<PAGE>
WADDELL & REED ADVISORS
RETIREMENT
SHARES,
INC.
ANNUAL
REPORT
-------------
June 30, 2000
<PAGE>
MANAGER'S LETTER
JUNE 30, 2000
Dear Shareholder:
This report relates to the operation of Waddell & Reed Advisors Retirement
Shares, Inc. for the fiscal year ended June 30, 2000. The following discussion,
graphs and tables provide you with information regarding the Fund's performance
during that period.
The past 12 months marked an unusual and frenetic time for the markets and the
economy. While the Federal Reserve raised the federal funds rate six times over
the 12-month period in an attempt to slow the economy and keep inflation under
control, it was also aggressively creating credit during the fourth quarter of
1999 in an effort to avoid problems associated with Y2K. As a result, the
growth in the monetary base recorded its highest stimulus in 15 years.
Additionally, margin debt soared at the same time, as individual investors were
aggressively borrowing money to buy stocks. The combined margin debt explosion
and strong cash flows into technology funds caused the stock market to perform
very well, especially in the aggressive-growth sector. Margin calls became a
reality, however, when the Federal Reserve began to tighten monetary policy and
withdraw the excess liquidity they created during the fourth quarter of 1999.
Anticipating a correction during the second quarter of 2000, particularly in the
"new economy" stocks, we reduced our technology exposure somewhat -- in
retrospect, not enough -- and we increased our exposure to the fixed-income
market by approximately 50 percent. We felt bonds would act as a hedge against
a declining Nasdaq market.
As the correction quickly unfolded during April, the Fund somewhat reduced its
exposure to the fixed-income market and increased its exposure to the equity
market -- particularly in the technology sector, as, in our opinion, the
fundamentals for most technology companies remained solid. It is noteworthy
that, from the March high to the April low, the median Nasdaq stock corrected
about 50 percent. Moreover, we were beginning to perceive that the Fed's
tightening moves were nearly over, as signs of economic slowing were becoming
apparent.
The strategies and techniques employed during the fiscal year resulted in the
Fund significantly outperforming the indices charted on the following page.
Class A shares of Waddell & Reed Advisors Retirement Shares returned 35.29
percent for the fiscal year, compared with the Salomon Brothers
Treasury/Government Sponsored/Corporate Index annual return of 4.23 percent, the
Lipper Flexible Portfolio Funds Universe Average annual return of 7.57 percent,
and the S&P 500 Index annual return of 7.34 percent.* Multiple indices are
presented because the Fund invests in both stocks and bonds. The Lipper
category assigned to the Fund has changed from last year. This change is a
result of Lipper's new fund classification system, which was instituted in
September 1999.
Current economic reports indicate that manufacturing activity, consumer spending
and residential mortgage demand all are slowing. The concern for the equity
market going forward is a weakening profit picture for a number of industries,
coupled with rising inflationary pressures brought on by rising labor and raw
materials costs.
Given the relatively high valuations in some sectors of the stock market, the
slowing of economic activity, gradually rising inflationary pressures, and
relatively high interest rates, a more defensively structured portfolio seems
warranted. We expect to increase our holdings of fixed-income securities in the
near future, and attempt to reduce our exposure to more volatile, or expensive,
areas of the stock market. We continue to favor the energy sector, as the
relative earnings look attractive regardless of the level of economic activity.
Overall, the Fund has investments in a broad and eclectic group of companies,
which we believe should perform well in a variety of market conditions.
In closing, I would like to thank you for your investment, your continued
confidence and your support of Waddell & Reed Advisors Retirement Shares.
Sincerely,
Charles W. Hooper Jr.
Manager, Waddell & Reed Advisors Retirement Shares, Inc.
*These indices reflect the performance of securities that generally represent
the bond market (the Salomon Brothers Treasury/Government Sponsored/Corporate
Index), the stock market (the S&P 500 Index), and the universe of funds with
similar investment objectives (the Lipper Flexible Portfolio Funds Universe
Average).
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
WADDELL & REED ADVISORS RETIREMENT SHARES, INC., CLASS A SHARES,
THE S&P 500 INDEX,
THE SALOMON BROTHERS TREASURY/GOVERNMENT SPONSORED/CORPORATE INDEX
AND THE LIPPER FLEXIBLE PORTFOLIO FUNDS UNIVERSE AVERAGE
Salomon
Waddell Brothers Lipper
& Reed Treasury/ Flexible
Advisors Government Portfolio
Retirement S&PSponsored/ Funds
Shares, Inc., 500 Corporate Universe
Class A Index Index Average
------------ --------------- ---------
06/30/90 Purchase 9,425 10,000 10,000 10,000
06/30/91 9,902 10,739 11,037 10,781
06/30/92 11,678 12,181 12,609 12,169
06/30/93 13,250 13,840 14,270 13,918
06/30/94 13,917 14,035 14,082 14,084
06/30/95 16,014 17,694 15,872 16,369
06/30/96 18,406 22,295 16,607 18,981
06/30/97 21,481 30,022 17,904 22,561
06/30/98 24,584 39,090 19,936 26,603
06/30/99 27,717 47,969 20,467 29,413
06/30/00 39,786 51,490 21,332 31,586
==== Waddell & Reed Advisors Retirement Shares, Inc., Class A Shares* -- $39,786
++++ S&P 500 Index -- $51,490
**** Salomon Brothers Treasury/Government Sponsored/Corporate Index -- $21,332
---- Lipper Flexible Portfolio Funds Universe Average -- $31,586
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund.
