File No. 811-2922
File No. 2-64526
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. _____
Post-Effective Amendment No. 26
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940
Amendment No. 21
UNITED CASH MANAGEMENT, INC.
(Exact Name as Specified in Charter)
6300 Lamar Avenue, Shawnee Mission, Kansas 66202-4200
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code (913) 236-2000
Sharon K. Pappas, P. O. Box 29217, Shawnee Mission, Kansas 66201-9217
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
_____ immediately upon filing pursuant to paragraph (b)
__X__ on September 30, 1994 pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)
_____ on (date) pursuant to paragraph (a) of Rule 485
==============================================================================
DECLARATION REQUIRED BY RULE 24f-2 (a) (1)
The issuer has registered an indefinite amount of its securities under the
Securities Act of 1933 pursuant to Rule 24f(a)(1).
Notice for the Registrant's fiscal year ended June
30, 1994 was filed on August 23, 1994.UNITED CASH
MANAGEMENT, INC.
============================
Cross Reference Sheet
=====================
Part A of
Form N-1A
Item No. Prospectus Caption
- --------- ------------------
1 ........................ Cover Page
2(a)...................... Summary of Expenses
(b)...................... *
(c) *
3(a)...................... Financial Highlights
(b)...................... Financial Highlights
(c)...................... Performance Information
(d)...................... *
4(a)...................... What is United Cash Management, Inc.?; Goal of the
Fund
(b) ..................... Goal of the Fund
(c) ..................... Goal of the Fund
5(a) ..................... What is United Cash Management, Inc.?
(b)...................... Management and Services; Inside Back Cover
(c) ..................... *
(d) ..................... Management and Services; Inside Back Cover
(e) ..................... Management and Services; Inside Back Cover
(f) ..................... Management and Services
(g)(i)................... *
(g)(ii).................. Management and Services
5A........................ *
6(a) ..................... What is United Cash Management, Inc.?
(b) ..................... *
(c) ..................... *
(d) ..................... *
(e) ..................... Management and Services
(f)...................... Dividends, Distributions and Taxes
(g) ..................... Dividends, Distributions and Taxes
7(a) ..................... Management and Services; Inside Back Cover
(b) ..................... Purchase of Shares
(c) ..................... Purchase of Shares
(d) ..................... Purchase of Shares
(e) ..................... *
(f) ..................... *
8(a) ..................... Redemption
(b) ..................... *
(c) ..................... Mandatory Redemption of Small Accounts
(d) ..................... Redemption
9 ........................ *
Part B of
Form N-1A
Item No. SAI Caption
- --------- -----------
10(a) ..................... Cover Page
(b) ..................... *
11 ........................ Cover Page
12 ........................ *
13(a) ..................... Investment Objective and Policies
(b) ..................... Investment Objective and Policies
(c) ..................... Investment Objective and Policies
(d) ..................... Investment Objective and Policies
14(a) ..................... Directors and Officers
(b) ..................... Directors and Officers
(c) ..................... *
15(a) ..................... *
(b) ..................... Directors and Officers
(c) ..................... Directors and Officers
16(a)(i) .................. Investment Management and Other Services
(a)(ii) ................. Directors and Officers
(a)(iii) ................ Investment Management and Other Services
(b) ..................... Investment Management and Other Services
(c) ..................... *
(d) ..................... Investment Management and Other Services
(e) ..................... *
(f) ..................... *
(g) ..................... *
(h) Investment Management and Other Services
(i) ..................... *
17(a) ..................... Portfolio Transactions and Brokerage
(b) ..................... *
(c) ..................... Portfolio Transactions and Brokerage
(d) ..................... *
(e) ..................... Portfolio Transactions and Brokerage
18(a) ..................... Other Information
(b) ..................... *
19(a) ..................... Purchase, Redemption and Pricing of Shares
(b) ..................... Purchase, Redemption and Pricing of Shares
(c) ..................... Purchase, Redemption and Pricing of Shares
20 ........................ Payments to Shareholders; Taxes
21(a) ..................... Investment Management and Other Services
(b) ..................... *
(c) ..................... *
22(a) ..................... Performance Information
(b)(i)................... *
(b)(ii).................. *
(b)(iii)................. *
(b)(iv).................. Performance Information
23 ........................ **
- ---------------------------------------------------------------------------
*Not Applicable or Negative Answer
**Included in Prospectus
<PAGE>
UNITED CASH MANAGEMENT, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
(913) 236-2000
September 30, 1994
PROSPECTUS
United Cash Management, Inc. (the "Fund") is a management investment
company which seeks maximum current income to the extent consistent with
stability of principal by investing in a portfolio of "money market" instruments
meeting specified quality standards.
This Prospectus contains concise information about the Fund of which you
should be aware before investing. Additional information has been filed with
the Securities and Exchange Commission and is contained in a Statement of
Additional Information (the "SAI"), dated September 30, 1994. You may obtain a
copy of the SAI free of charge by request to the Fund or its Underwriter,
Waddell & Reed, Inc., at the address or telephone number shown below. The SAI
is incorporated by reference into this Prospectus and you will not be aware of
all facts unless you read both this Prospectus and the SAI.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the Fund will be able to maintain a
stable net asset value of $1.00 per share.
Retain This Prospectus For Future Reference
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
UNITED CASH MANAGEMENT, INC.
Summary of Expenses
Shareholder Transaction Expenses
- --------------------------------
Maximum Sales Load Imposed on Purchases None
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None
Deferred Sales Load (as a percentage
of original purchase price or redemption
proceeds, as applicable) None
Redemption Fees (as a percentage
of amount redeemed, if applicable) None
Exchange Fee None
Annual Fund Operating Expenses
- ------------------------------
(as a percentage of average net assets)
Management Fees 0.42%
12b-1 Fees None
Other Expenses 0.62%
(Includes, among other expenses, transfer
agency, accounting, custodian, audit and legal fees)
Total Fund Operating Expenses 1.04%
Example 1 year 3 years 5 years 10 years
- ------- ------ ------- ------- --------
You would pay the
following expenses on
a $1,000 investment,
assuming (1) 5% annual
return and (2) redemption
at the end of each
time period: $11 $33 $57 $127
The purpose of this table is to assist investors in understanding the various
costs and expenses that an investor in the Fund will bear directly or
indirectly. The example should not be considered a representation of past or
future expenses. Actual expenses may be greater or lesser than those shown.
<PAGE>
United Cash Management, Inc.
FINANCIAL HIGHLIGHTS
(Audited)
The following information has been audited by Price Waterhouse, independent
accountants, and should be read in conjunction with the financial statements and
notes thereto, together with the report of Price Waterhouse LLP.
(For a Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
For the fiscal year ended June 30,
----------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------- ------- ------- ------- ------- ------- ------- ------ ------ -------
Net investment
income .. 0.0252 0.0251 0.0434 0.0665 0.0786 0.0805 0.0626 0.0555 0.0707 0.0895
Less dividends
declared . (0.0252)(0.0251) (0.0434)(0.0665) (0.0786)(0.0805) (0.0626)(0.0555) (0.0707)(0.0895)
------- ------- ------- ------- ------- ------- ------- ------ ------ -------
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= ======= ======= ======= ====== ====== =======
Total return 2.55% 2.57% 4.41% 6.89% 8.18% 8.33% 6.46% 5.68% 7.27% 9.35%
Net assets, end of
period (000
omitted) $316,920 $350,624 $448,127 $579,944 $563,893 $445,156 $298,162 $242,084 $283,937$323,358
Ratio of expenses
to average net
assets .. 1.04% 1.06% 0.99% 0.95% 0.95% 1.00% 1.07% 1.08% 1.07% 1.06%
Ratio of net investment
income to average net
assets .. 2.51% 2.56% 4.36% 6.65% 7.86% 8.14% 6.27% 5.54% 7.04% 8.97%
</TABLE>
<PAGE>
What is United Cash Management, Inc.?
United Cash Management, Inc. is a corporation organized under Maryland
law on February 13, 1979. It is an open-end diversified management investment
company commonly called a "mutual fund." The Fund has a Board of Directors
which has overall responsibility for the management of its affairs. For the
names of the directors and other information about them, see the SAI. The Fund
has only one class of shares. Each share has the same rights to dividends and
to vote. Shares are fully paid and nonassessable when bought. The Fund does
not hold annual meetings of shareholders; however, certain significant corporate
matters, such as the approval of a new investment advisory agreement or a change
in a fundamental investment policy, which require shareholder approval, will be
presented to shareholders at an annual or special meeting called by the Board of
Directors for such purpose.
Special meetings of shareholders may be called for any purpose upon receipt
by the Fund of a request in writing signed by shareholders holding not less than
25% of all shares entitled to vote at such meeting, provided certain conditions
stated in the Bylaws of the Fund are met. There will normally be no meeting of
shareholders for the purpose of electing directors until such time as less than
a majority of directors holding office have been elected by shareholders, at
which time the directors then in office will call a shareholders' meeting for
the election of directors. To the extent that Section 16(c) of the Investment
Company Act of 1940, as amended, applies to the Fund, the directors are required
to call a meeting of shareholders for the purpose of voting upon the question of
removal of any director when requested in writing to do so by the shareholders
of record of not less than 10% of the Fund's outstanding shares.
Performance Information
From time to time the Fund or Waddell & Reed, Inc. may include performance
data in advertisements or in information furnished to present or prospective
shareholders. Fund performance may be shown by presenting one or more
performance measurements, including "current yield," "effective yield" and
performance rankings.
The "current yield" of the Fund refers to the income generated by an
investment in the Fund over a stated seven-day period. This income is then
"annualized." That is, the amount of income generated by the investment during
that period is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. See the SAI for current yield and effective yield
quotations and methods of computation.
The "effective yield" will be slightly higher than the "current yield"
because of the compounding effect of the assumed reinvestment. Both yield
figures are based on historical earnings and are not intended to indicate future
performance. An investment in Fund shares is not insured and these yields are
not fixed or guaranteed. Yield information cannot necessarily be used to
compare Fund shares with investment alternatives which provide fixed yields,
such as money market instruments or bank accounts which may also be insured.
From time to time in advertisements and information furnished to present or
prospective shareholders the Fund may discuss its performance rankings as
published by recognized independent mutual fund statistical services such as
Lipper Analytical Services, Inc., or by publications of general interest such as
Forbes, Money, The Wall Street Journal, Business Week, Barron's, Fortune or
Morningstar Mutual Fund Values. The Fund may also compare its performance to
that of other selected mutual funds or selected recognized market indicators
such as Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average.
Performance information may be quoted numerically or presented in a table, graph
or other illustration.
All performance information which the Fund advertises or includes in
information provided to present or prospective shareholders is historical in
nature and is not intended to represent or guarantee future results. Yield
figures are based on historical earnings and are not intended to indicate future
performance. An investment in Fund shares is not insured and yield rate is not
fixed or guaranteed. Yield information cannot necessarily be used to compare
Fund shares with investment alternatives which provide fixed yields, such as
bank accounts (which accounts may be insured), or with yields of similar
investment companies which may be computed in a different manner. The value of
the Fund's shares when redeemed may be more or less than their original cost.
Goal of the Fund
The goal of the Fund is to seek maximum current income to the extent
consistent with stability of principal. It tries to achieve this goal by
investing in a portfolio of money market instruments. This goal, the type of
securities the Fund may invest in, as described in the following paragraph, and
the required maturities of these securities are matters of fundamental policy
which may not be changed without the approval of shareholders. There is no
assurance that the Fund will achieve its goal; some market risks are inherent in
all securities to varying degrees.
Subject to the further limitations imposed by Rule 2a-7 under the
Investment Company Act of 1940 ("Rule 2a-7"), as described below, the Fund may
invest only in the following money market obligations and instruments which must
be denominated in U.S. dollars: U.S. Government obligations (including
obligations of U.S. Government agencies and instrumentalities); bank obligations
and instruments secured by bank obligations, such as letters of credit;
commercial paper obligations, including variable amount master demand notes,
rated A-1 or A-2 by Standard & Poor's Ratings Group ("S&P") or Prime-1 or Prime-
2 by Moody's Investors Service, Inc. ("MIS") or, if not rated, issued by a
corporation in whose debt obligations the Fund may invest -- corporate debt
obligations rated at least A by S&P or MIS; Canadian Government obligations up
to 10% of the value of the Fund's total assets and certain other obligations
guaranteed as to principal and interest by a bank or a corporation in whose
commercial paper the Fund may invest. The Fund intends to invest in U.S.
Government obligations when there is limited availability of other obligations
and instruments. See the SAI for a description of each type of investment.
The Fund is also subject to the requirements of Rule 2a-7 applicable to
money market funds. Under the Rule, the Fund may invest only in instruments
that are rated in one of the two highest rating categories by the requisite
nationally recognized statistical rating organization(s) or are comparable
unrated securities. S&P and MIS are among the nationally recognized statistical
rating organizations. See Appendix A to the SAI for a description of some of
these ratings. Investments in the securities of any one issuer (except U.S.
Government Securities) are limited to no more than 5% of the Fund's assets.
Investments in securities rated in the second highest rating category by the
requisite rating organization(s) or comparable unrated securities are limited to
no more than 5% of the Fund's assets, with investments in such securities of any
one issuer (except U.S. Government Securities) being limited to the greater of
1% of the Fund's assets or $1,000,000. While Rule 2a-7 allows the Fund to
invest in securities with a remaining maturity of not more than thirteen months,
as a matter of fundamental policy, the Fund may only invest in securities with a
remaining maturity of not more than one year.
