WADDELL & REED
FUNDS, INC.
Asset Strategy Fund
Growth Fund
High Income Fund
International Growth Fund
Limited-Term Bond Fund
Municipal Bond Fund
Science and Technology Fund
Total Return Fund
SEMIANNUAL
REPORT
-------------------------------------------
For the six months ended September 30, 1999
(PAGE)
This report is submitted for the general information of the shareholders of
Waddell & Reed Funds, Inc. It is not authorized for distribution to
prospective investors unless accompanied with or preceded by the Waddell &
Reed Funds, Inc. current prospectus.
(PAGE)
PRESIDENT'S LETTER SEPTEMBER 30, 1999
Dear Shareholder:
As president of your Fund, I would like to thank you for your continued
confidence as an investor. I especially want to express our appreciation
for your confidence during our conversion to a new shareholder accounting
system. During this period some of you may have experienced delays in
reaching our home office shareholder services staff and we apologize for
any inconvenience and frustration you experienced.
Our conversion is now complete. Our new system complies with all of the
date requirements for the new millennium. It has the capacity to handle
our growing business and its modern structure will allow us to expand our
services available to you. We have also added to our telephone line
capacity and have doubled the size of our shareholder services staff. We
are committed to the goal of providing the best service possible to our
shareholders.
With respect to your investment program, while it is impossible to predict
the future of the markets, there are some basic principles that we stand by
that can help investors achieve their financial goals.
. Work with your financial advisor to develop a comprehensive financial
plan. A comprehensive plan can help you pinpoint your financial
objectives and identify specific strategies for turning your financial
dreams into reality. A financial plan can also help ensure that your
investment portfolio is appropriately diversified. It can be one of the
best ways to plan for your financial future.
. Review your financial plan regularly. Financial planning is an ongoing
process that requires periodic reviews to adapt to life's changes.
. Make regular investments and adopt a long-term investment view. Over
the long term, regular contributions to your investments can smooth out
the bumps of volatility and enable investors to take advantage of the
power of compounding.
Waddell & Reed is positioned to assist you as you work toward your
financial goals. We will continue to offer quality investment products and
personal service to make the financial planning and investment process
convenient and accessible to you. Your financial advisor is ready to
assist you in completing your comprehensive financial plan to reach the
financial goals that are most important to you.
We look forward to assisting you in the future. If you have any questions
about your account, wish to review your financial plan or have other
financial issues, please contact your financial advisor or your local
Waddell & Reed office. Again, thank you for your continued confidence.
Respectfully,
Robert L. Hechler
President
(PAGE)
SHAREHOLDER SUMMARY
-----------------------------------------------------------------
ASSET STRATEGY FUND
Stocks 70% OBJECTIVE: To seek high total return
(can range from 0-100%) over the long term.
Bonds 25%
(can range from 0-100%) STRATEGY: Invests in stocks, bonds and
short-term instruments. Within
Short-Term Instruments 5% each of these classes, the Fund
(can range from 0-100%) may invest in both domestic and
foreign securities. The Fund
selects an allocation mix which
represents the way the Fund's
investments will generally be
allocated over the long term as
indicated in the accompanying
chart. This mix will vary over
shorter time periods as Fund
holdings change based on the
current outlook for the different
markets.
FOUNDED: 1995
SCHEDULED DIVIDEND FREQUENCY: QUARTERLY (March, June, September
and December)
PERFORMANCE SUMMARY - Class B Shares
PER SHARE DATA
For the Six Months ended September 30, 1999
-------------------------------------------
DIVIDENDS PAID $0.04
=====
NET ASSET VALUE ON
9/30/99 $11.67
3/31/99 11.20
------
CHANGE PER SHARE $0.47
======
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual
Total Return
----------------
With Without
CDSC** CDSC***
------ -------
Period
------
1-year period ended 9-30-99 2.78% 5.78%
Period from 4-20-95*
through 9-30-99 7.12% 7.12%
*Initial public offering of the Fund.
**"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted represents past performance and
reflects payment of the applicable contingent deferred sales charge upon
redemption at the end of each period.
***"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted in this column represents past
performance without reflecting deduction of the applicable contingent
deferred sales charge upon redemption at the end of each period.
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 September 30, 1999, Asset Strategy Fund had net assets totaling
$39,446,993 invested in a diversified portfolio of:
52.57% Common Stocks
31.07% United States Government Securities
12.71% Cash and Cash Equivalents
3.65% Corporate Debt Securities
As a shareholder of Asset Strategy Fund, for every $100 you had invested on
September 30, 1999, your Fund owned:
$52.57Common Stocks
31.07United States Government Securities
12.71Cash and Cash Equivalents
3.65Corporate Debt Securities
(PAGE)
THE INVESTMENTS OF ASSET STRATEGY FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS
Business Services - 1.54%
Clear Channel Communications, Inc.* .... 5,400 $ 431,325
TMP Worldwide Inc.* .................... 2,900 176,628
Total ................................. 607,953
Chemicals and Allied Products - 9.79%
American Home Products Corporation ..... 7,400 307,100
Forest Laboratories, Inc.* ............. 8,200 345,425
Johnson & Johnson ...................... 3,800 349,125
Lilly (Eli) and Company ................ 10,000 640,000
Merck & Co., Inc. ...................... 7,200 466,650
Pharmacia & Upjohn, Inc. ............... 8,800 436,700
Schering-Plough Corporation ............ 13,600 593,300
Smith International, Inc.* ............. 4,300 174,150
Warner-Lambert Company ................. 8,300 550,912
Total ................................. 3,863,362
Communication - 1.63%
Cox Communications, Inc., Class A* ..... 8,009 334,376
EchoStar Communications Corporation, Class A* 3,400 308,868
Total ................................. 643,244
Depository Institutions - 0.95%
U. S. Bancorp. ......................... 12,400 374,325
Eating and Drinking Places - 2.03%
McDonald's Corporation ................. 9,200 395,600
Wendy's International, Inc. ............ 15,300 403,537
Total ................................. 799,137
Electronic and Other Electric Equipment - 2.94%
Analog Devices, Inc.* .................. 10,300 527,875
Eaton Corporation ...................... 3,900 336,619
JDS Uniphase Corporation* .............. 2,600 295,831
Total ................................. 1,160,325
Fabricated Metal Products - 0.89%
Parker Hannifin Corporation ............ 7,800 349,537
General Merchandise Stores - 1.75%
BJ's Wholesale Club, Inc.* ............. 12,400 366,575
Dayton Hudson Corporation .............. 5,400 324,338
Total ................................. 690,913
Holding and Other Investment Offices - 1.54%
ABB Ltd. (Sweden) (A)* ................. 2,900 297,645
"Shell" Transport and Trading Company,
p.l.c. (The), ADR ..................... 6,800 309,400
Total ................................. 607,045
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF ASSET STRATEGY FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS (Continued)
Industrial Machinery and Equipment - 3.42%
Applied Materials, Inc.* ............... 2,600 $ 201,906
Baker Hughes Incorporated .............. 10,700 310,300
Case Corporation ....................... 4,700 234,119
Cooper Cameron Corporation* ............ 5,400 203,850
SPX Corporation* ....................... 4,400 399,300
Total ................................. 1,349,475
Instruments and Related Products - 3.87%
Beckman Coulter, Inc. .................. 7,800 351,975
CONMED Corporation* .................... 13,300 326,266
KLA-Tencor Corporation* ................ 2,600 169,081
Raytheon Company, Class B .............. 9,400 466,475
Teradyne, Inc.* ........................ 6,000 211,500
Total ................................. 1,525,297
Insurance Carriers - 0.85%
American International Group, Inc. ..... 3,875 336,883
Metal Mining - 5.49%
Barrick Gold Corporation ............... 18,500 402,375
Homestake Mining Company ............... 46,300 425,381
Newmont Mining Corporation ............. 30,400 786,600
Placer Dome Inc. ....................... 37,000 550,375
Total ................................. 2,164,731
Motion Pictures - 1.15%
AT&T Corp. - Liberty Media Group,
Class A* .............................. 12,200 452,925
Oil and Gas Extraction - 2.49%
Burlington Resources Incorporated ...... 8,300 305,025
Schlumberger Limited ................... 5,100 317,794
Transocean Offshore Incorporated ....... 6,200 189,875
USX Corporation - Marathon Group ....... 5,800 169,650
Total ................................. 982,344
Petroleum and Coal Products - 0.43%
Texaco Inc. ............................ 2,700 170,438
Prepackaged Software - 3.69%
BMC Software, Inc.* .................... 7,000 500,719
Microsoft Corporation* ................. 5,000 452,969
Oracle Corporation* .................... 11,000 500,843
Total ................................. 1,454,531
Primary Metal Industries - 0.93%
Phelps Dodge Corporation ............... 6,700 368,919
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF ASSET STRATEGY FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS (Continued)
Transportation By Air - 0.99%
Southwest Airlines Co. ................. 25,650 $ 389,559
Transportation Equipment - 3.97%
Ford Motor Company ..................... 5,200 260,975
General Motors Corporation ............. 5,900 371,331
Gentex Corporation* .................... 20,850 430,683
Lockheed Martin Corporation ............ 15,400 503,388
Total ................................. 1,566,377
Wholesale Trade -- Nondurable Goods - 2.23%
Cardinal Health, Inc. .................. 6,400 348,800
McKesson HBOC, Inc. .................... 6,500 188,500
U.S. Foodservice* ...................... 19,100 343,800
Total ................................. 881,100
TOTAL COMMON STOCKS - 52.57% $20,738,420
(Cost: $19,701,996)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Communication - 0.80%
Grupo Televisa, S.A.,
11.375%, 5-15-2003 .................... $ 300 314,250
Fabricated Metal Products - 0.76%
Crown Cork & Seal Company, Inc.,
7.125%, 9-1-2002 ...................... 300 299,166
Finance, Taxation and Monetary Policy - 0.69%
Banco Nacional de Comercio Exterior, S.N.C.,
7.25%, 2-2-2004 ....................... 300 272,250
Petroleum and Coal Products - 0.72%
Petroleos Mexicanos (Daily Adjusted Yield
Securities (DAYS)),
9.52019%, 7-15-2005 ................... 300 286,500
Stone, Clay and Glass Products - 0.68%
Vicap, S.A. de C.V.,
10.25%, 5-15-2002 ..................... 300 268,500
TOTAL CORPORATE DEBT SECURITIES - 3.65% $ 1,440,666
(Cost: $1,443,211)
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF ASSET STRATEGY FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Banks:
6.2%, 2-27-2004 ....................... $ 300 $ 292,344
6.02%, 3-30-2006 ...................... 300 286,686
United States Treasury:
7.125%, 2-29-2000 ..................... 60 60,460
5.625%, 12-31-2002 .................... 11,600 11,552,904
7.5%, 2-15-2005 ....................... 60 64,125
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 31.07% $12,256,519
(Cost: $12,279,595)
TOTAL SHORT-TERM SECURITIES - 7.25% $ 2,857,101
(Cost: $2,857,101)
TOTAL INVESTMENT SECURITIES - 94.54% $37,292,706
(Cost: $36,281,903)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 5.46% 2,154,287
NET ASSETS - 100.00% $39,446,993
See Notes to Schedule of Investments on page 59.
(PAGE)
SHAREHOLDER SUMMARY
-----------------------------------------------------------------
GROWTH FUND
PORTFOLIO STRATEGY:
Common stocks and OBJECTIVE: To seek capital appreciation.
securities convertible
into common stocks.
STRATEGY: Invests primarily in common stocks
of U.S. companies that offer above-
average growth potential, including
relatively new or unseasoned
companies.
FOUNDED: 1992
SCHEDULED DIVIDEND FREQUENCY: ANNUALLY (December)
(PAGE)
PERFORMANCE SUMMARY - Class B Shares
PER SHARE DATA
For the Six Months Ended September 30, 1999
-------------------------------------------
NET ASSET VALUE ON
9/30/99 $16.42
3/31/99 14.74
------
CHANGE PER SHARE $1.68
======
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
----------------------------
With Without
CDSC** CDSC***
------ -------
Period
------
1-year period ended 9-30-99 44.50% 47.50%
5-year period ended 9-30-99 23.83% 23.83%
Period from 9-21-92*
through 9-30-99 23.82% 23.82%
*Initial public offering of the Fund.
**"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted represents past performance and
reflects payment of the applicable contingent deferred sales charge
upon redemption at the end of each period.
***"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted in this column represents past
performance without reflecting deduction of the applicable contingent
deferred sales charge upon redemption at the end of each period.
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 September 30, 1999, Growth Fund had net assets totaling $528,324,152
invested in a diversified portfolio of:
74.08% Common Stocks
25.92% Cash and Cash Equivalents
As a shareholder of Growth Fund, for every $100 you had invested on
September 30, 1999, your Fund owned:
$42.48 Services Stocks
25.92 Cash and Cash Equivalents
17.34 Transportation, Communication, Electric
and Sanitary Services Stocks
10.61 Manufacturing Stocks
3.65 Wholesale and Retail Trade Stocks
(PAGE)
THE INVESTMENTS OF GROWTH FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS
Automotive Dealers and Service Stations - 2.07%
O'Reilly Automotive, Inc.* ............. 230,000 $ 10,960,938
Building Materials and Garden Supplies - 0.33%
Tractor Supply Company* ................ 92,750 1,739,062
Business Services - 23.91%
Acxiom Corporation* .................... 240,400 4,725,363
America Online, Inc.* .................. 80,000 8,320,000
Cerner Corporation* .................... 265,000 4,032,969
CheckFree Holdings Corporation* ........ 422,500 17,362,109
FactSet Research Systems, Inc. ......... 169,000 9,611,875
Getty Images, Inc.* .................... 550,000 13,234,375
MedE America Corporation* .............. 117,700 2,677,675
MemberWorks Incorporated* .............. 350,000 11,626,563
Primark Corporation* ................... 345,000 9,810,937
Sanchez Computer Associates, Inc.* ..... 105,000 3,665,156
Securities First Technologies Corporation* 256,700 9,963,169
Shared Medical Systems Corporation ..... 175,000 8,181,250
USINTERNETWORKING, Inc.* ............... 300,000 9,393,750
USWeb Corporation* ..................... 400,000 13,737,500
Total ................................. 126,342,691
Chemicals and Allied Products - 1.22%
Pharmacyclics, Inc.* ................... 158,800 6,441,325
Communication - 5.09%
COLT Telecom Group plc, ADR* ........... 125,000 11,976,562
Emmis Broadcasting Corporation* ........ 225,000 14,913,281
Total ................................. 26,889,843
Electronic and Other Electric Equipment - 2.70%
Advanced Fibre Communications, Inc.* ... 641,800 14,259,994
Engineering and Management Services - 4.46%
Incyte Pharmaceuticals, Inc.* .......... 500,000 11,562,500
MAXIMUS, Inc.* ......................... 400,000 11,975,000
Total ................................. 23,537,500
Food and Kindred Products - 2.65%
American Italian Pasta Company,
Class A* .............................. 490,000 14,026,250
Health Services - 1.38%
American Healthcorp, Inc.* ............. 500,000 3,156,250
Amsurg Corp., Class A* ................. 118,000 774,375
Amsurg Corp., Class B* ................. 536,809 3,355,056
Total ................................. 7,285,681
Instruments and Related Products - 0.58%
Lunar Corporation* ..................... 420,000 3,071,250
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF GROWTH FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS (Continued)
Miscellaneous Retail - 0.21%
NCS Healthcare, Inc., Class A* ......... 423,200 $ 1,124,125
Personal Services - 0.92%
Stewart Enterprises, Inc., Class A ..... 800,000 4,837,500
Prepackaged Software - 11.81%
Best Software, Inc.* ................... 393,900 7,742,597
Citrix Systems, Inc.* .................. 204,100 12,635,066
Dendrite International, Inc.* .......... 316,500 14,944,734
Intuit Inc.* ........................... 175,000 15,339,844
Transaction Systems Architects,
Inc., Class A* ........................ 434,200 11,709,831
Total ................................. 62,372,072
Rubber and Miscellaneous Plastics Products - 0.59%
Medical Manager Corporation* ........... 62,500 3,107,422
Stone, Clay and Glass Products - 1.09%
Department 56, Inc.* ................... 240,000 5,745,000
Telephone Communication - 10.44%
Intermedia Communications of
Florida, Inc.* ........................ 400,000 8,687,500
RCN Corporation* ....................... 300,000 12,262,500
VoiceStream Wireless Corporation* ...... 300,000 18,515,625
Western Wireless Corporation, Class A* . 350,000 15,695,312
Total ................................. 55,160,937
Transportation by Air - 1.81%
Midwest Express Holdings, Inc.* ........ 365,700 9,576,769
Transportation Equipment - 1.78%
Gentex Corporation* .................... 454,000 9,377,938
Wholesale Trade -- Durable Goods - 1.04%
MSC Industrial Direct Co., Inc., Class A* 600,000 5,512,500
TOTAL COMMON STOCKS - 74.08% $391,368,797
(Cost: $281,104,880)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Business Services - 1.89%
Electronic Data Systems Corporation,
5.33%, 10-5-99 ........................ $10,000 9,994,078
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF GROWTH FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Chemicals and Allied Products - 1.89%
Air Products and Chemicals, Inc.,
5.51%, 10-15-99 ....................... $10,000 $ 9,978,572
Electric, Gas and Sanitary Services - 4.80%
Allegheny Energy Inc.,
5.3%, 10-4-99 ......................... 6,000 5,997,350
Puget Sound Energy Inc.,
5.57%, 10-19-99 ....................... 11,000 10,969,365
Western Resources, Inc.,
5.55%, 10-7-99 ........................ 8,400 8,392,230
Total ................................. 25,358,945
Fabricated Metal Products - 3.79%
Danaher Corporation,
5.38%, Master Note .................... 2,076 2,076,000
Snap-On Inc.:
5.4%, 10-7-99 ......................... 3,000 2,997,300
5.35%, 10-19-99 ....................... 15,000 14,959,875
Total ................................. 20,033,175
Food and Kindred Products - 2.87%
General Mills, Inc.,
5.235%, Master Note ................... 15,144 15,144,000
Miscellaneous Retail - 3.37%
Toys ` `R' ' Us Inc.,
5.5%, 10-21-99 ........................ 17,900 17,845,305
Nondepository Institutions - 5.19%
Associates First Capital B.V.,
5.31%, 10-25-99 ....................... 10,000 9,964,600
Textron Financial Corp.,
5.4%, 10-15-99 ........................ 17,500 17,463,250
Total ................................. 27,427,850
Wholesale Trade -- Nondurable Goods - 3.01%
McKesson HBOC, Inc.,
5.9%, 10-1-99 ......................... 15,895 15,895,000
TOTAL SHORT-TERM SECURITIES - 26.81% $141,676,925
(Cost: $141,676,925)
TOTAL INVESTMENT SECURITIES - 100.89% $533,045,722
(Cost: $422,781,805)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.89%) (4,721,570)
NET ASSETS - 100.00% $528,324,152
See Notes to Schedule of Investments on page 59.
(PAGE)
SHAREHOLDER SUMMARY
--------------------------------------------------------------
HIGH INCOME FUND
PORTFOLIO STRATEGY:
Invests generally in OBJECTIVE: To seek a high level of current
High-Risk, High-Yield income as its primary goal and
Fixed Income Securities. capital growth as a secondary goal
when consistent with its primary
goal.
