400		329,600		3,616,000
							Total		27,410,616		7,638,679		35,049,295

See Notes to Pro Forma Combined Financial Statements.

SHARES OR												(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION		VALUE
				W&R								W&R
				TARGET								TARGET
				GROWTH								GROWTH
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO				W&R TARGET		ADVANTUS		PRO
GROWTH		GROWTH		FORMA				GROWTH		GROWTH		FORMA
PORTFOLIO		PORTFOLIO		COMBINED				PORTFOLIO		PORTFOLIO		COMBINED
						Electronic Instruments
	482,600		108,542		591,142	Applied Materials, Inc.*			6,288,278		1,414,302		7,702,580
			17,313		17,313	KLA-Tencor Corporation*					612,361		612,361
			12,900		12,900	Novellus Systems, Inc.*					362,232		362,232
							Total		6,288,278		2,388,895		8,677,173
						Food and Related
	255,200		23,000		278,200	Kraft Foods Inc			9,934,936		895,390		10,830,326
			34,000		34,000	Sysco Corporation					1,012,860		1,012,860
							Total		9,934,936		1,908,250		11,843,186
						Health Care — Drugs
			70,500		70,500	Abbott Laboratories					2,820,000		2,820,000
	100,000		15,000		115,000	AmerisourceBergen Corporation			5,431,000		814,650		6,245,650
	190,400		95,500		285,900	Amgen Inc.*			9,206,792		4,616,470		13,823,262
			46,500		46,500	Eli Lilly & Company					2,952,750		2,952,750
	110,300		17,000		127,300	Forest Laboratories, Inc.*			10,833,666		1,669,740		12,503,406
			9,400		9,400	Genentech, Inc.*					311,704		311,704
	100,000				100,000	Gilead Sciences, Inc.*			3,391,500				3,391,500
	1,027,725		422,325		1,450,050	Pfizer Inc			31,417,553		12,910,475		44,328,028
	280,250				280,250	Pharmacia Corporation			11,714,450				11,714,450
							Total		71,994,961		26,095,789		98,090,750
						Health Care — General
	180,000				180,000	Biomet, Inc			5,164,200				5,164,200
			13,700		13,700	Boston Scientific Corporation*					582,524		582,524
	213,800		144,700		358,500	Johnson & Johnson			11,483,198		7,771,837		19,255,035
			54,400		54,400	St. Jude Medical, Inc.*					2,160,768		2,160,768
			88,100		88,100	Wyeth					3,294,940		3,294,940
	195,000		50,300		245,300	Zimmer Holdings, Inc.*			8,096,400		2,088,456		10,184,856
							Total		24,743,798		15,898,525		40,642,323
						Hospital Supply and Management
			31,000		31,000	Express Scripts, Inc.*					1,489,240		1,489,240
	100,000		18,100		118,100	HCA — The Healthcare Company			4,150,000		751,150		4,901,150
	935,700				935,700	Health Management Associates, Inc., Class A			16,749,030				16,749,030
	235,400		56,500		291,900	Medtronic, Inc			10,734,240		2,576,400		13,310,640
			5,200		5,200	Unitedhealth Group, Inc					434,200		434,200
							Total		31,633,270		5,250,990		36,884,260
						Hotels and Gaming
			35,300		35,300	Harrah’s Entertainment, Inc.*					1,397,880		1,397,880
	75,000				75,000	International Game Technology*			5,694,000				5,694,000
							Total		5,694,000		1,397,880		7,091,880
						Household — General Products
			75,300		75,300	Colgate-Palmolive Company					3,947,979		3,947,979
	126,800		50,600		177,400	Procter & Gamble Company (The)			10,897,192		4,348,564		15,245,756
							Total		10,897,192		8,296,543		19,193,735
						Insurance — Property and Casualty
	108,812		45,900		154,712	American International Group, Inc			6,294,774		2,655,315		8,950,089

See Notes to Pro Forma Combined Financial Statements.

SHARES OR												(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION		VALUE
				W&R								W&R
				TARGET								TARGET
				GROWTH								GROWTH
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO				W&R TARGET		ADVANTUS		PRO
GROWTH		GROWTH		FORMA				GROWTH		GROWTH		FORMA
PORTFOLIO		PORTFOLIO		COMBINED				PORTFOLIO		PORTFOLIO		COMBINED
						Leisure Time Industry
			118,100		118,100	Brunswick Corporation					2,345,466		2,345,466
						Metal Fabrication
			31,100		31,100	Fastenal Company					1,162,829		1,162,829
						Motion Pictures
			93,800		93,800	AOL Time Warner, Inc.*					1,228,780		1,228,780
						Motor Vehicle Parts
	145,200		19,200		164,400	AutoZone, Inc.*			10,258,380		1,356,480		11,614,860
	60,000		20,600		80,600	Danaher Corporation			3,942,000		1,353,420		5,295,420
			15,300		15,300	Eaton Corporation					1,195,083		1,195,083
			29,200		29,200	Lear Corporation*					971,776		971,776
							Total		14,200,380		4,876,759		19,077,139
						Motor Vehicles
	190,800		30,600		221,400	Harley-Davidson, Inc			8,814,960		1,413,720		10,228,680
						Multiple Industry
			30,700		30,700	3M Company					3,785,310		3,785,310
			33,700		33,700	Fisher Scientific International, Inc					1,013,696		1,013,696
			378,600		378,600	General Electric Company					9,218,910		9,218,910
							Total		0		14,017,916		14,017,916
						Petroleum — Canada
			52,960		52,960	Nabors Industries, Ltd.*					1,867,899		1,867,899
						Petroleum — Domestic
	235,200				235,200	Anadarko Petroleum Corporation			11,266,080				11,266,080
	290,000				290,000	Burlington Resources Inc			12,368,500				12,368,500
			13,900		13,900	EOG Resources, Inc					554,888		554,888
							Total		23,634,580		554,888		24,189,468
						Petroleum — International
	310,000				310,000	Exxon Mobil Corporation			10,831,400				10,831,400
						Petroleum — Services
	255,000				255,000	Baker Hughes Incorporated			8,208,450				8,208,450
			40,200		40,200	Ensco International, Inc					1,183,890		1,183,890
	130,200		30,100		160,300	Smith International, Inc.*			4,247,124		981,862		5,228,986
			49,400		49,400	Veritas DCG, Inc.*					771,628		771,628
							Total		12,455,574		2,937,380		15,392,954
						Restaurants
			71,900		71,900	Darden Restaurants, Inc					1,470,355		1,470,355
						Retail — Food Stores
			47,400		47,400	Walgreen Company					1,383,606		1,383,606

See Notes to Pro Forma Combined Financial Statements.

SHARES OR													(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION		VALUE
				W&R								W&R
				TARGET								TARGET
				GROWTH								GROWTH
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO				W&R TARGET		ADVANTUS			PRO
GROWTH		GROWTH		FORMA				GROWTH		GROWTH			FORMA
PORTFOLIO		PORTFOLIO		COMBINED				PORTFOLIO		PORTFOLIO			COMBINED
						Retail — General Merchandise
			75,200		75,200	Family Dollar Stores					2,346,992			2,346,992
	180,000		28,400		208,400	Kohl’s Corporation*			10,071,000		1,588,980			11,659,980
	385,300				385,300	Target Corporation			11,559,000					11,559,000
			117,000		117,000	Wal-Mart Stores, Inc					5,909,670			5,909,670
							Total		21,630,000		9,845,642			31,475,642
						Retail — Specialty Stores
			37,200		37,200	Bed Bath & Beyond, Inc.*					1,284,516			1,284,516
	300,100				300,100	Home Depot, Inc. (The)			7,190,396					7,190,396
	240,400		85,000		325,400	Lowe’s Companies, Inc			9,015,000		3,187,500			12,202,500
							Total		16,205,396		4,472,016			20,677,412
						Security and Commodity Brokers
			36,400		36,400	American Express Company					1,286,740			1,286,740
	330,400				330,400	Charles Schwab Corporation (The)			3,584,840					3,584,840
	233,800				233,800	Fannie Mae			15,040,354					15,040,354
	240,200		38,400		278,600	Freddie Mac			14,183,810		2,267,520			16,451,330
	190,200		14,000		204,200	Goldman Sachs Group, Inc. (The)			12,952,620		953,400			13,906,020
			24,200		24,200	Marsh and McLennan Companies, Inc					1,118,282			1,118,282
	240,200				240,200	Prudential Financial, Inc			7,623,948					7,623,948
			9,900		9,900	SLM Corporation					1,028,214			1,028,214
			36,400		36,400	T. Rowe Price Associates, Inc					992,992			992,992
							Total		53,385,572		7,647,148			61,032,720
						Timesharing and Software
			7,200		7,200	Affiliated Computer Services, Inc.*					379,080			379,080
			24,000		24,000	Automatic Data Processing, Inc					942,000			942,000
			32,025		32,025	eBay, Inc.*					2,171,935			2,171,935
			22,500		22,500	Paychex, Inc					627,750			627,750
							Total		0		4,120,765			4,120,765
						Tobacco
			19,400		19,400	Philip Morris Companies, Inc					786,282			786,282
						Trucking and Shipping
			39,100		39,100	Expeditor Washington International, Inc					1,276,615			1,276,615
			11,600		11,600	United Parcel Service, Inc					731,728			731,728
							Total		0		2,008,343			2,008,343
						Utilities — Telephone
	200,000				200,000	Vodafone Group Plc, ADR			3,624,000					3,624,000
						TOTAL COMMON STOCKS			632,888,597		194,977,844			827,866,441
						S&P DEPOSITORY RECEIPT
			10,900		10,900	S&P Depository Receipt					962,361			962,361
						SHORT-TERM SECURITIES
						Commercial Paper
						Banks
						Bank One Corporation,
	10,000				10,000		1.25%, 1-22-03		9,992,708					9,992,708
			95,336		95,336		Wells Fargo & Company — Cash Investment Fund, current rate 1.326%				95,336			95,336
							Total		9,992,708		95,336			10,088,044

See Notes to Pro Forma Combined Financial Statements.

SHARES OR															(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION		VALUE
				W&R										W&R
				TARGET										TARGET
				GROWTH										GROWTH
				PORTFOLIO										PORTFOLIO
W&R TARGET		ADVANTUS		PRO				W&R TARGET			ADVANTUS				PRO
GROWTH		GROWTH		FORMA				GROWTH			GROWTH				FORMA
PORTFOLIO		PORTFOLIO		COMBINED				PORTFOLIO			PORTFOLIO				COMBINED
						Food and Related
	6,895					ConAgra Foods, Inc.,
	6,895				6,895		1.42%, 1-13-03		6,891,737							6,891,737
	1,214					General Mills, Inc.,
	1,214				1,214		1.53%, Master Note		1,214,000							1,214,000
							Total		8,105,737			0				8,105,737
						Forest and Paper Products
						Sonoco Products Co.,
	4,000				4,000		1.38%, 1-16-03		3,997,700							3,997,700
						Health Care — Drugs
						Alcon Finance PLC (Nestle S.A.),
	7,000				7,000		1.33%, 1-17-03		6,995,862							6,995,862
						Pfizer Inc.,
	7,000				7,000		1.31%, 1-23-03		6,994,396							6,994,396
						Pharmacia Corporation:
	5,000				5,000		1.32%, 1-21-03		4,996,334							4,996,334
	10,000				10,000		1.35%, 1-21-03		9,992,500							9,992,500
							Total		28,979,092			0				28,979,092
						Health Care — General
						Johnson & Johnson:
	4,500				4,500		1.27%, 2-3-03		4,494,761							4,494,761
	5,000				5,000		1.26%, 2-5-03		4,993,875							4,993,875
							Total		9,488,636			0				9,488,636
						Household — General Products
						Procter & Gamble Company (The),
	7,000				7,000		1.3%, 2-10-03		6,989,889							6,989,889
						Multiple Industry
						Federated Money Market Obligations Trust — Prime Obligation Fund,
			69		69		current rate 1.370%					69				69
			3,560,308		3,560,308		Provident Institutional Fund — TempFund Portfolio, current rate 1.220%					3,560,308				3,560,308
							Total		0			3,560,377				3,560,377
						Utilities — Telephone
						SBC International Inc.,
	4,500				4,500		1.32%, 1-16-03		4,497,525							4,497,525
						Total Commercial Paper			72,051,287			3,655,713				75,707,000
						United States Government Security
	5,000				5,000	United States Treasury Bill,
							1.24%, 5-8-03		4,978,216							4,978,216
						TOTAL SHORT-TERM SECURITIES			77,029,503			3,655,713				80,685,216
						TOTAL INVESTMENT SECURITIES			709,918,100			199,595,918				909,514,018
						LIABILITIES, NET OF CASH AND OTHER ASSETS			(5,274,053	)		(1,175,110	)			(6,449,163	)
						NET ASSETS			704,644,047			198,420,808				903,064,855

Notes to Schedule of Investments

*No income dividends were paid during the preceding 12 months.

See Notes to Pro Forma Combined Financial Statements.

										W&R
										Target
					W&R					Growth
			Advantus		Target					Portfolio
			Growth		Growth		Pro Forma			Pro Forma
			Portfolio		Portfolio		Adjustments			Combined
Statement of Assets and Liabilities (in thousands)
Assets
	Investment Securities		$	199,596	$	709,918	$	—		$	909,514
	Cash					1					1
	Dividends and Interest Receivable			219		184					403
	Receivable for Investment Securities Sold			3,978		2,721					6,699
	Receivable for Fund Shares Sold			96		110					206
	Other Assets					8					8
	Collateral for securities loaned			9,400		—					9,400
		Total Assets		213,289		712,942		—			926,231
Liabilities
	Payable for Fund Shares Repurchased			144		261					405
	Payable for Investment Securities Purchased			5,193		7,980					13,173
	Payable to Affiliates			131		25					156
	Other Payables					32					32
	Payable Upon Return of Securities Loaned			9,400		—					9,400
		Total Liabilities		14,868		8,298		—			23,166
Net Assets			$	198,421	$	704,644	$	—		$	903,065
Net Assets			$	198,421	$	704,644	$	—		$	903,065
Shares Outstanding				169,559		106,698		(139,514	)		136,743
Net Asset Value per Share			$	1.1702	$	6.6041	$	—		$	6.6041

See Notes to Pro Forma Combined Financial Statements.

The following unaudited Pro Forma Combined Statement of Operations for W&R Target Growth Portfolio and Advantus Growth Portfolio has been derived from the Statements of Operations of W&R Target Growth Portfolio and Advantus Growth Portfolio for the fiscal year ended December 31, 2002. Such information has been adjusted to give effect to the Reorganization as if it had occurred on January 1, 2002, and reflects Pro Forma adjustments that are directly attributable to the transaction and are expected to have a continuing impact.

The unaudited Pro Forma Statement of Operations is presented for informational purposes only and does not purport to be indicative of the results of operations that would have occurred if the Reorganization had been consummated on January 1, 2002. The unaudited Pro Forma Financial Statements should be read in conjunction with the financial statements and related notes of the respective funds incorporated by reference in this Statement of Additional Information.

												W&R
												Target
						W&R						Growth
			Advantus			Target						Portfolio
			Growth			Growth			Pro Forma			Pro Forma
			Portfolio			Portfolio			Adjustments			Combined
Statement of Operations (in thousands)
Investment Income
	Dividends		$	2,173		$	6,981		$	—		$	9,154
	Interest & Other			118			1,434			—			1,552
		Total Investment Income		2,291			8,415			—			10,706
Expenses
	Investment Advisory Fees			1,091			5,891			564			7,546
	Rule 12b-1 Fees			606			2,104			—			2,710
	Other Expenses			144			328			(35	)		437
		Total Expenses		1,841			8,323			529			10,693
Net Investment Income (Loss)				450			92			(529	)		13
Realized and Unrealized Gain (Loss)
	Realized net loss on securities			(22,254	)		(81,247	)		—			(103,501	)
	Net change in unrealized appreciation (depreciation) on investments			(51,859	)		(126,019	)		—			(177,878	)
		Net gain (loss) on investments		(74,113	)		(207,266	)		—			(281,379	)
Net increase (decrease) in net assets resulting from operations			$	(73,663	)	$	(207,174	)	$	(529	)	$	(281,366	)

See Notes to Pro Forma Combined Financial Statements.

W&R TARGET GROWTH PORTFOLIO AND ADVANTUS GROWTH PORTFOLIO
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
December 31, 2002
(Unaudited)

NOTE 1 — Significant Accounting Policies

      W&R Target Growth Portfolio and Advantus Growth Portfolio (the “Funds”) are registered under the Investment Company Act of 1940 as diversified, open-end management investment companies. W&R Target Growth Portfolio’s investment objective is to seek capital growth, with a secondary goal of current income. Advantus Growth Portfolio’s investment objective is to seek long-term appreciation of capital. Current income is a factor in the selection of securities but is a secondary objective. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of the pro forma combined financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America.

A. Security valuation — Each stock and convertible bond is valued at the latest sale price thereof on each business day of the fiscal period as reported by the principal securities exchange on which the issue is traded or, if no sale is reported for a stock, the average of the latest bid and asked prices. Bonds, other than convertible bonds, are valued using a pricing system provided by a pricing service or dealer in bonds. Convertible bonds are valued using this pricing system only on days when there is no sale reported. Stocks which are traded over-the-counter are priced using the Nasdaq Stock Market, which provides information on bid and asked prices quoted by major dealers in such stocks. Restricted securities and securities for which quotations are not readily available are valued as determined in good faith in accordance with procedures established by and under the general supervision of the Fund’s Board of Directors. Short-term debt securities are valued at amortized cost, which approximates market value.

B. Security transactions and related investment income — Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Securities gains and losses are calculated on the identified cost basis. Premium and discount on the purchase of bonds are amortized for both financial and tax reporting purposes. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded as soon as the Fund is informed of the ex-dividend date. Interest income is recorded on the accrual basis.

C. Foreign currency translations — All assets and liabilities denominated in foreign currencies are translated into U.S. dollars daily. Purchases and sales of investment securities and accruals of income and expenses are translated at the rate of exchange prevailing on the date of the transaction. For assets and liabilities other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. The Fund combines fluctuations from currency exchange rates and fluctuations in market value when computing net realized and unrealized gain or loss from investments.

D. Federal income taxes — It is the Fund’s policy to distribute all of its taxable income and capital gains to its shareholders and otherwise qualify as a regulated investment company under the Internal Revenue Code. Accordingly, provision has not been made for Federal income taxes.

E. Dividends and distributions — Dividends and distributions to shareholders are recorded by each Fund on the record date. Net investment income distributions and capital gains distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences are due to differing treatments for items such as deferral of wash sales and post-October losses, foreign currency transactions, net operating losses and expiring capital loss carryovers.

      The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

NOTE 2 — Investment Management And Payments To Affiliated Persons

      Waddell & Reed Investment Management Company (“WRIMCO”), a wholly owned subsidiary of Waddell & Reed, Inc. (“W&R”), serves as the Fund’s investment manager. The Fund pays a fee for investment management services. The fee is computed daily based on the net asset value at the close of business. The fee is payable by the Fund at the following annual rates:

	Annual
Fund	Net Asset Breakpoints	Rate
Growth Portfolio	Up to $1 Billion		0.700	%
	Over $1 Billion up to $2 Billion		0.650	%
	Over $2 Billion up to $3 Billion		0.600	%
	Over $3 Billion		0.550	%

The Fund accrues and pays this fee daily. The Fund also reimburses WRIMCO for certain expenses, including additional Fund-related security costs incurred by WRIMCO as a result of the September 11, 2001 terrorist activities. The amount reimbursed represents the Fund’s share of incremental security-related costs including the cost of using private transportation for WRIMCO’s personnel in lieu of commercial transportation, certain security-related personnel and facilities costs. At December 31, 2002, additional security costs amounted to $57,486, which is included in other expenses.

WRIMCO, the Fund’s investment manager, has agreed to waive a Portfolio’s management fee on any day that the Portfolio’s net assets are less than $25 million, subject to its right to change or modify this waiver.

The Fund has an Accounting Services Agreement with Waddell & Reed Services Company (“WRSCO”), a wholly owned subsidiary of W&R. Under the agreement, WRSCO acts as the agent in providing bookkeeping and accounting services and assistance to the Fund, including maintenance of Fund records, pricing of Fund shares, preparation of prospectuses for existing shareholders, preparation of proxy statements and certain shareholder reports. For these services, each Portfolio pays WRSCO a monthly fee of one-twelfth of the annual fee shown in the following table.

Accounting Services Fee

Average
Net Asset Level						Annual Fee
(all dollars in millions)						Rate for Each Portfolio
From	$	0	to	$	10	$	0
From	$	10	to	$	25	$	11,000
From	$	25	to	$	50	$	22,000
From	$	50	to	$	100	$	33,000
From	$	100	to	$	200	$	44,000
From	$	200	to	$	350	$	55,000
From	$	350	to	$	550	$	66,000
From	$	550	to	$	750	$	77,000
From	$	750	to	$	1,000	$	93,500
	$	1,000	and Over			$	110,000

The Fund has adopted a Service Plan pursuant to Rule 12b-1 of the 1940 Act. Under the Plan, each Portfolio may pay a fee to W&R in an amount not to exceed 0.25% of the Portfolio’s average annual net assets. The fee is to be paid to compensate W&R for amounts it expends in connection with the provision of personal services to Policyowners and/or maintenance of Policyowner accounts.

The Fund paid Directors’ fees of $40,421, which is included in other expenses.

W&R is a subsidiary of Waddell & Reed Financial, Inc., a public holding company, and a direct subsidiary of Waddell & Reed Financial Services, Inc., a holding company.

W&R TARGET GROWTH PORTFOLIO,
ADVANTUS CAPITAL APPRECIATION PORTFOLIO
AND ADVANTUS GROWTH PORTFOLIO
PRO FORMA COMBINED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
(UNAUDITED)

The following unaudited Pro Forma Combined Statement of Assets and Liabilities, including the unaudited Pro Forma Combined Investments of W&R Target Growth Portfolio, Advantus Capital Appreciation Portfolio and Advantus Growth Portfolio as of December 31, 2002 has been derived from the respective statements of assets and liabilities, including the schedules of investments, of W&R Target Growth Portfolio, Advantus Capital Appreciation Portfolio and Advantus Growth Portfolio, respectively, as of December 31, 2002.

Under the terms of the Agreement and Plan of Reorganization, the combination of Advantus Capital Appreciation Portfolio and Advantus Growth Portfolio with W&R Target Growth Portfolio will be taxed as a tax-free business combination and accordingly will be accounted for by a method of accounting for tax-free mergers of investment companies (sometimes referred to as the pooling without restatement method). The acquisition would be accomplished by an acquisition of the net assets of Advantus Capital Appreciation Portfolio and Advantus Growth Portfolio in exchange for shares of W&R Target Growth Portfolio at net asset value. W&R Target Growth Portfolio will be the accounting survivor for financial statement purposes.

As of July 23, 2003, all of the securities held by Advantus Capital Appreciation Portfolio and Advantus Growth Portfolio would comply with the compliance guidelines and/or investment restrictions of W&R Target Growth Portfolio. All reorganization costs will be borne by Advantus Capital Management, Inc. and not by the funds.

The Pro Forma Combined Statement of Assets and Liabilities is presented for informational purposes only and does not purport to be indicative of the financial condition that would have resulted if the Reorganization had been consummated on December 31, 2002. The unaudited Pro Forma Financial Statements should be read in conjunction with the respective financial statements and related notes of W&R Target Growth Portfolio, Advantus Capital Appreciation Portfolio and Advantus Growth Portfolio incorporated by reference in this Statement of Additional Information.

SHARES OR																(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)									DESCRIPTION	VALUE
							W&R									W&R
							TARGET									TARGET
							GROWTH									GROWTH
W&R TARGET			ADVANTUS				PORTFOLIO PRO			W&R TARGET		ADVANTUS				PORTFOLIO PRO
GROWTH			CAPITAL		ADVANTUS		FORMA			GROWTH		CAPITAL		ADVANTUS		FORMA
PORTFOLIO			APPRECIATION		GROWTH		COMBINED			PORTFOLIO		APPRECIATION		GROWTH		COMBINED
									COMMON STOCKS
									Aircraft
	390,400					11,500		401,900	Lockheed Martin Corporation		22,545,600				664,125		23,209,725
	185,000							185,000	Raytheon Company		5,688,750						5,688,750
				45,200		18,600		63,800	United Technologies Corporation				2,799,688		1,152,084		3,951,772
									Total		28,234,350		2,799,688		1,816,209		32,850,247
									Banks
		75,200		24,600		14,300		114,100	Bank of America Corporation		5,231,664		1,711,422		994,851		7,937,937
				59,125				59,125	Charter One Financial, Inc.				1,698,662				1,698,662
	350,100					43,700		393,800	Citigroup Inc.*		12,320,019				1,537,803		13,857,822
						43,900		43,900	Fifth Third BanCorporation						2,570,345		2,570,345
						60,300		60,300	MBNA Corporation						1,146,906		1,146,906
	150,000							150,000	Mellon Financial Corporation		3,916,500						3,916,500
						13,900		13,900	State Street Corporation						542,100		542,100
	250,200			81,100		31,000		362,300	Wells Fargo & Company		11,726,874		3,801,157		1,452,970		16,981,001
						16,300		16,300	Zion BanCorporation						641,389		641,389
									Total		33,195,057		7,211,241		8,886,364		49,292,662
									Beverages
	230,000			74,600		38,000		342,600	Anheuser-Busch Companies, Inc.		11,132,000		3,610,640		1,839,200		16,581,840
	200,000					72,400		272,400	Coca-Cola Company (The)		8,764,000				3,172,568		11,936,568
				58,300				58,300	Pepsi Bottling Group, Inc.				1,498,310				1,498,310
				70,900		70,790		141,690	Pepsico, Inc.				2,993,398		2,988,754		5,982,152
									Total		19,896,000		8,102,348		8,000,522		35,998,870
									Broadcasting
	145,000			98,200		60,000		303,200	Clear Channel Communications, Inc.*		5,407,050		3,661,878		2,237,400		11,306,328
				95,400				95,400	Comcast Corporation*				2,155,086				2,155,086
				97,500				97,500	Fox Entertainment Group, Inc.*				2,528,175				2,528,175
	210,000							210,000	Fox Entertainment Group, Inc., Class A*		5,445,300						5,445,300
				113,880				113,880	Liberty Media Corporation*				1,018,087				1,018,087
				148,017				148,017	Viacom Inc.*				6,033,173				6,033,173
	258,442					42,000		300,442	Viacom Inc., Class B*		10,534,096				1,711,920		12,246,016
									Total		21,386,446		15,396,399		3,949,320		40,732,165
									Business Equipment and Services
	708,000							708,000	Accenture Ltd, Class A*		12,736,920						12,736,920
	250,000							250,000	BearingPoint, Inc.*		1,725,000						1,725,000
						30,500		30,500	Entegris, Inc.*						314,150		314,150
						85,100		85,100	First Data Corporation						3,013,391		3,013,391
	225,000							225,000	Manpower Inc.		7,177,500						7,177,500
				40,500				40,500	Omnicom Group				2,616,300				2,616,300
						64,300		64,300	Robert Half International, Inc.*						1,035,873		1,035,873
	390,200							390,200	Staples, Inc.*		7,134,807						7,134,807
						12,777		12,777	Sungard Data Systems, Inc.*						301,026		301,026
									Total		28,774,227		2,616,300		4,664,440		36,054,967
									Capital Equipment
	210,200							210,200	Cooper Cameron Corporation*		10,472,164						10,472,164
	180,000							180,000	Parker Hannifin Corporation		8,303,400						8,303,400
									Total		18,775,564		0		0		18,775,564
									Chemicals — Specialty
	200,000					29,700		229,700	Air Products and Chemicals, Inc.		8,550,000				1,269,675		9,819,675
		85,000						85,000	Praxair, Inc.		4,910,450						4,910,450
									Total		13,460,450		0		1,269,675		14,730,125
									Communications Equipment
1,541,900				188,300		360,084		2,090,284	Cisco Systems, Inc.*		20,191,181		2,466,730		4,717,100		27,375,011
				98,100				98,100	Harris Corporation				2,580,030				2,580,030
	475,000							475,000	Nokia Corporation, Series A, ADR		7,362,500						7,362,500
						85,900		85,900	Nokia Oyj						1,331,450		1,331,450
						67,900		67,900	Qualcomm, Inc.*						2,470,881		2,470,881
									Total		27,553,681		5,046,760		8,519,431		41,119,872

See Notes to Pro Forma Combined Financial Statements.

SHARES OR																(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)									DESCRIPTION	VALUE
							W&R									W&R
							TARGET									TARGET
							GROWTH									GROWTH
W&R TARGET			ADVANTUS				PORTFOLIO PRO			W&R TARGET		ADVANTUS				PORTFOLIO PRO
GROWTH			CAPITAL		ADVANTUS		FORMA			GROWTH		CAPITAL		ADVANTUS		FORMA
PORTFOLIO			APPRECIATION		GROWTH		COMBINED			PORTFOLIO		APPRECIATION		GROWTH		COMBINED
									Computers — Main and Mini
						40,100		40,100	International Business Machines Corporation						3,107,750		3,107,750
									Computers — Micro
	300,200			96,300		110,140		506,640	Dell Computer Corporation*		8,040,857		2,575,062		2,945,144		13,561,063
									Computers — Peripherals
	600,300					37,800		638,100	BEA Systems, Inc.*		6,888,442				433,566		7,322,008
						38,500		38,500	Brocade Communication Systems, Inc.*						159,390		159,390
1,259,200						56,800		1,316,000	EMC Corporation*		7,731,488				348,752		8,080,240
						5,602		5,602	Electronic Arts, Inc.*						278,812		278,812
				45,200				45,200	Intuit, Inc.*				2,120,784				2,120,784
	494,400			153,600		197,500		845,500	Microsoft Corporation*		25,570,368		7,941,120		10,210,750		43,722,238
	475,600					189,600		665,200	Oracle Corporation*		5,141,236				2,047,680		7,188,916
						12,700		12,700	Peoplesoft, Inc.*						232,410		232,410
	675,200			26,000				701,200	SAP Aktiengesellschaft, ADR		13,166,400		507,000				13,673,400
						14,400		14,400	Symantec Corporation*						582,480		582,480
						109,800		109,800	Symbol Technologies, Inc.						902,556		902,556
									Total		58,497,934		10,568,904		15,196,396		84,263,234
									Cosmetics and Toiletries
				78,900				78,900	Estee Lauder Company, Inc. (The)				2,082,960				2,082,960
	350,400			34,200				384,600	Gillette Company (The)		10,638,144		1,038,312				11,676,456
									Total		10,638,144		3,121,272		0		13,759,416
									Defense
		60,000						60,000	General Dynamics Corporation		4,762,200						4,762,200
									Electrical Equipment
				157,400		68,100		225,500	Tyco International, Ltd.				2,688,392		1,163,148		3,851,540
						34,700		34,700	WW Grainger, Inc.						1,788,785		1,788,785
									Total		0		2,688,392		2,951,933		5,640,325
									Electronic Components
	260,000					24,200		284,200	Altera Corporation*		3,218,800				298,628		3,517,428
	210,200			99,800		15,732		325,732	Analog Devices, Inc.*		5,017,474		2,382,226		375,523		7,775,223
				260,400		214,490		474,890	Intel Corporation				4,054,428		3,339,609		7,394,037
						14,597		14,597	Linear Technology Corporation						375,435		375,435
	135,000					14,172		149,172	Maxim Integrated Products, Inc.		4,459,050				468,243		4,927,293
	375,200					18,096		393,296	Microchip Technology Incorporated		9,177,392				442,447		9,619,839
	150,000			127,200		133,857		411,057	Texas Instruments Incorporated		2,251,500		1,909,272		2,009,194		6,169,966
	160,000					16,000		176,000	Xilinx, Inc.*		3,286,400				329,600		3,616,000
									Total		27,410,616		8,345,926		7,638,679		43,395,221
									Electronic Instruments
	482,600					108,542		591,142	Applied Materials, Inc.*		6,288,278				1,414,302		7,702,580
						17,313		17,313	KLA-Tencor Corporation*						612,361		612,361
				52,800		12,900		65,700	Novellus Systems, Inc.*				1,482,624		362,232		1,844,856
				83,200				83,200	Teradyne, Inc.*				1,082,432				1,082,432
									Total		6,288,278		2,565,056		2,388,895		11,242,229
									Food and Related
	255,200					23,000		278,200	Kraft Foods Inc.		9,934,936				895,390		10,830,326
						34,000		34,000	Sysco Corporation						1,012,860		1,012,860
									Total		9,934,936		0		1,908,250		11,843,186
									Health Care — Drugs
						70,500		70,500	Abbott Laboratories						2,820,000		2,820,000
	100,000					15,000		115,000	AmerisourceBergen Corporation		5,431,000				814,650		6,245,650
	190,400					95,500		285,900	Amgen Inc.*		9,206,792				4,616,470		13,823,262
						46,500		46,500	Eli Lilly & Company						2,952,750		2,952,750
	110,300			14,500		17,000		141,800	Forest Laboratories, Inc.*		10,833,666		1,424,190		1,669,740		13,927,596
				66,700		9,400		76,100	Genentech, Inc.*				2,211,772		311,704		2,523,476
	100,000			50,800				150,800	Gilead Sciences, Inc.*		3,391,500		1,727,200				5,118,700
				50,400				50,400	Medimmune, Inc.*				1,369,368				1,369,368
1,027,725				222,275		422,325		1,672,325	Pfizer Inc.		31,417,553		6,794,947		12,910,475		51,122,975
	280,250							280,250	Pharmacia Corporation		11,714,450						11,714,450

See Notes to Pro Forma Combined Financial Statements.