The Fund may purchase certain securities subject to repurchase
agreements (which can be considered to be collateralized loans by the Fund).
The majority of the repurchase transactions in which the Fund would engage run
from day to day and the delivery pursuant to the resale typically will occur
within one to five days of the purchase. The Fund's risk is limited to the
ability of the vendor to pay the agreed-upon sum on the delivery date. Due to
their possible limited liquidity, the Fund will not invest in repurchase
agreements not terminable within seven days and certain other investments
described in the SAI if thereafter more than 10% of its net assets would consist
of such investments. The Fund may invest in commercial paper which is exempt
from registration under Section 4(2) of the Securities Act of 1933 ("Section
4(2) paper"). See the SAI for further discussion of other restrictions.
Subject to the diversification requirements stated in Rule 2a-7 applicable
to the Fund, the Fund may invest up to 10% of its total assets in Canadian
Government obligations and may also invest in foreign bank obligations and in
the obligations of foreign branches of domestic banks, all of which must be
payable in U.S. dollars. As an operating (i.e., non-fundamental) policy, the
Fund does not intend to invest more than 25% of its assets in a combination of
these obligations. There may be certain risks associated with these securities
not usually associated with U.S. securities including absence of uniform
accounting, auditing and financial standards, changes in currency rates and in
exchange regulations, political instability and less government regulation. See
the SAI for further information.
The Fund will not purchase the securities of any company which has a record
of less than three years continuous operation including the operation of any
predecessor.
The Fund may lend its securities for the purpose of realizing income. The
requirement that such loans be on a collateralized basis in accordance with
certain regulatory requirements and that the Fund not lend securities
representing more than 1/3 of its total asset value are fundamental policies
which can only be changed by shareholder vote. There are risks associated with
lending securities in that the Fund may experience delay in recovering the
collateral or even loss of the collateral. See the SAI for further information.
The Fund can borrow from banks for temporary or emergency purposes but only
up to 10% of its total assets. Interest paid would reduce the Fund's income.
This, too, is a fundamental policy.
The value of the obligations and instruments in which the Fund invests will
fluctuate depending, in large part, on changes in prevailing interest rates.
Management and Services
Waddell & Reed, Inc. and its predecessors served as investment manager
to each of the registered investment companies in the United Group of Mutual
Funds since 1940 or the inception of the investment company, whichever was
later, and to TMK/United Funds, Inc. since its inception. On January 8, 1992,
subject to the authority of the Fund's Board of Directors, Waddell & Reed, Inc.
assigned its investment management duties (and assigned its professional staff
for investment management services) to Waddell & Reed Investment Management
Company (Manager), a wholly-owned subsidiary of Waddell & Reed, Inc. The
Manager has also served as investment manager for Waddell & Reed Funds, Inc.
since its inception in September 1992 and Torchmark Government Securities Fund,
Inc. and Torchmark Insured Tax-Free Fund, Inc. since each commenced operations
in February 1993. Waddell & Reed, Inc. serves as the Fund's underwriter and as
underwriter for each of the investment companies in the United Group of Mutual
Funds, TMK/United Funds, Inc. and Waddell & Reed Funds, Inc. Waddell & Reed,
Inc. is an indirect subsidiary of Torchmark Corporation, a holding company, and
United Investors Management Company, a holding company, and a direct subsidiary
of Waddell & Reed Financial Services, Inc., a holding company.
Subject to authority of the Fund's Board of Directors, the Manager provides
investment advice and supervises investments for which it is paid a fee which
consists of a pro rata participation based on the relative net asset size of the
Fund in a "Group" fee computed each day on the combined net asset values of all
of the funds in the United Group at the annual rates shown in the following
table. The fee is accrued and paid daily. Prior to the above-described
assignment to the Manager on January 8, 1992, the fees were paid to Waddell &
Reed, Inc.
Group Fee Rate
Group Net Asset Level Annual Group Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 750 .51 of 1%
From $ 750 to $ 1,500 .49 of 1%
From $ 1,500 to $ 2,250 .47 of 1%
From $ 2,250 to $ 3,000 .45 of 1%
From $ 3,000 to $ 3,750 .43 of 1%
From $ 3,750 to $ 7,500 .40 of 1%
From $ 7,500 to $12,000 .38 of 1%
Over $12,000 .36 of 1%
Waddell & Reed Services Company, a subsidiary of Waddell & Reed,
Inc., acts as transfer agent ("Shareholder Servicing Agent") for the Fund and
processes the payments of dividends. See the SAI for the fees paid for these
services. Inquiries concerning shareholder accounts should be sent to that
company at the address shown on the inside back cover of this Prospectus or to
the Fund at the address shown on the front cover of this Prospectus.
Waddell & Reed Services Company also acts as agent ("Accounting Services
Agent") in providing bookkeeping and accounting services and assistance to the
Fund and pricing daily the value of shares of the Fund. For these services,
the Fund pays the Accounting Services Agent a monthly fee of one-twelfth of
the annual fee shown in the following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 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
The combined net asset values of all of the funds in the United Group
were approximately $10.5 billion as of June 30, 1994. Management fees for the
fiscal year ended June 30, 1994 were 0.42% of the Fund's average net assets.
The Fund's total expenses for that year were 1.04% of its average net
assets.
The Manager places transactions for the Fund's portfolio and in doing so
may consider sales of shares of the Fund and other funds it manages as a factor
in the selection of brokers to execute portfolio transactions. See the SAI for
further information.
Dividends, Distributions and Taxes
Ordinarily, dividends are declared daily and paid on the 27th day of each
month or on the last business day prior to the 27th, if the 27th falls on a
weekend or holiday, from net investment income, which includes accrued interest,
earned discount and other income earned on portfolio securities less expenses.
The Fund distributes its net short-term capital gains annually but may make more
frequent distributions of such gains if necessary to maintain its net asset
value per share at $1.00. The Fund may make additional distributions if
necessary to avoid Federal income or excise taxes on certain undistributed
income and capital gains. The Fund does not expect to realize net long-term
capital gains and, thus, does not anticipate payment of any long-term capital
gains distributions. When shares are redeemed, any declared but unpaid
dividends on those shares will be paid with the next regular dividend payment
and not at the time of redemption.
You have the option to receive dividends and distributions in cash, to
reinvest them without charge or to receive dividends in cash and reinvest
distributions, as you may instruct. In the absence of instructions, dividends
and distributions will be reinvested.
The Fund intends to continue to qualify for treatment as a regulated
investment company under the Internal Revenue Code of 1986 so that it will be
relieved of Federal income tax on that part of its investment company taxable
income (consisting generally of net investment income and net short-term capital
gains) that is distributed to its shareholders.
Dividends from the Fund's investment company taxable income are taxable to
you as ordinary income, to the extent of the Fund's earnings and profits,
whether received in cash or reinvested in additional Fund shares. The Fund
notifies you after each calendar year-end as to the amounts of dividends paid
(or deemed paid) to you for that year.
The Fund is required to withhold 31% of all dividends payable to
individuals and certain other noncorporate shareholders who do not furnish the
Fund with a correct taxpayer identification number or otherwise are subject to
backup withholding.
The foregoing is only a summary of some of the important Federal tax
considerations generally affecting the Fund and its shareholders; see the SAI
for a further discussion. There may be other Federal, state or local tax
considerations applicable to a particular investor. You are urged to consult
your own tax adviser.
Purchase of Shares
You may purchase shares through Waddell & Reed, Inc. and its sales
representatives, or through registered broker-dealers. Broker-dealers may
charge a fee for this service. To open an account by mail you must complete an
application form and mail it to Waddell & Reed, Inc. accompanied by a check,
money order, Federal Reserve draft or other negotiable bank draft payable to
Waddell & Reed, Inc. (see inside back cover of this Prospectus for address), and
it need not accept any orders. To open an account by wire you may telephone the
toll-free number on the inside back cover of this Prospectus. See the SAI for
additional instructions regarding wiring of funds.
Ordinarily, an initial investment must be at least $1,000. A $50
minimum initial investment pertains to certain retirement plan accounts and to
accounts for which an investor has arranged, at the time of initial investment,
to make subsequent purchases for the account by having regular monthly
withdrawals of $25 or more made from a bank account. See the SAI for additional
information. Except with respect to automatic bank withdrawals, additional
investments may be made in any amount. To make additional investments by wire,
instruct your bank to wire the specified amount along with the account number
and registration to: United Missouri Bank, n.a. 101000695, United K.C. for
United Cash Management, Inc.
Shares of any other fund in the United Group (listed on back cover of this
Prospectus) on which a regular sales charge has been paid may be exchanged for
shares of another fund in the United Group without payment of an additional
sales charge. Shares of the Fund which were acquired by exchange for shares of
one or more other funds in the United Group whose shares are sold with a sales
charge may be exchanged for shares of any other fund in the United Group without
payment of an additional sales charge. In addition, subject to certain
conditions, automatic monthly exchanges of shares of the Fund may be made into
any other fund in the United Group. These exchange privileges may be eliminated
or modified at any time, upon notice in certain instances.
The offering price of a share is its net asset value next determined
after the effectiveness of the purchase. Shares are not issued until the Fund
has Federal funds available to it; Federal funds are monies of a member bank of
the Federal Reserve System held in deposit at a Federal Reserve Bank. There is
no sales charge. The net asset value will normally remain fixed at $1.00 per
share. See the SAI for a discussion of extraordinary circumstances which could
result in a change in this fixed share value. The net asset value per share is
based on a valuation of the Fund's investments at amortized cost. Other assets
are valued at their fair value. See the SAI for discussion of this valuation
method. The value of the Fund's investments is determined once each day as of
the close of the regular session of the New York Stock Exchange on each day the
Exchange is open.
Information concerning Flexible Withdrawal Service, Individual
Retirement Accounts, exchange privileges, Section 403(b) plans, Keogh, 401(k),
457 plans and other qualified employee benefit plans is contained in the SAI.
Applicable forms are available from Waddell & Reed, Inc.'s sales
representatives.
Redemption
You have the right to sell your shares back to the Fund (redeem) at any
time. Redemptions are at the net asset value next determined after receipt of
your request for redemption in good order at the Fund's address shown on the
front cover of this Prospectus. A complete purchase application form must have
been received by Waddell & Reed, Inc. before redemption requests can be honored.
Payment is made within seven days unless delayed because of emergency conditions
determined by the Securities and Exchange Commission, when the regular session
of the New York Stock Exchange is closed (other than on weekends and holidays),
or when trading on the Exchange is restricted. Payment is made in cash,
although under extraordinary conditions redemptions may be made in portfolio
securities.
If you recently purchased the shares by check, the payment of redemption
proceeds on these shares may be delayed. You may arrange for the bank upon
which the purchase check was drawn to provide to the Fund telephone or written
assurance, satisfactory to the Fund, that the check has cleared and been
honored. If no such assurance is given, payment of the redemption proceeds on
these shares will be delayed until the earlier of 10 days or when the Fund has
been able to verify that the check has cleared and been honored. Checks under
the check writing redemption procedure are subject to the same delay and may,
therefore, be dishonored if at the time the check is presented for payment the
Fund is unable to verify that the purchase check has cleared and been honored.
In order to avoid this delay investors may use wire payments, Federal Reserve
drafts or bank cashier's checks to pay for purchases.
Information concerning the establishment of automatic payments from an
account is available from sales representatives of Waddell & Reed, Inc.
Mandatory Redemption of Small Accounts
Except in the case of retirement plan accounts, if the total net asset
value of shares held in an account falls below $250, the Fund may redeem all
shares held in the account and pay the proceeds to the shareholder unless the
shareholder brings the net asset value of the account above $250 within 60 days
or within this 60-day period there is a transaction in the account (other than a
dividend payment) which affects the net asset value. See the SAI for more
information. The Fund has the right to charge a fee of $1.75 per month on all
accounts with a net asset value of less than $250, except for retirement plan
accounts and accounts with an increase or decrease in net asset value within 60
days of such determination.
Expedited Redemption Methods (Non-certificate Shares)
1) By Telephone, Telegram or Telex. The Shareholder Servicing Agent (the
"Agent") will accept instructions to redeem shares and make payment to a
predesignated domestic bank account by telephone, telegram or telex request.
Cash proceeds from the redemption of shares will be mailed (or wired, wherever
possible, upon request, if in an amount of $1,000 or more) to the bank account
specified in your application form. To redeem investments by this method, you
may telephone toll-free (see inside back cover for number). If instructions are
received by 3:00 P.M. Overland Park, Kansas time, proceeds will normally be
mailed or wired the next business day.
If you wish to use this procedure, you should so elect in your application
form and provide the required information concerning the domestic commercial
bank or broker account number.
2) By Check. The Fund's Custodian Bank (the Bank--see inside back cover
of this Prospectus) will, upon request, provide you with forms of checks drawn
on it if you own shares not represented by certificates. These checks may be
made payable by you to the order of anyone in any amount of not less than $250.
If you wish to avail yourself of this check writing redemption procedure, you
should notify the Agent or so indicate on your application form. There is no
additional charge for the maintenance of this special check writing privilege or
for the clearance of any checks. This privilege is not available for retirement
plan accounts. Contact the Shareholder Servicing Agent for further information.
When a check is presented to the Bank for payment, the Bank will request
that the Fund redeem a sufficient number of full and fractional shares in your
account to cover the amount of the check. You will continue to receive
dividends on those shares equaling the amount being redeemed until such time as
the check is presented to the Bank for payment. No "stop-payment" order can be
placed against these checks.