Average Annual Total Return+
Class A Class B Class C Class Y
----------------------------------------------
Year Ended
6/30/00 35.29% N/A N/A 43.75%
5 Years Ended
6/30/00 18.55% N/A N/A N/A
10 Years Ended
6/30/00 14.81% N/A N/A N/A
Since inception of
Class++ through
6/30/00 N/A 33.28% 37.28% 20.15%
+Performance data quoted represents past performance and is based on deduction
of the maximum applicable sales load for each of the periods. Class A shares
carry a maximum front-end sales load of 5.75%. Class B and Class C shares
carry maximum contingent deferred sales charges of 5% and 1%, respectively.
Total returns reflect share price appreciation, including reinvestment of all
income and capital gains distributions. Investment return and principal value
will fluctuate and an investor's shares, when redeemed, may be worth more or
less than their original cost.
++10/4/99 for Class B shares, 10/4/99 for Class C shares and 2/27/96 for Class Y
shares (the date on which shares were first acquired by shareholders).
Past performance is not predictive of future performance. Indexes are
unmanaged.
<PAGE>
SHAREHOLDER SUMMARY
--------------------------------------------------------------------------------
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
PORTFOLIO STRATEGY:
Common stocks believed to GOAL: To provide the highest
have the potential for: long-term total
Long-term appreciation investment return as is,
Stability in the opinion of
Income the Fund's investment manager,
consistent with reasonable safety of
capital.
Maximum 10% foreign STRATEGY: Invests primarily in
securities common stocks and debt
securities (of any
Debt securities maturity and mostly of
investment grade) of U.S.
issuers. The Fund
generally owns common stock of medium to
large, well-established companies while
typically emphasizing a blend of value
and growth potential.
FOUNDED: 1972
SCHEDULED DIVIDEND FREQUENCY: QUARTERLY (March, June, September,
December)
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Fiscal Year Ended June 30, 2000
---------------------------------------
DIVIDENDS PAID $0.06
=====
CAPITAL GAINS DISTRIBUTION $1.71
=====
NET ASSET VALUE ON
06/30/00 $12.05 adjusted to:$13.76(A)
06/30/99 9.84
------
CHANGE PER SHARE $3.92
======
(A)This number includes the capital gains distribution of $1.71 paid in December
1999 added to the actual net asset value on June 30, 2000.
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
------ ----------- ------------
1-year period ended 6-30-00 35.29% 43.54%
5-year period ended 6-30-00 18.55% 19.96%
10-year period ended 6-30-00 14.81% 15.49%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On June 30, 2000, Waddell & Reed Advisors Retirement Shares, Inc. had net assets
totaling $1,422,228,003 invested in a diversified portfolio of:
85.53% Common Stocks
10.50% Corporate Bonds
2.35% U.S. Government Securities
1.41% Cash and Cash Equivalents
0.21% Other Government Security
As a shareholder of Waddell & Reed Advisors Retirement Shares, Inc., for every
$100 you had invested on June 30, 2000, your Fund owned:
$45.58 Manufacturing Stocks
10.50 Corporate Bonds
9.51 Services Stocks
9.13 Transportation, Communication, Electric
and Sanitary Services Stocks
8.21 Mining Stocks
7.07 Finance, Insurance and Real Estate Stocks
6.03 Wholesale and Retail Trade Stocks
2.35 U.S. Government Securities
1.41 Cash and Cash Equivalents
0.21 Other Government Security
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
JUNE 30, 2000
Shares Value
COMMON STOCKS
Amusement and Recreation Services - 0.60%
Westwood One, Inc.* .................... 250,000 $ 8,531,250
Building Materials and Garden Supplies - 1.77%
Home Depot, Inc. (The) ................. 300,000 14,981,250
Lowe's Companies, Inc. ................. 250,000 10,265,625
Total ................................. 25,246,875
Business Services - 6.93%
America Online, Inc.* .................. 250,000 13,187,500
BroadVision, Inc.* ..................... 300,000 15,215,625
Clear Channel Communications, Inc.* .... 225,000 16,875,000
GO.com* ................................ 550,000 6,565,625
International FiberCom, Inc.* .......... 350,000 8,914,063
Oracle Corporation* .................... 150,000 12,604,687
Pilot Network Services, Inc.* .......... 400,000 5,975,000
S1 Corporation* ........................ 325,000 7,586,719
SunGard Data Systems, Inc.* ............ 375,000 11,625,000
Total ................................. 98,549,219
Chemicals and Allied Products - 8.09%
American Home Products Corporation ..... 550,000 32,312,500
Bristol-Myers Squibb Company ........... 200,000 11,650,000
Dow Chemical Company (The) ............. 300,000 9,056,250
Forest Laboratories, Inc.* ............. 125,000 12,625,000
Merck & Co., Inc. ...................... 150,000 11,493,750
Pfizer Inc. ............................ 475,000 22,800,000