Maximum 20% Common Stock
STRATEGY: Invests primarily in high-yield,
high-risk, fixed-income securities
of U.S. issuers. The Fund may
invest up to 20% of its total
assets in common stock in order to
seek capital growth.
FOUNDED: 1997
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
(PAGE)
PERFORMANCE SUMMARY -- Class B Shares
PER SHARE DATA
For the Six Months Ended September 30, 1999
----------------------------------------
DIVIDENDS PAID $ 0.32
======
NET ASSET VALUE ON
9/30/99 $9.33
3/31/99 9.94
------
CHANGE PER SHARE $(0.61)
======
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual
Total Return
----------------
With Without
CDSC** CDSC***
------ -------
Period
------
1-year period ended 9-30-99 -0.16% 2.72%
Period from 7-31-97*
through 9-30-99 1.76% 3.02%
*Initial public offering of the Fund.
**"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted represents past performance and
reflects payment of the applicable contingent deferred sales charge upon
redemption at the end of each period.
***"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted in this column represents past
performance without reflecting deduction of the applicable contingent
deferred sales charge upon redemption at the end of each period.
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 September 30, 1999, High Income Fund had net assets totaling $25,679,249
invested in a diversified portfolio of:
85.95% Corporate Debt Securities
7.42% Cash and Cash Equivalents
5.65% Common Stocks and Warrants
0.98% Other Government Security
As a shareholder of High Income Fund, for every $100 you had invested on
September 30, 1999, your Fund owned:
$38.25 Transportation, Communication, Electric
and Sanitary Services Bonds
22.15 Services Bonds
18.10 Manufacturing Bonds
7.42 Cash and Cash Equivalents
7.25 Wholesale and Retail Trade Bonds
5.65 Common Stocks and Warrants
0.98 Other Government Security
0.20 Agriculture, Forestry and Fisheries Bonds
(PAGE)
THE INVESTMENTS OF HIGH INCOME FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS AND WARRANTS
Communication - 3.01%
Cox Communications, Inc., Class A* ..... 10,000 $ 417,500
Crown Castle International Corp.* ...... 2,500 46,797
Infinity Broadcasting Corporation,
Class A* .............................. 10,500 307,781
Total ................................. 772,078
Food and Kindred Products - 1.16%
Keebler Foods Company* ................. 10,000 298,750
Food Stores - 0.86%
Kroger Co. (The)* ...................... 10,000 220,625
Paper and Allied Products - 0.00%
SF Holdings Group, Inc., Class C (B)* .. 500 5
Telephone Communication - 0.20%
Allegiance Telecom, Inc., Warrants (B)* 250 20,000
OnePoint Communications Corp., Warrants (B)* 100 100
VersaTel Telecom International N.V.,
Warrants (B)* ......................... 250 31,250
Total ................................. 51,350
Wholesale Trade -- Nondurable Goods - 0.42%
U.S. Foodservice* ...................... 6,000 108,000
TOTAL COMMON STOCKS AND WARRANTS - 5.65% $ 1,450,808
(Cost: $1,295,573)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Agricultural Production - Crops - 0.20%
Hines Horticulture, Inc.,
11.75%, 10-15-2005 .................. $ 49 52,246
Amusement and Recreation Services - 10.64%
Hollywood Park, Inc.,
9.25%, 2-15-2007 .................... 250 240,000
Isle of Capri Casinos, Inc.,
8.75%, 4-15-2009 .................... 500 457,500
MGM Grand, Inc.,
6.875%, 2-6-2008 .................... 500 452,330
Mohegan Tribal Gaming Authority,
8.75%, 1-1-2009 ..................... 250 245,000
Premier Parks Inc.:
9.75%, 6-15-2007..................... 500 475,000
0.0%, 4-1-2008 (C) .................. 750 472,500
Station Casinos, Inc.,
8.875%, 12-1-2008 ................... 400 389,000
Total ............................... 2,731,330
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF HIGH INCOME FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Auto Repair, Services and Parking - 1.00%
Avis Rent A Car, Inc.,
11.0%, 5-1-2009 (B) ................. $250 $ 256,250
Business Services - 4.92%
Adams Outdoor Advertising Limited
Partnership,
10.75%, 3-15-2006 ................... 250 257,500
Cybernet Internet Services International,
Inc., Units,
14.0%, 7-1-2009 (B)(D) .............. 250 248,750
Lamar Advertising Company:
9.625%, 12-1-2006 ................... 25 25,437
8.625%, 9-15-2007 ................... 250 242,500
National Equipment Services, Inc.,
10.0%, 11-30-2004 ................... 500 490,000
Total ............................... 1,264,187
Chemicals and Allied Products - 1.84%
Chattem, Inc.,
8.875%, 4-1-2008 .................... 500 472,500
Communication - 12.88%
ACME Television, LLC,
0.0%, 9-30-2004 (C) ................. 100 87,750
Bresnan Communications Group LLC and
Bresnan Capital Corporation,
8.0%, 2-1-2009 ...................... 250 246,563
Chancellor Media Corporation of
Los Angeles,
8.0%, 11-1-2008 ..................... 250 242,500
Charter Communications Holdings, LLC
and Charter Communications Holdings
Capital Corporation:
8.625%, 4-1-2009 (B) ................ 500 465,000
0.0%, 4-1-2011 (B)(C) ............... 500 295,000
Classic Cable, Inc.,
9.375%, 8-1-2009 (B) ................ 500 481,250
Crown Castle International Corp.,
0.0%, 5-15-2011 (C) ................. 500 287,500
EchoStar DBS Corporation,
9.375%, 2-1-2009 .................... 500 492,500
ICG Services, Inc.,
0.0%, 5-1-2008 (C) .................. 100 55,500
LIN Holdings Corp.,
0.0%, 3-1-2008 (C) .................. 250 169,375
MetroNet Communications Corp.,
0.0%, 6-15-2008 (C) ................. 500 385,710
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF HIGH INCOME FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Communication (Continued)
Salem Communications Corporation,
9.5%, 10-1-2007 ..................... $ 75 $ 75,000
Sinclair Broadcast Group, Inc.,
10.0%, 9-30-2005 .................... 25 24,875
Total ............................... 3,308,523
Eating and Drinking Places - 3.13%
Domino's Inc.,
10.375%, 1-15-2009 .................. 100 95,000
Foodmaker, Inc.,
8.375%, 4-15-2008 ................... 500 482,500
NE Restaurant Company, Inc.,
10.75%, 7-15-2008 ................... 250 227,500
Total ............................... 805,000
Electric, Gas and Sanitary Services - 0.91%
Allied Waste North America, Inc.,
10.0%, 8-1-2009 (B) ................. 250 233,125
Electronic and Other Electric Equipment - 2.76%
Elgar Holdings, Inc.,
9.875%, 2-1-2008 .................... 250 180,000
Juno Lighting, Inc.,
11.875%, 7-1-2009 (B) ............... 250 248,125
Level 3 Communications, Inc.,
0.0%, 12-1-2008 (C) ................. 500 280,000
Total ............................... 708,125
Fabricated Metal Products - 1.47%
AXIA Incorporated,
10.75%, 7-15-2008 ................... 150 141,750
Neenah Corporation,
11.125%, 5-1-2007 ................... 250 236,250
Total ............................... 378,000
Food and Kindred Products - 0.21%
Southern Foods Group, L.P.
and SFG Capital Corporation,
9.875%, 9-1-2007 .................... 50 53,625
Furniture and Home Furnishings Stores - 0.72%
MTS INCORPORATED,
9.375%, 5-1-2005 .................... 250 185,000
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF HIGH INCOME FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Hotels and Other Lodging Places - 1.87%
Coast Hotels and Casinos, Inc.,
9.5%, 4-1-2009 ...................... $250 $ 236,250
Lodgian Financing Corp.,
12.25%, 7-15-2009 (B) ............... 250 245,000
Total ............................... 481,250
Miscellaneous Retail - 1.19%
Frank's Nursery & Crafts, Inc.,
10.25%, 3-1-2008 .................... 100 95,000
Michaels Stores, Inc.,
10.875%, 6-15-2006 .................. 200 211,000
Total ............................... 306,000
Motion Pictures - 3.72%
AMC Entertainment Inc.,
9.5%, 3-15-2009 ..................... 250 208,750
Loews Cineplex Entertainment Corporation,
8.875%, 8-1-2008 .................... 450 407,250
Regal Cinemas, Inc.,
9.5%, 6-1-2008 ...................... 500 340,000
Total ............................... 956,000
Paper and Allied Products - 1.34%
Buckeye Technologies Inc.,
8.0%, 10-15-2010 .................... 250 231,875
SF Holdings Group, Inc.,
0.0%, 3-15-2008 (C) ................. 250 111,875
Total ............................... 343,750
Petroleum and Coal Products - 1.44%
Building Materials Corporation of America,
8.0%, 12-1-2008 ..................... 400 370,000
Primary Metal Industries - 1.77%
ISG Resources, Inc.,
10.0%, 4-15-2008 .................... 220 213,400
Wheeling-Pittsburgh Corporation,
9.25%, 11-15-2007 ................... 250 240,000
Total ............................... 453,400
Printing and Publishing - 4.68%
Big Flower Press Holdings, Inc.,
8.625%, 12-1-2008 ................... 500 480,000
Perry-Judd's Incorporated,
10.625%, 12-15-2007 ................. 250 228,125
World Color Press, Inc.,
8.375%, 11-15-2008 .................. 500 493,750
Total ............................... 1,201,875
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF HIGH INCOME FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Rubber and Miscellaneous Plastics Products - 0.87%
Home Products International, Inc.,
9.625%, 5-15-2008 ................... $250 $ 222,500
Telephone Communication - 19.66%
Alestra, S.A. de C.V.,
12.625%, 5-15-2009 (B) .............. 250 237,500
Allegiance Telecom, Inc.,
0.0%, 2-15-2008 (C) ................. 250 162,500
Concentric Network Corporation,
12.75%, 12-15-2007 .................. 250 251,875
Hyperion Telecommunications, Inc.:
0.0%, 4-15-2003 (C) ................. 250 210,000
12.0%, 11-1-2007 .................... 250 251,250
ITC /\ DeltaCom, Inc.:
11.0%, 6-1-2007 ..................... 250 262,500
8.875%, 3-1-2008 .................... 100 95,000
Intermedia Communications Inc.,
8.5%, 1-15-2008 ..................... 250 213,750
Nextel Communications, Inc.:
9.75%, 8-15-2004 .................... 500 503,750
0.0%, 2-15-2008 (C) ................. 100 69,750
Nextel Partners, Inc.,
0.0%, 2-1-2009 (C) .................. 500 291,250
Microcell Telecommunications Inc.,
0.0%, 6-1-2006 (C) .................. 100 83,500
ONO Finance Plc, Units,
13.0%, 5-1-2009 (B)(E) .............. 250 261,562
OnePoint Communications Corp.,
14.5%, 6-1-2008 (B) ................. 100 65,500
Qwest Communications International Inc.,
0.0%, 10-15-2007 (C) ................ 250 198,183
Sprint Spectrum L.P.,
0.0%, 8-15-2006 (C) ................. 600 555,660
Time Warner Telecom LLC and Time
Warner Telecom Inc.,
9.75%, 7-15-2008 .................... 500 503,750
Tritel PCS, Inc.,
0.0%, 5-15-2009 (B)(C) .............. 250 140,000
VersaTel Telecom International N.V.,
13.25%, 5-15-2008 ................... 250 247,500
Viatel Inc.,
11.5%, 3-15-2009 .................... 250 236,250
WinStar Communications, Inc.,
10.0%, 3-15-2008 .................... 250 207,500
Total ............................... 5,048,530
Textile Mill Products - 1.00%
Anvil Knitwear, Inc.,
10.875%, 3-15-2007 .................. 400 256,000
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF HIGH INCOME FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Transportation by Air - 3.66%
Atlas Air, Inc.,
9.375%, 11-15-2006 .................. $500 $ 485,000
RSL Communications, Ltd.,
10.5%, 11-15-2008 ................... 500 455,000
Total ............................... 940,000
Transportation Equipment - 0.72%
Delco Remy International, Inc.,
8.625%, 12-15-2007 .................. 100 92,750
Federal-Mogul Corporation,
7.875%, 7-1-2010 .................... 100 91,113
Total ............................... 183,863
Transportation Services - 0.95%
Railworks Corporation,
11.5%, 4-15-2009 (B) ................ 250 245,000
Trucking and Warehousing - 0.19%
Pierce Leahy Corp.,
9.125%, 7-15-2007 ................... 50 48,750
Wholesale Trade -- Durable Goods - 1.89%
Heafner (J.H.) Company, Inc. (The),
10.0%, 5-15-2008 .................... 500 485,000
Wholesale Trade -- Nondurable Goods - 0.32%
Amscan Holdings, Inc.,
9.875%, 12-15-2007 .................. 100 81,500
TOTAL CORPORATE DEBT SECURITIES - 85.95% $22,071,329
(Cost: $23,155,921)
OTHER GOVERNMENT SECURITY - 0.98%
Mexico
United Mexican States,
9.75%, 4-6-2005 ..................... 250 $ 253,125
(Cost: $249,908)
TOTAL SHORT-TERM SECURITIES - 5.97% $ 1,532,000
(Cost: $1,532,000)
TOTAL INVESTMENT SECURITIES - 98.55% $25,307,262
(Cost: $26,233,402)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.45% 371,987
NET ASSETS - 100.00% $25,679,249
See Notes to Schedule of Investments on page 59.
(PAGE)
SHAREHOLDER SUMMARY
-----------------------------------------------------------------
INTERNATIONAL GROWTH FUND
PORTFOLIO STRATEGY:
Normally at least 80% in OBJECTIVE: To seek long-term appreciation as
foreign securities. Not its primary goal and realization
more than 75% in securities of current income as its secondary
in any one country. goal.
Maximum of 15% in currency STRATEGY: Invests primarily in common stocks
exchange contracts. of foreign companies that have the
potential to provide long-term
growth. International Growth Fund
(formerly Global Income Fund)
changed its name and investment
objective effective April 20, 1995.
FOUNDED: 1992
SCHEDULED DIVIDEND FREQUENCY: ANNUALLY (December)
(PAGE)
PERFORMANCE SUMMARY - Class B Shares
PER SHARE DATA
For the Six Months Ended September 30, 1999
-------------------------------------------
NET ASSET VALUE ON
9/30/99 $16.95
3/31/99 15.58
------
CHANGE PER SHARE $1.37
======
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
CDSC** CDSC***
------ -------
Period
------
1-year period ended 9-30-99 29.67% 32.67%
5-year period ended 9-30-99 17.41% 17.41%
Period from 9-21-92*
through 9-30-99 12.19% 12.19%
*Initial public offering of the Fund.
**"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted represents past performance and
reflects payment of the applicable contingent deferred sales charge upon
redemption at the end of each period.
***"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted in this column represents past
performance without reflecting deduction of the applicable contingent
deferred sales charge upon redemption at the end of each period.
