<PAGE>
WADDELL & REED ADVISORS
FUNDS, INC.
Waddell & Reed Advisors Accumulative Fund
Waddell & Reed Advisors Bond Fund
Waddell & Reed Advisors Income Fund
Waddell & Reed Advisors Science and
Technology Fund
SEMIANNUAL
REPORT
---------------------------------------
For the six months ended June 30, 2000
<PAGE>
This report is submitted for the general information of the shareholders of
Waddell & Reed Advisors Funds, Inc. It is not authorized for distribution to
prospective investors unless accompanied with or preceded by the Waddell & Reed
Advisors Funds, Inc. current prospectus.
<PAGE>
PRESIDENT'S LETTER
JUNE 30, 2000
Dear Shareholder,
We are delighted to share with you this report on your Fund's operations for the
six months ended June 30, 2000.
The last six months marked an unusual and frenetic time for the markets and the
economy. While the first quarter of 2000 was quite strong, especially for
stocks in the technology sector, the second quarter brought a decline for those
same stocks and a slowdown in the overheated U.S. economy. The slowdown was
engineered by the Federal Reserve, which raised interest rates 25 basis points
in both February and March, followed by a 50-basis-point increase in May.
The efforts at slowing the economy have apparently worked, although a parallel
acceleration in inflation remains a possibility. As a result of the Fed's
actions, the stock market didn't make much progress during the first half of the
year -- in fact, it receded a bit. While the first few months of this year were
strong, the last few months saw negative returns -- especially April and May.
Year-to-date, the technology-heavy Nasdaq Composite Index was down 2.54 percent,
while the Nasdaq Industrial Index was down 5.91 percent. The performance of the
two major indices was also down from January through June, as the Dow Jones
Industrial Average declined 8.55 percent and the Standard & Poor's 500 was down
0.47 percent. One of the broadest indices, the Wilshire 5000, was also down for
the first half of this year, declining 1.41 percent. The one positive return
came in the smaller-company index, the Russell 2000 Index, which was up 3.07
percent.
Looking ahead, the market is still trying to find direction. Currently,
statistics suggest that the economy has slowed significantly since the beginning
of the year. The question remains, however, whether it has slowed enough to
prevent any further interest rate increases by the Federal Reserve. Other
factors that may affect the market during the remainder of the year include the
presidential election, the high trade deficit and the implications of that
deficit for the value of the U.S. dollar abroad.
Overall, investors have been rewarded well in recent years. Those who continue
a structured and consistent investment program remain well positioned to take
advantage of opportunities, including those presented by the market's occasional
downdrafts. Just as we urge you not to become unduly concerned if the market
moves downward in the near term, we would urge that you not become too exuberant
when it moves higher in similarly short time periods.
It is impossible to predict with certainty where markets will go next, but one
thing that remains certain is that a well-thought-out investment plan is
essential. Remember, a plan that is appropriate for you is appropriate
regardless of inevitable market changes. You have a partnership with your
Waddell & Reed financial advisor, and that partnership is built upon a
customized program based on your specific needs. Focusing on that plan, despite
market fluctuations, could be your key to a sound financial future. Thank you
for your ongoing commitment and support.
Respectfully,
Robert L. Hechler
President
<PAGE>
SHAREHOLDER SUMMARY
-----------------------------------------------------------------
WADDELL & REED ADVISORS ACCUMULATIVE FUND
PORTFOLIO STRATEGY:
Appreciation-oriented GOALS: To seek capital growth, with
common stocks current income as a secondary objective.
STRATEGY: Invests primarily in largely capitalized
common stocks of U.S. and foreign
companies.
FOUNDED: 1940
SCHEDULED DIVIDEND FREQUENCY: SEMIANNUALLY
(JUNE AND DECEMBER)
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Six Months Ended June 30, 2000
--------------------------------------
DIVIDEND PAID $0.01
=====
NET ASSET VALUE ON
06/30/00 $9.61
12/31/99 9.14
-----
CHANGE PER SHARE $0.47
=====
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
------ ----------- ------------
1-year period ended 6-30-00 13.42% 20.34%
5-year period ended 6-30-00 20.65% 22.08%
10-year period ended 6-30-00 15.23% 15.91%
*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 Accumulative Fund had net assets
totaling $2,327,793,667 invested in a diversified portfolio of:
97.79% Common Stocks
2.21% Cash and Cash Equivalents
As a shareholder of Waddell & Reed Advisors Accumulative Fund, for every $100
you had invested on June 30, 2000, your Fund owned:
$46.23 Manufacturing Stocks
24.31 Finance, Insurance and Real Estate Stocks
12.43 Services Stocks
9.07 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
5.33 Mining Stocks
2.21 Cash and Cash Equivalents
0.42 Wholesale and Retail Trade Stocks
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS ACCUMULATIVE FUND
JUNE 30, 2000
Shares Value
COMMON STOCKS
Business Services - 5.76%
BroadVision, Inc.* ..................... 500,000 $ 25,359,375
Brocade Communications Systems, Inc.* .. 150,000 27,482,812
Electronic Data Systems Corporation .... 1,432,000 59,070,000
Phone.com, Inc.* ....................... 125,000 8,152,344
Veritas Software Corp.* ................ 125,000 14,121,094
Total ................................. 134,185,625
Chemicals and Allied Products - 19.10%
American Home Products Corporation ..... 1,600,000 94,000,000
Aphton Corporation* .................... 150,000 3,867,187
Aviron* ................................ 250,000 7,710,938
Axys Pharmaceuticals, Inc.* ............ 500,000 2,984,375
Bristol-Myers Squibb Company ........... 500,000 29,125,000
Dial Corporation (The) ................. 1,500,000 15,562,500
Forest Laboratories, Inc.* ............. 1,188,300 120,018,300
Mylan Laboratories Inc. ................ 1,500,000 27,375,000
OCCIDENTAL PETROLEUM CORPORATION ....... 700,000 14,743,750
QLT Inc.* .............................. 200,000 15,531,250
Schering-Plough Corporation ............ 2,250,300 113,640,150
Total ................................. 444,558,450
Communication - 6.52%
ALLTEL Corporation ..................... 700,000 43,356,250
EchoStar Communications Corporation,
Class A*............................... 500,000 16,546,875
Sprint Corporation - FON Group ......... 1,800,000 91,800,000
Total ................................. 151,703,125
Depository Institutions - 5.00%
Bank of America Corporation ............ 1,100,000 47,300,000
Chase Manhattan Corporation (The) ...... 1,500,000 69,093,750
Total ................................. 116,393,750
Electric, Gas and Sanitary Services - 2.55%
Duke Energy Corp. ...................... 200,000 11,275,000
Dynegy Inc., Class A ................... 300,000 20,493,750
Energy East Corporation ................ 700,000 13,343,750
Northern States Power Company .......... 700,000 14,131,250
Total ................................. 59,243,750
Electronic and Other Electric Equipment - 6.58%
Broadcom Corporation, Class A* ......... 175,000 38,314,063
Maxim Integrated Products, Inc.* ........ 200,000 13,581,250
Nortel Networks Corporation ............ 500,000 34,125,000
Texas Instruments Incorporated ......... 550,000 37,778,125
Vitesse Semiconductor Corporation* ..... 400,000 29,437,500
Total.................................. 153,235,938
See Notes to Schedules of Investments on page 10.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS ACCUMULATIVE FUND
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Food and Kindred Products - 2.80%
Flowers Industries, Inc. ............... 750,000 $14,953,125
General Mills, Inc. .................... 450,000 17,212,500
Keebler Foods Company .................. 450,000 16,706,250
Kellogg Company ........................ 550,000 16,362,500
Total ................................. 65,234,375
Health Services - 6.67%
HCA - The Healthcare Company ........... 2,000,000 60,750,000
Health Management Associates, Inc.,
Class A* .............................. 2,066,500 26,993,656
Tenet Healthcare Corporation* .......... 2,500,000 67,500,000
Total ................................. 155,243,656
Industrial Machinery and Equipment - 2.47%
Baker Hughes Incorporated .............. 1,000,000 32,000,000
Compaq Computer Corporation ............ 1,000,000 25,562,500
Total ................................. 57,562,500
Insurance Agents, Brokers and Service - 0.30%
Gallagher (Arthur J.) & Co. ............ 168,300 7,068,600
Insurance Carriers - 14.66%
Allmerica Financial Corporation ........ 500,000 26,187,500
American General Corporation ........... 800,000 48,800,000
Aon Corporation ........................ 2,000,000 62,125,000
Everest Re Group, Ltd. ................. 869,400 28,581,525
Liberty Corporation (The) .............. 250,000 10,500,000
Lincoln National Corporation ........... 1,500,000 54,187,500
Oxford Health Plans Inc.* .............. 1,350,000 32,146,875
SAFECO Corporation ..................... 1,100,000 21,896,875
St. Paul Companies, Inc. (The) ......... 1,000,000 34,125,000
Torchmark Corporation .................. 916,800 22,633,500
Total ................................. 341,183,775
Nondepository Institutions - 4.35%
CIT Group, Inc. (The), Class A ......... 2,500,000 40,625,000
Freddie Mac ............................ 1,500,000 60,750,000
Total ................................. 101,375,000
Oil and Gas Extraction - 5.33%
USX Corporation - Marathon Group ....... 2,700,000 67,668,750
Unocal Corporation ..................... 1,700,000 56,312,500
Total ................................. 123,981,250
See Notes to Schedules of Investments on page 10.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS ACCUMULATIVE FUND
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Petroleum and Coal Products - 13.39%
Amerada Hess Corporation ............... 250,000 $ 15,437,500
BP Amoco p.l.c., ADR ................... 2,000,000 113,125,000
Conoco Inc., Class B ................... 700,000 17,193,750
Exxon Mobil Corporation ................ 1,300,000 102,050,000
Texaco Inc. ............................ 1,200,000 63,900,000
Total ................................. 311,706,250
Transportation Equipment - 1.89%
Federal-Mogul Corporation .............. 2,000,000 19,125,000
Lockheed Martin Corporation ............ 1,000,000 24,812,500
Total ................................. 43,937,500
Wholesale Trade -- Nondurable Goods - 0.42%
Enron Corp. ............................ 150,000 9,675,000
TOTAL COMMON STOCKS - 97.79% $2,276,288,544
(Cost: $2,263,782,048)
TOTAL SHORT-TERM SECURITIES - 0.44% $10,379,744
(Cost: $10,379,744)
TOTAL INVESTMENT SECURITIES - 98.23% $2,286,668,288
(Cost: $2,274,161,792)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.77% 41,125,379
NET ASSETS - 100.00% $2,327,793,667
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 ACCUMULATIVE FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands)
Assets
Investment securities --
at value (Notes 1 and 3) ................. $2,286,668
Cash ....................................... 1
Receivables:
Investment securities sold ............... 49,086
Dividends and interest ................... 1,543
Fund shares sold ......................... 1,246
Prepaid insurance premium .................. 31
----------
Total assets ............................. 2,338,575
----------
Liabilities
Payable for investment
securities purchased ..................... 6,026
Payable to Fund shareholders ............... 3,892
Accrued service fee (Note 2) ............... 446
Accrued transfer agency and
dividend disbursing (Note 2) ............. 243
Accrued distribution fee (Note 2) .......... 50
Accrued management fee (Note 2) ............ 43
Accrued accounting services fee (Note 2) ... 8
Accrued shareholder servicing -- Class Y (Note 2) 1
Other ..................................... 72
----------
Total liabilities ........................ 10,781
