Waddell & Reed Inc

FEES AND COMPENSATION
Negotiable Fees
WRI is a registered investment adviser and its financial advisors are investment adviser representatives (IARs) of the firm. Both
parties must adhere to a fiduciary duty and standard of care which requires that we place the interest of our clients ahead of our own
interests. As such, it is a common practice for financial advisors and clients to negotiate their specific advisory fees in context of the
services offered, and the specific needs of each client. Advisor fees are negotiable for all of the advisory programs discussed in this
section.

There are many factors that you should consider when negotiating the advisor fees with your financial advisor. These include such
things as the complexity of your financial situation, your specific investment objectives, needs and risk tolerance. Other factors that
would be appropriate to consider include, the products or services your financial advisor offers and the amount of time and due
diligence necessary to research both investments you currently own as well as recommendations for any future investments. You and
your financial advisor should also consider the frequency of meetings and contact necessary to serve your needs as well as any

Waddell & Reed, Inc.                                                 12                                                           BRK7745

potential involvement between your financial advisor and your other professional service providers, such as accountants and attorneys.
This is not meant to be an exhaustive list of the items to be considered, but rather serves as a guideline for you to consider when
negotiating advisor fees with your financial advisor.

The financial advisor who recommends and assists you in purchasing an advisory product described in this Brochure is paid a portion
of the fees charged to you for the program(s) you have chosen. If elected by the financial advisor, WRI will advance some of the
advisor fee to your financial advisor. WRI may at its discretion pay your financial advisor some of the fixed Sponsor Fee. Note that
the fees discussed in this section do not cover certain account services available upon request from WRI, including wire transfer fees,
overnight delivery fees, account termination fees, reorganization fees, etc., where applicable.

Sponsor Fee – WRI has the discretion to change the Sponsor Fee at any time. The Sponsor Fee is not a negotiated fee. You will
receive notice of any Sponsor Fee change at least thirty (30) days prior to the change.

Advisor Fee – The Advisor Fee is negotiated between you and your advisor within the parameters of each Advisory Program’s Total
Client Fee Schedule as set forth in WRI’s Advisory Brochures.

Total Client Fee – Your Total Client Fee may change based upon you and your advisor re-negotiating the Advisor Fee. If you and
your financial advisor negotiate a new Advisor Fee, you will be provided a new Service Agreement with your new Fee Schedule. The
Total Client Fee may also change based upon WRI’s discretion to change the Sponsor Fee at any time. You will receive notice of the
Sponsor Fee change at least thirty (30) days prior to the change.

Advisory Fee Billing Methodology, Frequency and Changes
Upon reaching the program minimum, the initial fee will be assessed for the partial period from the time the program minimum was
reached through the end of the billing period. Thereafter, the method used to calculate the advisory fee is monthly in advance.
Advisory fees are computed based on the prior period’s ending balance. Please see the Flow Billing section below for additional
details.

Upon termination of your Service Agreement, the prorated asset-based fee will be refunded to you.

You will pay an ongoing asset-based fee (Client Fee described below) to cover the cost of such services as consulting and
administrative services, creation and continual maintenance of the tools used to select asset category percentages in each account,
ongoing monitoring of and periodic revisions of the model portfolios, and services provided by your financial advisor, including
annual and other periodic meetings for account reviews as requested by you, answering your inquiries, assistance with annual tax
reporting and meeting with you as required to reassess the propriety of your current asset allocation model selection. If, during any
billing period, there is insufficient cash in an account to pay the asset-based fee, WRI may in its sole discretion sell shares of the
investments held in the account in amounts necessary to raise sufficient cash to pay the asset-based fee. Your asset-based fee will be
deducted automatically from the Primary Fund.

Assuming you invest more than the first tier in any of the programs, the net effective fee will be a weighted average of the negotiated
schedule fee rates shown in your Service Agreement, and may change with the account’s asset level.

MAPChoice Fee Schedule
 Value of Assets                      Maximum Advisor Fee           Sponsor Fee         Maximum Client Fee*
                                              (1)                       (2)                  (1) + (2)
 On the first $300,000                      1.50%                     0.00%                   1.50%
 On the next $700,000                       1.25%                     0.00%                   1.25%
 On assets in excess of $1 million          1.00%                     0.00%                   1.00%

MAPFlex Fee Schedule
 Value of Assets                      Maximum Advisor Fee           Sponsor Fee         Maximum Client Fee*
                                              (1)                       (2)                  (1) + (2)
 On the first $300,000                      2.00%                     0.20%                   2.20%
 On the next $700,000                       2.00%                     0.20%                   2.20%
...

TYPES OF CLIENTS
WRI provides investment advice to the following types of clients:

    •    Individuals
    •    Certain pension and professional plans
    •    Trusts, estates and charitable organizations
    •    Certain corporations and business entities not included in the categories above

Please carefully read the discussion in Advisory Business above to learn more about the account minimums for investing in and
maintaining an investment in the investment advisory programs discussed in Advisory Business.

METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF
LOSS
WRI typically recommends a broad asset allocation strategy across a number of common asset classes. These asset classes are
represented in the model portfolios of the various asset allocation programs discussed in this Brochure.

Asset allocation may assist you in determining if you have an appropriate mix of investments for your personal investment needs.
Development of a personalized asset allocation is designed to position your assets in accordance with your financial objectives, time
horizon and risk tolerance. The asset allocation programs described are based primarily on an investment concept known as Modern
Portfolio Theory, which states that through diversification you may be able to minimize the effects of investment risks and that gains
in one investment class may help offset losses in another. There is no certainty that any investment or strategy will be profitable or
successful in achieving your specific investment objectives. Principal values of your investments will fluctuate and, when redeemed,
may be worth more or less than your original investment. Asset allocation does not ensure a profit or protect against losses in a
declining market.

If you have a substantial amount of your net worth concentrated in one or a small number of investment products or asset classes, the
asset allocation process we use may prompt your financial advisor to recommend that you sell those investments and asset classes. It is
always important to consult your tax and legal advisors before making significant changes to your investments because these changes
may cause you to incur adverse tax consequences. Neither WRI nor your financial advisor can provide the specialized, detailed legal
and tax advice necessary to ensure that you avoid adverse tax consequences in these situations.

WRI has selected mutual funds and asset allocation programs, as described in this Brochure, in an effort to offer programs that do not
involve significant or unusual risks to our clients. The SMA and LIS Programs managed by and/or offered through Lockwood do not
have the same oversight as WRI programs due to their management by third parties. As a result, these programs may present a
significant risk of loss or unusual risk to clients. Performance of the SMA and LIS programs and risk of loss is dependent upon the
manager(s) and management style(s) you select. WRI strongly recommends that you read carefully the disclosure materials for the
SMA and LIS programs discussed in more detail in Advisory Business above.

Waddell & Reed, Inc.                                                17                                                       BRK7745

Investment advisory programs, including mutual fund asset allocation and wrap fee products sponsored by other investment advisers
may be less expensive, invest in mutual funds and other packaged products with lower internal expenses, lower cost share classes and
have better performance than the advisory programs discussed in this Brochure.