Fund Description

The fund was incepted in September 1992 and is managed by Waddell & Reed Investment Management Company (WRIMCO). The goal of the fund is to provide income that is not subject to federal income tax. The fund seeks to achieve this goal by investing primarily in a diversified portfolio of tax-free municipal bonds, mainly of investment grade and of any maturity. However, a significant portion, up to 40%, of the fund's dividends paid to shareholders each year may be a tax preference item for purposes of the federal alternative minimum tax (AMT). The fund diversifies its holdings between two main types of municipal bonds - general obligation bonds and revenue bonds. The fund declares dividends from net investment income daily and pays them monthly. Capital gains, if any, are paid annually.