SHARES OR															(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)								DESCRIPTION	VALUE
						W&R									W&R
						TARGET									TARGET
						GROWTH									GROWTH
W&R TARGET		ADVANTUS				PORTFOLIO PRO			W&R TARGET		ADVANTUS				PORTFOLIO PRO
GROWTH		CAPITAL		ADVANTUS		FORMA			GROWTH		CAPITAL		ADVANTUS		FORMA
PORTFOLIO		APPRECIATION		GROWTH		COMBINED			PORTFOLIO		APPRECIATION		GROWTH		COMBINED
								Total		71,994,961		13,527,477		26,095,789		111,618,227
								Health Care — General
	180,000		125,400				305,400	Biomet, Inc.		5,164,200		3,593,964				8,758,164
					13,700		13,700	Boston Scientific Corporation*						582,524		582,524
	213,800		87,696		144,700		446,196	Johnson & Johnson		11,483,198		4,710,152		7,771,837		23,965,187
					54,400		54,400	St. Jude Medical, Inc.						2,160,768		2,160,768
			78,700		88,100		166,800	Wyeth				2,943,380		3,294,940		6,238,320
	195,000				50,300		245,300	Zimmer Holdings, Inc.*		8,096,400				2,088,456		10,184,856
								Total		24,743,798		11,247,496		15,898,525		51,889,819
								Hospital Supply and Management
			36,900				36,900	Anthem, Inc.*				2,321,010				2,321,010
					31,000		31,000	Express Scripts, Inc.*						1,489,240		1,489,240
	100,000		51,500		18,100		169,600	HCA — The Healthcare Company		4,150,000		2,137,250		751,150		7,038,400
	935,700						935,700	Health Management Associates, Inc., Class A		16,749,030						16,749,030
	235,400		108,300		56,500		400,200	Medtronic, Inc.		10,734,240		4,938,480		2,576,400		18,249,120
					5,200		5,200	Unitedhealth Group, Inc.						434,200		434,200
								Total		31,633,270		9,396,740		5,250,990		46,281,000
								Hotels and Gaming
					35,300		35,300	Harrah’s Entertainment, Inc.*						1,397,880		1,397,880
	75,000						75,000	International Game Technology*		5,694,000						5,694,000
								Total		5,694,000		0		1,397,880		7,091,880
								Household — General Products
					75,300		75,300	Colgate-Palmolive Company						3,947,979		3,947,979
	126,800				50,600		177,400	Procter & Gamble Company (The)		10,897,192				4,348,564		15,245,756
								Total		10,897,192		0		8,296,543		19,193,735
								Insurance — Property and Casualty
	108,812		101,500		45,900		256,212	American International Group, Inc.		6,294,774		5,871,775		2,655,315		14,821,864
			1,380				1,380	Berkshire Hathaway, Inc.*				3,343,740				3,343,740
								Total		6,294,774		9,215,515		2,655,315		18,165,604
								Leisure Time Industry
					118,100		118,100	Brunswick Corporation						2,345,466		2,345,466
			52,100				52,100	Carnival Corporation				1,299,895				1,299,895
								Total		0		1,299,895		2,345,466		3,645,361
								Metal Fabrication
					31,100		31,100	Fastenal Company						1,162,829		1,162,829
								Motion Pictures
			194,250		93,800		288,050	AOL Time Warner, Inc.*				2,544,675		1,228,780		3,773,455
								Motor Vehicle Parts
	145,200				19,200		164,400	AutoZone, Inc.*		10,258,380				1,356,480		11,614,860
	60,000		71,100		20,600		151,700	Danaher Corporation		3,942,000		4,671,270		1,353,420		9,966,690
					15,300		15,300	Eaton Corporation						1,195,083		1,195,083
					29,200		29,200	Lear Corporation*						971,776		971,776
								Total		14,200,380		4,671,270		4,876,759		23,748,409
								Motor Vehicles
	190,800				30,600		221,400	Harley-Davidson, Inc.		8,814,960				1,413,720		10,228,680
								Multiple Industry
					30,700		30,700	3M Company						3,785,310		3,785,310
					33,700		33,700	Fisher Scientific International, Inc.						1,013,696		1,013,696
			164,200		378,600		542,800	General Electric Company				3,998,270		9,218,910		13,217,180
								Total		0		3,998,270		14,017,916		18,016,186
								Petroleum — Canada
					52,960		52,960	Nabors Industries, Ltd.*						1,867,899		1,867,899
								Petroleum — Domestic
	235,200						235,200	Anadarko Petroleum Corporation		11,266,080						11,266,080

See Notes to Pro Forma Combined Financial Statements.

SHARES OR															(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)								DESCRIPTION	VALUE
						W&R									W&R
						TARGET									TARGET
						GROWTH									GROWTH
W&R TARGET		ADVANTUS				PORTFOLIO PRO			W&R TARGET		ADVANTUS				PORTFOLIO PRO
GROWTH		CAPITAL		ADVANTUS		FORMA			GROWTH		CAPITAL		ADVANTUS		FORMA
PORTFOLIO		APPRECIATION		GROWTH		COMBINED			PORTFOLIO		APPRECIATION		GROWTH		COMBINED
	290,000						290,000	Burlington Resources Inc.		12,368,500						12,368,500
					13,900		13,900	EOG Resources, Inc.						554,888		554,888
								Total		23,634,580		0		554,888		24,189,468
								Petroleum — International
	310,000						310,000	Exxon Mobil Corporation		10,831,400						10,831,400
								Petroleum — Services
	255,000						255,000	Baker Hughes Incorporated		8,208,450						8,208,450
					40,200		40,200	Ensco International, Inc.						1,183,890		1,183,890
	130,200				30,100		160,300	Smith International, Inc.*		4,247,124				981,862		5,228,986
			31,900				31,900	Transocean Offshore, Inc.				740,080				740,080
					49,400		49,400	Veritas DCG, Inc.*						771,628		771,628
			22,800				22,800	Weatherford International, Ltd.*				910,404				910,404
								Total		12,455,574		1,650,484		2,937,380		17,043,438
								Publishing
			30,300				30,300	Gannett Company, Inc.				2,175,540				2,175,540
								Restaurants
					71,900		71,900	Darden Restaurants, Inc.						1,470,355		1,470,355
			58,000				58,000	Wendys International, Inc.				1,570,060				1,570,060
								Total		0		1,570,060		1,470,355		3,040,415
								Retail — Food Stores
					47,400		47,400	Walgreen Company						1,383,606		1,383,606
								Retail — General Merchandise
					75,200		75,200	Family Dollar Stores						2,346,992		2,346,992
	180,000				28,400		208,400	Kohl's Corporation*		10,071,000				1,588,980		11,659,980
	385,300		88,200				473,500	Target Corporation		11,559,000		2,646,000				14,205,000
			63,700		117,000		180,700	Wal-Mart Stores, Inc.				3,217,487		5,909,670		9,127,157
								Total		21,630,000		5,863,487		9,845,642		37,339,129
								Retail — Specialty Stores
					37,200		37,200	Bed Bath & Beyond, Inc.*						1,284,516		1,284,516
	300,100		114,797				414,897	Home Depot, Inc. (The)		7,190,396		2,750,536				9,940,932
	240,400				85,000		325,400	Lowe's Companies, Inc.		9,015,000				3,187,500		12,202,500
								Total		16,205,396		2,750,536		4,472,016		23,427,948
								Security and Commodity Brokers
					36,400		36,400	American Express Company						1,286,740		1,286,740
	330,400						330,400	Charles Schwab Corporation (The)		3,584,840						3,584,840
	233,800						233,800	Fannie Mae		15,040,354						15,040,354
	240,200		28,100		38,400		306,700	Freddie Mac		14,183,810		1,659,305		2,267,520		18,110,635
	190,200				14,000		204,200	Goldman Sachs Group, Inc. (The)		12,952,620				953,400		13,906,020
					24,200		24,200	Marsh and McLennan Companies, Inc.						1,118,282		1,118,282
	240,200						240,200	Prudential Financial, Inc.		7,623,948						7,623,948
			32,700		9,900		42,600	SLM Corporation				3,396,222		1,028,214		4,424,436
					36,400		36,400	T. Rowe Price Associates, Inc.						992,992		992,992
								Total		53,385,572		5,055,527		7,647,148		66,088,247
								Timesharing and Software
					7,200		7,200	Affiliated Computer Services, Inc.*						942,000		942,000
					24,000		24,000	Automatic Data Processing, Inc.						379,080		379,080
					32,025		32,025	eBay, Inc.*						2,171,935		2,171,935
					22,500		22,500	Paychex, Inc.						627,750		627,750
								Total		0		0		4,120,765		4,120,765
								Tobacco
					19,400		19,400	Philip Morris Companies, Inc.						786,282		786,282
								Trucking and Shipping
					39,100		39,100	Expeditor Washington International, Inc.						1,276,615		1,276,615
			70,100		11,600		81,700	United Parcel Service, Inc.				4,421,908		731,728		5,153,636
								Total		0		4,421,908		2,008,343		6,430,251

See Notes to Pro Forma Combined Financial Statements.

SHARES OR																			(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)										DESCRIPTION	VALUE
								W&R											W&R
								TARGET											TARGET
								GROWTH											GROWTH
W&R TARGET				ADVANTUS				PORTFOLIO PRO			W&R TARGET			ADVANTUS					PORTFOLIO PRO
GROWTH				CAPITAL		ADVANTUS		FORMA			GROWTH			CAPITAL		ADVANTUS			FORMA
PORTFOLIO				APPRECIATION		GROWTH		COMBINED			PORTFOLIO			APPRECIATION		GROWTH			COMBINED
										Utilities — Telephone
	200,000								200,000	Vodafone Group Plc, ADR		3,624,000								3,624,000
										TOTAL COMMON STOCKS		632,888,597			150,426,228		194,977,844			978,292,669
										S&P DEPOSITORY RECEIPT
							10,900		10,900	S&P Depository Receipt							962,361			962,361
										SHORT-TERM SECURITIES
										Commercial Paper
										Banks
										Bank One Corporation,
		10,000							10,000	1.25%, 1-22-03		9,992,708								9,992,708
										Wells Fargo & Company — Cash Investment Fund
					2,987,763		95,336		3,083,099	current rate 1.326%					2,987,763		95,336			3,083,099
										Total		9,992,708			2,987,763		95,336			13,075,807
										Food and Related
										ConAgra Foods, Inc.,
			6,895						6,895	1.42%, 1-13-03		6,891,737								6,891,737
										General Mills, Inc.,
			1,214						1,214	1.53%, Master Note		1,214,000								1,214,000
										Total		8,105,737			0					8,105,737
										Forest and Paper Products
										Sonoco Products Co.,
			4,000						4,000	1.38%, 1-16-03		3,997,700								3,997,700
										Health Care — Drugs
										Alcon Finance PLC (Nestle S.A.),
			7,000						7,000	1.33%, 1-17-03		6,995,862								6,995,862
										Pfizer Inc.,
			7,000						7,000	1.31%, 1-23-03		6,994,396								6,994,396
										Pharmacia Corporation:
			5,000						5,000	1.32%, 1-21-03		4,996,334								4,996,334
		10,000							10,000	1.35%, 1-21-03		9,992,500								9,992,500
										Total		28,979,092			0					28,979,092
										Health Care — General
										Johnson & Johnson:
			4,500						4,500	1.27%, 2-3-03		4,494,761								4,494,761
			5,000						5,000	1.26%, 2-5-03		4,993,875								4,993,875
										Total		9,488,636			0					9,488,636
										Household — General Products
										Procter & Gamble Company (The),
			7,000						7,000	1.3%, 2-10-03		6,989,889								6,989,889
										Multiple Industry
										Federated Money Market Obligations Trust — Prime Obligation Fund,
							69		69	current rate 1.370%							69			69
										Provident Institutional Fund — TempFund Portfolio,										0
							3,560,308		3,560,308	current rate 1.220%							3,560,308			3,560,308
										Total		0			0		3,560,377			3,560,377
										Utilities — Telephone
										SBC International Inc.,
			4,500						4,500	1.32%, 1-16-03		4,497,525								4,497,525
										Total Commercial Paper		72,051,287			2,987,763		3,655,713			78,694,763
										United States Government Security
										United States Treasury Bill,
			5,000						5,000	1.24%, 5-8-03		4,978,216								4,978,216
										TOTAL SHORT-TERM SECURITIES		77,029,503			2,987,763		3,655,713			83,672,979
										TOTAL INVESTMENT SECURITIES		709,918,100			153,413,991		199,595,918			1,062,928,009
										LIABILITIES, NET OF CASH AND OTHER ASSETS		(5,274,053	)		73,903		(1,175,110	)		(6,375,260	)
										NET ASSETS		704,644,047			153,487,894		198,420,808			1,056,552,749
										Notes to Schedule of Investments
										* No income dividends were paid during the preceding 12 months

See Notes to Pro Forma Combined Financial Statements.

												W&R
												Target
					Advantus		W&R					Growth
			Advantus		Capital		Target					Portfolio
			Growth		Apprec.		Growth		Pro Forma			Pro Forma
			Portfolio		Portfolio		Portfolio		Adjustments			Combined
Statement of Assets and Liabilities (in thousands)
Assets
	Investment Securities		$	199,596	$	153,414	$	709,918	$	—		$	1,062,928
	Cash							1					1
	Dividends and Interest Receivable			219		209		184					612
	Receivable for Investment Securities Sold			3,978				2,721					6,699
	Receivable for Fund Shares Sold			96		81		110					287
	Other Assets							8					8
	Collateral for securities loaned			9,400		2,764		—					12,164
		Total Assets		213,289		156,468		712,942		—			1,082,699
Liabilities
	Payable for Fund Shares Repurchased			144		111		261					516
	Payable for Investment Securities Purchased			5,193				7,980					13,173
	Payable to Affiliates			131		105		25					261
	Other Payables							32					32
	Payable Upon Return of Securities Loaned			9,400		2,764		—					12,164
		Total Liabilities		14,868		2,980		8,298		—			26,146
Net Assets			$	198,421	$	153,488	$	704,644	$	—		$	1,056,553
Net Assets			$	198,421	$	153,488	$	704,644	$	—		$	1,056,553
Shares Outstanding				169,559		140,304		106,698		(256,577	)		159,984
Net Asset Value per Share			$	1.1702	$	1.0940	$	6.6041	$	—		$	6.6041

See Notes to Pro Forma Combined Financial Statements.

The following unaudited Pro Forma Combined Statement of Operations for W&R Target Growth Portfolio, Advantus Capital Appreciation Portfolio and Advantus Growth Portfolio has been derived from the Statements of Operations of W&R Target Growth Portfolio, Advantus Capital Appreciation Portfolio and Advantus Growth Portfolio for the fiscal year ended December 31, 2002. Such information has been adjusted to give effect to the Reorganization as if it had occurred on January 1, 2002, and reflects Pro Forma adjustments that are directly attributable to the transaction and are expected to have a continuing impact.

The unaudited Pro Forma Statement of Operations is presented for informational purposes only and does not purport to be indicative of the results of operations that would have occurred if the Reorganization had been consummated on January 1, 2002. The unaudited Pro Forma Financial Statements should be read in conjunction with the financial statements and related notes of the respective funds incorporated by reference in this Statement of Additional Information.

															W&R
															Target
						Advantus			W&R						Growth
			Advantus			Capital			Target						Portfolio
			Growth			Apprec.			Growth			Pro Forma			Pro Forma
			Portfolio			Portfolio			Portfolio			Adjustments			Combined
Statement of Operations (in thousands)
Investment Income
	Dividends		$	2,173		$	1,350		$	6,981		$	—		$	10,504
	Interest & Other			118			184			1,434			—			1,736
		Total Investment Income		2,291			1,534			8,415			—			12,240
Expenses
	Investment Advisory Fees			1,091			966			5,891			854			8,802
	Rule 12b-1 Fees			606			483			2,104			—			3,193
	Other Expenses			144			145			328			(125	)		492
		Total Expenses		1,841			1,594			8,323			729			12,487
Net Investment Income (Loss)				450			(60	)		92			(729	)		(247	)
Realized and Unrealized Gain (Loss)
	Realized net loss on securities			(22,254	)		(45,440	)		(81,247	)		—			(148,941	)
	Net change in unrealized appreciation (depreciation) on investments			(51,859	)		(32,193	)		(126,019	)		—			(210,071	)
		Net gain (loss) on investments		(74,113	)		(77,633	)		(207,266	)		—			(359,012	)
Net increase (decrease) in net assets resulting from operations			$	(73,663	)	$	(77,693	)	$	(207,174	)	$	(729	)	$	(359,259	)

See Notes to Pro Forma Combined Financial Statements.

W&R TARGET GROWTH PORTFOLIO, ADVANTUS CAPITAL APPRECIATION
PORTFOLIO AND ADVANTUS GROWTH PORTFOLIO
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
December 31, 2002
(Unaudited)

NOTE 1 — Significant Accounting Policies

W&R Target Growth Portfolio, Advantus Capital Appreciation Portfolio and Advantus Growth Portfolio (the “Funds”) are registered under the Investment Company Act of 1940 as diversified, open-end management investment companies. W&R Target Growth Portfolio’s investment objective is to seek capital growth, with a secondary goal of current income. Advantus Capital Appreciation Portfolio’s investment objective is to seek growth of capital. Advantus Growth Portfolio’s investment objective is to seek long-term appreciation of capital. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of the pro forma combined financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America.

A.

Security valuation — Each stock and convertible bond is valued at the latest sale price thereof on each business day of the fiscal period as reported by the principal securities exchange on which the issue is traded or, if no sale is reported for a stock, the average of the latest bid and asked prices. Bonds, other than convertible bonds, are valued using a pricing system provided by a pricing service or dealer in bonds. Convertible bonds are valued using this pricing system only on days when there is no sale reported. Stocks which are traded over-the-counter are priced using the Nasdaq Stock Market, which provides information on bid and asked prices quoted by major dealers in such stocks. Restricted securities and securities for which quotations are not readily available are valued as determined in good faith in accordance with procedures established by and under the general supervision of the Fund’s Board of Directors. Short-term debt securities are valued at amortized cost, which approximates market value.

B.

Security transactions and related investment income — Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Securities gains and losses are calculated on the identified cost basis. Premium and discount on the purchase of bonds are amortized for both financial and tax reporting purposes. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded

	as soon as the Fund is informed of the ex-dividend date. Interest income is recorded on the accrual basis.
C.	Foreign currency translations — All assets and liabilities denominated in foreign currencies are translated into U.S. dollars daily. Purchases and sales of investment securities and accruals of income and expenses are translated at the rate of exchange prevailing on the date of the transaction. For assets and liabilities other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. The Fund combines fluctuations from currency exchange rates and fluctuations in market value when computing net realized and unrealized gain or loss from investments.
D.	Federal income taxes — It is the Fund’s policy to distribute all of its taxable income and capital gains to its shareholders and otherwise qualify as a regulated investment company under the Internal Revenue Code. Accordingly, provision has not been made for Federal income taxes.
E.	Dividends and distributions — Dividends and distributions to shareholders are recorded by each Fund on the record date. Net investment income distributions and capital gains distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences are due to differing treatments for items such as deferral of wash sales and post-October losses, foreign currency transactions, net operating losses and expiring capital loss carryovers.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

NOTE 2 — Investment Management And Payments To Affiliated Persons

Waddell & Reed Investment Management Company (“WRIMCO”), a wholly owned subsidiary of Waddell & Reed, Inc. (“W&R”), serves as the Fund’s investment manager. The Fund pays a fee for investment management services. The fee is computed daily based on the net asset value at the close of business. The fee is payable by the Fund at the following annual rates:

	Annual
Fund	Net Asset Breakpoints	Rate
Growth Portfolio	Up to $1 Billion		0.700	%
	Over $1 Billion up to $2 Billion		0.650	%
	Over $2 Billion up to $3 Billion		0.600	%
	Over $3 Billion		0.550	%

The Fund accrues and pays this fee daily. The Fund also reimburses WRIMCO for certain expenses, including additional Fund-related security costs incurred by WRIMCO as a result of the September 11, 2001 terrorist activities. The amount reimbursed represents the Fund’s share of incremental security-related costs including the cost of using private transportation for WRIMCO’s personnel in lieu of commercial transportation, certain security-related personnel and facilities costs. At December 31, 2002, additional security costs amounted to $57,486, which is included in other expenses.

WRIMCO, the Fund’s investment manager, has agreed to waive a Portfolio’s management fee on any day that the Portfolio’s net assets are less than $25 million, subject to its right to change or modify this waiver.

The Fund has an Accounting Services Agreement with Waddell & Reed Services Company (“WRSCO”), a wholly owned subsidiary of W&R. Under the agreement, WRSCO acts as the agent in providing bookkeeping and accounting services and assistance to the Fund, including maintenance of Fund records, pricing of Fund shares, preparation of prospectuses for existing shareholders, preparation of proxy statements and certain shareholder reports. For these services, each Portfolio pays WRSCO a monthly fee of one-twelfth of the annual fee shown in the following table.

Accounting Services Fee

Average
Net Asset Level		Annual Fee
(all dollars in millions)		Rate for Each Portfolio
From $0 to $10		$	0
From $10 to $25		$	11,000
From $25 to $50		$	22,000
From $50 to $100		$	33,000
From $100 to $200		$	44,000
From $200 to $350		$	55,000
From $350 to $550		$	66,000
From $550 to $750		$	77,000
From $750 to $1,000		$	93,500
	$1,000 and Over	$	110,000

The Fund has adopted a Service Plan pursuant to Rule 12b-1 of the 1940 Act. Under the Plan, each Portfolio may pay a fee to W&R in an amount not to exceed 0.25% of the Portfolio’s average annual net assets. The fee is to be paid to compensate W&R for amounts it expends in connection with the provision of personal services to Policyowners and/or maintenance of Policyowner accounts.

The Fund paid Directors’ fees of $40,421, which is included in other expenses.

W&R is a subsidiary of Waddell & Reed Financial, Inc., a public holding company, and a direct subsidiary of Waddell & Reed Financial Services, Inc., a holding company.

W&R TARGET VALUE PORTFOLIO
ADVANTUS VALUE STOCK PORTFOLIO
PRO FORMA COMBINED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
(UNAUDITED)

The following unaudited Pro Forma Combined Statement of Assets and Liabilities, including the unaudited Pro Forma Combined Investments of W&R Target Value Portfolio and Advantus Value Stock Portfolio as of December 31, 2002 has been derived from the respective statements of assets and liabilities, including the schedules of investments, of W&R Target Value Portfolio and Advantus Value Stock Portfolio as of December 31, 2002.

Under the terms of the Agreement and Plan of Reorganization, the combination of Advantus Value Stock Portfolio and W&R Target Value Portfolio will be taxed as a tax-free business combination and accordingly will be accounted for by a method of accounting for tax-free mergers of investment companies (sometimes referred to as the pooling without restatement method). The acquisition would be accomplished by an acquisition of the net assets of Advantus Value Stock Portfolio in exchange for shares of W&R Target Value Portfolio at net asset value. W&R Target Value Portfolio will be the accounting survivor for financial statement purposes.

As of July 23, 2003, all of the securities held by Advantus Value Stock Portfolio would comply with the compliance guidelines and/or investment restrictions of W&R Target Value Portfolio. All reorganization costs will be borne by Advantus Capital Management, Inc. and not by the funds.

The Pro Forma Combined Statement of Assets and Liabilities is presented for informational purposes only and does not purport to be indicative of the financial condition that would have resulted if the Reorganization had been consummated on December 31, 2002. The unaudited Pro Forma Financial Statements should be read in conjunction with the respective financial statements and related notes of W&R Target Value Portfolio and Advantus Value Stock Portfolio incorporated by reference in this Statement of Additional Information.

SHARES OR												(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION		VALUE
				W&R								W&R
				TARGET								TARGET
				VALUE								VALUE
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO				W&R TARGET		ADVANTUS		PRO
VALUE		VALUE STOCK		FORMA				VALUE		VALUE STOCK		FORMA
PORTFOLIO		PORTFOLIO		COMBINED				PORTFOLIO		PORTFOLIO		COMBINED
						COMMON STOCKS
						Air Transportation
			116,600		116,600	Northwest Airlines, Inc.*					855,844		855,844
						Aircraft
	26,700				26,700	Lockheed Martin Corporation			1,541,925				1,541,925
	13,000				13,000	Northrop Grumman Corporation			1,261,000				1,261,000
	44,000				44,000	Raytheon Company			1,353,000				1,353,000
			11,900		11,900	United Technologies Corporation					737,086		737,086
							Total		4,155,925		737,086		4,893,011
						Banks
	9,000		59,380		68,380	Bank of America Corporation			626,130		4,131,067		4,757,197
			25,300		25,300	Bank of New York Company, Inc.					606,188		606,188
			28,700		28,700	Bank One Corporation					1,048,985		1,048,985
			18,900		18,900	Charter One Financial, Inc.					542,997		542,997
	27,000		114,206		141,206	Citigroup Inc.*			950,130		4,018,909		4,969,039
			29,700		29,700	Fleet Boston Financial Corporation					721,710		721,710
			26,800		26,800	MBNA Corporation					509,736		509,736
	38,600		163,894		202,494	U.S. Bancorp			819,092		3,477,831		4,296,923
			92,600		92,600	Wachovia Corporation					3,374,344		3,374,344
			64,400		64,400	Wells Fargo & Company					3,018,428		3,018,428
			11,900		11,900	Zion BanCorporation					468,253		468,253
							Total		2,395,352		21,918,448		24,313,800
						Beverages
	21,000		14,100		35,100	Coca-Cola Company (The)			920,220		617,862		1,538,082
						Broadcasting
			31,300		31,300	Clear Channel Communications, Inc.*					1,167,177		1,167,177
			31,004		31,004	Comcast Corporation*					730,764		730,764
			24,500		24,500	Comcast Corporation*					553,455		553,455
			58,300		58,300	Liberty Media Corporation*					521,202		521,202
			18,500		18,500	Viacom, Inc.*					754,060		754,060
							Total		0		3,726,658		3,726,658
						Business Equipment and Services
	24,700				24,700	Dun & Bradstreet Corporation (The)*			851,903				851,903
	28,000				28,000	First Data Corporation			991,480				991,480
	33,000				33,000	Genuine Parts Company			1,016,400				1,016,400
			25,900		25,900	Manpower, Inc.					826,210		826,210
	25,900				25,900	Pitney Bowes Inc.			845,894				845,894
							Total		3,705,677		826,210		4,531,887
						Capital Equipment
	10,000		9,200		19,200	Caterpillar Inc.			457,200		420,624		877,824
	18,700				18,700	Ingersoll-Rand Company Limited, Class A			805,222				805,222
							Total		1,262,422		420,624		1,683,046
						Chemicals — Petroleum and Inorganic
			44,900		44,900	Dow Chemical Company					1,333,530		1,333,530
	20,100		58,100		78,200	du Pont (E.I.) de Nemours and Company			852,240		2,463,440		3,315,680
							Total		852,240		3,796,970		4,649,210

See Notes to Pro Forma Combined Financial Statements.

SHARES OR												(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION		VALUE
				W&R								W&R
				TARGET								TARGET
				VALUE								VALUE
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO				W&R TARGET		ADVANTUS		PRO
VALUE		VALUE STOCK		FORMA				VALUE		VALUE STOCK		FORMA
PORTFOLIO		PORTFOLIO		COMBINED				PORTFOLIO		PORTFOLIO		COMBINED
						Chemicals — Specialty
	19,100		28,400		47,500	Air Products and Chemicals, Inc.			816,525		1,214,100		2,030,625
						Communications Equipment
	45,000				45,000	Cisco Systems, Inc.*			589,275				589,275
			33,800		33,800	Tellabs, Inc.*					245,726		245,726
							Total		589,275		245,726		835,001
						Computers — Main and Mini
			54,500		54,500	Hewlett-Packard Company					946,120		946,120
			33,300		33,300	International Business Machines Corporation					2,580,750		2,580,750
							Total		0		3,526,870		3,526,870
						Computers — Peripherals
	50,800				50,800	Microsoft Corporation*			2,627,376				2,627,376
			83,900		83,900	Oracle Systems*					906,120		906,120
			164,800		164,800	Symbol Technologies, Inc.					1,354,656		1,354,656
							Total		2,627,376		2,260,776		4,888,152
						Cosmetic and Toiletries
			20,100		20,100	Avon Products, Inc.					1,082,787		1,082,787
	35,000				35,000	Estee Lauder Companies Inc. (The), Class A			924,000				924,000
							Total		924,000		1,082,787		2,006,787
						Electrical Equipment
	32,000				32,000	Emerson Electric Co.			1,627,200				1,627,200
			71,300		71,300	Tyco International, Ltd.					1,217,804		1,217,804
			26,200		26,200	WW Grainger, Inc.					1,350,610		1,350,610
							Total		1,627,200		2,568,414		4,195,614
						Electronic Components
			20,100		20,100	Analog Devices, Inc.*					479,787		479,787
	71,000				71,000	Intel Corporation			1,105,825				1,105,825
			36,900		36,900	National Semiconductor Corporation*					553,869		553,869
			75,800		75,800	Texas Instruments, Inc.					1,137,758		1,137,758
							Total		1,105,825		2,171,414		3,277,239
						Food and Related
	40,000				40,000	ConAgra Foods, Inc.			1,000,400				1,000,400
	8,000				8,000	Dean Foods Company*			296,800				296,800
			37,100		37,100	Kraft Foods, Inc.					1,444,303		1,444,303
							Total		1,297,200		1,444,303		2,741,503
						Forest and Paper Products
	19,000				19,000	Boise Cascade Corporation			479,180				479,180
			14,600		14,600	Bowater, Inc.					612,470		612,470
	62,891				62,891	Sealed Air Corporation*			2,345,834				2,345,834
	15,812				15,812	Smurfit-Stone Container Corporation*			243,742				243,742
	20,000				20,000	Temple-Inland Inc.			896,200				896,200
							Total		3,964,956		612,470		4,577,426
						Health Care — Drugs
	51,800		23,100		74,900	Abbott Laboratories			2,072,000		924,000		2,996,000
			8,600		8,600	Eli Lilly & Company					546,100		546,100

See Notes to Pro Forma Combined Financial Statements.