Regular Redemption Method (Certificate and Non-certificate Shares)
A written request must be sent to the address on the inside back cover of
this Prospectus, stating how many shares or the amount in dollars you wish to
redeem. The written request must be in good order which requires that if more
than one person owns the shares, each owner must sign the written request. If
you hold a certificate, it must be properly endorsed and sent to the Fund. The
Fund reserves the right to require a signature guarantee by a national bank, a
federally chartered savings and loan or a member firm of a national stock
exchange or other eligible guarantor if the request for redemption is made by a
corporation, partnership or fiduciary, or if the redemption request is made by,
or if redemption proceeds are payable to, someone other than the owner of
record.
Telephone Transactions
The Fund and its agents will not be liable for following instructions
communicated by telephone that they reasonably believe to be genuine. The Fund
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. If the Fund fails to do so, the Fund may be liable for
losses due to unauthorized or fraudulent instructions. Current procedures
relating to instructions communicated by telephone include tape recording
instructions, requiring personal identification and providing written
confirmations of transactions effected pursuant to such instructions.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1994
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
Certificates of Deposit
Domestic - 6.31%
NationsBank of N. C., Charlotte,
5.4%, 5-19-95 ......................... $10,000 $ 9,999,931
PNC Bank, N.A.:
3.75%, 8-2-94 ......................... 5,000 5,000,000
3.55%, 1-20-95 ........................ 5,000 4,996,468
Total ................................. 19,996,399
Yankee - 1.58%
Credit Suisse, New York,
4.03%, 2-17-95 ........................ 5,000 5,000,925
TOTAL BANK OBLIGATIONS - 7.89% $ 24,997,324
(Cost: $24,997,324)
CORPORATE OBLIGATIONS
Commercial Paper
Aerospace - 2.45%
United Technologies Corp.,
4.26%, 7-28-94 ........................ 7,800 7,775,079
Chemicals Major - 3.15%
Air Products and Chemicals, Inc.,
4.27%, 7-12-94 ........................ 10,000 9,986,953
Drugs and Hospital Supply - 0.47%
Ciba-Geigy Ltd.,
4.37%, 7-19-94 ........................ 1,500 1,496,722
Electronics - 1.58%
Intel Corporation,
4.3%, 7-1-94 .......................... 5,000 5,000,000
Financial - 7.88%
B.A.T. Capital Corp.,
4.25%, 7-5-94 ......................... 5,000 4,997,639
Deere (John) Credit Co.,
4.37%, 7-18-94 ........................ 10,000 9,979,364
PHH Corp.,
4.26%, 7-18-94 ........................ 10,000 9,979,883
Total ................................. 24,956,886
See Notes to Schedule of Investments on page 15.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1994
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
Food and Related - 0.14%
Sara Lee Corporation,
Master Note ........................... $ 440 $ 440,000
Leisure Time - 3.10%
Grand Metropolitan Investment Corp.,
4.8%, 11-15-94 ........................ 10,000 9,817,334
Machinery - 1.99%
Cooper Industries, Inc.,
4.25%, 7-11-94......................... 6,300 6,292,563
Public Utilities - Electric - 8.03%
Duke Power Co.,
4.25%, 7-5-94 ......................... 5,000 4,997,639
Pacific Gas and Electric Co.,
4.3%, 7-26-94 ......................... 10,000 9,970,139
Potomac Electric Power Co.,
4.35%, 7-11-94 ........................ 5,500 5,493,354
Southern California Edison Company,
4.33%, 7-6-94 ......................... 5,000 4,996,993
Total ................................. 25,458,125
Public Utilities - Gas - 3.15%
Questar Corp.:
4.28%, 7-22-94 ........................ 4,500 4,488,765
4.32%, 7-29-94 ........................ 5,500 5,481,520
Total ................................. 9,970,285
Tobacco - 3.15%
Philip Morris, Incorporated,
4.25%, 7-6-94 ......................... 10,000 9,994,098
Total Commercial Paper - 35.09% 111,188,045
Commercial Paper (backed by irrevocable
bank letter of credit)
Automotive - 3.16%
Hyundai Motor Finance Co. (Bank of
America NT & SA),
4.25%, 7-5-94 ......................... 10,000 9,995,278
See Notes to Schedule of Investments on page 15.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1994
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (backed by irrevocable
bank letter of credit) (Continued)
Computers and Office Equipment - 2.11%
Comdisco Inc. (Series BAB)
(Barclays Bank PLC),
4.27%, 7-5-94 ......................... $ 6,700 $ 6,696,821
Financial - 1.13%
Mission Funding Co. (Barclays
Bank PLC),
4.3%, 7-27-94 ......................... 3,100 3,090,373
Spiegel Funding Corp. (Dresdner
Bank A.G.),
4.27%, 7-6-94 ......................... 500 499,703
Total ................................. 3,590,076
Leisure Time - 3.16%
Paragon Communications (Credit
Lyonnais):
4.325%, 7-14-94 ....................... 6,008 5,998,617
4.325%, 7-19-94 ....................... 4,036 4,027,272
Total ................................. 10,025,889
Total Commercial Paper (backed by irrevocable
bank letter of credit) - 9.56% 30,308,064
Notes
Beverages - 3.15%
PepsiCo, Inc.,
4.37%, 7-6-94 ......................... 10,000 10,000,000
Financial - 14.67%
AT&T Capital Corp.,
3.48%, 9-23-94 ........................ 9,200 9,200,000
American Express Credit Corp.,
5.95%, 1-27-95 ........................ 8,000 8,063,569
Avco Financial Services Inc.,
4.46%, 7-6-94 ......................... 10,000 10,000,000
Merrill Lynch & Co., Inc.,
4.8%, 8-15-94 ......................... 10,000 10,000,000
Mobil Australia Finance Co.,
8.0%, 7-25-94 ......................... 9,200 9,226,215
Total ................................. 46,489,784
See Notes to Schedule of Investments on page 15.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1994
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Notes (Continued)
Public Utilities - Electric - 1.61%
Florida Power Corp.,
8.4%, 12-1-94 ......................... $ 5,000 $ 5,097,766
Total Notes - 19.43% 61,587,550
TOTAL CORPORATE OBLIGATIONS - 64.08% $203,083,659
(Cost: $203,083,659)
MUNICIPAL OBLIGATIONS
California - 2.90%
City of Anaheim, California, Certificates of
Participation (1993 Arena Financing Project),
Adjustable Rate Taxable Securities
(Credit Suisse),
4.375%, 7-5-94 ........................ 9,200 9,200,000
Georgia - 3.15%
Development Authority of Richmond
County (Georgia), Taxable
Industrial Revenue Bonds
(NutraSweet Project), Series
1990 (Union Bank of Switzerland),
5.71%, 6-2-95 ......................... 10,000 10,000,000
Missouri - 0.95%
Missouri Economic Development, Export
and Infrastructure Board, Taxable
Industrial Development Revenue Bonds
(Heilig-Meyers Company Project),
Series 1992 (AmSouth Bank N.A.),
4.55%, 7-6-94 ......................... 3,000 3,000,000
New York - 5.84%
Health Insurance Plan of Greater New York
(Morgan Guaranty Trust Company of New York),
4.5%, 7-6-94 (A) ...................... 18,500 18,500,000
TOTAL MUNICIPAL OBLIGATIONS - 12.84% $ 40,700,000
(Cost: $40,700,000)
See Notes to Schedule of Investments on page 15.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1994
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT OBLIGATIONS
Federal Home Loan Banks,
4.65%, 7-8-94 ......................... $14,000 $ 14,000,000
Federal Home Loan Mortgage Corporation,
4.70%, 9-7-94 ......................... 10,000 10,000,000
Federal National Mortgage Association,
4.65%, 9-20-94 ........................ 9,500 9,500,000
Student Loan Management Association,
4.83%, 7-6-94 ......................... 13,900 13,900,000
TOTAL UNITED STATES GOVERNMENT
OBLIGATIONS - 14.96% $ 47,400,000
(Cost: $47,400,000)
TOTAL INVESTMENT SECURITIES - 99.77% $316,180,983
(Cost: $316,180,983)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.23% 738,657
NET ASSETS - 100.00% $316,919,640
Notes to Schedule of Investments
(A) Security is subject to an irrevocable put option.
Cost of investments owned is the same as that used for Federal income tax
purposes.
See Note 1 to financial statements for security valuation and other significant
accounting policies concerning investments.
<PAGE>
UNITED CASH MANAGEMENT, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1994
Assets
Investment securities - at value (Note 1) ........ $316,180,983
Cash ............................................ 579,156
Receivables:
Interest ........................................ 2,037,706
Fund shares sold ................................ 1,282,629
Prepaid insurance premium ........................ 26,567
------------
Total assets .................................. 320,107,041
------------
Liabilities
Payable for Fund shares redeemed ................. 2,911,901
Accrued transfer agency and dividend disbursing .. 146,117
Dividends payable ................................ 113,385
Accrued accounting services fee .................. 4,167
Other ............................................ 11,831
------------
Total liabilities ............................. 3,187,401
------------
Total net assets ............................. $316,919,640
============
Net Assets
$0.01 par value capital stock, authorized --
5,000,000,000; shares outstanding -- 316,919,640
Capital stock ................................... $ 3,169,196
Additional paid-in capital ...................... 313,750,444
------------
Net assets applicable to outstanding
units of capital ............................. $316,919,640
============
Net asset value, redemption and offering price
per share ........................................ $1.00
=====
See notes to financial statements.
<PAGE>
UNITED CASH MANAGEMENT, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended JUNE 30, 1994
Investment Income
Interest ......................................... $11,658,916
-----------
Expenses (Note 2):
Transfer agency and dividend disbursing ......... 1,757,449
Investment management fee ....................... 1,372,977
Custodian fees .................................. 57,975
Accounting services fee ......................... 50,000
Audit fees ...................................... 20,500
Legal fees ...................................... 5,133
Other ........................................... 141,128
-----------
Total expenses ................................ 3,405,162
-----------
Net investment income ........................ 8,253,754
-----------
Net increase in net assets resulting
from operations ........................... $ 8,253,754
===========
See notes to financial statements.
<PAGE>
UNITED CASH MANAGEMENT, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year ended
June 30,
-------------------------
1994 1993
------------- ------------
Decrease in Net Assets
Operations:
Net investment income ..............$ 8,253,754 $ 10,085,867
------------ ------------
Net increase in net assets
resulting from operations ....... 8,253,754 10,085,867
------------ ------------
Dividends to shareholders
from net investment income* ........ (8,253,754) (10,085,867)
------------ ------------
Capital share transactions:
Proceeds from sale of shares
(421,971,836 and 420,866,621
shares, respectively) ............ 421,971,836 420,866,621
Proceeds from reinvestment of
dividends (8,072,255 and
9,862,502 shares, respectively) ... 8,072,255 9,862,502
Payments for shares redeemed
(463,748,538 and 528,231,957
shares, respectively) ............(463,748,538) (528,231,957)
------------ ------------
Net decrease in net assets
resulting from capital
share transactions .............. (33,704,447) (97,502,834)
------------ ------------
Total decrease .................. (33,704,447) (97,502,834)
Net Assets
Beginning of period ................. 350,624,087 448,126,921
------------ ------------
End of period .......................$316,919,640 $350,624,087
============ ============
Undistributed net investment
income ........................... $--- $---
==== ====
*See "Financial Highlights" on page 19.
See notes to financial statements.
<PAGE>
UNITED CASH MANAGEMENT, INC.
FINANCIAL HIGHLIGHTS
For a Share of Capital Stock Outstanding
Throughout Each Period:
<TABLE>
<CAPTION>
For the fiscal year ended June 30,
----------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------- ------- ------- ------- ------- ------- ------- ------ ------ -------
Net investment
income .. 0.0252 0.0251 0.0434 0.0665 0.0786 0.0805 0.0626 0.0555 0.0707 0.0895
Less dividends
declared . (0.0252)(0.0251) (0.0434)(0.0665) (0.0786)(0.0805) (0.0626)(0.0555) (0.0707)(0.0895)
------- ------- ------- ------- ------- ------- ------- ------ ------ -------
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= ======= ======= ======= ====== ====== =======
Total return 2.55% 2.57% 4.41% 6.89% 8.18% 8.33% 6.46% 5.68% 7.27% 9.35%
Net assets, end of
period (000
omitted) $316,920 $350,624 $448,127 $579,944 $563,893 $445,156 $298,162 $242,084 $283,937$323,358
Ratio of expenses
to average net
assets .. 1.04% 1.06% 0.99% 0.95% 0.95% 1.00% 1.07% 1.08% 1.07% 1.06%
Ratio of net investment
income to average net
assets .. 2.51% 2.56% 4.36% 6.65% 7.86% 8.14% 6.27% 5.54% 7.04% 8.97%
</TABLE>
See notes to financial statements.
<PAGE>
UNITED CASH MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1994
NOTE 1 -- Significant Accounting Policies
United Cash Management, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
A. Security valuation -- The Fund invests only in money market securities with
maturities or irrevocable put options within one year. The Fund uses the
amortized cost method of security valuation which is accomplished by
valuing a security at its cost and thereafter assuming a constant
amortization rate to maturity of any discount or premium.
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, if any, are calculated on
the identified cost basis. Interest income is recorded on the accrual
basis.
C. Federal income taxes -- It is the Fund's policy to distribute all of its
taxable income and capital gains to its shareholders and otherwise qualify
as a regulated investment company under the Internal Revenue Code.
