Waddell & Reed Advisors
Municipal
High Income
Fund, Inc.
ANNUAL
REPORT
--------------------------------------------
For the fiscal year ended September 30, 2000
<PAGE>
CONTENTS
3 Manager's Letter
6 Performance Summary
8 Portfolio Highlights
9 Investments
24 Statement of Assets and Liabilities
25 Statement of Operations
26 Statement of Changes in Net Assets
27 Financial Highlights
31 Notes to Financial Statements
36 Independent Auditors' Report
37 Income Tax Information
38 Directors & Officers
This report is submitted for the general information of the shareholders of
Waddell & Reed Advisors Municipal High Income Fund, Inc. It is not authorized
for distribution to prospective investors in the Fund unless accompanied with or
preceded by the Waddell & Reed Advisors Municipal High Income Fund current
prospectus and current Fund performance information.
<PAGE>
MANAGER'S LETTER OF MUNICIPAL HIGH INCOME FUND
-----------------------------------------------------------------
SEPTEMBER 30, 2000
Dear Shareholder:
This report relates to the operation of Waddell & Reed Advisors Municipal High
Income Fund, Inc. for the fiscal year ended September 30, 2000. The following
discussion, graphs and tables provide you with information regarding the Fund's
performance during that period.
The last 12 months have been challenging for bond funds. The growth rate of the
U.S. economy remained stronger than most economists expected and, until
recently, the global economy was robust, strengthening our export markets.
Consumer confidence remained very strong, personal income levels continued to
increase and domestic consumption remained strong.
The stock markets hit new highs throughout the last year. To combat the
potential effects of any Y2K disruptions, the Federal Reserve pumped massive
liquidity into the banking system at year end, and investors raised an above
average level of cash at year end. This increased liquidity only added fuel to
an already blazing fire.
Tight labor markets, strong consumer confidence, wage growth and the booming
economy added to the rise in inflation expectations. The Federal Reserve raised
short rates 125 basis points over the last 12 months. As interest rates rose,
investors withdrew money from the bond market and invested more heavily into
domestic and international stock markets.
During the last half of 1999, we maintained a relatively long duration because
we expected to see a "flight to quality" into bond funds due to Y2K disruptions.
When this did not materialize, bond yields stayed depressed through the end of
the year. In addition, the Fund was overweighted in health care, which has
consistently been the best performing sector in the Fund. However, in 1999,
health care did not perform as well as it had in the past. During the first
half of 2000, we increased the cash position in the portfolio and lowered its
duration. We intend to maintain this added liquidity until cash flows into
municipal bond funds show a meaningful improvement.
As a result of the factors discussed above, Waddell & Reed Advisors Municipal
High Income Fund underperformed, declining 3.46 percent for the fiscal year,
compared with the Lipper High Yield Municipal Bond Funds Universe Average return
of 0.78 percent (which reflects the performance of the universe of funds with
similar investment objectives) and the Lehman Brothers Municipal Bond Index
annual return of 6.18 percent (which reflects the performance of securities that
generally represent the municipal bond index). These indices are charted on the
following page. We underperformed most muni-high funds because we were
overweighted in health care and had a longer duration.
Currently, it appears the Federal Reserve is nearing the end of its interest
rate tightening cycle. Evidence continues to indicate that economic growth is
slowing and inflationary risks are falling. Higher worker productivity has
allowed the economy to grow faster than expected without causing inflation
expectations to rise. It is apparent that the impact of previous monetary
tightening, the slowing of domestic spending and the strong dollar are
contributing to slower economic growth. At this point, we believe the Federal
Reserve appears to have engineered another "soft landing." The municipal bond
market has shown a fairly robust appetite for current coupon bonds, especially
retail buyers. New issue supply is down significantly year over year. This has
helped support new issue pricing. Cash flow into the municipal bond market has
been improving, although cash flow into institutional investors has continued to
be sluggish. While we may be reaching the end of the current tightening cycle,
treasury bond yields may remain in a fairly tight trading range for some time.
In this environment, we believe that higher yielding, current coupon bonds
should perform well. As the tightening cycle ends, we believe cash flows into
bond funds should improve and credit spreads should begin to narrow. We
anticipate that the portfolio will continue to hold a relatively high level of
cash. The health care sector of the municipal bond market has begun to see
meaningful credit strengthening. We are taking this opportunity to increase the
credit quality of the portfolio and maintain a high level of liquidity. Our
goal continues to be consistent with maintaining high current income while
emphasizing total return.
In closing, I would like to thank you for your investment, your continued
confidence and your support of the Waddell & Reed Advisors Municipal High Income
Fund.
Sincerely,
Mark J. Otterstrom
Manager, Waddell & Reed Advisors Municipal High Income Fund, Inc.
<PAGE>
Comparison of Change in Value of $10,000 Investment
==== Waddell & Reed Advisors Municipal High Income Fund, Inc., Class A Shares*--
$19,716
++++ Lehman Brothers Municipal Bond Index -- $20,263
---- Lipper High Yield Municipal Bond Funds Universe Average - $18,198
Waddell Lipper
& Reed High Yield
Advisors Lehman Municipal
Municipal Brothers Bond
High IncomeMunicipal Funds
Fund, Inc., Bond Universe
Class A SharesIndex Average
------------------ ----------
09/30/90Purchase $9,575 $10,000 $10,000
09/30/91 10,758 11,318 11,084
09/30/92 11,950 12,502 12,138
09/30/93 13,595 14,095 13,586
09/30/94 13,602 13,751 13,339
09/30/95 15,049 15,290 14,614
09/30/96 16,163 16,214 15,498
09/30/97 18,015 17,678 16,974
09/30/98 19,796 19,219 18,370
09/30/99 19,554 19,084 18,057
09/30/00 19,716 20,263 18,198
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund.
Average Annual Total Return+
Class A Class B Class C Class Y
----------------------------------------------
Year Ended
9-30-00 -3.46% --- --- 0.97%
5 Years Ended
9-30-00 4.64% --- --- ---
10 Years Ended
9-30-00 7.02% --- --- ---
Since inception of
Class++ through
9-30-00 --- -4.47% -0.70% -0.33%
+Performance data quoted represents past performance and is based on deduction
of the maximum applicable sales load for each of the periods. Class A shares
carry a maximum front-end sales load of 4.25%. Class B and Class C shares
carry maximum contingent deferred sales charges of 5% and 1%, respectively.
Total returns reflect share price appreciation, including reinvestment of all
income and capital gains distributions. Investment return and principal value
will fluctuate and an investor's shares, when redeemed, may be worth more or
less than their original cost.
++10-5-99 for Class B shares, 10-8-99 for Class C shares and 12-30-98 for Class
Y shares (the date on which shares were first acquired and continuously held
by shareholders).
Past performance is not predictive of future performance. Indexes are
unmanaged.
<PAGE>
SHAREHOLDER SUMMARY
--------------------------------------------------------------
Waddell & Reed Advisors Municipal High Income Fund, Inc.
PORTFOLIO STRATEGY:
Ordinarily, at least 75% GOAL: To seek to provide a high
of assets in medium and level of income that is
lower rated Municipal Bonds not subject to Federal income tax.
(Income may
Generally less than 20% be subject to state and
of assets in Taxable local taxes and a
Debt Securities significant portion may
be subject to the Federal
No more than 25% of assets alternative minimum tax.)
in industrial revenue
bonds of any one industry
STRATEGY: Invests primarily in tax-exempt
municipal bonds rated in the lower tier
of investment grade or lower, including
bonds rated below investment grade, junk
bonds and lower-quality unrated bonds.
The Fund diversifies its holdings among
two main types of municipal bonds:
general obligation bonds and revenue
bonds.
FOUNDED: 1986
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
<PAGE>
PERFORMANCE SUMMARY - Class A Shares
PER SHARE DATA
For the Fiscal Year Ended September 30, 2000
--------------------------------------------
DIVIDENDS PAID $0.30
=====
CAPITAL GAINS DISTRIBUTION $0.004
======
NET ASSET VALUE ON
9-30-00 $4.92
9-30-99 5.19
------
CHANGE PER SHARE $(0.27)
======
Past performance is not necessarily indicative of future results.