----------
Total net assets ..................... $2,327,794
==========
<PAGE>
WADDELL & REED ADVISORS ACCUMULATIVE FUND
STATEMENT OF ASSETS AND LIABILITIES (Continued)
JUNE 30, 2000
(In Thousands, Except
for Per Share Amounts)
Net Assets
$1.00 par value capital stock:
Capital stock ............................ $ 242,351
Additional paid-in capital ............... 1,494,653
Accumulated undistributed income:
Accumulated undistributed
net investment income ................. 5,005
Accumulated undistributed net
realized gain on investment
transactions .......................... 573,295
Net unrealized appreciation
of investments ........................ 12,490
----------
Net assets applicable to outstanding
units of capital .................... $2,327,794
==========
Net asset value per share
(net assets divided by
shares outstanding):
Class A .................................... $9.61
Class B .................................... $9.54
Class C .................................... $9.54
Class Y .................................... $9.61
Capital shares outstanding:
Class A .................................... 240,513
Class B .................................... 1,128
Class C .................................... 176
Class Y .................................... 534
Capital shares authorized ..................... 500,000
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS ACCUMULATIVE FUND
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
Investment Income
Income (Note 1B):
Dividends (net of foreign withholding
taxes of $26) ......................... $14,254
Interest and amortization ................ 2,701
--------
Total income .......................... 16,955
--------
Expenses (Note 2):
Investment management fee ................ 7,800
Service fees:
Class A ............................... 2,647
Class B ............................... 8
Class C ............................... 1
Transfer agency and dividend disbursing:
Class A ............................... 1,249
Class B ............................... 13
Class C ............................... 2
Distribution fees:
Class A ............................... 185
Class B ............................... 25
Class C ............................... 4
Custodian fees ........................... 57
Accounting services fee................... 50
Audit fees ............................... 10
Legal fees ............................... 9
Shareholder servicing -- Class Y.......... 4
Other .................................... 106
--------
Total expenses ........................ 12,170
--------
Net investment income ............... 4,785
--------
<PAGE>
WADDELL & REED ADVISORS ACCUMULATIVE FUND
STATEMENT OF OPERATIONS (Continued)
For the Six Months Ended JUNE 30, 2000
(In Thousands)
Realized and Unrealized
Gain (Loss) on Investments (Notes 1 and 3)
Realized net gain on securities ............ 493,991
Realized net gain on foreign
currency transactions .................... 341
--------
Realized net gain
on investments ........................ 494,332
Unrealized depreciation in value of investments
during the period ........................ (382,329)
--------
Net gain on investments ............... 112,003
--------
Net increase in net assets
resulting from operations ......... $116,788
========
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS ACCUMULATIVE FUND
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
For the sixFor the fiscal
months ended year ended
June 30,December 31,
2000 1999
Increase in Net Assets ------------------------
Operations:
Net investment income .......... $ 4,785 $ 5,976
Realized net gain
on investments .............. 494,332 265,407
Unrealized appreciation
(depreciation) .............. (382,329) 201,521
---------- ----------
Net increase in net assets
resulting from operations . 116,788 472,904
---------- ----------
Distributions to shareholders
from (Note 1E):*
Net investment income:
Class A ..................... (2,668) (5,519)
Class B ..................... --- ---
Class C ..................... --- ---
Class Y ..................... (11) (20)
Realized net gains on
investment transactions:
Class A ..................... --- (250,533)
Class B ..................... --- (223)
Class C ..................... --- (34)
Class Y ..................... --- (530)
---------- ----------
(2,679) (256,859)
---------- ----------
Capital share transactions (Note 5) (40,924) 170,527
---------- ----------
Total increase ................. 73,185 386,572
Net Assets
Beginning of period .............. 2,254,609 1,868,037
---------- ----------
End of period .................... $2,327,794 $2,254,609
========== ==========
Undistributed net investment
income ...................... $5,005 $2,558
====== ======
*See "Financial Highlights" on pages 16 - 19.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS ACCUMULATIVE FUND
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
six months For the fiscal year ended December 31,
ended --------------------------------------
6/30/00 1999 1998 1997 1996 1995
---------- ----- ----- ----- ----- -----
Net asset value,
beginning of period $9.14 $8.28 $7.77 $7.75 $7.78 $6.58
---- ---- ---- ---- ---- ----
Income from investment
operations:
Net investment
income .......... 0.02 0.03 0.10 0.10 0.11 0.11
Net realized and
unrealized gain on
investments ..... 0.46 2.01 1.60 2.14 0.82 2.12
---- ---- ---- ---- ---- ----
Total from investment
operations ....... 0.48 2.04 1.70 2.24 0.93 2.23
---- ---- ---- ---- ---- ----
Less distributions:
From net investment
income .......... (0.01) (0.03) (0.11) (0.09) (0.11) (0.11)
From capital gains (0.00) (1.15) (1.08) (2.13) (0.85) (0.92)
---- ---- ---- ---- ---- ----
Total distributions (0.01) (1.18) (1.19) (2.22) (0.96) (1.03)
---- ---- ---- ---- ---- ----
Net asset value,
end of period .... $9.61 $9.14 $8.28 $7.77 $7.75 $7.78
==== ==== ==== ==== ==== ====
Total return* ...... 5.26% 25.72% 22.62% 29.58% 12.18% 34.21%
Net assets, end of
period (in millions)$2,310 $2,247 $1,864 $1,595 $1,285 $1,206
Ratio of expenses to
average net assets 1.03%** 0.98% 0.88% 0.82% 0.83% 0.80%
Ratio of net investment
income to average
net assets ....... 0.41%** 0.30% 1.12% 1.16% 1.34% 1.42%
Portfolio turnover
rate ............. 197.08% 372.35%373.78% 313.99%240.37% 229.03%
*Total return calculated without taking into account the sales load deducted on
an initial purchase.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS ACCUMULATIVE FUND
Class B Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the period
six from
months 10/4/99*
ended through
6/30/00 12/31/99
--------- -------
Net asset value,
beginning of period $9.12 $8.43
---- ----
Income from investment
operations:
Net investment loss (0.01) (0.01)
Net realized and
unrealized gain
on investments .. 0.43 1.85
---- ----
Total from investment
operations ....... 0.42 1.84
---- ----
Less distributions:
From net investment
income .......... (0.00) (0.00)
From capital gains (0.00) (1.15)
---- ----
Total distributions (0.00) (1.15)
---- ----
Net asset value,
end of period .... $9.54 $9.12
==== ====
Total return ....... 4.61% 22.89%
Net assets, end of
period (in
millions) ........ $11 $3
Ratio of expenses to
average net assets 2.07%** 2.24%**
Ratio of net investment
loss to average
net assets ....... -0.57%** -1.40%**
Portfolio turnover
rate ............. 197.08% 372.35%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS ACCUMULATIVE FUND
Class C Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the period
six from
months 10/6/99*
ended through
6/30/00 12/31/99
--------- -------
Net asset value,
beginning of period $9.12 $8.53
---- ----
Income from investment
operations:
Net investment loss (0.01) (0.01)
Net realized and
unrealized gain
on investments .. 0.43 1.75
---- ----
Total from investment
operations ....... 0.42 1.74
---- ----
Less distributions:
From net investment
income .......... (0.00) (0.00)
From capital gains (0.00) (1.15)
---- ----
Total distributions (0.00) (1.15)
---- ----
Net asset value,
end of period .... $9.54 $9.12
==== ====
Total return ....... 4.61% 21.45%
Net assets, end of
period (in
thousands) ....... $1,682 $347
Ratio of expenses to
average net assets 2.18%** 2.28%**
Ratio of net investment
loss to average
net assets ....... -0.69%** -1.35%**
Portfolio turnover
rate ............. 197.08% 372.35%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS ACCUMULATIVE FUND
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the For the
six For the fiscal year period
months ended December 31, from
ended---------------------------------7/11/95* to
6/30/00 1999 1998 1997 199612/31/95
------- ----- ----- ----- ---- -------
Net asset value,
beginning of period $9.14 $8.28 $7.77 $7.75 $7.78 $7.84
---- ---- ---- ---- ---- ----
Income from investment
operations:
Net investment income0.03 0.04 0.12 0.11 0.12 0.05
Net realized and
unrealized gain
on investments .. 0.46 2.01 1.59 2.14 0.82 0.87
---- ---- ---- ---- ---- ----
Total from investment
operations ....... 0.49 2.05 1.71 2.25 0.94 0.92
---- ---- ---- ---- ---- ----
Less distributions:
From net investment
income .......... (0.02) (0.04) (0.12) (0.10) (0.12) (0.06)
From capital gains (0.00) (1.15) (1.08) (2.13) (0.85) (0.92)
---- ---- ---- ---- ---- ----
Total distributions (0.02) (1.19) (1.20) (2.23) (0.97) (0.98)
---- ---- ---- ---- ---- ----
Net asset value,
end of period .... $9.61 $9.14 $8.28 $7.77 $7.75 $7.78
==== ==== ==== ==== ==== ====
Total return ....... 5.37% 25.95% 22.79% 29.67% 12.27% 11.92%
Net assets, end of
period (in
millions) ........ $5 $5 $4 $4 $3 $1
Ratio of expenses to
average net assets 0.84%**0.80% 0.75% 0.75% 0.74% 0.76%**
Ratio of net investment
income to average
net assets ....... 0.61%** 0.49% 1.21% 1.22% 1.45% 1.24%**
Portfolio turnover
rate ............. 197.08% 372.35%373.78% 313.99%240.37% 229.03%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
SHAREHOLDER SUMMARY
----------------------------------------------------------------------
WADDELL & REED ADVISORS BOND FUND
PORTFOLIO STRATEGY:
Corporate and government GOAL: To seek a reasonable return
bonds with emphasis on preservation of
capital.
Maximum 10% non-debt
securities STRATEGY: Invests primarily in domestic debt
securities usually of investment grade
(rated BBB and higher by Standard &
Poor's and Baa and higher by Moody's
Investors Service, Inc.).
FOUNDED: 1964
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Six Months Ended June 30, 2000
--------------------------------------
DIVIDENDS PAID $0.18
=====
NET ASSET VALUE ON
06/30/00 $5.98
12/31/99 5.97
------
CHANGE PER SHARE $0.01
======
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
------ ----------- ------------
1-year period ended 6-30-00 -2.23% 3.74%
5-year period ended 6-30-00 4.64% 5.88%
10-year period ended 6-30-00 7.11% 7.75%
*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 Bond Fund had net assets totaling
$496,112,570 invested in a diversified portfolio of:
94.97% Bonds
5.03% Cash and Cash Equivalents
As a shareholder of Waddell & Reed Advisors Bond Fund, for every $100 you had
invested on June 30, 2000, your Fund owned:
Bonds:
Corporate $53.72
U.S. Government 33.80
Other Government 7.45
Cash and Cash Equivalents 5.03
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS BOND FUND
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Chemicals and Allied Products - 2.15%
Procter & Gamble Company (The),
8.0%, 9-1-24 .......................... 10,000 $10,666,700
Communication - 4.42%
Bell Atlantic Financial Services, Inc.,
7.6%, 3-15-07 ......................... 2,250 2,245,410
BellSouth Capital Funding Corporation,
7.875%, 2-15-30 ....................... 1,875 1,878,319
BellSouth Telecommunications, Inc.,
5.85%, 11-15-45 ....................... 3,000 2,989,500
Cox Trust II,
7.0%, 8-16-04 ......................... 2,500 2,441,250
Deutsche Telekom International Finance B.V.,
8.25%, 6-15-30 ........................ 2,000 2,037,500
Jones Intercable, Inc.,
9.625%, 3-15-02 ....................... 2,500 2,550,550
Tele-Communications, Inc.,
8.35%, 2-15-05 ........................ 7,500 7,776,450
Total ................................. 21,918,979
Depository Institutions - 11.61%