Schering-Plough Corporation ............ 300,000 15,150,000
Total ................................. 115,087,500
Communication - 7.57%
BellSouth Corporation .................. 250,000 10,656,250
Qwest Communications International Inc.* 200,000 9,937,500
SBC Communications Inc. ................ 400,000 17,300,000
Sinclair Broadcast Group, Inc.* ........ 700,000 7,678,125
Sprint Corporation - FON Group ......... 300,000 15,300,000
Sprint Corporation - PCS Group* ........ 200,000 11,900,000
USA Networks, Inc.* .................... 900,000 19,490,625
Viacom Inc., Class B* .................. 225,000 15,342,188
Total ................................. 107,604,688
Depository Institutions - 2.11%
Bank of America Corporation ............ 375,000 16,125,000
Chase Manhattan Corporation (The) ...... 300,000 13,818,750
Total ................................. 29,943,750
See Notes to Schedule of Investments on page 16.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment - 23.10%
Amphenol Corporation, Class A* ......... 325,000 $ 21,510,937
Analog Devices, Inc.* .................. 175,000 13,300,000
Glenayre Technologies, Inc.* ........... 800,000 8,425,000
Harman International Industries,
Incorporated .......................... 225,000 13,725,000
Intel Corporation ...................... 200,000 26,731,250
JDS Uniphase Corporation* .............. 150,000 17,976,563
Jabil Circuit, Inc.* ................... 350,000 17,368,750
LSI Logic Corporation* ................. 400,000 21,650,000
Maxim Integrated Products, Inc.* ....... 225,000 15,278,906
Maytag Corporation ..................... 400,000 14,750,000
Micron Technology, Inc.* ............... 340,000 29,941,250
National Semiconductor Corporation* .... 125,000 7,093,750
Nokia Corporation, Series A, ADR ....... 150,000 7,490,625
Nortel Networks Corporation ............ 150,000 10,237,500
PMC - Sierra Inc.* ..................... 150,000 26,648,437
Rambus Inc.* ........................... 300,000 30,900,000
Sanmina Corporation* ................... 175,000 14,957,031
Solectron Corporation* ................. 400,000 16,750,000
Texas Instruments Incorporated ......... 200,000 13,737,500
Total ................................. 328,472,499
Engineering and Management Services - 0.92%
marchFIRST, Inc.* ...................... 275,000 5,027,344
Tetra Tech, Inc.* ...................... 350,000 8,017,187
Total ................................. 13,044,531
Food Stores - 0.62%
Kroger Co. (The)* ...................... 400,000 8,825,000
Furniture and Home Furnishings Stores - 0.58%
Circuit City Stores, Inc. -
Circuit City Group .................... 250,000 8,296,875
General Merchandise Stores - 1.60%
BJ's Wholesale Club, Inc.* ............. 250,000 8,250,000
Target Corporation ..................... 250,000 14,500,000
Total ................................. 22,750,000
Health Services - 0.46%
Health Management Associates, Inc.,
Class A* .............................. 500,000 6,531,250
See Notes to Schedule of Investments on page 16.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Industrial Machinery and Equipment - 8.65%
Apple Computer, Inc.* .................. 300,000 $ 15,703,125
Applied Materials, Inc.* ............... 200,000 18,131,250
Cisco Systems, Inc.* ................... 350,000 22,235,938
Cooper Cameron Corporation* ............ 175,000 11,550,000
Dell Computer Corporation* ............. 400,000 19,737,500
EMC Corporation* ....................... 200,000 15,387,500
Lam Research Corporation* .............. 175,000 6,567,969
Sun Microsystems, Inc.* ................ 150,000 13,645,312
Total ................................. 122,958,594
Instruments and Related Products - 1.04%
Guidant Corporation* ................... 300,000 14,850,000
Insurance Agents, Brokers & Service - 0.98%
Hartford Financial Services
Group Inc. (The) ...................... 250,000 13,984,375
Insurance Carriers - 0.76%
Lincoln National Corporation ........... 300,000 10,837,500
Lumber and Wood Products - 0.60%
Weyerhaeuser Company ................... 200,000 8,600,000
Motion Pictures - 0.60%
AT&T Corp. - Liberty Media Group, Class A* 350,000 8,487,500
Nondepository Institutions - 1.73%
Freddie Mac ............................ 350,000 14,175,000
Morgan Stanley, Dean Witter,
Discover & Co. ........................ 125,000 10,406,250
Total ................................. 24,581,250
Oil and Gas Extraction - 8.21%
Anadarko Petroleum Corporation ......... 450,000 22,190,625
Apache Corporation ..................... 325,000 19,114,062
Burlington Resources Incorporated ...... 600,000 22,950,000
Kerr-McGee Corporation ................. 300,000 17,681,250
Santa Fe International Corporation ..... 250,000 8,734,375
Schlumberger Limited ................... 350,000 26,118,750
Total ................................. 116,789,062
Paper and Allied Products - 1.00%