<PAGE>
AVERAGE ANNUAL TOTAL RETURN (1)
Class A Class B
----------------------- -----------------------
With Without With Without
Period Sales Load(2) Sales Load(3) CDSC(4) CDSC(5)
------ ---------- ---------- ----------- ----------
1-year period
ended 9-30-00 -3.46% 0.83% --- ---
5-year period
ended 9-30-00 4.64% 5.55% --- ---
10-year period
ended 9-30-00 7.02% 7.49% --- ---
Cumulative return
since inception
of Class (6) --- --- -4.47% 0.29%
(1)Performance data represents share price appreciation, including reinvestment
of all income and capital gains distributions. Performance data represents
past performance and is no guarantee of future results. Share price,
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
(2)Performance data is based on deduction of 4.25% sales load on the initial
purchase in the periods.
(3)Performance data does not take into account the sales load deducted on an
initial purchase.
(4)Performance data reflects the effect of paying the applicable contingent
deferred sales charge (CDSC) at a maximum of 5.00% upon redemption at the end
of the period.
(5)Performance data does not reflect the effect of paying the applicable CDSC
upon redemption at the end of the period.
(6)10-5-99 for Class B shares (the date on which shares were first acquired by
shareholders).
AVERAGE ANNUAL TOTAL RETURN (1)
Class C Class Y(2)
----------------------- ----------
With Without
Period CDSC (3) CDSC (4)
------ ---------- ----------
1-year period
ended 9-30-00 --- --- 0.97%
5-year period
ended 9-30-00 --- --- ---
10-year period
ended 9-30-00 --- --- ---
Cumulative return
since inception
of Class(5) -0.70% 0.26% ---
Since inception
of Class(5) --- --- -0.33%
(1)Performance data represents share price appreciation, including reinvestment
of all income and capital gains distributions. Performance data represents
past performance and is no guarantee of future results. Share price,
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
(2)Performance data does not include the effect of sales charges, as Class Y
shares are not subject to these charges.
(3)Performance data reflects the effect of paying the applicable contingent
deferred sales charge (CDSC) at a maximum of 1.00% which declines to zero at
the end of the first year after investment.
(4)Performance data does not reflect the effect of paying the applicable CDSC
upon redemption at the end of the period.
(5)10-8-99 for Class C shares and 12-30-98 for Class Y shares (the date on which
shares were first acquired and continuously held by shareholders).
<PAGE>
PORTFOLIO HIGHLIGHTS
On September 30, 2000, Waddell & Reed Advisors Municipal High Income Fund, Inc.
had net assets totaling $419,064,315 invested in a diversified portfolio.
As a shareholder of Waddell & Reed Advisors Municipal High Income Fund, Inc.,
for every $100 you had invested on September 30, 2000, your Fund owned:
$23.03 Life Care/Nursing Center Revenue Bonds
17.51 Other Municipal Bonds
14.30 Industrial Development Revenue Bonds
10.16 Cash and Cash Equivalents
9.63 Hospital Revenue Bonds
8.01 Housing Revenue Bonds
4.09 Water and Sewer Revenue Bonds
3.54 Transportation Revenue Bonds
3.47 Airport Revenue Bonds
3.41 Resource Recovery Bonds
2.85 City General Obligation Bonds
2000 TAX YEAR TAXABLE EQUIVALENT YIELDS*
---------------------------------------------------------------------------
If your Taxable Income is:
Your Equivalent
Marginal Tax Free Yields
Joint Single Tax---------------------------
return Return Bracket Is 5% 6% 7% 8%
$ 0- 43,850 $ 0- 26,250 15% 5.88 7.06 8.24 9.41
$ 43,851-105,950 $ 26,251- 63,550 28% 6.94 8.33 9.72 11.11
$105,951-161,450 $ 63,551-132,600 31% 7.25 8.70 10.14 11.59
$161,451-288,350 $132,601-288,350 36% 7.81 9.38 10.94 12.50
$288,351 and above$288,351 and above 39.6% 8.28 9.93 11.59 13.25
*Table is for illustration only and does not represent the actual performance of
Waddell & Reed Advisors Municipal High Income Fund, Inc.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS
ALABAMA - 0.75%
The Marshall County Health Care Authority,
Hospital Revenue Refunding Bonds, Series
1992 (Guntersville-Arab Medical Center),
7.0%, 10-1-13 ......................... $ 3,100 $3,131,000
ALASKA - 0.48%
City of Seward, Alaska, Revenue Bonds, 1996
(Alaska Sealife Center Project),
7.65%, 10-1-16 ........................ 2,000 2,030,000
ARIZONA - 1.75%
Hayden-Winkelman Unified School District No.
41 of Gila County, Arizona, Capital
Appreciation Refunding Bonds, Series 1995,
0.0%, 7-1-10 .......................... 6,145 3,564,100
The Industrial Development Authority of the
County of Gila, Arizona, Environmental Revenue
Refunding Bonds (ASARCO Incorporated Project),
Series 1998,
5.55%, 1-1-27 ......................... 4,750 3,788,125
Total ................................. 7,352,225
CALIFORNIA - 2.19%
California Statewide Communities Development
Authority, Hospital Refunding Revenue Certificates
of Participation, Series 1993, Cedars-Sinai
Medical Center, Inverse Floating Rate
Security (INFLOS),
6.342%, 11-1-15 (A) ................... 4,000 3,845,000
Sierra Kings Health Care District Revenue
Bonds, Series 1996,
6.5%, 12-1-26 ......................... 1,500 1,216,875
Certificates of Participation (1991 Capital
Improvement Project), Bella Vista Water
District (California),
7.375%, 10-1-17 ....................... 1,500 1,578,330
Carson Redevelopment Agency (California),
Redevelopment Project Area No. 1,
Tax Allocation Bonds, Series 1993B,
6.0%, 10-1-16 ......................... 1,500 1,535,625
Kings County Waste Management Authority, Solid
Waste Revenue Bonds, Series 1994 (California),
7.2%, 10-1-14 ......................... 940 1,016,375
Total ................................. 9,192,205
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
COLORADO - 3.20%
Sand Creek Metropolitan District, Adams
County and City and County of Denver,
Colorado, General Obligation Limited
Tax Bonds:
Series 1998,
6.625%, 12-1-17 ....................... $ 3,070 $2,916,500
Series 1997,
7.125%, 12-1-16 ....................... 2,000 1,985,000
City and County of Denver, Colorado,
Revenue Bonds (Jewish Community Centers
of Denver Project), Series 1994:
8.25%, 3-1-24 ......................... 2,390 2,479,625
7.875%, 3-1-19 ........................ 815 834,356
Colorado Health Facilities Authority,
Revenue Bonds (Steamboat Springs
Health Care Association Project),
Series 1999,
5.7%, 9-15-23 ......................... 3,000 2,370,000
Bachelor Gulch Metropolitan District,
Eagle County, Colorado, General Obligation
Bonds, Series 1996,
7.0%, 12-1-15 ......................... 1,095 1,123,744
Eaglebend Affordable Housing Corporation,
Multifamily Housing Project Revenue
Refunding Bonds, Series 1997A,
6.45%, 7-1-21 ......................... 1,000 950,000
Deer Creek Metropolitan District, Jefferson
County, Colorado, General Obligation Bonds,
Series 2000,
7.625%, 12-1-19 ....................... 750 762,187
Total ................................. 13,421,412
CONNECTICUT - 2.21%
Eastern Connecticut Resource Recovery
Authority, Solid Waste Revenue Bonds
(Wheelabrator Lisbon Project),
Series 1993A,
5.5%, 1-1-14 .......................... 5,250 4,600,312
Connecticut Development Authority, Pollution
Control Revenue Refunding Bonds (The
Connecticut Light and Power Company
Project - 1993B Series),
5.95%, 9-1-28 ......................... 2,500 2,328,125
State of Connecticut Health and
Education Facilities Authority,
Revenue Bonds, Edgehill Issue
Series A (Fixed Rate),
6.875%, 7-1-27 ........................ 2,300 2,317,250
Total ................................. 9,245,687
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
DISTRICT OF COLUMBIA - 1.26%
Certificates of Participation, Series 1993,
District of Columbia,
7.3%, 1-1-13 .......................... $ 3,000 $3,161,250
District of Columbia Revenue Bonds
(National Public Radio Issue),
Series 1992,
7.625%, 1-1-13 ........................ 2,000 2,115,000
Total ................................. 5,276,250
FLORIDA - 4.06%
Sanford Airport Authority (Florida),
Industrial Development Revenue Bonds
(Central Florida Terminals, Inc. Project):
Series 1995A,
7.75%, 5-1-21 ......................... 4,000 4,195,000
Series 1995C,
7.5%, 5-1-21 .......................... 500 516,875
St. Johns County Industrial Development
Authority (Florida), Health Care Revenue
Bonds, Tax Exempt Series 1997A
(Bayview Project),
7.1%, 10-1-26 ......................... 4,000 3,905,000
Escambia County Health Facilities Authority,
Health Facilities Revenue Bonds (Azalea
Trace, Inc.), Series 1997,
6.0%, 1-1-15 .......................... 3,000 2,790,000
Sarasota County (Florida) Health Facilities
Authority, Health Care Facilities Revenue
Refunding Bonds, Series 1995 (Sarasota-
Manatee Jewish Housing Council, Inc.