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 September 30, 1999, International Growth Fund had net assets totaling
$119,835,223 invested in a diversified portfolio of:
90.77% Common Stocks and Rights
5.76% Cash and Cash Equivalents and open Forward Currency Contracts
3.47% Preferred Stocks
As a shareholder of International Growth Fund, for every $100 you had
invested on September 30, 1999, your Fund owned:
$90.77 Common Stocks and Rights
5.76 Cash and Cash Equivalents and Open Forward Currency Contracts
3.47 Preferred Stocks
(PAGE)
THE INVESTMENTS OF INTERNATIONAL GROWTH FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS AND RIGHTS (Continued)
Australia - 2.63%
LibertyOne Limited (A)* ................ 1,050,360 $ 987,523
Solution 6 Holdings Limited (A)* ....... 56,625 202,376
Solution 6 Holdings Limited (A)(B)* .... 550,200 1,966,401
Total ................................. 3,156,300
Canada - 4.15%
AT&T Canada Inc.* ...................... 43,400 2,727,419
BCE Inc. (A) ........................... 23,000 1,142,099
Rogers Communications Inc., Class B (A)* 65,000 1,098,735
Total ................................. 4,968,253
China - 0.10%
Jinpan International Limited* .......... 57,000 124,688
Finland - 8.06%
KCI Konecranes International Plc (A) ... 30,000 814,113
Nokia, AB (A) .......................... 18,500 1,655,736
Perlos Oy (A)* ......................... 37,600 506,176
Perlos Oy (A)(B)* ...................... 37,400 503,484
Sonera Group plc (A)(B) ................ 97,000 2,807,785
TT Tieto Oy, Class B (A) ............... 36,532 1,154,657
Teleste OY (A)(B)* ..................... 94,000 900,313
UPM-Kymmene Corporation (A) ............ 38,500 1,311,094
Total ................................. 9,653,358
France - 13.11%
ALTEN (A)* ............................. 13,800 1,312,191
ALTRAN TECHNOLOGIES (A) ................ 9,284 2,791,109
AXA-UAP (A) ............................ 10,000 1,264,270
Cap Gemini N.V. (A) .................... 6,666 1,049,906
Carrefour, S.A. (A) .................... 7,150 1,143,637
Havas Advertising (A) .................. 5,000 1,197,225
Lagardere SCA (A) ...................... 17,500 726,130
Societe Industrielle de Transports
Automobiles S.A. (A) .................. 1,875 461,131
Suez Lyonnaise des Eaux (A) ............ 11,613 1,878,500
Television Francaise 1-TF1 S.A. (A) .... 6,270 1,752,875
Transiciel S.A. (A)(B) ................. 16,700 1,024,564
Unilog SA (A) .......................... 17,910 1,104,517
Total ................................. 15,706,055
Germany - 7.00%
Bayer Group (The) (A) .................. 27,000 1,076,066
Heyde AG (A)* ........................... 34,500 1,615,456
Intertainment AG (A) ................... 7,400 564,643
LHS Group Inc. (A)* .................... 17,000 510,177
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF INTERNATIONAL GROWTH FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS AND RIGHTS (Continued)
Germany (Continued)
Mannesmann AG, Registered Shares (A) ... 14,000 $ 2,234,820
QIAGEN N.V. (A)* ....................... 27,450 1,159,728
Rhoen-Klinikum AG (A) .................. 10,773 1,226,715
Total ................................. 8,387,605
Hong Kong - 0.27%
Dickson Concepts International
Limited (A) ........................... 189,500 147,591
Ng Fung Hong Limited (A) ............... 255,000 170,702
Total ................................. 318,293
Ireland - 0.86%
Bank of Ireland (The) (Great
Britain) (A) .......................... 77,040 627,196
Bank of Ireland (The) (Ireland) (A) .... 50,160 408,359
Total ................................. 1,035,555
Italy - 2.61%
Class Editori S.p.A. (A) ............... 228,500 1,957,516
Saipem S.p.A. (A) ...................... 273,000 1,176,633
Total ................................. 3,134,149
Japan - 24.32%
Asatsu-DK Inc. (A) ..................... 33,300 1,085,107
Bank of Tokyo-Mitsubishi, Ltd. (The) (A) 32,000 489,911
Benesse Corporation (A) ................ 17,800 3,531,832
FamilyMart Co., Ltd. (A) ............... 24,900 1,310,342
Fujitsu Support and Service Inc. (A) ... 3,600 1,021,396
Hikari Tsushin, Inc. (A) ............... 1,700 1,034,693
Keyence Corporation (A) ................ 7,400 1,974,812
Matsushita Communication Industrial
Co., Ltd. (A) ......................... 15,000 1,664,404
NTT Mobile Communications Network,
Inc. (A) .............................. 120 2,359,661
Nichiei Co., Ltd. (A) .................. 24,000 1,831,546
Nippon Express Co., Ltd. (A) ........... 165,000 1,103,141
Nippon Telegraph and Telephone
Corporation (A) ....................... 150 1,839,974
Olympus Optical Co., Ltd. (A) .......... 77,000 1,038,251
ORIX Corporation (A) ................... 10,000 1,225,713
ROHM CO., LTD. (A) ..................... 8,500 1,770,916
SECOM Co., Ltd. (A) .................... 9,000 800,599
SECOM Co., Ltd., New (A)* .............. 9,000 817,454
Sony Corporation (A) ................... 8,700 1,296,100
Sumitomo Bank, Limited (The) (A) ....... 33,000 494,405
Sumitomo Electric Industries, Ltd. (A) . 92,000 1,257,737
TransCosmos Inc. (A) ................... 9,600 1,195,562
Total ................................. 29,143,556
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF INTERNATIONAL GROWTH FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS AND RIGHTS (Continued)
Netherlands - 6.79%
Benckiser N.V., Class B (A) ............ 21,338 $ 1,325,006
Koninklijke Philips Electronics N.V.,
Ordinary Shares (A) ................... 16,860 1,695,558
Ordina N.V. (A)* ....................... 58,406 1,336,347
STMicroelectronics N.V., NY Shares ..... 7,700 569,800
Unique International NV (A) ............ 36,339 839,182
United Pan-Europe
Communications N.V. (A)* .............. 38,400 2,370,186
Total ................................. 8,136,079
Norway - 1.50%
Merkantildata ASA (A) .................. 175,000 1,796,204
PC LAN ASA, Rights (A)* ................ 46,193 716
Total ................................. 1,796,920
Portugal - 0.31%
Ibersol SGPS SA (A) .................... 8,000 374,598
Spain - 0.93%
Abengoa SA (A) ......................... 4,352 114,627
Tele Pizza, S.A. (A)* .................. 217,080 1,004,922
Total ................................. 1,119,549
Switzerland - 2.05%
Choco Lindt & Spru AG, Registered (A) .. 20 518,107
Julius Baer Holding AG (A) ............. 240 710,957
UBS AG, Registered Shares (A) .......... 4,350 1,224,903
Total ................................. 2,453,967
United Kingdom - 13.65%
CMG plc (A) ............................ 20,250 690,130
Capita Group plc (The) (A) ............. 142,000 1,636,522
COLT Telecom Group plc, ADR* ........... 50,000 4,790,625
Computacenter plc (A)(B)* .............. 72,000 752,734
Energis plc (A)* ....................... 63,025 1,494,207
Kingfisher plc (A) ..................... 100,000 1,075,099
NTL Incorporated* ...................... 13,000 1,249,219
Sema Group plc (A) ..................... 117,572 1,436,293
Telewest Communications plc (A)* ....... 228,000 829,588
Vodafone Group Plc (A) ................. 101,704 2,399,494
Total ................................. 16,353,911
United States - 2.43%
ESG Re Limited ......................... 40,000 356,250
Global TeleSystems Group, Inc.* ........ 60,000 1,183,125
Nortel Networks Corporation ............ 27,000 1,377,000
Total ................................. 2,916,375
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF INTERNATIONAL GROWTH FUND
SEPTEMBER 30, 1999
Shares Value
TOTAL COMMON STOCKS AND RIGHTS - 90.77% $108,779,211
(Cost: $83,365,012)
PREFERRED STOCKS
Brazil - 1.32%
Petroleo Brasileiro S.A. - Petrobras (A) 4,720,000 718,208
Telebras S.A., ADR ..................... 11,500 861,781
Total ................................. 1,579,989
Germany - 1.40%
MLP AG (A) ............................. 7,500 1,299,388
Moebel Walther AG (A) .................. 30,000 379,919
Total ................................. 1,679,307
Portugal - 0.75%
Lusomundo-SGPS, S.A. (A) ............... 100,000 892,864
TOTAL PREFERRED STOCKS - 3.47% $ 4,152,160
(Cost: $3,802,849)
Face
Amount in
Thousands
UNREALIZED GAIN ON OPEN FORWARD
CURRENCY CONTRACTS - 0.02%
Japanese Yen, 10-8-99 (A) .............. Y600,144 $ 27,993
TOTAL SHORT-TERM SECURITIES - 3.02% $ 3,616,704
(Cost: $3,616,704)
TOTAL INVESTMENT SECURITIES - 97.28% $116,576,068
(Cost: $90,784,565)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 2.72% 3,259,155
NET ASSETS - 100.00% $119,835,223
See Notes to Schedule of Investments on page 59.
(PAGE)
SHAREHOLDER SUMMARY
-----------------------------------------------------------------
LIMITED-TERM BOND FUND
PORTFOLIO STRATEGY:
OBJECTIVE: To seek a high level of current
Dollar-weighted average income consistent with
maturity of portfolio is preservation of capital.
between two and five years.
STRATEGY: Invests primarily in investment-
At least 65% investment-grade grade debt securities, including
bonds. corporate bonds, mortgage-backed
securities and U.S. Government
securities. The Fund maintains a
dollar-weighted average maturity of
not less than two years and not
more than five years.
FOUNDED: 1992
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
(PAGE)
PERFORMANCE SUMMARY - Class B Shares
PER SHARE DATA
For the Six Months Ended September 30, 1999
----------------------------------------
DIVIDENDS PAID $0.22
=====
NET ASSET VALUE ON
9/30/99 $ 9.93
3/31/99 10.16
------
CHANGE PER SHARE $(0.23)
======
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual
Total Return
----------------
With Without
CDSC** CDSC***
------ -------
Period
------
1-year period ended 9-30-99 -2.16% 0.74%
5-year period ended 9-30-99 5.14% 5.14%
Period from 9-21-92*
through 9-30-99 4.12% 4.12%
*Initial public offering of the Fund.
**"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted represents past performance and
reflects payment of the applicable contingent deferred sales charge upon
redemption at the end of each period.
***"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted in this column represents past
performance without reflecting deduction of the applicable contingent
deferred sales charge upon redemption at the end of each period.
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 September 30, 1999, Limited-Term Bond Fund had net assets totaling
$24,381,950 invested in a diversified portfolio of:
94.65% Bonds
5.35% Cash and Cash Equivalents
As a shareholder of Limited-Term Bond Fund, for every $100 you had invested
on September 30, 1999, your Fund owned:
$59.04Corporate Bonds
34.31U.S. Government Securities
5.35Cash and Cash Equivalents
1.30Municipal Bond
(PAGE)
THE INVESTMENTS OF LIMITED-TERM BOND FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Auto Repair, Services and Parking - 2.49%
Hertz Corporation (The),
7.375%, 6-15-2001 ..................... $600 $ 606,954
Chemicals and Allied Products - 2.07%
American Home Products Corporation,
7.7%, 2-15-2000 ....................... 500 503,760
Depository Institutions - 3.61%
Society National Bank,
6.75%, 6-15-2003 ...................... 150 149,145
Wells Fargo & Company,
8.375%, 5-15-2002 ..................... 700 730,667
Total ................................. 879,812
Electric, Gas and Sanitary Services - 7.15%
NorAm Energy Corp.,
6.375%, 11-1-2003 ..................... 500 488,660
UtiliCorp United,
6.875%, 10-1-2004 ..................... 500 489,755
WMX Technologies, Inc.:
8.25%, 11-15-99 ....................... 580 580,348
7.0%, 5-15-2005 ....................... 200 184,856
Total ................................. 1,743,619
General Merchandise Stores - 2.37%
J.C. Penney Company, Inc.,
7.6%, 4-1-2007 ........................ 600 578,244
Industrial Machinery and Equipment - 7.11%
Black & Decker Corp.,
7.5%, 4-1-2003 ........................ 610 616,051
Tenneco Inc.,
8.2%, 11-15-99 ........................ 500 501,020
Westinghouse Electric Corporation,
8.875%, 6-1-2001 ...................... 600 617,298
Total ................................. 1,734,369
Instruments and Related Products - 2.85%
Baxter International Inc.,
8.125%, 11-15-2001 .................... 350 359,846
Raytheon Company,
6.3%, 8-15-2000 ....................... 335 335,248
Total ................................. 695,094
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF LIMITED-TERM BOND FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Insurance Carriers - 1.46%
Aon Corporation,
7.4%, 10-1-2002 ....................... $350 $ 356,643
Nondepository Institutions - 12.80%
American General Finance Corporation,
6.2%, 3-15-2003 ....................... 500 490,445
Aristar, Inc.,
5.85%, 1-27-2004 ...................... 500 476,310
Avco Financial Services, Inc.,
7.375%, 8-15-2001 ..................... 500 507,685
Ford Motor Credit Company,
5.75%, 1-25-2001 ...................... 500 496,000
General Motors Acceptance Corporation,
7.0%, 9-15-2002 ....................... 700 705,110
Household Finance Corporation,
9.0%, 9-28-2001 ....................... 428 445,886
Total ................................. 3,121,436
Personal Services - 2.03%
Service Corporation International,
6.375%, 10-1-2000 ..................... 500 493,755
Petroleum and Coal Products - 2.91%
Chevron Corporation Profit Sharing/Savings
Plan Trust Fund,
8.11%, 12-1-2004 ...................... 430 446,275
USX Corporation,
9.8%, 7-1-2001 ........................ 250 262,185
Total ................................. 708,460
Railroad Transportation - 4.34%
Norfolk Southern Corporation,
7.35%, 5-15-2007 ...................... 445 444,212
Union Pacific Corporation,
7.875%, 2-15-2002 ..................... 600 613,194
Total ................................. 1,057,406
Security and Commodity Brokers - 2.07%
Salomon Inc.,
7.75%, 5-15-2000....................... 500 505,390
Telephone Communication - 2.12%
GTE Corporation,
9.375%, 12-1-2000 ..................... 500 517,255
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF LIMITED-TERM BOND FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Transportation Equipment - 3.66%
AlliedSignal Inc.,
6.75%, 8-15-2000 ...................... $300 $ 301,395
Lockheed Martin Corporation,
7.25%, 5-15-2006 ...................... 600 590,220
Total ................................. 891,615
TOTAL CORPORATE DEBT SECURITIES - 59.04% $14,393,812
(Cost: $14,552,188)
MUNICIPAL BOND - 1.30%
Kansas
Kansas Development Finance Authority,
Health Facilities Revenue Bonds
(Stormont-Vail HealthCare, Inc.),
7.25%, 11-15-2002 ..................... 310 $ 316,587
(Cost: $310,000)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
6.05%, 9-15-2020 ...................... 439 435,843
6.5%, 6-15-2024 ....................... 677 671,416
Federal National Mortgage Association:
6.0%, 11-1-2000 ....................... 149 144,496
5.82%, 12-3-2003 ...................... 500 485,155
7.95%, 3-7-2005 ....................... 500 502,265
6.21%, 8-15-2005 ...................... 500 483,515
7.5%, 11-15-2006 ...................... 500 495,780
8.0%, 2-1-2008 ........................ 98 100,667
6.5%, 12-1-2010 ....................... 401 393,752
6.0%, 1-1-2011 ........................ 321 308,241
6.5%, 2-1-2011 ........................ 383 375,755
7.0%, 5-1-2011 ........................ 245 244,921
7.0%, 7-1-2011 ........................ 268 267,229
7.0%, 9-1-2012 ........................ 319 319,008
6.0%, 11-1-2013 ....................... 458 440,409
7.0%, 9-1-2014 ........................ 500 499,530
7.0%, 4-1-2026 ........................ 312 306,611
Government National Mortgage Association:
6.5%, 10-15-2008 ...................... 148 145,703
7.0%, 7-15-2010 ....................... 226 227,121
6.5%, 1-15-2014 ....................... 435 427,438
7.0%, 4-15-2029 ....................... 596 586,301
United States Treasury,
6.25%, 2-15-2007 ...................... 500 504,375
TOTAL UNITED STATES GOVERNMENT SECURITIES - 34.31% $ 8,365,531
(Cost: $8,523,008)
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF LIMITED-TERM BOND FUND
SEPTEMBER 30, 1999
Value
TOTAL SHORT-TERM SECURITIES - 3.38% $ 825,000
(Cost: $825,000)
TOTAL INVESTMENT SECURITIES - 98.03% $23,900,930
(Cost: $24,210,196)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.97% 481,020
NET ASSETS - 100.00% $24,381,950
See Notes to Schedule of Investments on page 59.
(PAGE)
SHAREHOLDER SUMMARY
-----------------------------------------------------------------
MUNICIPAL BOND FUND
PORTFOLIO STRATEGY:
Minimum 80% investment- OBJECTIVE: To seek income which is not subject
grade Municipal Bonds.* to Federal income taxation.
(Income may be subject to state
Less than 25% of its assets and local taxes, and a portion
in securities of issuers may be subject to Federal taxes,
located in any single state. including alternative minimum
tax.)
STRATEGY: Invests primarily in tax-exempt
municipal bonds, mainly of
investment grade (rated BBB or
higher by Standard & Poor's or Baa
or higher by Moody's Investors
Service, Inc.).
FOUNDED: 1992
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
*During normal market conditions.
(PAGE)
PERFORMANCE SUMMARY - Class B Shares
PER SHARE DATA
For the Six Months Ended September 30, 1999
-------------------------------------------
DIVIDENDS PAID $0.20
=====
NET ASSET VALUE ON
9/30/99 $10.56
3/31/99 11.24
------
CHANGE PER SHARE $(0.68)
======
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual
Total Return
----------------
With Without
CDSC** CDSC***
------ -------
Period
------
1-year period ended 9-30-99 -6.55% -3.85%
5-year period ended 9-30-99 5.81% 5.81%
Period from 9-21-92*
through 9-30-99 5.40% 5.40%
*Initial public offering of the Fund.
**"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted represents past performance and
reflects payment of the applicable contingent deferred sales charge
upon redemption at the end of each period.
***"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted in this column represents past
performance without reflecting deduction of the applicable contingent
deferred sales charge upon redemption at the end of each period.
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 September 30, 1999, Municipal Bond Fund had net assets totaling
$39,417,734 invested in a diversified portfolio.
As a shareholder of Municipal Bond Fund, for every $100 you had invested on
September 30, 1999, your Fund owned:
$16.88Industrial Revenue Bonds
15.21Hospital Revenue Bonds
13.78Lifecare/Nursing Centers Revenue Bonds
11.04Other Municipal Bonds
10.61Housing Revenue Bonds
7.54Education Revenue Bonds
4.72Student Loan Bonds
3.58Public Power Revenue Bonds
3.32Sales Revenue Bonds
3.17Cash and Cash Equivalents
3.12Special Tax Bonds
2.61Leasing/Certificates of Participation Bonds
2.44Resource Recovery Revenue Bonds
1.98Electric Utility Revenue Bonds
(PAGE)
THE INVESTMENTS OF MUNICIPAL BOND FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS
ALASKA - 3.46%
City of Valdez, Alaska, Marine
Terminal Revenue Refunding Bonds
(BP Pipelines (Alaska) Inc. Project),
Series 1993A,
5.85%, 8-1-2025 ....................... $1,000 $ 982,500
Alaska Housing Finance Corporation, Housing
Development Bonds, 1997 Series B (AMT),
5.8%, 12-1-2029 ....................... 390 380,737
Total ................................. 1,363,237
ARIZONA - 0.71%
City of Bullhead City, Arizona, Bullhead
Parkway Improvement District,
Improvement Bonds,
6.1%, 1-1-2013 ........................ 270 280,462
ARKANSAS - 1.02%
Baxter County, Arkansas, Industrial Development
Revenue Refunding Bonds (Aeroquip Corporation
Project), Series 1993,
5.8%, 10-1-2013 ....................... 400 404,000
COLORADO - 7.92%
City of Aspen, Colorado, Sales Tax Revenue Bonds,
Series 1999,
5.25%, 11-1-2015 ...................... 1,375 1,307,969
Boulder County, Colorado, Hospital Development
Revenue Bonds (Longmont United Hospital
Project), Series 1997,
5.6%, 12-1-2027 ....................... 1,000 915,000
Colorado Health Facilities Authority, Hospital
Revenue Bonds (Steamboat Springs Health Care
Association Project), Series 1997,
5.75%, 9-15-2022 ...................... 1,000 900,000
Total ................................. 3,122,969
DISTRICT OF COLUMBIA - 1.26%
District of Columbia, Redevelopment Land
Agency (Washington, D.C.), Sports Arena
Special Tax Revenue Bonds (Series 1996),
5.625%, 11-1-2010 ..................... 490 497,962
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF MUNICIPAL BOND FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
FLORIDA - 4.59%
Escambia County, Florida, Pollution Control Revenue
Bonds (Champion International Corporation Project),
Series 1994,
6.9%, 8-1-2022 ........................ $1,000 $ 1,065,000
Housing Finance Authority of Palm Beach
County, Florida, Multifamily Housing
Revenue Bonds (Windsor Park Apartments
Project), Series 1998A,
5.9%, 6-1-2038 ........................ 750 742,500
Total ................................. 1,807,500
ILLINOIS - 1.15%
School District Number 116, Champaign County,
Illinois (Urbana), General Obligation School
Building Bonds, Series 1999C,
0.0%, 1-1-2011 ........................ 850 453,687
INDIANA - 0.99%
East Chicago Elementary School Building
Corporation (Lake County, Indiana),
First Mortgage Bonds, Series 1993A,
5.5%, 1-15-2016 ....................... 400 390,000
IOWA - 0.88%
Scott County, Iowa, Refunding Certificates
of Participation (County Golf Course
Project, Series 1993),
6.2%, 5-1-2013 ........................ 340 345,525
MARYLAND - 2.86%
Montgomery County Revenue Authority
(Maryland), Golf Course System Revenue
Bonds, Series 1996A,
6.125%, 10-1-2022 ..................... 650 654,875
Maryland Health and Higher Educational
Facilities Authority, Project and
Refunding Revenue Bonds, Doctors Community
Hospital Issue, Series 1993,
5.75%, 7-1-2013 ....................... 500 473,125
Total ................................. 1,128,000
MASSACHUSETTS - 5.34%
Massachusetts Health and Educational Facilities
Authority, Revenue Bonds, Caritas Christi
Obligated Group Issue, Series A,
5.625%, 7-1-2020 ...................... 1,250 1,143,750
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF MUNICIPAL BOND FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MASSACHUSETTS (Continued)
Massachusetts Industrial Finance Agency,
Resource Recovery Revenue Refunding Bonds
(Ogden Haverhill Project), Series 1998A,
5.5%, 12-1-2013 ....................... $1,000 $ 962,500
Total ................................. 2,106,250
MICHIGAN - 4.51%
City of Flint Hospital Building Authority,
Revenue Rental Bonds, Series 1998B (Hurley
Medical Center),
5.375%, 7-1-2018 ...................... 1,000 892,500
Michigan Strategic Fund, Limited Obligation
Revenue Bonds (Porter Hills Presbyterian
Village, Inc. Project), Series 1998,
5.375%, 7-1-2028 ...................... 1,000 883,750
Total ................................. 1,776,250
MINNESOTA - 3.62%
City of Victoria, Minnesota, Private School Facility
Revenue Bonds (Holy Family Catholic High School
Project), Series 1999A,
5.6%, 9-1-2019 ........................ 1,500 1,426,875
MISSOURI - 8.31%
The Industrial Development Authority of the
County of Taney, Missouri, Hospital Revenue
Bonds (The Skaggs Community Hospital
Association), Series 1998,
5.3%, 5-15-2018 ....................... 1,860 1,671,675
Health and Educational Facilities Authority
of the State of Missouri, Educational Facilities
Revenue Bonds (Southwest Baptist University
Project), Series 1998,
5.375%, 10-1-2023 ..................... 700 651,875
Tax Increment Financing Commission of Kansas City,
Missouri, Tax Increment Refunding and Improvement
Revenue Bonds (Briarcliff West Project), Series 1999,
6.1%, 8-1-2014 ........................ 500 492,500
City of Fenton, Missouri, Public Facilities
Authority, Leasehold Revenue Bonds,
Series 1997 (City of Fenton, Missouri, Lessee),
5.25%, 1-1-2018 ....................... 500 459,375
Total ................................. 3,275,425
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF MUNICIPAL BOND FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MONTANA - 4.72%
Montana Higher Education Student Assistance
Corporation, Student Loan Revenue Bonds,
Subordinate Series 1998-B,
5.5%, 12-1-2031 ....................... $2,000 $ 1,860,000
NEBRASKA - 1.28%
Nebraska Higher Education Loan Program, Inc.,
Senior Subordinate Bonds, 1993-2
Series A-5A,
6.2%, 6-1-2013 ........................ 500 503,750
NEVADA - 6.22%
Clark County, Nevada, Industrial Development
Refunding Revenue Bonds (Nevada Power
Company Project), Series 1995B,
5.9%, 10-1-2030 ....................... 1,500 1,410,000
West Wendover Recreation District, Elko
County, Nevada, General Obligation
(Limited Tax), Recreational Facilities
and Refunding Bonds, Series 1996,
6.25%, 12-1-2021 ...................... 950 1,043,813
Total ................................. 2,453,813
NEW JERSEY - 3.92%
New Jersey Economic Development Authority,
Economic Development Refunding Bonds (Preston
Trucking Company, Inc. - 1996 Project),
6.5%, 9-1-2014 ........................ 1,500 1,545,000
NEW MEXICO - 5.35%
City of Albuquerque, New Mexico, Gross
Receipts/Lodgers' Tax Refunding and
Improvement Revenue Bonds, Series 1991B:
0.0%, 7-1-2013 ........................ 2,650 1,228,938
0.0%, 7-1-2013 ........................ 1,850 881,062
Total ................................. 2,110,000
OHIO - 2.11%
City of Moraine, Ohio, Solid Waste
Disposal Revenue Bonds (General Motors
Corporation Project), Series 1994,
6.75%, 7-1-2014 ....................... 750 833,438
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF MUNICIPAL BOND FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
OKLAHOMA - 3.40%
Oklahoma Housing Finance Agency, Single
Family Mortgage Revenue Bonds
(Homeownership Loan Program),
1996 Series A,
7.05%, 9-1-2026 ....................... $ 995 $ 1,065,894
Tulsa Public Facilities Authority (Oklahoma):
Assembly Center Lease Payment Revenue
Bonds, Refunding Series 1985,
6.6%, 7-1-2014 ........................ 200 223,000
Recreational Facilities Revenue Bonds,
Series 1985,
6.2%, 11-1-2012 ....................... 50 51,563
Total ................................. 1,340,457
PENNSYLVANIA - 4.35%
Montgomery County Industrial Development
Authority, Retirement Community Revenue Bonds
(Adult Communities Total Services, Inc.