Packaging Corporation of America* ...... 650,000 6,581,250
Smurfit-Stone Container Corporation* ... 600,000 7,706,250
Total ................................. 14,287,500
See Notes to Schedule of Investments on page 16.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Petroleum and Coal Products - 0.87%
Royal Dutch Petroleum Company,
NY Shares ............................. 200,000 $ 12,312,500
Primary Metal Industries - 0.82%
Alcoa Incorporated ..................... 400,000 11,600,000
Real Estate - 0.60%
FrontLine Capital Group* ............... 400,000 8,537,500
Security and Commodity Brokers - 0.89%
Charles Schwab Corporation (The) ....... 375,000 12,609,375
Transportation by Air - 1.56%
Northwest Airlines Corporation,
Class A* .............................. 300,000 9,112,500
UAL Corporation* ....................... 225,000 13,092,188
Total ................................. 22,204,688
Transportation Equipment - 1.41%
Boeing Company (The) ................... 250,000 10,453,125
Harley-Davidson, Inc. .................. 250,000 9,625,000
Total ................................. 20,078,125
Wholesale Trade -- Durable Goods - 1.46%
Avnet, Inc. ............................ 350,000 20,737,500
TOTAL COMMON STOCKS - 85.53% $1,216,338,906
(Cost: $1,036,506,530)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Chemicals and Allied Products- 1.37%
du Pont (E.I.) de Nemours and Company:
6.75%, 10-15-04 ....................... $10,000 9,850,500
6.875%, 10-15-09 ...................... 10,000 9,719,000
Total ................................. 19,569,500
Communication - 3.03%
Bell Atlantic Financial Services, Inc.,
7.6%, 3-15-07 ......................... 10,000 9,979,600
Bell Telephone Company of Pennsylvania (The),
8.35%, 12-15-30 ....................... 3,000 3,128,370
Deutsche Telekom International Finance B.V.,
8.25%, 6-15-30 ........................ 28,000 28,525,000
Southwestern Bell Telephone Company,
5.77%, 10-14-03 ....................... 1,500 1,427,445
Total ................................. 43,060,415
See Notes to Schedule of Investments on page 16.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Depository Institutions - 0.16%
Wachovia Corporation,
6.25%, 8-4-08 ......................... $ 2,500 $ 2,256,200
Electric, Gas and Sanitary Services - 0.07%
California Infrastructure and Economic
Development Bank, Special Purpose
Trust PG&E-1,
6.42%, 9-25-08 ........................ 1,000 971,410
Food and Kindred Products - 0.34%
Coca-Cola Enterprises Inc.,
6.7%, 10-15-36 ........................ 5,000 4,885,250
Health Services - 0.45%
Columbia/HCA Healthcare Corporation,
6.91%, 6-15-05 ........................ 7,000 6,352,500
Industrial Machinery and Equipment - 0.17%
Tyco International Group S.A.,
6.375%, 6-15-05 ....................... 2,500 2,384,825
Nondepository Institutions - 4.50%
Ford Motor Credit Company:
6.7%, 7-16-04 ......................... 22,000 21,314,920
7.375%, 10-28-09 ...................... 20,000 19,345,400
General Electric Capital Corporation:
7.5%, 5-15-05 ......................... 20,000 20,205,200
8.3%, 9-20-09 ......................... 3,000 3,221,040
Total ................................. 64,086,560
Transportation by Air - 0.26%
Southwest Airlines Co.,
7.875%, 9-1-07 ........................ 3,650 3,650,256
United States Postal Service - 0.15%
Postal Square Limited Partnership,
8.95%, 6-15-22 ........................ 1,842 2,153,119
TOTAL CORPORATE DEBT SECURITIES - 10.50% $149,370,035
(Cost: $150,093,620)
OTHER GOVERNMENT SECURITY - 0.21%
Supranational
International Bank for Reconstruction and
Development,
9.25%, 7-15-17 ........................ 2,500 $ 3,005,375
(Cost: $2,498,327)
See Notes to Schedule of Investments on page 16.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
JUNE 30, 2000
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
Federal National Mortgage Association,
6.51%, 5-6-08 ......................... $ 7,500 $ 7,061,700
Government National Mortgage Association,
6.5%, 8-15-28 ......................... 12,444 11,810,599
National Archives Facility Trust,
8.5%, 9-1-19 .......................... 4,081 4,493,009
United States Treasury,
6.25%, 2-15-07 ........................ 10,000 10,007,800
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 2.35% $ 33,373,108
(Cost: $33,906,636)
TOTAL SHORT-TERM SECURITIES - 3.40% $ 48,387,002
(Cost: $48,387,002)
TOTAL INVESTMENT SECURITIES - 101.99% $1,450,474,426
(Cost: $1,271,392,115)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (1.99%) (28,246,423)
NET ASSETS - 100.00% $1,422,228,003
Notes to Schedule of Investments
*No dividends were paid during the preceding 12 months.
See Note 1 to financial statements for security valuation and other significant
accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and
depreciation of investments owned for Federal income tax purposes.