AmSouth Bancorporation,
6.75%, 11-1-25 ........................ 6,500 6,189,950
Chevy Chase Savings Bank, F.S.B.,
9.25%, 12-1-05 ........................ 1,500 1,410,000
First Union Corporation:
6.824%, 8-1-26 ........................ 7,500 7,297,275
6.55%, 10-15-35 ....................... 4,500 4,263,795
ING Groep N.V.,
5.5%, 5-11-05 (A) ..................... EUR4,000 3,797,647
Kansallis-Osake-Pankki,
10.0%, 5-1-02 ......................... $6,000 6,246,780
National Westminster Bank plc,
7.375%, 10-1-09 ....................... 4,250 4,130,533
NationsBank Corporation,
8.57%, 11-15-24 ....................... 5,000 5,371,250
SouthTrust Bank of Alabama, National Association:
5.58%, 2-6-06 ......................... 7,800 7,732,140
7.69%, 5-15-25 ........................ 5,000 5,171,750
Sovereign Bancorp, Inc.,
8.0%, 3-15-03 ......................... 2,000 1,885,000
Wachovia Corporation,
6.605%, 10-1-25 ....................... 4,250 4,077,365
Total ................................. 57,573,485
See Notes to Schedules of Investments on page 32.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS BOND FUND
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Electric, Gas and Sanitary Services - 6.14%
California Infrastructure and Economic Development
Bank, Special Purpose Trust:
PG&E-1,
6.42%, 9-25-08 ........................ $5,000 $4,857,050
SCE-1,
6.38%, 9-25-08 ........................ 5,000 4,839,050
Cleveland Electric Illuminating Co. (The),
9.5%, 5-15-05 ......................... 4,000 4,047,440
Entergy Arkansas, Inc.,
7.5%, 8-1-07 .......................... 3,750 3,665,513
Korea Electric Power Corporation,
6.375%, 12-1-03 ....................... 2,500 2,374,050
Niagara Mohawk Power Corporation,
7.375%, 7-1-03 ........................ 4,159 4,102,148
TXU Eastern Funding Company,
6.45%, 5-15-05 ........................ 3,250 3,026,855
Union Electric Co.,
8.25%, 10-15-22 ....................... 3,500 3,576,755
Total ................................. 30,488,861
Electronic and Other Electric Equipment - 1.85%
Motorola, Inc.,
8.4%, 8-15-31 ......................... 8,500 9,195,810
Finance, Taxation and Monetary Policy - 0.48%
Banco Nacional de Comercio Exterior, S.N.C.,
7.25%, 2-2-04 ......................... 2,500 2,375,000
Food and Kindred Products - 2.17%
Anheuser-Busch Companies, Inc.,
7.0%, 9-1-05 .......................... 3,000 2,923,470
Coca-Cola Enterprises Inc.,
6.7%, 10-15-36 ........................ 5,500 5,373,775
Coca-Cola FEMSA, S.A. de C.V.,
8.95%, 11-1-06 ........................ 2,500 2,478,125
Total ................................. 10,775,370
General Merchandise Stores - 1.13%
Fred Meyer, Inc.:
7.15%, 3-1-03 ......................... 3,750 3,671,287
7.45%, 3-1-08 ......................... 2,000 1,907,500
Total ................................. 5,578,787
Health Services - 0.98%
Tenet Healthcare Corporation,
7.875%, 1-15-03 ....................... 5,000 4,862,500
See Notes to Schedules of Investments on page 32.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS BOND FUND
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Holding and Other Investment Offices - 2.44%
Bay Apartment Communities, Inc.,
6.5%, 1-15-05 ......................... $3,000 $2,823,120
GRUMA, S.A. de C.V.,
7.625%, 10-15-07....................... 3,500 2,996,875
NBD Bank, National Association,
8.25%, 11-1-24 ........................ 6,000 6,289,860
Total ................................. 12,109,855
Industrial Machinery and Equipment - 1.23%
Coltec Industries Inc.,
7.5%, 4-15-08 ......................... 2,500 2,356,000
International Business Machines Corporation,
5.375%, 3-31-05(A) .................... EUR4,000 3,757,257
Total ................................. 6,113,257
Insurance Carriers - 0.02%
Reliance Group Holdings, Inc.,
9.0%, 11-15-00 ........................ $ 150 117,000
Nondepository Institutions - 9.05%
Asset Securitization Corporation,
7.49%, 4-14-29 ........................ 6,000 6,005,400
CHYPS CBO 1997-1 Ltd.,
6.72%, 1-15-10 (B) .................... 8,500 7,854,510
Equicon Loan Trust,
7.3%, 2-18-13 ......................... 4,571 4,513,744
General Electric Capital Corporation,
7.5%, 5-15-05 ......................... 2,250 2,273,085
General Motors Acceptance Corporation:
5.5%, 2-2-05(A) ....................... EUR3,750 3,515,849
8.875%, 6-1-10 ........................ $5,500 5,931,530
IMC Home Equity Loan Trust,
6.9%, 1-20-22 ......................... 4,500 4,466,250
Norse CBO, Ltd. and Norse CBO, Inc.,
6.515%, 8-13-10 (B) ................... 3,750 3,482,812
Residential Asset Securities Corporation,
8.0%, 10-25-24 ........................ 2,074 2,080,547
Westinghouse Electric Corporation,
8.875%, 6-14-14 ....................... 4,500 4,778,100
Total ................................. 44,901,827
Oil and Gas Extraction - 1.18%
Mitchell Energy & Development Corp.,
9.25%, 1-15-02 ........................ 165 167,237
See Notes to Schedules of Investments on page 32.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS BOND FUND
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Oil and Gas Extraction (Continued)
Oryx Energy Company,
10.0%, 4-1-01 ......................... $3,500 $3,557,820
Pemex Finance Ltd.,
5.72%, 11-15-03 ....................... 2,188 2,104,682
Total ................................. 5,829,739
Paper and Allied Products - 2.06%
Canadian Pacific Forest Products Ltd.,
9.25%, 6-15-02 ........................ 4,500 4,572,990
Champion International Corporation,
6.4%, 2-15-26 ......................... 6,100 5,663,118
Total ................................. 10,236,108
Petroleum and Coal Products - 1.15%
Pemex Finance Ltd. and Petroleos Mexicanos,
9.03%, 2-15-11 (B) .................... 1,750 1,780,572
YPF Sociedad Anoima,
8.0%, 2-15-04 ......................... 4,000 3,923,960
Total ................................. 5,704,532
Printing and Publishing - 1.21%
Quebecor Printing Capital Corporation,
6.5%, 8-1-27 .......................... 6,500 6,005,935
Railroad Transportation - 0.99%
CSX Corporation,
6.95%, 5-1-27 ......................... 5,000 4,925,600
Security and Commodity Brokers - 1.07%
Salomon Inc.,
3.65%, 2-14-02 ........................ 5,000 5,295,750
Stone, Clay and Glass Products - 1.72%
Cemex, S.A. de C.V.,
9.5%, 9-20-01 ......................... 3,500 3,535,000
Owens-Illinois, Inc.,
7.15%, 5-15-05......................... 3,250 2,970,890
USG Corporation,
9.25%, 9-15-01 ........................ 2,000 2,024,900
Total ................................. 8,530,790
Transportation Equipment - 0.15%
Federal-Mogul Corporation,
7.75%, 7-1-06 ......................... 1,000 735,000
Transportation Services - 0.21%
TOLLROAD INVESTMENT PARTNERSHIP
SERIES II,,
0.0%, 2-15-09 (B) ..................... 2,000 1,047,500
See Notes to Schedules of Investments on page 32.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS BOND FUND
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
United States Postal Service - 0.31%
Postal Square Limited Partnership,
6.5%, 6-15-22 ......................... $ 1,667 $1,546,531
TOTAL CORPORATE DEBT SECURITIES - 53.72% $266,534,916
(Cost: $274,717,404)
OTHER GOVERNMENT SECURITIES
Canada - 5.85%
Hydro-Quebec:
8.05%, 7-7-24 ......................... 9,000 9,545,130
8.4%, 3-28-25 ......................... 5,150 5,494,226
Province de Quebec:
5.67%, 2-27-26 ........................ 9,200 9,108,368
6.29%, 3-6-26 ......................... 5,000 4,898,350
Total ................................. 29,046,074
Korea - 0.50%
Korea Development Bank (The),
7.9%, 2-1-02 .......................... 2,500 2,497,700
Supranational - 1.10%
Inter-American Development Bank,
8.4%, 9-1-09 .......................... 5,000 5,439,450
TOTAL OTHER GOVERNMENT SECURITIES - 7.45% $36,983,224
(Cost: $36,505,566)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
7.5%, 2-15-07 ......................... 4,116 4,132,979
6.5%, 9-25-18 ......................... 2,000 1,920,000
7.0%, 1-15-19 ......................... 2,000 1,973,120
7.5%, 4-15-19 ......................... 10,797 10,837,065
6.25%, 1-15-21 ........................ 12,000 11,606,160
7.5%, 3-15-29 ......................... 4,000 4,035,000
7.5%, 9-15-29 ......................... 1,586 1,556,768
Federal National Mortgage Association:
8.25%, 11-1-04 ........................ 1,810 1,820,500
7.0%, 7-25-06 ......................... 6,487 6,468,781
6.09%, 4-1-09 ......................... 4,437 4,082,863
0.0%, 2-12-18 ......................... 4,500 1,328,355
7.0%, 9-25-20 ......................... 2,000 1,975,000
6.5%, 8-25-21 ......................... 2,500 2,402,725
7.0%, 8-25-21 ......................... 10,000 9,853,100
7.0%, 6-1-24 .......................... 5,693 5,495,734
6.0%, 12-1-28 ......................... 6,382 5,839,511
See Notes to Schedules of Investments on page 32.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS BOND FUND
JUNE 30, 2000
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES (Continued)
Government National Mortgage Association:
7.5%, 7-15-23 ......................... 2,646 2,634,031
7.5%, 12-15-23 ........................ 2,929 2,915,820
8.0%, 9-15-25 ......................... 3,997 4,059,230
7.0%, 7-20-27 ......................... 235 227,238
7.0%, 9-20-27 ......................... 3,840 3,713,790
7.5%, 7-15-29 ......................... 4,444 4,412,108
7.75%, 10-15-31 ....................... 1,956 1,963,528
Tennessee Valley Authority,
5.88%, 4-1-36 ......................... $ 5,500 $ 5,244,965
United States Department of Veterans Affairs,
Guaranteed Remic Pass-Through Certificates,
Vendee Mortgage Trust:
1998-1 Class 2-B,
7.0%, 6-15-19 ......................... 750 744,135
1999-2 Class 1-B,
6.5%, 7-15-19 ......................... 5,500 5,298,865
1999-2 Class 3-B,
6.5%, 2-15-20 ......................... 4,000 3,857,480
2000-1 Class 2-C,
7.25%, 11-15-21 ....................... 2,250 2,196,562
2000-2 Class 2-D,
7.5%, 9-15-26 ......................... 4,500 4,433,895
United States Treasury:
6.625%, 3-31-02 ....................... 4,000 4,010,640
7.5%, 2-15-05 ......................... 6,500 6,812,780
6.5%, 8-15-05 ......................... 14,750 14,902,073
11.25%, 2-15-15 ....................... 7,250 10,690,342
6.125%, 11-15-27 ...................... 14,250 14,218,793
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 33.80% $167,663,936
(Cost: $169,640,105)
TOTAL SHORT-TERM SECURITIES - 4.24% $21,022,611
(Cost: $21,022,611)
TOTAL INVESTMENT SECURITIES - 99.21% $492,204,687
(Cost: $501,885,687)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.79% 3,907,883
NET ASSETS - 100.00% $496,112,570
See Notes to Schedules of Investments on page 32.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS BOND FUND
JUNE 30, 2000
Notes to Schedules of Investments
(A) Principal amounts are denominated in the indicated foreign currency, where
applicable (EUR -- Euro).
(B) Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may be resold in transactions exempt from registration, normally
to qualified institutional buyers. At June 30, 2000, the value of these
securities amounted to $14,165,394 or 2.86% of net assets.
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 BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands)
Assets
Investment securities --
at value (Notes 1 and 3) ................. $492,205
Cash ....................................... 1
Receivables:
Dividends and interest ................... 7,520
Fund shares sold ......................... 543
Prepaid insurance premium .................. 14
--------
Total assets ............................ 500,283
--------
Liabilities
Payable for investment securities purchased 1,999
Payable to Fund shareholders ............... 1,930
Accrued service fee (Note 2) ............... 89
Accrued transfer agency and
dividend disbursing (Note 2) ............. 87
Accrued distribution fee (Note 2) .......... 10
Accrued management fee (Note 2) ............ 7
Accrued accounting services fee (Note 2) ... 5
Accrued shareholder servicing -- Class Y (Note 2) ---*
Other ...................................... 43
--------
Total liabilities ........................ 4,170
--------
Total net assets ...................... $496,113
========
*Not shown due to rounding.