Obligated Group), Series 1996B,
5.625%, 11-15-2012 .................... 1,750 1,715,000
TENNESSEE - 7.31%
The Health and Educational Facilities Board
of the Metropolitan Government of Nashville
and Davidson County, Tennessee, Multi-Modal
Interchangeable Rate Health Facility Revenue
Bonds (Richland Place, Inc. Project),
Series 1993,
5.5%, 5-1-2023 ........................ 1,955 1,849,919
Tennessee Housing Development Agency,
Homeownership Program Bonds, Issue T,
7.375%, 7-1-2023 ...................... 1,000 1,030,000
Total ................................. 2,879,919
TEXAS - 4.43%
Texas Department of Housing and Community
Affairs, Single Family Mortgage Revenue
Bonds, 1997 Series D (AMT) TEAMS Structure,
5.7%, 9-1-2029 ........................ 1,000 962,500
Sabine River Authority of Texas,
Collateralized Pollution Control
Revenue Refunding Bonds (Texas
Utilities Electric Company Project),
Series 1993B Bonds,
5.85%, 5-1-2022 ....................... 800 782,000
Total ................................. 1,744,500
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF MUNICIPAL BOND FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
UTAH - 4.63%
Tooele County, Utah, Hazardous Waste Treatment
Revenue Bonds (Union Pacific Corporation/
USPCI, Inc. Project), Series A,
5.7%, 11-1-2026 ....................... $2,000 $ 1,825,000
WASHINGTON - 2.49%
Housing Authority of the City of Seattle,
Low-Income Housing Assistance Revenue Bonds,
1995 (GNMA Collateralized Mortgage Loan -
Kin On Project),
7.4%, 11-20-2036 ...................... 875 980,000
TOTAL MUNICIPAL BONDS - 96.83% $38,169,019
(Cost: $39,041,457)
TOTAL SHORT-TERM SECURITIES - 1.91% $ 751,000
(Cost: $751,000)
TOTAL INVESTMENT SECURITIES - 98.74% $38,920,019
(Cost: $39,792,457)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.26% 497,715
NET ASSETS - 100.00% $39,417,734
See Notes to Schedule of Investments on page 59.
(PAGE)
SHAREHOLDER SUMMARY
------------------------------------------------------------------------
SCIENCE AND TECHNOLOGY FUND
PORTFOLIO STRATEGY:
Technology-related OBJECTIVE: To seek long-term capital growth.
stocks
Generally at least 80% STRATEGY: Invests primarily in science and
in science or technology technology equity securities of
securities.* U.S. companies, typically in common
stock.
FOUNDED: 1997
SCHEDULED DIVIDEND FREQUENCY: ANNUALLY (DECEMBER)
*During normal market conditions.
(PAGE)
PERFORMANCE SUMMARY -- Class B Shares
PER SHARE DATA
For the Six Months Ended September 30, 1999
--------------------------------------
NET ASSET VALUE ON
9/30/99 $22.33
3/31/99 17.45
------
CHANGE PER SHARE $4.88
======
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual
Total Return
----------------
With Without
CDSC** CDSC***
------ -------
Period
------
1-year period ended 9-30-99 91.51% 94.51%
Period from 7-31-97*
through 9-30-99 43.97% 44.87%
*Initial public offering of the Fund.
**"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted represents past performance and
reflects payment of the applicable contingent deferred sales charge
upon redemption at the end of the period.
***"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted in this column represents past
performance without reflecting deduction of the applicable contingent
deferred sales charge upon redemption at the end of the period.
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 September 30, 1999, Science and Technology Fund had net assets totaling
$108,166,292 invested in a diversified portfolio of:
81.96% Common Stocks
18.04% Cash and Cash Equivalents
As a shareholder of Science and Technology Fund, for every $100 you had
invested on September 30, 1999, your Fund owned:
$51.37 Services Stocks
20.84 Manufacturing Stocks
18.04 Cash and Cash Equivalents
5.40 Wholesale and Retail Trade Stocks
2.96 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
1.39 Finance, Insurance and Real Estate Stocks
(PAGE)
THE INVESTMENTS OF SCIENCE AND TECHNOLOGY FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS
Business Services - 26.19%
Abacus Direct Corporation* ............. 10,000 $ 1,220,625
Acxiom Corporation* .................... 60,000 1,179,375
America Online, Inc.* .................. 12,800 1,331,200
Clear Channel Communications, Inc.* .... 14,000 1,118,250
Critical Path, Inc.* ................... 28,000 1,129,625
DoubleClick Inc.* ...................... 14,000 1,668,188
eBay Inc.* ............................. 10,000 1,410,312
Engage Technologies, Inc.* ............. 20,250 762,539
Fiserv, Inc.* .......................... 25,000 812,500
Gerald Stevens, Inc.* .................. 100,000 1,409,375
Inktomi Corporation* ................... 13,000 1,560,406
InterNAP Network Services Corporation* . 25,000 1,117,188
MemberWorks Incorporated* .............. 22,000 730,812
Netopia, Inc.* ......................... 30,000 1,195,313
Portal Software, Inc.* ................. 38,500 1,489,469
Redback Networks* ...................... 20,000 2,160,625
Securities First Technologies Corporation* 45,000 1,746,562
SunGard Data Systems, Inc.* ............ 45,000 1,184,063
TMP Worldwide Inc.* .................... 28,000 1,705,375
TenFold Corporation* ................... 28,000 738,500
USWeb Corporation* ..................... 20,000 686,875
Yahoo! Inc.* ........................... 11,000 1,971,406
Total ................................. 28,328,583
Chemicals and Allied Products - 1.92%
Albany Molecular Research, Inc.* ..... 50,000 1,240,625
Gilead Sciences* ..................... 13,000 834,031
Total ............................... 2,074,656
Communication - 1.72%
COLT Telecom Group plc, ADR* ........... 8,000 766,500
EchoStar Communications Corporation,
Class A* .............................. 12,000 1,090,125
Total ................................. 1,856,625
Depository Institutions - 1.39%
Concord EFS, Inc.* ..................... 45,000 928,125
TeleBanc Financial Corporation* ........ 25,000 575,781
Total ................................. 1,503,906
Electronic and Other Electric Equipment - 13.37%
Broadcom Corporation, Class A* ......... 15,000 1,634,062
Copper Mountain Networks, Inc.* ........ 11,000 963,875
Gemstar International Group Limited* ... 24,000 1,874,250
Inet Technologies, Inc.* ............... 37,000 1,476,531
JDS Uniphase Corporation* .............. 20,000 2,275,625
Level 3 Communications, Inc.* .......... 9,000 469,969
Nokia Corporation, Series A, ADR ....... 18,000 1,609,313
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF SCIENCE AND TECHNOLOGY FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment (Continued)
Rambus Inc.* ........................... 24,000 $ 1,589,250
STMicroelectronics N.V., NY Shares ..... 20,000 1,480,000
Wink Communications, Inc.* ............. 25,000 1,091,406
Total ................................. 14,464,281
Engineering and Management Services - 4.99%
Incyte Pharmaceuticals, Inc.* .......... 26,100 603,563
MAXIMUS, Inc.* ......................... 30,000 898,125
Paychex, Inc. .......................... 35,000 1,195,469
Quintiles Transnational Corp.* ......... 35,000 666,094
Trimeris, Inc.* ........................ 52,500 874,453
Whittman-Hart, Inc.* ................... 30,000 1,163,437
Total ................................. 5,401,141
Food and Kindred Products - 0.47%
American Italian Pasta Company, Class A* 18,000 515,250
Health Services - 0.12%
American Healthcorp, Inc.* ............. 20,000 126,250
Industrial Machinery and Equipment - 3.20%
Apple Computer, Inc.* .................. 20,900 1,322,578
Foundry Networks, Inc.* ................ 2,500 315,078
Juniper Networks, Inc.* ................ 10,000 1,820,625
Total ................................. 3,458,281
Instruments and Related Products - 1.88%
Guidant Corporation .................... 20,000 1,072,500
Metro One Telecommunications, Inc.* .... 50,000 957,813
Total ................................. 2,030,313
Miscellaneous Retail - 1.62%
Amazon.com, Inc.* ...................... 22,000 1,757,938
Motion Pictures - 0.86%
AT&T Corp. - Liberty Media Group, Class A* 25,000 928,125
Prepackaged Software - 19.21%
Allaire Corporation* ................... 10,000 555,625
Ariba, Inc.* ........................... 16,000 2,310,500
Broadbase Software, Inc.* .............. 20,000 318,125
BroadVision, Inc.* ..................... 25,000 3,325,781
Citrix Systems, Inc.* .................. 35,000 2,166,719
Concord Communications, Inc.* .......... 30,000 1,190,625
eGain Communications Corporation* ...... 25,000 461,719
HNC Software Inc.* ..................... 20,000 790,625
Intuit Inc.* ........................... 20,000 1,753,125
Macromedia, Inc.* ...................... 25,000 1,021,094
NetIQ Corporation* ..................... 40,000 1,187,500
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF SCIENCE AND TECHNOLOGY FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS (Continued)
Prepackaged Software (Continued)
Transaction Systems Architects, Inc.,
Class A*............................... 26,000 $ 701,187
Veritas Software Corp.* ................ 30,000 2,278,125
Vignette Corporation* .................. 30,000 2,715,937
Total ................................. 20,776,687
Telephone Communication - 1.24%
Intermedia Communications of Florida,
Inc.* ................................. 15,000 325,782
Nextel Communications, Inc.* ........... 15,000 1,017,656
Total ................................. 1,343,438
Wholesale Trade -- Durable Goods - 1.63%
Latitude Communications, Inc.* ......... 60,000 1,760,625
Wholesale Trade -- Nondurable Goods - 2.15%
Cardinal Health, Inc. .................. 20,000 1,090,000
Chemdex Corporation* ................... 40,000 1,238,750
Total ................................. 2,328,750
TOTAL COMMON STOCKS - 81.96% $88,654,849
(Cost: $60,087,052)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Electric, Gas and Sanitary Services - 4.62%
OGE Energy Corp.,
5.6%, 10-1-99 ......................... $5,000 5,000,000
Fabricated Metal Products - 2.52%
Danaher Corporation,
5.38%, Master Note .................... 2,727 2,727,000
Food and Kindred Products - 8.78%
ConAgra Inc.,
5.45%, 10-7-99 ........................ 4,800 4,795,640
General Mills, Inc.,
5.235%, Master Note ................... 1,703 1,703,000
Ralston Purina Co.,
5.65%, 10-8-99 ........................ 3,000 2,996,704
Total ................................. 9,495,344
Nondepository Institutions - 1.85%
Textron Financial Corp.,
5.4%, 10-15-99 ........................ 2,000 1,995,800
TOTAL SHORT-TERM SECURITIES - 17.77% $ 19,218,144
(Cost: $19,218,144)
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF SCIENCE AND TECHNOLOGY FUND
SEPTEMBER 30, 1999
Value
TOTAL INVESTMENT SECURITIES - 99.73% $107,872,993
(Cost: $79,305,196)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.27% 293,299
NET ASSETS - 100.00% $108,166,292
See Notes to Schedule of Investments on page 59.
(PAGE)
SHAREHOLDER SUMMARY
-----------------------------------------------------------------
TOTAL RETURN FUND
PORTFOLIO STRATEGY:
Common stocks and OBJECTIVE: To seek current income while
securities convertible into seeking capital growth.
common stocks.
STRATEGY: Invests primarily in common stocks
of U.S. companies with dominant
market positions in their
industries and that have a record
of paying regular dividends on
common stock or have the potential
for capital appreciation.
FOUNDED: 1992
SCHEDULED DIVIDEND FREQUENCY: ANNUALLY (December)
(PAGE)
PERFORMANCE SUMMARY - Class B Shares
PER SHARE DATA
For the Six Months ended September 30, 1999
-------------------------------------------
NET ASSET VALUE ON
9/30/99 $11.57
3/31/99 11.52
------
CHANGE PER SHARE $0.05
======
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual
Total Return
----------------
With Without
CDSC** CDSC***
------ -------
Period
------
1-year period ended 9-30-99 10.80% 13.80%
5-year period ended 9-30-99 17.92% 17.92%
Period from 9-21-92*
through 9-30-99 15.59% 15.59%
*Initial public offering of the Fund.
**"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted represents past performance and
reflects payment of the applicable contingent deferred sales charge upon
redemption at the end of each period.
***"CDSC" refers to the contingent deferred sales charge described in the
Prospectus. Performance data quoted in this column represents past
performance without reflecting deduction of the applicable contingent
deferred sales charge upon redemption at the end of each period.
