Waddell & Reed Investment Management Co

ITEM 5: FEES AND COMPENSATION
WRIMCO generally charges clients asset-based investment management fees for the investment advisory
services it provides. WRIMCO’s fee schedules vary from product to product based on a variety of
factors, including but not limited to the portfolio manager, strategy, investment vehicle, degree of
servicing required, market-place conditions and other factors WRIMCO deems relevant. The fees
applicable to each Pooled Account managed by WRIMCO are outlined in each Pooled Accounts offering
documents. In addition, WRIMCO’s current institutional fee schedule ranges from 40-85 bps on an
annual basis for domestic equity investment strategies, 65-85 bps for global and international equity
alternative strategies and 20-55 bps for fixed-income and balanced strategies. WRIMCO may also
receive a performance allocation or performance fee from certain client accounts based on the
performance achieved by an account, provided the client is a “Qualified Client” as defined under the
Advisers Act. See Item 6 – “Performance-Based Fees and Side-by-Side Management” for more
information about performance based fees.

WRIMCO’s investment management fees are typically calculated as a percentage of the market value of
an account’s assets under management in accordance with its contractual agreements. Fee breakpoints
are available for certain strategies and product types. In certain instances, WRIMCO calculates the fee
rate applicable to a client based on the assets held across multiple accounts managed by WRIMCO for the
client. Clients that became WRIMCO clients prior to the date of this brochure may have different fee
arrangements from those described above. Each such fee arrangement is outlined in either the applicable
offering documents or investment management agreement entered into between WRIMCO and the client.

WRIMCO may, in its sole discretion, charge lower management fees or waive account minimums based
on certain criteria including product type, investment strategy, client type, client domicile, services
provided, the client’s historical relationship with the firm, number of related investment accounts, account
composition or size, anticipated future earning capacity, current and anticipated future assets under
management, marketplace considerations, early adoption of an investment strategy or investment in a
particular vehicle, client’s operational or investment limitations or restrictions and other factors
WRIMCO deems relevant. In appropriate circumstances, WRIMCO may waive or reduce all or a portion
of the fees charged to particular clients in its sole and absolute discretion. Fees may be waived or reduced
for accounts held by or on behalf of WRIMCO and its employees, principals, shareholders or affiliates.
WRIMCO may also enter into “side letter” agreements with certain Investors in Private Funds to provide
different or more favorable terms to these Investors than described in a Private Fund’s offering
documents. These terms may include waived or reduced management fees. Assets from related accounts
in similar Pooled Accounts may be aggregated for fee calculation purposes.

WRIMCO is limited in its ability to negotiate fees, in part, due to historic client contracts, which
generally require WRIMCO to charge the same fee schedule to similarly-situated clients. WRIMCO
generally considers separately managed account clients to be similarly-situated if they are domiciled in
the same country, are invested in the same investment vehicle managed as a component of the same
investment strategy, are of the same client type and have a similar account size, among other factors.

Fee Billing
As a general matter, advisory fees for clients other than Third-party U.S. Mutual Funds are billed
quarterly, in arrears. Sub-advisory fees for Third-party U.S. Mutual Funds are calculated daily, but
generally paid monthly. Invoices for advisory fees are payable upon receipt. Fees are ordinarily based on
the level of total assets under management within the relevant account(s), including allocations to cash,
on the appropriate valuation day.

Fee calculation methods are dictated by the client’s investment management agreement and/or the
relevant offering documents. Most commonly, the quarterly fee is calculated by applying the annual fee
rate to the average assets and dividing by four. The average value of assets for each quarter is generally
determined by adding the market value of the assets, as determined by WRIMCO in accordance with
commercially reasonable practices, at the beginning of the first day of the quarter and the market value of
the assets at the end of the last day of each month during the quarter and dividing by four. Calculations
are based on market value, which includes realized and unrealized gains and losses. Upon agreement,
aggregated assets of all clients managed by WRIMCO may be used to determine any fee breakpoints.
Fees will then be applied on a pro-rata basis to the various client accounts. If assets are managed for a
partial quarter, the fee is prorated.

If a client requests that WRIMCO automatically deduct investment management fees from its account(s),
WRIMCO will bill the client’s custodian directly.

Other Fees
The advisory fees described above do not include brokerage commissions, transaction fees and other
related costs and expenses which shall be incurred by the client. Clients incur certain charges imposed by
third parties such as custodial fees and mutual fund fee expenses. Clients incur brokerage commissions
and other execution costs charged by the custodian or executing broker-dealer in connection with
transactions for client accounts. Please see Item 12 – “Brokerage Practices” in this Brochure for
additional important information about the brokerage and transaction practices of WRIMCO.

Except as otherwise agreed in the relevant investment management agreement, each account bears (and
...

ITEM 7: TYPES OF CLIENTS

Description
WRIMCO provides or may provide investment management services for a variety of clients, including:

    •   Open-end mutual funds;
    •   Public and private institutional clients, including government entities, pension plans, Taft-Hartley
        plans, corporations, charitable organizations (foundations, endowments, etc.) and insurance
        companies;
    •   High net worth individuals;
    •   Third-party U.S. open-end mutual funds;
    •   UCITS (Undertakings for Collective Investments in Transferable Securities); and
    •   Private funds in the form of privately placed commingled or pooled investment vehicles
        organized as U.S. limited liability companies.

To help the U.S. government fight the funding of terrorism and money laundering activities, WRIMCO
seeks to obtain, verify, and record information that identifies each client who retains WRIMCO to
manage its account or who invests in a fund managed by WRIMCO. In this regard, when a client or
investor seeks to open an account, WRIMCO may ask for the name, address, tax/employer identification
number (or any other registration number issued in the jurisdiction of location or incorporation) and other
reasonably required information that will allow WRIMCO to identify the client. WRIMCO may ask for
information and documentation regarding source of funds to be invested. WRIMCO also reserves the
right to ask for more information regarding the individuals who are beneficial owners of, or exercise
control over, the client account. WRIMCO may ask for the names of such beneficial owners and may
also ask for addresses, dates of birth, and other information that will allow WRIMCO to identify such
beneficial owners. WRIMCO may also request such other information as may be necessary to comply
with applicable law. Furthermore, WRIMCO may verify any of the aforementioned information using
third-party sources and may share that information as required by applicable law or in connection with the
execution of trades on behalf of that client or investor. In certain circumstances, WRIMCO may rely on
its client’s or investor’s broker-dealer, administrator, transfer agent, custodian or placement agent to
obtain, verify and record the required information.

Account Minimums
For new accounts, WRIMCO generally requires the following account minimums:

                            ACCOUNT                         ASSET MINIMUM
                            EQUITY
                             Core                                 $15 Million
                             Small Cap Growth                     $20 Million
                             Mid Cap Growth                       $20 Million
                             Large Cap Growth                     $20 Million
                             Large Cap Value                      $10 Million
                             International Core                   $20 Million
                             Global Growth                        $20 Million
                             Energy                               $20 Million

                            BALANCED                              $15 Million

                            FIXED-INCOME
                              Core                                  $3 Million
                              Core Intermediate                     $3 Million

                             GLOBAL TACTICAL
                             ASSET ALLOCATION
                               Asset Strategy                      $25 Million

WRIMCO may consider accounts below the minimum assets shown under certain circumstances.