<PAGE>
WADDELL & REED ADVISORS BOND FUND
STATEMENT OF ASSETS AND LIABILITIES (Continued)
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
Net Assets
$1.00 par value capital stock:
Capital stock ............................ $ 82,992
Additional paid-in capital................ 444,062
Accumulated undistributed
income (loss):
Accumulated undistributed net
investment income ..................... 460
Accumulated undistributed net realized
loss on investment transactions ....... (21,723)
Net unrealized depreciation of
investments ........................... (9,678)
--------
Net assets applicable to outstanding units
of capital .......................... $496,113
========
Net asset value per share
(net assets divided by
shares outstanding):
Class A .................................... $5.98
Class B .................................... $5.98
Class C .................................... $5.98
Class Y .................................... $5.98
Capital shares outstanding:
Class A .................................... 81,500
Class B .................................... 864
Class C .................................... 165
Class Y .................................... 463
Capital shares authorized ..................... 240,000
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS BOND FUND
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
Investment Income
Interest and amortization (Note 1B) ........ $17,242
--------
Expenses (Note 2):
Investment management fee ................ 1,288
Service fees:
Class A ............................... 559
Class B ............................... 4
Class C ............................... 1
Transfer agency and dividend disbursing:
Class A ............................... 520
Class B ............................... 6
Class C ............................... 1
Distribution fees:
Class A ............................... 51
Class B ............................... 13
Class C ............................... 2
Accounting services fee................... 30
Audit fees ............................... 9
Custodian fees ........................... 7
Legal fees ............................... 2
Shareholder servicing -- Class Y ......... 2
Other .................................... 50
--------
Total expenses ........................ 2,545
--------
Net investment income ............... 14,697
--------
Realized and Unrealized
Gain (Loss) on Investments (Notes 1 and 3)
Realized net loss on securities ............ (2,639)
Realized net loss on foreign
currency transactions .................... (17)
--------
Realized net loss on investments ......... (2,656)
Unrealized appreciation in value of
investments during the period............. 3,158
--------
Net gain on investments ............... 502
--------
Net increase in net assets
resulting from operations ........ $15,199
========
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
For the sixFor the fiscal
months ended year ended
June 30,December 31,
2000 1999
------------------------
Decrease in Net Assets
Operations:
Net investment income .......... $ 14,697 $ 30,664
Realized net loss
on investments .............. (2,656) (593)
Unrealized appreciation
(depreciation) .............. 3,158 (36,307)
---------- ----------
Net increase (decrease) in net
assets resulting
from operations ........... 15,199 (6,236)
---------- ----------
Distributions to shareholders
from nNet investment income (Note 1E):*
Class A ..................... (14,278) (30,472)
Class B ..................... (83) (9)
Class C ..................... (14) (1)
Class Y ..................... (82) (148)
---------- ----------
(14,457) (30,630)
---------- ----------
Capital share transactions (Note 5) (10,123) (14,788)
---------- ----------
Total decrease ................ (9,381) (51,654)
Net Assets
Beginning of period .............. 505,494 557,148
---------- ----------
End of period .................... $496,113 $505,494
========== ==========
Undistributed net investment
income ...................... $460 $237
====== ======
*See "Financial Highlights" on pages 38 - 41.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS BOND FUND
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
six months For the fiscal year ended December 31,
ended --------------------------------------
6/30/00 1999 1998 1997 1996 1995
---------- ----- ----- ----- ----- -----
Net asset value,
beginning of period $5.97 $6.39 $6.32 $6.14 $6.34 $5.62
---- ---- ---- ---- ---- ----
Income from investment
operations:
Net investment income0.18 0.35 0.38 0.39 0.39 0.40
Net realized and
unrealized gain
(loss) on
investments ..... 0.01 (0.42) 0.07 0.19 (0.20) 0.72
---- ---- ---- ---- ---- ----
Total from investment
operations ....... 0.19 (0.07) 0.45 0.58 0.19 1.12
---- ---- ---- ---- ---- ----
Less distributions from
net investment income(0.18) (0.35) (0.38) (0.40) (0.39) (0.40)
---- ---- ---- ---- ---- ----
Net asset value,
end of period .... $5.98 $5.97 $6.39 $6.32 $6.14 $6.34
===== ===== ===== ===== ===== =====
Total return* ...... 3.16% -1.08% 7.27% 9.77% 3.20% 20.50%
Net assets, end of
period (in
millions) ........ $487 $501 $551 $524 $519 $563
Ratio of expenses to
average net assets 1.03%** 0.95% 0.84% 0.77% 0.77% 0.74%
Ratio of net investment
income to average
net assets ....... 5.99%** 5.72% 5.88% 6.34% 6.34% 6.54%
Portfolio turnover
rate ............. 14.14% 34.12% 33.87% 35.08% 55.74% 66.38%
*Total return calculated without taking into account the sales load deducted on
an initial purchase.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS BOND FUND
Class B Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the period
six from
months 9/9/99*
ended through
6/30/00 12/31/99
--------- -------
Net asset value,
beginning of period $5.97 $6.05
---- ----
Income from investment
operations:
Net investment income0.15 0.10
Net realized and
unrealized gain (loss)
on investments .. 0.01 (0.08)
---- ----
Total from investment
operations ....... 0.16 0.02
---- ----
Less distributions from
net investment income(0.15) (0.10)
---- ----
Net asset value,
end of period .... $5.98 $5.97
==== ====
Total return ....... 2.71% 0.30%
Net assets, end of
period (in
millions) ........ $5 $2
Ratio of expenses to
average net assets 1.92%** 1.91%**
Ratio of net investment
income to average
net assets ....... 5.11%** 4.93%**
Portfolio turnover
rate ............. 14.14% 34.12%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS BOND FUND
Class C Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the period
six from
months 9/9/99*
ended through
6/30/00 12/31/99
--------- -------
Net asset value,
beginning of period $5.96 $6.05
---- ----
Income from investment
operations:
Net investment income0.15 0.10
Net realized and
unrealized gain (loss)
on investments .. 0.02 (0.09)
---- ----
Total from investment
operations ....... 0.17 0.01
---- ----
Less distributions from
net investment income(0.15) (0.10)
---- ----
Net asset value,
end of period .... $5.98 $5.96
==== ====
Total return ....... 2.81% 0.13%
Net assets, end of
period (in
thousands) ....... $989 $289
Ratio of expenses to
average net assets 2.00%** 1.98%**
Ratio of net investment
income to average
net assets ....... 5.03%** 4.87%**
Portfolio turnover
rate ............. 14.14% 34.12%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS BOND FUND
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
six For the fiscal year For the
months ended December 31,period from
ended-------------------------------- 6/19/95* to
6/30/00 1999 1998 1997 1996 12/31/95
------- ----- ----- ----- ---- ---------
Net asset value,
beginning of period $5.97 $6.39 $6.32 $6.14 $6.34 $6.11
---- ---- ---- ---- ---- ----
Income from investment
operations:
Net investment income0.18 0.40 0.39 0.42 0.40 0.21
Net realized and
unrealized gain (loss)
on investments .. 0.01 (0.45) 0.07 0.17 (0.20) 0.22
---- ---- ---- ---- ---- ----
Total from investment
operations ....... 0.19 (0.05) 0.46 0.59 0.20 0.43
---- ---- ---- ---- ---- ----
Less distributions from
net investment income(0.18) (0.37) (0.39) (0.41) (0.40) (0.20)
---- ---- ---- ---- ---- ----
Net asset value,
end of period .... $5.98 $5.97 $6.39 $6.32 $6.14 $6.34
==== ==== ==== ==== ==== ====
Total return ....... 3.30% -0.81% 7.54% 9.91% 3.35% 7.20%
Net assets, end of
period (in
millions) ........ $3 $2 $6 $5 $12 $3
Ratio of expenses to
average net assets 0.72%**0.69% 0.61% 0.64% 0.62% 0.63%**
Ratio of net investment
income to average
net assets ....... 6.30%** 6.00% 6.10% 6.48% 6.52% 6.41%**
Portfolio turnover
rate ............. 14.14% 34.12% 33.87% 35.08% 55.74% 66.38%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
SHAREHOLDER SUMMARY
-----------------------------------------------------------------
WADDELL & REED ADVISORS INCOME FUND
PORTFOLIO STRATEGY:
Investment quality GOALS: To seek capital growth and
common stocks income.
STRATEGY: Invests primarily in the common stocks
of large U.S. and foreign companies that
have the potential for capital
appreciation or that the Fund's
investment manager expects to resist
market decline.
FOUNDED: 1940
SCHEDULED DIVIDEND FREQUENCY: QUARTERLY
(MARCH, JUNE, SEPTEMBER, DECEMBER)
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Six Months Ended June 30, 2000
--------------------------------------
DIVIDENDS PAID $0.01
=====
NET ASSET VALUE ON
06/30/00 $9.09
12/31/99 8.13
-----
CHANGE PER SHARE $0.96
=====
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
------ ----------- ------------
1-year period ended 6-30-00 14.95% 21.96%
5-year period ended 6-30-00 20.20% 21.63%
10-year period ended 6-30-00 16.15% 16.84%
*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 Income Fund had net assets totaling
$8,964,825,867 invested in a diversified portfolio of:
97.46% Common Stocks
2.19% Cash and Cash Equivalents
0.35% Preferred Stock
As a shareholder of Waddell & Reed Advisors Income Fund, for every $100 you had
invested on June 30, 2000, your Fund owned:
$49.39 Manufacturing Stocks
11.99 Finance, Insurance and Real Estate Stocks
10.02 Wholesale and Retail Trade Stocks
9.84 Services Stocks
8.27 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
6.50 Mining Stocks
2.19 Cash and Cash Equivalents
1.45 Miscellaneous Investing Institutions Stocks
0.35 Preferred Stock
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS INCOME FUND
JUNE 30, 2000
Shares Value
COMMON STOCKS
Amusement and Recreation Services - 1.33%
Walt Disney Company (The) .............. 3,061,000 $ 118,805,062
Building Materials and Garden Supplies - 0.50%
Home Depot, Inc. (The) ................. 891,300 44,509,294
Business Services - 6.90%
America Online, Inc.* .................. 1,007,000 53,119,250
Citrix Systems, Inc.* .................. 2,366,800 44,895,238
Clear Channel Communications, Inc.* .... 1,420,000 106,500,000
Microsoft Corporation* ................. 3,403,000 272,133,656
Oracle Corporation* .................... 1,089,000 91,510,031
Veritas Software Corp.* ................ 447,000 50,497,031
Total ................................. 618,655,206
Chemicals and Allied Products - 20.55%
Air Products and Chemicals, Inc. ....... 2,051,700 63,218,006
American Home Products Corporation ..... 1,937,900 113,851,625
Biogen, Inc.* .......................... 557,100 35,915,541
Bristol-Myers Squibb Company ........... 817,000 47,590,250
Dow Chemical Company (The) ............. 4,175,000 126,032,813
du Pont (E.I.) de Nemours and Company .. 2,300,000 100,625,000
Forest Laboratories, Inc.* ............. 1,658,600 167,518,600
Johnson & Johnson ...................... 1,400,000 142,625,000
Merck & Co., Inc. ...................... 1,806,300 138,407,738
Pfizer Inc. ............................ 7,125,250 342,012,000
Pharmacia Corporation .................. 5,413,500 279,810,281
QLT Inc.* .............................. 1,043,000 80,995,469
Schering-Plough Corporation ............ 4,034,800 203,757,400
Total ................................. 1,842,359,723
Communication - 8.27%
Cox Communications, Inc., Class A* ..... 3,001,800 136,769,512
General Motors Corporation, Class H* ... 759,700 66,663,675
Nippon Telegraph and Telephone
Corporation (A) ....................... 4,675 62,110,148
SBC Communications Inc. ................ 3,744,000 161,928,000
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 6,704,000 134,289,500
Vodafone Airtouch Public Limited
Company, ADR .......................... 2,250,000 93,234,375
Worldcom, Inc.* ........................ 1,888,100 86,675,591
Total ................................. 741,670,801
Depository Institutions - 3.74%
Bank of America Corporation ............ 2,562,000 110,166,000
Chase Manhattan Corporation (The) ...... 1,899,000 87,472,688
Citigroup Inc. ......................... 2,287,500 137,821,875
Total ................................. 335,460,563
See Notes to Schedules of Investments on page 50.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS INCOME FUND
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment - 11.64%
Analog Devices, Inc.* .................. 1,675,800 127,360,800
General Electric Company ............... 3,306,000 175,218,000
Intel Corporation ...................... 1,924,000 257,154,625
Nokia Oyj (A) .......................... 3,600,000 183,607,165
Nortel Networks Corporation ............ 1,689,000 115,274,250
Rambus Inc.* ........................... 1,795,400 184,926,200
Total ................................. 1,043,541,040
Fabricated Metal Products - 0.61%
Gillette Company (The) ................. 1,569,900 54,848,381
Food Stores - 4.22%
Kroger Co. (The)* ......................11,442,000 252,439,125
Safeway Inc.* .......................... 2,783,000 125,582,875
Total ................................. 378,022,000
Furniture and Fixtures - 0.21%
Lear Corporation* ...................... 955,400 19,108,000
Furniture and Home Furnishings Stores - 1.90%
Best Buy Co., Inc.* .................... 777,000 49,145,250
Circuit City Stores, Inc. - Circuit
City Group ............................ 3,647,000 121,034,813
Total ................................. 170,180,063
General Merchandise Stores - 1.88%
Target Corporation ..................... 1,627,000 94,366,000
Wal-Mart Stores, Inc. .................. 1,282,000 73,875,250
Total ................................. 168,241,250
Holding and Other Investment Offices - 1.45%
ABB Ltd. (A) ........................... 1,086,070 129,983,552
Industrial Machinery and Equipment - 8.52%
Baker Hughes Incorporated .............. 4,949,000 158,368,000
Cisco Systems, Inc.* ................... 1,874,000 119,057,562
Dell Computer Corporation* ............. 3,130,000 154,445,938
EMC Corporation* ....................... 2,604,000 200,345,250
International Business Machines
Corporation ........................... 1,200,000 131,475,000
Total ................................. 763,691,750
Instruments and Related Products - 2.31%
Guidant Corporation* ................... 2,400,000 118,800,000
Medtronic, Inc. ........................ 941,000 46,873,562
Raytheon Company, Class A .............. 2,135,981 41,518,131
Total ................................. 207,191,693
See Notes to Schedules of Investments on page 50.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS INCOME FUND
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Insurance Carriers - 2.70%
American International Group, Inc. ..... 1,146,187 134,676,972
Chubb Corporation (The) ................ 1,742,600 107,169,900
Total ................................. 241,846,872
Motion Pictures - 1.61%
Time Warner Incorporated ............... 1,895,000 144,020,000
Nondepository Institutions - 5.02%
Associates First Capital Corporation,
Class A ............................... 5,925,070 132,203,124
Fannie Mae ............................. 3,004,000 156,771,250
Freddie Mac ............................ 3,986,000 161,433,000
Total ................................. 450,407,374
Oil and Gas Extraction - 6.50%
Anadarko Petroleum Corporation ......... 3,630,000 179,004,375
Burlington Resources Incorporated ...... 3,700,000 141,525,000
Schlumberger Limited ................... 2,472,000 184,473,000
Transocean Sedco Forex Inc. ............ 1,461,661 78,107,510
Total ................................. 583,109,885
Paper and Allied Products - 0.98%
International Paper Company ............ 2,946,000 87,827,625
Petroleum and Coal Products - 2.92%
Exxon Mobil Corporation ................ 1,672,720 131,308,520
Royal Dutch Petroleum Company, NY Shares 2,120,000
130,512,500
Total ................................. 261,821,020
Primary Metal Industries - 0.95%
Alcoa Incorporated ..................... 2,938,000 85,202,000
Security and Commodity Brokers - 0.53%
Charles Schwab Corporation (The) ....... 1,414,500 47,562,562
Transportation Equipment - 0.70%
Lockheed Martin Corporation ............ 2,539,000 62,998,938
Wholesale Trade - Nondurable Goods - 1.52%
Cardinal Health, Inc. .................. 900,000 66,600,000
Enron Corp. ............................ 1,081,000 69,724,500
Total ................................. 136,324,500
TOTAL COMMON STOCKS - 97.46% $8,737,389,154
(Cost: $5,536,747,474)
See Notes to Schedules of Investments on page 50.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS INCOME FUND
JUNE 30, 2000
Shares Value
PREFERRED STOCK - 0.35%
Communication
Cox Communications, Inc., 7.0% Convertible 505,800
$31,075,087
(Cost: $25,290,000)
TOTAL SHORT-TERM SECURITIES - 2.47% $221,343,671
(Cost: $221,343,671)
TOTAL INVESTMENT SECURITIES - 100.28% $8,989,807,912
(Cost: $5,783,381,145)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.28%) (24,982,045)
NET ASSETS - 100.00% $8,964,825,867
Notes to Schedule of Investments
*No dividends were paid during the preceding 12 months.