Project),
6.7%, 7-1-25 .......................... 3,000 2,550,000
Dade County Industrial Development Authority,
Industrial Development Revenue Bonds,
Series 1995 (Miami Cerebral Palsy
Residential Services, Inc. Project),
8.0%, 6-1-22 .......................... 1,800 1,813,500
City of Fort Walton Beach, First Mortgage
Industrial Development Revenue Bonds,
Series 1986 (Ft. Walton Beach Ventures,
Inc. Project),
10.5%, 12-1-16 ........................ 1,210 1,225,839
Total ................................. 16,996,214
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
GEORGIA - 1.77%
Coffee County Hospital Authority (Georgia),
Revenue Anticipation Certificates (Coffee
Regional Medical Center, Inc. Project),
Series 1997A,
6.75%, 12-1-16 ........................ $ 5,000 $4,618,750
Savannah Economic Development Authority,
First Mortgage Revenue Bonds (Senior Care
Group, Inc. - Shadowmoss Project),
Series 1999A,
6.75%, 7-1-29 ......................... 3,185 2,782,894
Total ................................. 7,401,644
HAWAII - 0.59%
Department of Transportation of the State
of Hawaii, Special Facility Revenue Bonds
(Continental Airlines, Inc.), Series 1997,
5.625%, 11-15-27 ...................... 3,000 2,471,250
ILLINOIS - 2.10%
Illinois Development Finance Authority
Revenue Bonds, Series 1993C (Catholic
Charities Housing Development
Corporation Project),
6.1%, 1-1-20 .......................... 2,500 2,325,000
Village of Lansing, Illinois, Landings
Redevelopment Project Area, Tax Increment
Refunding Revenue Bonds (Limited Sales
Tax Pledge), Series 1992,
7.0%, 12-1-08 ......................... 2,000 2,102,500
Illinois Health Facilities Authority,
Revenue Refunding Bonds, Series 1998
(Lifelink Corporation Obligated Group),
5.7%, 2-15-24 ......................... 1,750 1,397,813
Village of Hodgkins, Cook County, Illinois,
Tax Increment Revenue Refunding Bonds,
Series 1995A,
7.625%, 12-1-13 ....................... 1,750 1,844,062
Village of Bourbonnais, Kankakee County,
Illinois, Sewerage Revenue Bonds,
Series 1993,
7.25%, 12-1-12 ........................ 1,085 1,135,181
Total ................................. 8,804,556
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
INDIANA - 1.68%
Indiana Health Facility Financing Authority:
Revenue Refunding Bonds, Series 1998
(Greenwood Village South Project),
5.625%, 5-15-28 ....................... $4,100 $3,182,625
Hospital Revenue Bonds, Series 1992
(Fayette Memorial Hospital Project),
7.2%, 10-1-22 ......................... 1,000 985,000
City of Goshen, Indiana, Revenue Bonds,
Series 1998 (Greencroft Obligated Group),
5.75%, 8-15-28 ........................ 1,900 1,463,000
City of Carmel, Indiana, Retirement Rental
Housing Revenue Refunding Bonds (Beverly
Enterprises - Indiana, Inc. Project),
Series 1992,
8.75%, 12-1-08 ........................ 1,335 1,406,756
Total ................................. 7,037,381
IOWA - 3.09%
City of Creston, Iowa, Industrial Development
Revenue Bonds, Series 1997A (CF Processing,
L.C. Project),
8.0%, 8-1-26 .......................... 5,000 4,975,000
City of Cedar Rapids, Iowa, First Mortgage
Revenue Bonds, Series 1998-A (Cottage Grove
Place Project),
5.875%, 7-1-28 ........................ 5,000 4,012,500
Iowa Finance Authority,
Community Provider Revenue Bonds (Boys and
Girls Home and Family Services, Inc. Project),
Series 1998,
6.25%, 12-1-28 ........................ 4,000 3,970,000
Total ................................. 12,957,500
KANSAS - 4.82%
Kansas Development Finance Authority:
Revenue Bonds (Village Shalom Obligated Group),
Series 1998AA,
5.625%, 11-15-28 ...................... 4,750 3,889,063
Multifamily Housing Revenue Bonds, Series 1998K
(Pioneer Olde Town Apartments Project),
6.5%, 10-1-30 ......................... 3,200 2,860,000
Community Provider Loan Program (Community
Living Opportunities, Inc.), Series
1992A Revenue Bonds,
8.875%, 9-1-11 ........................ 2,790 2,872,472
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
KANSAS (Continued)
Certificates of Participation, Series 1998A,
Evidencing Proportionate Interests of the
Owners Thereof in Rental Payments to be
Made by the City of Spring Hill, Kansas, to
Spring Hill Golf Corporation,
6.5%, 1-15-28 ......................... $ 4,000 $3,570,000
City of Olathe, Kansas, Senior Living Facility
Revenue Bonds (Aberdeen Village, Inc.),
Series 2000A,
8.0%, 5-15-30 ......................... 2,505 2,505,000
City of Prairie Village, Kansas, Revenue Bonds
(Claridge Court Project), Series 1993A:
8.75%, 8-15-23 ........................ 1,000 1,066,250
8.5%, 8-15-04 ......................... 640 680,800
City of Topeka, Kansas, Economic Development
Revenue Bonds, Series 2000A (YMCA Project),
7.5%, 9-01-25 ......................... 2,800 2,758,000
Total ................................. 20,201,585
KENTUCKY - 0.25%
County of Perry, Kentucky, Solid Waste
Disposal Revenue Bonds (TJ International
Project), Series 1994,
7.0%, 6-1-24 .......................... 1,000 1,037,500
LOUISIANA - 1.59%
Louisiana Public Facilities Authority,
Revenue Bonds (Progressive Healthcare
Providers/Louisiana, Inc. Project), Series 1998:
6.375%, 10-1-20 ....................... 2,000 1,817,500
6.375%, 10-1-28 ....................... 2,000 1,742,500
5.75%, 10-1-03 ........................ 1,160 1,109,250
Board of Commissioners of the Port of New Orleans,
Industrial Development Revenue Refunding Bonds
(Continental Grain Company Project), Series 1993,
7.5%, 7-1-13 .......................... 2,000 2,005,000
Total ................................. 6,674,250
MAINE - 2.06%
Maine Health and Higher Educational Facilities
Authority, Revenue Bonds, Piper Shores
Issue, Series 1999A:
7.55%, 1-1-29 ......................... 5,000 4,818,750
7.5%, 1-1-19 .......................... 1,000 968,750
Maine Veterans' Homes, Revenue Bonds, 1995 Series,
7.75%, 10-1-20 ........................ 2,810 2,862,687
Total ................................. 8,650,187
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MARYLAND - 0.81%
Maryland Economic Development Corporation,
Senior Lien Revenue Bonds (Rocky Gap
Golf Course and Hotel/Meeting Center
Project), Series 1996 A,
8.375%, 10-1-09 ....................... $ 3,250 $3,380,000
MASSACHUSETTS - 4.43%
Massachusetts Industrial Finance Agency:
First Mortgage Revenue Bonds, Reeds
Landing Project, Series 1993,
8.625%, 10-1-23 ....................... 9,945 9,945,000
Resource Recovery Revenue Bonds (SEMASS
Project), Series 1991B,
9.25%, 7-1-15 ......................... 4,900 5,165,188
Resource Recovery Revenue Refunding Bonds
(Ogden Haverhill Project),
Series 1998A Bonds,
5.6%, 12-1-19 ......................... 2,500 2,196,875
Revenue Bonds, Beaver Country Day School
Issue, Series 1992, Subseries A,
8.1%, 3-1-08 .......................... 1,215 1,234,744
Total ................................. 18,541,807
MINNESOTA - 0.32%
City of Coon Rapids, Minnesota, Multifamily
Housing Revenue Bonds (Wedum Redwood
Terrace, LLC Project), Series 1999A,
6.375%, 11-1-29 ....................... 1,450 1,348,500