SHARES OR												(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION		VALUE
				W&R								W&R
				TARGET								TARGET
				VALUE								VALUE
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO				W&R TARGET		ADVANTUS		PRO
VALUE		VALUE STOCK		FORMA				VALUE		VALUE STOCK		FORMA
PORTFOLIO		PORTFOLIO		COMBINED				PORTFOLIO		PORTFOLIO		COMBINED
	17,000				17,000	Merck & Co., Inc.			962,370				962,370
			38,700		38,700	Pfizer, Inc.					1,183,059		1,183,059
	50,700				50,700	Pharmacia Corporation			2,119,260				2,119,260
							Total		5,153,630		2,653,159		7,806,789
						Health Care — General
	12,600		18,900		31,500	Becton, Dickinson and Company			386,694		580,041		966,735
	28,000		18,700		46,700	Bristol-Myers Squibb Company			648,200		432,905		1,081,105
	18,100		29,600		47,700	Wyeth			676,940		1,107,040		1,783,980
							Total		1,711,834		2,119,986		3,831,820
						Hospital Supply and Management
			10,700		10,700	Express Scripts, Inc.*					514,028		514,028
						Hotels and Gaming
			98,400		98,400	Hilton Hotels					1,250,664		1,250,664
						Household — General Products
			19,800		19,800	Procter & Gamble Company					1,701,612		1,701,612
						Insurance — Life
			29,800		29,800	MetLife, Inc.					805,792		805,792
						Insurance — Property and Casualty
			49,600		49,600	Allstate Corporation					1,834,704		1,834,704
	25,600		35,350		60,950	American International Group, Inc.			1,480,960		2,044,998		3,525,958
	400				400	Berkshire Hathaway Inc., Class B*			969,200				969,200
	31,600		10,400		42,000	Chubb Corporation (The)			1,649,520		542,880		2,192,400
							Total		4,099,680		4,422,582		8,522,262
						Leisure Time Industry
			141,500		141,500	Brunswick Corporation					2,810,190		2,810,190
	13,900		73,200		87,100	Walt Disney Company (The)*			226,709		1,193,892		1,420,601
							Total		226,709		4,004,082		4,230,791
						Mining
	40,200				40,200	Newmont Mining Corporation			1,167,006				1,167,006
						Motion Pictures
			39,300		39,300	AOL Time Warner, Inc.*					514,830		514,830
						Motor Vehicle Parts
			11,900		11,900	Borg-Warner Automotive, Inc.					599,998		599,998
			9,400		9,400	Eaton Corporation					734,234		734,234
			29,700		29,700	Lear Corporation*					988,416		988,416
							Total		0		2,322,648		2,322,648
						Motor Vehicles
			29,100		29,100	Ford Motor Company					270,630		270,630
			7,800		7,800	General Motors Corporation					287,508		287,508
							Total		0		558,138		558,138
						Multiple Industry
			18,100		18,100	3M Company					2,231,730		2,231,730

See Notes to Pro Forma Combined Financial Statements.

SHARES OR												(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION		VALUE
				W&R								W&R
				TARGET								TARGET
				VALUE								VALUE
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO				W&R TARGET		ADVANTUS		PRO
VALUE		VALUE STOCK		FORMA				VALUE		VALUE STOCK		FORMA
PORTFOLIO		PORTFOLIO		COMBINED				PORTFOLIO		PORTFOLIO		COMBINED
			19,900		19,900	Fisher Scientific International, Inc.*					598,592		598,592
							Total		0		2,830,322		2,830,322
						Petroleum — Canada
	18,800		30,800		49,600	Nabors Industries Ltd.*			663,076		1,086,316		1,749,392
						Petroleum — Domestic
	36,600				36,600	Burlington Resources Inc.			1,560,990				1,560,990
			11,600		11,600	ConocoPhillips					561,324		561,324
			13,200		13,200	Devon Energy Corporation					605,880		605,880
			26,000		26,000	EOG Resources, Inc.					1,037,920		1,037,920
	48,800				48,800	Occidental Petroleum Corporation			1,388,360				1,388,360
							Total		2,949,350		2,205,124		5,154,474
						Petroleum — International
	11,800				11,800	BP p.l.c., ADR			479,670				479,670
			29,560		29,560	Chevron Corporation					1,965,149		1,965,149
	34,000		185,804		219,804	Exxon Mobil Corporation			1,187,960		6,491,991		7,679,951
							Total		1,667,630		8,457,140		10,124,770
						Petroleum — Services
			26,500		26,500	Smith International, Inc.					864,430		864,430
			36,000		36,000	Veritas DGC, Inc.*					562,320		562,320
							Total		0		1,426,750		1,426,750
						Publishing
			8,400		8,400	Gannett Company, Inc.					603,120		603,120
			15,200		15,200	Tribune Company					690,992		690,992
	800				800	Washington Post Company (The), Class B			590,400				590,400
							Total		590,400		1,294,112		1,884,512
						Real Estate Investment Trusts
			29,900		29,900	Developers Diversified Realty Corporation					657,501		657,501
	20,350		29,800		50,150	ProLogis Trust			511,803		749,470		1,261,273
							Total		511,803		1,406,971		1,918,774
						Restaurants
	37,000		35,200		72,200	McDonald’s Corporation			594,960		566,016		1,160,976
						Retail — Food Stores
			13,700		13,700	CVS Corporation					342,089		342,089
			30,800		30,800	Winn-Dixie Stores, Inc.					470,624		470,624
							Total		0		812,713		812,713
						Retail — General Merchandise
			26,400		26,400	JC Penney Company					607,464		607,464
	35,700				35,700	Target Corporation			1,071,000				1,071,000
							Total		1,071,000		607,464		1,678,464
						Security and Commodity Brokers
	28,900		35,000		63,900	American Express Company			1,021,615		1,237,250		2,258,865
			9,800		9,800	Freddie Mac					578,690		578,690
	9,300		13,100		22,400	Goldman Sachs Group, Inc. (The)			633,330		892,110		1,525,440
			23,800		23,800	JP Morgan Chase and Company					571,200		571,200

See Notes to Pro Forma Combined Financial Statements.

SHARES OR												(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION		VALUE
				W&R								W&R
				TARGET								TARGET
				VALUE								VALUE
				PORTFOLIO								PORTFOLIO
W&R TARGET		ADVANTUS		PRO				W&R TARGET		ADVANTUS		PRO
VALUE		VALUE STOCK		FORMA				VALUE		VALUE STOCK		FORMA
PORTFOLIO		PORTFOLIO		COMBINED				PORTFOLIO		PORTFOLIO		COMBINED
	8,700		12,200		20,900	Marsh & McLennan Companies, Inc.			402,027		563,762		965,789
	23,300		13,700		37,000	Merrill Lynch & Co., Inc.			884,235		519,915		1,404,150
	25,100		27,710		52,810	Morgan Stanley			1,001,992		1,106,183		2,108,175
			41,300		41,300	T. Rowe Price Associates, Inc.					1,126,664		1,126,664
							Total		3,943,199		6,595,774		10,538,973
						Tobacco
			11,300		11,300	Philip Morris Companies, Inc.					457,989		457,989
	3,500				3,500	UST Inc.			117,005				117,005
							Total		117,005		457,989		574,994
						Trucking and Shipping
	20,700				20,700	Hunt (J.B.) Transport Services, Inc.*			606,614				606,614
						Utilities — Electric
	16,000				16,000	American Electric Power Company, Inc.			437,280				437,280
	13,500				13,500	Cinergy Corp.			455,220				455,220
			14,200		14,200	Entergy Corporation					647,378		647,378
	17,700		23,300		41,000	Exelon Corporation			934,029		1,229,541		2,163,570
			134,000		134,000	Nisource, Inc.					2,680,000		2,680,000
	18,900				18,900	PPL Corporation			655,452				655,452
			72,800		72,800	Pacific Gas and Electric Company*					1,011,920		1,011,920
			16,600		16,600	Public Service Enterprise Group, Inc.					532,860		532,860
							Total		2,481,981		6,101,699		8,583,680
						Utilities — Gas and Pipeline
	32,000		19,100		51,100	FirstEnergy Corp.			1,055,040		629,727		1,684,767
						Utilities — Telephone
	18,000				18,000	ALLTEL Corporation			918,000				918,000
			8,720		8,720	AT&T Corporation					227,679		227,679
	15,000		64,250		79,250	BellSouth Corporation			388,050		1,662,147		2,050,197
	67,500		105,210		172,710	SBC Communications Inc.			1,829,925		2,852,243		4,682,168
			84,605		84,605	Verizon Communications					3,278,444		3,278,444
							Total		3,135,975		8,020,513		11,156,488
						TOTAL COMMON STOCKS			57,991,085		111,392,713		169,383,798
						PREFERRED STOCKS
						Forest and Paper Products
	18,700				18,700	Sealed Air Corporation, $2, Convertible			796,620				796,620
						Insurance – Property and Casualty
	18,500				18,500	Chubb Corporation (The), 7.0%, Convertible*			443,075				443,075
						TOTAL PREFERRED STOCKS			1,239,695		0		1,239,695
						SHORT-TERM SECURITIES
						Commercial Paper
						Banks
			35,534		35,534	Wells Fargo & Company - Cash Investment Fund

See Notes to Pro Forma Combined Financial Statements.

SHARES OR													(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION			VALUE
				W&R									W&R
				TARGET									TARGET
				VALUE									VALUE
				PORTFOLIO									PORTFOLIO
W&R TARGET		ADVANTUS		PRO					W&R TARGET		ADVANTUS		PRO
VALUE		VALUE STOCK		FORMA					VALUE		VALUE STOCK		FORMA
PORTFOLIO		PORTFOLIO		COMBINED					PORTFOLIO		PORTFOLIO		COMBINED
							current rate 1.326%					35,534		35,534
						Chemicals — Petroleum and Inorganic
						du Pont (E.I.) de Nemours and Company,
	92				92		1.30036%, Master Note			92,000				92,000
						Finance Companies
						USAA Capital Corp.,
	1,328				1,328		1.35%, 1-10-03			1,327,552				1,327,552
						Food and Related
						General Mills, Inc.,
	2,744				2,744		1.53%, Master Note			2,744,000				2,744,000
						Health Care — Drugs
						Alcon Capital Corporation (Nestle S.A.),
	2,700				2,700		1.32%, 2-12-03			2,695,842				2,695,842
						Health Care — General
						Johnson & Johnson,
	2,500				2,500		1.27%, 2-3-03			2,497,089				2,497,089
						Household — General Products
						Kimberly-Clark Worldwide Inc.,
	1,200				1,200		1.28%, 1-22-03			1,199,104				1,199,104
						Procter & Gamble Company (The),
	2,700				2,700		1.3%, 2-10-03			2,696,100				2,696,100
								Total		3,895,204		0		3,895,204
						Multiple Industry
						Dreyfus Funds - Cash Management Plus Fund,
			1,214,760		1,214,760	current rate 1.266%					1,214,760		1,214,760
						Federated Money Market Obligations Trust -
							Prime Obligation Fund,
			12,368		12,368		current rate 1.37%					12,368		12,368
								Total		0		1,227,128		1,227,128
						Total Commercial Paper				13,251,687		1,262,662		14,514,349
						Municipal Obligation
						California
						California Pollution Control Financing
							Authority, Environmental Improvement
							Revenue Bonds, Shell Oil Company Project,
							Series 1998A (Taxable),
	2,200				2,200		1.2%, 1-2-03			2,200,000				2,200,000
						Repurchase Agreement
						J.P. Morgan Securities Inc., 0.97% Repurchase
							Agreement dated 12-31-02, to be
	589				589		repurchased at $589,032 on 1-2-03 (A)			589,000				589,000

See Notes to Pro Forma Combined Financial Statements.

SHARES OR										(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)			DESCRIPTION	VALUE
		W&R							W&R
		TARGET							TARGET
		VALUE							VALUE
		PORTFOLIO							PORTFOLIO
W&R TARGET	ADVANTUS	PRO		W&R TARGET			ADVANTUS		PRO
VALUE	VALUE STOCK	FORMA		VALUE			VALUE STOCK		FORMA
PORTFOLIO	PORTFOLIO	COMBINED		PORTFOLIO			PORTFOLIO		COMBINED
			TOTAL SHORT-TERM SECURITIES		16,040,687			1,262,662		17,303,349
			TOTAL INVESTMENT SECURITIES		75,271,467			112,655,375		187,926,842
			LIABILITIES, NET OF CASH AND OTHER ASSETS		(488,701	)		147,302		(341,399	)
			NET ASSETS		74,782,766			112,802,677		187,585,443

Notes to Schedule of Investments

*No income dividends were paid during the preceding 12 months.

(A)Collateralized by $453,000 United States Treasury Bond, 7.5% due 11–15–16; market value and accrued interest aggregate $600,296.

See Notes to Pro Forma Combined Financial Statements.

										W&R
										Target
			Advantus		W&R					Value
			Value		Target					Portfolio
			Stock		Value		Pro Forma			Pro Forma
			Portfolio		Portfolio		Adjustments			Combined
Statement of Assets and Liabilities (in thousands)
Assets
	Investment Securities		$	112,655	$	75,271	$	—		$	187,926
	Cash					1					1
	Dividends and Interest Receivable			181		97					278
	Receivable for Investment Securities Sold			2,217		—					2,217
	Receivable for Fund Shares Sold			64		61					125
	Other Assets					1					1
	Collateral for securities loaned			5,468		—					5,468
		Total Assets		120,585		75,431		—			196,016
Liabilities
	Payable for Fund Shares Repurchased			63		—					63
	Payable for Investment Securities Purchased			2,171		640					2,811
	Payable to Affiliates			80		5					85
	Other Payables					3					3
	Payable Upon Return of Securities Loaned			5,468		—					5,468
		Total Liabilities		7,782		648		—			8,430
Net Assets			$	112,803	$	74,783	$	—		$	187,586
Net Assets			$	112,803	$	74,783	$	—		$	187,586
Shares Outstanding				90,097		16,990		(64,469	)		42,618
Net Asset Value per Share			$	1.2520	$	4.4016	$	—		$	4.4016

See Notes to Pro Forma Combined Financial Statements.

The following unaudited Pro Forma Combined Statement of Operations for W&R Target Value Portfolio and Advantus Value Stock Portfolio has been derived from the Statements of Operations of W&R Target Value Portfolio and Advantus Value Stock Portfolio for the fiscal year ended December 31, 2002. Such information has been adjusted to give effect to the Reorganization as if it had occurred on January 1, 2002, and reflects Pro Forma adjustments that are directly attributable to the transaction and are expected to have a continuing impact.

The unaudited Pro Forma Statement of Operations is presented for informational purposes only and does not purport to be indicative of the results of operations that would have occurred if the Reorganization had been consummated on January 1, 2002. The unaudited Pro Forma Financial Statements should be read in conjunction with the financial statements and related notes of the respective funds incorporated by reference in this Statement of Additional Information.

												W&R
												Target
			Advantus			W&R						Value
			Value			Target						Portfolio
			Stock			Value			Pro Forma			Pro Forma
			Portfolio			Portfolio			Adjustments			Combined
Statement of Operations (in thousands)
Investment Income
	Dividends		$	2,654		$	976		$	—		$	3,630
	Interest & Other			48			272			—			320
		Total Investment Income		2,702			1,248			—			3,950
Expenses
	Investment Advisory Fees			645			445			258			1,348
	Rule 12b-1 Fees			323			159			—			482
	Other Expenses			100			58			(59	)		100
		Total Expenses		1,069			662			199			1,930
Net Investment Income (Loss)				1,633			586			(199	)		2,020
Realized and Unrealized Gain (Loss)
	Realized net loss on securities			(12,030	)		(7,029	)		—			(19,059	)
	Net change in unrealized appreciation (depreciation) on investments			(10,871	)		(2,670	)		—			(13,541	)
		Net gain (loss) on investments		(22,901	)		(9,699	)		—			(32,600	)
Net increase (decrease) in net assets resulting from operations			$	(21,268	)	$	(9,113	)	$	(199	)	$	(30,580	)

See Notes to Pro Forma Combined Financial Statements.

W&R TARGET VALUE PORTFOLIO AND ADVANTUS VALUE STOCK PORTFOLIO
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
December 31, 2002
(Unaudited)

NOTE 1 — Significant Accounting Policies

W&R Target Value Portfolio and Advantus Value Stock Portfolio (the “Funds”) are registered under the Investment Company Act of 1940 as diversified, open-end management investment companies. W&R Target Value Portfolio’s investment objective is to seek long-term capital appreciation. Advantus Value Stock Portfolio’s investment objective is to seek long-term accumulation of capital. The production of income is a secondary objective. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of the pro forma combined financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America.

A.

Security valuation — Each stock and convertible bond is valued at the latest sale price thereof on each business day of the fiscal period as reported by the principal securities exchange on which the issue is traded or, if no sale is reported for a stock, the average of the latest bid and asked prices. Bonds, other than convertible bonds, are valued using a pricing system provided by a pricing service or dealer in bonds. Convertible bonds are valued using this pricing system only on days when there is no sale reported. Stocks which are traded over-the-counter are priced using the Nasdaq Stock Market, which provides information on bid and asked prices quoted by major dealers in such stocks. Restricted securities and securities for which quotations are not readily available are valued as determined in good faith in accordance with procedures established by and under the general supervision of the Fund’s Board of Directors. Short-term debt securities are valued at amortized cost, which approximates market value.

B.

Security transactions and related investment income — Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Securities gains and losses are calculated on the identified cost basis. Premium and discount on the purchase of bonds are amortized for both financial and tax reporting purposes. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded as soon as the Fund is informed of the ex-dividend date. Interest income is recorded on the accrual basis.

C.	Foreign currency translations — All assets and liabilities denominated in foreign currencies are translated into U.S. dollars daily. Purchases and sales of investment securities and accruals of income and expenses are translated at the rate of exchange prevailing on the date of the transaction. For assets and liabilities other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. The Fund combines fluctuations from currency exchange rates and fluctuations in market value when computing net realized and unrealized gain or loss from investments.
D.	Federal income taxes — It is the Fund’s policy to distribute all of its taxable income and capital gains to its shareholders and otherwise qualify as a regulated investment company under the Internal Revenue Code. Accordingly, provision has not been made for Federal income taxes.
E.	Dividends and distributions — Dividends and distributions to shareholders are recorded by each Fund on the record date. Net investment income distributions and capital gains distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences are due to differing treatments for items such as deferral of wash sales and post-October losses, foreign currency transactions, net operating losses and expiring capital loss carryovers.
H.	Repurchase agreements — Repurchase agreements are collateralized by the value of the resold securities which, during the entire period of the agreement, remains at least equal to the value of the loan, including accrued interest thereon. The collateral for the repurchase agreement is held by the Fund’s custodian bank.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

NOTE 2 — Investment Management And Payments To Affiliated Persons

Waddell & Reed Investment Management Company (“WRIMCO”), a wholly owned subsidiary of Waddell & Reed, Inc. (“W&R”), serves

as the Fund’s investment manager. The Fund pays a fee for investment management services. The fee is computed daily based on the net asset value at the close of business. The fee is payable by the Fund at the following annual rates:

	Annual
Fund	Net Asset Breakpoints	Rate
Value Portfolio	Up to $1 Billion		0.700	%
	Over $1 Billion up to $2 Billion		0.650	%
	Over $2 Billion up to $3 Billion		0.600	%
	Over $3 Billion		0.550	%

The Fund accrues and pays this fee daily. The Fund also reimburses WRIMCO for certain expenses, including additional Fund-related security costs incurred by WRIMCO as a result of the September 11, 2001 terrorist activities. The amount reimbursed represents the Fund’s share of incremental security-related costs including the cost of using private transportation for WRIMCO’s personnel in lieu of commercial transportation, certain security-related personnel and facilities costs. At December 31, 2002, additional security costs amounted to $4,229, which is included in other expenses.

WRIMCO, the Fund’s investment manager, has agreed to waive a Portfolio’s management fee on any day that the Portfolio’s net assets are less than $25 million, subject to its right to change or modify this waiver.

The Fund has an Accounting Services Agreement with Waddell & Reed Services Company (“WRSCO”), a wholly owned subsidiary of W&R. Under the agreement, WRSCO acts as the agent in providing bookkeeping and accounting services and assistance to the Fund, including maintenance of Fund records, pricing of Fund shares, preparation of prospectuses for existing shareholders, preparation of proxy statements and certain shareholder reports. For these services, each Portfolio pays WRSCO a monthly fee of one-twelfth of the annual fee shown in the following table.

Accounting Services Fee

	Average
	Net Asset Level					Annual Fee
(all dollars in millions)						Rate for Each Portfolio
From	$	0	to	$	10	$	0
From	$	10	to	$	25	$	11,000
From	$	25	to	$	50	$	22,000
From	$	50	to	$	100	$	33,000
From	$	100	to	$	200	$	44,000
From	$	200	to	$	350	$	55,000
From	$	350	to	$	550	$	66,000
From	$	550	to	$	750	$	77,000
From	$	750	to	$	1,000	$	93,500
	$	1,000	and Over			$	110,000

The Fund has adopted a Service Plan pursuant to Rule 12b-1 of the 1940 Act. Under the Plan, each Portfolio may pay a fee to W&R in an amount not to exceed 0.25% of the Portfolio’s average annual net assets. The fee is to be paid to compensate W&R for amounts it expends in connection with the provision of personal services to Policyowners and/or maintenance of Policyowner accounts.

The Fund paid Directors’ fees of $1,426, which is included in other expenses.

W&R is a subsidiary of Waddell & Reed Financial, Inc., a public holding company, and a direct subsidiary of Waddell & Reed Financial Services, Inc., a holding company.

W&R TARGET SMALL CAP GROWTH PORTFOLIO
ADVANTUS SMALL COMPANY GROWTH PORTFOLIO
PRO FORMA COMBINED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
(UNAUDITED)

The following unaudited Pro Forma Combined Statement of Assets and Liabilities, including the unaudited Pro Forma Combined Investments of W&R Target Small Cap Growth Portfolio and Advantus Small Company Growth Fund as of December 31, 2002 has been derived from the respective statements of assets and liabilities, including the schedules of investments, of W&R Target Small Cap Growth Portfolio and Advantus Small Company Growth Portfolio as of December 31, 2002.

Under the terms of the Agreement and Plan of Reorganization, the combination of Advantus Small Company Growth Portfolio and W&R Target Small Cap Growth Portfolio will be taxed as a tax-free business combination and accordingly will be accounted for by a method of accounting for tax-free mergers of investment companies (sometimes referred to as the pooling without restatement method). The acquisition would be accomplished by an acquisition of the net assets of Advantus Small Company Growth Portfolio in exchange for shares of W&R Target Small Cap Growth Portfolio at net asset value. W&R Target Small Cap Growth Portfolio will be the accounting survivor for financial statement purposes.

As of July 23, 2003, all of the securities held by Advantus Small Company Growth Portfolio would comply with the compliance guidelines and/or investment restrictions of W&R Target Small Cap Growth Portfolio. All reorganization costs will be borne by Advantus Capital Management, Inc. and not by the funds.

The Pro Forma Combined Statement of Assets and Liabilities is presented for informational purposes only and does not purport to be indicative of the financial condition that would have resulted if the Reorganization had been consummated on December 31, 2002. The unaudited Pro Forma Financial Statements should be read in conjunction with the respective financial statements and related notes of W&R Target Small Cap Growth Portfolio and Advantus Small Company Growth Portfolio incorporated by reference in this Statement of Additional Information.

SHARES OR											(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION	VALUE
				W&R							W&R
				TARGET							TARGET
				SMALL							SMALL
				CAP							CAP
				GROWTH							GROWTH
W&R TARGET				PORTFOLIO			W&R TARGET				PORTFOLIO
SMALL CAP		ADVANTUS		PRO			SMALL CAP		ADVANTUS		PRO
GROWTH		SMALL COMPANY		FORMA			GROWTH		SMALL COMPANY		FORMA
PORTFOLIO		GROWTH		COMBINED			PORTFOLIO		GROWTH		COMBINED
						COMMON STOCKS
						Apparel
			108,900		108,900	Tommy Hilfiger Corporation*				756,855		756,855
						Banks
			35,200		35,200	Westamerica BanCorporation				1,414,336		1,414,336
						Broadcasting
			106,700		106,700	Cumulus Media, Inc.*				1,586,629		1,586,629
			89,900		89,900	Emmis Communications*				1,872,617		1,872,617
			36,800		36,800	Entercom Communications Corporation*				1,726,656		1,726,656
			102,600		102,600	Insight Communications Company, Inc.*				1,270,188		1,270,188
						Total		0		6,456,090		6,456,090
						Business Equipment and Services
	457,100				457,100	Acxiom Corporation*		7,009,628				7,009,628
			66,088		66,088	Advance Paradigm, Inc.*				1,467,815		1,467,815
			69,500		69,500	CACI International, Inc.*				2,476,980		2,476,980
	175,700				175,700	Catalina Marketing Corporation*		3,250,450				3,250,450
	366,155				366,155	CheckFree Corporation*		5,860,311				5,860,311
			56,300		56,300	Education Management Corporation*				2,116,880		2,116,880
	306,400				306,400	ITT Educational Services, Inc.*		7,215,720				7,215,720
	535,000		67,900		602,900	MSC Industrial Direct Co., Inc., Class A*		9,496,250		1,205,225		10,701,475
			258,632		258,632	Manugistics Group, Inc.*				620,717		620,717
	185,500				185,500	MAXIMUS, Inc.*		4,841,550				4,841,550
	81,305				81,305	MemberWorks Incorporated*		1,463,083				1,463,083
			78,300		78,300	Moore Corporation, Ltd.*				712,530		712,530
	230,000				230,000	ProBusiness Services, Inc.*		2,301,150				2,301,150
			40,919		40,919	QRS Corporation*				270,065		270,065
						Total		41,438,142		8,870,212		50,308,354
						Chemicals — Specialty
			61,600		61,600	Airgas, Inc.*				1,062,600		1,062,600
			21,300		21,300	Albemarle Corporation				605,985		605,985
			42,600		42,600	Cambrex Corporation				1,286,946		1,286,946
	480,000				480,000	IMC Global Inc.		5,121,600				5,121,600
			24,300		24,300	Minerals Technologies, Inc.				1,048,545		1,048,545
						Total		5,121,600		4,004,076		9,125,676
						Communications Equipment
	320,000				320,000	Advanced Fibre Communications, Inc.*		5,352,000				5,352,000
			106,400		106,400	InterDigital Communications Corporation*				1,549,184		1,549,184
			131,200		131,200	Polycom, Inc.*				1,249,024		1,249,024
	293,500				293,500	Tekelec*		3,070,010				3,070,010
			113,045		113,045	Valuevision Media, Inc.*				1,693,414		1,693,414
						Total		8,422,010		4,491,622		12,913,632
						Computers — Peripherals
			136,100		136,100	Agile Software Corporation*				1,053,414		1,053,414
			57,200		57,200	Avid Technology, Inc.*				1,312,740		1,312,740
			38,500		38,500	Business Objects SA*				577,500		577,500
			100,000		100,000	Caminus Corporation*				234,000		234,000
			328,900		328,900	Chordiant Software, Inc.*				473,616		473,616
			113,164		113,164	Documentum, Inc.*				1,772,148		1,772,148

See Notes to Pro Forma Combined Financial Statements.

SHARES OR												(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)					DESCRIPTION	VALUE
			W&R									W&R
			TARGET									TARGET
			SMALL									SMALL
			CAP									CAP
			GROWTH									GROWTH
W&R TARGET			PORTFOLIO				W&R TARGET				PORTFOLIO
SMALL CAP	ADVANTUS		PRO			SMALL CAP			ADVANTUS			PRO
GROWTH	SMALL COMPANY		FORMA			GROWTH			SMALL COMPANY			FORMA
PORTFOLIO	GROWTH		COMBINED			PORTFOLIO			GROWTH			COMBINED
		163,700		163,700	Informatica Corporation*					942,912			942,912
		173,300		173,300	Legato Systems, Inc.*					871,699			871,699
180,000		81,400		261,400	NetIQ Corporation*			2,225,700		1,005,290			3,230,990
		362,600		362,600	Openwave Systems, Inc.*					725,200			725,200
		164,900		164,900	Radiant Systems, Inc.*					1,587,987			1,587,987
286,700				286,700	Sanchez Computer Associates, Inc.*			861,534					861,534
177,800				177,800	Take-Two Interactive Software, Inc.*			4,176,522					4,176,522
234,400				234,400	Transaction Systems Architects, Inc., Class A*			1,522,428					1,522,428
					Total			8,786,184		10,556,506			19,342,690
					Containers
		97,700		97,700	Constar International, Inc.*					1,147,975			1,147,975
		191,300		191,300	Crown Cork & Seal Company, Inc.*					1,520,835			1,520,835
					Total			0		2,668,810			2,668,810
					Defense
		43,000		43,000	Kroll, Inc.*					820,440			820,440
					Electrical Equipment
60,300				60,300	Intermagnetics General Corp.*			1,189,116					1,189,116
					Electronic Components
		159,300		159,300	Adaptec, Inc.*					900,045			900,045
		1		1	Anadigics, Inc.*					1			1
		72,368		72,368	Brooks-PRI Automation, Inc.*					829,337			829,337
269,600				269,600	Cree, Inc.*			4,409,308					4,409,308
		55,000		55,000	Integrated Circuit Systems*					1,003,750			1,003,750
		76,600		76,600	Semtech Corporation*					836,472			836,472
		46,600		46,600	Varian Semiconductor Equipment*					1,107,263			1,107,263
					Total			4,409,308		4,676,868			9,086,176
					Electronic Instruments
		214,897		214,897	APW, Ltd.*					4,298			4,298
		42,216		42,216	Cymer, Inc.*					1,361,466			1,361,466
237,800				237,800	Lam Research Corporation*			2,564,673					2,564,673
320,250				320,250	PerkinElmer, Inc			2,642,063					2,642,063
237,200				237,200	Plexus Corp.*			2,084,988					2,084,988
					Total			7,291,724		1,365,764			8,657,488
					Finance Companies
158,200				158,200	Financial Federal Corporation*			3,975,566					3,975,566
					Food and Related
190,000				190,000	American Italian Pasta Company, Class A*			6,836,200					6,836,200
		62,900		62,900	Hain Celestial Group, Inc.*					956,080			956,080
		56,900		56,900	Performance Food Group Company*					1,932,267			1,932,267
95,000				95,000	Smucker (J.M.) Company (The)			3,781,950					3,781,950
					Total			10,618,150		2,888,347			13,506,497
					Health Care — Drugs
202,998		108,300		311,298	Affymetrix, Inc.*			4,647,639		2,478,987			7,126,626
235,000				235,000	Andrx Corporation*			3,448,625					3,448,625
131,100				131,100	Cell Therapeutics, Inc.*			953,752					953,752
		50,900		50,900	Cubist Pharmaceuticals, Inc.*					418,907			418,907

See Notes to Pro Forma Combined Financial Statements.

SHARES OR
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION			VALUE		(Unaudited)
				W&R							W&R
				TARGET							TARGET
				SMALL							SMALL
				CAP							CAP
				GROWTH							GROWTH
W&R TARGET				PORTFOLIO			W&R TARGET				PORTFOLIO
SMALL CAP		ADVANTUS		PRO			SMALL CAP		ADVANTUS		PRO
GROWTH		SMALL COMPANY		FORMA			GROWTH		SMALL COMPANY		FORMA
PORTFOLIO		GROWTH		COMBINED			PORTFOLIO		GROWTH		COMBINED
	325,700				325,700	Gene Logic Inc.*		2,055,167				2,055,167
			65,900		65,900	K-V Pharmaceutical Company*				1,528,880		1,528,880
			65,849		65,849	Lynx Therapeutics, Inc.*				26,998		26,998
			53,235		53,235	Medicis Pharmaceutical Corporation*				2,644,182		2,644,182
			27,600		27,600	OSI Pharmaceuticals, Inc.*				452,640		452,640
			31,100		31,100	Scios, Inc.*				1,013,238		1,013,238
	460,900		135,800		596,700	Sepracor Inc.*		4,438,467		1,313,186		5,751,653
						Total		15,543,650		9,877,018		25,420,668
						Health Care — General
			66,600		66,600	Alliance Imaging, Inc.*				352,980		352,980
	256,300		67,900		324,200	Apria Healthcare Group Inc.*		5,700,112		1,510,096		7,210,208
	270,000				270,000	ArthroCare Corporation*		2,673,000				2,673,000
	71,200				71,200	Cholestech Corporation*		492,348				492,348
			39,662		39,662	DaVita, Inc.*				978,462		978,462
			39,800		39,800	Henry Schein, Inc.*				1,791,000		1,791,000
	118,957				118,957	IDEXX Laboratories, Inc.*		3,928,555				3,928,555
	283,200				283,200	IMPATH Inc.*		5,591,784				5,591,784
	330,000				330,000	Omnicare, Inc.		7,863,900				7,863,900
			50,800		50,800	Renal Care Group, Inc.*				1,607,312		1,607,312
			50,600		50,600	SonoSite, Inc.*				661,342		661,342
			68,800		68,800	Therasense, Inc.*				574,480		574,480
	240,000				240,000	Urologix, Inc.*		788,400				788,400
	584,200				584,200	VISX, Incorporated*		5,596,636				5,596,636
						Total		32,634,735		7,475,672		40,110,407
						Hospital Supply and Management
	157,179				157,179	American Healthways, Inc.*		2,751,418				2,751,418
	185,000				185,000	Amsurg Corp.*		3,774,000				3,774,000
	141,022				141,022	Cerner Corporation*		4,399,886				4,399,886
			125,500		125,500	Community Health Systems*				2,584,045		2,584,045
			83,700		83,700	Coventry Health Care, Inc.*				2,429,811		2,429,811
			80,300		80,300	Lifepoint Hospitals, Inc.*				2,403,459		2,403,459
			56,300		56,300	Mid Atlantic Medical Services, Inc.*				1,824,120		1,824,120
						Total		10,925,304		9,241,435		20,166,739
						Hotels and Gaming
			69,700		69,700	Penn National Gaming, Inc.*				1,105,442		1,105,442
	56,700				56,700	Vail Resorts, Inc.*		860,139				860,139
						Total		860,139		1,105,442		1,965,581
						Insurance — Property and Casualty
			73,000		73,000	HCC Insurance Holdings, Inc.				1,795,800		1,795,800
			92,400		92,400	USI Holdings Corporation*				1,085,700		1,085,700
						Total		0		2,881,500		2,881,500
						Motor Vehicle Parts
			29,600		29,600	Borg-Warner Automotive, Inc.				1,492,432		1,492,432
	376,000				376,000	Gentex Corporation*		11,894,760				11,894,760
						Total		11,894,760		1,492,432		13,387,192
						Multiple Industry
			36,900		36,900	Fisher Scientific International, Inc.*				1,109,952		1,109,952
			15,900		15,900	Oshkosh Truck Corporation*				977,850		977,850

See Notes to Pro Forma Combined Financial Statements.