(A) Listed on an exchange outside the United States.
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 INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands)
Assets
Investment securities --
at value (Notes 1 and 3) ................. $8,989,808
Cash ....................................... 1
Receivables:
Investment securities sold ............... 51,450
Dividends and interest ................... 6,039
Fund shares sold ......................... 5,095
Prepaid insurance premium .................. 46
----------
Total assets ............................. 9,052,439
----------
Liabilities
Payable for investment securities purchased 69,477
Payable to Fund shareholders ............... 14,697
Accrued service fee (Note 2) ............... 1,719
Accrued transfer agency and
dividend disbursing (Note 2) ............. 1,001
Accrued management fee (Note 2) ............ 138
Accrued distribution fee (Note 2) .......... 113
Accrued shareholder servicing -- Class Y (Note 2) 27
Accrued accounting services fee (Note 2) ... 8
Other ...................................... 433
----------
Total liabilities ........................ 87,613
----------
Total net assets ..................... $8,964,826
==========
<PAGE>
WADDELL & REED ADVISORS INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES (Continued)
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
Net Assets
$1.00 par value capital stock:
Capital stock ............................ $ 985,914
Additional paid-in capital ............... 3,411,942
Accumulated undistributed income:
Accumulated undistributed net
investment income ..................... 1,312
Accumulated undistributed net ....realized
gain on investment transactions ........ 1,359,286
Net unrealized appreciation of
investments ........................... 3,206,372
----------
Net assets applicable to ...outstanding
units of capital .................... $8,964,826
==========
Net asset value per share
(net assets divided by
shares outstanding):
Class A .................................... $9.09
Class B .................................... $9.05
Class C .................................... $9.04
Class Y .................................... $9.09
Capital shares outstanding:
Class A .................................... 954,865
Class B .................................... 5,429
Class C .................................... 1,138
Class Y .................................... 24,482
Capital shares authorized ..................... 1,950,000
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS INCOME FUND
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
Investment Income
Income (Note 1B):
Dividends (net of foreign withholding
taxes of $279) ......................... $40,105
Interest and amortization ................ 5,969
--------
Total income .......................... 46,074
--------
Expenses (Note 2):
Investment management fee................. 24,593
Service fees:
Class A ............................... 9,637
Class B ............................... 38
Class C ............................... 7
Transfer agency and dividend disbursing:
Class A ............................... 5,233
Class B ............................... 64
Class C ............................... 12
Distribution fees:
Class A ............................... 656
Class B ............................... 113
Class C ............................... 20
Custodian fees ........................... 387
Shareholder servicing -- Class Y ......... 183
Accounting services fee................... 50
Legal fees ............................... 37
Audit fees ............................... 11
Other .................................... 330
--------
Total expenses ........................ 41,371
--------
Net investment income ............... 4,703
--------
<PAGE>
WADDELL & REED ADVISORS INCOME FUND
STATEMENT OF OPERATIONS (Continued)
For the Six Months Ended JUNE 30, 2000
(In Thousands)
Realized and Unrealized
Gain (Loss) on Investments (Notes 1 and 3)
Realized net gain on securities ............ 999,119
Realized net loss on foreign
currency transactions .................... (537)
--------
Realized net gain on investments ......... 998,582
Unrealized depreciation in value
of investments during the period.......... (34,154)
--------
Net gain on investments ............... 964,428
--------
Net increase in net assets
resulting from operations ......... $969,131
========
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
For the sixFor the fiscal
months ended year ended
June 30,December 31,
2000 1999
------------------------
Increase in Net Assets
Operations:
Net investment income .......... $ 4,703 $ 76,012
Realized net gain
on investments .............. 998,582 835,942
Unrealized appreciation
(depreciation) .............. (34,154) 317,336
---------- ----------
Net increase in net ...assets
resulting from operations . 969,131 1,229,290
---------- ----------
Distributions to shareholders
from (Note 1E):*
Net investment income:
Class A ..................... (6,785) (77,099)
Class B ..................... --- ---
Class C ..................... --- ---
Class Y ..................... (443) (4,135)
Realized net gains on
investment transactions:
Class A ..................... --- (486,908)
Class B ..................... --- (607)
Class C ..................... --- (66)
Class Y ..................... --- (16,884)
---------- ----------
(7,228) (585,699)
---------- ----------
Capital share transactions (Note 5) (396,211) (11,758)
---------- ----------
Total increase ................. 565,692 631,833
Net Assets
Beginning of period .............. 8,399,134 7,767,301
---------- ----------
End of period .................... $8,964,826 $8,399,134
========== ==========
Undistributed net investment
income ...................... $1,312 $4,374
====== ======
*See "Financial Highlights" on pages 56 - 59.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS INCOME FUND
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:*
For the
six months For the fiscal year ended December 31,
ended --------------------------------------
6/30/00 1999 1998 1997 1996 1995
---------- ----- ----- ----- ----- -----
Net asset value,
beginning of period $8.13 $7.52 $7.59 $6.58 $5.79 $4.67
---- ---- ---- ----- ----- -----
Income from investment
operations:
Net investment income0.01 0.08 0.20 0.06 0.07 0.07
Net realized and
unrealized gain on
investments ..... 0.96 1.13 1.66 1.73 1.10 1.30
---- ---- ----- ----- ----- -----
Total from investment
operations ....... 0.97 1.21 1.86 1.79 1.17 1.37
---- ---- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.01) (0.08) (0.19) (0.06) (0.06) (0.07)
From capital gains (0.00) (0.52) (1.74) (0.72) (0.32) (0.18)
---- ---- ----- ----- ----- -----
Total distributions (0.01) (0.60) (1.93) (0.78) (0.38) (0.25)
---- ---- ----- ----- ----- -----
Net asset value,
end of period .... $9.09 $8.13 $7.52 $7.59 $6.58 $5.79
====== ====== ====== ====== ====== ======
Total return** ..... 11.90% 16.41% 24.02% 27.34% 20.36% 29.60%
Net assets, end of
period (in
millions) ........$8,683 $8,102 $7,368 $6,196 $4,851 $3,976
Ratio of expenses to
average net assets 0.96%***0.94% 0.89% 0.84% 0.86% 0.83%
Ratio of net investment
income to average
net assets ....... 0.11%***0.94% 1.11% 0.74% 1.03% 1.31%
Portfolio turnover
rate ............. 27.89% 53.79% 49.29% 33.59% 22.24% 17.59%
*Per-share amounts have been adjusted retroactively to reflect the 400% stock
dividend effected June 26, 1998.
**Total return calculated without taking into account the sales load deducted
on an initial purchase.
***Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS INCOME FUND
Class B Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the period
six from
months 10/4/99*
ended through
6/30/00 12/31/99
--------- -------
Net asset value,
beginning of period $8.13 $7.77
---- ----
Income from investment
operations:
Net investment loss (0.02) (0.00)
Net realized and
unrealized gain
on investments .. 0.94 0.88
---- ----
Total from investment
operations ....... 0.92 0.88
---- ----
Less distributions:
From net investment
income .......... (0.00) (0.00)
From capital gains (0.00) (0.52)
---- ----
Total distributions (0.00) (0.52)
---- ----
Net asset value,
end of period .... $9.05 $8.13
==== ====
Total return ....... 11.32% 11.53%
Net assets, end of
period (in
millions) ........ $49 $13
Ratio of expenses to
average net assets 2.02%** 2.18%**
Ratio of net investment
loss to average
net assets ....... -0.97%** -0.59**
Portfolio turnover
rate ............. 27.89% 53.79%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS INCOME FUND
Class C Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the period
six from
months 10/4/99*
ended through
6/30/00 12/31/99
--------- -------
Net asset value,
beginning of period $8.13 $7.77
---- ----
Income from investment
operations:
Net investment loss (0.02) (0.00)
Net realized and
unrealized gain
on investments .. 0.93 0.88
---- ----
Total from investment
operations ....... 0.91 0.88
---- ----
Less distributions:
From net investment
income .......... (0.00) (0.00)
From capital gains (0.00) (0.52)
---- ----
Total distributions (0.00) (0.52)
---- ----
Net asset value,
end of period .... $9.04 $8.13
==== ====
Total return ....... 11.19% 11.53%
Net assets, end of
period (in
millions) ........ $10 $1
Ratio of expenses to
average net assets 2.05%** 2.23%**
Ratio of net investment
loss to average
net assets ....... -1.01%** -0.63%**
Portfolio turnover
rate ............. 27.89% 53.79%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS INCOME FUND
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:*
For the
six For the fiscal year For the
months ended December 31, period from
ended ---------------------------- 6/19/95** to
6/30/00 1999 1998 1997 1996 12/31/95
------- ----- ----- ----- ---- -----------
Net asset value,
beginning of period $8.13 $7.52 $7.59 $6.58 $5.79 5.55
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment income0.02 0.10 0.24 0.07 0.07 0.04
Net realized and
unrealized gain
on investments .. 0.96 1.13 1.66 1.73 1.11 0.42
----- ----- ----- ----- ----- -----
Total from investment
operations ....... 0.98 1.23 1.90 1.80 1.18 0.46
----- ----- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.02) (0.10) (0.23) (0.07) (0.07) (0.04)
From capital gains (0.00) (0.52) (1.74) (0.72) (0.32) (0.18)
----- ----- ----- ----- ----- -----
Total distributions (0.02) (0.62) (1.97) (0.79) (0.39) (0.22)
----- ----- ----- ----- ----- -----
Net asset value,
end of period .... $9.09 $8.13 $7.52 $7.59 $6.58 $5.79
===== ===== ===== ===== ===== =====
Total return ....... 12.01% 16.67% 24.27% 27.49% 20.53% 8.45%
Net assets, end of
period (in
millions) ........ $223 $283 $399 $299 $151 $107
Ratio of expenses to
average net assets 0.73%***0.73% 0.71% 0.72% 0.73% 0.74%***
Ratio of net investment
income to average
net assets ....... 0.33%***1.18% 1.29% 0.85% 1.17% 1.36%***
Portfolio turnover
rate ............. 27.89% 53.79% 49.29% 33.59% 22.24% 17.59%***
*Per-share amounts have been adjusted retroactively to reflect the 400% stock
dividend effected June 26, 1998.