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 September 30, 1999, Total Return Fund had net assets totaling
$530,921,320 invested in a diversified portfolio of:
73.61% Common Stocks
15.63% United States Government Securities
9.86% Cash and Cash Equivalents
0.51% Corporate Debt Security
0.39% Preferred Stock
As a shareholder of Total Return Fund, for every $100 you had invested on
September 30, 1999, your Fund owned:
$42.54 Manufacturing Stocks
15.63 United States Government Securities
9.86 Cash and Cash Equivalents
8.62 Finance, Insurance and Real Estate Stocks
6.28 Wholesale and Retail Trade Stocks
6.08 Services Stocks
5.78 Transportation, Communication, Electric
and Sanitary Services Stocks
2.73 Mining Stocks
1.58 Miscellaneous Investing Institutions Stocks
0.51 Corporate Debt Security
0.39 Preferred Stock
(PAGE)
THE INVESTMENTS OF TOTAL RETURN FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS
Amusement and Recreation Services - 0.55%
Walt Disney Company (The) .............. 112,300 $ 2,905,763
Building Materials and Garden Supplies - 0.81%
Home Depot, Inc. (The) ................. 62,500 4,289,063
Business Services - 1.76%
America Online, Inc.* .................. 33,800 3,515,200
Clear Channel Communications, Inc.* .... 72,800 5,814,900
Total ................................. 9,330,100
Chemicals and Allied Products - 14.46%
Air Products and Chemicals, Inc. ....... 71,800 2,086,687
American Home Products Corporation ..... 97,600 4,050,400
Bristol-Myers Squibb Company ........... 73,600 4,968,000
Colgate-Palmolive Company .............. 80,200 3,669,150
du Pont (E.I.) de Nemours and Company .. 133,600 8,132,900
Forest Laboratories, Inc.* ............. 31,000 1,305,875
Johnson & Johnson ...................... 71,400 6,559,875
Lilly (Eli) and Company ................ 96,000 6,144,000
Merck & Co., Inc. ...................... 96,600 6,260,888
Monsanto Company ....................... 131,800 4,703,613
Pfizer Inc. ............................ 142,200 5,110,312
Pharmacia & Upjohn, Inc. ............... 66,700 3,309,987
Procter & Gamble Company (The) ......... 39,600 3,712,500
Schering-Plough Corporation ............ 99,300 4,331,962
Warner-Lambert Company ................. 187,200 12,425,400
Total ................................. 76,771,549
Communication - 1.47%
Cox Communications, Inc., Class A* ..... 186,800 7,798,900
Depository Institutions - 0.87%
Chase Manhattan Corporation (The) ...... 61,000 4,597,875
Electric, Gas and Sanitary Services - 0.81%
Duke Energy Corp. ...................... 78,300 4,316,288
Electronic and Other Electric Equipment - 7.17%
Analog Devices, Inc.* .................. 99,600 5,104,500
General Electric Company ............... 82,100 9,733,981
Intel Corporation ...................... 181,300 13,478,522
Rambus Inc.* ........................... 42,600 2,820,919
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 221,400 6,911,831
Total ................................. 38,049,753
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF TOTAL RETURN FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS (Continued)
Fabricated Metal Products - 0.52%
Gillette Company (The) ................. 82,050 $ 2,784,572
Food and Kindred Products - 1.28%
Bestfoods .............................. 86,200 4,180,700
PepsiCo, Inc. .......................... 86,600 2,619,650
Total ................................. 6,800,350
Food Stores - 1.84%
Kroger Co. (The)* ...................... 220,800 4,871,400
Safeway Inc.* .......................... 128,000 4,872,000
Total ................................. 9,743,400
General Merchandise Stores - 2.00%
Dayton Hudson Corporation .............. 51,500 3,093,219
Wal-Mart Stores, Inc. .................. 157,900 7,510,119
Total ................................. 10,603,338
Holding and Other Investment Offices - 1.58%
ABB Ltd. (Switzerland) (A)* ............ 81,050 8,362,901
Industrial Machinery and Equipment - 9.55%
Baker Hughes Incorporated .............. 93,600 2,714,400
Case Corporation ....................... 212,400 10,580,175
Cisco Systems, Inc.* ................... 177,600 12,171,150
Deere & Company ........................ 122,800 4,750,825
Dell Computer Corporation* ............. 133,300 5,573,606
EMC Corporation* ....................... 92,400 6,600,825
International Business Machines Corporation 68,400 8,302,050
Total ................................. 50,693,031
Instruments and Related Products - 3.43%
General Motors Corporation, Class H* ... 46,900 2,685,025
Guidant Corporation .................... 142,800 7,657,650
Medtronic, Inc. ........................ 97,200 3,450,600
Raytheon Company, Class A .............. 90,599 4,394,051
Total ................................. 18,187,326
Insurance Carriers - 3.16%
American International Group, Inc. ..... 73,500 6,389,906
Chubb Corporation (The) ................ 81,200 4,044,775
Citigroup Inc. ......................... 144,675 6,365,700
Total ................................. 16,800,381
Motion Pictures - 1.39%
Time Warner Incorporated ............... 121,200 7,362,900
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF TOTAL RETURN FUND
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS (Continued)
Nondepository Institutions - 4.59%
Associates First Capital Corporation,
Class A ............................... 199,142 $ 7,169,112
Fannie Mae ............................. 156,400 9,804,325
Freddie Mac ............................ 142,700 7,420,400
Total ................................. 24,393,837
Oil and Gas Extraction - 2.73%
Burlington Resources Incorporated ...... 208,900 7,677,075
Schlumberger Limited ................... 68,400 4,262,175
USX Corporation - Marathon Group ....... 88,200 2,579,850
Total ................................. 14,519,100
Petroleum and Coal Products - 2.93%
Chevron Corporation .................... 28,500 2,529,375
Exxon Corporation ...................... 31,200 2,369,250
Mobil Corporation ...................... 45,200 4,553,900
Royal Dutch Petroleum Company .......... 103,200 6,095,250
Total ................................. 15,547,775
Prepackaged Software - 2.38%
Microsoft Corporation* ................. 106,400 9,639,175
Oracle Corporation* .................... 66,200 3,014,169
Total ................................. 12,653,344
Telephone Communication - 3.05%
MCI WORLDCOM, Inc.* .................... 64,000 4,598,000
SBC Communications Inc. ................ 97,300 4,968,381
Vodafone Airtouch Public Limited
Company, ADR .......................... 28,000 6,657,000
Total ................................. 16,223,381
Transportation By Air - 0.45%
AMR Corporation* ....................... 44,200 2,408,900
Transportation Equipment - 3.20%
DaimlerChrysler AG ..................... 45,702 3,173,433
Ford Motor Company ..................... 86,100 4,321,144
Lockheed Martin Corporation ............ 290,700 9,502,256
Total ................................. 16,996,833
Wholesale Trade -- Nondurable Goods - 1.63%
Cardinal Health, Inc. .................. 112,600 6,136,700
McKesson HBOC, Inc. .................... 86,700 2,514,300
Total ................................. 8,651,000
TOTAL COMMON STOCKS - 73.61% $390,791,660
(Cost: $253,489,799)
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF TOTAL RETURN FUND
SEPTEMBER 30, 1999
Shares Value
PREFERRED STOCK - 0.39%
Communication
Cox Communications, Inc., 7.0% Convertible 35,700 $ 2,061,675
(Cost: $1,785,000)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITY - 0.51%
Nondepository Institutions
Ford Motor Credit Company,
6.7%, 7-16-2004 ....................... $ 2,750 $ 2,734,545
(Cost: $2,745,279 )
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation,
6.625%, 9-15-2009 ..................... 20,000 19,900,000
United States Treasury:
5.5%, 3-31-2003 ....................... 33,000 32,685,510
5.25%, 8-15-2003 ...................... 31,000 30,384,960
TOTAL UNITED STATES GOVERNMENT SECURITIES - 15.63% $ 82,970,470
(Cost: $82,756,241)
SHORT-TERM SECURITIES
Commercial Paper
Depository Institutions - 3.67%
UBS Finance (DE) Inc.,
5.6%, 10-1-99 ......................... 19,500 19,500,000
Fabricated Metal Products - 2.31%
Danaher Corporation,
5.38%, Master Note .................... 2,303 2,303,000
Snap-On Inc.,
5.35%, 10-12-99 ....................... 10,000 9,983,653
Total ................................. 12,286,653
Food and Kindred Products - 0.57%
General Mills, Inc.,
5.235%, Master Note ................... 3,008 3,008,000
See Notes to Schedule of Investments on page 59.
(PAGE)
THE INVESTMENTS OF TOTAL RETURN FUND
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Personal Services - 1.34%
Block Financial Corp.,
5.37%, 10-5-99 ........................ $7,140 $ 7,135,740
Transportation Equipment - 0.94%
Dana Corp.,
5.53%, 10-20-99 ....................... 5,000 4,985,407
Total Commercial Paper - 8.83% 46,915,800
Commercial Paper (backed by irrevocable bank
letter of credit) - 1.32%
Nondepository Institutions
ED&F Man Finance Inc. (Rabobank Nederland),
5.37%, 10-4-99 ........................ 7,000 6,996,867
TOTAL SHORT-TERM SECURITIES - 10.15% $ 53,912,667
(Cost: $53,912,667)
TOTAL INVESTMENT SECURITIES - 100.29% $532,471,017
(Cost: $394,688,986)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.29%) (1,549,697)
NET ASSETS - 100.00% $530,921,320
See Notes to Schedule of Investments on page 59.
(PAGE)
WADDELL & REED FUNDS, INC.
SEPTEMBER 30, 1999
Notes to Schedules of Investments
* No income dividends were paid during the preceding 12 months.
(A) Listed on an exchange outside the United States.
(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 September 30, 1999,
the value of these securities amounted to $3,473,417 in High Income
Fund, or 13.53% of net assets and $7,955,281 in International Growth
Fund, or 6.64% of net assets.
(C) The security does not bear interest for an initial period of time and
subsequently becomes interest bearing.
(D) Each unit of Cybernet Internet Services International, Inc. consists
of $1,000 principal amount of 14.0% senior notes due 2009 and one
warrant to purchase 30.2310693 shares of common stock.
(E) Each unit of ONO Finance Plc consists of $1,000 principal amount of
13.0% Dollar Notes and one Dollar Equity Value Certificate evidencing
the right to receive the cash value of 0.002299657 of one ordinary
share of Cableuropa in dollars.
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 FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999
(In Thousands Except for Per Share and Share Amounts)
Asset High
Strategy Growth Income
Fund Fund Fund
Assets ------------ ----------- -----------
Investment securities--at
value (Notes 1 and 3).. $37,293 $533,046 $25,307
Cash ................... 1 1 2
Receivables:
Fund shares sold ...... 378 1,081 53
Investment securities sold 2,411 --- 1,212
Dividends and interest. 221 75 547
Prepaid insurance premium --- 3 ---
------- -------- -------
Total assets ........ 40,304 534,206 27,121
Liabilities ------- -------- -------
Payable to Fund shareholders 76 749 198
Payable for investment
securities purchased .. 748 4,813 1,209
Accrued service fee -
Class B (Note 2)....... 8 104 5
Accrued transfer agency and
dividend disbursing (Note 2) 13 138 9
Accrued distribution
fee - Class B (Note 2). 1 10 1
Dividends payable ...... --- --- 11
Accrued accounting
services fee (Note 2).. 2 5 2
Accrued management fee (Note 2) 1 12 ---
Due to custodian ........ --- --- ---
Other .................. 8 51 7
------- -------- -------
Total liabilities ... 857 5,882 1,442
------- -------- -------
Total net assets ... $39,447 $528,324 $25,679
Net Assets ======= ======== =======
$0.01 par value capital stock
Capital stock ......... $ 34 $ 322 $ 28
Additional paid-in capital 36,874 330,422 28,100
Accumulated undistributed income (loss):
Accumulated undistributed net
investment income (loss) 20 (1,996) ---
Accumulated undistributed
net realized gain (loss)
on investments ...... 1,508 89,312 (1,523)
Net unrealized appreciation
(depreciation) of
investments ......... 1,011 110,264 (926)
------- -------- -------
Net assets applicable to
outstanding units
of capital ......... $39,447 $528,324 $25,679
======= ======== =======
Net asset value, redemption and offering price per share:
Class B Shares ......... $11.67 $16.42 $9.33
Class Y Shares ......... $11.67 $17.01 $9.33
Capital shares outstanding:
Class B Shares ......... 3,351,419 31,527,923 2,753,022
Class Y Shares ......... 29,167 629,699 420
Capital shares authorized
See notes to financial statements.
(PAGE)
WADDELL & REED FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999
(In Thousands Except for Per Share and Share Amounts)
International Limited- Municipal
Growth Term Bond Bond
Fund Fund Fund
Assets ------------ ----------- -----------
Investment securities--at
value (Notes 1 and 3).. $116,576 $23,901 $38,920
Cash ................... --- 2 1
Receivables:
Fund shares sold ...... 467 246 55
Investment securities sold 4,981 --- ---
Dividends and interest. 240 394 577
Prepaid insurance premium 1 --- 1
-------- ------- -------
Total assets ........ 122,265 24,543 39,554
Liabilities -------- ------- -------
Payable to Fund shareholders 130 17 97
Payable for investment
securities purchased .. 2,135 111 ---
Accrued service fee -
Class B (Note 2)....... 24 5 9
Accrued transfer agency and
dividend disbursing (Note 2) 46 9 9
Accrued distribution
fee - Class B (Note 2). 2 --- 1
Dividends payable ...... --- 12 11
Accrued accounting
services fee (Note 2).. 3 1 2
Accrued management fee (Note 2) 3 --- 1
Due to Custodian ........ 23 --- ---
Other .................. 64 6 6
-------- ------- -------
Total liabilities ... 2,430 161 136
-------- ------- -------
Total net assets ... $119,835 $24,382 $39,418
Net Assets ======== ======= =======
$0.01 par value capital stock
Capital stock ......... $ 71 $ 25 $ 37
Additional paid-in capital 83,865 24,815 40,071
Accumulated undistributed income (loss):
Accumulated undistributed net
investment income (loss) (529) --- ---
Accumulated undistributed
net realized gain (loss)
on investments ...... 10,608 (149) 182
Net unrealized appreciation
(depreciation) of
investments ......... 25,820 (309) (872)
-------- ------- -------
Net assets applicable to
outstanding units
of capital ......... $119,835 $24,382 $39,418
======== ======= =======
Net asset value, redemption and offering price per share:
Class B Shares ......... $16.95 $9.93 $10.56
Class Y Shares ......... $17.58 $9.93 $10.56
Capital shares outstanding:
Class B Shares ......... 6,969,875 2,426,375 3,732,299
Class Y Shares ......... 96,246 27,807 183
Capital shares authorized
See notes to financial statements.
(PAGE)
WADDELL & REED FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999
(In Thousands Except for Per Share and Share Amounts)
Science and Total
Technology Return
Fund Fund
Assets ------------ -----------
Investment securities--at
value (Notes 1 and 3).. $107,873 $532,471
Cash ................... 31 1
Receivables:
Fund shares sold ...... 1,230 1,045
Investment securities sold 344 ---
Dividends and interest. 23 619
Prepaid insurance premium 1 4
-------- --------
Total assets ........ 109,502 534,140
Liabilities -------- --------
Payable to Fund shareholders 102 1,889
Payable for investment
securities purchased .. 1,152 997
Accrued service fee -
Class B (Note 2)....... 22 114
Accrued transfer agency and
dividend disbursing (Note 2) 35 133
Accrued distribution
fee - Class B (Note 2). 2 11
Dividends payable ...... --- ---
Accrued accounting
services fee (Note 2).. 3 5
Accrued management fee (Note 2) 2 10
Due to Custodian ........ --- ---
Other .................. 18 60
-------- --------
Total liabilities ... 1,336 3,219
-------- --------
Total net assets ... $108,166 $530,921
Net Assets ======== ========
$0.01 par value capital stock
Capital stock ......... $ 48 $ 459
Additional paid-in capital 77,095 367,495
Accumulated undistributed income (loss):
Accumulated undistributed net
investment income (loss) (511) 1,490
Accumulated undistributed
net realized gain (loss)
on investments ...... 2,966 23,695
Net unrealized appreciation
(depreciation) of
investments ......... 28,568 137,782
-------- --------
Net assets applicable to
outstanding units
of capital ......... $108,166 $530,921
======== ========
Net asset value, redemption and
offering price per share:
Class B Shares ......... $22.33 $11.57
Class Y Shares ......... $22.70 $11.88
Capital shares outstanding:
Class B Shares ......... 4,823,432 45,768,330
Class Y Shares ......... 20,051 121,007
Capital shares authorized
See notes to financial statements.
(PAGE)
WADDELL & REED FUNDS, INC. STATEMENTS OF OPERATIONS
For the Six Months Ended SEPTEMBER 30, 1999
(In Thousands)
Asset High
Strategy Growth Income
Fund Fund Fund
Investment Income (Loss) ------------ ----------- -----------
Income (Note 1B):
Interest and amortization $ 488 $ 2,992 $1,182
Dividends ............. 73 156 ---
------ ------- ------
Total income ........ 561 3,148 1,182
------ ------- ------
Expenses (Note 2):
Distribution fee - Class B 134 1,783 98
Investment management fee 134 2,000 83
Service fee - Class B.. 45 593 33
Transfer agency and dividend
disbursing - Class B 56 587 41
Registration fees ..... 24 46 33
Accounting services fee 10 30 10
Custodian fees ........ 4 4 3
Audit fees ............ 7 10 6
Legal fees ............ --- 7 1
Shareholder servicing fee -
Class Y ............. --- 6 ---
Distribution fee - Class Y --- 9 ---
Other ................. 6 69 5
------ ------- ------
Total expenses ...... 420 5,144 313
------ ------- ------
Net investment income (loss) 141 (1,996) 869
------ ------- ------
Realized and Unrealized Gain
(Loss) on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ......... 1,987 59,644 (762)
Realized net loss from foreign
currency transactions . (1) --- ---
------ ------- ------
Realized net gain (loss)
on investments ...... 1,986 59,644 (762)
------ ------- ------
Unrealized appreciation (depreciation)
in value of securities during the
period ................ (703) (7,066) (908)
Unrealized appreciation from
translation of assets and
liabilities in foreign currencies --- --- ---
Unrealized appreciation on open
forward currency contracts during
.the period --- --- ---
------ ------- ------
Unrealized appreciation
(depreciation) ...... (703) (7,066) (908)
------ ------- ------
Net gain (loss) on investments 1,283 52,578 (1,670)
------ ------- ------
Net increase (decrease) in net
assets resulting from
operations ....... $1,424 $50,582 $ (801)
====== ======= ======
See notes to financial statements.
(PAGE)
WADDELL & REED FUNDS, INC.
STATEMENTS OF OPERATIONS
For the Six Months Ended SEPTEMBER 30, 1999
(In Thousands)
International Limited- Municipal
Growth Term Bond Bond
Fund Fund Fund
Investment Income (Loss) ------------ ----------- -----------
Income (Note 1B):
Interest and amortization $ 124 $722 $ 1,195
Dividends ............. 877 --- ---
------ ---- -------
Total income ........ 1,001 722 1,195
------ ---- -------
Expenses (Note 2):
Distribution fee - Class B 408 84 158
Investment management fee 455 30 114
Service fee - Class B.. 137 28 53
Transfer agency and dividend
disbursing - Class B 201 38 41
Registration fees ..... 34 31 30
Accounting services fee 20 5 10
Custodian fees ........ 92 2 1
Audit fees ............ 10 7 7
Legal fees ............ 2 --- 1
Shareholder servicing fee -
Class Y ............. 1 --- ---
Distribution fee - Class Y 1 --- ---
Other ................. 21 4 5
------ ---- -------
Total expenses ...... 1,382 229 420
------ ---- -------
Net investment income (loss) (381) 493 775
------ ---- -------
Realized and Unrealized Gain
(Loss) on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ......... 5,362 4 251
Realized net loss from foreign
currency transactions . (105) --- ---
------ ---- -------
Realized net gain (loss)
on investments ...... 5,257 4 251
------ ---- -------
Unrealized appreciation (depreciation)
in value of securities during the
period ................ 4,411 (494) (2,894)
Unrealized appreciation from
translation of assets and
liabilities in foreign currencies 39 --- ---
Unrealized appreciation on open
forward currency contracts during
.the period 28 --- ---
------ ---- -------
Unrealized appreciation
(depreciation) ...... 4,478 (494) (2,894)
------ ---- -------
Net gain (loss) on investments 9,735 (490) (2,643)
------ ---- -------
Net increase (decrease) in net
assets resulting from
operations ....... $9,354 $ 3 $(1,868)
====== ==== =======
See notes to financial statements.
(PAGE)
WADDELL & REED FUNDS, INC.
STATEMENTS OF OPERATIONS
For the Six Months Ended SEPTEMBER 30, 1999
(In Thousands)
Science and Total
Technology Return
Fund Fund
Investment Income (Loss) ------------ -----------
Income (Note 1B):
Interest and amortization $ 375 $ 3,682
Dividends ............. 4 2,139
------- -------
Total income ........ 379 5,821
------- -------
Expenses (Note 2):
Distribution fee - Class B 270 2,013
Investment management fee 285 1,894
Service fee - Class B.. 91 676
Transfer agency and dividend
disbursing - Class B 153 579
Registration fees ..... 45 42
Accounting services fee 15 31
Custodian fees ........ 5 23
Audit fees ............ 7 12
Legal fees ............ 1 8
Shareholder servicing fee -
Class Y ............. --- 1
Distribution fee - Class Y --- 2
Other ................. 18 71
------- -------
Total expenses ...... 890 5,352
------- -------
Net investment income (loss) (511) 469
------- -------
Realized and Unrealized Gain
(Loss) on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ......... 3,040 14,733
Realized net loss from foreign
currency transactions . --- (18)
------- -------
Realized net gain (loss)
on investments ...... 3,040 14,715
------- -------
Unrealized appreciation (depreciation)
in value of securities during the
period ................ 16,528 (13,689)
Unrealized appreciation from
translation of assets and
liabilities in foreign currencies --- ---
Unrealized appreciation on open
forward currency contracts
during the period...... --- ---
------- -------
Unrealized appreciation
(depreciation) ...... 16,528 (13,689)
------- -------
Net gain (loss) on investments 19,568 1,026
------- -------
Net increase (decrease) in net
assets resulting from
operations ....... $19,057 $ 1,495
======= =======
See notes to financial statements.
