N-Q 1 a_tm-nqmain.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: September 30, 2007

ITEM 1. SCHEDULE OF INVESTMENTS.

The Investments of W&R Advisors Tax-Managed Equity Fund
      September 30, 2007              
COMMON STOCKS  


Shares
    
Value
               
Aircraft - 3.79%              
Boeing Company (The)
   
21,700
   
$
2,278,283
Raytheon Company
   
21,500
     
1,372,130
           

3,650,413
Beverages - 1.46%              
PepsiCo, Inc.
   
19,200
   

1,406,592
               
Capital Equipment - 5.99%              
Deere & Company
   
21,800
     
3,235,556
Foster Wheeler Ltd.*
   
5,800
     
761,163
Illinois Tool Works Inc.
   
29,600
     
1,765,344
           

5,762,063
Chemicals - Petroleum and Inorganic - 4.16%              
Monsanto Company
   
46,700
   

4,004,058
               
Communications Equipment - 6.50%              
Cisco Systems, Inc.*
   
98,900
     
3,276,062
Marvell Technology Group Ltd.*
   
65,100
     
1,066,664
QUALCOMM Incorporated
   
45,200
     
1,909,700
           

6,252,426
Computers - Micro - 5.73%              
Apple Inc.*
   
26,300
     
4,036,656
Dell Inc.*
   
53,400
     
1,473,573
           

5,510,229
Computers - Peripherals - 7.84%              
Adobe Systems Incorporated*
   
64,900
     
2,834,183
Electronic Arts Inc.*
   
49,500
     
2,772,495
Microsoft Corporation
   
65,700
     
1,935,851
           

7,542,529
Consumer Electronics - 3.69%              
Research In Motion Limited*
   
36,000
   

3,547,080
               
Defense - 2.23%              
General Dynamics Corporation
   
25,400
   

2,145,538
               
Electrical Equipment - 1.20%              
Emerson Electric Co.
   
21,600
   

1,149,552
               
Electronic Components - 1.61%              
Broadcom Corporation, Class A*
   
42,500
   

1,548,912
               
Health Care - Drugs - 8.70%              
Abbott Laboratories
   
34,000
     
1,823,080
Genentech, Inc.*
   
29,100
     
2,270,382
Gilead Sciences, Inc.*
   
49,400
     
2,018,237
Schering-Plough Corporation
   
71,300
     
2,255,219
           

8,366,918
Health Care - General - 3.89%              
Baxter International Inc.
   
17,700
     
996,156
DENTSPLY International Inc.
   
40,600
     
1,691,193
Zimmer Holdings, Inc.*
   
13,000
     
1,052,870
           

3,740,219
Hospital Supply and Management - 2.25%              
Medtronic, Inc.
   
15,000
     
846,150
Stryker Corporation
   
19,200
     
1,320,192
           

2,166,342
Hotels and Gaming - 4.42%              
International Game Technology
   
26,800
     
1,155,080
Las Vegas Sands, Inc.*
   
23,200
     
3,095,344
           

4,250,424
Household - General Products - 3.65%              
Colgate-Palmolive Company
   
26,400
     
1,882,848
Procter & Gamble Company (The)
   
23,100
     
1,624,854
           

3,507,702
Insurance - Life - 2.37%              
Aflac Incorporated
   
39,900
   

2,275,896
               
Insurance - Property and Casualty - 0.58%              
Ambac Financial Group, Inc.
   
8,900
   

559,899
               
Non-Residential Construction - 0.87%              
Fluor Corporation
   
5,800
   

835,084
               
Petroleum - Services - 8.63%              
Schlumberger Limited
   
30,300
     
3,181,500
Smith International, Inc.
   
27,900
     
1,992,060
Transocean Inc.*
   
18,300
     
2,068,815
Weatherford International Ltd.*
   
15,800
     
1,061,444
           

8,303,819
Restaurants - 0.72%              
YUM! Brands, Inc.
   
20,400
   

690,132
               
Retail - General Merchandise - 0.45%              
Kohl's Corporation*
   
7,600
   

435,708
               
Security and Commodity Brokers - 4.60%              
CME Group Inc.
   
3,200
     
1,879,520
Goldman Sachs Group, Inc. (The)
   
7,900
     
1,712,246
UBS AG
   
15,600
     
830,700
           

4,422,466
Timesharing and Software - 3.61%              
Google Inc., Class A*
   
4,600
     
2,610,431
Paychex, Inc.
   
21,100
     
865,416
           

3,475,847
Trucking and Shipping - 1.25%              
Expeditors International of Washington, Inc.
   
25,400
   

1,200,658
               
Utilities - Telephone - 3.96%              
China Mobile (Hong Kong) Limited, ADR
   
29,800
     
2,444,792
Crown Castle International Corp.
   
33,600
     
1,365,168
           

3,809,960
               
TOTAL COMMON STOCKS - 94.15%          
$
90,560,466
(Cost: $62,665,302)
             
               
               
SHORT-TERM SECURITIES  
Principal
Amount in
Thousands
      
               
Finance Companies - 3.12%              
Prudential Funding LLC,
             
      4.75%, 10-1-07
  
$
3,000
   

3,000,000
               
Restaurants - 2.73%              
Starbucks Corporation,
             
      5.5%, 10-1-07
    
2,629
   

2,629,000
               
TOTAL SHORT-TERM SECURITIES - 5.85%          
$
5,629,000
(Cost: $5,629,000)
             
               
TOTAL INVESTMENT SECURITIES - 100.00%          
$
96,189,466
(Cost: $68,294,302)
             
               
               
Notes to Schedule of Investments
 
Certain acronyms may be used within the body of the Fund's holdings. The definitions of these acronyms are as follows: ADR - American Depositary Receipts; CMO - Collateralized Mortgage Obligation; GDR - Global Depositary Receipts; and REMIC - Real Estate Mortgage Investment Conduit.
 
*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 Assistant Secretary
   
Date: November 29, 2007
   
   
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, Principal Executive Officer
   
Date: November 29, 2007
   
   
By
/s/Joseph W. Kauten
 
Joseph W. Kauten, Principal Financial Officer
   
Date: November 29, 2007