<PAGE>
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $1,450,474
Cash ............................................ 1
Receivables:
Investment securities sold ...................... 22,659
Dividends and interest .......................... 3,081
Fund shares sold ................................ 2,175
Prepaid insurance premium ......................... 9
----------
Total assets .................................. 1,478,399
----------
Liabilities
Payable for investment securities purchased ....... 53,915
Payable to Fund shareholders ..................... 1,738
Accrued service fee (Note 2) ..................... 252
Accrued transfer agency and
dividend disbursing (Note 2) .................... 165
Accrued distribution fee (Note 2) ................ 44
Accrued management fee (Note 2) .................. 26
Accrued accounting services fee (Note 2) ......... 8
Accrued shareholder servicing - Class Y (Note 2) . 1
Other ............................................ 22
----------
Total liabilities ............................. 56,171
----------
Total net assets ............................. $1,422,228
==========
Net Assets
$1.00 par value capital stock:
Capital stock ................................... $ 118,036
Additional paid-in capital....................... 829,670
Accumulated undistributed income:
Accumulated undistributed net investment income . 1,827
Accumulated undistributed net realized
gain on investment transactions ............... 293,613
Net unrealized appreciation in value of
investments ................................... 179,082
----------
Net assets applicable to outstanding
units of capital ............................. $1,422,228
==========
Capital shares outstanding:
Class A .......................................... 114,250
Class B ........................................... 2,394
Class C .......................................... 493
Class Y .......................................... 899
Capital shares authorized .......................... 300,000
Net asset value per share (net assets divided
by shares outstanding):
Class A .......................................... $12.05
Class B ........................................... $12.00
Class C .......................................... $12.00
Class Y .......................................... $12.05
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended JUNE 30, 2000
(In Thousands)
Investment Income
Income (Note 1B):
Interest and amortization ....................... $11,980
Dividends ....................................... 6,773
--------
Total income .................................. 18,753
--------
Expenses (Note 2):
Investment management fee ....................... 7,900
Service fee:
Class A ....................................... 2,450
Class B ....................................... 23
Class C ....................................... 5
Transfer agency and dividend disbursing:
Class A ....................................... 1,506
Class B ....................................... 30
Class C ....................................... 7
Distribution fee:
Class A ....................................... 163
Class B ....................................... 67
Class C ....................................... 14
Accounting services fee ......................... 95
Custodian fees .................................. 49
Legal fees ...................................... 14
Audit fees ...................................... 13
Shareholder servicing - Class Y ................. 13
Other ........................................... 228
--------
Total expenses ................................ 12,577
--------
Net investment income ........................ 6,176
--------
Realized and Unrealized Gain on
Investments (Notes 1 and 3)
Realized net gain on investments ................. 363,878
Unrealized appreciation in value of investments
during the period ............................... 33,900
--------
Net gain on investments ......................... 397,778
--------
Net increase in net assets resulting
from operations .............................. $403,954
========
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
For the fiscal year ended
June 30,
-------------------------
2000 1999
Increase in Net Assets ------------ -----------
Operations:
Net investment income ............... $ 6,176 $ 16,688
Realized net gain on investments .... 363,878 89,889
Unrealized appreciation
(depreciation) .................... 33,900 (5,039)
---------- --------
Net increase in net assets
resulting from operations ........ 403,954 101,538
---------- --------
Distributions to shareholders from (Note 1E):*
Net investment income:
Class A ........................... (5,913) (15,950)
Class B ........................... --- ---
Class C ........................... --- ---
Class Y ........................... (69) (74)
Realized gains on securities transactions:
Class A ........................... (157,339) (32,461)
Class B ........................... (576) ---
Class C ........................... (113) ---
Class Y ........................... (1,368) (138)
---------- --------
(165,378) (48,623)
---------- --------
Capital share transactions (Note 5) .. 290,316 12,084
---------- --------
Total increase ................... 528,892 64,999
Net Assets
Beginning of period .................. 893,336 828,337
---------- --------
End of period, including undistributed
net investment income of $1,827
and $1,633, respectively ............ $1,422,228 $893,336
========== ========
*See "Financial Highlights" on pages 22 - 25.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
FINANCIAL HIGHLIGHTS
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the fiscal year ended June 30,
------------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $ 9.84 $9.28 $9.14 $8.72 $8.26
------ ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... 0.06 0.19 0.24 0.27 0.26
Net realized and
unrealized gain
on investments .. 3.92 0.92 0.99 1.08 0.94
------ ----- ----- ----- -----
Total from investment
operations ....... 3.98 1.11 1.23 1.35 1.20
------ ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.06) (0.18) (0.25) (0.27) (0.27)
From capital gains (1.71) (0.37) (0.84) (0.66) (0.47)
------ ----- ----- ----- -----
Total distributions. (1.77) (0.55) (1.09) (0.93) (0.74)
------ ----- ----- ----- -----
Net asset value,
end of period .... $12.05 $9.84 $9.28 $9.14 $8.72
====== ===== ===== ===== =====
Total return* ...... 43.54% 12.75% 14.45% 16.70% 14.93%
Net assets, end of
period (in millions) $1,377 $890 $825 $716 $607
Ratio of expenses to
average net assets 1.10% 0.99% 0.93% 0.92% 0.89%
Ratio of net
investment income
to average net
assets ........... 0.55% 2.04% 2.57% 3.12% 3.01%
Portfolio turnover
rate ............. 295.37%122.58% 53.52% 39.55% 42.05%