Accordingly, no provision has been made for Federal income taxes.
D. Dividends to shareholders -- All of the Fund's net income is declared and
recorded by the Fund as dividends on each day to shareholders of record at
the time of the previous determination of net asset value. Dividends are
declared from the total of net investment income, plus or minus realized
gains or losses on portfolio securities. Since the Fund does not expect to
realize any long-term capital gains, it does not expect to pay any capital
gains distributions.
NOTE 2 -- Investment Management and Payments to Affiliated Persons
The Fund pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business. The fee
consists of a "Group" fee computed each day on the combined net asset values of
all of the funds in the United Group of mutual funds (approximately $10.5
billion of combined net assets at June 30, 1994) at annual rates of .51% of the
first $750 million of combined net assets, .49% on that amount between $750
million and $1.5 billion, .47% between $1.5 billion and $2.25 billion, .45%
between $2.25 billion and $3 billion, .43% between $3 billion and $3.75 billion,
.40% between $3.75 billion and $7.5 billion, .38% between $7.5 billion and $12
billion, and .36% of that amount over $12 billion. The Fund accrues and pays
this fee daily.
Pursuant to assignment of the Investment Management Agreement between the
Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly-owned subsidiary of W&R, serves as the Fund's
investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed Services
Company ("WARSCO"), a wholly-owned subsidiary of W&R. Under the agreement,
WARSCO acts as the agent in providing accounting services and assistance to the
Fund and pricing daily the value of shares of the Fund. For these services, the
Fund pays WARSCO a monthly fee of one-twelfth of the annual fee shown in the
following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 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
At present, the Fund operates under state expense requirements which limit
the amount of aggregate annual expenses, adjusted for certain excess expenses,
that the Fund may incur during its fiscal year. The Manager will reimburse the
Fund for any expenses in excess of the limitation. No such reimbursement is
required for the period ended June 30, 1994.
The Fund also pays WARSCO a monthly per account charge of $1.75 for each
shareholder account which was in existence at any time during the prior month
and $0.75 for each shareholder check it processed. The Fund also reimburses W&R
and WARSCO for certain out-of-pocket costs.
The Fund paid Directors' fees of $12,587.
W&R is an indirect subsidiary of Torchmark Corporation, a holding company,
and United Investors Management Company, a holding company, and a direct
subsidiary of Waddell & Reed Financial Services, Inc., a holding company.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
United Cash Management, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of United Cash Management, Inc. (the
"Fund") at June 30, 1994, the results of its operations for the year then ended
and the changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at June
30, 1994 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
Kansas City, Missouri
July 29, 1994
<PAGE>
UNITED CASH MANAGEMENT, INC.
Custodian Underwriter
United Missouri Bank, n.a. Waddell & Reed, Inc.
Kansas City, Missouri 6300 Lamar Avenue
P. O. Box 29217
Legal Counsel Shawnee Mission, Kansas 66201-9217
Kirkpatrick & Lockhart (913) 236-2000
1800 M Street, N. W.
Washington, D. C. Shareholder Servicing Agent
Waddell & Reed Services Company
Independent Accountants 6300 Lamar Avenue
Price Waterhouse LLP P. O. Box 29217
Kansas City, Missouri Shawnee Mission, Kansas 66201-9217
Toll-Free - (800)366-5465
Investment Manager Local - 236-1303
Waddell & Reed Investment For Yield Information Only
Management Company Toll-Free - (800)366-4953
6300 Lamar Avenue Local - 236-1307
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217Accounting Services Agent
(913) 236-2000 Waddell & Reed Services Company
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
(913) 236-2000
UNITED CASH MANAGEMENT, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
PROSPECTUS
September 30, 1994
TABLE OF CONTENTS
Summary of Expenses .. 2
Financial Highlights 3
What is United Cash
Management, Inc.? . 4
Performance Information 4
Goal of the Fund ..... 4
Management and Services 6
Dividends, Distributions
and Taxes ........... 7
Purchase of Shares ... 7
Redemption ........... 8
Financial Statements.. 10
The United Group of Mutual Funds
United Funds, Inc.
United Bond Fund
United Income Fund
United Accumulative Fund
United Science and Technology Fund
United International Growth Fund, Inc.
United Continental Income Fund, Inc.
United Vanguard Fund, Inc.
United Retirement Shares, Inc.
United Municipal Bond Fund, Inc.
United High Income Fund, Inc.
United Cash Management, Inc.
United Government Securities Fund, Inc.
United New Concepts Fund, Inc.
United Gold & Government Fund, Inc.
United Municipal High Income Fund, Inc.
United High Income Fund II, Inc.
NUP2010(9-94)
printed on recycled paper
<PAGE>
UNITED CASH MANAGEMENT, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
(913) 236-2000
September 30, 1994
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information (the "SAI") is not a
prospectus. Investors should read this SAI in conjunction with the prospectus
(the "Prospectus") of United Cash Management, Inc. (the "Fund") dated September
30, 1994, which may be obtained from the Fund or its Underwriter, Waddell &
Reed, Inc., at the address or telephone number shown above.
TABLE OF CONTENTS
Performance Information............................. 2
Investment Objective and Policies................... 3
Investment Management and Other Services............ 11
Purchase, Redemption and Pricing of Shares.......... 15
Directors and Officers.............................. 23
Payments to Shareholders............................ 27
Taxes ..............................................
Portfolio Transactions and Brokerage................ 28
Other Information................................... 30
Appendix A.......................................... 31
<PAGE>
PERFORMANCE INFORMATION
Waddell & Reed, Inc., the Fund's underwriter, or the Fund may from time to
time publish the Fund's yield, effective yield and performance rankings in
advertisements and sales materials. Yield information is also available by
calling the Shareholder Servicing Agent at the telephone number shown on the
inside back cover of the Prospectus.
There are two methods by which the Fund's yield for a specified time is
calculated. The first method, which results in an amount referred to as the
"current yield," assumes an account containing exactly one share at the
beginning of the period. The net asset value of this share will be $1.00 except
under extraordinary circumstances. The net change in the value of the account
during the period is then determined by subtracting this beginning value from
the value of the account at the end of the period which will include all
dividends accrued; however, capital changes are excluded from the calculation,
i.e., realized gains and losses from the sale of securities and unrealized
appreciation and depreciation. However, so that the change will not reflect the
capital changes to be excluded, the dividends used in the yield computation may
not be the same as the dividends actually declared, as certain realized gains
and losses and, under unusual circumstances, unrealized gains and losses (see
"Purchase, Redemption and Pricing of Shares"), will be taken into account in the
calculation of dividends actually declared. Instead, the dividends used in the
yield calculation will be those which would have been declared if the capital
changes had not affected the dividends.
This net change in the account value is then divided by the value of the
account at the beginning of the period (i.e., normally $1.00 as discussed above)
and the resulting figure (referred to as the "base period return") is then
annualized by multiplying it by 365 and dividing it by the number of days in the
period with the resulting current yield figure carried to at least the nearest
hundredth of one percent.
The second method results in a figure referred to as the "effective yield."
This represents an annualization of the current yield with dividends reinvested
daily. Effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7, and subtracting
1 from the result and rounding the result to the nearest hundredth of one
percent according to the following formula:
365/7
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)] - 1
The Fund's yield as calculated above for the seven days ended June 30,
1994, the date of the most recent balance sheet included in the Prospectus, was
4.11% and its effective yield calculated for the same period was 4.19%.
Changes in yields (calculated on either basis) primarily reflect different
interest rates received by the Fund as its portfolio securities change. These
different rates reflect changes in current interest rates on money market
instruments. Both yields are affected by portfolio quality, portfolio maturity,
type of instruments held and operating expense ratio.
Waddell & Reed, Inc. or the Fund also may from time to time publish in
advertisements or sales material performance rankings as published by recognized
independent mutual fund statistical services such as Lipper Analytical Services,
Inc., or by publications of general interest such as Forbes, Money, The Wall
Street Journal, Business Week, Barron's, Fortune or Morningstar Mutual Fund
Values. The Fund may also compare its performance to that of other selected
mutual funds or selected recognized market indicators such as the Standard &
Poor's 500 Stock Index and the Dow Jones Industrial Average. Performance
information may be quoted numerically or presented in a table, graph or other
illustration.
All performance information which the Fund advertises or includes in sales
material is historical in nature and is not intended to represent or guarantee
future results. The value of Fund shares when redeemed may be more or less than
their original cost.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are described in the
Prospectus, which refers to the following investment methods and practices.
The Fund may invest only in the money market obligations and instruments
listed below. In addition, as a money market fund and in order for the Fund to
use the "amortized cost method" of valuing its portfolio securities, the Fund
must comply with Rule 2a-7 under the Investment Company Act of 1940 (the
"Rule"). Under the Rule, investments are limited to those that are denominated
in U.S. dollars and that are rated in one of the two highest rating categories
by the requisite nationally recognized statistical rating organizations(s)
("NRSRO(s)") or are comparable unrated securities. See the Appendix to this SAI
for a description of some of these ratings. In addition, the Rule limits
investments in securities of any one issuer (except U.S. Government Securities)
to no more than 5% of the Fund's assets. Investments in securities rated in the
second highest rating category by the requisite NRSRO(s) or comparable unrated
securities are limited to no more than 5% of the Fund's assets, with investment
in such securities of any one issuer (except U.S. Government Securities) being
limited to the greater of 1% of the Fund's assets or $1,000,000. While the Rule
allows the Fund to invest in securities with a remaining maturity of not more
than thirteen months, as a matter of fundamental policy, the Fund may only
invest in securities with a remaining maturity of not more than one year. See
discussion under "Determination of Offering Price."
(1) U.S. Government Obligations: Obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities. These include securities
issued by the U.S. Government, which in turn include Treasury Bills (which
mature within one year of the date they are issued) and Treasury Notes and Bonds
(which are issued with longer maturities). All Treasury securities are backed
by the full faith and credit of the United States.
U.S. Government agencies and instrumentalities that issue or guarantee
securities include, but are not limited to, the Federal Housing Administration,
Federal National Mortgage Association, Farmers Home Administration, Export-
Import Bank of the United States, Small Business Administration, Government
National Mortgage Association, General Services Administration, Central Bank for
Cooperatives, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation,
Farm Credit Banks, Maritime Administration, the Tennessee Valley Authority, the
Resolution Funding Corporation and the Student Loan Marketing Association.
Securities issued or guaranteed by U.S. Government agencies and
instrumentalities are not always supported by the full faith and credit of the
United States. Some, such as securities issued by the Federal Home Loan Banks,
are backed by the right of the agency or instrumentality to borrow from the
Treasury. Others, such as securities issued by the Federal National Mortgage
Association, are supported only by the credit of the instrumentality and not by
the Treasury. If the securities are not backed by the full faith and credit of
the United States, the owner of the securities must look principally to the
agency issuing the obligation for repayment and may not be able to assert a
claim against the United States in the event that the agency or instrumentality
does not meet its commitment. The Fund will invest in securities of agencies
and instrumentalities only if the Manager is satisfied that the credit risk
involved is minimal.
(2) Bank Obligations and Instruments Secured Thereby: Subject to the
limitations described above, time deposits, certificates of deposit, bankers'
acceptances and other bank obligations if they are obligations of a bank subject
to regulation by the U.S. Government (including obligations issued by foreign
branches of these banks) or obligations issued by a foreign bank having total
assets equal to at least U.S. $500,000,000, and instruments secured by any such
obligation; in this SAI, a "bank" includes commercial banks and savings and loan
associations. Time deposits are monies kept on deposit with U.S. banks or other
U.S. financial institutions for a stated period of time at a fixed rate of
interest. At present, bank time deposits are not considered by the Board of
Directors or the Manager to be readily marketable. There may be penalties for
the early withdrawal of such time deposits, in which case, the yield of these
investments will be reduced.
(3) Commercial Paper Obligations Including Variable Amount Master
Demand Notes: Commercial paper rated A-1 or A-2 by Standard & Poor's Ratings
Group ("S&P") or Prime-1 or Prime-2 by Moody's Investors Service, Inc. ("MIS")
or, if not rated, issued by a corporation in whose debt obligations the Fund may
invest (see 4 below). S&P and MIS are among the NRSRO's under the Rule. See
Appendix A for a description of some of these ratings. A variable amount master
demand note represents a borrowing arrangement under a letter agreement between
a commercial paper issuer and an institutional lender.
(4) Corporate Debt Obligations: Corporate debt obligations if they are
rated at least A by S&P or MIS. See Appendix A for a description of some of
these debt ratings.
(5) Canadian Government Obligations: Obligations of, or guaranteed by,
the Government of Canada, a Province of Canada or any agency, instrumentality or
political subdivision of that Government or any Province; however, the Fund may
not invest in Canadian Government obligations if more than 10% of the value of
its total assets would then be so invested, subject to the diversification
requirements of the Rule. The Fund may not invest in Canadian Government
obligations if they are denominated in Canadian dollars. See "Determination of
Offering Price."
(6) Certain Other Obligations: Obligations other than those listed in 1
through 5 above only if such other obligation is guaranteed as to principal and
interest by either a bank in whose obligations the Fund may invest (see 2 above)
or a corporation in whose commercial paper the Fund may invest (see 3 above) and
otherwise permissible under the Rule.