SHARES OR
PRINCIPAL AMOUNT (000 OMITTED)						DESCRIPTION			VALUE		(Unaudited)
				W&R							W&R
				TARGET							TARGET
				SMALL							SMALL
				CAP GROWTH							CAP GROWTH
W&R TARGET				PORTFOLIO			W&R TARGET				PORTFOLIO
SMALL CAP		ADVANTUS		PRO			SMALL CAP		ADVANTUS		PRO
GROWTH		SMALL COMPANY		FORMA			GROWTH		SMALL COMPANY		FORMA
PORTFOLIO		GROWTH		COMBINED			PORTFOLIO		GROWTH		COMBINED
						Total		0		2,087,802		2,087,802
						Non-Residential Construction
			64,550		64,550	Granite Construction, Inc.				1,000,525		1,000,525
						Petroleum — Domestic
	223,700		33,500		257,200	Newfield Exploration Company*		8,064,385		1,207,675		9,272,060
	140,000				140,000	Patterson-UTI Energy, Inc.*		4,224,500				4,224,500
			32,700		32,700	Pogo Producing Company				1,218,075		1,218,075
			73,100		73,100	Remington Oil & Gas Corporation*				1,199,571		1,199,571
			52,200		52,200	Spinnaker Exploration Company*				1,151,010		1,151,010
	155,000		57,196		212,196	Stone Energy Corporation*		5,170,800		1,908,059		7,078,859
						Total		17,459,685		6,684,390		24,144,075
						Petroleum — Services
			60,600		60,600	FMC Technologies, Inc.*				1,238,058		1,238,058
	481,400				481,400	Global Industries, Ltd.*		2,014,659				2,014,659
			243,000		243,000	Newpark Resources, Inc.*				1,057,050		1,057,050
						Total		2,014,659		2,295,108		4,309,767
						Publishing
	312,200		73,412		385,612	Getty Images, Inc.*		9,537,710		2,242,737		11,780,447
			39,200		39,200	Scholastic Corporation*				1,409,240		1,409,240
						Total		9,537,710		3,651,977		13,189,687
						Railroad
	356,600				356,600	Kansas City Southern*		4,279,200				4,279,200
						Restaurants
			130,800		130,800	CKE Restaurants, Inc.*				562,440		562,440
						Retail — Food Stores
			57,700		57,700	Duane Reade, Inc.*				980,900		980,900
						Retail — General Merchandise
			51,900		51,900	Cost Plus, Inc.*				1,487,973		1,487,973
	181,500				181,500	Tuesday Morning Corporation*		3,106,373				3,106,373
						Total		3,106,373		1,487,973		4,594,346
						Retail — Specialty Stores
	155,300				155,300	Borders Group, Inc.*		2,500,330				2,500,330
			65,600		65,600	Delta & Pine Land Company				1,338,896		1,338,896
	158,500		68,900		227,400	Gymboree Corporation (The)*		2,514,603		1,092,754		3,607,357
			65,400		65,400	Hot Topic, Inc.*				1,496,352		1,496,352
			66,600		66,600	Linens n Things, Inc.*				1,505,160		1,505,160
	190,000				190,000	O’Reilly Automotive, Inc.*		4,804,150				4,804,150
						Total		9,819,083		5,433,162		15,252,245
						Security and Commodity Brokers
			26,200		26,200	Affiliated Managers Group*				1,317,860		1,317,860
	49,283				49,283	Chicago Mercantile Exchange Holdings Inc.		2,151,696				2,151,696
			61,800		61,800	IndyMac Bancorp, Inc.*				1,142,682		1,142,682
			41,000		41,000	Raymond James Financial, Inc.				1,212,780		1,212,780
						Total		2,151,696		3,673,322		5,825,018

See Notes to Pro Forma Combined Financial Statements.

SHARES OR										(Unaudited)
PRINCIPAL AMOUNT (000 OMITTED)					DESCRIPTION	VALUE
			W&R							W&R
			TARGET							TARGET
			SMALL							SMALL
			CAP GROWTH							CAP GROWTH
W&R TARGET			PORTFOLIO			W&R TARGET				PORTFOLIO
SMALL CAP	ADVANTUS		PRO			SMALL CAP		ADVANTUS		PRO
GROWTH	SMALL COMPANY		FORMA			GROWTH		SMALL COMPANY		FORMA
PORTFOLIO	GROWTH		COMBINED			PORTFOLIO		GROWTH		COMBINED
					Timesharing and Software
380,000				380,000	Digital Insight Corporation*		3,321,200				3,321,200
		173,200		173,200	Doubleclick, Inc.*				980,312		980,312
163,900				163,900	FactSet Research Systems, Inc		4,633,453				4,633,453
		148,500		148,500	MatrixOne, Inc.*				638,550		638,550
					Total		7,954,653		1,618,862		9,573,515
					Trucking and Shipping
		45,700		45,700	Hunt (J.B.) Transport Services, Inc.*				1,339,010		1,339,010
		61,900		61,900	Swift Transportation Company, Inc.*				1,239,114		1,239,114
					Total		0		2,578,124		2,578,124
					Utilities — Telephone
155,000				155,000	Commonwealth Telephone Enterprises, Inc.*		5,558,300				5,558,300
					TOTAL COMMON STOCKS		224,991,747		113,098,010		338,089,757
					CORPORATE DEBT SECURITY
					Multiple Industry
1,000				1,000	Kestrel Solutions, Inc.,
					5.5%, 7-15-05, Convertible (A)(B)		80,000				80,000
					SHORT — TERM SECURITIES
					Banks
					Wells Fargo & Company,
8,000				8,000	1.29%, 1-16-03		7,995,700				7,995,700
		6,427,290		6,427,290	1.326%, Cash Investment Fund				6,427,290		6,427,290
		3,395,545		3,395,545	1.261%, Treasury Plus Fund				3,395,545		3,395,545
					Total		7,995,700		9,822,835		17,818,535
					Chemicals — Petroleum and Inorganic
4,522				4,522	du Pont (E.I.) de Nemours and Company,
					1.30036%, Master Note		4,522,000				4,522,000
					Food and Related — 2.49%
5,000				5,000	ConAgra Foods, Inc.,
					1.42%, 1-13-03		4,997,633				4,997,633
1,961				1,961	General Mills, Inc.,
					1.53%, Master Note		1,961,000				1,961,000
					Total		6,958,633		0		6,958,633
					Health Care — Drugs
8,000				8,000	Alcon Capital Corporation (Nestle S.A.),
					1.32%, 2-12-03		7,987,680				7,987,680
					Pfizer Inc.:
5,400				5,400	1.3%, 1-9-03		5,398,440				5,398,440
8,000				8,000	1.3%, 1-29-03		7,991,911				7,991,911
					Total		21,378,031		0		21,378,031
					Health Care — General

See Notes to Pro Forma Combined Financial Statements.

SHARES OR

(Unaudited)

PRINCIPAL AMOUNT (000 OMITTED)

DESCRIPTION

VALUE

W&R

W&R

TARGET

TARGET

SMALL

SMALL

CAP GROWTH

CAP GROWTH

W&R TARGET

PORTFOLIO

W&R TARGET

PORTOLIO

SMALL CAP

ADVANTUS

PRO

SMALL CAP

ADVANTUS

PRO

GROWTH

SMALL COMPANY

FORMA

GROWTH

SMALL COMPANY

FORMA

PORTFOLIO

GROWTH

COMBINED

PORTFOLIO

GROWTH

COMBINED

3,354

3,354

Johnson & Johnson,

1.27%, 2-3-03

3,350,096

3,350,096

Petroleum - International

9,836

9,836

BP America Inc.,

1.2%, 1-2-03

9,835,672

9,835,672

TOTAL SHORT-TERM SECURITIES

54,040,132

9,822,835

63,862,967

TOTAL INVESTMENT SECURITIES

279,111,879

122,920,845

402,032,724

CASH AND OTHER ASSETS, NET OF LIABILITIES

140,581

(33,223

)

107,358

NET ASSETS

279,252,460

122,887,622

402,140,082

Notes to Schedule of Investments

*No income dividends were paid during the preceding 12 months.

(A) Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2002, the value of this security amounted to 0.03% of net assets.

(B) Non-income producing as the issuer has either missed its most recent interest payment or declared bankruptcy.

See Notes to Pro Forma Combined Financial Statements.

										W&R
										Target
					W&R					Small
			Advantus		Target					Cap Growth
			Small Company		Small					Portfolio
			Growth		Cap Growth		Pro Forma			Pro Forma
			Portfolio		Portfolio		Adjustments			Combined
Statement of Assets and Liabilities (in thousands)
Assets
	Investment Securities		$	122,921	$	279,112	$	—		$	402,033
	Cash					1					1
	Dividends and Interest Receivable			29		21					50
	Receivable for Investment Securities Sold			48		556					604
	Receivable for Fund Shares Sold			63		154					217
	Other Assets					3					3
	Collateral for securities loaned			17,716		—					17,716
		Total Assets		140,777		279,847		—			420,624
Liabilities
	Payable for Fund Shares Repurchased			72		55					127
	Payable for Investment Securities Purchased			—		513					513
	Payable to Affiliates			101		14					115
	Other Payables					13					13
	Payable Upon Return of Securities Loaned			17,716		—					17,716
		Total Liabilities		17,889		595		—			18,484
Net Assets			$	122,888	$	279,252	$	—		$	402,140
Net Assets			$	122,888	$	279,252	$	—		$	402,140
Shares Outstanding				186,021		44,760		(166,323	)		64,458
Net Asset Value per Share			$	0.6606	$	6.2388	$	—		$	6.2388

See Notes to Pro Forma Combined Financial Statements.

The following unaudited Pro Forma Combined Statement of Operations for W&R Target Small Cap Portfolio and Advantus Small Company Growth Portfolio has been derived from the Statements of Operations of W&R Target Small Cap Portfolio and Advantus Small Company Growth Portfolio for the fiscal year ended December 31, 2002. Such information has been adjusted to give effect to the Reorganization as if it had occurred on January 1, 2002, and reflects Pro Forma adjustments that are directly attributable to the transaction and are expected to have a continuing impact.

The unaudited Pro Forma Statement of Operations is presented for informational purposes only and does not purport to be indicative of the results of operations that would have occurred if the Reorganization had been consummated on January 1, 2002. The unaudited Pro Forma Financial Statements should be read in conjunction with the financial statements and related notes of the respective funds incorporated by reference in this Statement of Additional Information.

												W&R
												Target
						W&R						Small
			Advantus			Target						Cap Growth
			Small Company			Small						Portfolio
			Growth			Cap Growth			Pro Forma			Pro Forma
			Portfolio			Portfolio			Adjustments			Combined
Statement of Operations (in thousands)
Investment Income
	Dividends		$	146		$	229		$	—		$	375
	Interest & Other			230			1,302			—			1,532
		Total Investment Income		376			1,531			—			1,907
Expenses
	Investment Advisory Fees			975			2,645			300			3,920
	Rule 12b-1 Fees			375			778			—			1,153
	Other Expenses			120			159			(61	)		218
		Total Expenses		1,470			3,582			239			5,291
Net Investment Income (Loss)				(1,094	)		(2,051	)		(239	)		(3,384	)
Realized and Unrealized Gain (Loss)
	Realized net loss on securities			(29,124	)		(18,965	)		—			(48,089	)
	Net change in unrealized appreciation (depreciation) on investments			(30,287	)		(60,013	)		—			(90,300	)
		Net gain (loss) on investments		(59,411	)		(78,978	)		—			(138,389	)
Net increase (decrease) in net assets resulting from operations			$	(60,505	)	$	(81,029	)	$	(239	)	$	(141,773	)

See Notes to Pro Forma Combined Financial Statements.

W&R TARGET SMALL CAP GROWTH PORTFOLIO AND ADVANTUS SMALL COMPANY GROWTH PORTFOLIO
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
December 31, 2002
(Unaudited)

NOTE 1 — Significant Accounting Policies

W&R Target Small Cap Growth Portfolio and Advantus Small Company Growth Portfolio (the “Funds”) are registered under the Investment Company Act of 1940 as diversified, open-end management investment companies. W&R Target Small Cap Growth Portfolio’s investment objective is to seek growth of capital. Advantus Small Company Growth Portfolio’s investment objective is to seek long-term accumulation of capital. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of the pro forma combined financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America.

A.

Security valuation — Each stock and convertible bond is valued at the latest sale price thereof on each business day of the fiscal period as reported by the principal securities exchange on which the issue is traded or, if no sale is reported for a stock, the average of the latest bid and asked prices. Bonds, other than convertible bonds, are valued using a pricing system provided by a pricing service or dealer in bonds. Convertible bonds are valued using this pricing system only on days when there is no sale reported. Stocks which are traded over-the-counter are priced using the Nasdaq Stock Market, which provides information on bid and asked prices quoted by major dealers in such stocks. Restricted securities and securities for which quotations are not readily available are valued as determined in good faith in accordance with procedures established by and under the general supervision of the Fund’s Board of Directors. Short-term debt securities are valued at amortized cost, which approximates market value.

B.

Security transactions and related investment income — Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Securities gains and losses are calculated on the identified cost basis. Premium and discount on the purchase of bonds are amortized for both financial and tax reporting purposes. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded as soon as the Fund is informed of the ex-dividend date. Interest income is recorded on the accrual basis.

C.	Foreign currency translations — All assets and liabilities denominated in foreign currencies are translated into U.S. dollars daily. Purchases and sales of investment securities and accruals of income and expenses are translated at the rate of exchange prevailing on the date of the transaction. For assets and liabilities other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. The Fund combines fluctuations from currency exchange rates and fluctuations in market value when computing net realized and unrealized gain or loss from investments.
D.	Federal income taxes — It is the Fund’s policy to distribute all of its taxable income and capital gains to its shareholders and otherwise qualify as a regulated investment company under the Internal Revenue Code. Accordingly, provision has not been made for Federal income taxes.
E.	Dividends and distributions — Dividends and distributions to shareholders are recorded by each Fund on the record date. Net investment income distributions and capital gains distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences are due to differing treatments for items such as deferral of wash sales and post-October losses, foreign currency transactions, net operating losses and expiring capital loss carryovers.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

NOTE 2 — Investment Management And Payments To Affiliated Persons

Waddell & Reed Investment Management Company (“WRIMCO”), a wholly owned subsidiary of Waddell & Reed, Inc. (“W&R”), serves as the Fund’s investment manager. The Fund pays a fee for investment management services. The fee is computed daily based on the net asset value at the close of business. The fee is payable by the Fund at the following annual rates:

	Annual
Fund	Net Asset Breakpoints	Rate
Small Cap Growth Portfolio	Up to $1 Billion		0.850	%
	Over $1 Billion up to $2 Billion		0.830	%
	Over $2 Billion up to $3 Billion		0.800	%
	Over $3 Billion		0.760	%

The Fund accrues and pays this fee daily. The Fund also reimburses WRIMCO for certain expenses, including additional Fund-related security costs incurred by WRIMCO as a result of the September 11, 2001 terrorist activities. The amount reimbursed represents the Fund’s share of incremental security-related costs including the cost of using private transportation for WRIMCO’s personnel in lieu of commercial transportation, certain security-related personnel and facilities costs. At December 31, 2002, additional security costs amounted to $20,701, which is included in other expenses.

WRIMCO, the Fund’s investment manager, has agreed to waive a Portfolio’s management fee on any day that the Portfolio’s net assets are less than $25 million, subject to its right to change or modify this waiver.

The Fund has an Accounting Services Agreement with Waddell & Reed Services Company (“WRSCO”), a wholly owned subsidiary of W&R. Under the agreement, WRSCO acts as the agent in providing bookkeeping and accounting services and assistance to the Fund, including maintenance of Fund records, pricing of Fund shares, preparation of prospectuses for existing shareholders, preparation of proxy statements and certain shareholder reports. For these services, each Portfolio pays WRSCO a monthly fee of one-twelfth of the annual fee shown in the following table.

Accounting Services Fee

Average
Net Asset Level						Annual Fee
(all dollars in millions)						Rate for Each Portfolio
From	$	0	to	$	10	$	0
From	$	10	to	$	25	$	11,000
From	$	25	to	$	50	$	22,000
From	$	50	to	$	100	$	33,000
From	$	100	to	$	200	$	44,000
From	$	200	to	$	350	$	55,000
From	$	350	to	$	550	$	66,000
From	$	550	to	$	750	$	77,000
From	$	750	to	$	1,000	$	93,500
	$	1,000 and Over				$	110,000

The Fund has adopted a Service Plan pursuant to Rule 12b-1 of the 1940 Act. Under the Plan, each Portfolio may pay a fee to W&R in an amount not to exceed 0.25% of the Portfolio’s average annual net assets. The fee is to be paid to compensate W&R for amounts it expends in connection with the provision of personal services to Policyowners and/or maintenance of Policyowner accounts.

The Fund paid Directors’ fees of $14,931, which is included in other expenses.

W&R is a subsidiary of Waddell & Reed Financial, Inc., a public holding company, and a direct subsidiary of Waddell & Reed Financial Services, Inc., a holding company.

PART C

OTHER INFORMATION

Item 15. Indemnification.

     Reference is made to Section 7 of Article SEVENTH of the Articles of Incorporation of Registrant, as amended, filed July 1, 1998 as EX-99.B1-charter to Post-Effective Amendment No. 21 to the Registration Statement on Form N-1A and to Paragraph 12 of the Fund Participation Agreement with Nationwide Life Insurance Company, dated December 1, 2000, filed by EDGAR on March 1, 2001 as EX-99.B(e)tgtnwpart to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A, each of which provides for indemnification. Also refer to Section 2-418 of the Maryland General Corporation Law regarding indemnification of directors, officers, employees and agents.

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

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

Item 16. Exhibits.

(1)(a)	Articles of Incorporation, as amended, filed July 1, 1998 as EX-99.B1-charter to Post Effective Amendment No. 21 to the Registration Statement on Form N-1A
(1)(b)	Articles of Amendment, dated May 13, 1998, filed July 1, 1998 as EX-99.B1-tkartsup to Post-Effective Amendment No. 21 to the Registration Statement on Form N-1A
(1)(c)	Articles Supplementary, dated May 25, 1999, filed by EDGAR on April 29, 2002 as EX-99.B(a)tmkartsup1 to Post-Effective Amendment No. 27 to the Registration Statement on Form N-1A
(1)(d)	Articles Supplementary, dated July 19, 1999, filed by EDGAR on April 29, 2002 as EX-99.B(a)tmkartsup2 to Post-Effective Amendment No. 27 to the Registration Statement on Form N-1A

(1)(e)	Articles Supplementary, dated August 21, 1998, filed by EDGAR on April 29, 2002 as EX-99.B(a)tmkartsup3 to Post-Effective Amendment No. 27 to the Registration Statement on Form N-1A
(1)(f)	Articles Supplementary, dated February 18, 2000, filed by EDGAR on April 27, 2000 as EX-99.B(a)tgtsupp to Post-Effective Amendment No. 23 to the Registration Statement on Form N-1A
(1)(g)	Articles of Amendment, dated September 26, 2000, filed by EDGAR on March 1, 2001 as EX-99.B(a)tgtartamend1 to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A
(1)(h)	Articles of Amendment, dated November 15, 2000, filed by EDGAR on March 1, 2001 as EX-99.B(a)tgtartamend2 to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A
(1)(i)	Articles Supplementary, dated February 14, 2001, filed by EDGAR on March 1, 2001 as EX-99.B(a)tgtartsupp to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A
(1)(j)	Articles of Amendment, dated August 22, 2001, filed by EDGAR on April 29, 2002 as EX-99.B(a)tgtartamend1 to Post-Effective Amendment No. 27 to the Registration Statement on Form N-1A
(1)(k)	Articles of Amendment, dated November 14, 2001, filed by EDGAR on April 29, 2002 as EX-99.B(a)tgtartamend2 to Post-Effective Amendment No. 27 to the Registration Statement on Form N-1A
(1)(l)	Articles of Amendment for Reallocation of Shares, dated November 13, 2002, filed by EDGAR on June 10, 2003 as EX-99.B(a)tgtartamend to Post-Effective Amendment No. 31 to the Registration Statement on Form N-1A
(1)(m)	Articles of Amendment for Reallocation of Shares, dated March 26, 2003, filed by EDGAR on June 10, 2003 as EX-99.B(a)tgtartamend2 to Post-Effective Amendment No. 31 to the Registration Statement on Form N-1A
(1)(n)	Articles Supplementary, dated May 22, 2003, filed by EDGAR on June 10, 2003 as EX-99.B(a)tgtartsup to Post-Effective Amendment No. 31 to the Registration Statement on Form N-1A
(2)(a)	Bylaws filed April 29, 1996 as EX-99.B2-tmkbylaw to Post-Effective Amendment No. 13 to the Registration Statement on Form N-1A
(2)(b)	Amendment to Bylaws, dated February 10, 1999, filed by EDGAR on March 1, 1999 as EX-99.B(b)-bylaw2 to Post-Effective Amendment No. 22 to the Registration Statement on Form N-1A
(2)(c)	Amendment to Bylaws, dated May 17, 2000, filed by EDGAR on March 1, 2001 as EX-99.B(b)tgtbylawamend1 to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A

2

(2)(d)	Amendment to Bylaws, dated August 16, 2000, filed by EDGAR on March 1, 2001 as EX-99.B(b)tgtbylawamend2 to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A
(3)	[Not applicable.]
(4)	Form of Agreement and Plan of Reorganization. (Included as Appendix A to the Prospectus/Proxy Statement comprising Part A of this Registration Statement.)
(5)	Articles Fifth and Seventh of the Articles of Incorporation, as amended, and Articles I and IV of the Bylaws, as amended, each define the rights of shareholders.
(6)(a)	Investment Management Agreement with fee schedule amended to reflect the addition of Science and Technology Portfolio filed October 31, 1996 as EX-99.B5-tmkima to Post-Effective Amendment No. 14 to the Registration Statement on Form N-1A
(6)(b)	Fee Schedule (Exhibit A) to the Investment Management Agreement, as amended, filed by EDGAR on March 1, 2001 as EX-99.B(d)tgtimafees to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A
(6)(c)	Investment Management Agreement with respect to International II Portfolio, Micro Cap Portfolio and Small Company Value Portfolio, filed by EDGAR on June 10, 2003 as EX-99.B(d)tgtima2 to Post-Effective Amendment No. 31 to the Registration Statement on Form N-1A
(6)(d)	Subadvisory Agreement between Waddell & Reed Investment Management Company and Wall Street Associates, filed by EDGAR on June 10, 2003 as EX-99.B(d)tgtsubadv1 to Post-Effective Amendment No. 31 to the Registration Statement on Form N-1A
(6)(e)	Subadvisory Agreement between Waddell & Reed Investment Management Company and Templeton Investment Counsel, Inc., filed by EDGAR on June 10, 2003 as EX-99.B(d)tgtsubadv2 to Post-Effective Amendment No. 31 to the Registration Statement on Form N-1A
(6)(f)	Subadvisory Agreement between Waddell & Reed Investment Management Company and State Street Research & Management Company.(5)
(7)(a)	Distribution Contract between TMK/United Funds, Inc. and United Investors Life Insurance Company, dated April 4, 1997, filed by EDGAR on March 1, 2001 as EX-99.B(e)tmkdist to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A
(7)(b)	Agreement Amending Distribution Contract, dated March 3, 1998, reflecting termination of the agreement as of December 31, 1998 filed by EDGAR on March 1, 2001 as EX-99.B(e)tmkterm1 to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A

3

(7)(c)	Agreement Amending Distribution Contract, effective December 31, 1998, to rescind the provision to terminate the agreement filed by EDGAR on March 1, 2001 as EX-99.B(e)amnddist to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A
(7)(d)	Letter Agreement, dated July 8, 1999, filed by EDGAR on March 1, 2001 as EX-99.B(e)amendpua to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A
(7)(e)	Limited Selling Agreement, dated May 16, 2001, filed by EDGAR on April 29, 2002 as EX-99.B(e)tgtuilicsel to Post-Effective Amendment No. 27 to the Registration Statement on Form N-1A
(7)(f)	Fund Participation Agreement with Nationwide Life Insurance Company, dated December 1, 2000, filed by EDGAR on March 1, 2001 as EX-99.B(e)tgtnwpart to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A
(8)	Not applicable.
(9)(a)	Custodian Agreement, as amended, filed April 26, 2000 as EX-99.B(g)tgtca to Post-Effective Amendment No. 23 to the Registration Statement on Form N-1A. The Custodian Agreement for Target/United Funds, Inc. Asset Strategy Portfolio was filed as a representative copy. The Custodian Agreements for all portfolios of W&R Target Funds, Inc. are identical with the exception of their respective effective dates.
(9)(b)	Amendment to Custodian Agreement, dated July 1, 2001, filed by EDGAR on March 28, 2003 as EX-99.B(g)tgtcaamend to Post-Effective Amendment No. 28 to the Registration Statement on Form N-1A. The Amendment to the Custodian Agreement for W&R Target Funds, Inc. Asset Strategy Portfolio is being filed as a representative copy. The Amendment to Custodian Agreements for all portfolios of W&R Target Funds, Inc. (except Micro Cap Growth Portfolio, International II Portfolio and Small Company Value Portfolio) are identical with the exception of their respective effective dates.
(9)(c)	Custodian Agreement for Micro Cap Growth Portfolio, filed by EDGAR on June 10, 2003 as EX-99.B(g)mcgpca to Post-Effective Amendment No. 31 to the Registration Statement on Form N-1A. The Custodian Agreement for International II Portfolio and for Small Company Value Portfolio is identical to the Custodian Agreement for Micro Cap Growth Portfolio.
(9)(d)	Delegation Agreement, dated July 1, 2001, filed by EDGAR on March 28, 2003 as EX-99B(g)tgtcadel to Post-Effective Amendment No. 28 to the Registration Statement on Form N-1A. Delegation Agreement for W&R Target Funds, Inc. Asset Strategy Portfolio is being filed as a representative copy. The Delegation Agreements for all portfolios of W&R Target Funds, Inc. (except Micro Cap Growth Portfolio, International II Portfolio and Small Company Value Portfolio) are identical with the exception of their respective effective dates.

4

(9)(e)	Rule 17f-5 Delegation Agreement for Micro Cap Growth Portfolio, filed by EDGAR on June 10, 2003 as EX-99.B(g)mcgpcadel to Post-Effective Amendment No. 31 to the Registration Statement on Form N-1A. The Rule 17f-5 Delegation Agreement for International II Portfolio and Small Company Value Portfolio is identical to the Rule 17f-5 Delegation Agreement for Micro Cap Growth Portfolio.
(10)	Service Plan filed by EDGAR on March 1, 1999 as EX-99.B(m)-tmksp to Post-Effective Amendment No. 22 to the Registration Statement on Form N-1A
	Service Plan, as revised May 16, 2001, filed by EDGAR on April 29, 2002 as EX-99.B(m)tgtsp to Post-Effective Amendment No. 27 to the Registration Statement on Form N-1A
(11)	Opinion and consent of Associate General Counsel to W&R Target Funds with respect to the legality of the securities being registered.(5)
(12)	Opinion and consent of Dorsey & Whitney LLP with respect to tax matters.(2)
(13)(a)	Accounting Services Agreement filed October 3, 1995 as EX-99.B9-tmkasa to Post-Effective Amendment No. 12 to the Registration Statement on Form N-1A
(13)(b)	Amendment to Accounting Services Agreement, dated September 1, 2000, filed by EDGAR on March 1, 2001 as EX-99.B(h)tgtasaamend to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A
(14)(a)	Consent of Deloitte & Touche LLP with respect to financial statements of the Registrant.(1)
(14)(b)	Consent of KPMG LLP with respect to financial statements of Advantus Series Fund, Inc.(1)
(15)	Not applicable.
(16)	Powers of attorney.(5)
(17)(a)	Form of contract holder voting instructions.(5)
(17)(b)	W&R Target Funds, Inc. Prospectus dated May 1, 2003.(3)
(17)(c)	W&R Target Funds, Inc. Statement of Additional Information dated May 1, 2003.(5)
(17)(d)	W&R Target Funds, Inc. Prospectus dated July 24, 2003 for the W&R International II Portfolio, W&R Micro Cap Growth Portfolio and W&R Small Cap Value Portfolio.(4)
(17)(e)	W&R Target Funds, Inc. Statement of Additional Information dated July 24, 2003 for the W&R International II Portfolio, W&R Micro Cap Growth Portfolio and W&R Small Cap Value Portfolio.(1)

5

(17)(f)	Advantus Series Fund, Inc. Prospectus dated May 1, 2003.(5)
(17)(g)	Advantus Series Fund, Inc. Statement of Additional Information dated May 1, 2003.(5)
(17)(h)	W&R Target Funds, Inc. Annual Report for the year ended December 31, 2002.(5)
(17)(i)	Advantus Series Fund, Inc. Annual Report for the year ended December 31, 2002.(5)

(1)	Filed herewith.
(2)	To be filed by amendment.
(3)	Filed herewith as Appendix D to the Proxy Statement/Prospectus.
(4)	Filed herewith as Appendix E to the Proxy Statement/Prospectus.
(5)	Filed as an Exhibit to the registration statement on Form N-14 filed with the Commission on June 26, 2003 (Accession No. 0000950134-03-009540).

Item 17. Undertakings.

     (1)  The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this Registration Statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act, the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.

     (2)  The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the Registration Statement and will not be used until the amendment is effective, and that, in determining any liability under the 1933 Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them.

     (3)  The undersigned Registrant agrees to file, by post-effective amendment, an opinion of counsel or a copy of a ruling of the Internal Revenue Service supporting the tax consequences of the proposed reorganization within a reasonable time after receipt of such opinion or ruling.

6

SIGNATURES

     As required by the Securities Act of 1933, this registration statement has been signed on behalf of the registrant, in the city of Shawnee Mission, and the state of Kansas on the 29th day of July, 2003.

W&R Target Funds, Inc.

By/s/ HENRY J. HERRMANN
Name: Henry J. Herrmann
Title: President

     As required by the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signatures	Title
/s/ Keith A. Tucker* Keith A. Tucker	Chairman of the Board	July 29, 2003
/s/ Henry J. Herrmann Henry J. Herrman	President and Director	July 29, 2003
/s/ Theodore W. Howard Theodore W. Howard	Vice President, Treasurer, Principal Financial Officer and Accounting Officer	July 29, 2003
/s/ James M. Concannon* James M. Concannon	Director	July 29, 2003
/s/ John A. Dillingham* John A. Dillingham	Director	July 29, 2003
/s/ David P. Gardner* David P. Gardner	Director	July 29, 2003
/s /Linda K. Graves* Linda K. Graves	Director	July 29, 2003
/s/ Joseph Harroz, Jr.* Joseph Harroz, Jr.	Director	July 29, 2003

7

/s/ John F. Hayes* John F. Hayes	Director	July 29, 2003
/s/ Glendon E. Johnson* Glendon E. Johnson	Director	July 29, 2003
/s/ Frank J. Ross, Jr.* Frank J. Ross, Jr.	Director	July 29, 2003
/s/ Eleanor B. Schwartz* Eleanor B. Schwartz	Director	July 29, 2003
/s/ Frederick Vogel III* Frederick Vogel III	Director	July 29, 2003
*By /s/ Kristen A. Richards Kristen A. Richards Attorney-in-Fact
ATTEST:
/s/ Daniel C. Schulte Daniel C. Schulte Assistant Secretary

* Pursuant to powers of attorney filed herewith.