MISSOURI - 4.44%
The Industrial Development Authority of the
City of Kansas City, Missouri:
Revenue Bonds (The Bishop Spencer Place,
Incorporated Project), Series 1994,
8.0%, 9-1-16 .......................... 2,965 3,061,363
Multifamily Housing Revenue Bonds (Village
Green Apartments Project), Series 1998,
6.25%, 4-1-30 ......................... 1,750 1,570,625
The Industrial Development Authority of the
City of Bridgeton, Missouri, Senior Housing
Revenue Bonds (The Sarah Community Project),
Series 1998,
5.9%, 5-1-28 .......................... 3,100 2,514,875
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MISSOURI (Continued)
Missouri Housing Development Commission,
Multifamily Housing Revenue Bonds (The Mansion
Apartments Phase II Project), Series 1999,
6.17%, 10-1-32 ........................ $ 3,915 $3,499,031
The City of Lake Saint Louis, Missouri,
Public Facilities Authority, Certificates
of Participation (Municipal Golf Course
Project), Series 1993,
7.55%, 12-1-14 ........................ 2,000 2,142,500
The Industrial Development Authority of
the City of St. Louis, Missouri,
Industrial Revenue Refunding Bonds
(Kiel Center Multipurpose Arena Project),
Series 1992,
7.75%, 12-1-13 ........................ 1,500 1,571,250
The Industrial Development Authority of
Callaway County, Missouri, Industrial
Development Revenue Bonds (A.P. Green
Refractories Co. Project), Series 1984,
8.6%, 11-1-14 ......................... 900 928,260
Tax Increment Financing Commission of Kansas
City, Missouri, Tax Increment Refunding and
Improvement Revenue Bonds (Briarcliff West
Project), Series 2000,
6.25%, 8-1-23 ......................... 3,500 3,307,500
Total ................................. 18,595,404
NEVADA - 0.64%
Reno-Sparks Convention & Visitors Authority,
Nevada, Limited Obligation Medium-Term
Refunding Bonds, Series November 1, 1996,
6.0%, 11-1-06 ......................... 2,640 2,669,700
NEW HAMPSHIRE - 2.64%
State of New Hampshire, Turnpike System Revenue
Bonds, 1994 Series C, Linked Select Auction
Variable Rate Securities (SAVRS) and Residual
Interest Bonds (RIBS),
5.226%, 2-1-24 ........................ 11,200 10,192,000
Lisbon Regional School District, New
Hampshire, General Obligation Capital
Appreciation School Bonds,
0.0%, 2-1-13 .......................... 1,390 891,337
Total ................................. 11,083,337
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW JERSEY - 3.09%
New Jersey Health Care Facilities Financing
Authority, Revenue Bonds, Englewood Hospital
and Medical Center Issue, Series 1994,
6.75%, 7-1-24 ......................... $ 4,480 $4,093,600
New Jersey Economic Development Authority:
First Mortgage Revenue Fixed Rate Bonds
(Winchester Gardens at Ward Homestead
Project), Series 1996A,
8.625%, 11-1-25 ....................... 3,000 3,176,250
Economic Development Bonds, Kapkowski
Road Landfill Reclamation Improvement
District Project (City of Elizabeth),
Series 1998A:
6.375%, 4-1-18 ........................ 2,385 2,376,056
0.0%, 4-1-11 .......................... 1,740 865,650
Senior Mortgage Revenue and Revenue Refunding
Bonds (Arbor Glen of Bridgewater Project),
Series 1998A,
6.0%, 5-15-28 ......................... 3,150 2,417,625
Total ................................. 12,929,181
NEW YORK - 3.89%
New York City Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, Inverse
Rate Securities, Fiscal 1994 Series E,
Newly Linked Bonds,
5.21%, 6-15-12 ........................ 5,500 5,541,250
City of New York, General Obligation Bonds,
Fiscal 2001 Series B Tax-Exempt Bonds,
5.75%, 8-1-14 ......................... 5,000 5,143,750
Tompkins County Industrial Development
Agency, Life Care Community Revenue Bonds,
1994 (Kendal at Ithaca, Inc. Project),
7.875%, 6-1-24 ........................ 4,035 4,151,006
Suffolk County Industrial Development Agency,
Continuing Care Retirement Community, First
Mortgage Fixed Rate Revenue Bonds
(Jefferson's Ferry Project - Series 1999A),
7.2%, 11-1-19 ......................... 1,500 1,473,750
Total ................................. 16,309,756
NORTH CAROLINA - 1.05%
City of Charlotte, North Carolina, Charlotte/
Douglas International Airport, Special
Facility Refunding Revenue Bonds, Series 1998
(US Airways, Inc. Project),
5.6%, 7-1-27 .......................... 3,075 2,325,469
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NORTH CAROLINA (Continued)
City of Durham, North Carolina, Multifamily
Housing Revenue Bonds (Ivy Commons Project),
Series 1997,
8.0%, 3-1-29 .......................... $ 2,205 $ 2,075,456
Total ................................. 4,400,925
NORTH DAKOTA - 0.61%
City of Grand Forks, North Dakota, Senior
Housing Revenue Bonds (4000 Valley
Square Project), Series 1997:
6.25%, 12-1-34 ........................ 2,000 1,450,000
6.375%, 12-1-34 ....................... 1,500 1,125,000
Total ................................. 2,575,000
OHIO - 2.04%
Ohio Water Development Authority, State of
Ohio, Solid Waste Disposal Revenue Bonds
(Bay Shore Power Project), Tax-Exempt
Series 1998 A,
5.875%, 9-1-20 ........................ 6,000 4,792,500
City of Toledo, Ohio, Multifamily Housing
Mortgage Revenue Bonds, Series 1998-A
(Hillcrest Apartments Project),
6.125%, 12-1-29 ....................... 4,000 3,750,000
Total ................................. 8,542,500
OKLAHOMA - 3.04%
Bixby Public Works Authority, Utility
System Revenue Bonds, Refunding
Series 1994,
7.25%, 11-1-19 ........................ 2,685 2,886,375
The Clinton Public Works Authority,
Refunding and Improvement Revenue
Bonds, Series 1994,
6.25%, 1-1-19 ......................... 2,575 2,603,969
Oklahoma County Industrial Authority,
Industrial Development Revenue Bonds:
1986 Series A (Westlake Nursing Center
Project):
10.25%, 9-1-16 (B) .................... 905 678,750
10.125%, 9-1-06 (B) ................... 430 322,500
1986 Series B (Choctaw Nursing
Center Project):
10.25%, 9-1-16 (B) .................... 1,230 713,400
10.125%, 9-1-06 (B) ................... 525 304,500
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
OKLAHOMA (Continued)
The Broken Arrow Public Golf Authority
(Broken Arrow, Oklahoma), Recreational
Facilities Revenue Bonds, Series 1995,
7.25%, 8-1-20 ......................... $ 2,025 $ 2,088,281
Trustees of the Oklahoma Ordnance Works
Authority, Industrial Development Revenue
Refunding Bonds (A.P. Green Industries,
Inc. Project), Series 1992,
8.5%, 5-1-08 .......................... 1,600 1,672,000
The Guthrie Public Works Authority
(Guthrie, Oklahoma), Utility System
Revenue Bonds, Series 1994A,
6.75%, 9-1-19 ......................... 1,415 1,487,519
Total ................................. 12,757,294
OREGON - 0.36%
Myrtle Creek Building Authority, Gross
Revenue Bonds, Series 1996A (Myrtle Creek
Golf Course Project),
8.0%, 6-1-21 (B) ...................... 3,000 1,500,000
PENNSYLVANIA - 7.09%
Allegheny County Hospital Development Authority,
Health System Revenue Bonds, Series 2000B
(West Penn Allegheny Health System),