**Commencement of operations.
***Annualized.
See notes to financial statements.
<PAGE>
SHAREHOLDER SUMMARY
----------------------------------------------------------------------
WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
PORTFOLIO STRATEGY:
Technology-related GOAL: To seek long-term capital
stocks growth.
Generally at least 80% STRATEGY: Concentrates its investments
in science or technology primarily in the equity
securities securities of of U.S. and foreign
science and technology companies.
Science and technology companies are
companies whose products, processes or
services, in the Fund's investment
manager's opinion, are being or are
expected to be significantly benefited
by the use or commercial application of
scientific or technological decelopments
or discoveries.
FOUNDED: 1950
SCHEDULED DIVIDEND FREQUENCY: SEMIANNUALLY
(JUNE AND DECEMBER)
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Six Months Ended June 30, 2000
-------------------------------------------
NET ASSET VALUE ON
06/30/00 $18.02
12/31/99 18.43
------
CHANGE PER SHARE $(0.41)
======
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
------ ----------- ------------
1-year period ended 6-30-00 52.03% 61.30%
5-year period ended 6-30-00 33.27% 34.85%
10-year period ended 6-30-00 24.50% 25.24%
*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 Science and Technology Fund had net
assets totaling $3,935,753,367 invested in a diversified portfolio of:
75.60% Common Stocks
24.40% Cash and Cash Equivalents
As a shareholder of Waddell & Reed Advisors Science and Technology Fund, for
every $100 you had invested on June 30, 2000, your Fund owned:
$45.14 Manufacturing Stocks
24.40 Cash and Cash Equivalents
21.38 Services Stocks
6.62 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
1.44 Mining Stocks
1.02 Finance, Insurance and Real Estate Stocks
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
JUNE 30, 2000
Shares Value
COMMON STOCKS
Business Services - 17.29%
Acxiom Corporation* .................... 600,000 $ 16,762,500
America Online, Inc.* .................. 1,160,500 61,216,375
BroadVision, Inc.* ..................... 1,169,400 59,310,506
Clear Channel Communications, Inc.* .... 547,300 41,047,500
DoubleClick Inc.* ...................... 158,700 6,050,438
Electronic Data Systems Corporation .... 876,400 36,151,500
Getty Images, Inc.* .................... 547,500 20,308,828
HNC Software Inc.* ..................... 600,000 37,125,000
Intuit Inc.* ........................... 1,286,400 53,144,400
Microsoft Corporation* ................. 700,000 55,978,125
Oracle Corporation* .................... 814,000 68,401,438
TMP Worldwide Inc.* .................... 595,600 43,944,112
Veritas Software Corp.* ................ 1,142,900 129,111,984
Yahoo! Inc.* ........................... 420,900 52,152,141
Total ................................. 680,704,847
Chemicals and Allied Products - 7.27%
Bristol-Myers Squibb Company ........... 699,500 40,745,875
Forest Laboratories, Inc.* ............. 779,000 78,679,000
Pfizer Inc. ............................ 2,212,500 106,200,000
QLT Inc.* .............................. 111,100 8,627,609
Schering-Plough Corporation ............ 1,024,600 51,742,300
Total ................................. 285,994,784
Communication - 6.62%
BellSouth Corporation .................. 800,000 34,100,000
COLT Telecom Group plc, ADR* ........... 307,700 41,529,884
Cox Communications, Inc., Class A* ..... 820,000 37,361,250
EchoStar Communications Corporation,
Class A* .............................. 1,664,300 55,077,928
Nextel Communications, Inc.* ........... 800,000 48,925,000
Telefonos de Mexico, S.A. de C.V., ADR . 398,000 22,735,750
Vodafone Airtouch Public Limited
Company, ADR .......................... 500,000 20,718,750
Total ................................. 260,448,562
Depository Institutions - 1.02%
Concord EFS, Inc.* ..................... 1,550,000 $40,300,000
Electronic and Other Electric Equipment - 21.43%
Analog Devices, Inc.* .................. 1,138,800 86,548,800
Broadcom Corporation, Class A* ......... 573,200 125,494,975
Gemstar International Group Limited* ... 1,166,000 71,672,563
General Electric Company ............... 975,000 51,675,000
Intel Corporation ...................... 461,500 61,682,359
JDS Uniphase Corporation* .............. 753,500 90,302,266
See Notes to Schedules of Investments on page 71.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment (Continued)
Maxim Integrated Products, Inc.* ....... 560,500 38,061,453
Micron Technology, Inc.* ............... 440,000 38,747,500
Nokia Corporation, Series A, ADR ....... 1,275,300 63,685,294
Nortel Networks Corporation ............ 720,000 49,140,000
PMC - Sierra Inc.* ..................... 234,000 41,571,562
Rambus Inc.* ........................... 1,211,200 124,753,600
Total ................................. 843,335,372
Engineering and Management Services - 3.32%
Incyte Pharmaceuticals, Inc.* .......... 900,000 73,940,625
Paychex, Inc. .......................... 1,350,000 56,700,000
Total ................................. 130,640,625
Industrial Machinery and Equipment - 9.99%
Apple Computer, Inc.* .................. 894,000 46,795,313
Applied Materials, Inc.* ............... 789,700 71,591,241
Cisco Systems, Inc.* ................... 1,501,800 95,411,231
Cooper Cameron Corporation* ............ 257,300 16,981,800
Dell Computer Corporation* ............. 833,100 41,108,278
EMC Corporation* ....................... 573,900 44,154,431
Extreme Networks, Inc.* ................ 300,000 31,546,875
Sun Microsystems, Inc.* ................ 500,000 45,484,375
Total ................................. 393,073,544
Instruments and Related Products - 3.61%
Agilent Technologies, Inc.* ............ 136,884 10,095,229
Guidant Corporation* ................... 862,400 42,688,800
Medtronic, Inc. ........................ 800,000 39,850,000
Teradyne, Inc.* ........................ 671,200 49,333,200
Total ................................. 141,967,229
Motion Pictures - 0.77%
Time Warner Incorporated ............... 400,000 30,400,000
Oil and Gas Extraction - 1.44%
Apache Corporation ..................... 663,400 39,016,213
Schlumberger Limited ................... 237,500 17,723,437
Total ................................. 56,739,650
Transportation Equipment - 2.84%
Boeing Company (The) ................... 960,000 40,140,000
General Dynamics Corporation* .......... 670,100 35,012,725
Lockheed Martin Corporation ............ 1,469,800 36,469,413
Total ................................. 111,622,138
TOTAL COMMON STOCKS - 75.60% $2,975,226,751
(Cost: $1,260,537,979)
See Notes to Schedules of Investments on page 71.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
JUNE 30, 2000
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES
Commercial Paper
Auto Repair, Services and Parking - 0.51%
PHH Corp.,
6.77%, 7-18-00 ........................ $20,000 $19,936,061
Chemicals and Allied Products - 1.27%
Air Products and Chemicals, Inc.:
6.79%, 7-6-00 ......................... 25,000 24,943,417
6.79%, 7-13-00 ........................ 25,000 24,976,425
Total ................................. 49,919,842
Communication - 1.90%
AT&T Corp.,
6.5%, 7-13-00 ......................... 20,000 19,956,667
Bell Atlantic Network Funding Corp.:
6.74%, 7-5-00 ......................... 11,695 11,686,242
6.53%, 7-25-00 ........................ 8,129 8,093,612
Dominion Resources Inc.,
6.84%, 7-11-00 ........................ 10,000 9,981,000
U S West Communications Inc.:
6.8%, 7-11-00 ......................... 15,000 14,971,666
6.8%, 7-18-00 ......................... 10,000 9,967,889
Total ................................. 74,657,076
Depository Institutions - 1.83%
Canadian Imperial Bank of Commerce - NY,
6.58%, 7-12-00 ........................ 35,000 35,000,000
Dresdner U.S. Finance Inc.,
6.49%, 7-10-00 ........................ 17,180 17,152,126
Societe Generale N.A. Inc.,
6.52%, 7-10-00 ........................ 20,000 19,967,400
Total ................................. 72,119,526
Electric, Gas and Sanitary Services - 5.13%
Bay State Gas Co.,
6.51%, 7-12-00 ........................ 26,250 26,197,785
Carolina Power & Light Co.,
6.52%, 7-6-00 ......................... 24,293 24,271,001
Commonwealth Edison Co.,
6.8%, 7-20-00 ......................... 10,312 10,274,991
Detroit Edison Co.,
7.0%, 7-14-00 ......................... 5,000 4,987,361
See Notes to Schedules of Investments on page 71.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
JUNE 30, 2000
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Electric, Gas and Sanitary Services (Continued)
Georgia Power Co.,
6.55%, 7-17-00 ........................ 18,125 18,072,236
National Fuel Gas Co.,
6.57%, 7-11-00 ........................ 6,000 5,989,050
PS Colorado Credit Corp.,
6.9%, 7-10-00 ......................... 15,155 15,128,858
Public Service Electric & Gas Co.:
7.05%, 7-12-00 ........................ 16,300 16,264,887
6.8%, 7-19-00 ......................... 22,000 21,925,200
Puget Sound Energy Inc.,
6.87%, 7-26-00 ........................ 23,750 23,636,693
Reliant Energy Inc.,
7.17%, 7-6-00 ......................... 20,000 19,980,083
Wisconsin Electric Power Co.,
6.51%, 7-13-00 ........................ 15,250 15,216,908
Total ................................. 201,945,053
Electronic and Other Electric Equipment - 0.51%
Whirlpool Corp.,
6.75%, 7-19-00 ........................ 20,000 19,932,500
Fabricated Metal Products - 0.56%
Danaher Corporation,
6.6738%, Master Note .................. 22,246 22,246,000
Food and Kindred Products - 0.93%
Conagra Inc.:
6.7%, 7-11-00 ......................... 9,555 9,537,217
6.7%, 7-13-00 ......................... 17,000 16,962,033
General Mills, Inc.,
6.5288%, Master Note .................. 10,240 10,240,000
Total ................................. 36,739,250
General Merchandise Stores - 0.55%
Wal-Mart Stores, Inc.
6.5%, 7-11-00 ......................... 21,750 21,710,729
Industrial Machinery and Equipment - 0.76%
Deere & Co.,
6.56%, 7-20-00 ........................ 15,000 14,948,067
Ingersoll-Rand Company,
6.87%, 7-13-00 ........................ 15,000 14,965,650
Total ................................. 29,913,717
See Notes to Schedules of Investments on page 71.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
JUNE 30, 2000
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Instruments and Related Products - 0.46%
Honeywell International Inc.,
6.62%, 7-24-00 ........................ 18,000 17,923,870
Insurance Carriers - 0.43%
SAFECO Credit Co. Inc.:
6.83%, 7-12-00 ........................ 12,000 11,974,957
6.9%, 8-1-00 .......................... 5,000 4,970,291
Total ................................. 16,945,248
Miscellaneous Retail - 0.25%
Toys "R" Us Inc.,
6.9%, 7-28-00 ......................... 10,000 9,948,250
Nondepository Institutions - 0.64%
General Electric Capital Corporation,
6.6%, 7-12-00 ......................... 3,010 3,003,930
Paccar Financial Corp.,
6.57%, Master Note .................... 454 454,000
Transamerica Finance Corp.:
6.62%, 7-7-00 ......................... 15,000 14,983,450
6.635%, 7-18-00 ....................... 6,600 6,579,321
Total ................................. 25,020,701
Paper and Allied Products - 2.16%
Champion International Corporation,
6.8%, 7-6-00 .......................... 12,700 12,688,005
International Paper Company:
7.2%, 7-3-00 .......................... 2,553 2,551,979
6.99%, 7-12-00 ........................ 30,000 29,930,100
Westvaco Corp.:
6.8%, 7-20-00 ......................... 20,000 19,928,222
6.87%, 7-24-00 ........................ 20,000 19,912,217
Total 85,010,523
Printing and Publishing - 1.69%
American Greetings Corp.:
6.52%, 7-10-00 ........................ 24,000 23,960,880
6.6%, 7-11-00 ......................... 17,000 16,968,833
Tribune Co.,
6.65%, 8-3-00 ......................... 25,830 25,672,545
Total ................................. 66,602,258
See Notes to Schedules of Investments on page 71.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
JUNE 30, 2000
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Security and Commodity Brokers - 0.38%
Merrill Lynch & Co. Inc.,
6.53%, 7-17-00 ........................ 15,000 14,956,200
Transportation Equipment - 0.63%
Dana Corp.:
6.82%, 7-5-00 ......................... 10,000 9,992,422
6.97%, 7-24-00 ........................ 15,000 14,933,204
Total ................................. 24,925,626
Total Commercial Paper - 20.59% 810,452,430
Commercial Paper (backed by irrevocable bank
letter of credit) - 0.85%
Nondepository Institutions
Agway Financial Corp. (Rabobank Nederland),
6.5%, 7-11-00 ......................... 20,750 20,712,535
ED&F Man Finance Inc. (Rabobank Nederland),
6.58%, 7-24-00 ........................ 12,705 12,651,589
Total ................................. 33,364,124
MUNICIPAL OBLIGATIONS
California - 1.24%
California Pollution Control Financing
Authority, Environmental Improvement
Revenue Bonds (Shell Martinez Refining
Company Project), Series 1996 (Taxable),
6.55%, 7-12-00 ........................ 20,750 20,750,000
Oakland-Alameda County Coliseum Authority, Lease
Revenue Bonds (Oakland Arena Project),
1996 Series A-2 Variable Rate Lease Revenue Bonds
(Taxable), (Canadian Imperial Bank of Commerce),
6.62%, 7-05-00 ........................ 18,000 18,000,000
Oakland-Alameda County Coliseum Authority, Lease
Revenue Bonds (Oakland Coliseum Project),
2000 Series D Variable Rate Lease Revenue Bonds
(Taxable), (First Union National Bank),
6.83%, 7-05-00 ........................ 10,000 10,000,000
Total ................................. 48,750,000
See Notes to Schedules of Investments on page 71.