*Total return calculated without taking into account the sales load deducted on
an initial purchase.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
FINANCIAL HIGHLIGHTS
Class B Shares
For a Share of Capital Stock Outstanding Throughout The Period:
For the
period
from
10/4/99*
through
6/30/00
-------
Net asset value,
beginning of period $10.12
------
Income from investment
operations:
Net investment loss (0.01)
Net realized and
unrealized gain
on investments .. 3.60
------
Total from investment
operations ....... 3.59
------
Less distributions:
From net investment
income .......... (0.00)
From capital gains (1.71)
------
Total distributions (1.71)
------
Net asset value,
end of period .... $12.00
======
Total return ....... 38.28
Net assets, end of
period (in
millions) ........ $28
Ratio of expenses to
average net assets 2.05%**
Ratio of net investment
loss to average
net assets ....... -0.42%**
Portfolio turnover
rate ............. 295.37%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
FINANCIAL HIGHLIGHTS
Class C Shares
For a Share of Capital Stock Outstanding Throughout The Period:
For the
period
from
10/4/99*
through
6/30/00
-------
Net asset value,
beginning of period $10.12
-----
Income from investment
operations:
Net investment loss (0.01)
Net realized and
unrealized gain
on investments .. 3.60
-----
Total from investment
operations ....... 3.59
-----
Less distributions:
From net investment
income .......... (0.00)
From capital gains (1.71)
-----
Total distributions (1.71)
-----
Net asset value,
end of period .... $12.00
=====
Total return ....... 38.28%
Net assets, end of
period (in
millions) ........ $6
Ratio of expenses to
average net assets 2.07%**
Ratio of net investment
loss to average
net assets ....... -0.44%**
Portfolio turnover
rate ............. 295.37%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
FINANCIAL HIGHLIGHTS
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
period
For the fiscal from
year ended June 30, 2/27/96*
----------------------------- through
2000 1999 1998 1997 6/30/96
------ ------ ------ ------ -------
Net asset value,
beginning of period $ 9.85 $9.28 $9.14 $8.72 $8.68
------ ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... 0.10 0.20 0.25 0.29 0.10
Net realized and
unrealized gain
on investments .. 3.89 0.94 0.99 1.07 0.06
------ ----- ----- ----- -----
Total from investment
operations ........ 3.99 1.14 1.24 1.36 .16
------ ----- ----- ----- -----
Less distributions:
From net investment
income........... (0.08) (0.20) (0.26) (0.28) (0.12)
From capital gains (1.71) (0.37) (0.84) (0.66) (0.00)
------ ----- ----- ----- -----
Total distributions. (1.79) (0.57) (1.10) (0.94) (0.12)
------ ----- ----- ----- -----
Net asset value,
end of period .... $12.05 $9.85 $9.28 $9.14 $8.72
====== ===== ===== ===== =====
Total return ....... 43.75% 13.11% 14.62% 16.87% 1.91%
Net assets, end of
period (in
millions) ........ $11 $3 $3 $3 $2
Ratio of expenses
to average net
assets ............ 0.88% 0.75% 0.79% 0.78%0.71%**
Ratio of net
investment income
to average net
assets ............ 0.75% 2.32% 2.71% 3.28%3.36%**
Portfolio
turnover rate ..... 295.37%122.58% 53.52% 39.55%42.05%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS RETIREMENT SHARES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 1 -- Significant Accounting Policies
Waddell & Reed Advisors Retirement Shares, Inc. (the "Fund"), formerly
United Retirement Shares, Inc., is registered under the Investment Company Act
of 1940 as a diversified, open-end management investment company. Its
investment objective is to provide the highest long-term total investment return
as is, in the opinion of management, consistent with reasonable safety of
capital. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its 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 the last 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. Short-term debt
securities are valued at amortized cost, which approximates market.
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. Original issue discount (as defined in the Internal
Revenue Code), premiums on the purchase of bonds and post-1984 market
discount are amortized for both financial and tax reporting purposes.
Dividend income is recorded on the ex-dividend date. Interest income is
recorded on the accrual basis. See Note 3 -- Investment Securities
Transactions.
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 Subchapter M of the Internal
Revenue Code. In addition, the Fund intends to pay distributions as
required to avoid imposition of excise tax. Accordingly, provision has not
been made for Federal income taxes. See Note 4 -- Federal Income Tax
Matters.
E. Dividends and distributions -- Dividends and distributions to shareholders
are recorded by the Fund on the business day following record date. Net
investment income dividends 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
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 annual rates of: 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. The Fund accrues and pays this fee daily.
Pursuant to assignment of the Investment Management Agreement between the
Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly owned subsidiary of W&R, serves as the Fund's
investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed Services
Company ("WARSCO"), a wholly owned subsidiary of W&R. Under the agreement,
WARSCO acts as the agent in providing accounting services and assistance to the
Fund and pricing daily the value of shares of the Fund. For these services, the
Fund pays WARSCO 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 Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
For Class A, Class B and Class C shares, the Fund pays WARSCO a monthly per
account charge for transfer agency and dividend disbursement services of $1.3125
for each shareholder account which was in existence at any time during the prior
month, plus $0.30 for each account on which a dividend or distribution of cash
or shares had a record date in that month. With respect to Class Y shares, the
Fund pays WARSCO a monthly fee at an annual rate of 0.15% of the average daily
net assets of the class for the preceding month. The Fund also reimburses W&R
and WARSCO for certain out-of-pocket costs.
As principal underwriter for the Fund's shares, W&R received gross sales
commissions for Class A shares (which are not an expense of the Fund) of
$3,253,764. During the period ended June 30, 2000, W&R received $5,953 and
$1,002 in deferred sales charges for Class B shares and Class C shares,
respectively. With respect to Class A, Class B and Class C shares, W&R paid
sales commissions of $2,875,497 and all expenses in connection with the sale of
Fund shares, except for registration fees and related expenses.