The value of the obligations and instruments in which the Fund invests will
fluctuate depending in large part on changes in prevailing interest rates. If
these rates go up after the Fund buys an obligation or instrument, its value may
go down; if these rates go down, its value may go up. Changes in value and
yield based on changes in prevailing interest rates may have different effects
on short-term debt obligations than on long-term obligations. Long-term
obligations (which often have higher yields) may fluctuate in value more than
short-term ones. Changes in interest rates will be more quickly reflected in
the yield of a portfolio of short-term obligations than in the yield of a
portfolio of long-term obligations.
Lending Securities
The Fund may lend its securities. If the Fund does this, the borrower pays
the Fund an amount equal to the dividends or interest on the securities that the
Fund would have received if it had not loaned the securities. The Fund may not
lend securities representing more than one third of its total asset value.
Any securities loans which the Fund makes must be collateralized in
accordance with applicable regulatory requirements (the "Guidelines"); under the
present Guidelines, the collateral must consist of cash and/or U.S. Government
Obligations. If the Fund lends its securities, the borrower must put up
collateral equal to the then market value to secure the loan. If the market
value of the loaned securities exceeds the value of the collateral, the borrower
must add more collateral so that it at least equals the market value of the
securities loaned. If the market value of the securities decreases, the
borrower is entitled to return of the excess collateral. This policy of 100%
collateralization and the limitation on the amount of securities which the Fund
may lend are fundamental policies which can be changed only by shareholder vote.
There are two methods of receiving compensation for making loans. The
first is to receive a negotiated loan fee from the borrower. This method is
available for both types of collateral. The second method is to receive
interest on the investment of the cash collateral or to receive interest on the
U.S. Government Obligations used as collateral. Part of the interest received
in either case may be shared with the borrower.
The Manager, subject to the direction and control of the Board of
Directors, has adopted additional rules concerning lending of securities which
may be changed without shareholder approval. At present, under these rules, the
Fund will lend securities only to creditworthy broker-dealers and financial
institutions. The Fund will make loans only under rules of the New York Stock
Exchange, which presently require the borrower to give the securities back to
the Fund within five business days after the Fund gives notice to do so. The
Fund may pay reasonable finder's, administrative and custodian fees in
connection with loans of securities.
Some, but not all, of the Fund's rules are necessary to meet requirements
of certain laws relating to securities loans. These rules will not be changed
unless the change is permitted under these requirements. These requirements do
not cover the present rules which may be changed without shareholder vote as to
how the Fund may invest cash collateral.
There may be risks of delay in receiving additional collateral from the
borrower if the market value of the securities loaned goes up, risks of delay in
recovering the securities loaned or even loss of rights in the collateral should
the borrower of the securities fail financially. The investments made with cash
collateral received are also subject to market value fluctuations.
Repurchase Agreements
The Fund may purchase securities subject to repurchase agreements. A
repurchase transaction occurs when, at the time the Fund purchases securities,
it also agrees to resell them to the vendor (normally a commercial bank or
broker-dealer), and must deliver those securities and/or securities substituted
for them under the repurchase agreement to the vendor on an agreed-upon date in
the future. In this section, such securities, including any securities so
substituted, are referred to as the "Resold Securities." The resale price is in
excess of the purchase price in that it reflects an agreed-upon market interest
rate effective for the period of time during which the Fund's money is invested
in the Resold Securities. The majority of the repurchase transactions in which
the Fund would engage run from day to day, and the delivery pursuant to the
resale typically will occur within one to five days of the purchase. The Fund's
risk is limited to the ability of the vendor to pay the agreed-upon sum upon the
delivery date. In the event of bankruptcy or other default by the vendor, there
may be possible delays or expenses in liquidating the Resold Securities, decline
in their value or loss of interest. Upon default, the Resold Securities
constitute collateral security for the repurchase obligation. The return on
such collateral may be more or less than that from the repurchase agreement.
Repurchase agreements will be structured so as to fully collateralize the loans,
i.e., the value of the Resold Securities, which will be held by the Fund's
Custodian bank or by a third party that qualifies as a custodian under section
17(f)(5) of the Investment Company Act of 1940, is and, during the entire term
of the agreement, remains at least equal to the value of the loan, including the
accrued interest earned thereon. The Fund's repurchase agreements are entered
into only with those entities approved on the basis of criteria established by
the Board of Directors.
Restricted Securities
The Fund may purchase commercial paper that is issued in reliance on the
so-called "private placement" exemption from registration which is afforded by
Section 4(2) of the Securities Act of 1933 ("Section 4(2) paper"). Section 4(2)
paper is subject to legal or contractual restrictions on resale under the
federal securities laws. It is generally sold to institutional investors such
as the Fund who agree that they are purchasing the paper for investment and not
with a view to public distribution. Any resale by the purchaser must be in an
exempt transaction. Section 4(2) paper is normally resold to other
institutional investors through or with the assistance of investment dealers who
make a market in the Section 4(2) paper, thus providing liquidity. Any such
paper purchased must meet the credit, maturity and other criteria that apply to
other securities in which the Fund invests. Although the Manager is of the
opinion that this type of paper is nearly as liquid as other commercial paper in
which the Fund invests, there is no assurance that a market will exist for
Section 4(2) paper which the Fund may own. The Manager will determine the
liquidity of Section 4(2) paper in accordance with procedures approved by the
Board of Directors.
These restricted securities will be valued in the same manner that other
commercial paper held by the Fund is valued. See "Portfolio Valuation." The
Fund does not anticipate adjusting for any diminution in value of these
securities on account of their restrictive feature because of the existence of
an active market which creates liquidity and because of the availability of
actual market quotations for these restricted securities. In the event that
there should cease to be an active market for these securities or actual market
quotations become unavailable, they will be valued at fair value as determined
in good faith by the Board of Directors.
Illiquid Investments
The Fund has an operating policy which may be changed without
shareholder approval, which provides that due to their possible limited
liquidity, the Fund may not make certain investments if as a result of such
investment more than 10% of its net assets would consist of such investments.
The investments included in this 10% limit are (i) repurchase agreements not
terminable within seven days; (ii) fixed time deposits subject to withdrawal
penalties other than overnight deposits; (iii) securities for which market
quotations are not readily available; and (iv) commercial paper which is exempt
from registration under Section 4(2) of the Securities Act of 1933 and which is
determined by the Manager to be illiquid. However, this 10% limit does not
include any obligations payable at principal amount plus accrued interest on
demand or within seven days after demand.
Foreign Obligations and Instruments
Subject to the diversification requirements applicable to the Fund under
the Rule, the Fund may invest up to 10% of its assets in Canadian Government
obligations and may also invest in foreign bank obligations and obligations of
foreign branches of domestic banks. Each of these obligations must be payable
in U.S. dollars. Although there is no fundamental policy limiting the Fund's
investment in foreign bank obligations and obligations of foreign branches of
domestic banks, it does not intend to invest more than 25% of its total assets
in a combination of these obligations.
Purchasing these securities presents special considerations: reduction of
income by foreign taxes; changes in currency rates and controls (e.g., currency
blockage); currency exchange transaction charges; lack of public information;
lack of uniform accounting, auditing and financial reporting standards; less
volume on foreign exchanges; less liquidity; greater volatility; less regulation
of issuers, exchanges and brokers; greater difficulties in commencing lawsuits;
possibilities in some countries of expropriation, confiscatory taxation, social
instability or adverse diplomatic developments; and differences (which may be
favorable or unfavorable) between the U.S. economy and foreign economies.
Uncertificated foreign securities will be purchased only if permissible under
the custodianship provisions of the Investment Company Act of 1940.
Investment Restrictions
Certain of the Fund's investment restrictions are described in the
Prospectus. The following are fundamental policies and together with certain
restrictions described in the Prospectus cannot be changed without shareholder
approval. Under these restrictions, the Fund may not:
(i) Buy commodities or commodity contracts, voting securities, any mineral
related programs or leases, or oil or gas leases, any shares of other
investment companies or any warrants, puts, calls or combinations
thereof;
(ii) Buy real estate nor any nonliquid interest in real estate investment
trusts; however, the Fund may buy obligations or instruments which it
may otherwise buy even though the issuer invests in real estate or
interests in real estate;
(iii) Buy the securities of any company if it would then own more than 10% of
the total value of its outstanding securities; or buy the securities
(not including U.S. Government Obligations) of any company if more than
5% of the Fund's total assets (valued at market value) would then be
invested in that company; or buy the securities of companies in any one
industry if more than 25% of the Fund's total assets would then be in
companies in that industry; U.S. Government Obligations and bank
obligations and instruments are not included in this limit (but see
"Foreign Obligations and Instruments");
(iv) Make loans other than certain limited types of loans described herein;
the Fund can buy debt securities which it is permitted to purchase; it
can also lend its portfolio securities (see "Lending Securities" above)
or, except as provided above, enter into repurchase agreements (see
"Repurchase Agreements" above);
(v) Invest for the purpose of exercising control or management of other
companies;
(vi) Buy or continue to hold securities if the Fund's Directors or officers
or certain others own a certain percentage of the same securities; if
any one of these individuals owns more than .5 of 1% of the shares of a
company and if the individuals who own that much or more own 5% of that
company's shares, the Fund cannot buy that company's shares or continue
to own them;
(vii) Participate on a joint, or a joint and several, basis in any trading
account in any securities;
(viii) Sell securities short or buy securities on margin; also, the Fund may
not engage in arbitrage transactions;
(ix) Engage in the underwriting of securities or invest in restricted
securities, which are securities which are restricted as to disposition
under the Federal securities laws, except commercial paper which is
exempt from registration under Section 4(2) of the Securities Act of
1933; or
(x) Borrow to increase income, but only to meet redemptions so it will not
have to sell portfolio securities for this purpose. The Fund may borrow
money from banks as a temporary measure or for extraordinary or
emergency purposes but only up to 10% of its total assets. It can
mortgage or pledge its assets in connection with such borrowing but only
up to the lesser of the amounts borrowed or 5% of the value of the
Fund's assets. Interest on borrowing would reduce the Fund's income.
Portfolio Turnover
In general, the Fund purchases investments with the expectation of holding
them to maturity. However, the Fund may engage in short-term trading to attempt
to take advantage of short-term market variations. The Fund may also sell
securities prior to maturity to meet redemptions or as a result of a revised
management evaluation of the issuer. The Fund has high portfolio turnover due
to the short maturities of its investments, but this should not affect its net
asset value or income, as brokerage commissions are not usually paid on the
investments which the Fund makes. In the usual calculation of portfolio
turnover, securities of the type in which the Fund invests are excluded.
Consequently, the high turnover which it will have is not comparable to the
turnover rates of most investment companies.
Portfolio Valuation
Under Rule 2a-7 of the Investment Company Act of 1940 (the "Rule"), the
Fund is permitted to use the "amortized cost method" for valuing its portfolio
securities provided it meets certain conditions. See "Purchase, Redemption and
Pricing of Shares." The conditions imposed under the Rule relating to the
Fund's portfolio investments are that (i) the Fund must not maintain a dollar
weighted average portfolio maturity in excess of 90 days; (ii) it must limit its
investments, including repurchase agreements, to those instruments which are
denominated in U.S. dollars and which the Manager, pursuant to guidelines
established by the Fund's Board of Directors, determines present minimal credit
risks and which are rated in one of the two highest rating categories by the
requisite nationally recognized statistical rating organization(s) ("NRSRO(s)"),
as defined in the Rule or, in the case of any instrument that is not rated, of
comparable quality as determined by the Fund's Board of Directors; (iii) it must
limit its investments in the securities of any one issuer (except U.S.
Government Securities) to no more than 5% of its assets; (iv) it must limit its
investments in securities rated in the second highest rating category by the
requisite NRSRO(s) or comparable unrated securities to no more than 5% of its
assets; (v) it must limit its investments in the securities of any one issuer
which are rated in the second highest rating category by the requisite NRSRO(s)
or comparable unrated securities to the greater of 1% of its assets or
$1,000,000; and (vi) it must limit its investments to securities with a
remaining maturity of not more than thirteen months; however, the Fund is
required as a matter of fundamental policy to limit its investments to
securities with a remaining maturity of not more than one year. The Rule sets
forth the method by which the maturity of a security is determined.
INVESTMENT MANAGEMENT AND OTHER SERVICES
The Management Agreement
The Fund has an Investment Management Agreement (the "Management
Agreement") with Waddell & Reed, Inc. On January 8, 1992, subject to the
authority of the Fund's Board of Directors, Waddell & Reed, Inc. assigned the
Management Agreement and all related investment management duties (and related
professional staff) to Waddell & Reed Investment Management Company, a wholly-
owned subsidiary of Waddell & Reed, Inc. Under the Management Agreement, the
Manager is employed to supervise the investments of the Fund and provide
investment advice to the Fund. The address of the Manager and Waddell & Reed,
Inc. is 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217.
Waddell & Reed, Inc. is the Fund's underwriter.
The Management Agreement permits Waddell & Reed, Inc. or an affiliate of
Waddell & Reed, Inc. to enter into a separate agreement for transfer agency
services ("Shareholder Servicing Agreement") and a separate agreement for
accounting services ("Accounting Services Agreement") with the Fund. The
Management Agreement contains detailed provisions as to the matters to be
considered by the Fund's Directors prior to approving any Shareholder Servicing
Agreement or Accounting Services Agreement.
Torchmark Corporation and United Investors Management Company
The Manager is a wholly-owned subsidiary of Waddell & Reed, Inc.
