UAB Green and Gold Fund Waddell Reed

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UAB Green and Gold Fund Waddell & Reed Financial Inc. (WDR) Buy Presentation January 19, 2012

Asset Management Highly competitive industry, but offers significant economic profits (ROIC > WACC) 3 Levers for Earnings Fund Flows Market Appreciation Economies of Scale (Operating Leverage)

Waddell & Reed Asset management and financial planning Ivy Funds and Waddell & Reed Advisors Funds Consistently ranked in top decile for fund families Historical focus in large cap growth equities Distribute funds through Advisor, Wholesale, and Institutional Channels Future growth catalysts – promote Ivy Funds brand focus on diversification of product line

Historical Fund Performance (2010)

Growth relative to peers

Fund Flows Advisors channel was historically chief source of fund flows Sticky AUMs with redemptions ~ 10% Wholesale and institutional channels will drive future growth

Fund Flows and AUM by Channel 10 8 AUM by Channel Thousands Net Sales (sales less redemptions) 50 40 6 30 4 20 2 0 -2 10 2006 2007 2008 2009 2010 3 Q 11 Advisor Wholesale Institutional

Valuation

Historical P/Es

Fundamental Data

Key stats relative to peers

Why is WDR undervalued relative to peers? Ivy Asset Strategy – flagship product with 33% of WDR’s AUM World Allocation strategy targets all asset classes Sharp 19% drop in fund value from July – Oct. Recently downgraded to 3 from 4 stars by Morningstar

WASAX fund flows

WASAX Top Holdings

Long-term Outperformance

Stock Price: Buy Low, Sell High

Stock Price

SWOT Analysis Strengths Weaknesses Good relative performance Product concentration Historically strong fund flows Financial market sensitivity Strong advisor base reduces redemptions Asset Strategy fund underperformance Opportunities Threats Diversification among products Deterioration in global equity markets Inexpensive beta play Higher correlation among asset classes Growing awareness of Ivy Funds brand Fierce competition for fund flows

Investment Thesis As one of the more attractively priced asset managers, WDR currently provides a discounted beta play on the broader U. S. equity market. Longer-term, the successful performance and growing name recognition of the Ivy Funds brand should contribute to above average growth in AUM.

Portfolio Recommendation BUY 500 shares of WDR at limit of ~$27 ($13, 500) Total position: 500 shares / 2. 8% of portfolio (after purchase) Financials Target Sector Allocation: 10. 5%, Current Sector Allocation: 11. 1% Allocation after purchase: 13. 9%

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