9.25%, 11-15-22 ....................... 13,000 12,350,000
Delaware County Authority (Pennsylvania),
First Mortgage Revenue Bonds, Series 1994,
(Riddle Village Project),
8.25%, 6-1-22 ......................... 4,000 4,560,000
Philadelphia Authority for Industrial
Development, Commercial Development Revenue
Refunding Bonds (Doubletree Guest Suites
Project), Series 1997A,
6.5%, 10-1-27.......................... 3,500 3,421,250
Clearfield Hospital Authority, Hospital
Revenue and Refunding Bonds (Clearfield
Hospital Project), Series 1994,
6.875%, 6-1-16 ........................ 3,240 3,211,650
Allentown Area Hospital Authority, Hospital
Revenue Bonds (Sacred Heart Hospital of
Allentown), Series A of 1993,
6.75%, 11-15-14 ....................... 2,865 2,832,769
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
PENNSYLVANIA (Continued)
Susquehanna Area Regional Airport Authority,
Airport Facilities Revenue Bonds (Aero
Harrisburg, LLC Project), Series 1999,
5.5%, 1-1-24 .......................... $ 2,000 $ 1,712,500
South Wayne County Water and Sewer Authority
(Wayne County, Pennsylvania), Sewer Revenue
Bonds, Series of 1992,
8.2%, 4-15-13 ......................... 1,600 1,614,000
Total ................................. 29,702,169
RHODE ISLAND - 0.50%
City of Providence, Rhode Island, Special
Obligation Tax Increment Bonds, Series D,
6.65%, 6-1-16 ......................... 2,000 2,072,500
SOUTH CAROLINA - 3.00%
South Carolina Jobs - Economic Development Authority,
Solid Waste Recycling Facilities Revenue Bonds
(Santee River Rubber Project):
Tax-Exempt Series 1998A,
8.0%, 12-1-14 ......................... 4,000 3,745,000
Tax-Exempt Series 1998B,
9.0%, 12-1-11 ......................... 2,460 2,398,500
Connector 2000 Association, Inc., Toll Road
Revenue Bonds (Southern Connector Project,
Greenville, South Carolina),
Senior Capital Appreciation Bonds, Series 1998B:
0.0%, 1-1-35 .......................... 17,000 1,317,500
0.0%, 1-1-36 .......................... 11,000 783,750
McCormick County, South Carolina, Hospital
Facilities Revenue Refunding and Improvement
Bonds, Series 1997 (McCormick Health Care
Center Project),
7.0%, 3-1-18 .......................... 2,530 2,264,350
South Carolina State Housing, Finance
and Development Authority, Multifamily
Housing Mortgage Revenue Bonds (United
Dominion-Plum Chase), Series 1991,
8.5%, 10-1-21 ......................... 2,000 2,075,340
Total ................................. 12,584,440
SOUTH DAKOTA - 0.48%
South Dakota Health and Educational
Facilities Authority, Refunding Revenue
Bonds (Westhills Village Retirement
Community Issue), Series 1993,
7.25%, 9-1-13 ......................... 2,000 1,990,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TENNESSEE - 0.82%
The Health and Educational Facilities
Board of the City of Crossville, Tennessee,
Hospital Revenue Improvement Bonds,
Series 1992 (Cumberland Medical Center),
6.75%, 11-1-12 ........................ $ 2,000 $ 2,020,000
Upper Cumberland Gas Utility District
(of Cumberland County, Tennessee),
Gas System Revenue Bonds, Series 1996,
7.0%, 3-1-16 (B) ...................... 1,400 1,429,750
Total ................................. 3,449,750
TEXAS - 5.69%
AllianceAirport Authority, Inc., Special
Facilities Revenue Bonds:
Series 1991 (American Airlines, Inc. Project),
7.0%, 12-1-11 ......................... 4,700 5,046,625
Series 1996 (Federal Express Corporation Project),
6.375%, 4-1-21 ........................ 4,000 3,970,000
Lubbock Health Facilities Development Corporation,
Fixed Rate First Mortgage Revenue Bonds
(Carillon, Inc. Project), Series 1999A,
6.5%, 7-1-19 .......................... 6,000 5,325,000
North Central Texas Health Facilities Development
Corporation, Retirement Facility Revenue Bonds
(Northwest Senior Housing Corporation -
Edgemere Project), Series 1999A, Fixed
Rate Bonds,
7.5%, 11-15-29 ........................ 3,000 2,973,750
Alvarado Industrial Development Corporation,
Industrial Development Revenue Bonds
(Rich-Mix Products of Texas, Inc. Project),
Series 1996,
7.75%, 3-1-10 ......................... 2,625 2,562,656
City of Houston, Housing Corporation
No. 1, First Lien Revenue Refunding
Bonds, Series 1996 (6800 Long Drive
Apartments - Section 8 New Construction
Program), Houston, Texas,
6.625%, 2-1-20 ........................ 2,305 2,232,969
Gulf Coast Waste Disposal Authority, Waste
Disposal Revenue Bonds (Valero Energy
Corporation Project), Series 1999,
5.7%, 4-1-32 .......................... 2,000 1,732,500
Total ................................. 23,843,500
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
UTAH - 4.42%
Tooele County, Utah, Hazardous Waste
Treatment Revenue Bonds (Union Pacific
Corporation/USPCI, Inc. Project),
Series A,
5.7%, 11-1-26 ......................... $17,000 $ 14,853,750
Utah Housing Finance Agency, Revenue Bonds
(RHA Community Services of Utah, Inc.
Project), Series 1997A,
6.875%, 7-1-27 ........................ 2,440 2,342,400
Carbon County, Utah, Solid Waste Disposal
Facility Revenue Refunding Bonds
(Sunnyside Cogeneration Associates Project):
Series 1999A,
7.1%, 8-15-23 ......................... 1,250 1,250,000
Series 1999B,
0.0%, 8-15-24 ......................... 390 64,350
Total ................................. 18,510,500
VIRGINIA - 2.74%
Peninsula Ports Authority of Virginia,
Port Facility Refunding Revenue Bonds
(Zeigler Coal Project), Series 1997 (Non-AMT),
6.9%, 5-2-22 .......................... 5,000 2,750,000
Norfolk Redevelopment and Housing Authority,
Multifamily Rental Housing Facility Revenue
Bonds, Series 1996 (1016 Limited Partnership -
Sussex Apartments Project),
8.0%, 9-1-26 .......................... 3,480 3,340,800
Fairfax County Redevelopment and Housing
Authority, Multifamily Housing Revenue
Refunding Bonds (Burke Shire Commons
Apartments Project), Series 1996,
7.6%, 10-1-36 ......................... 3,000 2,853,750
Pocahontas Parkway Association, Route 895
Connector, Toll Road Revenue Bonds, Senior
Capital Appreciation Bonds, Series 1998B,
0.0%, 8-15-18 ......................... 9,000 2,542,500
Total ................................. 11,487,050
WASHINGTON - 1.13%
Port of Anacortes, Washington, Revenue and
Refunding Bonds, 1998 Series A (AMT),
5.625%, 9-1-16 ........................ 3,790 3,477,325
Housing Authority of the City of Seattle,
Low-Income Housing Assistance Revenue
Bonds, 1995 (GNMA Collateralized Mortgage
Loan - Kin On Project),
7.4%, 11-20-36 ........................ 1,142 1,274,758
Total ................................. 4,752,083
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WEST VIRGINIA - 0.37%
Upshur County, West Virginia, Solid Waste
Disposal Revenue Bonds (TJ International
Project), Series 1995,
7.0%, 7-15-25 ......................... $ 1,500 $1,560,000
WISCONSIN - 2.39%
Wisconsin Health and Educational Facilities
Authority, Revenue Bonds, Series 1995:
National Regency of New Berlin, Inc.
Project,
8.0%, 8-15-25 ......................... 4,445 4,611,688
Hess Memorial Hospital Association, Inc.