Waddell & Reed, Inc. is a wholly-owned subsidiary of Waddell & Reed Financial
Services, Inc., a holding company. Waddell & Reed Financial Services, Inc. is a
wholly-owned subsidiary of United Investors Management Company. United
Investors Management Company is a wholly-owned subsidiary of Torchmark
Corporation. Torchmark Corporation is a publicly held company. The address of
Torchmark Corporation and United Investors Management Company is 2001 Third
Avenue South, Birmingham, Alabama 35233.
Waddell & Reed, Inc. and its predecessors served as investment manager to
each of the registered investment companies in the United Group of Mutual Funds
since 1940 or the company's inception date, whichever was later, and to
TMK/United Funds, Inc. since that fund's inception, until January 8, 1992 when
it assigned its duties as investment manager for these funds (and the related
professional staff) to the Manager. The Manager has also served as investment
manager for Waddell & Reed Funds, Inc. since its inception in September 1992 and
Torchmark Government Securities Fund, Inc. and Torchmark Insured Tax-Free Fund,
Inc. since they each commenced operations in February 1993. Waddell & Reed,
Inc. serves as principal underwriter for the investment companies in the United
Group of Mutual Funds, TMK/United Funds, Inc. and Waddell & Reed Funds, Inc.
Shareholder Services
Under the Shareholder Servicing Agreement entered into between Waddell &
Reed Services Company (the "Agent"), a subsidiary of Waddell & Reed, Inc., and
the Fund, the Agent performs shareholder servicing functions, including the
maintenance of shareholder accounts, the issuance, transfer and redemption of
shares, distribution of dividends and payment of redemptions, the furnishing of
related information to the Fund and handling of shareholder inquiries. A new
Shareholder Servicing Agreement, or amendments to the existing one, may be
approved by the Fund's Directors without shareholder approval.
Accounting Services
Under the Accounting Services Agreement entered into between the Fund and
the Agent, the Agent provides the Fund with bookkeeping and accounting services
and assistance, including maintenance of the Fund's records, pricing of the
Fund's shares, and preparation of prospectuses for existing shareholders, proxy
statements and certain reports. A new Accounting Services Agreement, or
amendments to an existing one, may be approved by the Fund's Directors without
shareholder approval.
Payments by the Fund for Management, Accounting and Shareholder Services
Under the Management Agreement, for the Manager's management services,
the Fund pays the Manager a fee as described in the Prospectus.
Prior to the above-described assignment from Waddell & Reed, Inc. to
Waddell & Reed Investment Management Company, all fees were paid to Waddell &
Reed, Inc. The management fees paid to Waddell & Reed, Inc. or the Manager, as
the case may be, during the fiscal years ended June 30, 1994, 1993 and 1992 were
$1,372,977, $1,668,435 and $2,227,676, respectively.
For purposes of calculating the daily fee the Fund does not include money
owed to it by Waddell & Reed, Inc. for shares which it has sold but not yet paid
to the Fund. The Fund accrues and pays this fee daily.
Under the Shareholder Servicing Agreement, the Fund pays the Agent a
monthly fee of $1.75 for each shareholder account which was in existence at any
time during the prior month, and $.75 for each shareholder check it processes.
It also pays certain out-of-pocket expenses of the Agent, including long
distance telephone communications costs; microfilm and storage costs for certain
documents; forms, printing and mailing costs; and costs of legal and special
services not provided by Waddell & Reed, Inc., the Manager, or the Agent.
Under the Accounting Services Agreement, the Fund pays the Agent a fee
for accounting services as described in the Prospectus. Fees paid to the Agent
for the fiscal years ended June 30, 1994, 1993 and 1992 were $50,000, $60,000
and $62,500, respectively.
The state of California imposes limits on the amount of certain expenses
the Fund can pay. If these expense amounts are exceeded, the Manager is
required to reduce the amount of such expenses to the extent they exceed the
expense limitation.
The State of California has granted the Fund a variance from the expense
limitation to allow the Fund to exclude from its aggregate annual expenses
transfer agency fees, professional fees and report costs to the extent that the
Fund's expense ratio for each of these expenses exceeds what its expense ratio
for such expenses would be if its average account size was equal to or greater
than the industry average account size for money market funds as reported by the
Investment Company Institute. Other expenses excluded from aggregate annual
expenses include interest, taxes, brokerage commissions and extraordinary
expenses, such as litigation. The Fund will notify shareholders of any change
in the variance.
Since the Fund pays a management fee for investment supervision and an
accounting services fee for accounting services as discussed above, the Manager
and the Agent, respectively, pay all of their own expenses in providing these
services. Amounts paid by the Fund under the Shareholder Servicing Agreement
are described above. Waddell & Reed, Inc. and affiliates pay the Fund's
Directors and officers who are affiliated with the Manager and its affiliates.
The Fund pays the fees and expenses of the Fund's other Directors.
Waddell & Reed, Inc., under an agreement separate from the Management
Agreement, Shareholder Servicing Agreement and Accounting Services Agreement,
acts as the Fund's underwriter, i.e., sells its shares on a continuous basis.
Waddell & Reed, Inc. is not required to sell any particular number of shares,
and thus sells shares only for purchase orders received. Under this agreement,
Waddell & Reed, Inc. pays the costs of sales literature, including the costs of
shareholder reports used as sales literature, and the costs of printing the
prospectus furnished to it by the Fund.
These and other sales expenses of Waddell & Reed, Inc. are not covered by
any sales charge on Fund shares. On those funds in the United Group whose
shares are sold with sales charges and in the sale of certain unit investment
trusts, a major portion of the sales charge is paid to Waddell & Reed, Inc.'s
sales representatives and managers. Waddell & Reed, Inc. may compensate its
sales representatives as to purchases for which there is no sales charge.
The Fund pays all of its other expenses. These include the costs of
materials sent to shareholders, audit and outside legal fees, taxes, brokerage
commissions, interest, insurance premiums, custodian fees, fees payable by the
Fund under Federal or other securities laws and to the Investment Company
Institute and nonrecurring and extraordinary expenses, including litigation and
indemnification relating to litigation.
Custodial and Auditing Services
The Fund's Custodian is United Missouri Bank, n.a., Kansas City, Missouri.
In general, the Custodian is responsible for holding the Fund's cash and
securities. The Fund may place and maintain its foreign securities and cash
with a foreign custodian in accordance with Rule 17f-5 of the Investment Company
Act of 1940. Price Waterhouse, Kansas City, Missouri, the Fund's independent
accountants, audits the Fund's financial statements.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Determination of Offering Price
The value of each of the Fund's shares is their net asset value. The
Fund is designed so that the value of each of the Fund's shares (the net asset
value per share) will remain fixed at $1.00 per share except under extraordinary
circumstances, although this may not always be possible. This net asset value
per share is what you pay for shares and what you receive when you redeem
them.
The net asset value per share is computed once each day that the New
York Stock Exchange is open for trading as of the close of the regular session
of that Exchange (ordinarily, 4:00 P.M. Eastern time). That Exchange annually
announces the days on which it will not be open for trading. The most recent
announcement indicates that the New York Stock Exchange will not be open on the
following days: New Years Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. However, it is
possible that the Exchange may close on other days.
The Fund operates under Rule 2a-7 of the Investment Company Act of 1940
which permits it to value its portfolio on the basis of amortized cost. The
amortized cost method of valuation is accomplished by valuing a security at its
cost and thereafter assuming a constant amortization rate to maturity of any
discount or premium, and does not reflect the impact of fluctuating interest
rates on the market value of the security. This method does not take into
account unrealized gains or losses.
While the amortized cost method provides some degree of certainty in
valuation, there may be periods during which value, as determined by amortized
cost, is higher or lower than the price the Fund would receive if it sold the
instrument. During periods of declining interest rates, the daily yield on the
Fund's shares may tend to be higher than a like computation made by a fund with
identical investments utilizing a method of valuation based upon market prices
and estimates of market prices for all of its portfolio instruments and changing
its dividends based on these changing prices. Thus, if the use of amortized
cost by the Fund resulted in a lower aggregate portfolio value on a particular
day, a prospective investor in the Fund's shares would be able to obtain a
somewhat higher yield than would result from investment in such a fund, and
existing investors in the Fund's shares would receive less investment income.
The converse would apply in a period of rising interest rates.
Under Rule 2a-7, the Fund's Board of Directors must establish procedures
designed to stabilize, to the extent reasonably possible, the Fund's price per
share as computed for the purpose of sales and redemptions at $1.00. Such
procedures must include review of the Fund's portfolio holdings by the Board at
such intervals as it may deem appropriate and at such intervals as are
reasonable in light of current market conditions to determine whether the Fund's
net asset value calculated by using available market quotations (see below)
deviates from the per share value based on amortized cost.
For the purpose of determining whether there is any deviation between the
value of the Fund's portfolio based on amortized cost and that determined on the
basis of available market quotations, if there are readily available market
quotations, investments are valued at the mean between the bid and asked prices.
If such market quotations are not available, the investments will be valued at
their fair value as determined in good faith under procedures established by and
under the general supervision and responsibility of the Fund's Board of
Directors, including being valued at prices based on market quotations for
investments of similar type, yield and duration.
Under Rule 2a-7, if the extent of any deviation between the net asset value
per share based upon "available market quotations" (see above) and the net asset
value per share based on amortized cost exceeds one-half of 1%, the Board must
promptly consider what action, if any, will be initiated. When the Board
believes that the extent of any deviation may result in material dilution or
other unfair results to investors or existing shareholders, it is required to
take such action as it deems appropriate to eliminate or reduce to the extent
reasonably practicable such dilution or unfair results. Such actions could
include the sale of portfolio securities prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity, withholding dividends
or payment of distributions from capital or capital gains, redemptions of shares
in kind, or establishing a net asset value per share using available market
quotations.
The procedures which the Fund's Board has adopted include changes in the
dividends payable by the Fund under specified conditions, as further described
under "Taxes" and "Payments to Shareholders." The purpose of this portion of
the procedures is to provide for the automatic taking of one of the actions
which the Board might take should it otherwise be required to consider taking
appropriate action.
Minimum Initial and Subsequent Investments
Initial investments must be at least $1,000 with the exceptions
described in this paragraph. A $50 minimum initial investment pertains to
certain retirement plan accounts and to accounts for which an investor has
arranged, at the time of initial investment, to make subsequent purchases for
the account by having regular monthly withdrawals of $25 or more made from a
bank account. A minimum initial investment is not applicable to purchases made
through payroll deduction for or by employees of Waddell & Reed, Inc., the
Manager, their affiliates or certain retirement plan accounts. With the
exception of automatic withdrawals from a shareholder's bank account, a
shareholder may make subsequent investments of any amount. See "Exchanges for
shares of other Funds in the United Group."
Waddell & Reed, Inc., in addition to distributing shares of the funds in
the United Group, TMK/United Funds, Inc. and Waddell & Reed Funds, Inc., may
distribute certain limited partnership investment interests from time to time.
These investments may provide distributions at various intervals in amounts less
than $1,000. A Fund account may be set up by an investor in these limited
partnerships to receive partnership distributions. Accordingly, the $1,000
minimum initial investment will not apply to such accounts.
How to Open an Account
You can make an initial investment of $1,000 or more in any of the
following ways:
1) By Mail. Complete an application form and mail it to Waddell & Reed,
Inc. at the address indicated on the form. Accompany the form with a check,
money order, Federal Reserve draft or other negotiable bank draft payable to
Waddell & Reed, Inc.
2) By Wire. (a) Telephone Waddell & Reed, Inc. (toll-free phone number on
the inside back cover of the Prospectus) and provide the account registration,
address and social security or tax identification number, the amount being
wired, the name of the wiring bank and the name and telephone number of the
person to be contacted in connection with the order. You will then be provided
with an order number; (b) instruct your bank to wire by the Federal Reserve Wire
Order System the specified amount, along with the order number and registration
to the United Missouri Bank, n.a.; 101000695, United K.C.; for United Cash
Management, Inc.; (c) complete an application form and mail it to Waddell &
Reed, Inc.
3) Through Broker-dealers. You may, if you wish, purchase your shares
through registered broker-dealers, which may charge their customers a fee for
this service. There is no such fee for investments made by mail or wire, as
described above, or for additional investments made by mail or wire. No such
service fee will be charged for shares purchased through Waddell & Reed, Inc.
How to Make Additional Investments
You may make additional investments in any amount through broker-dealers as
described above or in either of the following ways:
1) By Mail. Mail a check, money order, Federal Reserve draft or other
negotiable bank draft payable to Waddell & Reed, Inc. at P.O. Box 29217, Shawnee
Mission, Kansas 66201-9217, accompanied by either (i) the detachable form which
accompanies the confirmation of a prior purchase by you, or (ii) a letter
showing your account number and registration and stating that you wish the
enclosed check, etc. to be used for the purchase of shares of United Cash
Management, Inc.
2) By Wire. Instruct your bank to wire the specified amount along with
the account number and registration to the United Missouri Bank, n.a.;
101000695, United K.C.; for United Cash Management, Inc.
Purchase of the Fund's shares are effective after (i) one of the methods
for purchasing the Fund's shares indicated above has been properly completed and
(ii) United Missouri Bank, n.a. (the "Bank") has Federal funds available to it
which are thus available to the Fund for investment. Federal funds are monies
of a member bank with the Federal Reserve System held in deposit at a Federal
Reserve Bank. They represent immediately available cash. If payment is made by
check or otherwise than in Federal funds, it will be necessary to convert
investors' payments into Federal funds, and orders for the purchase of the
Fund's shares, if accepted by Waddell & Reed, Inc., will become effective on the
day Federal funds are received for value by the Bank; this is normally
anticipated to be two business days following receipt of payment by Waddell &
Reed, Inc. The Fund's shares are issued at their net asset value next
determined after the effectiveness of the purchase (i.e., at $1.00 per share
except under extraordinary circumstances as described above).