(PAGE)
WADDELL & REED FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended SEPTEMBER 30, 1999
(Dollars In Thousands)
Asset High
Strategy Growth Income
Fund Fund Fund
------------ ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment income
(loss) .............. $ 141 $ (1,996) $ 869
Realized net gain (loss)
on investments ...... 1,986 59,644 (762)
Unrealized appreciation
(depreciation) ...... (703) (7,066) (908)
------- -------- -------
Net increase (decrease) in
net assets resulting from
operations ......... 1,424 50,582 (801)
------- -------- -------
Distributions to shareholders (Note 1E):*
From net investment income:
Class B ............. (124) --- (869)
Class Y ............. (3) --- ---**
From realized net gain on
investment transactions:
Class B ............. --- --- ---
Class Y ............. --- --- ---
------- -------- -------
.................. (127) --- (869)
------- -------- -------
Capital share transactions
(Note 5) .............. 7,370 45,188 1,916
------- -------- -------
Total increase (decrease) 8,667 95,770
246
Net Assets
Beginning of period .... 30,780 432,554 25,433
------- -------- -------
End of period .......... $39,447 $528,324 $25,679
======= ======== =======
Undistributed net
investment income (loss) $20 $(1,996)
$---
=== ======== ====
*See "Financial Highlights" on pages 68 - 83.
**Amounts not shown due to rounding.
See notes to financial statements.
(PAGE)
WADDELL & REED FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended SEPTEMBER 30, 1999
(Dollars In Thousands)
International Limited- Municipal
Growth Term Bond Bond
Fund Fund Fund
------------ ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment income
(loss) .............. $ (381) $ 493 $ 775
Realized net gain (loss)
on investments ...... 5,257 4 251
Unrealized appreciation
(depreciation) ...... 4,478 (494) (2,894)
-------- ------- -------
Net increase (decrease) in
net assets resulting from
operations ......... 9,354 3 (1,868)
-------- ------- -------
Distributions to shareholders (Note 1E):*
From net investment income:
Class B ............. --- (486) (775)
Class Y ............. --- (7) ---**
From realized net gain on
investment transactions:
Class B ............. --- --- ---
Class Y ............. --- --- ---
-------- ------- -------
.................. --- (493) (775)
-------- ------- -------
Capital share transactions
(Note 5) .............. 10,088 3,298 (847)
-------- ------- -------
Total increase (decrease) 19,442 2,808
(3,490)
Net Assets
Beginning of period .... 100,393 21,574 42,908
-------- ------- -------
End of period .......... $119,835 $24,382 $39,418
======== ======= =======
Undistributed net
investment income (loss) $(529) $--- $---
===== ==== ====
*See "Financial Highlights" on pages 68 - 83.
**Amounts not shown due to rounding.
See notes to financial statements.
(PAGE)
WADDELL & REED FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended SEPTEMBER 30, 1999
(Dollars In Thousands)
Science and Total
Technology Return
Fund Fund
------------ -----------
Increase (Decrease) in Net Assets
Operations:
Net investment income
(loss) .............. $ (511) $ 469
Realized net gain (loss)
on investments ...... 3,040 14,715
Unrealized appreciation
(depreciation) ...... 16,528 (13,689)
-------- --------
Net increase (decrease) in
net assets resulting from
operations ......... 19,057 1,495
-------- --------
Distributions to shareholders (Note 1E):*
From net investment income:
Class B ............. --- ---
Class Y ............. --- ---
From realized net gain on
investment transactions:
Class B ............. --- ---
Class Y ............. --- ---
-------- --------
.................. --- ---
-------- --------
Capital share transactions
(Note 5) .............. 44,685 19,835
-------- --------
Total increase (decrease) 63,742 21,330
Net Assets
Beginning of period .... 44,424 509,591
-------- --------
End of period .......... $108,166 $530,921
======== ========
Undistributed net
investment income (loss) $(511) $1,490
====== ======
*See "Financial Highlights" on pages 68 - 83.
See notes to financial statements.
(PAGE)
WADDELL & REED FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Fiscal Year Ended MARCH 31, 1999
(Dollars In Thousands) Asset High
Strategy Growth Income
Fund Fund Fund
------------ ----------- -----------
Increase in Net Assets
Operations:
Net investment income
(loss) .............. $ 347 $ (3,141) $1,188
Realized net gain (loss)
on investments ...... (425) 68,630 (761)
Unrealized appreciation
(depreciation) ...... 555 7,999 (524)
------- -------- -------
Net increase (decrease) in
net assets resulting from
operations ......... 477 73,488 (97)
------- -------- -------
Distributions to shareholders (Note 1E):*
From net investment income:
Class B ............. (358) --- (1,188)
Class Y ............. (7) --- ---
From realized net gain on
investment transactions:
Class B ............. (628) (54,879) (57)
Class Y ............. (6) (130) ---
------- -------- -------
(999) (55,009) (1,245)
------- -------- -------
Capital share transactions
(Note 5) .............. 11,662 83,928 14,963
------- -------- -------
Total increase ........ 11,140 102,407 13,621
Net Assets
Beginning of period .... 19,640 330,147 11,812
------- -------- -------
End of period .......... $30,780 $432,554 $25,433
======= ======== =======
Undistributed net
investment income ..... $7 $--- $---
== ==== ====
*See "Financial Highlights" on pages 68 - 83.
See notes to financial statements.
(PAGE)
WADDELL & REED FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Fiscal Year Ended MARCH 31, 1999
(Dollars In Thousands) International Limited- Municipal
Growth Term Bond Bond
Fund Fund Fund
------------- ----------- -----------
Increase in Net Assets
Operations:
Net investment income
(loss) .............. $ (474) $ 836 $1,491
Realized net gain (loss)
on investments ...... 10,347 2 872
Unrealized appreciation
(depreciation) ...... (381) 2 (539)
-------- ------- -------
Net increase (decrease) in
net assets resulting from
operations ......... 9,492 840 1,824
-------- ------- -------
Distributions to shareholders (Note 1E):*
From net investment income:
Class B ............. --- (824) (1,491)
Class Y ............. --- (12) ---
From realized net gain on
investment transactions:
Class B ............. (5,284) --- (1,114)
Class Y ............. (31) --- ---
-------- ------- -------
(5,315) (836) (2,605)
-------- ------- -------
Capital share transactions
(Note 5) .............. 8,756 3,238 3,666
-------- ------- -------
Total increase ........ 12,933 3,242 2,885
Net Assets
Beginning of period .... 87,460 18,332 40,023
-------- ------- -------
End of period .......... $100,393 $21,574 $42,908
======== ======= =======
Undistributed net
investment income ..... $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 68 - 83.
See notes to financial statements.
(PAGE)
WADDELL & REED FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Fiscal Year Ended MARCH 31, 1999
(Dollars In Thousands) Science and Total
Technology Return
Fund Fund
------------ -----------
Increase in Net Assets
Operations:
Net investment income
(loss) .............. $ (234) $ 1,435
Realized net gain (loss)
on investments ...... 148 58,725
Unrealized appreciation
(depreciation) ...... 10,801 (24,832)
------- --------
Net increase (decrease) in
net assets resulting from
operations ......... 10,715 35,328
------- --------
Distributions to shareholders (Note 1E):*
From net investment income:
Class B ............. --- (383)
Class Y ............. --- (8)
From realized net gain on
investment transactions:
Class B ............. --- (59,613)
Class Y ............. --- (148)
------- --------
--- (60,152)
------- --------
Capital share transactions
(Note 5) .............. 26,094 60,502
------- --------
Total increase ........ 36,809 35,678
Net Assets
Beginning of period .... 7,615 473,913
------- --------
End of period .......... $44,424 $509,591
======= ========
Undistributed net
investment income ..... $--- $1,039
==== ======
*See "Financial Highlights" on pages 68 - 83.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF ASSET STRATEGY FUND
Class B Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
For the period
six For the fiscal year from
months year ended March 31, 4/20/95*
ended------------------------- to
9/30/99 1999 1998 19973/31/96
------------------------------------------
Net asset value,
beginning of period $11.20 $11.42 $9.73 $10.15 $10.00
------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income .......... 0.04 0.15 0.21 0.23 0.16
Net realized and
unrealized gain (loss)
on investments .. 0.47 0.05 2.16 (0.30) 0.14
------ ------ ------ ------ ------
Total from investment
operations ....... 0.51 0.20 2.37 (0.07) 0.30
------ ------ ------ ------ ------
Less distributions:
From net investment
income .......... (0.04) (0.16) (0.22) (0.21) (0.15)
From capital gains (0.00) (0.26) (0.46) (0.14) (0.00)
------ ------ ------ ------ ------
Total distributions (0.04) (0.42) (0.68) (0.35) (0.15)
------ ------ ------ ------ ------
Net asset value,
end of period .... $11.67 $11.20 $11.42 $9.73 $10.15
====== ====== ====== ====== ======
Total return ....... 4.56% 1.79% 24.94% -0.86% 3.00%
Net assets, end of
period (000
omitted) .........$39,107 $30,473$19,415 $13,398$13,221
Ratio of expenses
to average net
assets ........... 2.34%** 2.32% 2.44% 2.52% 2.54%**
Ratio of net investment
income to average net
assets ........... 0.78%** 1.38% 2.02% 2.21% 2.14%**
Portfolio
turnover rate .... 92.75% 168.17%220.67% 109.92% 75.02%
*Commencement of operations.
**Annualized.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF ASSET STRATEGY FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the For the
six For the fiscal period
months year ended March 31, from
ended------------------------12/29/95*
9/30/99 1999 1998 1997to 3/31/96
------- -----------------------------------
Net asset value,
beginning of
period ........... $11.21 $11.43 $9.73 $10.16 $10.23
----- ----- ----- ------ ------
Income from investment
operations:
Net investment
income........... 0.10 0.26 0.31 0.27 0.07
Net realized and
unrealized gain (loss)
on investments .. 0.46 0.05 2.16 (0.26) (0.08)
----- ----- ----- ------ ------
Total from investment
operations ....... 0.56 0.31 2.47 0.01 (0.01)
----- ----- ----- ------ ------
Less distributions:
From net investment
income .......... (0.10) (0.27) (0.31) (0.30) (0.06)
From capital gains (0.00) (0.26) (0.46) (0.14) (0.00)
----- ----- ----- ------ ------
Total distributions (0.10) (0.53) (0.77) (0.44) (0.06)
----- ----- ----- ------ ------
Net asset value,
end of period .... $11.67 $11.21 $11.43 $9.73 $10.16
====== ====== ====== ====== ======
Total return ....... 4.96% 2.75% 26.06% 0.05% -0.25%
Net assets, end of
period (000
omitted) .......... $340 $307 $225 $116 $1
Ratio of expenses
to average net
assets ........... 1.54%** 1.45% 1.58% 1.61% 1.95%**
Ratio of net investment
income to average
net assets ....... 1.58%** 2.25% 2.90% 2.97% 2.34%**
Portfolio turnover
rate ............. 92.75% 168.17%220.67% 109.92% 75.02%***
*Commencement of operations.
**Annualized.
***Portfolio turnover is for the period from April 20, 1995 to March 31,
1996.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF GROWTH FUND
Class B Shares
For a Share of Capital Stock Outstanding Throughout Each Period:*
For the
six
monthsFor the fiscal year ended March 31,
ended-----------------------------------------
9/30/99 1999 1998 1997 1996 1995
-------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $14.74 $14.29 $ 9.08 $10.50 $ 8.45 $7.04
------ ------ ------ ------ ------ -----
Income from investment
operations:
Net investment
income (loss) ... (0.06) (0.11) (0.13) (0.03) (0.01) 0.00
Net realized and
unrealized gain (loss)
on investments .. 1.74 2.91 5.91 (1.09) 2.25 1.58
------ ------ ------ ------ ------ -----
Total from investment
operations ....... 1.68 2.80 5.78 (1.12) 2.24 1.58
------ ------ ------ ------ ------ -----
Less distribution
from capital gains (0.00) (2.35) (0.57) (0.30) (0.19) (0.17)
------ ------ ------ ------ ------ -----
Net asset value,
end of period .... $16.42 $14.74 $14.29 $ 9.08 $10.50 $8.45
====== ====== ====== ====== ====== ======
Total return ....... 11.40% 21.61% 65.37% -10.97% 26.57% 22.61%
Net assets, end of period
(000 omitted) ...$517,613$424,612$329,514$198,088$202,557$100,683
Ratio of expenses
to average net
assets ........... 2.14%** 2.10% 2.13% 2.12% 2.14% 2.23%
Ratio of net investment
income (loss) to average
net assets ....... -0.84%**-0.90% -1.12% -0.27% -0.25% 0.01%
Portfolio turnover
rate .............. 41.80% 51.41% 33.46% 37.20% 31.84% 56.30%
*Per-share and share amounts have been adjusted retroactively to reflect
the 100% stock dividend effected June 26, 1998.
**Annualized.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF GROWTH 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 March 31, period from
ended-------------------------- 12/29/95**
9/30/99 1999 1998 1997 to 3/31/96
------------------------------- ------------
Net asset value,
beginning of
period ........... $15.21 $14.55 $ 9.16 $10.52 $10.11
------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income (loss) ... 0.00 0.00 (0.03) 0.01 0.02
Net realized and
unrealized gain (loss)
on investments .. 1.80 3.01 5.99 (1.07) 0.39
------ ------ ------ ------ ------
Total from investment
operations ....... 1.80 3.01 5.96 (1.06) 0.41
------ ------ ------ ------ ------
Less distribution
from capital gains (0.00) (2.35) (0.57) (0.30) (0.00)
------ ------ ------ ------ ------
Net asset value,
end of period .... $17.01 $15.21 $14.55 $ 9.16 $10.52
====== ====== ====== ====== ======
Total return ....... 11.83% 22.73% 66.78% -10.37% 4.11%
Net assets, end of
period (000
omitted) ..........$10,711 $7,942 $633 $264 $1
Ratio of expenses
to average net
assets ........... 1.32%***1.18% 1.30% 1.17% 1.17%***
Ratio of net investment
income (loss) to average
net assets ....... 0.05%***0.08% -0.30% 0.31% 0.78%***
Portfolio turnover
rate ............. 41.80% 51.41% 33.46% 37.20% 31.84%***
*Per-share and share amounts have been adjusted retroactively to reflect
the 100% stock dividend effected June 26, 1998.
**Commencement of operations.
***Annualized.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF HIGH INCOME FUND
Class B Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the For the For the
six fiscal period from
months year 7/31/97*
ended ended to
9/30/99 3/31/99 3/31/98
--------- --------- ---------
Net asset value,
beginning of period $9.94 $10.79 $10.00
------ ------ ------
Income from investment
operations:
Net investment
income .......... 0.32 0.63 0.37
Net realized and
unrealized gain (loss)
on investments .. (0.61) (0.82) 0.79
------ ------ ------
Total from investment
operations ....... (0.29) (0.19) 1.16
------ ------ ------
Less distributions:
From net investment
income .......... (0.32) (0.63) (0.37)
From capital gains (0.00) (0.03) (0.00)
------ ------ ------
Total distributions (0.32) (0.66) (0.37)
------ ------ ------
Net asset value,
end of period .... $9.33 $9.94 $10.79
====== ====== ======
Total return ....... -2.92% -1.72% 11.77%
Net assets, end of
period (000
omitted) .........$25,675 $25,427 $11,812
Ratio of expenses
to average net
assets ........... 2.40%** 2.20% 2.52%**
Ratio of net investment
income to average net
assets ........... 6.66%** 6.29% 5.98%**
Portfolio
turnover rate .... 31.41% 50.98% 67.82%
*Commencement of operations.
**Annualized.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF HIGH INCOME FUND
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the period
six from
months 12/30/98*
ended to
9/30/99 3/31/99
--------- ---------
Net asset value,
beginning of period $9.94 $9.97
----- -----
Income from investment
operations:
Net investment
income .......... 0.36 0.20
Net realized and
unrealized gain (loss)
on investments... (0.61) 0.00
----- -----
Total from investment
operations ........ (0.25) 0.20
----- -----
Less distributions:
From net investment
income .......... (0.36) (0.20)
From capital gains (0.00) (0.03)
----- -----
Total distributions (0.36) (0.23)
----- -----
Net asset value,
end of period ..... $9.33 $9.94
===== =====
Total return ....... -2.53% 2.45%
Net assets, end of
period (000
omitted) ......... $4 $6
Ratio of expenses
to average net
assets ............ 1.50%** 0.26%**
Ratio of net investment
income to average net
assets ............ 7.53%** 8.55%**
Portfolio
turnover rate ..... 31.41% 50.98%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF INTERNATIONAL GROWTH FUND*
Class B Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
six
monthsFor the fiscal year ended March 31,
ended------------------------------------------
9/30/99 1999 1998 1997 1996 1995
-------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $15.58 $15.04 $12.40 $9.94 $9.36 $9.37
------ ------ ------ ------ ------ -----
Income from investment
operations:
Net investment
income (loss) ... (0.05) (0.07) (0.10) (0.03) 0.08 0.36
Net realized and
unrealized gain (loss)
on investments .. 1.42 1.55 4.12 2.50 0.63 (0.01)
------ ------ ------ ------ ------ -----
Total from investment
operations ....... 1.37 1.48 4.02 2.47 0.71 0.35
------ ------ ------ ------ ------ -----
Less distributions:
From net investment
income .......... (0.00) (0.00) (0.00) (0.01) (0.11) (0.36)
In excess of net
investment income (0.00) (0.00) (0.00) (0.00) (0.02)
(0.00)
From capital gains (0.00) (0.94) (1.38) (0.00) (0.00)
(0.00)
------ ------ ------ ------ ------ -----
Total distributions (0.00) (0.94) (1.38) (0.01) (0.13)
(0.36)
------ ------ ------ ------ ------ -----
Net asset value,
end of period .... $16.95 $15.58 $15.04 $12.40 $9.94 $9.36
====== ====== ====== ====== ====== =====
Total return ....... 8.79% 10.36% 35.24% 24.85% 7.64% 3.84%
Net assets, end of
period (000
omitted) .........$118,143$99,764$87,041 $50,472$20,874 $11,188
Ratio of expenses
to average net
assets ........... 2.53%** 2.35% 2.35% 2.46% 2.50% 2.29%
Ratio of net investment
income (loss) to average
net assets ....... -0.70%**-0.53% -0.82% -0.52% 0.63% 3.87%
Portfolio turnover
rate ............. 59.13% 116.25%105.11% 94.76% 88.55% 13.33%
*International Growth Fund (formerly Global Income Fund) changed its
name and investment objective effective April 20, 1995.