Under a Distribution and Service Plan for Class A shares adopted by the
Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund
may pay monthly a distribution and/or service fee to W&R in an amount not to
exceed 0.25% of the Fund's Class A average annual net assets. The fee is to be
paid to reimburse W&R for amounts it expends in connection with the distribution
of the Class A shares and/or provision of personal services to Fund shareholders
and/or maintenance of shareholder accounts.
Under the Distribution and Service Plan adopted by the Fund for Class B and
Class C shares, respectively, the Fund may pay W&R, on an annual basis, a
service fee of up to 0.25% of the average daily net assets of the class to
compensate W&R for providing services to shareholders of that class and/or
maintaining shareholder accounts for that class and a distribution fee of up to
0.75% of the average daily net assets of the class to compensate W&R for
distributing the shares of that class. The Class B Plan and the Class C Plan
each permit W&R to receive compensation, through the distribution and service
fee, respectively, for its distribution activities for that class, which are
similar to the distribution activities described with respect to the Class A
Plan, and for its activities in providing personal services to shareholders of
that class and/or maintaining shareholder accounts of that class, which are
similar to the corresponding activities for which is it entitled to
reimbursement under the Class A Plan.
The Fund paid Directors' fees of $35,182, which are included in other
expenses.
W&R is a subsidiary of Waddell & Reed Financial, Inc., a holding company,
and a direct subsidiary of Waddell & Reed Financial Services, Inc., a holding
company.
NOTE 3 -- Investment Securities Transactions
Purchases of investment securities, other than U.S. Government obligations
and short-term securities, aggregated $3,207,374,466 while proceeds from
maturities and sales aggregated $3,012,814,199. Purchases of short-term and
U.S. Government securities aggregated $2,922,490,448 and $189,237,275,
respectively. Proceeds from maturities and sales of short-term and U.S.
Government securities aggregated $2,890,443,805 and $252,505,714, respectively.
For Federal income tax purposes, cost of investments owned at June 30, 2000
was $1,271,883,736, resulting in net unrealized appreciation of $178,590,690, of
which $236,484,521 related to appreciated securities and $57,893,831 related to
depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $364,205,179 during its fiscal year ended June 30, 2000, of which a portion
was paid to shareholders during the period ended June 30, 2000. Remaining
capital gain net income will be distributed to the Fund's shareholders.
NOTE 5 -- Multiclass Operations
The Fund is authorized to offer four classes of shares, Class A, Class B,
Class C and Class Y, each of which have equal rights as to assets and voting
privileges. Class Y shares are not subject to a sales charge on purchases, are
not subject to a Rule 12b-1 Distribution and Service Plan and are subject to a
separate transfer agency and dividend disbursement services fee structure. A
comprehensive discussion of the terms under which shares of each class are
offered is contained in the Prospectus and the Statement of Additional
Information for the Fund.
Income, non-class specific expenses, and realized and unrealized gains and
losses are allocated daily to each class of shares based on the value of their
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity.
Transactions in capital stock are summarized below. Amounts are in
thousands.
For the fiscal
year ended June 30,
--------------------------
2000 1999
------------ ------------
Shares issued from sale
of shares:
Class A ............ 20,241 10,309
Class B ............. 2,413 ---
Class C ............. 502 ---
Class Y ............ 728 230
Shares issued from reinvestment
of dividends and/or capital gains
distribution:
Class A ............ 15,696 5,446
Class B ............. 56 ---
Class C ............. 11 ---
Class Y ............ 86 24
Shares redeemed:
Class A ............ (12,091) (14,310)
Class B ............. (75) ---
Class C ............. (20) ---
Class Y ............ (254) (243)
---------- ----------
Increase in outstanding
capital shares ...... 27,293 1,456
========== ==========
Value issued from sale
of shares:
Class A ............ $222,569 $ 93,629
Class B ............. 27,172 ---
Class C ............. 5,630 ---
Class Y ............ 7,680 2,066
Value issued from
reinvestment of dividends
and/or capital gains
distribution:
Class A ............ 161,642 48,028
Class B ............. 576 ---
Class C ............. 113 ---
Class Y ............ 885 212
Value redeemed:
Class A ............ (132,076) (129,651)
Class B ............. (860) ---
Class C ............. (234) ---
Class Y ............ (2,781) (2,200)
-------- --------
Increase in outstanding
capital ............ $290,316 $ 12,084
======== ========
NOTE 6 -- Securities Loaned
On June 30, 2000 there were no securities outstanding on loan. If
securities were on loan, however, the aggregate amount of such loans must be
secured by 100% of the market value of the securities loaned. The Fund derives
income from its securities lending activities. These arrangements may be
terminated by the borrower or the Fund upon proper notice. In the event the
borrower fails to deliver the securities within five business days, the Fund has
the right to use the collateral to purchase similar or other securities. During
the period ended June 30, 2000, the Fund derived approximately $93,150 of
income, net of related expenses, from its security lending activity.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Waddell & Reed Advisors Retirement Shares, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Waddell & Reed Advisors Retirement Shares, Inc.
(formerly United Retirement Shares, Inc.) (the "Fund") as of June 30, 2000, and
the related statement of operations for the fiscal year then ended, the
statements of changes in net assets for each of the two fiscal years in the
period then ended, and the financial highlights for each of the five fiscal
years in the period then ended. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of June 30, 2000, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Waddell & Reed Advisors Retirement Shares, Inc. as of June 30, 2000, the results
of its operations for the fiscal year then ended, the changes in its net assets
for each of the two fiscal years in the period then ended, and the financial
highlights for each of the five fiscal years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America.