8 EX-99.(14)(A) 3 c77852a2exv99wx14yxay.htm EX-99.(14)(A) CONSENT OF DELOITTE & TOUCHE LLP

Exhibit 14(a)

INDEPENDENT AUDITORS’ CONSENT

We consent to the use in this Registration Statement of W&R Target Funds, Inc. on Form N-14 of our report dated February 7, 2003 appearing in the Annual Report to Shareholders of Asset Strategy Portfolio, Balanced Portfolio, Bond Portfolio, Core Equity Portfolio, Growth Portfolio, High Income Portfolio, International Portfolio, Limited-Term Bond Portfolio, Money Market Portfolio, Science and Technology Portfolio, Small Cap Portfolio, and Value Portfolio comprising W&R Target Funds, Inc. for the fiscal year ended December 31, 2002, which is also incorporated by reference in the Statement of Additional Information, which is part of such Registration Statement. We also consent to the reference to us under the caption “Custodial and Auditing Services” in the Proxy Statement/Prospectus, which also is a part of such Registration Statement.

/s/ Deloitte & Touche LLP

Kansas City, Missouri
July 28, 2003

EX-99.(14)(B) 4 c77852a2exv99wx14yxby.htm EX-99.(14)(B) CONSENT OF KPMG LLP

Exhibit 14(b)

Independent Auditors’ Consent

The Board of Directors
Advantus Series Fund, Inc.:

We consent to the use of our report dated February 7, 2003 incorporated by reference herein and to the reference to our Firm under the heading Other Service Providers — Custodial and Auditing Services in this combined proxy and registration statement on Form N-14.

KPMG LLP

Minneapolis, Minnesota
July 29, 2003

EX-99.(17)(E) 5 c77852a2exv99wx17yxey.htm EX-99.(17)(E) STATEMENT OF ADDITIONAL INFORMATION

Exhibit 17(e)

W&R TARGET FUNDS, INC.
International II Portfolio

Micro Cap Growth Portfolio

Small Cap Value Portfolio

6300 Lamar Avenue

P. O. Box 29217

Shawnee Mission, Kansas 66201-9217

913-236-2000

888-WADDELL

July 24, 2003

STATEMENT OF ADDITIONAL INFORMATION

          This Statement of Additional Information (SAI) is not a prospectus. Investors should read this SAI in conjunction with the prospectus (Prospectus) for International II Portfolio, Micro Cap Growth Portfolio and Small Cap Value Portfolio (each, a Portfolio) of W&R Target Funds, Inc. (Fund) dated July 24, 2003, which may be obtained by request to the Fund or Waddell & Reed, Inc. at the address or telephone number shown above.

TABLE OF CONTENTS

Performance Information

Investment Strategies, Policies and Practices

Investment Management and Other Services

Net Asset Value

Directors and Officers

Purchases and Redemptions

Shareholder Communications

Taxes

Dividends and Distributions

Portfolio Transactions and Brokerage

Other Information

Appendix A

THE FUND AND ITS HISTORY

          W&R Target Funds, Inc. (Fund) was organized as a Maryland corporation on December 2, 1986. Prior to August 31, 1998, the Fund was known as TMK/United Funds, Inc.; prior to October 16, 2000, it was known as Target/United Funds, Inc. Each of the Portfolios, a series of the Fund, is a mutual fund, an investment that pools shareholders’ money and invests it toward a specified goal. In technical terms, each Portfolio is an open-end, diversified management company. The Fund sells its shares only to the separate accounts of Participating Insurance Companies to fund certain variable life insurance policies and variable annuity contracts (Policies).

PERFORMANCE INFORMATION

          From time to time, advertisements and sales materials for one or more of the Portfolios may include total return information and/or performance rankings. Performance data will be accompanied by or used in calculating performance data for the respective separate accounts that invest in the Portfolio.

     Total Return

          The following relates to each Portfolio. Total return is the overall change in the value of an investment over a given period of time. An average annual total return quotation is computed by finding the average annual compounded rates of return over the one-, five-, and ten-year periods that would equate the initial amount invested to the ending redeemable value. Total return is calculated by assuming an initial $1,000 investment. No sales charge is required to be paid by the Participating Insurance Companies for purchase of shares. All dividends and distributions are assumed to be paid in shares at their net asset value (NAV) as of the day the dividend or distribution is paid. The formula used to calculate the total return is:

P(1 + T)n =	ERV
Where : P =	$1,000 initial payment
T =	Average annual total return
n =	Number of years
ERV =	Ending redeemable value of the $1,000 investment for the periods shown.

          None of the Portfolios has been in operation prior to the date of this SAI; therefore, no average annual total return information is provided.

          Unaveraged or cumulative total return may also be quoted. Such total return data reflects the change in value of an investment over a stated period of time. Cumulative total returns will be calculated according to the formula indicated above but without averaging the rate for the number of years in the period. The Fund may also provide non-standardized performance information.

     Performance Rankings and Other Information

          From time to time, advertisements and information furnished to present or prospective Policyholders may include a Portfolio’s performance rankings as published by recognized independent mutual fund statistical services such as Lipper Analytical Services, Inc., or by publications of general interest such as The Wall Street Journal, Business Week, Barron’s, Fortune, Morningstar, etc. A Portfolio’s performance may also be compared to that of other selected mutual funds or recognized market indicators including the Standard & Poor’s 500 Composite Stock Price Index and the Dow Jones Industrial Average. Performance information may be quoted numerically or presented in a table, graph or other illustration. In connection with a ranking, the Fund may provide additional information, such as the particular category to which it related, the number of funds in the category, the criteria upon which the ranking is based, and the effect of sales charges, fee waivers and/or expense reimbursements.

          Performance information for a Portfolio may be accompanied by information about market conditions and other factors that affected the Portfolio’s performance for the period(s) shown.

          All performance information included in advertisements or sales material is historical in nature and is not intended to represent or guarantee future results. The value of a Portfolio’s shares when redeemed may be more or less than their original cost.

INVESTMENT STRATEGIES, POLICIES AND PRACTICES

          This SAI supplements the information contained in the Portfolios’ Prospectus and contains more detailed information about the investment strategies and policies the investment manager, Waddell & Reed Investment Management Company (WRIMCO), or a Portfolio’s investment sub-advisor (Sub-Advisor), may employ, and the types of instruments in which a Portfolio may invest, in pursuit of the Portfolio’s goal. A summary of the risks associated with these instrument types and investment practices is included as well.

          A Portfolio’s Sub-Advisor might not buy all of these instruments or use all of these techniques, or use them to the full extent permitted by the Portfolio’s investment policies and restrictions. A Sub-Advisor buys an instrument or uses a technique only if it believes that doing so will help the Portfolio achieve its goal. See Investment Restrictions and Limitations for a listing of the fundamental and non-fundamental, or operating, investment restrictions and policies of the Portfolios.

     Securities - - General

          The main types of securities in which the Portfolios may invest include common stock, preferred stock, debt securities and convertible securities. Although common stocks and other equity securities have a history of long-term growth in value, their prices tend to fluctuate in the short term, particularly those of smaller companies. The equity securities in which a Portfolio invests may include preferred stock that converts into common stock. Each Portfolio may invest in preferred stock rated in any rating category of the established rating services or, if unrated, judged by its Sub-Advisor to be of equivalent quality. Debt securities have varying levels of sensitivity to changes in interest rates and varying degrees of quality. As a general matter, however, when interest rates rise, the values of fixed-rate securities fall and, conversely, when interest rates fall, the values of fixed-rate debt securities rise. Similarly, long-term bonds are generally more sensitive to interest rate changes than short-term bonds.

          Lower quality debt securities, or junk bonds, are considered to be speculative and involve greater risk of default or price changes due to changes in the issuer’s creditworthiness. The market prices of these securities may fluctuate more than high-quality securities and may decline significantly in periods of general economic difficulty. The market for lower-rated debt securities may be thinner and less active than that for higher-rated debt securities, which can adversely affect the prices at which the former are sold. Adverse publicity and changing investor perceptions may decrease the values and liquidity of lower-rated debt securities, especially in a thinly traded market. Valuation becomes more difficult and judgment plays a greater role in valuing lower-rated debt securities than with respect to securities for which more external sources of quotations and last sale

information are available. Since the risk of default is higher for lower-rated debt securities, the Sub-Advisor’s research and credit analysis are an especially important part of managing securities of this type held by the Portfolio. The Sub-Advisor continuously monitors the issuers of lower-rated debt securities in the Portfolio in an attempt to determine if the issuers will have sufficient cash flow and profits to meet required principal and interest payments. The Fund may choose, at its expense or in conjunction with others, to pursue litigation or otherwise exercise its rights as a security holder to seek to protect the interests of security holders if it determines this to be in the best interest of the shareholders of the affected Portfolio(s).

          Subject to its investment restrictions, a Portfolio may invest in debt securities rated in any rating category of the established rating services, including securities rated in the lowest category (securities rated D by Standard & Poor’s (S&P) and D by Moody’s Corporation (Moody’s)). Debt securities rated D by S&P or D by Moody’s are in payment default or are regarded as having extremely poor prospects of ever attaining any real investment standing. Debt securities rated at least BBB by S&P or Baa by Moody’s are considered to be investment grade debt securities; however, securities rated BBB or Baa may have speculative characteristics. However, International II Portfolio invests, for the most part, in investment-grade debt securities. As an operating policy, International II Portfolio will not invest more than 5% of its net assets in securities (including convertible securities) valid at least BBB by S&P or Baa by Moody’s and may not invest in securities below those ratings. Each Portfolio will treat unrated securities judged by its Sub-Advisor to be of equivalent quality to a rated security as having that rating.

          While credit ratings are only one factor a Sub-Advisor relies on in evaluating high-yield debt securities, certain risks are associated with credit ratings. Credit ratings evaluate the safety of principal and interest payments, not market value risk. Credit ratings for individual securities may change from time to time, and a Portfolio may retain the Portfolio security whose rating has been changed.

          Micro Cap Growth Portfolio and Small Cap Value Portfolio may purchase debt securities whose principal amount at maturity is dependent upon the performance of a specified equity security. The issuer of such debt securities, typically an investment banking firm, is unaffiliated with the issuer of the equity security to whose performance the debt security is linked. Equity-linked debt securities differ from ordinary debt securities in that the principal amount received at maturity is not fixed, but is based on the price of the linked equity security at the time the debt security matures. The performance of equity-linked debt securities depends primarily on the performance of the linked equity security and may also be influenced by interest rate changes. In addition, although the debt securities are typically adjusted for diluting events such as stock splits, stock dividends and certain other events affecting the market value of the linked equity security, the debt securities are not adjusted for subsequent issuances of the linked equity security for cash. Such an issuance could adversely affect the price of the debt security. In addition to the equity risk relating to the linked equity security, such debt securities are also subject to credit risk with regard to the issuer of the debt security. In general, however, such debt securities are less volatile than the equity securities to which they are linked.

          The Portfolios may invest in convertible securities. A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock of the same or different issuer within a particular period of time at a specified price or formula. Convertible securities generally have higher yields than common stocks of the same or similar issuers, but lower yields than comparable nonconvertible securities, are less subject to fluctuation in value than the underlying stock because they have fixed income characteristics, and provide the potential for capital appreciation if the market price of the underlying common stock increases.

          The value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors also may have an effect on the convertible security’s investment value.

          The Portfolios may also invest in a type of convertible preferred stock that pays a cumulative, fixed dividend that is senior to, and expected to be in excess of, the dividends paid on the common stock of the issuer. At the mandatory conversion date, the preferred stock is converted into not more than one share of the issuer’s common stock at the call price that was established at the time the preferred stock was issued. If the price per share of the related common stock on the mandatory conversion date is less than the call price, the holder of the preferred stock will nonetheless receive only one share of common stock for each share of preferred stock (plus cash in the amount of any accrued but unpaid dividends). At any time prior to the mandatory conversion date, the issuer may redeem the preferred stock upon issuing to the holder a number of shares of common stock equal to the call price of the preferred stock in effect on the date of redemption divided by the market value of the common stock, with such market value typically determined one or two trading days prior to the date notice of redemption is given. The issuer must also pay the holder of the preferred stock cash in an amount equal to any accrued but unpaid dividends on the preferred stock. This convertible preferred stock is subject to the same market risk as the common stock of the issuer, except to the extent that such risk is mitigated by the higher dividend paid on the preferred stock. The opportunity for equity appreciation afforded by an investment in such convertible preferred stock, however, is limited, because in the event the market value of the issuer’s common stock increases to or above the call price of the preferred stock, the issuer may (and would be expected to) call the preferred stock for redemption at the call price. This convertible preferred stock is also subject to credit risk with regard to the ability of the issuer to pay the dividend established upon issuance of the preferred stock. Generally, convertible preferred stock is less volatile than the related common stock of the issuer.

     Specific Securities and Investment Practices

   Bank Deposits

          Among the other debt securities in which the Portfolios may invest are deposits in banks (represented by certificates of deposit or other evidence of deposit issued by such banks) of varying maturities. The Federal Deposit Insurance Corporation insures the principal of certain such deposits, currently to the extent of $100,000 per bank. Bank deposits are not marketable, and a Portfolio may invest in them only within the 15% limit mentioned below under Investment Restrictions and Limitations regarding illiquid securities unless such obligations are payable at principal amount plus accrued interest on demand or within seven days after demand.

     Borrowing

          Each Portfolio may borrow money only for temporary, emergency or extraordinary purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of the value of its total assets less liabilities (other than borrowings). See Investment Restrictions and Limitations.

   Foreign Securities and Currencies

          Micro Cap Growth Portfolio and Small Cap Value Portfolio may each invest up to 10% of its total assets in the securities of foreign issuers, including depository receipts. International II Portfolio may invest in the securities of foreign issuers, including depository receipts, without limitation. See Investment Restrictions and Limitations.

          In general, depository receipts are securities convertible into and evidencing ownership of securities of foreign corporate issuers, although depository receipts may not necessarily be denominated in the same currency as the securities into which they may be converted. American Depository Receipts (ADRs), in registered form, are dollar-denominated receipts typically issued by a U.S. bank or trust company evidencing ownership of the underlying securities. International depository receipts and European depository receipts, in bearer form, are foreign receipts evidencing a similar arrangement and are designed for use by non-U.S. investors and traders in non-U.S. markets. Global depository receipts are more recently developed receipts designed to facilitate the trading of foreign issuers by U.S. and non-U.S. investors and traders.

          The Sub-Advisors believe that there are investment opportunities as well as risks in investing in foreign securities. Individual foreign economies may differ favorably or unfavorably from the U.S. economy or each other in such matters as gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position. Individual foreign companies may also differ favorably or unfavorably from domestic companies in the same industry. Foreign currencies may be stronger or weaker than the U.S. dollar or than each other. Thus, the value of securities denominated in or indexed to foreign currencies, and of dividends and interest from such securities, can change significantly when foreign currencies strengthen or weaken relative to the U.S. dollar. The Sub-Advisors each believe that a Portfolio’s ability to invest assets abroad might enable it to take advantage of these differences and strengths where they are favorable.

          However, foreign securities and foreign currencies involve additional significant risks, apart from the risks inherent in U.S. investments. Foreign securities markets generally have less trading volume and less liquidity than U.S. markets, and prices on some foreign markets can be highly volatile. Many foreign countries lack uniform accounting and disclosure standards comparable to those applicable to U.S. companies, and it may be more difficult to obtain reliable information regarding an issuer’s financial conditions and operations. In addition, the costs of foreign investing, including withholding taxes, brokerage commissions and custodial costs, are generally higher than for U.S. investments.

          Foreign markets may offer less protection to investors than U.S. markets. Foreign issuers, brokers and securities markets may be subject to less government supervision. Foreign security trading practices, including those involving the release of assets in advance of payment, may involve increased risks in the event of a failed trade or the insolvency of a broker-dealer, and may involve substantial delays. It may also be difficult to enforce legal rights in foreign countries.

          Investing abroad also involves different political and economic risks. Foreign investments may be affected by actions of foreign governments adverse to the interests of U.S. investors, including the possibility of expropriation or nationalization of assets, confiscatory taxation, restrictions on U.S. investment or on the ability to repatriate assets or convert currency into U.S. dollars, or other government intervention. There may be greater possibility of default by foreign governments or government-sponsored enterprises. Investments in foreign countries also involve a risk of local political, economic, or social instability, military action or unrest, or adverse diplomatic developments. These considerations generally are intensified with respect to developing market countries (as described below). There is no assurance that a Sub-Advisor will be able to anticipate these potential events or counter their effects.

          In particular, International II Portfolio may invest in securities issued by governments, governmental agencies and companies located in developing market countries. International II Portfolio’s Sub-Advisor considers countries having developing markets to be all countries that are generally considered to be developing or emerging countries by the International Bank for Reconstruction and Development (more commonly referred to as the World Bank) and the International Finance Corporation, as well as countries that are classified by the United Nations or otherwise regarded by their authorities as developing. Currently, the countries not included in this category are Ireland, Spain, New Zealand, Australia, the United Kingdom, Italy, the Netherlands, Belgium, Austria, France, Canada, Germany, Denmark, the United States, Sweden, Finland, Norway, Japan and Switzerland. In addition, developing market securities means (i) securities of companies the principal securities trading market for which is a developing market country, as defined above, (ii) securities, traded in any market, of companies that derive 50% or more of their total revenue from either goods or services produced in such developing market countries or sales made in such developing market countries or (iii) securities of companies organized under the laws of, and with a principal office in, a developing market country. International II Portfolio will at all times, except during temporary defensive periods, maintain investments in at least three countries having developing markets.

          Certain foreign securities impose restrictions on transfer within the United States or to U.S. persons. Although securities subject to transfer restrictions may be marketable abroad, they may be less liquid than foreign securities of the same class that are not subject to such restrictions.

          Investments in obligations of domestic branches of foreign banks will not be considered to be foreign securities if WRIMCO has determined that the nature and extent of federal and state regulation and supervision of the branch in question is substantially equivalent to federal or state chartered domestic banks doing business in the same jurisdiction.

     Illiquid Investments

          Illiquid investments are investments that cannot be sold or disposed of in the ordinary course of business within seven days at approximately the price at which they are valued. Investments currently considered to be illiquid include:

(1)	repurchase agreements not terminable within seven days;
(2)	securities for which market quotations are not readily available;

(3)	over-the-counter (OTC) options and their underlying collateral;
(4)	bank deposits, unless they are payable at principal amount plus accrued interest on demand or within seven days after demand;
(5)	restricted securities not determined to be liquid pursuant to guidelines established by or under the direction of the Fund’s Board of Directors;
(6)	non-government stripped fixed-rate mortgage-backed securities;
(7)	securities involved in swap, cap, floor and collar transactions; and
(8)	direct debt instruments.

          The assets used as cover for OTC options written by a Portfolio will be considered illiquid unless the OTC options are sold to qualified dealers who agree that the Portfolio may repurchase any OTC option it writes at a maximum price to be calculated by a formula set forth in the option agreement. The cover for an OTC option written subject to this procedure would be considered illiquid only to the extent that the maximum repurchase price under the formula exceeds the intrinsic value of the option.

          If, through a change in values, net assets, or other circumstances, a Portfolio were in a position where more than 15% of its net assets were invested in illiquid securities, it would seek to take appropriate steps to protect liquidity.

     Index Depositary Receipts

          Micro Cap Growth Portfolio and Small Cap Value Portfolio each may invest up to 5% of its total assets in one or more types of depositary receipts (DRs) as a means of tracking the performance of a designated stock index while maintaining liquidity. Micro Cap Growth Portfolio and Small Cap Value Portfolio each may invest in S&P 500 Depositary Receipts (SPDRs), which track the S&P 500 Index; S&P MidCap 400 Depositary Receipts (MidCap SPDRs), which track the S&P MidCap 400 Index; and Dow Industrial Diamonds, which track the Dow Jones Industrial Average, or in other DRs which track indexes, provided that such investments are consistent with the Portfolio’s investment objective as determined by its Sub-Advisor. Each of these securities represents shares of ownership of a long-term unit investment trust (a type of investment company) that holds all of the stock included in the relevant underlying index.

          DRs carry a price that equals a specified fraction of the value of the designated index and are exchange traded. As with other equity transactions, brokers charge a commission in connection with the purchase of DRs. In addition, an asset management fee is charged in connection with the underlying unit investment trust (which is in addition to the asset management fee paid by a Portfolio).

          Trading costs for DRs are somewhat higher than those for stock index futures contracts, but, because DRs trade like other exchange-listed equities, they represent a quick and convenient method of maximizing the use of a Portfolio’s assets to track the return of a particular stock index. DRs share in the same market risks as other equity investments.

     Indexed Securities

          Each Portfolio may purchase securities whose prices are indexed to the prices of other securities, securities indexes, currencies, or other financial indicators, subject to the Portfolio’s operating policy regarding derivative instruments. Indexed securities typically, but not always, are debt securities or deposits whose value at maturity or whose coupon rate is determined by reference to a specific instrument or statistic. The performance of indexed securities depends to a great extent on the performance of the security, currency or other instrument to which they are indexed and may also be influenced by interest rate changes in the United States and abroad. At the same time, indexed securities are subject to the credit risks associated with the issuer of the security and their values may decline substantially if the issuer’s creditworthiness deteriorates. Indexed securities may be more volatile than the underlying investments.

          Recent issuers of indexed securities have included banks, corporations, and certain U.S. government agencies. The Portfolio’s Sub-Advisor will use its judgment in determining whether indexed securities should be treated as short-term instruments, bonds, stocks, depending on the individual characteristics of the securities. Certain indexed securities that are not traded on an established market may be deemed illiquid.

     Investment Company Securities

          Each Portfolio may purchase shares of another investment company subject to the restrictions and limitations of the 1940 Act. As a shareholder in an investment company, a Portfolio would bear its pro rata share of that investment company’s expenses, which could result in duplication of certain fees, including management and administrative fees.

          Closed-End Investment Companies. Some countries, such as South Korea, Chile and India, have authorized the formation of closed-end investment companies to facilitate indirect foreign investment in their capital markets. In accordance with the 1940 Act, International II Portfolio may invest up to 10% of its total assets in securities of closed-end investment companies. This restriction on investments in securities of closed-end investment companies may limit opportunities for International II Portfolio to invest indirectly in certain developing markets. Shares of certain closed-end investment companies may at times be acquired only at market prices representing premiums to their net asset values.

     Lending Securities

          Securities loans may be made on a short-term or long-term basis for the purpose of increasing a Portfolio’s income. If a Portfolio lends securities, the borrower pays the Portfolio an amount equal to the dividends or interest on the securities that the Portfolio would have received if it had not lent the securities. The Portfolio also receives additional compensation. Under the Portfolios’ current securities lending procedures, the Portfolios may lend securities only to broker-dealers and financial institutions deemed creditworthy by WRIMCO.

          Any securities loans that a Portfolio makes must be collateralized in accordance with applicable regulatory requirements (Guidelines). At the time of each of its loan, a Portfolio must receive collateral equal to no less than 100% of the market value of the securities lent. Under the present Guidelines, the collateral must consist of cash or U.S. Government securities or bank letters of credit, at least equal in value to the market value of the securities lent on each day that the loan is outstanding. If the market value of the lent securities exceeds the value of the collateral, the borrower must add more collateral so that it at least equals the market value of the securities lent. If the market value of the securities decreases, the borrower is entitled to return of the excess collateral.

          There are two methods of receiving compensation for making loans. The first is to receive a negotiated loan fee from the borrower. This method is available for all three types of collateral. The second method, which is not available when letters of credit are used as collateral, is for the Portfolio to receive interest on the investment of the cash collateral or to receive interest on the U.S. Government securities used as collateral. Part of the interest received in either case may be shared with the borrower.

          The letters of credit that a Portfolio may accept as collateral are agreements by banks (other than the borrowers of the Portfolio’s securities), entered into at the request of the borrower and for its account and risk, under which the banks are obligated to pay to the Portfolio, while the letter is in effect, amounts demanded by the Portfolio if the demand meets the terms of the letter. The Portfolio’s right to make this demand secures the borrower’s obligations to it. The terms of any such letters and the creditworthiness of the banks providing them (which might include the Portfolio’s custodian bank) must be satisfactory to WRIMCO.

          The Portfolios will make loans only under rules of the New York Stock Exchange (NYSE), which presently require the borrower to give the securities back to the Portfolio within five business days after the Portfolio gives notice to do so. If a Portfolio loses its voting rights with respect to securities on loan, it will have the securities returned to it in time to vote them if a material event affecting the investment is to be voted on. A Portfolio may pay reasonable finder’s, administrative and custodian fees in connection with loans of securities.

          Some, but not all, of these rules are necessary to meet requirements of certain laws relating to securities loans. These rules will not be changed unless the change is permitted under these requirements. These requirements do not cover the present rules, which may be changed without shareholder vote, as to: (1) whom securities may be lent; (2) the investment of cash collateral; or (3) voting rights.

          There may be risks of delay in receiving additional collateral from the borrower if the market value of the securities on loan increases, as well as risks of delay in recovering the securities on loan or even loss of rights in the collateral should the borrower fail financially.

     Options, Futures and Other Strategies

          General. A Portfolio’s Sub-Advisor may use certain options, futures contracts (sometimes referred to as futures), options on futures contracts, forward currency contracts, swaps, caps, floors, collars, indexed securities and other derivative instruments (collectively, Financial Instruments) to attempt to enhance income or yield or to attempt to hedge the Portfolio’s investments. The strategies described below may be used in an attempt to manage the risks of a Portfolio’s investments that can affect fluctuation in its NAV.

          Generally, a Portfolio may purchase and sell any type of Financial Instrument. However, as an operating policy, a Portfolio will only purchase or sell a particular Financial Instrument if the Portfolio is authorized to invest in the type of asset by which the return on, or value of, the Financial Instrument is primarily measured. Since each Portfolio is authorized to invest in foreign securities, each Portfolio may purchase and sell foreign currency derivatives.

          Hedging strategies can be broadly categorized as short hedges and long hedges. A short hedge is a purchase or sale of a Financial Instrument intended partially or fully to offset potential declines in the value of one or more investments held in a Portfolio’s portfolio. Thus, in a short hedge, the Portfolio takes a position in a Financial Instrument whose price is expected to move in the opposite direction of the price of the investment being hedged.

          Conversely, a long hedge is a purchase or sale of a Financial Instrument intended partially or fully to offset potential increases in the acquisition cost of one or more investments that the Portfolio intends to acquire. Thus, in a long hedge, the Portfolio takes a position in a Financial Instrument whose price is expected to move in the same direction as the price of the prospective investment being hedged. A long hedge is sometimes referred to as an anticipatory hedge. In an anticipatory hedge transaction, the Portfolio does not own a corresponding security and, therefore, the transaction does not relate to a security the Portfolio owns. Rather, it relates to a security that the Portfolio intends to acquire. If the Portfolio does not complete the hedge by purchasing the security it anticipated purchasing, the effect on the Portfolio’s holdings is the same as if the transaction were entered into for speculative purposes.

          Financial Instruments on securities generally are used to attempt to hedge against price movements in one or more particular securities positions that a Portfolio owns or intends to acquire. Financial Instruments on indexes, in contrast, generally are used to attempt to hedge against price movements in market sectors in which a Portfolio has invested or expects to invest. Financial Instruments on debt securities may be used to hedge either individual securities or broad debt market sectors.

          The use of Financial Instruments is subject to applicable regulations of the SEC, the several exchanges upon which they are traded and the Commodity Futures Trading Commission (CFTC). In addition, a Portfolio’s ability to use Financial Instruments is limited by tax considerations. See Taxes.

          In addition to the instruments, strategies and risks described below, the Sub-Advisors expect to discover additional opportunities in connection with Financial Instruments and other similar or related techniques. These new opportunities may become available as the particular Sub-Advisor develops new techniques, as regulatory authorities broaden the range of permitted transactions and as new Financial Instruments or other techniques are developed. The Sub-Advisor may utilize these opportunities to the extent that they are consistent with the applicable Portfolio’s goal and permitted by that Portfolio’s investment limitations and applicable regulatory authorities. A Portfolio might not use any of these strategies, and there can be no assurance that any strategy used will succeed. The Portfolios’ Prospectus and/or SAI will be supplemented to the extent that new products or techniques involve materially different risks than those described below or in the Prospectus.

          Special Risks. The use of Financial Instruments involves special considerations and risks, certain of which are described below. In general, these techniques may increase the volatility of a Portfolio and may involve a small investment of cash relative to the magnitude of the risk assumed. Risks pertaining to particular Financial Instruments are described in the sections that follow:

          (1)     Successful use of most Financial Instruments depends upon the applicable Sub-Advisor’s ability to predict movements of the overall securities, currency and interest rate markets, which requires different skills than predicting changes in the prices of individual securities. There can be no assurance that any particular strategy will succeed, and use of Financial Instruments could result in a loss, regardless of whether the intent was to reduce risk or increase return.

          (2)     There might be imperfect correlation, or even no correlation, between price movements of a Financial Instrument and price movements of the investments being hedged. For example, if the value of a Financial Instrument used in a short hedge increased by less than the decline in value of the hedged investment, the hedge would not be fully successful. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as speculation or other pressures on the markets in which Financial Instruments are traded. The effectiveness of hedges using Financial Instruments on indexes will depend on the degree of correlation between price movements in the index and price movements in the securities being hedged.

          Because there are a limited number of types of exchange-traded options and futures contracts, it is likely that the standardized contracts available will not match a Portfolio’s current or anticipated investments exactly. A Portfolio may invest in options and futures contracts based on securities with different issuers, maturities, or other characteristics from the securities in which it typically invests, which involves a risk that the options or futures position will not track the performance of the Portfolio’s other investments.

          Options and futures prices can also diverge from the prices of their underlying instruments, even if the underlying instruments match a Portfolio’s investments well. Options and futures prices are affected by such factors as current and anticipated short-term interest rates, changes in volatility of the underlying instrument, and the time remaining until expiration of the contract, which may not affect security prices the same way. Imperfect correlation may also result from differing levels of demand in the options and futures markets and the securities markets, from structural differences in how options and futures and securities are traded, or from imposition of daily price fluctuation limits or trading halts. A Portfolio may purchase or sell options and futures contracts with a greater or lesser value than the securities it wishes to hedge or intends to purchase in order to attempt to compensate for differences in volatility between the contract and the securities, although this may not be successful in all cases. If price changes in a Portfolio’s options or futures positions are poorly correlated with its other investments, the positions may fail to produce anticipated gains or result in losses that are not offset by gains in other investments.

          (3)     If successful, the above-discussed strategies can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable price movements. However, such strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price movements. For example, if a Portfolio entered into a short hedge because its Sub-Advisor projected a decline in the price of a security in the Portfolio’s holdings, and the price of that security increased instead, the gain from that increase might be wholly or partially offset by a decline in the price of the Financial Instrument. Moreover, if the price of the Financial Instrument declined by more than the increase in the price of the security, the Portfolio could suffer a loss. In either such case, the Portfolio would have been in a better position had it not attempted to hedge at all.

          (4)     As described below, a Portfolio might be required to maintain assets as cover, maintain segregated accounts or make margin payments when it takes positions in Financial Instruments involving obligations to third parties (i.e., Financial Instruments other than purchased options). If the Portfolio were unable to close out its positions in such Financial Instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expired or matured. These requirements might impair the Portfolio’s ability to sell a portfolio security or make an investment at a time when it would otherwise be favorable to do so, or require that the Portfolio sell a portfolio security at a disadvantageous time.

          (5)     A Portfolio’s ability to close out a position in a Financial Instrument prior to expiration or maturity depends on the existence of a liquid secondary market or, in the absence of such a market, the ability and willingness of the other party to the transaction (counterparty) to enter into a transaction closing out the position. Therefore, there is no assurance that any position can be closed out at a time and price that is favorable to the Portfolio.

          Cover. Transactions using Financial Instruments, other than purchased options, expose a Portfolio to an obligation to another party. Each Portfolio will comply with SEC guidelines regarding cover for these instruments and will, if the guidelines so require, set aside cash or liquid assets in an account with its custodian in the prescribed amount as determined daily. A Portfolio will not enter into any such transactions unless it owns either (1) an offsetting (covered) position in securities, currencies or other options, futures contracts or forward contracts, or (2) cash and liquid assets with a value, marked-to-market daily, sufficient to cover its potential obligations to the extent not covered as provided in (1) above.