Project,
7.75%, 11-1-15 ........................ 3,400 3,527,500
City of Superior, Wisconsin, Water Supply
Facilities Revenue Refunding Bonds
(Superior Water, Light and Power Company
Project), Series 1996,
6.125%, 11-1-21 ....................... 1,910 1,874,188
Total ................................. 10,013,376
TOTAL MUNICIPAL BONDS - 89.84% $376,479,618
(Cost: $397,924,802)
SHORT-TERM SECURITIES
Commercial Paper
Electric, Gas and Sanitary Services - 2.16%
Detroit Edison Co.,
6.85%, 10-3-00 ........................ 2,400 2,399,087
Reliant Energy Inc.,
7.0%, 10-2-00 ......................... 6,660 6,658,705
Total ................................. 9,057,792
Food and Kindred Products - 2.48%
ConAgra Inc.,
6.7%, 10-3-00 ......................... 10,000 9,996,278
General Mills, Inc.,
6.67%, Master Note .................... 376 376,000
Total ................................. 10,372,278
Nondepository Institutions - 0.29%
PACCAR Financial Corp.,
6.49%, Master Note .................. 1,224 1,224,000
Total Commercial Paper - 4.93% 20,654,070
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Municipal Obligations
California - 1.19%
California Pollution Control Financing Authority,
Pollution Control Refunding Revenue Bonds (Pacific
Gas and Electric Company), 1996 Series E Bonds
(Morgan Guaranty Trust Company of New York),
5.0%, 10-2-00 ....................... 5,000 5,000,000
Colorado - 0.64%
Colorado Health Facilities Authority,
Revenue Refunding Bonds (Christian Living
Campus - University Hills Project), Series 1997
(US Bank),
5.75%, 10-4-00 ...................... 2,690 2,690,000
Minnesota - 0.79%
City of Burnsville, MN, Multifamily Housing
Revenue Refunding Bonds (Berkshire of
Burnsville), Series 2000A
(Federal National Mortgage Association),
5.65%, 10-5-00 ...................... 3,300 3,300,000
Oklahoma - 1.16%
Tulsa Industrial Authority, Multifamily Housing
Revenue Bonds (Park Chase Apartments Project),
Series 1999A-1 (Federal National Mortgage
Association),
5.65%, 10-5-00 ...................... 4,856 4,856,000
Washington - 1.19%
Washington Health Care Facilities Authority,
Variable Rate Demand Revenue Bonds (Fred
Hutchinson Cancer Research Center, Seattle),
Series 1991B (Morgan Guaranty Trust Company
of New York),
5.55%, 10-2-00 ...................... 5,000 5,000,000
Total Municipal Obligations - 4.97% 20,846,000
TOTAL SHORT-TERM SECURITIES - 9.90% $41,500,070
(Cost: $41,500,070)
TOTAL INVESTMENT SECURITIES - 99.74% $417,979,688
(Cost: $439,424,872)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.26% 1,084,627
NET ASSETS - 100.00% $419,064,315
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 2000
Notes to Schedule of Investments
(A) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in
effect at September 30, 2000.
(B) Non-income producing as the issuer has either missed its most recent
interest payment or declared bankruptcy.
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 MUNICIPAL HIGH INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
(In Thousands, Except for Per Share Amounts)
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $417,980
Cash ............................................. 321
Receivables:
Interest ........................................ 7,328
Investment securities sold....................... 203
Fund shares sold................................. 241
Prepaid insurance premium ........................ 11
--------
Total assets .................................. 426,084
Liabilities --------
Payable for investment sercurities purchased ...... 5,141
Payable to Fund shareholders ..................... 1,494
Dividends payable ................................ 235
Accrued service fee (Note 2) ..................... 81
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 41
Accrued management fee (Note 2) .................. 12
Accrued accounting services fee (Note 2) ......... 6
Accrued distribution fee (Note 2) ................ 6
Other ............................................ 4
--------
Total liabilities ............................. 7,020
--------
Total net assets ............................. $419,064
Net Assets ========
$1.00 par value capital stock
Capital stock ................................... $ 85,112
Additional paid-in capital ...................... 361,009
Accumulated undistributed loss:
Accumulated undistributed net realized loss
on investment transactions .................... (5,272)
Distribution in excess of net realized
loss on investment transactions ............... (340)
Net unrealized depreciation in value of
investments ................................... (21,445)
--------
Net assets applicable to outstanding
units of capital ............................. $419,064
========
Net asset value per share (net assets divided
by shares outstanding)
Class A .......................................... $4.92
Class B .......................................... $4.92
Class C .......................................... $4.92
Class Y .......................................... $4.92
Capital shares outstanding
Class A .......................................... 84,702
Class B .......................................... 239
Class C .......................................... 167
Class Y .......................................... 4
Capital shares authorized .......................... 300,000
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended SEPTEMBER 30, 2000
(In Thousands)
Investment Income
Interest and amortization (Note 1B) .............. $31,388
--------
Expenses (Note 2):
Investment management fee ....................... 2,353
Service fee:
Class A ........................................ 1,013
Class B ........................................ 2
Class C ........................................ 1
Transfer agency and dividend disbursing:
Class A ........................................ 468
Class B ........................................ 2
Class C ........................................ 1
Accounting services fee ......................... 61
Legal fees....................................... 57
Distribution fee:
Class A ........................................ 42
Class B ........................................ 4
Class C ........................................ 3
Custodian fees .................................. 18
Audit fees ...................................... 18
Other ........................................... 149
--------
Total expenses ................................ 4,192
--------
Net investment income ........................ 27,196
--------
Realized and Unrealized Loss on Investments
(Notes 1 and 3)
Realized net loss on investments ................. (5,257)
Unrealized depreciation in value of
investments during the period ................... (20,065)
--------
Net loss on investments ......................... (25,322)
--------
Net increase in net assets resulting
from operations .............................. $ 1,874
========
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
For the fiscal year
ended September 30,
-----------------------------
2000 1999
Increase (Decrease) in Net Assets -------------- ------------
Operations:
Net investment income ............... $27,196 $29,398
Realized net gain (loss) on
investments ....................... (5,257) 721
Unrealized depreciation ............. (20,065) (37,310)
-------- --------
Net increase (decrease) in net assets
resulting from operations ........ 1,874 (7,191)
-------- --------
Distributions to shareholders (Note 1D):*
From net investment income:
Class A ........................... (27,143) (29,398)
Class B ........................... (32) ---
Class C ........................... (21) ---
Class Y ........................... ---** ---**
From realized net gains on investment
transactions:
Class A ........................... --- (12,257)
Class B ........................... --- ---
Class C ........................... --- ---
Class Y ........................... --- ---**
In excess of realized capital gains:
Class A ........................... (335) (19)
Class B ........................... (1) ---
Class C ........................... ---** ---
Class Y ........................... ---** ---**
-------- --------
(27,532) (41,674)
-------- --------
Capital share transactions
(Note 5) ............................ (65,145) 36,537
-------- --------
Total decrease ................. (90,803) (12,328)
Net Assets
Beginning of period .................. 509,867 522,195
-------- --------
End of period ........................ $419,064 $509,867
======== ========
Undistributed net investment income . $--- $---
==== ====
*See "Financial Highlights" on pages 27 - 30.
**Not shown due to rounding.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the fiscal year ended
September 30,
------------------------------------
2000 1999 1998 1997 1996
------- ------ ------ ------ ------
Net asset value,
beginning of
period ........... $5.19 $5.69 $5.55 $5.31 $5.27
----- ----- ----- ----- -----
Income (loss) from investment
operations:
Net investment
income........... 0.30 0.31 0.32 0.34 0.34
Net realized and
unrealized gain
(loss) on
investments ..... (0.27) (0.37) 0.21 0.25 0.04
----- ----- ----- ----- -----
Total from investment
operations ....... 0.03 (0.06) 0.53 0.59 0.38
----- ----- ----- ----- -----
Less distributions:
Declared from net
investment income (0.30) (0.31) (0.32) (0.34) (0.34)
From capital gains (0.00) (0.13) (0.07) (0.01) (0.00)
In excess of capital
gains ........... (0.00)*(0.00)* (0.00) (0.00) (0.00)
----- ----- ----- ----- -----
Total distributions. (0.30) (0.44) (0.39) (0.35) (0.34)
----- ----- ----- ----- -----
Net asset value, end
of period ........ $4.92 $5.19 $5.69 $5.55 $5.31
===== ===== ===== ===== =====
Total return** ..... 0.83% -1.22% 9.88% 11.45% 7.40%
Net assets, end
of period (in
millions) ......... $417 $510 $522 $474 $400
Ratio of expenses to
average net
assets ........... 0.94% 0.87% 0.82% 0.78% 0.81%
Ratio of net investment
income to average
net assets ....... 6.08% 5.59% 5.72% 6.19% 6.41%
Portfolio turnover
rate ............. 22.41% 26.83% 35.16% 19.47% 26.91%
*Not shown due to rounding.