Deloitte & Touche LLP
Kansas City, Missouri
August 4, 2000
<PAGE>
INCOME TAX INFORMATION
The amounts of the dividends and long-term capital gains below, multiplied by
the number of shares owned by you on the record dates, will give you the total
amounts to be reported in your Federal income tax return for the years in which
they were received or reinvested.
PER-SHARE AMOUNTS REPORTABLE AS:
--------------------------------------------------------
For Individuals For Corporations
-----------------------------------------------------
Record Ordinary Long-Term Non- Long-Term
Date Total IncomeCapital GainQualifyingQualifyingCapital Gain
----------- ------------- -------- ----------------------------
Class A
09-15-99 $0.020 $0.0200 $0.0000 $0.0081 $0.0119 $0.0000
12-15-99 1.726 0.8782 0.8478 0.0178 0.8604 0.8478
03-15-00 0.010 0.0100 0.0000 0.0100 0.0000 0.0000
06-14-00 0.010 0.0100 0.0000 0.0100 0.0000 0.0000
------ ------- ------- ------- ------- -------
Total $1.766 $0.9182 $0.8478 $0.0459 $0.8723 $0.8478
====== ======= ======= ======= ======= =======
Class B and Class C
12-15-99 $1.706 $0.8582 $0.8478 $0.0000 $0.8582 $0.8478
====== ======= ======= ======= ======= =======
Class Y
09-15-99 $0.028 $0.280 $0.0000 $0.0114 $0.0166 $0.0000
12-15-99 1.734 0.8862 0.8478 0.0250 0.8612 0.8478
03-15-00 0.015 0.0150 0.0000 0.0150 0.0000 0.0000
06-14-00 0.017 0.0170 0.0000 0.0170 0.0000 0.0000
------ ------- ------- ------- ------- -------
Total $1.794 $0.9462 $0.8478 $0.0684 $0.8778 $0.8478
====== ======= ======= ======= ======= =======
CORPORATION DEDUCTIONS -- Under Federal tax law, the amounts reportable as
Qualifying Dividends are eligible for the dividends received deduction in the
year received as provided by Section 243 of the Internal Revenue Code.
The tax status of dividends paid will be reported to you on Form 1099-DIV after
the close of the applicable calendar year.
Shareholders are advised to consult with their tax advisor concerning the tax
treatment of dividends and distributions from the Fund.
<PAGE>
DIRECTORS
Keith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, San Mateo, California
Linda K. Graves, Topeka, Kansas
Joseph Harroz, Jr., Norman, Oklahoma
John F. Hayes, Hutchinson, Kansas
Robert L. Hechler, Overland Park, Kansas
Henry J. Herrmann, Overland Park, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Ronald C. Reimer, Mission Hills, Kansas
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Frederick Vogel III, Milwaukee, Wisconsin
OFFICERS
Robert L. Hechler, President
Henry J. Herrmann, Vice President
Charles W. Hooper, Vice President
Theodore W. Howard, Vice President and Treasurer
Kristen A. Richards, Vice President and Secretary
Daniel C. Schulte, Vice President
This report is submitted for the general information of the shareholders of
Waddell & Reed Advisors Retirement Shares, Inc. It is not authorized for
distribution to prospective investors in the Fund unless accompanied with or
preceded by the Waddell & Reed Advisors Retirement Shares, Inc. current
prospectus.
To all traditional IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from a traditional IRA unless you make a written
election not to have taxes withheld. The election may be made by submitting
forms provided by Waddell & Reed, Inc. which can be obtained from your Waddell &
Reed representative or by submitting Internal Revenue Service Form W-4P. Once
made, an election can be revoked by providing written notice to Waddell & Reed,
Inc. If you elect not to have tax withheld you may be required to make payments
of estimated tax. Penalties may be imposed by the IRS if withholding and
estimated tax payments are not adequate.
<PAGE>
THE WADDELL & REED ADVISORS GROUP OF MUTUAL FUNDS
Waddell & Reed Advisors Accumulative Fund
Waddell & Reed Advisors Asset Strategy Fund, Inc.
Waddell & Reed Advisors Bond Fund
Waddell & Reed Advisors Cash Management, Inc.
Waddell & Reed Advisors Continental Income Fund, Inc.
Waddell & Reed Advisors Government Securities Fund, Inc.
Waddell & Reed Advisors High Income Fund, Inc.
Waddell & Reed Advisors High Income Fund II, Inc.
Waddell & Reed Advisors Income Fund
Waddell & Reed Advisors International Growth Fund, Inc.
Waddell & Reed Advisors Municipal Bond Fund, Inc.
Waddell & Reed Advisors Municipal High Income Fund, Inc.
Waddell & Reed Advisors New Concepts Fund, Inc.
Waddell & Reed Advisors Retirement Shares, Inc.
Waddell & Reed Advisors Science and Technology Fund
Waddell & Reed Advisors Small Cap Fund, Inc.
Waddell & Reed Advisors Tax-Managed Equity Fund, Inc.
Waddell & Reed Advisors Vanguard Fund, Inc.
------------------------------------
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, KS 66201-9217
(888)-WADDELL
(888)-923-3355
Our INTERNET address is:
http://www.waddell.com
NUR1007A(6-00)