          Assets used as cover or held in an account cannot be sold while the position in the corresponding Financial Instrument is open, unless they are replaced with other appropriate assets. As a result, the commitment of a large portion of a Portfolio’s assets to cover or to segregated accounts could impede portfolio management or the Portfolio’s ability to meet redemption requests or other current obligations.

          Options. A call option gives the purchaser the right to buy, and obligates the writer to sell, the underlying investment at the agreed-upon price during the option period. A put option gives the purchaser the right to sell, and obligates the writer to buy, the underlying investment at the agreed-upon price during the option period. Purchasers of options pay an amount, known as a premium, to the option writer in exchange for the right under the option contract.

          The purchase of call options can serve as a long hedge, and the purchase of put options can serve as a short hedge. Writing put or call options can enable a Portfolio to enhance income or yield by reason of the premiums paid by the purchasers of such options. However, if the market price of the security underlying a put option declines to less than the exercise price of the option, minus the premium received, the Portfolio would expect to suffer a loss.

          Writing call options can serve as a limited short hedge, because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security or currency appreciates to a price higher than the exercise price of the call option, it can be expected that the option will be exercised and the Portfolio will be obligated to sell the security or currency at less than its

market value. If the call option is an OTC option, the securities or other assets used as cover would be considered illiquid to the extent described under Illiquid Investments.

          Writing put options can serve as a limited long hedge because increases in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security or currency depreciates to a price lower than the exercise price of the put option, it can be expected that the put option will be exercised and the Portfolio will be obligated to purchase the security or currency at more than its market value. If the put option is an OTC option, the securities or other assets used as cover would be considered illiquid to the extent described under Illiquid Investments.

          The value of an option position will reflect, among other things, the current market value of the underlying investment, the time remaining until expiration, the relationship of the exercise price to the market price of the underlying investment, the historical price volatility of the underlying investment and general market conditions. Options that expire unexercised have no value.

          A Portfolio may effectively terminate its right or obligation under an option by entering into a closing transaction. For example, the Portfolio may terminate its obligation under a call or put option that it had written by purchasing an identical call or put option; this is known as a closing purchase transaction. Conversely, the Portfolio may terminate a position in a put or call option it had purchased by writing an identical put or call option; this is known as a closing sale transaction. Closing transactions permit the Portfolio to realize profits or limit losses on an option position prior to its exercise or expiration.

          A type of put that a Portfolio may purchase is an optional delivery standby commitment, which is entered into by parties selling debt securities to the Portfolio. An optional delivery standby commitment gives the Portfolio the right to sell the security back to the seller on specified terms. This right is provided as an inducement to purchase the security.

          Risks of Options on Securities. Options offer large amounts of leverage, which will result in a Portfolio’s NAV being more sensitive to changes in the value of the related instrument. Each Portfolio may purchase or write both exchange-traded and OTC options. Exchange-traded options in the United States are issued by a clearing organization affiliated with the exchange on which the option is listed that, in effect, guarantees completion of every exchange-traded option transaction. In contrast, OTC options are contracts between a Portfolio and its counterparty (usually a securities dealer or a bank) with no clearing organization guarantee. Thus, when a Portfolio purchases an OTC option, it relies on the counterparty from whom it purchased the option to make or take delivery of the underlying investment upon exercise of the option. Failure by the counterparty to do so would result in the loss of any premium paid by the Portfolio as well as the loss of any expected benefit of the transaction.

          A Portfolio’s ability to establish and close out positions in exchange-listed options depends on the existence of a liquid market. However, there can be no assurance that such a market will exist at any particular time. Closing transactions can be made for OTC options only by negotiating directly with the counterparty, or by a transaction in the secondary market if any such market exists. There can be no assurance that a Portfolio will in fact be able to close out an OTC option position at a favorable price prior to expiration. In the event of insolvency of the counterparty, the Portfolio might be unable to close out an OTC option position at any time prior to its expiration.

          If a Portfolio were unable to effect a closing transaction for an option it had purchased, it would have to exercise the option to realize any profit. The inability to enter into a closing purchase transaction for a covered call option written by a Portfolio could cause material losses because the Portfolio would be unable to sell the investment used as cover for the written option until the option expires or is exercised.

          Options on Indexes. Puts and calls on indexes are similar to puts and calls on securities or futures contracts except that all settlements are in cash and gain or loss depends on changes in the index in question rather than on price movements in individual securities or futures contracts. When a Portfolio writes a call on an index, it receives a premium and agrees that, prior to the expiration date, the purchaser of the call, upon exercise of the call, will receive from the Portfolio an amount of cash if the closing level of the index upon which the call is based is greater than the exercise price of the call. The amount of cash is equal to the difference between the closing price of the index and the exercise price of the call times a specified multiple (multiplier), which determines the total dollar value for each point of such difference. When a Portfolio buys a call on an index, it pays a premium and has the same rights as to such call as are indicated above. When a Portfolio buys a put on an index, it pays a premium and has the right, prior to the expiration date, to require the seller of the put, upon the Portfolio’s exercise of the put, to deliver to the Portfolio an amount of cash if the closing level of the index upon which the put is based is less than the exercise price of the put, which amount of cash is determined by the multiplier, as described above for calls. When a Portfolio writes a put on an index, it receives a premium and the purchaser of the put has the right, prior to the expiration date, to require the Portfolio to deliver to it an amount of cash equal to the difference between the closing level of the index and the exercise price times the multiplier if the closing level is less than the exercise price.

          Risks of Options on Indexes. The risks of investment in options on indexes may be greater than options on securities. Because index options are settled in cash, when a Portfolio writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and holding the underlying securities. A Portfolio can offset some of the risk of writing a call index option by holding a diversified portfolio of securities similar to those on which the underlying index is based. However, a Portfolio cannot, as a practical matter, acquire and hold a portfolio containing exactly the same securities as underlie the index and, as a result, bears a risk that the value of the securities held will vary from the value of the index.

          Even if a Portfolio could assemble a portfolio that exactly reproduced the composition of the underlying index, it still would not be fully covered from a risk standpoint because of the timing risk inherent in writing index options. When an index option is exercised, the amount of cash that the holder is entitled to receive is determined by the difference between the exercise price and the closing index level on the date when the option is exercised. As with other kinds of options, a Portfolio as the call writer will not learn that the portfolio has been assigned until the next business day at the earliest. The time lag between exercise and notice of assignment poses no risk for the writer of a covered call on a specific underlying security, such as a common stock, because there the writer’s obligation is to deliver the underlying security, not to pay its value as of a fixed time in the past. So long as the writer already owns the underlying security, it can satisfy its settlement obligations by simply delivering it, and the risk that its value may have declined since the exercise date is borne by the exercising holder. In contrast, even if the writer of an index call holds securities that exactly match the composition of the underlying index, it will not be able to satisfy its assignment obligations by delivering those securities against payment of the exercise price. Instead, it will be required to pay cash in an amount based on the closing index value on the exercise date. By the time it learns that it has been assigned, the index may have declined, with a corresponding decline in the value of its portfolio. This timing risk is an inherent limitation on the ability of index call writers to cover their risk exposure by holding securities positions.

          If a Portfolio has purchased an index option and exercises it before the closing index value for that day is available, it runs the risk that the level of the underlying index may subsequently change. If such a change causes the exercised option to fall out-of-the-money, the Portfolio will be required to pay the difference between the closing index value and the exercise price of the option (times the applicable multiplier) to the assigned writer.

          OTC Options. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size and strike price, the terms of OTC options (options not traded on an exchange) generally are established through negotiation with the other party to the option contract. While this type of arrangement allows a Portfolio great flexibility to tailor the option to its needs, OTC options generally involve greater risk than exchange-traded options, which are guaranteed by the clearing organization of the exchanges where they are traded.

          Generally, OTC foreign currency options used by the Portfolios are European-style options. This means that the option is only exercisable immediately prior to its expiration. This is in contrast to American-style options, which are exercisable at any time prior to the expiration date of the option.

          Futures Contracts and Options on Futures Contracts. The purchase of futures contracts or call options on futures contracts can serve as a long hedge, and the sale of futures contracts or the purchase of put options on a futures contract can serve as a short hedge. Writing call options on futures contracts can serve as a limited short hedge, using a strategy similar to that used for writing call options on securities or indexes. Similarly, writing put options on futures contracts can serve as a limited long hedge. Futures contracts and options on futures contracts can also be purchased and sold to attempt to enhance income or yield.

          In addition, futures contract strategies can be used to manage the average duration of a Portfolio’s fixed-income portfolio. If a Portfolio’s Sub-Advisor wishes to shorten the average duration of the Portfolio’s fixed-income portfolio, the Portfolio may sell a debt futures contract or a call option thereon, or purchase a put option on that futures contract. If the Sub-Advisor wishes to lengthen the average duration of the Portfolio’s fixed-income portfolio, the Portfolio may buy a debt futures contract or a call option thereon, or sell a put option thereon.

          No price is paid upon entering into a futures contract. Instead, at the inception of a futures contract the Portfolio is required to deposit initial margin in an amount generally equal to 10% or less of the contract value. Margin must also be deposited when writing a call or put option on a futures contract, in accordance with applicable exchange rules. Unlike margin in securities transactions, initial margin on futures contracts does not represent a borrowing, but rather is in the nature of a performance bond or good-faith deposit that is returned to the Portfolio at the termination of the transaction if all contractual obligations have been satisfied. Under certain circumstances, such as periods of high volatility, the Portfolio may be required by an exchange to increase the level of its initial margin payment, and initial margin requirements might be increased generally in the future by regulatory action.

          Subsequent variation margin payments are made to and from the futures broker daily as the value of the futures position varies, a process known as marking-to-market. Variation margin does not involve borrowing, but rather represents a daily settlement of the Portfolio’s obligations to or from a futures broker. When a Portfolio purchases an option on a futures contract, the premium paid plus transaction costs is all that is at risk. In contrast, when a Portfolio purchases or sells a futures contract or writes a call or put option thereon, it is subject to daily variation margin calls that could be substantial in the event of adverse price movements. If the Portfolio has insufficient cash to meet daily variation margin requirements, it might need to sell securities at a time when such sales are disadvantageous.

          Purchasers and sellers of futures contracts and options on futures contracts can enter into offsetting closing transactions, similar to closing transactions on options, by selling or purchasing, respectively, an instrument identical to the instrument purchased or sold. Positions in futures contracts and options on futures contracts may be closed only on an exchange or board of trade that provides a secondary market. However, there can be no assurance that a liquid secondary market will exist for a particular contract at a particular time. In such event, it may not be possible to close a futures contract or options position.

          Under certain circumstances, futures contracts exchanges may establish daily limits on the amount that the price of a futures contract or an option on a futures contract can vary from the previous day’s settlement price; once that limit is reached, no trades may be made that day at a price beyond the limit. Daily price limits do not limit potential losses because prices could move to the daily limit for several consecutive days with little or no trading, thereby preventing liquidation of unfavorable positions.

          If a Portfolio were unable to liquidate a futures contract or an option on a futures position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Portfolio would continue to be subject to market risk with respect to the position. In addition, except in the case of purchased options, the Portfolio would continue to be required to make daily variation margin payments and might be required to maintain the position being hedged by the futures contract or option or to maintain cash or liquid assets in an account.

          Risks of Futures Contracts and Options Thereon. The ordinary spreads between prices in the cash and futures markets (including the options on futures market), due to differences in the natures of those markets, are subject to the following factors which may create distortions. First, all participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions, which could distort the normal relationship between the cash and futures markets. Second, the liquidity of the futures market depends on participants entering into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced, thus producing distortion. Third, from the point of view of speculators, the deposit requirements in the futures market are less onerous than margin requirements in the securities market. Therefore, increased participation by speculators in the futures market may cause temporary price distortions. Due to the possibility of distortion, a correct forecast of general interest rate, currency exchange rate or stock market trends by the Portfolio’s Sub-Advisor may still not result in a successful transaction. The Sub-Advisor may be incorrect in its expectations as to the extent of various interest rate, currency exchange rate or stock market movements or the time span within which the movements take place.

          Index Futures. The risk of imperfect correlation between movements in the price of an index futures contract and movements in the price of the securities that are the subject of the hedge increases as the composition of a Portfolio’s holdings diverges from the securities included in the applicable index. The price of the index futures contract may move more than or less than the price of the securities being hedged. If the price of the index futures contract moves less than the price of the securities that are the subject of the hedge, the hedge will not be fully effective but, if the price

of the securities being hedged has moved in an unfavorable direction, the Portfolio would be in a better position than if it had not hedged at all. If the price of the securities being hedged has moved in a favorable direction, this advantage will be partially offset by the futures contract. If the price of the futures contract moves more than the price of the securities, the Portfolio will experience either a loss or a gain on the futures contract that will not be completely offset by movements in the price of the securities that are the subject of the hedge. To compensate for the imperfect correlation of movements in the price of the securities being hedged and movements in the price of the index futures contract, a Portfolio may buy or sell index futures contracts in a greater dollar amount than the dollar amount of the securities being hedged if the historical volatility of the prices of the securities being hedged is more than the historical volatility of the prices of the securities included in the index. It is also possible that, where a Portfolio has sold index futures contracts to hedge against decline in the market, the market may advance and the value of the securities held in the portfolio may decline. If this occurred, the Portfolio would lose money on the futures contract and also experience a decline in value of its portfolio securities. However, while this could occur for a very brief period or to a very small degree, over time the value of a diversified portfolio of securities will tend to move in the same direction as the market indexes on which the futures contracts are based.

          Where index futures contracts are purchased to hedge against a possible increase in the price of securities before a Portfolio is able to invest in them in an orderly fashion, it is possible that the market may decline instead. If the Portfolio then concludes not to invest in them at that time because of concern as to possible further market decline or for other reasons, it will realize a loss on the futures contract that is not offset by a reduction in the price of the securities it had anticipated purchasing.

          To the extent that a Portfolio enters into futures contracts, options on futures contracts or options on foreign currencies traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish those positions (excluding the amount by which options are in-the-money at the time of purchase) will not exceed 5% of the liquidation value of the Portfolio’s holdings, after taking into account unrealized profits and unrealized losses on any contracts the Portfolio has entered into. (In general, a call option on a futures contract is in-the-money if the value of the underlying futures contract exceeds the strike, i.e., exercise, price of the call; a put option on a futures contract is in-the-money if the value of the underlying futures contract is exceeded by the strike price of the put.) This policy does not limit to 5% the percentage of the Portfolio’s total assets that are at risk in futures contracts, options on futures contracts and currency options.

          Foreign Currency Hedging Strategies – Special Considerations. International II Portfolio may use options and futures contracts on foreign currencies (including the euro), as described above, and forward foreign currency contracts (forward currency contracts), as described below, to attempt to hedge against movements in the values of the foreign currencies in which the Portfolio’s securities are denominated or to attempt to enhance income or yield. Currency hedges can protect against price movements in a security that the Portfolio owns or intends to acquire that are attributable to changes in the value of the currency in which it is denominated. Such hedges do not, however, protect against price movements in the securities that are attributable to other causes.

          International II Portfolio might seek to hedge against changes in the value of a particular currency when no Financial Instruments on that currency are available or such Financial Instruments are more expensive than certain other Financial Instruments. In such cases, the Portfolio may seek to hedge against price movements in that currency by entering into transactions using Financial Instruments on another currency or a basket of currencies, the values of which its Sub-Advisor believes will have a high degree of positive correlation to the value of the currency being hedged. The risk that movements in the price of the Financial Instrument will not correlate perfectly with movements in the price of the currency subject to the hedging transaction is magnified when this strategy is used.

          The value of Financial Instruments on foreign currencies depends on the value of the underlying currency relative to the U.S. dollar. Because foreign currency transactions occurring in the interbank market might involve substantially larger amounts than those involved in the use of such Financial Instruments, International Stock Value Portfolio could be disadvantaged by having to deal in the odd lot market (generally consisting of transactions of less than $1 million) for the underlying foreign currencies at prices that are less favorable than for round lots.

          There is no systematic reporting of last sale information for foreign currencies or any regulatory requirement that quotations available through dealers or other market sources be firm or revised on a timely basis. Quotation information generally is representative of very large transactions in the interbank market and thus might not reflect odd-lot transactions where rates might be less favorable. The interbank market in foreign currencies is a global, round-the-clock market. To the extent the U.S. options or futures markets are closed while the markets for the underlying currencies remain open, significant price and rate movements might take place in the underlying markets that cannot be reflected in the markets for the Financial Instruments until they reopen.

          Settlement of transactions involving foreign currencies might be required to take place within the country issuing the underlying currency. Thus, the Portfolio might be required to accept or make delivery of the underlying foreign currency in accordance with any U.S. or foreign regulations regarding the maintenance of foreign banking arrangements by U.S. residents and might be required to pay any fees, taxes and charges associated with such delivery assessed in the issuing country.

          Forward Currency Contracts. International II Portfolio may enter into forward currency contracts to purchase or sell foreign currencies for a fixed amount of U.S. dollars or another foreign currency. A forward currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days (term) from the date of the forward currency contract agreed upon by the parties, at a price set at the time of the forward currency contract. These forward currency contracts are traded directly between currency traders (usually large commercial banks) and their customers.

          Such transactions may serve as long hedges; for example, International II Portfolio may purchase a forward currency contract to lock in the U.S. dollar price of a security denominated in a foreign currency that the Portfolio intends to acquire. Forward currency contract transactions may also serve as short hedges; for example, the Portfolio may sell a forward currency contract to lock in the U.S. dollar equivalent of the proceeds from the anticipated sale of a security or a dividend or interest payment denominated in a foreign currency.

          International II Portfolio may also use forward currency contracts to hedge against a decline in the value of existing investments denominated in foreign currency. For example, if the Portfolio owned securities denominated in euros, it could enter into a forward currency contract to sell euros in return for U.S. dollars to hedge against possible declines in the euro’s value. Such a hedge, sometimes referred to as a position hedge, would tend to offset both positive and negative currency fluctuations, but would not offset changes in security values caused by other factors. The Portfolio could also hedge the position by selling another currency expected to perform similarly to the euro. This type of hedge, sometimes referred

to as a proxy hedge, could offer advantages in terms of cost, yield or efficiency, but generally would not hedge currency exposure as effectively as a simple hedge into U.S. dollars. Proxy hedges may result in losses if the currency used to hedge does not perform similarly to the currency in which the hedged securities are denominated.

          International II Portfolio also may use forward currency contracts to attempt to enhance income or yield. The Portfolio could use forward currency contracts to increase its exposure to foreign currencies that its Sub-Adviser believes might rise in value relative to the U.S. dollar, or shift its exposure to foreign currency fluctuations from one country to another. For example, if the Portfolio owned securities denominated in a foreign currency and its Sub-Adviser believed that currency would decline relative to another currency, it might enter into a forward currency contract to sell an appropriate amount of the first foreign currency, with payment to be made in the second foreign currency.

          The cost to International II Portfolio of engaging in forward currency contracts varies with factors such as the currency involved, the length of the contract period and the market conditions then prevailing. Because forward currency contracts are usually entered into on a principal basis, no fees or commissions are involved. When the Portfolio enters into a forward currency contract, it relies on the counterparty to make or take delivery of the underlying currency at the maturity of the contract. Failure by the counterparty to do so would result in the loss of any expected benefit of the transaction.

          As is the case with futures contracts, purchasers and sellers of forward currency contracts can enter into offsetting closing transactions by selling or purchasing, respectively, an instrument identical to the instrument purchased or sold. Secondary markets generally do not exist for forward currency contracts, with the result that closing transactions generally can be made for forward currency contracts only by negotiating directly with the counterparty. Thus, there can be no assurance that the Portfolio will in fact be able to close out a forward currency contract at a favorable price prior to maturity. In addition, in the event of insolvency of the counterparty, the Portfolio might be unable to close out a forward currency contract at any time prior to maturity. In either event, the Portfolio would continue to be subject to market risk with respect to the position, and would continue to be required to maintain a position in securities denominated in the foreign currency or to maintain cash or liquid assets in an account.

          The precise matching of forward currency contract amounts and the value of the securities involved generally will not be possible because the value of such securities, measured in the foreign currency, will change after the forward currency contract has been established. Thus, the Portfolio might need to purchase or sell foreign currencies in the spot (cash) market to the extent such foreign currencies are not covered by forward currency contracts. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain.

          Normally, consideration of the prospect for currency parities will be incorporated into the longer term investment decisions made with regard to overall diversification strategies. However, International II Portfolio’s Sub-Advisor believes that it is important to have the flexibility to enter into such forward currency contracts when it determines that the best interests of the Portfolio will be served.

          Successful use of forward currency contracts depends on the skill of International II Portfolio’s Sub-Advisor in analyzing and predicting currency values. Forward currency contracts may substantially change the Portfolio’s exposure to changes in currency exchange rates and could result in losses to the Portfolio if currencies do not perform as the Sub-Advisor anticipates. There is no assurance that the Sub-Advisor’s use of forward currency contracts will be advantageous to the Portfolio or that the Sub-Advisor will hedge at an appropriate time.

          Combined Positions. A Portfolio may purchase and write options in combination with each other, or in combination with futures contracts or forward contracts, to adjust the risk and return characteristics of its overall position. For example, a Portfolio may purchase a put option and write a call option on the same underlying instrument, in order to construct a combined position whose risk and return characteristics are similar to selling a futures contract. Another possible combined position would involve writing a call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out.

          Turnover. A Portfolio’s options and futures contracts activities may affect its turnover rate and brokerage commission payments. The exercise of calls or puts written by a Portfolio, and the sale or purchase of futures contracts, may cause it to sell or purchase related investments, thus increasing its turnover rate. Once a Portfolio has received an exercise notice on an option it has written, it cannot effect a closing transaction in order to terminate its obligation under the option and must deliver or receive the underlying securities at the exercise price. The exercise of puts purchased by a Portfolio may also cause the sale of related investments, also increasing turnover; although such exercise is within the Portfolio’s control, holding a protective put might cause it to sell the related investments for reasons that would not exist in the absence of the put. A Portfolio will pay a brokerage commission each time it buys or sells a put or call or purchases or sells a futures contract. Such commissions may be higher than those that would apply to direct purchases or sales.

     Repurchase Agreements

          Each Portfolio may purchase securities subject to repurchase agreements, subject to its limitation on investment in illiquid investments. See Investment Restrictions and Limitations. A repurchase agreement is an instrument under which a Portfolio purchases a security and the seller (normally a commercial bank or broker-dealer) agrees, at the time of purchase, that it will repurchase the security at a specified time and price. The amount by which the resale price is greater than the purchase price reflects an agreed-upon market interest rate effective for the period of the agreement. The return on the securities subject to the repurchase agreement may be more or less than the return on the repurchase agreement.

          The majority of repurchase agreements in which a Portfolio will engage are overnight transactions, and the delivery pursuant to the resale typically will occur within one to five days of the purchase. The primary risk is that a Portfolio may suffer a loss if the seller fails to pay the agreed-upon amount on the delivery date and that amount is greater than the resale price of the underlying securities and other collateral held by the Portfolio. In the event of bankruptcy or other default by the seller, there may be possible delays and expenses in liquidating the underlying securities or other collateral, decline in their value or loss of interest. The return on such collateral may be more or less than that from the repurchase agreement. A Portfolio’s repurchase agreements will be structured so as to fully collateralize the loans. In other words, the value of the underlying securities, which will be held by the Portfolio’s custodian bank or by a third party that qualifies as a custodian under section 17(f) of the Investment Company Act of 1940, as amended (1940 Act), is and, during the entire term of the agreement, will remain at least equal to the value of the loan, including the accrued interest earned thereon. Repurchase agreements are entered into only with those entities approved by WRIMCO.

     Restricted Securities

          Each Portfolio may invest in restricted securities. Restricted securities are securities that are subject to legal or contractual restrictions on resale. However, restricted securities generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the Securities Act of 1933, as amended, or in a registered public offering. Where registration is required, a Portfolio may be obligated to pay all or part of the registration expense and a considerable period may elapse between the time it decides to seek registration and the time the Portfolio may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, a Portfolio might obtain a less favorable price than prevailed when it decided to seek registration of the security.

          There are risks associated with investments in restricted securities in that there can be no assurance of a ready market for resale. Also, the contractual restrictions on resale might prevent a Portfolio from reselling the securities at a time when such sale would be desirable. Restricted securities that are traded in foreign markets are often subject to restrictions that prohibit resale to U.S. persons or entities or permit sales only to foreign broker-dealers who agree to limit their resale to such persons or entities. The buyer of such securities must enter into an agreement that, usually for a limited period of time, it will resell such securities subject to such restrictions. Restricted securities in which a Portfolio seeks to invest need not be listed or admitted to trading on a foreign or domestic exchange and may be less liquid than listed securities. Certain restricted securities, for example Rule 144A securities, may be determined to be liquid in accordance with guidelines adopted by the Board of Directors. See Illiquid Investments.

     Short Sales Against The Box

          Each Portfolio may sell securities short against the box; provided, however, that the Portfolio’s aggregate short sales prices may not, at the time of any short sale, exceed 10% of its total assets. Whereas a short sale is the sale of a security a Portfolio does not own, a short sale is against the box if, at all times during which the short position is open, the Portfolio owns at least an equal amount of the securities sold short or other securities convertible into or exchangeable without further consideration for securities of the same issue as the securities sold short. Short sales against the box are typically used by sophisticated investors to defer recognition of capital gains or losses. None of the Portfolios has any present intention to sell securities short in this fashion.

     U.S. Government Securities

          Securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities (U.S. Government securities) are high quality debt instruments issued or guaranteed as to principal or interest by the U.S. Treasury or an agency or instrumentality of the U.S. Government. These securities include Treasury Bills (which mature within one year of the date they are issued), Treasury Notes (which have maturities of one to ten years) and Treasury Bonds (which generally have maturities of more than ten years). All such Treasury securities are backed by the full faith and credit of the United States.

          U.S. Government agencies and instrumentalities that issue or guarantee securities include, but are not limited to, the Federal Housing Administration, Fannie Mae (also known as the Federal National Mortgage Association), Farmers Home Administration, Export-Import Bank of the United States, Small Business Administration, Government National Mortgage Association (Ginnie Mae), General Services Administration, Central Bank for Cooperatives, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation (Freddie Mac), Farm Credit Banks, Maritime Administration, the Tennessee Valley Authority, the Resolution Funding Corporation and the Student Loan Marketing Association.

          Securities issued or guaranteed by U.S. Government agencies and instrumentalities are not always supported by the full faith and credit of the United States. Some, such as securities issued by the Federal Home Loan Banks, are backed by the right of the agency or instrumentality to borrow from the Treasury. Other securities, such as securities issued by Fannie Mae, are supported only by the credit of the instrumentality and by a pool of mortgage assets. If the securities are not backed by the full faith and credit of the United States, the owner of the securities must look principally to the agency issuing the obligation for repayment and may not be able to assert a claim against the United States in the event that the agency or instrumentality does not meet its commitment.

     Variable or Floating Rate Instruments

          Variable or floating rate instruments (including notes purchased directly from issuers) bear variable or floating interest rates and may carry rights that permit holders to demand payment of the unpaid principal balance plus accrued interest from the issuers or certain financial intermediaries on dates prior to their stated maturities. Floating rate securities have interest rates that change whenever there is a change in a designated base rate while variable rate instruments provide for a specified periodic adjustment in the interest rate. These formulas are designed to result in a market value for the instrument that approximates its par value.

     Warrants and Rights

          Each Portfolio may invest in warrants and rights. Warrants are options to purchase equity securities at specified prices for a specific period of time. The prices do not necessarily move parallel to the prices of the underlying securities. Rights are similar to warrants but normally have a short duration and are distributed directly by the issuer to its shareholders. Rights and warrants have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer. Warrants and rights are highly volatile and, therefore, more susceptible to sharp declines in value than the underlying security might be. They are also generally less liquid than an investment in the underlying shares.

          Warrants With Cash Extractions. International II Portfolio may also invest up to 5% of its total assets in warrants used in conjunction with the cash extraction method. If an investor wishes to replicate an underlying share, the investor can use the warrant with cash extraction method by purchasing warrants and holding cash. The cash component would be determined by subtracting the market price of the warrant from the underlying share price.

          For example, assume one share for company Alpha has a current share price of $40 and issued warrants can be converted one for one share at an exercise price of $31 exercisable two years from today. Also assume that the market price of the warrant is $10 ($40 – $31 + $1) because investors are willing to pay a premium ($1) for previously stated reasons. If an investor wanted to replicate an underlying share by engaging in a warrant with cash extraction strategy, the amount of cash the investor would need to hold for every warrant would be $30 ($40 – $10 = $30). A

warrant with cash extraction is, thus, simply a synthetically created quasi-convertible bond.

          If an underlying share issues no or a low dividend and has an associated warrant with a market price that is low relative to its share price, a warrant with cash extraction may provide attractive cash yields and minimize capital loss risk, provided the underlying share is also considered a worthy investment. For example, assume Alpha’s share is an attractive investment opportunity and its share pays no dividend. Given the information regarding Alpha provided above, also assume that short-term cash currently yields 5% per year and that the investor plans to hold the investment at least two years, barring significant near-term capital appreciation. If the share price were to fall below $30, the warrant with cash extraction strategy would yield a lower loss than the underlying share because an investor cannot lose more than the purchase cost of the warrant (capital risk minimized). The cash component for this strategy would yield $3.08 after two years (compound interest). The total value of the underlying investment would be $43.08 versus $40.00 for the non-yielding underlying share (attractive yield). Finally, it is important to note that this strategy will not be pursued if it is not economically more attractive than underlying shares.

     When-Issued and Delayed-Delivery Transactions

          International II Portfolio may purchase securities in which it may invest on a when-issued or delayed-delivery basis or sell them on a delayed-delivery basis. In either case, payment and delivery for the securities take place at a future date. The securities so purchased or sold by the Portfolio are subject to market fluctuation; their value may be less or more when delivered than the purchase price paid or received. When purchasing securities on a when-issued or delayed-delivery basis, the Portfolio assumes the rights and risks of ownership, including the risk of price and yield fluctuations. No interest accrues to the Portfolio until delivery and payment are completed. When the Portfolio makes a commitment to purchase securities on a when-issued or delayed-delivery basis, it will record the transaction and thereafter reflect the value of the securities in determining its NAV per share. When the Portfolio sells a security on a delayed-delivery basis, the Portfolio does not participate in further gains or losses with respect to the security. When the Portfolio makes a commitment to sell securities on a delayed basis, it will record the transaction and thereafter value the securities at the sales price in determining the Portfolio’s NAV per share. If the other party to a delayed-delivery transaction fails to deliver or pay for the securities, the Portfolio could miss a favorable price or yield opportunity, or could suffer a loss.

          Ordinarily, International II Portfolio purchases securities on a when-issued or delayed-delivery basis with the intention of actually taking delivery of the securities. However, before the securities are delivered and before it has paid for them (the settlement date), the Portfolio may sell the securities if its Sub-Adviser decided it was advisable to do so for investment reasons. The Portfolio will hold aside or segregate cash or other securities, other than those purchased on a when-issued or delayed-delivery basis, at least equal in value to the amount it will have to pay on the settlement date; these other securities may, however, be sold at or before the settlement date to pay the purchase price of the when-issued or delayed-delivery securities.

     Currency Exchange Transactions

          Spot Exchange Transactions. International II Portfolio usually effects currency exchange transactions on a spot (i.e., cash) basis at the spot rate prevailing in the foreign exchange market. However, some price spread on currency exchange will be incurred when the Portfolio converts assets from one currency to another. Further, the Portfolio may be affected either unfavorably or favorably by fluctuations in the relative rates of exchange between the currencies of different nations. For example, in order to realize the value of a foreign investment, the Portfolio must convert that value, as denominated in its foreign currency, into U.S. dollars using the applicable currency exchange rate. The exchange rate represents the current price of a U.S. dollar relative to that foreign currency; that is, the amount of such foreign currency required to buy one U.S. dollar. If the Portfolio holds a foreign security which has appreciated in value as measured in the foreign currency, the level of appreciation actually realized by the Portfolio may be reduced or even eliminated if the foreign currency has decreased in value relative to the U.S. dollar subsequent to the date of purchase. In such a circumstance, the cost of a U.S. dollar purchased with that foreign currency has gone up and the same amount of foreign currency purchases fewer dollars than at an earlier date.