**Annualized.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF INTERNATIONAL GROWTH FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
six For the fiscal For the
months year ended March 31, period from
ended -------------------------12/29/95*
9/30/99 1999 1998 1997to 3/31/96
-------- ------------------------------------
Net asset value,
beginning of
period ........... $16.08 $15.35 $12.52 $9.95 $9.70
------ ------ ------ ------ ------
Income from investment
operations:
Net investment income
(loss) .......... (0.00) 0.05 0.01 0.02 0.02
Net realized and
unrealized gain
on investments .. 1.50 1.62 4.20 2.56 0.23
------ ------ ------ ------ ------
Total from investment
operations ....... 1.50 1.67 4.21 2.58 0.25
------ ------ ------ ------ ------
Less distributions:
From net investment
income .......... (0.00) (0.00) (0.00) (0.01) (0.00)
From capital gains (0.00) (0.94) (1.38) (0.00) (0.00)
------ ------ ------ ------ ------
Total distributions (0.00) (0.94) (1.38) (0.01) (0.00)
------ ------ ------ ------ ------
Net asset value,
end of period .... $17.58 $16.08 $15.35 $12.52 $9.95
====== ====== ====== ====== ======
Total return ....... 9.33% 11.41% 36.45% 25.93% 2.58%
Net assets, end of
period (000
omitted) .......... $1,692 $629 $419 $227 $7
Ratio of expenses
to average net
assets ........... 1.62%** 1.44% 1.51% 1.59% 1.84%**
Ratio of net investment
income (loss) to average
net assets ....... -0.01%** 0.36% 0.07% 0.05% 1.07%**
Portfolio turnover
rate ............. 59.13% 116.25%105.11% 94.76% 88.55%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF LIMITED-TERM BOND FUND
Class B Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
six
monthsFor the fiscal year ended March 31,
ended-----------------------------------------
9/30/99 1999 1998 1997 1996 1995
-------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $10.16 $10.14 $9.90 $10.00 $ 9.70 $9.84
------ ------ ------ ------ ------ -----
Income from investment
operations:
Net investment
income .......... 0.22 0.44 0.45 0.44 0.41 0.39
Net realized and
unrealized gain
(loss) on
investments ..... (0.23) 0.02 0.24 (0.09) 0.30 (0.13)
------ ------ ------ ------ ------ -----
Total from investment
operations ....... (0.01) 0.46 0.69 0.35 0.71 0.26
------ ------ ------ ------ ------ -----
Less distributions:
From net investment
income .......... (0.22) (0.44) (0.45) (0.44) (0.41) (0.39)
From capital gains (0.00) (0.00) (0.00) (0.01) (0.00) (0.01)
------ ------ ------ ------ ------ -----
Total distributions (0.22) (0.44) (0.45) (0.45) (0.41) (0.40)
------ ------ ------ ------ ------ -----
Net asset value,
end of period .... $9.93 $10.16 $10.14 $9.90 $10.00 $9.70
====== ====== ====== ====== ====== =====
Total return ....... -0.13% 4.65% 7.15% 3.52% 7.41% 2.73%
Net assets, end of
period (000
omitted) .........$24,106 $21,311$18,148 $17,770$23,682 $12,419
Ratio of expenses
to average net
assets ........... 2.03%* 2.11% 2.12% 2.07% 2.10% 2.17%
Ratio of net investment
income to average
net assets ........ 4.33%* 4.34% 4.52% 4.40% 4.14% 4.05%
Portfolio turnover
rate ............. 8.28% 32.11% 27.37% 23.05% 22.08% 29.20%
*Annualized.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF LIMITED-TERM BOND FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the For the
six For the fiscal period
months year ended March 31, from
ended-------------------------12/29/95*
9/30/99 1999 1998 1997to 3/31/96
--------- -----------------------------
Net asset value,
beginning of
period ........... $10.16 $10.14 $9.90 $10.00 $10.16
------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income .......... 0.26 0.53 0.53 0.52 0.11
Net realized and
unrealized gain (loss)
on investments .. (0.23) 0.02 0.24 (0.09) (0.16)
------ ------ ------ ------ ------
Total from investment
operations ....... 0.03 0.55 0.77 0.43 (0.05)
------ ------ ------ ------ ------
Less distributions:
From net investment
income .......... (0.26) (0.53) (0.53) (0.52) (0.11)
From capital gains (0.00) (0.00) (0.00) (0.01) (0.00)
------ ------ ------ ------ ------
Total distributions (0.26) (0.53) (0.53) (0.53) (0.11)
------ ------ ------ ------ ------
Net asset value,
end of period .... $9.93 $10.16 $10.14 $9.90 $10.00
====== ====== ====== ====== ======
Total return ....... 0.37% 5.60% 7.91% 4.33% -0.49%
Net assets, end of
period (000
omitted) ......... $276 $263 $184 $105 $1
Ratio of expenses
to average net
assets ........... 1.09%** 1.20% 1.32% 1.04% 1.18%**
Ratio of net investment
income to average
net assets ....... 5.27%** 5.25% 5.32% 5.62% 4.70%**
Portfolio turnover
rate ............. 8.28% 32.11% 27.37% 23.05% 22.08%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF MUNICIPAL BOND FUND
Class B Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
six
monthsFor the fiscal year ended March 31,
ended------------------------------------------
9/30/99 1999 1998 1997 1996 1995
-------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $11.24 $11.45 $10.74 $10.63 $10.30 $10.12
------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income .......... 0.20 0.42 0.44 0.45 0.43 0.44
Net realized and
unrealized gain (loss)
on investments .. (0.68) 0.10 0.71 0.11 0.33 0.18
------ ------ ------ ------ ------ ------
Total from investment
operations ....... (0.48) 0.52 1.15 0.56 0.76 0.62
------ ------ ------ ------ ------ ------
Less distributions:
From net investment
income .......... (0.20) (0.42) (0.44) (0.45) (0.43) (0.44)
From capital gains (0.00) (0.31) (0.00) (0.00) (0.00) (0.00)
------ ------ ------ ------ ------ ------
Total distributions (0.20) (0.73) (0.44) (0.45) (0.43) (0.44)
------ ------ ------ ------ ------ ------
Net asset value,
end of period .... $10.56 $11.24 $11.45 $10.74 $10.63 $10.30
====== ====== ====== ====== ====== ======
Total return ....... -4.29% 4.64% 10.89% 5.32% 7.48% 6.37%
Net assets, end of
period (000
omitted) .........$39,416 $42,906$40,023 $36,618$33,869 $27,434
Ratio of expenses
to average net
assets ........... 2.00%* 1.88% 1.89% 1.92% 1.93% 1.94%
Ratio of net investment
income to average
net assets ....... 3.68%* 3.68% 3.94% 4.18% 4.05% 4.41%
Portfolio turnover
rate ............. 11.51% 41.53% 27.86% 34.72% 42.02% 56.92%
*Annualized.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF MUNICIPAL BOND FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For
For the the For For the
six period the fiscal For the
months from period year period from
ended12/30/98*** ended ended 12/29/95*
9/30/99to 3/31/996/23/97** 3/31/97 to 3/31/96
--------------------------- -------- ------------
Net asset value,
beginning of
period ........... $11.24 $11.58 $10.74 $10.63 $10.94
------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income........... 0.23 0.13 0.10 0.52 0.12
Net realized and
unrealized gain
(loss) on
investments ..... (0.68) (0.03) 0.29 0.11 (0.31)
------ ------ ------ ------ ------
Total from investment
operations ....... (0.45) 0.10 0.39 0.63 (0.19)
------ ------ ------ ------ ------
Less distributions:
From net investment
income .......... (0.23) (0.13) (0.10) (0.52) (0.12)
From capital gains (0.00) (0.31) (0.00) (0.00) (0.00)
------ ------ ------ ------ ------
Total distributions(0.23) (0.44) (0.10) (0.52) (0.12)
------ ------ ------ ------ ------
Net asset value,
end of period .... $10.56 $11.24 $11.03 $10.74 $10.63
====== ====== ====== ====== ======
Total return ....... -4.05% 0.80% 3.22% 5.96% -1.80%
Net assets, end of
period (000
omitted) .......... $2 $2 $0 $1 $1
Ratio of expenses
to average net
assets ........... 1.52%**** 1.00%****4.95%**** 1.28%
1.18%****
Ratio of net investment
income to average
net assets ....... 4.25%**** 4.40%****4.12%**** 4.83%
4.33%****
Portfolio turnover
rate ............. 11.51% 41.53%****27.86%****34.72% 42.02%****
*Initial commencement of operations.
**All outstanding shares were redeemed on June 23, 1997 at the ending net
asset value shown in the table.
***Recommencement of operations.
****Annualized.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF SCIENCE AND TECHNOLOGY FUND
Class B Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the For the For the
six fiscal period from
months year 7/31/97*
ended ended to
9/30/99 3/31/99 3/31/98
-------- -------- --------------
Net asset value,
beginning of period $17.45 $12.01 $10.00
------ ------ ------
Income from investment
operations:
Net investment
loss ............ (0.11) (0.09) (0.07)
Net realized and
unrealized gain
on investments .. 4.99 5.53 2.08
------ ------ ------
Total from investment
operations ....... 4.88 5.44 2.01
------ ------ ------
Net asset value,
end of period .... $22.33 $17.45 $12.01
====== ====== ======
Total return ....... 27.97% 45.30% 20.10%
Net assets, end of
period (000
omitted) .........$107,711 $44,371 $7,615
Ratio of expenses
to average net
assets ........... 2.47%** 2.57% 3.20%**
Ratio of net investment
loss to average net
assets ........... -1.42%** -1.26% -1.66%**
Portfolio
turnover rate .... 27.18% 51.00% 26.64%
*Commencement of operations.
**Annualized.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF SCIENCE AND TECHNOLOGY FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the For the
six period from
months 6/9/98*
ended to
9/30/99 3/31/99
--------- -----------
Net asset value,
beginning of period $17.65 $12.20
------ ------
Income from investment
operations:
Net investment
income (loss) ... (0.03) 0.01
Net realized and
unrealized gain
on investments .. 5.08 5.44
------ ------
Total from investment
operations ....... 5.05 5.45
------ ------
Net asset value,
end of period .... $22.70 $17.65
====== ======
Total return ....... 28.61% 44.67%
Net assets, end of
period (000
omitted) ......... $455 $53
Ratio of expenses
to average net
assets ........... 1.69%** 0.62%**
Ratio of net investment
income (loss) to average net
assets ........... -0.65%** 0.54%**
Portfolio
turnover rate .... 27.18% 51.00%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF TOTAL RETURN FUND
Class B Shares
For a Share of Capital Stock Outstanding Throughout Each Period:*
For the
six
monthsFor the fiscal year ended March 31,
ended-----------------------------------------
9/30/99 1999 1998 1997 1996 1995
-------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $11.52 $12.24 $ 9.09 $8.17 $6.37 $6.00
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment income
(loss)........... 0.01 0.03 (0.02) (0.01) (0.01) (0.00)
Net realized and
unrealized gain
on investments .. 0.04 0.82 3.56 0.98 1.84 0.37
----- ----- ----- ----- ----- -----
Total from investment
operations ....... 0.05 0.85 3.54 0.97 1.83 0.37
----- ----- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.00) (0.01) (0.00) (0.00) (0.00) (0.00)
From capital gains (0.00) (1.56) (0.39) (0.05) (0.03) (0.00)
----- ----- ----- ----- ----- -----
Total distributions(0.00) (1.57) (0.39) (0.05) (0.03) (0.00)
----- ----- ----- ----- ----- -----
Net asset value,
end of period .... $11.57 $11.52 $12.24 $9.09 $8.17 $6.37
====== ====== ====== ===== ====== =====
Total return ....... 0.44% 7.47% 39.57% 11.93% 28.75% 6.17%
Net assets, end of
period (000
omitted) .........$529,484$508,210$472,970$317,453$208,233$104,691
Ratio of expenses
to average net
assets ........... 1.99%** 1.93% 1.92% 1.95% 1.99% 2.05%
Ratio of net investment
income (loss) to
average net assets 0.17%**0.30% -0.23% -0.17% -0.11% -
0.04%
Portfolio turnover
rate ............. 37.64% 54.73% 36.94% 26.23% 16.78% 16.60%
*Per-share and share amounts have been adjusted retroactively to reflect
the 100% stock dividend effected June 26, 1998.
**Annualized.
See notes to financial statements.
(PAGE)
FINANCIAL HIGHLIGHTS OF TOTAL RETURN 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 March 31, period from
ended------------------------ 12/29/95**
9/30/99 1999 1998 1997 to 3/31/96
-------- ------ ------ ------ -------------
Net asset value,
beginning of
period ........... $11.78 $12.46 $ 9.18 $8.19 $7.66
------ ------ ------ ----- -----
Income from investment
operations:
Net investment
income........... 0.06 0.12 0.05 0.02 0.02
Net realized and
unrealized gain
on investments .. 0.04 0.84 3.62 1.02 0.51
------ ------ ------ ----- -----
Total from investment
operations ....... 0.10 0.96 3.67 1.04 0.53
------ ------ ------ ----- -----
Less distributions:
From net investment
income .......... (0.00) (0.08) (0.00) (0.00) (0.00)
From capital gains (0.00) (1.56) (0.39) (0.05) (0.00)
------ ------ ------ ----- -----
Total distributions(0.00) (1.64) (0.39) (0.05) (0.00)
------ ------ ------ ----- -----
Net asset value,
end of period .... $11.88 $11.78 $12.46 $9.18 $8.19
====== ====== ====== ===== =====
Total return ....... 0.85% 8.37% 40.63% 12.69% 6.92%
Net assets, end of
period (000
omitted) .......... $1,437 $1,381 $943 $504 $87
Ratio of expenses
to average net
assets ........... 1.17%***1.15% 1.20% 1.18% 0.96%***
Ratio of net investment
income to average
net assets ....... 0.99%***1.10% 0.50% 0.65% 1.04%***
Portfolio turnover
rate ............. 37.64% 54.73% 36.94% 26.23% 16.78%***
*Per-share and share amounts have been adjusted retroactively to reflect
the 100% stock dividend effected June 26, 1998.
**Commencement of operations.
***Annualized.
See notes to financial statements.
(PAGE)
WADDELL & REED FUNDS, INC. NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
Note 1 - Significant Accounting Policies
Waddell & Reed Funds, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company. The Corporation issues eight 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 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 generally accepted accounting principles.
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. Restricted securities and 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. Short-term debt securities denominated in foreign currencies
are valued at amortized cost in that currency.
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 and post-1984 market discount on
the purchase of bonds are amortized for both financial and tax
reporting purposes over the remaining lives of the bonds. Dividend
income is recorded on the ex-dividend date. Interest income is
recorded on the accrual basis. See Note 3 -- Investment Securities
Transactions.
C. Foreign currency translations -- All assets and liabilities
denominated in foreign currencies are translated into U.S. dollars
daily. Purchases and sales of investment securities and accruals of
income and expenses are translated at the rate of exchange prevailing
on the date of the transaction. For assets and liabilities other than
investments in securities, net realized and unrealized gains and
losses from foreign currency translation 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 dividends and capital gains
distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. 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 generally
accepted accounting principles 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
Waddell & Reed Investment Management Company ("WRIMCO"), a wholly
owned subsidiary of W&R, serves as the Corporation's investment manager.
WRIMCO provides advice and supervises investments for which services it is
paid a fee. As of June 30, 1999, the fee is payable by each Fund at the
following annual rates:
Annual
Fund Net Assets Breakpoints Rate
-------------------------------------------------------------------
W&R Asset Strategy 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%
W&R Growth 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%
W&R High Income Fund Up to $500 Million .625%
Over $500 Million up to $1 Billion .600%
Over $1 Billion up to $1.5 Billion .550%
Over $1.5 Billion .500%
W&R International Up to $1 Billion .850%
Growth Fund Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
W&R Limited-Term Up to $500 Million .500%
Bond Fund Over $500 Million up to $1 Billion .450%
Over $1 Billion up to $1.5 Billion .400%
Over $1.5 Billion .350%
W&R Municipal 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%
W&R Science and Up to $1 Billion .850%
Technology Fund Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
W&R Total Return 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%
Prior to June 30, 1999, the fee was computed on each Fund's net assets as
of the close of business each day at the following annual rates: Asset
Strategy Fund - 0.81% of net assets, Growth Fund - 0.81% of net assets,
High Income Fund - 0.66% of net assets, International Growth Fund - 0.81%
of net assets, Limited-Term Bond Fund - 0.56% of net assets, Municipal Bond
Fund - 0.56% of net assets, Science and Technology Fund - 0.71% of net
assets and Total Return Fund - 0.71% of net assets. The fee is accrued and
paid daily.
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 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 B shares, each Fund pays WARSCO a monthly per account charge
for transfer agency and dividend disbursement services of $1.3125 for each
shareholder account which was in existence at any time during the prior
month, plus $0.30 for each account on which a dividend or distribution of
cash or shares had a record date in that month. For Class Y shares, each
Fund pays WARSCO a monthly fee equal to one-twelfth of .15 of 1% of the
average daily net assets of that Class for the preceding month. Each Fund
also reimburses W&R, WRIMCO and WARSCO for certain out-of-pocket costs.
The Corporation has adopted a 12b-1 plan for both Class B and Class Y
shares. Under the Distribution and Service Plan for the Class B shares,
W&R, principal underwriter and sole distributor of the Corporation's
shares, is compensated in an amount calculated and payable daily up to 1%
annually of each of the Fund's Class B average daily net assets. This fee
consists of two elements: (i) up to 0.75% of the particular Fund's Class B
net asset value for distribution services and distribution expenses
including commissions paid by the Distributor to its sales representatives
and managers and (ii) up to 0.25% of the particular Fund's Class B net
asset value may be paid to reimburse the Distributor for continuing
payments made to the Distributor's representatives and managers, its
administrative costs in overseeing these payments, and the expenses of
WARSCO in providing certain personal services to shareholders. During the
period ended September 30, 1999, the Distributor received $4,947,667 in
distribution fees and $1,655,015 in service fees. During this same period
W&R paid sales commissions of $4,086,247.
Under a Distribution and Service Plan for Class Y shares adopted by
the Corporation pursuant to Rule 12b-1, with respect to each Fund, the
Corporation pays W&R daily a distribution and/or service fee not to exceed,
on an annual basis, 0.25% of the particular Fund's Class Y net asset value.
During the period ended September 30, 1999, the Distributor received
$12,891 in 12b-1 payments on Class Y shares.
For Class B shares, a contingent deferred sales charge may be assessed
against a shareholder's redemption amount and paid to the Distributor, W&R.
The purpose of the deferred sales charge is to compensate the Distributor
for the costs incurred by the Distributor in connection with the sale of a
Fund's shares. The amount of the deferred sales charge will be the
following percent of the total amount invested during a calendar year to
acquire the shares or the value of the shares redeemed, whichever is less.
Redemption at any time during the calendar year of investment and the first
full calendar year after the calendar year of investment, 3%; the second
full calendar year, 2%; the third full calendar year, 1%; and thereafter,
0%. All investments made during a calendar year shall be deemed as a
single investment during the calendar year for purposes of calculating the
deferred sales charge. The deferred sales charge will not be imposed on
shares representing payment of dividends or distributions or on amounts
which represent an increase in the value of the shareholder's account
resulting from capital appreciation above the amount paid for shares
purchased during the deferred sales charge period. During the period ended
September 30, 1999, the Distributor received $494,716 in deferred sales
charges.