If you wish to insure that shares will be issued on the same day on which
your payment is made so that dividends on these shares will be declared on the
next day, you should (i) place your order by wire so that it will be received by
the Bank prior to 3:00 P.M. Kansas City time, and (ii) before wiring the order,
phone Waddell & Reed, Inc. at the number on the inside back cover of the
Prospectus to make sure that the wire order as described above is properly
identified.
Special arrangements may be made by Waddell & Reed, Inc. with other broker-
dealers to permit shares ordered by such broker-dealers to be issued on the day
of such order. Under these arrangements, the orders, including registration
information, must be received by Waddell & Reed, Inc. at its Overland Park,
Kansas office prior to 3:00 P.M. Overland Park, Kansas time; and the broker-
dealer must guarantee that the Bank will have Federal funds for the purchase
price of the shares ordered by at least 11:00 A.M. on the following business
day. Such arrangements will not be made on Fridays or on any day that precedes
a holiday.
Waddell & Reed, Inc. has the right not to accept any purchase order for the
Fund's shares. Certificates are not normally issued but may be requested.
Shareholdings are recorded on the Fund's books whether or not a certificate is
issued.
Redemptions
The Prospectus gives information as to expedited and regular procedures.
The emergency or other extraordinary conditions there indicated under which
payment may be delayed beyond seven days are certain emergency conditions
determined by the Securities and Exchange Commission, when the New York Stock
Exchange is closed other than for weekends or holidays, or when trading on the
Exchange is restricted. The extraordinary conditions mentioned in the
Prospectus under which redemptions may be made in portfolio securities are that
the Fund's Board of Directors can decide that conditions exist making cash
payments undesirable. If they should, redemption payments could be made in
securities. They would be valued at the value used in figuring net asset value.
There would be brokerage costs to the redeeming shareholder in selling such
securities. The Fund, however, has elected to be governed by Rule 18f-1 under
the Investment Company Act, pursuant to which it is obligated to redeem shares
solely in cash up to the lesser of $250,000 or 1% of its net asset value during
any 90-day period for any one shareholder.
Flexible Withdrawal Service
If you qualify, you may arrange to receive regular monthly, quarterly,
semiannual or annual payments; this can be done by redeeming shares on a regular
basis. This service is called Flexible Withdrawal Service (the "Service"). It
is available not only for Fund shares but also for shares of any of the funds in
the United Group. It would be a disadvantage to an investor to make additional
purchases of shares while a withdrawal program is in effect as this would result
in duplication of sales charges.
To qualify for the Service, you must have invested at least $10,000 in
shares which you still own of any of the funds in the United Group; or, you must
own shares having a value of at least $10,000. The value for this purpose is
not the net asset value but the value at the offering price, i.e., the net asset
value plus the sales charge.
To start this Service, you must fill out a form (available from Waddell &
Reed, Inc.), advising Waddell & Reed, Inc. how you want your shares redeemed to
make the payments. You have three choices:
First. To get a monthly, quarterly, semiannual or annual payment of $50 or
more;
Second. To get a monthly payment, which will change each month, equal to
one-twelfth of a percentage of the value of the shares in the Account; you fix
the percentage; or
Third. To get a monthly or quarterly payment, which will change each month
or quarter, by redeeming a number of shares fixed by you (at least five shares).
Shares are redeemed on the 20th day of the month in which the payment is to
be made (or on the prior business day if the 20th is not a business day).
Payments are made within five days of the redemption.
The Fund, not Waddell & Reed, Inc., pays the costs of this Service. Having
the Service costs you nothing extra individually. There is a $2.00 fee for each
withdrawal from Retirement Plan accounts.
If you have a share certificate for the shares you want to make available
for this Service, you must enclose the certificate with the form initiating the
Service.
The dividends and distributions on shares you have made available for this
Service are reinvested in additional shares. All payments are made by redeeming
shares, which may involve a gain or loss for tax purposes. To the extent that
payments exceed dividends and distributions, the number of shares you own will
decrease. When all of the shares in your account are redeemed, you will not
receive any payments. Thus, the payments are not an annuity or an income or
return on your investment.
You may, at any time, change the manner in which you have chosen to have
shares redeemed, you can change to any one of the other choices originally
available to you. For example, if you started out with a $50 monthly payment,
you could change to a $200 quarterly payment. You can at any time redeem part
or all of the shares in your account; if you redeem all of the shares, the
Service is terminated. The Fund can also terminate the Service by notifying you
in writing.
After the end of each calendar year, information on shares redeemed will be
sent to you to assist you in completing your Federal income tax return.
Exchanges for Shares of Other Funds in the United Group
If you own the Fund's shares which you have acquired by exchange for shares
of one or more other funds in the United Group, whose shares are sold with a
sales charge, you may exchange these shares (and any shares received in payment
of dividends on those shares) for shares of any of the other funds in the United
Group. If you decide to make this change, you can get these shares without any
additional sales charge.
In addition, you may specify a dollar amount of shares of the Fund to be
exchanged each month into any other fund in the United Group. The shares which
you designate for exchange into any fund must be worth at least $100 or you must
own shares of the fund in the United Group into which you want to exchange. The
minimum value of shares which you may designate for monthly exchange is $100,
which may be allocated among funds in the United Group, provided each fund
receives a value of at least $25. A minimum daily balance of $750 is required
in order to maintain such automatic exchange privileges.
When you exchange shares, the total shares you receive will have the same
aggregate net asset value as the shares you exchange. The relative values are
those next figured after your written exchange request is received in good
order.
These exchange rights and other exchange rights concerning other
funds in the United Group can in most instances be eliminated or modified at any
time. The Fund and the Manager reserve the right not to accept any exchange or
exchanges involving the Fund's shares.
Retirement Plans
For individual taxpayers meeting certain requirements, Waddell & Reed, Inc.
offers four individual retirement arrangements which provide tax deferral and
contribute to retirement assets. All four of them involve investment in Fund
shares, or the shares of certain other funds in the United Group.
First. A self employed person may set up a plan that is commonly called
a Keogh plan. As a general rule, an investor under a defined contribution Keogh
plan can contribute each year up to 25% of his or her annual earned income, with
a maximum of $30,000.
Second. Investors having earned income may set up a plan that is commonly
called an IRA. Under an IRA an investor can contribute each year up to 100% of
his or her earned income up to a maximum of $2,000. The maximum is $2,250 if an
investor's spouse has no earned income in a taxable year. If an investor's
spouse has at least $2,000 of earned income in a taxable year, the maximum is
$4,000 ($2,000 for each spouse).
These contributions are deductible unless the investor (or, if married,
either spouse) is an active participant in a qualified retirement plan or if,
notwithstanding that the investor or one or both spouses so participates, the
adjusted gross income does not exceed certain levels.
An investor may also use an IRA to receive a rollover contribution which
is either (a) a direct rollover from an employer's plan or (b) a rollover of an
eligible distribution paid to the investor from an employer's plan or another
IRA. To the extent a rollover contribution is made to an IRA, the distribution
will not be subject to Federal income tax until distributed from the IRA. A
direct rollover generally applies to any distribution from an employer's plan
(including a custodial account under Section 403(b)(7) of the Code, but not an
IRA) other than certain periodic payments, required minimum distributions and
other specified distributions. In a direct rollover, the eligible rollover
distribution is paid directly to the IRA, not to the investor. If, instead, an
investor receives payment of an eligible rollover distribution, all or a portion
of that distribution generally may be rolled over to an IRA within 60 days after
receipt of the distribution. Because mandatory Federal income tax withholding
applies to any eligible rollover distribution which is not paid in a direct
rollover, investors should consult their tax advisers or pension consultants as
to the applicable tax rules. If you already have an IRA, you may have the
assets in that IRA transferred directly to an IRA offered by Waddell & Reed,
Inc.
Third. If an investor is an employee of a public school system or of
certain types of charitable organizations, he or she may be able to enter into a
deferred compensation arrangement in accordance with Section 403(b) of the Code.
Fourth. If an investor is an employee of a state or local government or of
certain types of charitable organizations, he or she may be able to enter into a
deferred compensation arrangement in accordance with Section 457 of the Code.
Waddell & Reed, Inc. also offers to businesses prototype employee benefit
plans qualified under Section 401 of the Code. Investments may be made in the
Fund in accordance with the terms of the plans.
Under the terms of the 401(k) plan a loan may be made to a plan participant
by redeeming Fund shares held by the plan. Principal and interest payments on
the loan may be reinvested in shares of any of the funds in the United Group in
which the plan may invest without payment of a sales charge.
More detailed information about these arrangements is in the applicable
forms which are available from Waddell & Reed, Inc. These plans may involve
complex tax questions as to premature distributions and other matters.
Investors should consult their tax adviser or pension consultant.
Mandatory Redemption of Certain Small Accounts
The Fund has the right to compel the redemption of shares held under any
account or any plan if the aggregate net asset value of such shares (taken at
cost or value as the Board of Directors may determine) is less than $500. The
Board intends to compel redemptions of accounts, except for retirement plan
accounts, in which the total net asset value is less than $250. Shareholders
have 60 days from the date on which the net asset value falls below $250 to
bring the net asset value above $250 in order to avoid mandatory redemption. A
shareholder may also avoid mandatory redemption by initiating a transaction
which either increases or decreases the net asset value of the account. A
dividend payment does not constitute a shareholder initiated transaction for the
purpose of avoiding mandatory redemption.
<PAGE>
DIRECTORS AND OFFICERS
The day-to-day affairs of the Fund are handled by outside organizations
selected by the Board of Directors. The Board has responsibility for
establishing broad corporate policies for the Fund and for overseeing overall
performance of the selected experts. It has the benefit of advice and reports
from independent counsel and independent accountants.
Each of the Fund's Directors is also a Director of each of the other
funds in the United Group, TMK/United Funds, Inc., Waddell & Reed Funds, Inc.,
Torchmark Government Securities Fund, Inc. and Torchmark Insured Tax-Free Fund,
Inc. and each of its officers is also an officer of one or more of these funds.
The principal occupation of each Director and officer during at least the past
five years is given below. Each of the persons listed through and including Mr.
Wright is a member of the Fund's Board of Directors. The other persons are
officers but not Board members.
RONALD K. RICHEY*
2001 Third Avenue South
Birmingham, Alabama 35233
Chairman of the Board of Directors of the Fund; Chairman of the Board of
Directors of Waddell & Reed Financial Services, Inc., United Investors
Management Company and United Investors Life Insurance Company; Chairman of the
Board of Directors and Chief Executive Officer of Torchmark Corporation;
formerly, Chairman of the Board of Directors of Waddell & Reed, Inc.
KEITH A. TUCKER*
President of the Fund; President, Chief Executive Officer and Director of
Waddell & Reed Financial Services, Inc.; Chairman of the Board of Directors of
the Manager, Waddell & Reed, Inc., Waddell & Reed Services Company, Waddell &
Reed Asset Management Company and Torchmark Distributors, Inc., an affiliate of
Waddell & Reed, Inc.; Vice Chairman of the Board of Directors, Chief Executive
Officer and President of United Investors Management Company; Vice Chairman of
the Board of Directors of Torchmark Corporation; formerly, partner in Trivest, a
private investment concern; formerly, Director of Atlantis Group, Inc., a
diversified company.
HENRY L. BELLMON
Route 1
Red Rock, Oklahoma 74651
Rancher; Professor, Oklahoma State University; formerly, Governor of
Oklahoma; prior to his current service as Director of the funds in the United
Group, TMK/United Funds, Inc., Waddell & Reed Funds, Inc., Torchmark Government
Securities Fund, Inc. and Torchmark Insured Tax-Free Fund, Inc., he served in
such capacity for the funds in the United Group and TMK/United Funds, Inc.
DODDS I. BUCHANAN
University of Colorado
Campus Box 419
Boulder, Colorado 80309
Advisory Director, The Hand Companies; President, Buchanan Ranch Corp.;
formerly, Senior Vice President and Director of Marketing Services, The Meyer
Group of Management Consultants; formerly, Chairman, Department of Marketing,
Transportation and Tourism, University of Colorado; formerly, Professor of
Marketing, College of Business, University of Colorado.
JAY B. DILLINGHAM
926 Livestock Exchange Building
Kansas City, Missouri 64102
Formerly, President and Director of Kansas City Stock Yards Company;
formerly, Partner in Dillingham Farms, a farming operation.
JOHN F. HAYES*
335 N. Washington
P. O. Box 2977
Hutchinson, Kansas 67504-2977
Director of Central Bank and Trust; Director of Central Financial
Corporation; formerly, President of Gilliland & Hayes, P.A., a law firm.
GLENDON E. JOHNSON
7300 Corporate Center Drive
Miami, Florida 33126-1208
Director and Chief Executive Officer of John Alden Life Insurance Company.
WILLIAM T. MORGAN*
1799 Westridge Road
Los Angeles, California 90049
Retired; formerly, Chairman of the Board of Directors and President of the
Fund, each Fund in the United Group, TMK/United Funds, Inc., Waddell & Reed
Funds, Inc., Torchmark Government Securities Fund, Inc. and Torchmark Insured
Tax-Free Fund, Inc. (Mr. Morgan retired as Chairman of the Board of Directors
and President of these Funds on April 30, 1993); formerly, President, Director
and Chief Executive Officer of the Manager and Waddell & Reed, Inc.; formerly,
Chairman of the Board of Directors of Waddell & Reed Services Company; formerly,
Director of Waddell & Reed Asset Management Company, United Investors Management
Company and United Investors Life Insurance Company, affiliates of Waddell &
Reed, Inc.