          Forward Currency Contracts. International II Portfolio also has the authority to deal in forward currency contracts between currencies of the different countries in which it may invest for speculative purposes. This is accomplished through contractual agreements to purchase or sell a specified currency at a specified future date and price set at the time of the contract. Forward currency contracts are individually negotiated and privately traded by currency traders and their customers. These forward currency contracts may involve the sale of U.S. dollars and the purchase of a foreign currency, or may be foreign cross-currency contracts involving the sale of one foreign currency and the purchase of another foreign currency (such foreign cross-currency contracts may be considered a hedging rather than a speculative strategy if the Portfolio’s commitment to purchase the new (more favorable) currency is limited to the market value of the Portfolio’s securities denominated in the old (less favorable) currency - see Foreign Currency Hedging Strategies, above). Because these transactions are not entered into for hedging purposes, the Portfolio’s custodian bank maintains, in a separate account of the Portfolio, liquid assets, such as cash, short-term securities and other liquid securities (marked to the market daily), having a value equal to, or greater than, any commitments to purchase currency on a forward basis. The prediction of currency movements is extremely difficult and the successful execution of a speculative strategy is highly uncertain.

     Investments In Russia

          International II Portfolio may invest in securities of Russian companies, which involves risks and special considerations not typically associated with investing in United States securities markets. Since the breakup of the Soviet Union at the end of 1991, Russia has experienced dramatic political and social change. The political system in Russia is emerging from a long history of extensive state involvement in economic affairs. The country is undergoing a rapid transition from a centrally controlled command system to a market-oriented, democratic model. The Portfolio may be affected unfavorably by political or diplomatic developments, social instability, changes in government policies, taxation and interest rates, currency repatriation restrictions and other political and economic developments in the law or regulations in Russia and, in particular, the risks of expropriation, nationalization and confiscation of assets and changes in legislation relating to foreign ownership.

          The planned economy of the former Soviet Union was run with qualitatively different objectives and assumptions from those prevalent in a market system and Russian businesses do not have any recent history of operating within a market-oriented economy. In general, relative to companies operating in Western economies, companies in Russian are characterized by a lack of: (i) management with experience of operating in a market economy; (ii) modern technology; and, (iii) a sufficient capital base with which to develop and expand their operations. It is unclear what will be the future effect on Russian companies, if any, of Russia’s continued attempts to move toward a more market-oriented economy. Russia’s economy has experienced severe economic recession, if not depression, since 1990 during which time the economy has been characterized by high

rates of inflation, high rates of unemployment, declining gross domestic product, deficit government spending, and a devaluing currency. The economic reform program has involved major disruptions and dislocations in various sectors of the economy, and those problems have been exacerbated by growing liquidity problems. Further, Russia presently receives significant financial assistance from a number of countries through various programs. To the extent these programs are reduced or eliminated in the future, Russian economic development may be adversely impacted.

          The Russian securities markets are substantially smaller, less liquid and significantly more volatile than the securities markets in the United States. In addition, there is little historical data on these securities markets because they are of recent origin. A substantial proportion of securities transactions in Russia are privately negotiated outside of stock exchanges and over-the-counter markets. A limited number of issuers represent a disproportionately large percentage of market capitalization and trading volume. Although evolving rapidly, even the largest of Russia’s stock exchanges are not well developed compared to Western stock exchanges. The actual volume of exchange-based trading in Russia is low and active on-market trading generally occurs only in the shares of a few private companies. Most secondary market trading of equity securities occurs through over-the-counter trading facilitated by a growing number of licensed brokers. Shares are traded on the over-the-counter market primarily by the management of enterprises, investment funds, short-term speculators and foreign investors. The securities of Russian companies are mostly traded over-the-counter and, despite the large number of stock exchanges, there is still no organized public market for such securities. This may increase the difficulty of valuing the Portfolio’s investments. No established secondary markets may exist for many of the securities in which the Portfolio may invest. Reduced secondary market liquidity may have an adverse effect on market price and the Portfolio’s ability to dispose of particular instruments when necessary to meet its liquidity requirements or in response to specific economic events such as a deterioration in the creditworthiness of the issuer. Reduced secondary market liquidity for securities may also make it more difficult for the Portfolio to obtain accurate market quotations for purposes of valuing its portfolio and calculating its net asset value. Market quotations are generally available on many emerging country securities only from a limited number of dealers and may not necessarily represent firm bids of those dealers or prices for actual sales.

          Because of the recent formation of the securities markets as well as the underdeveloped state of the banking and telecommunications systems, settlement, clearing and registration transactions are subject to significant risks not normally associated with investments in the United States and other more developed markets. Ownership of shares (except where shares are held through depositories that meet the requirements of the 1940 Act) is defined according to entries in the company’s share register and normally evidenced by extracts from the register or in certain limited cases by formal share certificates. However, there is not a central registration system and these services are carried out by the companies themselves or by registrars located throughout Russia. These registrars are not necessarily subject to effective state supervision and its possible for the Portfolio to lose its registration through fraud, negligence and even mere oversight. The laws and regulations in Russia affecting Western investment business continue to evolve in an unpredictable manner. Russian laws and regulations, particularly those involving taxation, foreign investment and trade, title to property or securities, and transfer of title, applicable to the Portfolio’s activities are relatively new and can change quickly and unpredictably in a manner far more volatile than in the United States or other developed market economies. Although basic commercial laws are in place, they are often unclear or contradictory and subject to varying interpretation, and may at any time be amended, modified, repealed or replaced in a manner adverse to the interest of the Portfolio. There is still lacking a cohesive body of law and precedents normally encountered in business environments. Foreign investment in Russian companies is, in certain cases, legally restricted. Sometimes these restrictions are contained in constitutional documents of an enterprise that are not publicly available. Russian foreign investment legislation currently guarantees the right of foreign investors to transfer abroad income received on investments such as profits, dividends and interest payments. This right is subject to settlement of all applicable taxes and duties. However, more recent legislation governing currency regulation and control guarantees the right to export interest, dividends and other income on investments, but does not expressly permit the repatriation of capital from the realization of investments. Current practice is to recognize the right to repatriation of capital. Authorities currently do not attempt to restrict repatriation beyond the extent of the earlier law. No guarantee can be made, however, that amounts representing realization of capital of income will be capable of being remitted. If, for any reason, the Portfolio were unable to distribute an amount equal to substantially all of its investment company taxable income (as defined for U.S. tax purposes) within applicable time periods, the Portfolio would not qualify for the favorable U.S. federal income tax treatment afforded to regulated investment companies, or, even if it did so qualify, it might become liable for income and excise taxes on undistributed income.

          Russian courts lack experience in commercial dispute resolution and many of the procedural remedies for enforcement and protection of legal rights typically found in Western jurisdictions are not available in Russia. There remains uncertainty as to the extent to which local parties and entities, including Russian state authorities, will recognize the contractual and other rights of the parties with which they deal. Accordingly, there will be difficulty and uncertainty in the Portfolio’s ability to protect and enforce its rights against Russian state and private entities. There is also no assurance that the Russian courts will recognize or acknowledge that the Portfolio has acquired title to any property or securities in which the Portfolio invests, or that the Portfolio is the owner of any property or security held in the name of a nominee which has acquired such property or security on behalf of the Portfolio, because there is at present in Russia no reliable system or legal framework regarding the registration of titles. There can be no assurance that this difficulty in protecting and enforcing rights in Russia will not have a material adverse effect on the Portfolio and its operations. Difficulties are likely to be encountered enforcing judgments of foreign courts within Russia or of Russian courts in foreign jurisdictions due to the limited number of countries which have signed treaties for mutual recognition of court judgments with Russia.

     Investment Restrictions and Limitations

          Certain of the Portfolios’ investment restrictions and other limitations are described in this SAI. The following are each Portfolio’s fundamental investment limitations set forth in their entirety, which cannot be changed without shareholder approval. For this purpose, shareholder approval means the approval, at a meeting of Portfolio shareholders, by the lesser of (1) the holders of 67% or more of the Portfolio’s shares represented at the meeting, if more than 50% of the Portfolio’s outstanding shares are present in person or by proxy or (2) more than 50% of the Portfolio’s outstanding shares. A Portfolio may not:

(1)

With respect to 75% of the Portfolio’s total assets, purchase the securities of any issuer (other than obligations issued or guaranteed by the United States government, or any of its agencies or instrumentalities) if, as a result thereof, (a) more than 5% of the Portfolio’s total assets would be invested in the securities of such issuer, or (b) the Portfolio would hold more than 10% of the outstanding voting securities of such issuer;

(2)

Issue bonds or any other class of securities preferred over shares of the Portfolio in respect to the Portfolio’s assets or earnings, provided that the Portfolio may issue additional classes of shares in accordance with the Fund’s Articles of Incorporation;

(3)	Sell securities short (unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short) or purchase securities on margin, except that (1) this policy does not prevent the Portfolio from entering into short positions in foreign currency, futures contracts, options, forward contracts, swaps, caps, floors, collars and other financial instruments, (2) the Portfolio may obtain such short-term credits as are necessary for the clearance of transactions, and (3) the Portfolio may make margin payments in connection with futures contracts, options, forward contracts, swaps, caps, floors, collars and other financial instruments;
(4)	Borrow money, except that the Portfolio may borrow money for temporary, emergency or extraordinary purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of the value of its total assets less liabilities (other than borrowings). Any borrowings that come to exceed 33 1/3% of the Portfolio’s total assets less liabilities (other than borrowings) will be reduced within three days (not including Sundays and holidays) to the extent necessary to comply with the 33 1/3% limitation.
(5)	Underwrite securities issued by others, except to the extent that the Portfolio may be deemed to be an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities;
(6)	Purchase the securities of any issuer (other than obligations issued or guaranteed by the United States government or any of its agencies or instrumentalities) if, as a result, more than 25% of the Portfolio’s total assets (taken at current value) would be invested in the securities of issuers having their principal business activities in the same industry;
(7)	Invest in real estate limited partnerships or purchase or sell real estate unless acquired as a result of ownership of securities (but this shall not prevent the Portfolio from purchasing and selling securities issued by companies or other entities or investment vehicles that deal in real estate or interests therein, nor shall this prevent the Portfolio from purchasing interests in pools of real estate mortgage loans);
(8)	Purchase or sell physical commodities; however, this policy shall not prevent the Portfolio from purchasing and selling foreign currency, futures contracts, options, forward contracts, swaps, caps, floors, collars and other financial instruments; or
(9)	Make loans, except that the Portfolio may purchase or hold debt instruments in accordance with its investment objective and policies, lend Portfolio securities in accordance with its investment objective and policies and enter into repurchase agreements, to the extent allowed, and in accordance with the requirements, under the 1940 Act. For purposes of this restriction, the participation of the Portfolio in a credit facility whereby the Portfolio may directly lend and borrow money for temporary purposes, provided that the loans are made in accordance with an order of exemption from the SEC and any conditions thereto, will not be considered the making of a loan.

          The following investment restrictions are not fundamental and may be changed by the Fund’s Board of Directors without approval of the shareholders of the affected Portfolio:

(1)	At least 80% of International II Portfolio’s net assets will be invested, under normal market conditions, in foreign securities and at least 65% of its total assets will be invested in at least three different countries outside the United States. The Portfolio may not purchase a foreign security if, as a result, more than 75% of its total assets would be invested in issuers of any one foreign country. International II Portfolio will provide its shareholders with written notice at least 60 days prior to changing this policy;
(2)	At least 80% of Micro Cap Growth Portfolio’s net assets will be invested, under normal market conditions, in the equity securities of micro cap companies. For purposes of this restriction, a micro cap company is a company with a market capitalization that is within the range of capitalizations of companies included in the Russell 2000 Growth Index. Micro Cap Growth Portfolio will provide its shareholders with written notice at least 60 days prior to changing this policy;
(3)	At least 80% of Small Cap Value Portfolio’s net assets will be invested, under normal market conditions, in small cap domestic companies and foreign companies that are publicly traded in the United States. For purposes of this restriction, a small cap company is a company with a market capitalization that is within the range of capitalizations of companies included in the Lipper, Inc. Small Cap Category. Small Cap Value Portfolio will provide its shareholders with written notice at least 60 days prior to changing this policy;
(4)	International II Portfolio does not currently intend to invest more than 5% of its net assets in securities (including convertible securities) rated at least BBB by S&P or Baa by Moody’s and may not invest in securities below those ratings;
(5)	Each of Micro Cap Growth Portfolio and Small Cap Value Portfolio does not currently intend to invest more than 10% of its net assets in securities (including convertible securities) rated at least B- by S&P or B3 by Moody’s and may not invest in securities below those ratings;
(6)	Each of Micro Cap Growth Portfolio and Small Cap Value Portfolio currently intends to limit its investments in foreign securities that are not traded in the U.S., under normal market conditions, to no more than 10% of its total assets; for this purpose, ADRs are not considered foreign securities, although each of these Portfolios does not intend to invest more than 10% of its total assets in ADRs;
(7)	Micro Cap Growth Portfolio and Small Cap Value Portfolio each may invest up to 5% of its total assets in one or more types of DRs;
(8)	International II Portfolio may also invest up to 5% of its total assets in warrants used in conjunction with the cash extraction method;
(9)	No Portfolio may not purchase a security if, as a result, more than 15% of its net assets would consist of illiquid investments;
(10)	Each Portfolio may purchase shares of another investment company subject to the restrictions and limitations of the 1940 Act;
(11)	No Portfolio may participate on a joint, or a joint and several, basis in any trading account in any securities (but this does not prohibit the bunching of orders for the sale or purchase of a Portfolio’s securities with orders for other advisory accounts of the Portfolio’s Sub-Advisor, as applicable, to reduce brokerage commissions or otherwise to achieve best execution);
(12)	No Portfolio currently intends to invest in oil, gas, or other mineral exploration or development programs or leases;

(13)	No Portfolio will purchase any security while borrowings representing more than 5% of its total assets are outstanding;
(14)	To the extent that the Portfolio enters into futures contracts, options on futures contracts or options on foreign currencies traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish those positions (excluding the amount by which options are in-the-money at the time of purchase) will not exceed 5% of the liquidation value of the Portfolio, after taking into account unrealized profits and unrealized losses on any contracts the Portfolio has entered into. (In general, a call option on a futures contract is in-the-money if the value of the underlying futures contract is exceeded by the strike price of the put.) This policy does not limit to 5% the percentage of the Portfolio’s total assets that are at risk in futures contracts and options on futures contracts; and
(15)	Each Portfolio may purchase or sell options, futures contracts, options on futures contracts, forward currency contracts, swaps, caps, floors, collars, indexed securities and other derivative instruments only to the extent that the Portfolio is permitted to invest in the type of asset by which the return on, or value of, such instrument is measured.
(16)	The total market value of securities against which International II Portfolio may write, call or put options will not exceed 20% of the Portfolio’s total assets. In addition, the Portfolio will not commit more than 5% of its total assets to premiums when purchasing put or call options.
(17)	A Portfolio’s aggregate short sales prices may not, at the time of any short sale, exceed 10% of its total assets.

          An investment policy or limitation that states a maximum percentage of a Portfolio’s assets that may be so invested or prescribes quality standards is typically applied immediately after, and based on, the Portfolio’s acquisition of an asset. Accordingly, a subsequent change in the asset’s value, net assets, or other circumstances will not be considered when determining whether the investment complies with a Portfolio’s investment policies and limitations, except that International II Portfolio may not hold more than 5% of its net assets in securities that have been downgraded subsequent to purchase where such securities are not otherwise eligible for purchase by the Portfolio. (This is in addition to securities International II Portfolio may purchase under its other investment policies).

     Portfolio Turnover

          A Portfolio’s turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities for a year and dividing it by the monthly average of the market value of such securities during the year, excluding certain short-term securities. A Portfolio’s turnover rate may vary greatly from year to year as well as within a particular year.

INVESTMENT MANAGEMENT AND OTHER SERVICES

     The Management Agreement

          The Fund has an Investment Management Agreement (Management Agreement) with WRIMCO. Under the Management Agreement, WRIMCO is employed to supervise the investments of the Portfolios and provide investment advice to each Portfolio. The address of WRIMCO is 6300 Lamar Avenue, P. O. Box 29217, Shawnee Mission, Kansas 66201-9217.

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

          WRIMCO and its predecessor have served as investment manager to each of the registered investment companies in the Fund, Waddell & Reed Advisors Funds and Waddell & Reed InvestEd Portfolios, Inc. since 1940 or each company’s inception date, whichever is later. Waddell & Reed serves as principal underwriter for the investment companies in the Waddell & Reed Advisors Funds and Waddell & Reed InvestEd Portfolios, Inc. and acts as the distributor for Policies for which the Fund is the underlying investment vehicle.

          The Management Agreement with respect to each of International II Portfolio, Micro Cap Growth Portfolio and Small Cap Value Portfolio was approved by the Board of Directors at a meeting held June 24, 2003, and will continue in effect through September 30, 2003, unless sooner terminated. The Management Agreement provides that it may be renewed year to year, provided that any such renewal has been specifically approved, at least annually, by (i) the Board of Directors, or by a vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the applicable Portfolio, and (ii) the vote of a majority of the Directors who are not deemed to be interested persons (as defined in the 1940 Act) of the Fund or WRIMCO (the Disinterested Directors). The Management Agreement also provides that either party has the right to terminate it, without penalty, upon 60 days’ written notice to the other party, and that the Management Agreement automatically terminates in the event of its assignment (as defined in the 1940 Act).

          In connection with their consideration of the approval of the proposed Management Agreement as to each Portfolio, the Disinterested Directors met separately with independent legal counsel. In determining whether to approve the Management Agreement, the Disinterested Directors, as well as the Board of Directors, considered a number of factors, including: the nature and quality of investment management services to be provided to the Portfolio by WRIMCO, including WRIMCO’s investment management expertise and the personnel, resources and experience of WRIMCO and, WRIMCO’s anticipated retention of the Sub-Advisor; the cost to WRIMCO in providing its services under the Management Agreement and WRIMCO’s profitability; whether WRIMCO or any of its affiliates receive ancillary benefits that should be taken into consideration in evaluating the investment management fee payable by the Portfolio; and the investment management fees paid by comparable investment companies.

The Sub-Advisory Agreements

          International II Portfolio

          Templeton Investment Counsel, LLC (Templeton Counsel), a Delaware limited liability company with principal offices at 500 East Broward Boulevard, Fort Lauderdale, Florida 33394, has been retained under an investment sub-advisory agreement to provide investment advice for and, in general, conduct the investment management program of International II Portfolio, subject to the general control of the Board of Directors of the Fund. Templeton Counsel is an indirect, wholly owned subsidiary of Templeton Worldwide, Inc., Fort Lauderdale, Florida, which in turn is a wholly owned subsidiary of Franklin Resources, Inc.

          Franklin Resources, Inc. is a global investment organization operating as Franklin Templeton Investments. Franklin Templeton provides global and domestic investment management services through its Franklin, Templeton, Mutual Advisors and Fiduciary Trust subsidiaries with approximately 10 million shareholder accounts. With 51 offices in 28 countries, the company has over 50 years of investment experience and over $256 billion in assets under management as of January 31, 2003. Franklin Resources, Inc. is headquartered at One Franklin Parkway, P.O. Box 7777, San Mateo, California 94403-7777, and its common stock is listed on the New York Stock Exchange (NYSE) under the ticker symbol BEN.

          Templeton Counsel acts as investment sub-advisor to International II Portfolio under an Investment Sub-Advisory Agreement (the Templeton Agreement) with WRIMCO, which was approved by the Board of Directors at a meeting held June 24, 2003. The Templeton Agreement will continue in effect through September 30, 2003, unless sooner terminated.

          The Templeton Agreement will terminate automatically in the event of its assignment or upon the termination of the Management Agreement. In addition, the Templeton Agreement is terminable at any time, without penalty, by the Board of Directors of the Fund or by WRIMCO on 60 days’ written notice to Templeton Counsel, and by Templeton Counsel on 60 days’ written notice to WRIMCO. Unless sooner terminated, the Templeton Agreement shall continue in effect from year to year if approved at least annually either by the Board of Directors of the Fund, provided that in either event such continuance is also approved by the vote of a majority of the Directors who are not interested persons of any party to the Templeton Agreement, cast in person at a meeting called for the purpose of voting on such approval.

From the management fee received with respect to International II Portfolio, WRIMCO pays to Templeton Counsel a sub-advisory fee computed at an annual rate, which is a percentage of the average daily net assets of International II Portfolio, as follows: 0.70% of net assets up to $10 million, 0.65% of net assets over $10 million and up to $25 million, 0.55% of net assets over $25 million and up to $50 million, 0.50% of net assets over $50 million and up to $100 million, and 0.40% of net assets over $100 million.

          Micro Cap Growth Portfolio

          Wall Street Associates (WSA), a California corporation with principal offices at La Jolla Financial Building, Suite 100, 1200 Prospect Street, La Jolla, California 92037, has been retained under an investment sub-advisory agreement to provide investment advice for and, in general, conduct the investment management program of Micro Cap Growth Portfolio, subject to the general control of the Board of Directors of the Fund. WSA, founded in 1987, provides investment advisory services for institutional clients and high net worth individuals.

          WSA acts as investment sub-advisor to Micro Cap Growth Portfolio under an Investment Sub-Advisory Agreement (the WSA Agreement) with WRIMCO, which was approved by the Board of Directors at a meeting held June 24, 2003. The WSA Agreement will continue in effect through September 30, 2003, unless sooner terminated.

          The WSA Agreement will terminate automatically in the event of its assignment or upon the termination of the Management Agreement. In addition, the WSA Agreement is terminable at any time, without penalty, by the Board of Directors of the Fund or by WRIMCO on 60 days’ written notice to WSA, and by WSA on 60 days’ written notice to WRIMCO. Unless sooner terminated, the WSA Agreement shall continue in effect from year to year if approved at least annually either by the Board of Directors of the Fund, provided that in either event such continuance is also approved by the vote of a majority of the Directors who are not interested persons of any party to the WSA Agreement, cast in person at a meeting called for the purpose of voting on such approval.

          From the management fee received with respect to Micro Cap Growth Portfolio, WRIMCO pays to WSA a sub-advisory fee computed at an annual rate, which is a percentage of the average daily net assets of Micro Cap Growth Portfolio, as follows: 0.85% of net assets. The sub-advisory fee is accrued daily and payable in arrears on the last day of each calendar month.

          Small Cap Value Portfolio

          State Street Research & Management Company (State Street Research), a Delaware corporation with offices at One Financial Center, Boston, Massachusetts 02111-2690, has been retained under an investment sub-advisory agreement to provide investment advice for and, in general, conduct the investment management program of Small Cap Value Portfolio, subject to the general control of the Board of Directors of the Fund.

          State Street Research was founded by Paul Cabot, Richard Saltonstall and Richard Paine to serve as investment adviser to one the nation’s first mutual funds, presently known as State Street Research Investment Trust, which they formed in 1924. Their investment management philosophy emphasized comprehensive fundamental research and analysis, including meetings with the management of companies under consideration for investment. State Street Research’s portfolio management group has extensive investment industry experience managing equity and debt securities. State Street Research is a wholly owned subsidiary of Metropolitan Life Insurance Company.

          State Street Research acts as investment sub-advisor to Small Cap Value Portfolio under an Investment Sub-Advisory Agreement (the State Street Research Agreement) with WRIMCO, which was approved by the Board of Directors at a meeting held June 24, 2003. The State Street Research Agreement will continue in effect through September 30, 2003, unless sooner terminated.

          The State Street Research Agreement will terminate automatically in the event of its assignment or upon the termination of the Management Agreement. In addition, the State Street Research Agreement is terminable at any time, without penalty, by the Board of Directors of the Fund or by WRIMCO on 60 days’ written notice to State Street Research, and by State Street Research on 60 days’ written notice to WRIMCO. Unless sooner

terminated, the State Street Research Agreement shall continue in effect from year to year if approved at least annually either by the Board of Directors of the Fund, provided that in either event such continuance is also approved by the vote of a majority of the Directors who are not interested persons of any party to the State Street Research Agreement, cast in person at a meeting called for the purpose of voting on such approval.

          From the management fee received with respect to Small Cap Value Portfolio, WRIMCO pays to State Street Research a sub-advisory fee computed at an annual rate, which is a percentage of the average daily net assets of Small Cap Value Portfolio, as follows: 0.65% of net assets up to $500 million; 0.60% of net assets up to $1 billion; and 0.50% on all assets over $1 billion. The sub-advisory fee is accrued daily and payable in arrears on the last day of each calendar month.

Accounting Services

          The Management Agreement permits WRIMCO or an affiliate of WRIMCO to enter into a separate agreement for accounting services (Accounting Services Agreement) with the Fund. The Management Agreement contains detailed provisions as to the matters to be considered by the Fund’s Directors prior to approving any Accounting Services Agreement.

          Under the Accounting Services Agreement entered into between the Fund and Waddell & Reed Services Company (WRSCO), a subsidiary of Waddell & Reed, WRSCO provides the Fund with bookkeeping and accounting services and assistance including maintenance of the Fund’s records, pricing of the Portfolios’ shares, preparation of prospectuses for existing shareholders, preparation of proxy statements and certain shareholder reports. A new Accounting Services Agreement, or amendments to an existing one, may be approved by the Fund’s Board of Directors without shareholder approval.

     Payments by the Fund for Management and Accounting Services

          Under the Management Agreement, for WRIMCO’s management services to each Portfolio, the Fund pays WRIMCO a fee as described in the Prospectus. The Fund accrues and pays this fee daily. The Portfolios have not been in operation prior to the date of this SAI; therefore, no management fees were paid to WRIMCO for the Portfolios for the period ended December 31, 2002.

          Under the Accounting Services Agreement, the Fund pays WRSCO a monthly fee of one-twelfth of the annual fee shown in the following table, based on the assets of each Portfolio.

Accounting Services Fee

Average Net Asset Level	Annual Fee
(all dollars in millions)	for Each Portfolio
From $0 to $10	$	0
From $10 to $25	$	11,000
From $25 to $50	$	22,000
From $50 to $100	$	33,000
From $100 to $200	$	44,000
From $200 to $350	$	55,000
From $350 to $550	$	66,000
From $550 to $750	$	77,000
From $750 to $1,000	$	93,500
$1,000 and Over	$	110,000

          Since the Fund pays a management fee for investment supervision and an accounting services fee for accounting services as discussed above, WRIMCO and WRSCO, respectively, pay all of their own expenses in providing these services. Waddell & Reed and its affiliates pay the Fund’s Directors and officers who are affiliated with WRIMCO and Waddell & Reed. The Fund pays the fees and expenses of the Fund’s other Directors. The Fund pays all of its other expenses. These include the costs of printing and mailing materials sent to shareholders, audit and outside legal fees, taxes, brokerage commissions, interest, insurance premiums, fees payable under securities laws and to the Investment Company Institute, cost of processing and maintaining shareholder records, cost of systems or services used to price Portfolio securities and nonrecurring or extraordinary expenses, including litigation and indemnification relating to litigation.

     Service Plan

          Under a Service Plan (Plan) adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act, each Portfolio may pay Waddell & Reed a fee not to exceed 0.25% of the Portfolio’s average annual net assets, paid daily, to compensate Waddell & Reed for its costs and expenses in connection with the provision of personal services to Policyowners.

          The Plan permits Waddell & Reed to be compensated for amounts it expends in compensating, training and supporting registered financial advisors, sales managers and/or other appropriate personnel in providing personal services to Policyowners; increasing services provided to Policyowners by office personnel; engaging in other activities useful in providing personal service to Policyowners; and in compensating broker-dealers who may regularly sell Policies, and other third parties, for providing shareholder services.

          The only Directors or interested persons, as defined in the 1940 Act, of the Fund who have a direct or indirect financial interest in the operation of the Plan are the officers and Directors who are also officers of either Waddell & Reed or its affiliate(s) or who are shareholders of Waddell & Reed Financial, Inc., the indirect parent company of Waddell & Reed. The Plan is anticipated to benefit the Portfolio and the Policyholders through Waddell & Reed’s activities to provide directly, or indirectly, personal services to the Policyowners and thereby promote the maintenance of their accounts with the Fund. The Fund anticipates that Policyowners may benefit to the extent that Waddell & Reed’s activities are successful in increasing the assets of the Fund through reduced redemptions and reducing a Policyowner’s share of Fund and Portfolio expenses. In addition, the Fund anticipates that the revenues from the Plan will provide Waddell & Reed with greater resources to make the financial commitments necessary to continue to improve the quality and level of services to the Fund and Policyowners.

          The Plan was approved by the Fund’s Board of Directors, including the Directors who are not interested persons of the Fund and who have no direct or indirect financial interest in the operations of the Plan or any agreement referred to in the Plan (hereafter, Plan Directors).

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

     Custodial and Auditing Services

          The Custodian for each Portfolio is UMB Bank, n.a., 928 Grand Boulevard, Kansas City, Missouri. In general, the Custodian is responsible for holding the Portfolios’ cash and securities. Deloitte & Touche LLP, 1010 Grand Boulevard, Kansas City, Missouri, the Fund’s independent auditors, audits the Fund’s annual financial statements.

NET ASSET VALUE

          The NAV of one of the shares of a Portfolio is the value of its assets, less liabilities, divided by the total number of shares outstanding. For example, if on a particular day a Portfolio owned securities worth $100 and held cash of $15, the total value of the assets would be $115. If it had a liability of $5, the NAV would be $110 ($115 minus $5). If it had 11 shares outstanding, the NAV of one share would be $10 ($110 divided by 11).

          The NAV per share of each Portfolio is ordinarily computed once each day that the NYSE is open for trading as of the close of the regular session of the NYSE or the close of the regular session of any other securities or commodities exchange on which an option or future held by the Portfolio is traded. The NYSE ordinarily closes at 4:00 p.m. Eastern time. The NYSE annually announces the days on which it will not be open for trading. The most recent announcement indicates that it will not be open on the following days: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. However, it is possible that the NYSE may close on other days. The NAV may change every business day, since the value of the assets and the number of shares outstanding typically change every business day.

          The portfolio securities of a Portfolio that are listed or traded on a stock exchange are valued on the basis of the last sale on that day or, lacking any sales, at the mean of the last bid and asked prices available. In cases where securities or other instruments are traded on more than one exchange, such securities or other instruments generally are valued on the exchange designated by WRIMCO (under procedures established by and under the general supervision and responsibility of the Board of Directors) as the primary market. Securities traded in the OTC market are valued using the Nasdaq Stock Market, which provides information on bid and asked prices quoted by major dealers in such stocks.

          Bonds, other than convertible bonds, are valued using a third-party pricing system. Convertible bonds are valued using this pricing system only on days when there is no sale reported. Short-term debt securities held by the Portfolios are valued at amortized cost. When market quotations for options and futures contracts and non-exchange traded foreign securities held by a Portfolio are readily available, those securities will be valued based upon such quotations. Market quotations generally will not be available for options traded in the OTC market. Warrants and rights to purchase securities are valued at market value. When market quotations are not readily available, securities, options, futures contracts and other assets are valued at fair value as determined in good faith under procedures established by and under the general supervision and responsibility of the Board of Directors.

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

          When a Portfolio writes a call or a put option, an amount equal to the premium received is included in the Portfolio’s Statement of Assets and Liabilities as an asset, and an equivalent deferred credit is included in the liability section. The deferred credit is marked-to-market to reflect the current market value of the option. If an option a Portfolio wrote is exercised, the proceeds received on the sale of the related investment are increased by the amount of the premium that the Portfolio received. If an option written by a Portfolio expires, it has a gain in the amount of the premium; if it enters into a closing transaction, it will have a gain or loss depending on whether the premium was more or less than the cost of the closing transaction.

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

DIRECTORS AND OFFICERS

          Following is a list of the Board of Directors (Board) and the officers of the Fund. The Board oversees all of the Portfolios in the Fund, in addition to the other funds in the Family of Investment Companies. The Family of Investment Companies is comprised of the funds in the Fund, Waddell & Reed Advisors Funds, and Waddell & Reed InvestEd Portfolios, Inc. Eleanor B. Schwartz, Joseph Harroz, Jr., Henry J. Herrmann and Keith A. Tucker also serve as directors or trustees of the funds in the Ivy Family of Funds, which together with the Family of Investment Companies, comprise the 66 funds in the Fund Complex. Directors serve until resignation, retirement, death or removal. The Board appoints officers and delegates to them the management of the day-to-day operations of the Fund, based on policies reviewed and approved by the Board.

     Disinterested Directors

          The following table provides information regarding each Director who is not an interested person as defined in the 1940 Act.