**Total return calculated without taking into account the sales load deducted on
an initial purchase.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
Class B Shares
For a Share of Capital Stock Outstanding
Throughout The Period:
For the
period
from
10-5-99*
through
9-30-00
-------
Net asset value,
beginning of period $5.16
----
Income from investment
operations:
Net investment income 0.25
Net realized and
unrealized loss
on investments .. (0.24)
----
Total from investment
operations ....... 0.01
----
Less distributions:
Declared from net
investment income (0.25)
From capital gains (0.00)
In excess of capital
gains ........... (0.00)**
----
Total distributions (0.25)
----
Net asset value,
end of period .... $4.92
====
Total return ....... 0.29%
Net assets, end of
period (in millions) $1
Ratio of expenses to
average net assets 1.89%***
Ratio of net investment
income to average
net assets ....... 5.16%***
Portfolio turnover
rate ............. 22.41%****
*Commencement of operations.
**Not shown due to rounding.
***Annualized.
****For the fiscal year ended September 30, 2000.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
Class C Shares
For a Share of Capital Stock Outstanding
Throughout The Period:
For the
period
from
10-8-99*
through
9-30-00
-------
Net asset value,
beginning of period $5.16
----
Income from investment
operations:
Net investment income 0.25
Net realized and
unrealized loss
on investments .. (0.24)
----
Total from investment
operations ....... 0.01
----
Less distributions:
Declared from net
investment income (0.25)
From capital gains (0.00)
In excess of capital
gains ........... (0.00)**
----
Total distributions (0.25)
----
Net asset value,
end of period .... $4.92
====
Total return ....... 0.26%
Net assets, end of
period (000 omitted) $822
Ratio of expenses to
average net assets 1.91%***
Ratio of net investment
income to average
net assets ....... 5.13%***
Portfolio turnover
rate ............. 22.41%****
*Commencement of operations.
**Not shown due to rounding.
***Annualized.
****For the fiscal year ended September 30, 2000.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the For the
For the period period
fiscal from from
year 12-30-98* 7-1-98*
ended to to
9-30-00 9-30-99 8-25-98
------- ------- -------
Net asset value,
beginning of period $5.19 $5.65 $5.64
----- ----- -----
Income (loss) from investment
operations:
Net investment
income........... 0.30 0.24 0.05
Net realized and
unrealized gain (loss)
on investments .. (0.27) (0.33) 0.01
----- ----- -----
Total from investment
operations ....... 0.03 (0.09) 0.06
----- ----- -----
Less distributions:
Declared from net
investment income (0.30) (0.24) (0.05)
From capital gains (0.00) (0.13) (0.00)
In excess of capital
gains ........... (0.00)** (0.00)** (0.00)
----- ----- -----
Total distributions (0.30) (0.37) (0.05)
----- ----- -----
Net asset value, end
of period ........ $4.92 $5.19 $5.65
===== ===== =====
Total return ....... 0.97% -1.53% 1.07%
Net assets, end of
period (000 omitted) $18 $2 $0
Ratio of expenses to
average net assets 1.08% 0.80%*** 0.61%***
Ratio of net investment
income to average
net assets ....... 5.96% 5.68%*** 5.99%***
Portfolio turnover
rate ............. 22.41% 26.83%**** 35.16%***
*Class Y shares commenced operations on July 1, 1998 and continued operations
until August 25, 1998 when all outstanding Class Y shares were redeemed at
the ending net asset value shown in the table. Operations recommenced on
December 30, 1998.
**Not shown due to rounding.
***Annualized.
****For the fiscal year ended September 30, 1999.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS MUNICIPAL HIGH INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 -- Significant Accounting Policies
Waddell & Reed Advisors Municipal High Income Fund, Inc. (the "Fund"),
formerly United Municipal High Income Fund, Inc., is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. Its investment objective is to seek to provide a high level of income
which is not subject to Federal income tax. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in conformity with
accounting principles generally accepted in the United States of America.
A. Security valuation -- Municipal bonds and the taxable obligations in the
Fund's investment portfolio are not listed or traded on any securities
exchange. Therefore, municipal bonds are valued using a pricing system
provided by a pricing service or dealer in bonds. Short-term debt
securities, whether taxable or nontaxable, 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) and premiums on the purchase of bonds are amortized for both
financial and tax reporting purposes over the remaining lives of the bonds.
Interest income is recorded on the accrual basis. See Note 3 -- Investment
Security Transactions.
C. Federal income taxes -- The Fund intends to distribute all of its net
investment income and capital gains to its shareholders and otherwise
qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code. The Fund intends to pay distributions as required
to avoid imposition of excise tax. Accordingly, provision has not been
made for Federal income taxes. In addition, the Fund intends to meet
requirements of the Internal Revenue Code which will permit it to pay
dividends from net investment income, substantially all of which will be
exempt from Federal income tax. See Note 4 -- Federal Income Tax Matters.
D. Dividends and distributions -- All of the Fund's net investment income is
declared and recorded by the Fund as dividends payable on each day to
shareholders of record as of the close of the preceding business day. Net
investment income dividends and capital gains distributions are determined
in accordance with income tax regulations which may differ from accounting
principles generally accepted in the United States of America. These
differences are due to differing treatments for items such as deferral of
wash sales and post-October losses, net operating losses and expiring
capital loss carryovers.
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates.
NOTE 2 -- Investment Management and Payments to Affiliated Persons
The Fund pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business. The fee
is payable by the Fund at the annual rate of 0.525% of net assets up to $500
million, 0.50% of net assets over $500 million and up to $1 billion, 0.45% of
net assets over $1 billion and up to $1.5 billion, and 0.40% of net assets over
$1.5 billion. The Fund accrues and pays the fee daily.
Pursuant to assignment of the Investment Management Agreement between the
Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly owned subsidiary of W&R, serves as the Fund's
investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed Services
Company ("WARSCO"), a wholly owned subsidiary of W&R. Under the agreement,
WARSCO acts as the agent in providing accounting services and assistance to the
Fund and pricing daily the value of shares of the Fund. For these services, the
Fund pays WARSCO a monthly fee of one-twelfth of the annual fee shown in the
following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 11,000
From $ 25 to $ 50 $ 22,000
From $ 50 to $ 100 $ 33,000
From $ 100 to $ 200 $ 44,000
From $ 200 to $ 350 $ 55,000
From $ 350 to $ 550 $ 66,000
From $ 550 to $ 750 $ 77,000
From $ 750 to $1,000 $ 93,500
$1,000 and Over $110,000
In addition, for each class of shares in excess of one, the Fund pays
WARSCO a monthly per-class fee equal to 2.5% of the monthly base fee.
Prior to September 1, 2000, the Accounting Services Agreement was as shown
in the following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
For Class A, Class B and Class C shares, the Fund pays WARSCO a monthly per
account charge for transfer agency and dividend disbursement services of $1.6125
for each shareholder account which was in existence at any time during the prior
month. With respect to Class Y shares, the Fund pays WARSCO a monthly fee at an
annual rate of 0.15% of the average daily net assets of the class for the
preceding month. The Fund also reimburses W&R and WARSCO for certain out-of-
pocket costs.
Prior to September 1, 2000, for Class A, Class B and Class C shares, the
Fund paid WARSCO a monthly per account charge for transfer agency and dividend
disbursement services of $1.3125 for each shareholder account which was in
existence at any time during the prior month, plus $0.30 for each account on
which a dividend or distribution of cash or shares had a record date in that
month.
