N-Q 1 tm_mainpart-nq.htm MAIN PART

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-9789

Waddell & Reed Advisors Tax-Managed Equity Fund, Inc.

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(Exact name of registrant as specified in charter)

6300 Lamar Avenue, Overland Park, Kansas 66202

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(Address of principal executive offices) (Zip code)

Kristen A. Richards

6300 Lamar Avenue

Overland Park, Kansas 66202

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(Name and address of agent for service)

Registrant's telephone number, including area code: 913-236-2000

Date of fiscal year end: June 30

Date of reporting period: March 31, 2006

Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5 (ss. 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under that Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507.

ITEM 1. SCHEDULE OF INVESTMENTS.




The Investments of Waddell & Reed Advisors Tax-Managed Equity Fund
          March 31, 2006
COMMON STOCKS  
 

Shares
    
Value
               
Air Transportation - 1.11%              
Southwest Airlines Co.
   
46,550
   
$
837,434
               
Aircraft - 1.81%              
Boeing Company (The)
   
17,600
   

1,371,568
               
Beverages - 1.47%              
PepsiCo, Inc.
   
19,200
   

1,109,568
               
Business Equipment and Services - 0.77%              
CheckFree Corporation*
   
11,600
   

585,510
               
Capital Equipment - 1.73%              
Caterpillar Inc.
   
18,200
   

1,306,942
               
Chemicals -- Petroleum and Inorganic - 1.39%              
Monsanto Company
   
12,400
   

1,050,900
               
Communications Equipment - 7.32%              
Cisco Systems, Inc.*
   
64,000
     
1,387,200
Corning Incorporated*
   
21,000
     
565,110
Juniper Networks, Inc.*
   
69,200
     
1,322,758
Marvell Technology Group Ltd.*
   
19,700
     
1,064,982
QUALCOMM Incorporated
   
23,600
     
1,194,278
           

5,534,328
Computers -- Micro - 2.07%              
Apple Computer, Inc.*
   
25,000
   

1,567,875
               
Computers -- Peripherals - 7.63%              
Adobe Systems Incorporated
   
38,000
     
1,328,290
Electronic Arts Inc.*
   
21,500
     
1,176,373
Microsoft Corporation
   
70,000
     
1,906,450
SAP Aktiengesellschaft, ADR
   
25,100
     
1,363,432
           

5,774,545
Defense - 2.76%              
DRS Technologies, Inc.
   
14,700
     
806,589
General Dynamics Corporation
   
20,000
     
1,279,600
           

2,086,189
Electronic Components - 2.12%              
Advanced Micro Devices, Inc.*
   
21,000
     
696,360
Broadcom Corporation, Class A*
   
21,000
     
906,255
           

1,602,615
Finance Companies - 3.21%              
SLM Corporation
   
46,800
   

2,430,792
               
Health Care -- Drugs - 7.80%              
Alcon, Inc.
   
4,000
     
417,040
Amgen Inc.*
   
12,400
     
905,014
Genentech, Inc.*
   
13,000
     
1,098,630
Genzyme Corporation*
   
16,400
     
1,104,950
Gilead Sciences, Inc.*
   
21,600
     
1,346,328
Teva Pharmaceutical Industries Limited, ADR
   
25,000
     
1,029,500
           

5,901,462
Health Care -- General - 4.24%              
DENTSPLY International Inc.
   
20,300
     
1,180,344
Da Vita Inc.*
   
19,000
     
1,143,990
Zimmer Holdings, Inc.*
   
13,000
     
878,800
           

3,203,134
Hospital Supply and Management - 8.43%              
Aetna Inc.
   
29,400
     
1,444,716
Medtronic, Inc.
   