<PAGE>
THE INVESTMENTS OF WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
JUNE 30, 2000
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
MUNICIPAL OBLIGATIONS (Continued)
Louisiana - 0.48%
Gulf Coast Industrial Development Authority,
Environmental Facilities Revenue Bonds
(CITGO Petroleum Corporation Project), Taxable
Series 1998 (Royal Bank of Canada),
6.57%, 7-07-00 ........................ $10,000 $10,000,000
Industrial Development Board of the Parish
Of Calcasieu, Inc., Environmental Revenue
Bonds (CITGO Petroleum Corporation Project),
Series 1996 (Taxable), (Westdeutsche
Landesbank Girozentrale):
6.65%, 8-02-00 ........................ 9,000 9,000,000
Total ................................. 19,000,000
Total Municipal Obligations - 1.72% 67,750,000
TOTAL SHORT-TERM SECURITIES - 23.16% $911,566,554
(Cost: $911,566,554)
TOTAL INVESTMENT SECURITIES - 98.76% $3,886,793,305
(Cost: $2,172,104,533)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.24% 48,960,062
NET ASSETS - 100.00% $3,935,753,367
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 SCIENCE AND TECHNOLOGY FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands)
Assets
Investment securities --
at value (Notes 1 and 3) ................. $3,886,793
Cash ....................................... 2
Receivables:
Investment securities sold ............... 142,174
Fund shares sold ......................... 36,557
Dividends and interest ................... 866
Prepaid insurance premium .................. 10
----------
Total assets ............................. 4,066,402
----------
Liabilities
Payable for investment securities purchased 124,553
Payable to Fund shareholders ............... 4,627
Accrued service fee (Note 2) ............... 702
Accrued transfer agency and
dividend disbursing (Note 2) ............. 502
Accrued distribution fee (Note 2) .......... 101
Accrued management fee (Note 2) ............ 86
Accrued accounting services fee (Note 2) ... 8
Accrued shareholder servicing -- Class Y (Note 2) 4
Other ...................................... 66
----------
Total liabilities ........................ 130,649
----------
Total net assets ...................... $3,935,753
==========
<PAGE>
WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
STATEMENT OF ASSETS AND LIABILITIES (Continued)
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
Net Assets
$1.00 par value capital stock:
Capital stock ............................ $ 218,371
Additional paid-in capital................ 1,390,461
Accumulated undistributed income (loss):
Accumulated undistributed net
investment loss ....................... (9,907)
Accumulated undistributed net realized
gain on investment transactions ........ 622,147
Net unrealized appreciation of
investments ........................... 1,714,681
----------
Net assets applicable to outstanding
units of capital .................... $3,935,753
==========
Net asset value per share
(net assets divided by
shares outstanding):
Class A .................................... $18.02
Class B .................................... $17.85
Class C .................................... $17.87
Class Y .................................... $18.25
Capital shares outstanding:
Class A .................................... 213,160
Class B .................................... 2,997
Class C .................................... 472
Class Y .................................... 1,742
Capital shares authorized ..................... 510,000
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
Investment Loss
Income (Note 1B):
Interest and amortization ................ $13,140
Dividends ................................ 1,951
--------
Total income .......................... 15,091
--------
Expenses (Note 2):
Investment management fee ................ 16,607
Service fees:
Class A ............................... 4,635
Class B ............................... 48
Class C ............................... 8
Transfer agency and dividend disbursing:
Class A ............................... 2,651
Class B ............................... 123
Class C ............................... 19
Distribution fees:
Class A ............................... 334
Class B ............................... 146
Class C ............................... 25
Accounting services fee .................. 50
Custodian fees ........................... 47
Shareholder servicing -- Class Y.......... 26
Legal fees ............................... 18
Audit fees ............................... 10
Other .................................... 251
--------
Total expenses ........................ 24,998
--------
Net investment loss ................. (9,907)
--------
Realized and Unrealized
Gain (Loss) on Investments (Notes 1 and 3)
Realized net gain on securities ............ 589,924
Unrealized depreciation ............in value
of investments during the period.......... (686,571)
--------
Net loss on investments .................. (96,647)
--------
Net decrease in net assets
resulting from operations............ $(106,554)
========
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
For the sixFor the fiscal
months ended year ended
June 30,December 31,
2000 1999
------------------------
Increase in Net Assets
Operations:
Net investment loss ............ $ (9,907) $ (17,479)
Realized net gain
on investments .............. 589,924 288,535
Unrealized appreciation
(depreciation) .............. (686,571) 1,604,183
---------- ----------
Net increase (decrease) in net
assets resulting from
operations ................ (106,554) 1,875,239
---------- ----------
Distributions to shareholders
from realized net gains on
investment transactions (Note 1E):*:
Class A ..................... --- (280,167)
Class B ..................... --- (988)
Class C ..................... --- (171)
Class Y ..................... --- (2,276)
---------- ----------
--- (283,602)
---------- ----------
Capital share transactions (Note 5) 246,853 529,334
---------- ----------
Total increase ................. 140,299 2,210,971
Net Assets
Beginning of period .............. 3,795,454 1,674,483
---------- ----------
End of period .................... $3,935,753 $3,795,454
========== ==========
Undistributed net
investment loss ............. $(9,901) $---
====== ======
*See "Financial Highlights" on pages 77 - 80.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:*
For the
six
monthsFor the fiscal year ended December 31,
ended-----------------------------------------
6/30/00 1999 1998 1997 1996 1995
--------- ----- ----- ----- ----- -----
Net asset value,
beginning of period $18.43 $ 9.91 $6.71 $7.78 $7.63 $5.07
----- ----- ---- ----- ----- -----
Income from investment
operations:
Net investment loss (0.04) (0.09) (0.03) (0.01) (0.02) (0.00)
Net realized and
unrealized gain (loss) on
investments ..... (0.37) 10.12 3.93 0.46 0.66 2.80
----- ----- ---- ----- ----- -----
Total from investment
operations ....... (0.41) 10.03 3.90 0.45 0.64 2.80
----- ----- ---- ----- ----- -----
Less distributions from
capital gains .... (0.00) (1.51) (0.70) (1.52) (0.49) (0.24)
----- ----- ---- ----- ----- -----
Net asset value,
end of period .... $18.02 $18.43 $9.91 $6.71 $7.78 $7.63
====== ====== ===== ====== ====== ======
Total return** ..... -2.23% 102.93% 59.31% 7.22% 8.35% 55.37%
Net assets, end of
period (in
millions) ........$3,842 $3,744 $1,668 $1,063 $981 $821
Ratio of expenses to
average net assets 1.20%***1.16% 1.05% 1.02% 0.98% 0.93%
Ratio of net investment
loss to average
net assets ....... -0.47%***-0.79%-0.37% -0.18% -0.33% -0.07%
Portfolio turnover
rate ............. 30.01% 40.35% 55.70% 87.68% 33.90% 32.89%
*Per-share amounts have been adjusted retroactively to reflect the 200% stock
dividend effected June 26, 1998.
**Total return calculated without taking into account the sales load deducted
on an initial purchase.
***Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
Class B Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the period
six from
months 10/4/99*
ended through
6/30/00 12/31/99
--------- -------
Net asset value,
beginning of period$18.37 $12.64
----- -----
Income from investment
operations:
Net investment loss (0.13) (0.04)
Net realized and
unrealized gain (loss)
on investments .. (0.39) 7.28
----- -----
Total from investment
operations ....... (0.52) 7.24
----- -----
Less distributions from
capital gains .... (0.00) (1.51)
----- -----
Net asset value,
end of period ....$17.85 $18.37
===== =====
Total return ....... -2.83% 58.62%
Net assets, end of
period (in
millions) ........ $54 $17
Ratio of expenses to
average net assets 2.47%** 2.64%**
Ratio of net investment
loss to average
net assets ....... -1.59%** -2.35%**
Portfolio turnover
rate ............. 30.01% 40.35%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
Class C Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the period
six from
months 10/4/99*
ended through
6/30/00 12/31/99
--------- -------
Net asset value,
beginning of period$18.38 $12.64
----- -----
Income from investment
operations:
Net investment loss (0.14) (0.04)
Net realized and
unrealized gain (loss)
on investments .. (0.37) 7.29
----- -----
Total from investment
operations ....... (0.51) 7.25
----- -----
Less distributions from
from capital gains (0.00) (1.51)
----- -----
Net asset value,
end of period ....$17.87 $18.38
===== =====
Total return ....... -2.78% 58.70%
Net assets, end of
period (in
millions) ........ $8 $3
Ratio of expenses to
average net assets 2.40%** 2.42%**
Ratio of net investment
loss to average
net assets ....... -1.56%** -2.19%**
Portfolio turnover
rate ............. 30.01% 40.35%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
WADDELL & REED ADVISORS SCIENCE AND TECHNOLOGY FUND
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:*
For the
six For the fiscal year For the
months ended December 31, period from
ended -------------------- 2/27/96** to
6/30/00 1999 1998 1997 12/31/96
------- ----- ----- ----- ----------
Net asset value,
beginning of period$18.65 $ 9.98 $6.74 $7.79 $8.02
----- ----- ---- ----- -----
Income from investment
operations:
Net investment
loss ............ (0.03) (0.04) (0.01) (0.00) (0.01)
Net realized and
unrealized gain (loss)
on investments .. (0.37) 10.22 3.95 0.47 0.27
----- ----- ---- ----- -----
Total from investment
operations ....... (0.40) 10.18 3.94 0.47 0.26
----- ----- ---- ----- -----
Less distributions from
capital gains .... (0.00) (1.51) (0.70) (1.52) (0.49)
----- ----- ---- ----- -----
Net asset value,
end of period ....$18.25 $18.65 $9.98 $6.74 $7.79
===== ===== ==== ===== =====
Total return ....... -2.15% 103.72% 59.71% 7.43% 3.25%
Net assets, end of
period (in
millions) ........ $32 $31 $6 $4 $3
Ratio of expenses to
average net assets 0.98%***0.95% 0.79% 0.85% 0.80%***
Ratio of net investment
loss to average
net assets ....... -0.26%***-0.59%-0.12% -0.01% -0.12%***
Portfolio turnover
rate ............. 30.01% 40.35% 55.70% 87.68% 33.90%***
*Per-share amounts have been adjusted retroactively to reflect the 200% stock
dividend effected June 26, 1998.