As principal underwriter for the Fund's shares, W&R received gross sales
commissions for Class A shares (which are not an expense of the Fund) of
$473,666. During the period ended September 30, 2000, W&R received $191 and
$138 in deferred sales charges for Class B shares and Class C shares,
respectively. With respect to Class A, Class B and Class C shares, W&R paid
sales commissions of $299,856 and all expenses in connection with the sale of
Fund shares, except for registration fees and related expenses.
Under a Distribution and Service Plan for Class A shares adopted by the
Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund
may pay monthly a distribution and/or service fee to W&R in an amount not to
exceed 0.25% of the Fund's Class A average annual net assets. The fee is to be
paid to reimburse W&R for amounts it expends in connection with the distribution
of the Class A shares and/or provision of personal services to Fund shareholders
and/or maintenance of shareholder accounts.
Under the Distribution and Service Plan adopted by the Fund for Class B and
Class C shares, respectively, the Fund may pay W&R, on an annual basis, a
service fee of up to 0.25% of the average daily net assets of the class to
compensate W&R for providing services to shareholders of that class and/or
maintaining shareholder accounts for that class and a distribution fee of up to
0.75% of the average daily net assets of the class to compensate W&R for
distributing the shares of that class. The Class B Plan and the Class C Plan
each permit W&R to receive compensation, through the distribution and service
fee, respectively, for its distribution activities for that class, which are
similar to the distribution activities described with respect to the Class A
Plan, and for its activities in providing personal services to shareholders of
that class and/or maintaining shareholder accounts of that class, which are
similar to the corresponding activities for which it is entitled to
reimbursement under the Class A Plan.
The Fund paid Directors' fees of $14,913, 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 Security Transactions
Purchases of investment securities, other than U.S. Government and short-
term securities, aggregated $92,618,033, while proceeds from maturities and
sales aggregated $168,200,290. Purchases of short-term securities aggregated
$1,084,062,431, while proceeds from maturities and sales aggregated
$1,069,496,934. No U.S. Government securities were bought or sold during the
period ended September 30, 2000.
For Federal income tax purposes, cost of investments owned at September 30,
2000 was $439,752,323, resulting in net unrealized depreciation of $21,772,635,
of which $5,943,280 related to appreciated securities and $27,715,915 related to
depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $241,560 during its fiscal year ended September 30, 2000, which included the
effect of certain losses deferred into the next fiscal year (see discussion
below). The capital gain net income has been distributed to the Fund's
shareholders.
Internal Revenue Code regulations permit the 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 September 30, 2000, the Fund incurred net capital
losses of $5,283,963, which have been deferred to the fiscal year ending
September 30, 2001.
NOTE 5 -- Multiclass Operations
The Fund is authorized to offer four classes of shares, Class A, Class B,
Class C and Class Y, each of which have equal rights as to assets and voting
privileges. Class Y shares are not subject to a sales charge on purchases, are
not subject to a Rule 12b-1 Distribution and Service Plan and are subject to a
separate transfer agency and dividend disbursement services fee structure. A
comprehensive discussion of the terms under which shares of each class are
offered is contained in the Prospectus and the Statement of Additional
Information for the Fund.
Income, non-class specific expenses, and realized and unrealized gains and
losses are allocated daily to each class of shares based on the value of their
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity.
Transactions in capital stock are summarized below. Amounts are in
thousands.
<PAGE>
For the fiscal
year ended September 30,
------------------------
2000 1999
---------- ----------
Shares issued from sale
of shares:
Class A ............ 7,227 12,672
Class B ............. 256 ---
Class C ............. 182 ---
Class Y ............ 3 ---*
Shares issued from
reinvestment of dividends
and/or capital gains
distribution:
Class A ............ 4,359 6,356
Class B ............. 5 ---
Class C ............. 4 ---
Class Y ............ ---* ---*
Shares redeemed:
Class A ............ (25,188) (12,423)
Class B ............. (23) ---
Class C ............. (19) ---
Class Y ............ --- ---
------ ------
Increase (decrease) in
outstanding capital
shares .............. (13,194) 6,605
====== ======
Value issued from sale
of shares:
Class A ............ $35,691 $69,498
Class B ............. 1,264 ---
Class C ............. 902 ---
Class Y ............ 16 2
Value issued from
reinvestment of dividends
and/or capital gains
distribution:
Class A ............ 21,490 34,776
Class B ............. 27 ---
Class C ............. 21 ---
Class Y ............ ---* ---*
Value redeemed:
Class A ............ (124,351) (67,739)
Class B ............. (112) ---
Class C ............. (93) ---
Class Y ............ --- ---
-------- -------
Increase (decrease) in
outstanding capital $(65,145) $36,537
======== =======
*Not shown due to rounding.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Waddell & Reed Advisors Municipal High Income Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Waddell & Reed Advisors Municipal High Income
Fund, Inc. (formerly United Municipal High Income Fund, Inc.) (the "Fund") as of
September 30, 2000, and the related statement of operations for the fiscal year
then ended, the statements of changes in net assets for each of the two fiscal
years in the period then ended, and the financial highlights for each of the
five fiscal years in the period then ended. These financial statements and the
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of September 30, 2000, by correspondence with the
custodian and brokers or alternative auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Waddell & Reed Advisors Municipal High Income Fund, Inc. as of September 30,
2000, the results of its operations for the fiscal year then ended, the changes
in its net assets for each of the two fiscal years in the period then ended, and
the financial highlights for each of the five fiscal years in the period then
ended in conformity with accounting principles generally accepted in the United
States of America.
Deloitte & Touche LLP
Kansas City, Missouri
November 3, 2000
<PAGE>
INCOME TAX INFORMATION
Dividends are declared and recorded by the Fund on each day the New York Stock
Exchange is open for business. Dividends are paid monthly.
Exempt Interest Dividends - The exempt interest portion of dividends paid
represents the distribution of state and municipal bond interest and is exempt
from Federal income taxation.
The table below shows the taxability of dividends paid during the fiscal year
ended September 30, 2000:
PERCENTAGE OF AMOUNTS PAID REPORTABLE AS:
--------------------------------------------------------
For Individuals For Corporations
----------------------------------------------------------
Record OrdinaryLong-TermExempt Non-Long-Term Exempt
Date IncomeCapital GainInterestQualifyingCapital GainInterest
------- ------------------------------------------------------
Class A, B, C and Y
October 1999 through
December 1999 3.9728% ---% 96.0272% 3.9728% ---% 96.0272%
December 1999 21.4386% 78.5614% ---% 21.4386% 78.5614% ---%
January 2000
through
September
2000 6.3891% ---% 93.6109% 6.3891% ---% 93.6109%
NON-QUALIFYING DIVIDENDS - The non-qualifying portion of distributions
represents the taxable portion of dividends paid and does not qualify for the
dividends received deduction for corporations.
The actual taxable amount of dividends will be reported to you on Form 1099-DIV
after the close of the applicable calendar year.
Income from the Fund may be subject to the alternative minimum tax.
Shareholders are advised to consult with their tax adviser concerning the tax
treatment of dividends and distributions from the Fund.
<PAGE>
DIRECTORS
Keith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, San Mateo, California
Linda K. Graves, Topeka, Kansas
Joseph Harroz, Jr., Norman, Oklahoma
John F. Hayes, Hutchinson, Kansas
Robert L. Hechler, Overland Park, Kansas
Henry J. Herrmann, Overland Park, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Ronald C. Reimer, Mission Hills, Kansas
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Frederick Vogel III, Milwaukee, Wisconsin
OFFICERS
Robert L. Hechler, President
Henry J. Herrmann, Vice President
Theodore W. Howard, Vice President and Treasurer
Mark J. Otterstrom, Vice President
Kristen A. Richards, Vice President and Secretary
Daniel C. Schulte, 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 Core Investment Fund
Waddell & Reed Advisors Global Bond Fund, Inc.
Waddell & Reed Advisors Government Securities Fund, Inc.
Waddell & Reed Advisors High Income Fund, Inc.
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
NUR1014A(9-00)
For more complete information regarding any of the mutual funds in Waddell &
Reed Advisors Funds, including charges and expenses, please obtain the Fund's
prospectus by calling or writing to the number or address listed above. Please
read the prospectus carefully before investing.