					NUMBER OF
					FUNDS IN
		TERM OF			FUND
	POSITION	OFFICE:			COMPLEX
NAME,	HELD WITH	DIRECTOR		PRINCIPAL OCCUPATION(S) DURING	OVERSEEN BY		OTHER DIRECTORSHIPS HELD
ADDRESS AND AGE	THE FUND	SINCE		PAST 5 YEARS	DIRECTOR		BY DIRECTOR
James M. Concannon Washburn Law School 1700 College Topeka, KS 66621 Age: 55	Director		1997	Professor of Law, Washburn Law School; Formerly, Dean, Washburn Law School		39	Director, Am Vestors CBO II, Inc. (bond investment firm)
John A. Dillingham 4040 Northwest Claymont Drive Kansas City, MO 64116 Age: 64	Director		1997	President and Director, JoDill Corp. and Dillingham Enterprises, Inc., both farming enterprises; formerly, Instructor at Central Missouri State University; formerly, Consultant and Director, McDougal Construction Company		39	None
David P. Gardner 2441 Iron Canyon Drive Park City, UT 84060 Age: 70	Director		1998	Formerly, president, William and Flora Hewlett Foundation		39	None
Linda K. Graves 6300 Lamar Avenue Overland Park, KS 66202 Age: 49	Director		1995	Formerly, First Lady of Kansas		39	Director, American Guaranty Life Insurance Company
Joseph Harroz, Jr. 6300 Lamar Avenue Overland Park, KS 66202 Age: 36	Director		1998	General Counsel of the University of Oklahoma, Cameron University and Rogers State Univ.; Vice President of the University of Oklahoma; Adjunct Professor, University of Oklahoma Law School; Managing Member, Harroz Investments, LLC, commercial enterprise investments		60	Director, Oklahoma Appleseed Center for Law and Justice
John F. Hayes 6300 Lamar Avenue Overland Park, KS 66202 Age: 83	Director		1988	Chairman, Gilliland & Hayes, P.A., a law firm		39	Director, Central Bank & Trust; Central Financial Corporation
Glendon E. Johnson 13635 Deering Bay Drive, #284 Miami, FL 33158 Age: 79	Director		1971	Retired; formerly, Chief Executive Officer and Director, John Alden Financial Corporation		39	Chairman of the Board, Bank Assurance Partners (marketing)
Eleanor B. Schwartz 1213 West 95th Court Chartwell #4 Kansas City, MO 64114 Age: 66	Director		1995	Professor Emeritus, formerly, Professor of Business Administration, University of Missouri at Kansas City; formerly, Chancellor, University of Missouri at Kansas City		60	None
Frederick Vogel III 6300 Lamar Avenue Overland Park, KS 66202 Age: 67	Director		1971	Retired		39	None

Interested Directors

          Two of the three interested directors are interested by virtue of their current or former engagement as officers of Waddell & Reed Financial, Inc. (WDR) or its wholly owned subsidiaries, including the Fund’s investment manager, Waddell & Reed Investment Management Company (WRIMCO), the distributor of the Policies funded by the Fund, Waddell & Reed, Inc. (W&R), and the Fund’s accounting services agent, Waddell & Reed Services Company (WRSCO), as well as by virtue of their personal ownership in shares of WDR. The third interested director, Mr. Ross, is a shareholder in a law firm that has represented Waddell & Reed within the past two years.

		TERM OF
		OFFICE:		TOTAL
	POSITION(S)	DIRECTOR/		NUMBER OF
NAME,	HELD WITH	OFFICER	PRINCIPAL OCCUPATION(S) DURING	PORTFOLIOS
ADDRESS AND AGE	THE FUND	SINCE	PAST 5 YEARS	OVERSEEN		OTHER DIRECTORSHIPS HELD
Keith A. Tucker 6300 Lamar Avenue Overland Park, KS 66202 Age: 58	Chairman of the Board Director	1998 1993	Chairman of the Board, Chief Executive Officer and Director of WDR; formerly, Principal Financial Officer of WDR; Chairman of the Board and Director of Waddell & Reed, WRIMCO and WRSCO; formerly, Vice Chairman of the Board of Directors of Torchmark Corporation		60	None
Henry J. Herrmann 6300 Lamar Avenue Overland Park, KS 66202 Age: 60	President Director	2001 1998	President, Chief Investment Officer and Director of WDR; formerly, Treasurer of WDR; Director of Waddell & Reed; President, Chief Executive Officer, Chief Investment Officer and Director of		60	Director, Austin, Calvert & Flavin, Inc., an affiliate of WRIMCO; Director, Ivy Services Inc. (ISI), an affiliate of WRIICO
			WRIMCO; President, Chief Executive Officer and Director of Waddell & Reed Ivy Investment Company (WRIICO), an affiliate of WDR
Frank J. Ross, Jr. Polsinelli, Shalton & Welte, P.C. 700 West 47th Street Suite 1000 Kansas City, MO 64112 Age: 50	Director	1996	Shareholder/Director, Polsinelli, Shalton & Welte, P.C., a law firm		39	Director, Columbian Bank & Trust

Officers

          The Board has appointed officers who are responsible for the day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. In addition to Mr. Herrmann, who is President, the Fund’s officers are:

NAME,	POSITION(S) HELD WITH THE	TERM OF OFFICE:
ADDRESS AND AGE	FUND	OFFICER SINCE	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
Theodore W. Howard 6300 Lamar Avenue Overland Park KS 66202 Age: 60	Vice President Treasurer Principal Accounting Officer Principal Financial Officer	1987 1976 1976	Senior Vice President of WRSCO; Vice President, and Treasurer of each of the funds in the Fund Complex; Principal Accounting Officer and Principal Financial Officer of each of the funds in the Family of Investment Companies; formerly, Vice President of WRSCO
		2002
Kristen A. Richards 6300 Lamar Avenue Overland Park KS 66202 Age: 35	Vice President Secretary Associate General Counsel	2000 2000 2000	Vice President, Associate General Counsel and Chief Compliance Officer of WRIMCO and WRIICO; Vice President, Secretary and Associate General Counsel of each of the funds in the Fund Complex; formerly, Assistant Secretary of funds in the Fund Complex; formerly, Compliance Officer of WRIMCO
Daniel C. Schulte 6300 Lamar Avenue Overland Park KS 66202 Age: 37	Vice President General Counsel Assistant Secretary	2000 2000 2000	Vice President, Secretary and General Counsel of WDR; Senior Vice President, Secretary and General Counsel of Waddell & Reed, WRIMCO and WRSCO; Senior Vice President, Assistant Secretary and General Counsel of WRIICO and ISI; Vice President, General Counsel and Assistant Secretary of each of the funds in the Fund Complex; formerly, Assistant Secretary of WDR; formerly, an attorney with Klenda, Mitchell, Austerman & Zuercher, L.L.C.

RESPONSIBILITIES OF THE BOARD OF DIRECTORS

          The Board oversees the operations of the Fund, and is responsible for the overall management and supervision of its affairs in accordance with the laws of the State of Maryland, and directs the officers to perform the daily functions of the Fund. The Board similarly oversees the operations of each of the other funds in the Family of Investment Companies.

Committees of the Board of Directors

          The Board has established the following committees: Audit Committee, Executive Committee, Nominating Committee, Valuation Committee and Investment Review Committee. The respective duties and current memberships are:

AUDIT COMMITTEE: The Audit Committee meets with the Fund’s independent auditors, internal auditors and corporate officers to discuss the scope and results of the annual audit of the Fund, to review financial statements, reports, compliance matters, and to discuss such other matters as the Committee deems appropriate or desirable. The Committee acts as a liaison between the Fund’s independent auditors and the full Board of Directors. James M. Concannon, David P. Gardner, Linda K. Graves, John F. Hayes, and Frank J. Ross, Jr. are the members of the Audit Committee. During the calendar year ended December 31, 2002, the Audit Committee met four times.

EXECUTIVE COMMITTEE: When the Board is not in session, the Executive Committee has and may exercise any or all of the powers of the Board in the management of the business and affairs of the Fund except the power to increase or decrease the size of, or fill vacancies on the Board, and except as otherwise provided by law. Keith A. Tucker, Glendon E. Johnson and John A. Dillingham are the members of the Executive Committee. During the calendar year ended December 31, 2002, the Executive Committee did not meet.

NOMINATING COMMITTEE: The Nominating Committee evaluates, selects and recommends to the Board candidates for disinterested directors. Glendon E. Johnson, Eleanor B. Schwartz and Frederick Vogel III are the members of the Nominating Committee. During the calendar year ended December 31, 2002, the Nominating Committee did not meet.

VALUATION COMMITTEE: The Valuation Committee reviews and considers valuation recommendations by management for securities for which market quotations are not available, and values such securities and other assets at fair value as determined in good faith under procedures established by the Board. Keith A. Tucker and Henry J. Herrmann are the members of the Valuation Committee. During the calendar year ended December 31, 2002, the Valuation Committee met six times.

INVESTMENT REVIEW COMMITTEE: The Investment Review Committee considers such matters relating to the investment management of the funds in the Family of Investment Companies as the Committee may, from time to time, determine warrant review, such as investment

management policies and strategies, investment performance, risk management techniques and securities trading practices, and may make recommendations as to these matters to the Board. Frederick Vogel III, Joseph Harroz, Jr. and David P. Gardner are the members of the Investment Review Committee. The Investment Review Committee was formed in February 2002; the Committee met once during the calendar year ended December 31, 2002.

OWNERSHIP OF FUND SHARES AS OF DECEMBER 31, 2002

     The following table provides information regarding shares of the Portfolio, as well as the aggregate dollar range of shares of all funds overseen by the Director within the Family of Investment Companies.

DISINTERESTED DIRECTORS

			Aggregate Dollar Range of Fund Shares Owned in Funds
Director	Dollar Range of Portfolios’ Shares Owned*		Overseen by Director in Family of Investment Companies
James M. Concannon		$0		over $100,000
John A. Dillingham		$0		over $100,000
David P. Gardner		$0		$10,001 to $50,000
Linda K. Graves		$0		over $100,000
Joseph Harroz, Jr.		$0		over $100,000
John F. Hayes		$0		over $100,000
Glendon E. Johnson		$0		over $100,000
Eleanor B. Schwartz		$0		$0
Frederick Vogel III		$0		over $100,000

INTERESTED DIRECTORS

			Aggregate Dollar Range of Fund Shares Owned in Funds
Director	Dollar Range of Portfolios’ Shares Owned*		Overseen by Director in Family of Investment Companies
Henry J. Herrmann		$0		over $100,000
Frank J. Ross, Jr.		$0		over $100,000
Keith A. Tucker		$0		over $100,000

The Directors who are not affiliated persons of the Fund, as defined in the 1940 Act, have deferred a portion of their annual compensation. The values of the Directors’ deferred accounts, as of December 31, 2002 were:

			Aggregate Dollar Range of Fund Shares Deemed Owned
	Dollar Range of Portfolios’ Shares Deemed		in Funds Overseen by Director in Family of Investment
Director	to be Owned*			Companies
James M. Concannon		$0		$1 to $10,000
John A. Dillingham		$0		$1 to $10,000
David P. Gardner		$0		$10,001 to $50,000
Linda K. Graves		$0		$1 to $10,000
Joseph Harroz, Jr.		$0		$50,001 to $100,000
John F. Hayes		$0		$1 to $10,000
Glendon E. Johnson		$0		$1 to $10,000
Frank J. Ross, Jr.		$0		$10,001 to $50,000
Eleanor B. Schwartz		$0		$1 to $10,000
Frederick Vogel III		$0		$1 to $10,000

*The Portfolios’ shares are available for purchase only by Participating Insurance Companies.

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

          The funds in the Family of Investment Companies pay to each Director (other than Directors who are affiliates of Waddell & Reed) an annual base fee of $65,500 (of which at least $7,500 is deferred), plus $4,250 for each meeting of the Board attended, plus reimbursement of expenses for attending such meeting, and $500 for each committee meeting attended which is not in conjunction with a Board meeting. The fees to the Directors are divided among the funds in the Family of Investment Companies based on each fund’s relative size. Ivy Fund pays to each of its trustees annual compensation of $30,000, which includes $1,000 for each meeting of the Board attended. It is anticipated that the Directors will receive the following fees for service as a director of the Fund:

COMPENSATION TABLE

     Disinterested Directors

			Total
	Aggregate		Compensation
	Compensation		From Fund
	From		and Fund
Director	Portfolio1		Complex2
James M. Concannon		$0	$	82,500
John A. Dillingham		0		82,500
David P. Gardner		0		82,500
Linda K. Graves		0		82,500
Joseph Harroz, Jr.		0		82,500
John F. Hayes		0		82,500
Glendon E. Johnson		0		82,500
Eleanor B. Schwartz		0		82,500
Frederick Vogel III		0		82,500

     Interested Directors

			Total
	Aggregate		Compensation
	Compensation		From Portfolio
	From		and Fund
Director	Portfolio1		Complex2
Henry J. Herrmann		0		0
Frank J. Ross, Jr.		0		82,500
Keith A. Tucker		0		0

1For the current fiscal year, the Directors have agreed to not allocate any portion of their total compensation to the Portfolio.

2No pension or retirement benefits have been accrued as a part of Portfolio expenses.

          The officers of the Fund are paid by WRIMCO or its affiliates.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

The following table sets forth information with respect to the Fund, as of June 30, 2003, regarding the beneficial ownership of Fund shares.

Name and Address		Shares owned Beneficially
of Beneficial Owner	Portfolio	or of Record		Percent
	Value		3,569,836		18.69	%
Waddell & Reed Advisors	Science and Technology		1,814,854		8.88	%
Select Annuity	Asset Strategy		4,848,005		15.93	%
	Money Market		11,301,935		12.88	%
Nationwide Insurance Co.	Bond		6,505,286		14.29	%
	High Income		5,512,236		12.46	%
One Nationwide Plaza	Growth		10,519,810		9.98	%
	Core Equity		7,820,888		10.09	%
Columbus Ohio 43215	International		1,585,303		5.79	%
	Small Cap		3,692,941		8.79	%
	Balanced		3,050,305		10.94	%
	Limited-Term Bond		2,451,563		18.49	%
Waddell & Reed Advisors	Value		14,831,467		77.66	%
Select Plus Annuity	Science and Technology		6,297,172		30.81	%
	Asset Strategy		15,251,997		50.11	%
Nationwide Insurance Co.	Money Market		35,940,968		40.95	%
	Bond		19,236,315		42.27	%
One Nationwide Plaza	High Income		18,014,546		40.73	%
	Growth		31,894,115		30.24	%
Columbus Ohio 43215	Core Equity		24,660,441		31.80	%
	International		7,576,089		27.67	%
	Small Cap		13,466,590		32.06	%
	Balanced		10,588,244		37.98	%
	Limited-Term Bond		7,168,460		54.07	%

Advantage II Variable Annuity	Science and Technology	8,668,568	42.41	%
	Asset Strategy	6,398,455	21.02	%
United Investors Insurance	Money Market	34,115,105	38.87	%
Company	Bond	16,534,078	36.33	%
	High Income	17,056,535	38.56	%
Variable Products Division	Growth	51,661,715	48.99	%
	Core Equity	36,586,003	47.19	%
P.O. Box 10287	International	14,400,172	52.59	%
	Small Cap	19,178,972	45.66	%
Birmingham AL 35202	Balanced	10,400,647	37.31	%
	Limited-Term Bond	2,963,544	22.35	%
Advantage Gold Variable Annuity	Science and Technology	1,871,810	9.16	%
	Asset Strategy	2,721,940	8.94	%
United Investors Insurance Company	Growth	5,380,575	5.10	%
	Core Equity	4,575,132	5.90	%
Variable Products Division	International	1,659,599	6.06	%
	Small Cap	2,771,670	6.60	%
P.O. Box 10287
Birmingham AL 35202
	Balanced	2,549,801	9.15	%

Advantage Plus Variable Annuity	Science and Technology	1,269,059	6.21	%
United Investors Insurance Company
Variable Products Division
P.O. Box 10287
Birmingham AL 35202

As of June 30, 2003, all of the Directors and officers of the Fund, as a group, owned less than 1% of the outstanding shares of the Fund.

PURCHASES AND REDEMPTIONS

          The separate accounts of the Participating Insurance Companies place orders to purchase and redeem shares of a Portfolio based on, among other things, the amount of premium payments to be invested and the number of surrender and transfer requests to be effected on any day according to the terms of the Policies. Shares of a Portfolio are sold at their NAV per share. No sales charge is paid by any Participating Insurance Company for purchase of shares. Redemptions will be made at the NAV per share of the applicable Portfolio. Payment is generally made within seven days after receipt of a proper request to redeem. The Fund may suspend the right of redemption of shares of the Portfolios and may postpone payment for any period if any of the following conditions exist: (1) the NYSE is closed other than customary weekend and holiday closings or trading on the NYSE is restricted; (2) the SEC has determined that a state of emergency exists which may make payment or transfer not reasonably practicable; (3) the SEC has permitted suspension of the right of redemption of shares for the protection of the shareholders of the Fund; or (4) applicable laws and regulations otherwise permit the Fund to suspend payment on the redemption of shares. Redemptions are ordinarily made in cash but under extraordinary conditions the Fund’s Board may determine that the making of cash payments is undesirable. In such case, redemption payments may be made in Portfolio securities. The redeeming shareholders would incur brokerage costs in selling such securities. The Fund has elected to be governed by Rule 18f-1 under the 1940 Act, pursuant to which it is obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder.

          Should any conflict between Policyowners arise which would require that a substantial amount of net assets be withdrawn from a Portfolio, orderly portfolio management could be disrupted to the potential detriment of Policyowners. The Fund need not accept any purchase order, and it may discontinue offering the shares of any Portfolio.

SHAREHOLDER COMMUNICATIONS

          Policyowners will receive, from the Participating Insurance Companies, financial statements of the Fund as required under the 1940 Act. Each report shows the investments owned by each Portfolio and the market values thereof and provides other information about the Fund and its operations.

TAXES

General

          Shares of the Portfolios are offered only to insurance company separate accounts that fund Policies. See the applicable Policy prospectus for a discussion of the special taxation of insurance companies with respect to such accounts and of the Policyholders.

          Each Portfolio is treated as a separate corporation for Federal income tax purposes. Each Portfolio intends to qualify for treatment as a regulated investment company (RIC) under the Internal Revenue Code of 1986, as amended (Code), so that it is relieved of Federal income tax on that part of its investment company taxable income (consisting generally of net taxable investment income, net short-term capital gain and net gains from certain foreign currency transactions) that it distributes to its shareholders. To continue to qualify for treatment as a RIC, a Portfolio must distribute to its shareholders for each taxable year at least 90% of its investment company taxable income (Distribution Requirement) and must meet several additional requirements. With respect to a Portfolio, these requirements include the following: (1) the Portfolio must derive at least 90% of its gross income each taxable year from dividends, interest, payments with respect to securities loans, and gains from the sale or other disposition of securities or foreign currencies or other income (including gains from options, futures contracts or forward contracts) derived with respect to its business of investing in securities or those currencies (Income Requirement); (2) at the close of each quarter of the Portfolio’s taxable year, at least 50% of the value of its total assets must be represented by cash and cash items, U.S. Government securities, securities of other RICs and other securities that are limited, in respect of any one issuer, to an amount that does not exceed 5% of the value of the Portfolio’s total assets and that does not represent more than 10% of the issuer’s outstanding voting securities (50% Diversification Requirement); and (3) at the close of each quarter of the Portfolio’s taxable year, not more than 25% of the value of its total assets may be invested in securities (other than U.S. Government securities or the securities of other RICs) of any one issuer.

          Each Portfolio intends to comply with the diversification requirements imposed by section 817(h) of the Code and the regulations thereunder. These requirements, which are in addition to the diversification requirements imposed on a Portfolio by the 1940 Act and Subchapter M of the Code, place certain limitations on the assets of each separate account — and, because section 817(h) and those regulations treat the assets of the Portfolio as assets of the related separate account, of the Portfolio — that may be invested in securities of a single issuer. Specifically, the regulations provide that, except as permitted by the safe harbor described below, as of the end of each calendar quarter or within 30 days thereafter, no more than 55% of a Portfolio’s total assets may be represented by any one investment, no more than 70% by any two investments, no more than 80% by any three investments and no more than 90% by any four investments. For this purpose, all securities of the same issuer are considered a single investment, and while each U.S. Government agency and instrumentality is considered a separate issuer, a particular foreign government and its agencies, instrumentalities and political subdivisions all will be considered the same issuer. Section 817(h) provides, as a safe harbor, that a separate account will be treated as being adequately diversified if the diversification requirements under Subchapter M are satisfied and no more than 55% of the value of the account’s total assets are cash and cash items, government securities and securities of other RICs. Failure of a Portfolio to satisfy the section 817(h) requirements would result in taxation of the Participating Insurance Companies and treatment of the Policyowners other than as described in the prospectuses for the Policies. If a Portfolio failed to qualify for treatment as a regulated investment company for any taxable year, (1) it would be taxed at corporate rates on the full amount of its taxable income for that year without being able to deduct the distributions it makes to its shareholders, (2) the shareholders would treat all those distributions, including distributions of net capital gains (the excess of net long-term capital gains over net short-term capital losses), as dividends (that is, ordinary income) to the extent of the Portfolio’s earnings and profits, and (3) most importantly, each insurance company separate account invested therein would fail to satisfy the diversification requirements of Code section 817(h), with the result that the variable annuity contracts supported by that account would no longer be eligible for tax deferral. In addition, the Portfolio could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying for regulated investment company treatment.

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

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

     Income from Foreign Securities

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

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

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

          A Portfolio may elect to mark to market its stock in any PFIC. Marking-to-market, in this context, means including in ordinary income each taxable year the excess, if any, of the fair market value of a PFIC’s stock over the Portfolio’s adjusted basis therein as of the end of that year. Pursuant to the election, the Portfolio also may deduct (as an ordinary, not capital, loss) the excess, if any, of its adjusted basis in PFIC stock over the fair market value thereof as of the taxable year-end, but only to the extent of any net mark-to-market gains with respect to that stock included by the

Portfolio for prior taxable years under the election (and under regulations proposed in 1992 that provided a similar election with respect to the stock of certain PFICs). The Portfolio’s adjusted basis in each PFIC’s stock with respect to which it makes this election will be adjusted to reflect the amounts of income included and deductions taken under the election.

     Income from Options, Futures and Forward Currency Contracts and Foreign Currencies

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

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

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

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

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

DIVIDENDS AND DISTRIBUTIONS

          It is the Fund’s intention to distribute substantially all the net investment income, if any, of each Portfolio. For dividend purposes, net investment income of the Portfolio, will consist of all payments of dividends or interest received by the Portfolio less the estimated expenses of the Portfolio.

          Dividends from investment income of each Portfolio will usually be declared and paid annually in December in additional full and fractional shares of the Portfolio. Ordinarily, dividends are paid on shares starting on the day after they are issued and on shares the day they are redeemed.

          All net realized long-term or short-term capital gains of a Portfolio, if any, are declared and distributed annually in December to its shareholders.

          It is the policy of each Portfolio to make annual capital gains distributions to the extent that net capital gains are realized in excess of available capital loss carryovers. Income and expenses are earned and incurred separately by each Portfolio, and gains and losses on portfolio transactions of a Portfolio are attributable only to that Portfolio. For example, capital losses realized by one Portfolio would not affect capital gains realized by another portfolio of the Fund.

PORTFOLIO TRANSACTIONS AND BROKERAGE

          One of the duties undertaken by a Portfolio’s Sub-Advisor, pursuant to its Sub-Advisory Agreement, is to arrange the purchase and sale of securities for the Portfolio. Purchases from underwriters include a commission or concession paid by the issuer to the underwriter. Purchases from dealers will include the spread between the bid and the asked prices. Otherwise, transactions in securities other than those for which an exchange is

the primary market are generally effected with dealers acting as principals or market makers. Brokerage commissions are paid primarily for effecting transactions in securities traded on an exchange and otherwise only if it appears likely that a better price or execution can be obtained. A Portfolio’s Sub-Advisor may manage other advisory accounts with investment objectives similar to those of the Portfolio. It can be anticipated that a Sub-Advisor will frequently, yet not always, place concurrent orders for all or most accounts for which it has responsibility, or the Sub-Advisor may otherwise combine orders for the Portfolio with those of other accounts for which it has investment discretion, including accounts of its affiliates. Under current written procedures, transactions effected pursuant to such combined orders are averaged as to price and allocated in accordance with the purchase or sale orders actually placed for each fund or advisory account, except where the combined order is not filled completely. In this case, for a transaction not involving an initial public offering (IPO), a Sub-Advisor will ordinarily allocate the transaction pro rata based on the orders it has placed, subject to certain variances provided for in the written procedures. For a partially filled IPO order, subject to certain variances specified in the written procedures, a Sub-Advisor generally allocates the shares as follows: the IPO shares are initially allocated pro rata among the included portfolios/funds and/or advisory accounts grouped according to investment objective, based on relative total assets of each group; and the shares are then allocated within each group pro rata based on relative total assets of the included portfolios/funds and/or advisory accounts, except that (a) within a group having a small cap-related investment objective, shares are allocated on a rotational basis after taking into account the impact of the anticipated initial gain on the value of the included portfolio/fund or advisory account and (b) within a group having a mid cap-related investment objective, shares are allocated based on the portfolio manager’s judgment, including but not limited to such factors as the portfolio/fund’s or advisory account’s investment strategies and policies, cash availability, any minimum investment policy, liquidity, anticipated term of the investment and current securities positions. In all cases, a Sub-Advisor seeks to implement its allocation procedures to achieve a fair and equitable allocation of securities among its portfolios/funds and other advisory accounts. Sharing in large transactions could affect the price a Portfolio pays or receives or the amount it buys or sells. As well, a better negotiated commission may be available through combined orders.

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

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

          The commissions paid to brokers that provide such research and/or brokerage services may be higher than the commission another qualified broker would charge for effecting comparable transactions and are permissible if a good faith determination is made by the Sub-Advisor that the commission is reasonable in relation to the research or brokerage services provided. No allocation of brokerage or principal business is made to provide any other benefits to the Sub-Advisor or its affiliates.

          The investment research provided by a particular broker may be useful only to one or more of the other advisory accounts of a Sub-Advisor, and investment research received for the commissions of those other accounts may be useful both to the Portfolio and one or more of such other accounts. Such investment research, which may be supplied by a third party at the request of a broker, includes information on particular companies and industries as well as market, economic or institutional activity areas. It serves to broaden the scope and supplement the research activities of the Sub-Advisor; serves to make available additional views for consideration and comparisons; and enables the Sub-Advisor, as applicable, to obtain market information on the price of securities held in the Portfolio or being considered for purchase.

          To the extent that electronic or other products provided by such brokers to assist a Sub-Advisor in making investment management decisions are used for administration or other non-research purposes, a reasonable allocation of the cost of the product attributable to its non-research use is made and this cost is paid by the Sub-Advisor.

          The Fund may also use its brokerage to pay for pricing or quotation services to value securities. The Portfolios have not been in operation prior to the date of this SAI; therefore, no brokerage commissions were paid by the Fund with respect to the Portfolios.

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

OTHER INFORMATION

     Capital Stock

          Capital stock is currently divided into the following classes which are a type of class designated a series as that term is defined in the Articles of Incorporation of the Fund: Asset Strategy Portfolio, Balanced Portfolio, Bond Portfolio, Growth Portfolio, High Income Portfolio, Core Equity Portfolio, International Portfolio, International II Portfolio, Limited-Term Bond Portfolio, Money Market Portfolio, Micro Cap Growth Portfolio, Science and Technology Portfolio, Small Cap Portfolio, Small Cap Value Portfolio, and Value Portfolio.

          The Board may change the designation of any Fund series and may increase or decrease the numbers of shares of any Fund series but may not decrease the number of shares of any Fund series below the number of shares then outstanding.

          Each issued and outstanding share in a Fund series is entitled to participate equally in dividends and distributions declared by the Fund series and, upon liquidation or dissolution, in net assets of such Fund series remaining after satisfaction of outstanding liabilities. The shares of each

Fund series when issued are fully paid and nonassessable.

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

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

     Voting Rights

          All shares of the Fund have equal voting rights (regardless of the NAV per share) except that on matters affecting only one series, only shares of that series are entitled to vote. The shares do not have cumulative voting rights. Accordingly, the holders of more than 50% of the shares of the Fund voting for the election of directors can elect all of the directors of the Fund if they choose to do so, and in such event the holders of the remaining shares would not be able to elect any directors.

          Matters in which the interests of all the Fund series are substantially identical (such as the election of Directors or the approval of independent public accountants) will be voted on by all shareholders without regard to the separate Fund series. Matters that affect all the Fund series but where the interests of the Fund series are not substantially identical (such as approval of the Investment Management Agreement) will be voted on separately by each Fund series. Matters affecting only one Fund series, such as a change in its fundamental policies or its Sub-Advisor, will be voted on separately by that Fund series.

          Matters requiring separate shareholder voting by the Fund series shall have been effectively acted upon with respect to any Fund series if a majority of the outstanding voting securities of that Fund series votes for approval of the matter, notwithstanding that: (1) the matter has not been approved by a majority of the outstanding voting securities of any other Fund series; or (2) the matter has not been approved by a majority of the outstanding voting securities of the Fund.

          The phrase a majority of the outstanding voting securities of a Fund series (or of the Fund) means the vote of the lesser of: (1) 67% of the shares of the Fund series (or the Fund) present at a meeting if the holders of more than 50% of the outstanding shares are present in person or by proxy; or (2) more than 50% of the outstanding shares of a series (or the Fund).

          To the extent required by law, Policyholders are entitled to give voting instructions with respect to Fund shares held in the separate accounts of Participating Insurance Companies. Participating Insurance Companies will vote the shares in accordance with such instructions unless otherwise legally required or permitted to act with respect to such instructions.

APPENDIX A

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

DESCRIPTION OF BOND RATINGS

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

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

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

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

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

2.          Nature of and provisions of the obligation;

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

          A brief description of the applicable S&P rating symbols and their meanings follow:

          AAA — Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Description of preferred stock ratings

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

          The preferred stock ratings are based on the following considerations:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          Preferred stock rating symbols and their definitions are as follows:

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

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

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

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

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

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

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

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

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

DESCRIPTION OF COMMERCIAL PAPER RATINGS

          S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt considered short-term in the relevant market. Ratings are graded into several categories, ranging from A-1 for the highest quality obligations to D for the lowest. Issuers rated A are further referred to by use of numbers 1, 2 and 3 to indicate the relative degree of safety. Issues assigned an A rating (the highest rating) are regarded as having the greatest capacity for timely payment. An A-1 designation indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation. An A-2 rating indicates that capacity for timely payment is satisfactory; however, the relative degree of safety is not as high as for issues designated A-1. Issues rated A-3 have adequate capacity for timely payment; however, they are more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations. Issues rated B are regarded as having only speculative capacity for timely payment. A C rating is assigned to short-term debt obligations with a doubtful capacity for payment. Debt rated D is in payment default, which occurs when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period.

          Moody’s commercial paper ratings are opinions of the ability of issuers to repay punctually promissory obligations not having an original maturity in excess of nine months. Moody’s employs the designations of Prime 1, Prime 2 and Prime 3, all judged to be investment grade, to indicate the relative repayment capacity of rated issuers. Issuers rated Prime 1 have a superior capacity for repayment of short-term promissory obligations and repayment capacity will normally be evidenced by (1) leading market positions in well established industries; (2) high rates of return on funds employed; (3) conservative capitalization structures with moderate reliance on debt and ample asset protection; (4) broad margins in earnings coverage of fixed financial charges and high internal cash generation; and (5) well established access to a range of financial markets and assured sources of alternate liquidity. Issuers rated Prime 2 also have a strong capacity for repayment of short-term promissory obligations as will normally be evidenced by many of the characteristics described above for Prime 1 issuers, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation; capitalization characteristics, while still appropriate, may be more affected by external conditions; and ample alternate liquidity is maintained. Issuers rated Prime 3 have an acceptable capacity for repayment of short-term promissory obligations, as will normally be evidenced by many of the characteristics above for Prime 1 issuers, but to a lesser degree. The effect of industry characteristics and market composition may be more pronounced; variability in earnings and profitability may result in changes in the level of debt protection measurements and requirement for relatively high financial leverage; and adequate alternate liquidity is maintained.

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EX-99.(14)(A)

exv99wx14yxay

EX-99.(14)(B)

exv99wx14yxby

EX-99.(17)(E)

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