**Commencement of operations.
***Annualized.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 1 -- Significant Accounting Policies
Waddell & Reed Advisors Funds, Inc. (the "Corporation"), formerly United
Funds, Inc., is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The Corporation issues
four series of capital shares; each series represents ownership of a separate
mutual fund. The assets belonging to each Fund are held separately by the
Custodian. The capital shares of each Fund represent a pro rata beneficial
interest in the principal, net income (loss) and realized and unrealized capital
gains or losses of its respective investments and other assets. The following
is a summary of significant accounting policies consistently followed by the
Corporation 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. Securities for which
quotations are not readily available are valued as determined in good faith
in accordance with procedures established by and under the general
supervision of the Corporation's Board of Directors. 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 except that certain
dividends from foreign securities are recorded as soon as the Corporation
is informed of 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
Corporation 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 Corporation'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 Corporation 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 each Fund on the business day following record date. Net
investment income distributions 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 Corporation 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 each Fund at the following annual rates:
Annual
Fund Net Asset Breakpoints Rate
---------------------------------------------------------------------
Waddell & Reed Advisors Accumulative Fund
Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
Waddell & Reed Advisors Bond Fund
Up to $500 Million .525%
Over $500 Million up to $1 Billion .500%
Over $1 Billion up to $1.5 Billion .450%
Over $1.5 Billion .400%
Waddell & Reed Advisors Income Fund
Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion up to $6 Billion .550%
Over $6 Billion .500%
Waddell & Reed Advisors Science and
Technology Fund Up to $1 Billion .850%
Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
The Corporation accrues and pays this fee daily.
Pursuant to assignment of the Investment Management Agreement between the
Corporation and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment
Management Company ("WRIMCO"), a wholly owned subsidiary of W&R, serves as the
Corporation's investment manager.
The Corporation 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 Corporation and pricing daily the value of shares of the
Corporation. For these services, each of the four Funds 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 Fund
------------------------- ------------------
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 Corporation pays WARSCO a 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
Corporation 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 Corporation also
reimburses W&R and WARSCO for certain out-of-pocket costs.
As principal underwriter for the Corporation's shares, W&R receives gross
sales commissions (which are not an expense of the Corporation) for Class A
shares. A contingent deferred sales charge ("CDSC") may be assessed against a
shareholder's redemption amount of Class B and Class C shares and is paid to
W&R. During the period ended June 30, 2000, W&R received the following amounts
in gross sales commissions and deferred sales charges.
CDSC
Gross Sales -----------------
Commissions Class B Class C
Waddell & Reed Advisors
Accumulative Fund $1,779,751 $ 1,614 $ 478
Waddell & Reed Advisors
Bond Fund 514,430 1,905 144
Waddell & Reed Advisors
Income Fund 8,219,393 18,743 1,932
Waddell & Reed Advisors Science
and Technology Fund 8,253,468 18,379 8,222
With respect to Class A, Class B and Class C shares, W&R pays sales
commissions and all expenses in connection with the sale of the Corporation's
shares, except for registration fees and related expenses. During the period
ended June 30, 2000, W&R paid the following amounts: Waddell & Reed Advisors
Accumulative Fund - $1,203,990; Waddell & Reed Advisors Bond Fund - $377,396;
Waddell & Reed Advisors Income Fund - $5,500,004; and Waddell & Reed Advisors
Science and Technology Fund - $5,716,651.
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 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 Corporation for
Class B shares and Class C shares, respectively, each Fund may pay Waddell &
Reed, Inc. a service fee not to exceed 0.25% and a distribution fee not to
exceed 0.75% of a Fund's average annual net assets attributable to that class,
paid monthly, to compensate Waddell & Reed, Inc. for its services in connection
with the distribution of shares of that class and/or the service and/or
maintenance of shareholder accounts of that class. The Class B Plan and the
Class C Plan each permit Waddell & Reed, Inc. to receive compensation, through
the distribution fee 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 it is entitled to reimbursement under the Class A Plan.
The Corporation paid Directors' fees of $238,726, 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
Investment securities transactions for the period ended June 30, 2000 are
summarized as follows:
Waddell &
Waddell & Waddell & Waddell &Reed Advisors
Reed AdvisorsReed AdvisorsReed Advisors Science and
Accumulative Bond Income Technology
Fund Fund Fund Fund
----------- ------------------------ ------------
Purchases of investment
securities, excluding
short-term and U.S.
Government securities $4,534,685,349 $24,270,552$2,352,906,053$1,089,561,508
Purchases of U.S. Government
obligations --- 42,523,477 --- ---
Purchases of short-term
securities 2,794,744,592 747,655,6242,519,168,7886,151,566,963
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 4,469,649,621 20,164,0742,422,460,7231,679,962,010
Proceeds from maturities and
sales of U.S. Government
obligations --- 59,220,323 37,000,000 ---
Proceeds from maturities and sales
of short-term securities2,951,874,213 744,476,8412,816,124,9515,390,099,967
For Federal income tax purposes, cost of investments owned at June 30, 2000
and the related appreciation (depreciation) were as follows:
Aggregate
Appreciation
Cost AppreciationDepreciation (Depreciation)
-------------- --------------------------------------
Waddell & Reed Advisors
Accumulative Fund $2,274,292,903$ 185,691,117$(173,315,732)$12,375,385
Waddell & Reed Advisors
Bond Fund 501,981,571 4,237,624(14,014,508) (9,776,884)
Waddell & Reed Advisors
Income Fund 5,783,381,1453,506,183,371(299,756,604)3,206,426,767
Waddell & Reed Advisors
Science and Technology Fund2,172,105,0481,736,915,369(22,227,112)1,714,688,257
NOTE 4 -- Federal Income Tax Matters
The Corporation's income and expenses attributed to each Fund and the gains
and losses on security transactions of each Fund have been attributed to that
Fund for Federal income tax purposes as well as for accounting purposes. For
Federal income tax purposes, Waddell & Reed Advisors Accumulative Fund, Waddell
& Reed Advisors Income Fund and Waddell & Reed Advisors Science and Technology
Fund realized capital gain net income of $268,545,845, $836,278,477 and
$271,055,351, respectively, during the year ended December 31, 1999, a portion
of which was paid to shareholders during the period ended December 31, 1999.
Remaining capital gain net income will be distributed to each Fund's
shareholders. For Federal income tax purposes, Waddell & Reed Advisors Bond
Fund realized capital gain net income of $159,085 during the year ended December
31, 1999, which included the effect of certain losses deferred into the next
fiscal year (see discussion below). This capital gain net income was entirely
offset by utilization of capital loss carryovers. Remaining capital loss
carryovers of Waddell & Reed Advisors Bond Fund aggregated $18,314,931 as of
December 31, 1999, and are available to offset future realized capital gain net
income for Federal income tax purposes but, if not utilized, will expire as
follows: $18,234,028 at December 31, 2002 and $80,903 at December 31, 2003.
Internal Revenue Code regulations permit each Fund to defer into its next
fiscal year net capital losses or net long-term capital losses incurred between
each November 1 and the end of its fiscal year ("post-October losses"). From
November 1, 1999 through December 31, 1999, Waddell & Reed Advisors Bond Fund
incurred net capital losses of $655,692, which have been deferred to the fiscal
year ending December 31, 2000.
NOTE 5 -- Multiclass Operations
Each 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 for the period ended June 30, 2000 are
summarized below. Amounts are in thousands.
Waddell &
Waddell & Waddell & Waddell &Reed Advisors
Reed Advisors Reed Advisors Reed Advisors Science and
Accumulative Bond Income Technology
Fund Fund Fund Fund
----------- ------------ ------------------------
Shares issued from sale
of shares:
Class A ............ 11,959 65,838 48,425 64,333
Class B ............. 864 610 4,097
2,154
Class C ............. 144 141 1,012
383
Class Y ............ 63 91 2,476 878
Shares issued from
reinvestment of dividends:
Class A ............ 252 2,150 698 ---
Class B ............. --- 14 ---
---
Class C ............. --- 2 ---
---
Class Y ............ 1 12 49 ---
Shares redeemed:
Class A ............ (17,423) (70,409) (90,741) (54,290)
Class B ............. (24) (49) (280)
(100)
Class C ............. (6) (26) (44)
(66)
Class Y ............ (56) (92) (12,827) (801)
---------- ----------- ---------- ----------
Increase (decrease) in
outstanding capital
shares ............. (4,226) (1,718) (47,135) 12,491
========== =========== ========== ==========
Value issued from sale
of shares:
Class A ............ $115,566 $391,943 $417,928 $1,235,067
Class B ............. 8,327 3,627 35,425 41,889
Class C ............. 1,389 836 8,762 7,493
Class Y ............ 609 544 21,614 17,482
Value issued from
reinvestment of dividends:
Class A ............ 2,493 12,770 6,250 ---
Class B ............. --- 83 --- ---
Class C ............. --- 14 --- ---
Class Y ............ 11 72 439 ---
Value redeemed:
Class A ............ (168,489) (419,015) (774,638) (1,036,580)
Class B ............. (231) (295) (2,413) (1,880)
Class C ............. (59) (155) (380) (1,285)
Class Y ............ (540) (547) (109,198) (15,333)
-------- -------- --------- --------
Increase (decrease) in
outstanding capital $(40,924) $(10,123) $(396,211) $246,853
======== ======== ========= ========
Transactions in capital stock for the period ended December 31, 1999 are
summarized below. Amounts are in thousands.
Waddell &
Waddell & Waddell & Waddell &Reed Advisors
Reed Advisors Reed Advisors Reed Advisors Science and
Accumulative Bond Income Technology
Fund Fund Fund Fund
----------- ------------ ------------------------
Shares issued from sale
of shares:
Class A ............ 20,270 74,231 95,818 70,704
Class B ............. 275 333 1,568 888
Class C ............. 34 62 162 145
Class Y ............ 304 357 6,515 1,484
Shares issued from
reinvestment of dividends and/or
capital gains distribution:
Class A ............ 28,019 4,402 67,006 16,066
Class B ............. 26 1 77 60
Class C ............. 4 ---* 8 10
Class Y ............ 65 23 2,656 94
Shares redeemed:
Class A ............ (27,719) (80,926) (146,624) (52,059)
Class B ............. (13) (45) (34) (4)
Class C ............. (---)* (14) (1) (1)
Class Y ............ (291) (917) (27,430) (504)
------ ------ ------- ------
Increase (decrease) in
outstanding capital
shares ............. 20,974 (2,493) (279) 36,883
====== ====== ======= ======
Value issued from sale
of shares:
Class A ............ $176,177 $455,677 $ 746,043 $884,275
Class B ............. 2,464 2,000 12,526 13,812
Class C ............. 309 372 1,289 2,282
Class Y ............ 2,560 2,207 50,345 18,437
Value issued from
reinvestment of dividends and/or
capital gains distribution:
Class A ............ 236,622 27,368 524,162 266,218
Class B ............. 223 9 606 988
Class C ............. 34 1 66 171
Class Y ............ 550 141 20,760 1,577
Value redeemed:
Class A ............ (245,823) (496,408) (1,151,669) (652,677)
Class B ............. (122) (266) (277) (72)
Class C ............. (---)* (81) (8) (10)
Class Y ............ (2,467) (5,808) (215,601) (5,667)
-------- -------- --------- --------
Increase (decrease) in
outstanding capital $170,527 $(14,788) $ (11,758) $529,334
======== ======== ========= ========
*Not shown due to rounding.
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 $49,750 of
income, net of related expenses, from its security lending activity.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Waddell & Reed Advisors Funds, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Waddell & Reed Advisors Accumulative Fund,
Waddell & Reed Advisors Bond Fund, Waddell & Reed Advisors Income Fund, and
Waddell & Reed Advisors Science and Technology Fund (collectively the "Funds")
comprising Waddell & Reed Advisors Funds, Inc. (formerly United Funds, Inc.) as
of June 30, 2000, and the related statements of operations for the six-month
period then ended, the statements of changes in net assets for the six-month
period then ended and fiscal year ended December 31, 1999, and the financial
highlights for the six-month period ended June 30, 2000 and for each of the five
fiscal years in the period ended December 31, 1999. These financial statements
and the financial highlights are the responsibility of the Funds' 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 positions of each
of the respective Funds comprising Waddell & Reed Advisors Funds, Inc. as of
June 30, 2000, the results of their operations for the six-month period then
ended, the changes in their net assets for the six-month period then ended and
fiscal year ended December 31, 1999 and the financial highlights for the six-
month period June 30, 2000 and for each of the five fiscal years in the period
ended December 31, 1999 in conformity with accounting principles generally
accepted in the United States of America.
Deloitte & Touche LLP
Kansas City, Missouri
August 4, 2000
<PAGE>
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.
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
James C. Cusser, Vice President
Henry J. Herrmann, Vice President
Theodore W. Howard, Vice President and Treasurer
Antonio Intagliata, Vice President
Kristen A. Richards, Vice President and Secretary
Daniel C. Schulte, Vice President
James D. Wineland, Vice President
<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
NUR1000SA(6-00)