20,900
     
1,060,675
PSS World Medical, Inc.*
   
35,000
     
674,800
Stryker Corporation
   
19,200
     
851,328
Triad Hospitals, Inc.*
   
22,000
     
921,800
UnitedHealth Group Incorporated
   
25,500
     
1,424,430
           

6,377,749
Household -- General Products - 2.83%              
Colgate-Palmolive Company
   
26,400
     
1,507,440
Procter & Gamble Company (The)
   
11,000
     
633,820
           

2,141,260
Insurance -- Life - 1.46%              
Aflac Incorporated
   
24,400
   

1,101,172
               
Metal Fabrication - 1.02%              
Precision Castparts Corp.
   
13,000
   

772,200
               
Multiple Industry - 6.13%              
Altria Group, Inc.
   
15,400
     
1,091,244
General Electric Company
   
47,000
     
1,634,660
Las Vegas Sands, Inc.*
   
33,700
     
1,909,442
           

4,635,346
Petroleum -- Services - 8.51%              
Baker Hughes Incorporated
   
22,300
     
1,525,320
Schlumberger Limited
   
19,600
     
2,480,772
Smith International, Inc.
   
29,800
     
1,161,008
Transocean Inc.*
   
15,800
     
1,268,740
           

6,435,840
Railroad - 1.43%              
Burlington Northern Santa Fe Corporation
   
13,000
   

1,083,290
               
Retail -- Food Stores - 2.14%              
Walgreen Co.
   
37,600
   

1,621,688
               
Retail -- Specialty Stores - 2.84%              
Abercrombie & Fitch Co., Class A
   
17,100
     
996,930
Home Depot, Inc. (The)
   
27,200
     
1,150,560
           

2,147,490
Security and Commodity Brokers - 5.86%              
Franklin Resources, Inc.
   
11,100
     
1,046,064
Goldman Sachs Group, Inc. (The)
   
7,900
     
1,239,984
Legg Mason, Inc.
   
17,100
     
2,143,143
           

4,429,191
Timesharing and Software - 9.74%              
eBay Inc.*
   
66,000
     
2,576,310
Google Inc., Class A*
   
6,600
     
2,549,547
Paychex, Inc.
   
30,400
     
1,265,096
Yahoo! Inc.*
   
30,300
     
978,538
           

7,369,491
Trucking and Shipping - 1.71%              
Expeditors International of Washington, Inc.
   
4,900
     
423,238
United Parcel Service, Inc., Class B
   
11,000
     
873,180
           

1,296,418
               
TOTAL COMMON STOCKS - 97.53%          
$
73,773,997
(Cost: $61,998,384)
             
               
SHORT-TERM SECURITY - 2.47%  
Principal
Amount in
Thousands
      
               
Aluminum              
Alcoa Incorporated,
             
          4.86%, 4-3-06
$
1,866
      $
1,865,496
(Cost: $1,865,496)
         
               
TOTAL INVESTMENT SECURITIES - 100.00%          
$
75,639,493
(Cost: $63,863,880)
             
               

Notes to Schedule of Investments

Certain acronyms are used within the body of the Fund's holdings. The definition of this acronym is as follows: ADR - American Depositary Receipts.

*No dividends were paid during the preceding 12 months.




ITEM 2. CONTROLS AND PROCEDURES.

(a)

The Registrant's Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, have concluded that such controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective and adequately designed to ensure that information required to be disclosed by the Registrant in its reports that it files or submits is accumulated and communicated to the Registrant's management, including the Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

   

(b)

There were no significant changes in the registrant's internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

ITEM 3. EXHIBITS.

 

A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)).

Attached hereto as Exhibit 99.CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Waddell & Reed Advisors Tax-Managed Equity Fund, Inc.

(Registrant)

By

/s/Kristen A. Richards

 

Kristen A. Richards, Vice President and Secretary

Date: May 30, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By

/s/Henry J. Herrmann

 

Henry J. Herrmann, President and Principal Executive Officer

Date: May 30, 2006

By

/s/Theodore W. Howard

 

Theodore W. Howard, Treasurer and Principal Financial Officer

Date: May 30, 2006