The Corporation paid Directors' fees of $22,824, 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 September 30,
1999 are summarized as follows:
Asset High
Strategy Growth Income
Fund Fund Fund
----------- ---------- -----------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities ............... $23,288,093 $ 156,478,048 $ 8,981,481
Purchases of U.S. Government
securities ............... 10,985,391 --- ---
Purchases of short-term
securities ............... 43,107,120 1,730,488,241 24,824,066
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities .... 18,197,964 152,552,824 7,491,211
Proceeds from maturities
and sales of U.S.
Government securities .... 11,572,996 --- ---
Proceeds from maturities
and sales of short-term
securities ............... 41,924,000 1,687,635,278 24,529,000
International Limited- Municipal
Growth Term Bond Bond
Fund Fund Fund
----------- ---------- -----------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities ............... $67,165,622 $3,038,528 $ 4,674,637
Purchases of U.S. Government
securities ............... --- 1,796,473 ---
Purchases of short-term
securities ............... 99,533,931 8,233,911 10,769,762
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities .... 61,207,282 1,009,225 5,344,077
Proceeds from maturities
and sales of U.S.
Government securities .... --- 776,106 ---
Proceeds from maturities
and sales of short-term
securities ............... 99,770,342 8,031,319 11,059,656
Science and Total
Technology Return
Fund Fund
----------- ----------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities ...............$ 50,810,392 $ 99,393,819
Purchases of U.S. Government
securities ............... --- 82,734,800
Purchases of short-term
securities ............... 184,534,907 870,694,704
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities .... 15,955,312 111,393,142
Proceeds from maturities
and sales of U.S.
Government securities .... --- 73,428,243
Proceeds from maturities
and sales of short-term
securities ............... 174,886,556 845,408,127
For Federal income tax purposes, cost of investments owned at
September 30, 1999 and the related unrealized appreciation (depreciation)
were as follows:
Aggregate
Appreciation
Cost AppreciationDepreciation(Depreciation)
----------- -------------------------------------
Asset Strategy Fund $ 36,281,903 $ 2,181,525 $ 1,170,722 $ 1,010,803
Growth Fund 422,781,805 137,285,515 27,021,598 110,263,917
High Income Fund 26,233,402 341,329 1,267,469 (926,140)
International Growth
Fund 90,784,565 32,138,219 6,374,709 25,763,510
Limited-Term Bond Fund24,210,196 47,092 356,358 (309,266)
Municipal Bond Fund 39,845,274 615,443 1,540,698 (925,255)
Science and Technology
Fund 79,305,196 32,222,699 3,654,902 28,567,797
Total Return Fund 394,691,295 148,869,903 11,090,181 137,779,722
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, Asset Strategy Fund realized capital
gain net income of $52,457 during the fiscal year ended March 31,1999,
which included the effect of certain losses deferred into the next fiscal
year (see discussion below). For Federal income tax purposes, Growth Fund,
International Growth Fund, Municipal Bond Fund and Total Return Fund
realized capital gain net income of $65,489,279, $9,582,657, $807,798 and
$58,723,106, respectively, during the year ended March 31, 1999. For
Federal income tax purposes, High Income Fund realized capital losses of
$501,692 during the year ended March 31, 1999, which included the effect of
certain losses deferred into the next fiscal year (see discussion below).
These losses are available to offset future realized capital gain net
income for Federal income tax purposes through March 31, 2007. For Federal
income tax purposes, Limited-Term Bond Fund realized no net capital gains
or losses for the year ended March 31, 1999, because of the utilization of
capital loss carryovers and the effect of certain losses deferred into the
next fiscal year as well as the effect of losses recognized from prior year
(see discussion below). Remaining capital loss carryovers aggregated
$149,836 at March 31, 1999, and are available to offset future realized
capital gain net income for Federal income tax purposes but will expire if
not utilized as follows: $85,336 at March 31, 2005; and $64,500 at March
31, 2006. For Federal income tax purposes, Science and Technology Fund
realized capital gain net income of $33,918 during the year ended March 31,
1999, which included the effect of certain losses deferred into the next
fiscal year, as well as the effect of losses recognized from the prior year
(see discussion below). This capital gain net income was offset by
utilization of $24 capital loss carryover from the year ended March 31,
1998. A portion of the capital gain net income of Asset Strategy Fund,
Growth Fund, High Income Fund, International Growth Fund, Municipal Bond
Fund and Total Return Fund was paid to shareholders during the year ended
March 31, 1999. Remaining capital gain net income for Growth Fund,
International Growth Fund, Municipal Bond Fund, Science and Technology Fund
and Total Return Fund will be distributed to shareholders.
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, 1998 through March 31, 1999,
Asset Strategy Fund, High Income Fund, Limited-Term Bond Fund and Science and
Technology Fund incurred net capital losses of $477,952, $259,064, $3,090
and $108,105, respectively, which have been deferred to the fiscal year
ending March 31, 2000. In addition, during the year ended March 31, 1999,
Limited-Term Bond Fund and Science and Technology Fund recognized post-
October losses of $1,717 and $145,588, respectively, that had been deferred
from the year ended March 31, 1998.
NOTE 5 -- Multiclass Operations
Each Fund within the Corporation is authorized to offer three classes
of shares, Class B, Class C and Class Y, each of which have equal rights as
to assets and voting privileges. Only Class B and Class Y shares were
issued during the six months ended September 30, 1999. Class Y shares are
not subject to a deferred sales charge and are subject to separate Rule
12b-1 Distribution and Service Plans and transfer agency and dividend
disbursement services fee structures. A comprehensive discussion of the
terms under which shares of either 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 periods ended September 30, 1999
are summarized below. Dollar amounts are in thousands.
Asset High
Strategy Growth Income
Fund Fund Fund
----------- ------------ ------------
Shares issued from sale
of shares:
Class B ............ 890,757 4,313,315 629,127
Class Y ............ 2,626 686,429 69
Shares issued from
reinvestment of
dividends:
Class B ............. 10,623 --- 88,254
Class Y ............ 238 --- 15
Shares redeemed:
Class B ............ (270,972) (1,590,387) (521,569)
Class Y ............ (1,120) (578,960) (304)
------- --------- -------
Increase (decrease) in
outstanding capital shares:
Class B ............ 630,408 2,722,928 195,812
Class Y ............ 1,744 107,469 (220)
------- --------- -------
Total for Fund .... 632,152 2,830,397 195,592
======= ========= =======
Value issued from sale
of shares:
Class B ............ $10,397 $67,871 $6,063
Class Y ............ 30 11,525 1
Value issued from
reinvestment of
dividends:
Class B ............ 124 --- 842
Class Y ............ 3 --- ---*
Value redeemed:
Class B ............ (3,171) (24,985) (4,987)
Class Y ............ (13) (9,223) (3)
------- ------- ------
Increase (decrease)in
outstanding capital:
Class B ............ 7,350 42,886 1,918
Class Y ............ 20 2,302 (2)
------- ------- ------
Total for Fund .... $ 7,370 $45,188 $1,916
======= ======= ======
**Amounts not shown due to rounding.
International Limited- Municipal
Growth Term Bond Bond
Fund Fund Fund
----------- ------------ ------------
Shares issued from sale
of shares:
Class B ............ 1,109,802 687,691 445,616
Class Y ............ 81,138 3,027 ---
Shares issued from
reinvestment of
dividends:
Class B ............. --- 47,513 65,036
Class Y ............ --- 601 4
Shares redeemed:
Class B ............ (543,117) (406,780) (594,574)
Class Y ............ (24,031) (1,708) ---
--------- ------- --------
Increase (decrease) in
outstanding capital shares:
Class B ............ 566,685 328,424 (83,922)
Class Y ............ 57,107 1,920 4
--------- ------- --------
Total for Fund .... 623,792 330,344 (83,918)
========= ======= ========
Value issued from sale
of shares:
Class B ............ $17,918 $6,876 $4,903
Class Y ............ 1,366 30 ---
Value issued from
reinvestment of
dividends:
Class B ............ --- 475 708
Class Y ............ --- 6 ---*
Value redeemed:
Class B ............ (8,806) (4,072) (6,458)
Class Y ............ (390) (17) ---
------- ------ ------
Increase (decrease)in
outstanding capital:
Class B ............ 9,112 3,279 (847)
Class Y ............ 976 19 ---
------- ------ ------
Total for Fund .... $10,088 $3,298 $ (847)
======= ====== ======
**Amounts not shown due to rounding.
Science and Total
Technology Return
Fund Fund
----------- ------------
Shares issued from sale
of shares:
Class B ............ 2,417,281 5,518,299
Class Y ............ 68,999 21,663
Shares issued from
reinvestment of
dividends:
Class B ............. --- ---
Class Y ............ --- ---
Shares redeemed:
Class B ............ (137,360) (3,859,264)
Class Y ............ (51,941) (17,921)
--------- ---------
Increase (decrease) in
outstanding capital shares:
Class B ............ 2,279,921 1,659,035
Class Y ............ 17,058 3,742
--------- ---------
Total for Fund .... 2,296,979 1,662,777
========= =========
Value issued from sale
of shares:
Class B ............ $46,996 $65,627
Class Y ............ 1,418 260
Value issued from
reinvestment of
dividends:
Class B ............ --- ---
Class Y ............ --- ---
Value redeemed:
Class B ............ (2,677) (45,835)
Class Y ............ (1,052) (217)
------- -------
Increase (decrease)in
outstanding capital:
Class B ............ 44,319 19,792
Class Y ............ 366 43
------- -------
Total for Fund .... $44,685 $19,835
======= =======
Transactions in capital stock for the fiscal year ended March 31, 1999
are summarized below. Dollar amounts are in thousands.
Asset High
Strategy Growth Income
Fund Fund* Fund
----------- ------------ ------------
Shares issued from sale
of shares:
Class B ............ 1,487,385 6,727,339 1,990,704
Class Y ............ 8,363 471,624 630
Shares issued from
reinvestment of
dividends and/or capital
gains distribution:
Class B ............. 88,597 4,145,013 121,122
Class Y ............ 1,139 9,589 10
Shares redeemed:
Class B ............ (554,869) (5,132,051) (649,483)
Class Y ............ (1,755) (2,501) ---
--------- --------- ---------
Increase in outstanding
capital shares:
Class B ............ 1,021,113 5,740,301 1,462,343
Class Y ............ 7,747 478,712 640
--------- --------- ---------
Total for Fund .... 1,028,860 6,219,013 1,462,983
========= ========= =========
Value issued from sale
of shares:
Class B ............ $16,872 $95,835 $20,234
Class Y ............ 95 6,879 6
Value issued from
reinvestment of
dividends and/or capital
gains distribution:
Class B ............ 981 54,503 1,217
Class Y ............ 13 130 ---**
Value redeemed:
Class B ............ (6,279) (73,381) (6,494)
Class Y ............ (20) (38) ---
------- ------- -------
Increase in outstanding
capital:
Class B ............ 11,574 76,957 14,957
Class Y ............ 88 6,971 6
------- ------- -------
Total for Fund .... $11,662 $83,928 $14,963
======= ======= =======
*Share transactions prior to June 27, 1998 have been adjusted to effect the
100% stock dividend of June 26, 1998.
**Amounts not shown due to rounding.
International Limited- Municipal
Growth Term Bond Bond
Fund Fund Fund
----------- ------------ ------------
Shares issued from sale
of shares:
Class B ............ 2,459,922 1,154,374 1,111,959
Class Y ............ 11,890 8,190 172
Shares issued from
reinvestment of
dividends and/or capital
gains distribution:
Class B ............ 366,149 79,341 212,992
Class Y ............ 2,124 1,036 7
Shares redeemed:
Class B ............ (2,210,705) (925,409) (1,003,930)
Class Y ............ (2,188) (1,468) ---
--------- --------- ---------
Increase in outstanding
capital shares:
Class B ............ 615,366 308,306 321,021
Class Y ............ 11,826 7,758 179
--------- --------- ---------
Total for Fund .... 627,192 316,064 321,200
========= ========= =========
Value issued from sale
of shares:
Class B ............ $38,406 $11,778 $12,733
Class Y ............ 192 83 2
Value issued from
reinvestment of
dividends and/or capital
gains distribution:
Class B ............ 5,261 808 2,420
Class Y ............ 31 11 ---**
Value redeemed:
Class B ............ (35,100) (9,427) (11,489)
Class Y ............ (34) (15) ---
------- ------- -------
Increase in outstanding
capital:
Class B ............ 8,567 3,159 3,664
Class Y ............ 189 79 2
------- ------- -------
Total for Fund .... $ 8,756 $ 3,238 $ 3,666
======= ======= =======
**Amounts not shown due to rounding.
Science and Total
Technology Return
Fund Fund*
----------- ------------
Shares issued from sale
of shares:
Class B ............ 2,150,217 10,022,490
Class Y ............ 2,993 32,620
Shares issued from
reinvestment of
dividends and/or capital
gains distribution:
Class B ............. --- 5,395,830
Class Y ............ --- 13,872
Shares redeemed:
Class B ............ (240,714) (9,956,039)
Class Y ............ --- (4,907)
--------- ---------
Increase in outstanding
capital shares:
Class B ............ 1,909,503 5,462,281
Class Y ............ 2,993 41,585
--------- ---------
Total for Fund .... 1,912,496 5,503,866
========= =========
Value issued from sale
of shares:
Class B ............ $29,323 $119,057
Class Y ............ 47 401
Value issued from
reinvestment of
dividends and/or capital
gains distribution:
Class B ............ --- 59,624
Class Y ............ --- 156
Value redeemed:
Class B ............ (3,276) (118,675)
Class Y ............ --- (61)
------- --------
Increase in outstanding
capital:
Class B ............ 26,047 60,006
Class Y ............ 47 496
------- --------
Total for Fund .... $26,094 $ 60,502
======= ========
* Share transactions prior to June 27, 1998 have been adjusted to
effect the 100% stock dividend of June 26, 1998.
Note 6 -- Securities Loaned
On September 30, 1999, there were no securities outstanding on loan.
If securities were on loan, however, the aggregate amount of such loans
must be continuously secured by 100% of the market value of the securities
loaned. The Corporation derives income from its securities lending
activities. These agreements may be terminated by the borrower or the
Corporation upon proper notice. In the event the borrower fails to deliver
the securities within five business days, the Corporation has the right to
use the collateral to purchase similar or other securities. During the
period ended September 30, 1999, Total Return Fund derived approximately
$17,503 of income, net of related expenses, from its securities lending
activities.
(PAGE)
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Waddell & Reed Funds, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedules of investments, of Asset Strategy Fund, Growth
Fund, High Income Fund, International Growth Fund, Limited-Term Bond Fund,
Municipal Bond Fund, Science and Technology Fund and Total Return Fund
(collectively the "Funds") comprising Waddell & Reed Funds, Inc. as of
September 30, 1999, 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 the fiscal year ended March 31, 1999, and
the financial highlights for the six-month period ended September 30, 1999
and for each of the five fiscal years in the period ended March 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 generally accepted auditing
standards. 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, 1999, 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 Funds, Inc. as of
September 30, 1999, 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 the fiscal year ended March 31, 1999 and the financial
highlights for the six-month period ended September 30, 1999 and for each
of the five fiscal years in the period ended March 31, 1999 in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
November 5, 1999
(PAGE)
Shareholder Meeting Results
A special meeting of Waddell & Reed Funds, Inc. was held on June 22, 1999.
The matters voted upon by the shareholders and the resulting votes for each
matter are presented below.
Item 1. To elect the Board of Directors:
Broker
For Withhold Non-Votes*
J. Concannon 42,388,448 4,430,588 0
J. Dillingham 42,407,564 4,411,472 0
D. Gardner 42,379,766 4,439,270 0
L. Graves 42,362,538 4,456,498 0
J. Harroz Jr. 42,343,391 4,475,645 0
J. Hayes 42,336,292 4,482,744 0
R. Hechler 42,377,128 4,441,908 0
H. Herrmann 42,375,876 4,443,160 0
G. Johnson 42,341,135 4,477,901 0
W. Morgan 42,398,841 4,420,195 0
R. Reimer 42,356,739 4,462,297 0
F. Ross 42,406,695 4,412,341 0
E. Schwartz 42,376,747 4,442,289 0
K. Tucker 42,396,023 4,423,013 0
F. Vogel 42,384,521 4,434,515 0
Item 2. To ratify the selection of Deloitte & Touche LLP as the
Funds' independent accountants for its current fiscal year:
Broker
For Against Abstain Non-Votes*
41,810,901 374,728 4,633,407 0
Item 3. To approve or disapprove the amendment to the Funds'
investment management agreement with Waddell & Reed Investment
Management Company:
Broker
For Against AbstainNon-Votes*
Asset Strategy Fund 1,275,265 20,746 71,955 0
Growth Fund 11,978,168 527,306 2,082,801 18,533
High Income Fund 1,045,982 42,604 169,226 0
International Growth Fund 2,657,538111,495
446,329 61
Limited-Term Bond Fund 975,829 54,390 29,064 0
Municipal Bond Fund 1,890,271 38,967 123,008 0
Science and Technology Fund974,611 38,559 223,890 0
Total Return Fund 19,490,423 755,093 1,776,922 0
Item 4. To approve or disapprove the amendment of the Funds' policy
regarding securities lending:
Broker
For Against AbstainNon-Votes*
Asset Strategy Fund 1,269,313 23,212 75,442 0
Growth Fund 11,975,126 371,476 2,241,673 18,533
High Income Fund 1,070,554 12,933 174,325 0
International Growth Fund 2,641,795 96,050 477,516
61
Limited-Term Bond Fund 992,314 32,237 34,732 0
Municipal Bond Fund 0 0 0 0
Science and Technology Fund975,807 22,716 238,537 0
Total Return Fund 19,435,429 567,557 2,019,452 0
Item 5. To approve or disapprove the Funds' Articles of
Incorporation to change the par value of Fund shares to $0.001:
Broker
For Against Abstain Non-Votes*
39,643,495 1,159,005 6,016,536 0
*Broker Non-Votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary
power to vote on a particular matter.
(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, Menlo Park, 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
Michael L. Avery, Vice President
Abel Garcia, Vice President
Henry J. Herrmann, Vice President
John M. Holliday, Vice President
Theodore W. Howard, Vice President and Treasurer
Helge K. Lee, Vice President and Secretary
Thomas A. Mengel, Vice President
Louise D. Rieke, Vice President
Grant P. Sarris, Vice President
Mark G. Seferovich, Vice President
W. Patrick Sterner, Vice President
Daniel J. Vrabac, Vice President
James D. Wineland, Vice President
To all traditional IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from a traditional IRA unless you make a written
election not to have taxes withheld. The election may be made by
submitting forms provided by Waddell & Reed, Inc. which can be obtained
from your Waddell & Reed representative or by submitting Internal Revenue
Service Form W-4P. Once made, an election can be revoked by providing
written notice to Waddell & Reed, Inc. If you elect not to have tax
withheld you may be required to make payments of estimated tax. Penalties
may be imposed by the IRS if withholding and estimated tax payments are not
adequate.
(PAGE)
WADDELL & REED FUNDS, INC.
Asset Strategy Fund
Growth Fund
High Income Fund
International Growth Fund
Limited-Term Bond Fund
Municipal Bond Fund
Science and Technology Fund
Total Return Fund
------------------------------------
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
(800) 366-5465
Our INTERNET address is:
http://www.waddell.com
WRR3000SA(9-99)
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