DOYLE PATTERSON
1030 West 56th Street
Kansas City, Missouri 64113
Associated with Republic Real Estate, engaged in real estate management and
investment; formerly, Director of The Vendo Company, a manufacturer and
distributor of vending machines.
FREDERICK VOGEL, III
1805 West Bradley Road
Milwaukee, Wisconsin 53217
Retired.
PAUL S. WISE
P. O. Box 5248
8648 Silver Saddle Drive
Carefree, Arizona 85377
Director of Potash Corporation of Saskatchewan.
LESLIE S. WRIGHT
Samford University
800 Lakeshore Drive
Birmingham, Alabama 35209
Chancellor of Samford University; formerly, Director of City Federal
Savings and Loan Association; formerly, President of Samford University.
Robert L. Hechler
Vice President and Principal Financial Officer of the Fund; Vice
President, Chief Operations Officer, Director and Treasurer of Waddell & Reed
Financial Services, Inc.; Executive Vice President, Principal Financial Officer,
Director and Treasurer of the Manager; President, Chief Executive Officer,
Principal Financial Officer, Director and Treasurer of Waddell & Reed, Inc.;
Director and Treasurer of Waddell & Reed Asset Management Company; President,
Director and Treasurer of Waddell & Reed Services Company; Vice President,
Treasurer and Director of Torchmark Distributors, Inc.
Henry J. Herrmann
Vice President of the Fund; Vice President, Chief Investment Officer and
Director of Waddell & Reed Financial Services, Inc.; Director of Waddell & Reed,
Inc.; President, Chief Executive Officer, Chief Investment Officer and Director
of the Manager and Waddell & Reed Asset Management Company; Senior Vice
President and Chief Investment Officer of United Investors Management Company.
Theodore W. Howard
Vice President, Treasurer and Principal Accounting Officer of the Fund;
Vice President of Waddell & Reed Services Company.
Sharon K. Pappas
Vice President, Secretary and General Counsel of the Fund; Vice President,
Secretary and General Counsel of Waddell & Reed Financial Services, Inc.; Senior
Vice President, Secretary and General Counsel of the Manager and Waddell & Reed,
Inc.; Senior Vice President, Secretary and General Counsel of Waddell & Reed
Services Company; Secretary and General Counsel of Waddell & Reed Asset
Management Company; Vice President, Secretary and General Counsel of Torchmark
Distributors, Inc.; formerly,Assistant General Counsel of the Manager, Waddell &
Reed Financial Services, Inc., Waddell & Reed, Inc., Waddell & Reed Asset
Management Company and Waddell & Reed Services Company.
John M. Holliday
Vice President of the Fund; Senior Vice President of the Manager; Senior
Vice President of Waddell & Reed Asset Management Company; formerly, Senior Vice
President of Waddell & Reed, Inc.
Richard Poettgen
Vice President of the Fund; Vice President of the Manager; formerly, Vice
President of Waddell & Reed, Inc.
The address of each person is 6300 Lamar Avenue, P.O. Box 29217, Shawnee
Mission, Kansas 66201-9217 unless a different address is given.
As of the date of this SAI, four of the Fund's Directors may be deemed
to be "interested persons" as defined in the Investment Company Act of 1940 of
its underwriter, Waddell & Reed, Inc. or of the Manager. The Directors who may
be deemed to be interested persons are indicated as such by an asterisk.
The Board has created an honorary position of Director Emeritus, which
position a director may elect after resignation from the Board provided the
director has attained the age of 75 and has served as a director of the funds in
the United Group for a total of at least five years. A Director Emeritus
receives fees in recognition of his past services whether or not services are
rendered in his capacity as Director Emeritus, but he has no authority or
responsibility with respect to management of the Fund. Currently, no person
serves as Director Emeritus.
The funds in the United Group, TMK/United Funds, Inc. and Waddell & Reed
Funds, Inc. pay to each Director a total of $40,000 per year, plus $500 for each
meeting of the Board of Directors attended and $500 for each committee meeting
attended which is not in conjunction with a Board of Directors' meeting, other
than Directors who are affiliates of Waddell & Reed, Inc. The fees to the
Directors who receive them are divided among the funds in the United Group,
TMK/United Funds, Inc. and Waddell & Reed Funds, Inc. based on their relative
size. During the Fund's fiscal year ended June 30, 1994, its share was $12,587.
The officers are paid by Waddell & Reed, Inc. or its affiliates.
Shareholdings
As of August 31, 1994, all of the Fund's Directors and officers as a group
owned less than 1% of the outstanding shares of the Fund. As of such date no
person owned of record or was known by the Fund to own beneficially 5% or more
of the Fund's outstanding shares.
PAYMENTS TO SHAREHOLDERS
General
There are two sources for the payments the Fund makes to you as a
shareholder, other than payments when you redeem your shares. The first source
is the Fund's net investment income, which is derived from the interest and
earned discount on the securities it holds, less its expenses and amortization
of any premium. The second source is realized capital gains, which are derived
from the proceeds received from the sale of securities at a price higher than
the Fund's tax basis (usually cost) in such securities; these gains are expected
to be short-term capital gains. Payments from either net investment income or
net short-term capital gains are called dividends.
On each day, including a Saturday, Sunday or other holiday, a dividend of
all of the Fund's net investment income and realized net capital gains will be
declared. The shares whose holders are entitled to receive dividends are those
held on the Fund's books at the close of business on the prior day. Thus,
dividends are paid on shares starting on the day after they are issued and on
shares the day they are redeemed. See "How to Open An Account" for information
on when shares are issued.
Under the procedures that the Fund's Board of Directors has adopted
relating to "amortized cost" valuation, the calculation of the Fund's daily
dividend will change from that indicated above under certain circumstances. If
on any day there is a deviation of .3 of 1% or more between the net asset value
of a Fund share computed on the amortized cost basis and that computed on an
available market price basis, the amount of the deviation will be added to or
subtracted from the dividend for that day if necessary to reduce the per-share
value to within .3 of 1% of $1.00.
If on any day there is insufficient net income to absorb any such
reduction, the Fund's Board of Directors would be required under the Rule to
consider taking other action if the deviation after eliminating the dividend for
that day exceeds one-half of 1%. See "Determination of Offering Price." One of
the actions that the Board of Directors might take could be the elimination or
reduction of dividends for more than one day.
Choices You Have on Your Dividends and Distributions
In your application form, you can give instructions that (i) you want cash
for your dividends and distributions, (ii) you want your dividends and
distributions reinvested in Fund shares or (iii) you want cash for your
dividends and want your distributions reinvested in Fund shares. You can change
your instructions at any time. If you give no instruction, your dividends and
distributions (if any) will be reinvested in Fund shares. All reinvestments are
at net asset value. The net asset value used for this purpose is that computed
as of the payment date for the dividend, although this could be changed by the
Directors.
Even if you get dividends and distributions in cash, you can thereafter
reinvest them (or distributions only) in Fund shares at net asset value next
determined after receipt by Waddell & Reed, Inc., of the amount clearly
identified as a reinvestment. The reinvestment must be within 45 days after the
payment.
TAXES
General
In order to continue to qualify for treatment as a regulated investment
company ("RIC") under the Code, the Fund must distribute to its shareholders for
each taxable year at least 90% of its investment company taxable income
(consisting generally of net investment income, net short-term capital gains and
net gains from certain foreign currency transactions) and must meet several
additional requirements. These requirements include the following: (1) the Fund
must derive at least 90% of its gross income each taxable year from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of securities or foreign currencies, or other income
(including gains from options, futures contracts or forward contracts) derived
with respect to its business of investing in securities or those currencies
("Income Requirement"); (2) the Fund must derive less than 30% of its gross
income each taxable year from the sale or other disposition of securities, or
any of the following, that were held for less than three months -- (i) options,
futures contracts or forward contracts or (ii) foreign currencies (or options,
futures contracts or forward contracts thereon) that are not directly related to
the Fund's principal business of investing in securities (or in options and
futures contracts with respect to securities) ("Short-Short Limitation"); (3) at
the close of each quarter of the Fund's taxable year, at least 50% of the value
of its total assets must be represented by cash and cash items, Government
Securities, securities of other RICs and other securities that are limited, in
respect of any one issuer, to an amount that does not exceed 5% of the value of
the Fund's total assets and that does not represent more than 10% of the
issuer's outstanding voting securities; and (4) at the close of each quarter of
the Fund's taxable year, not more than 25% of the value of its total assets may
be invested in securities (other than Government Securities or the securities of
other RICs) of any one issuer.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to
the extent it fails to distribute by the end of any calendar year substantially
all of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
It is the Fund's policy to make sufficient distributions each year to avoid
imposition of the Excise Tax.
PORTFOLIO TRANSACTIONS AND BROKERAGE
One of the duties undertaken by the Manager pursuant to the Management
Agreement is to arrange the purchase and sale of securities for the portfolio of
the Fund. Purchases are made directly from issuers or from underwriters,
dealers or banks. Purchases from underwriters include a commission or
concession paid by the issuer to the underwriter. Purchases from dealers will
include the spread between the bid and the asked price. Brokerage commissions
are paid primarily for effecting transactions in securities traded on an
exchange and otherwise only if it appears likely that a better price or
execution can be obtained. The Fund has not effected transactions through
brokers and does not anticipate doing so. The individual who manages the Fund
may manage other advisory accounts with similar investment objectives. It can
be anticipated that the manager will frequently place concurrent orders for all
or most accounts for which the manager has responsibility. Transactions
effected pursuant to such combined orders are averaged as to price and allocated
in accordance with the purchase or sale orders actually placed for each fund or
advisory account.
To effect the portfolio transactions of the Fund, the Manager is authorized
to engage brokers-dealers ("brokers") which, in its best judgment based on all
relevant factors, will implement the policy of the Fund to achieve "best
execution" (prompt and reliable execution at the best price obtainable) for
reasonable and competitive commissions. The Manager is expected to allocate
orders to brokers or dealers consistent with the interests and policies of the
Fund. Subject to review by the Board of Directors, such policies include the
selection of brokers or dealers which provide research services and other
services including pricing or quotation services directly or through others
("services"). If the execution and price offered by more than one dealer are
comparable, the order may be allocated to a dealer which has provided such
services considered by the Manager to be useful or desirable for its investment
management of the Fund and/or the other funds and accounts over which the
Manager or its affiliates have investment discretion.
Subject to the foregoing considerations, the Manager may also consider the
willingness of particular brokers and dealers to sell shares of the Fund and
other funds managed by the Manager and its affiliates as a factor in its
selection. No allocation of brokerage or principal business is made to provide
any other benefits to the Manager or its affiliates.
The investment research provided by a particular broker may be useful only
to one or more of the other advisory accounts of the Manager and its affiliates
and investment research received for the commissions of those other accounts may
be useful both to the Fund and one or more of such other accounts. To the
extent that electronic or other products provided by such brokers to assist the
Manager in making investment management decisions are used for administration or
other non-research purposes, a reasonable allocation of the cost of the product
attributable to its non-research use is made by the Manager.
Such investment research (which may be supplied by a third party at the
instance of a broker or dealer) includes information on particular companies and
industries as well as market, economic or institutional activity areas. It
serves to broaden the scope and supplement the research activities of the
Manager; serves to make available additional views for consideration and
comparisons; and enables the Manager to obtain market information on the price
of securities held in the Fund's portfolio or being considered for purchase.
In placing transactions for the Fund's portfolio, the Manager may
consider sales of shares of the Fund and other funds managed by the Manager and
its affiliates in the United Group as a factor in the selection of brokers to
execute portfolio transactions. The Manager intends to allocate brokerage on
the basis of this factor only if the sale is $2 million or more and there is no
sales charge. This results in the consideration only of sales which by their
nature would not ordinarily be made by Waddell & Reed, Inc.'s direct sales force
and is done in order to prevent the direct sales force from being disadvantaged
by the fact that it cannot participate in the allocation of Fund orders for
portfolio securities. As of June 30, 1994, the Fund owned Merrill Lynch and
Co., Inc. debt securities in the aggregate amount of $10,000,000. Merrill Lynch
and Co., Inc. is a regular broker of the Fund.
Buying and Selling With Other Funds
The Fund and one or more of the other funds in the United Group, TMK/United
Funds, Inc., Waddell & Reed Funds, Inc., Torchmark Government Securities Fund,
Inc. and Torchmark Insured Tax-Free Fund, Inc. or accounts over which Waddell &
Reed Asset Management Company exercises investment discretion frequently buy or
sell the same securities at the same time. If this happens, the amount of each
purchase or sale is divided. This is done on the basis of the amount of
securities each fund or account wanted to buy or sell. Sharing in large
transactions could affect the price the Fund pays or receives or the amount it
buys or sells. However, sometimes a better negotiated commission is
available.
<PAGE>
OTHER INFORMATION
The Shares of the Fund
The Fund presently has only one kind (class) of shares. Each share has the
same rights to dividends, to vote and to receive assets if the Fund liquidates
(winds up). Each fractional share has the same rights, in proportion, as a full
share. Shares are fully paid and nonassessable when bought.
<PAGE>
APPENDIX A
The following are descriptions of some of the ratings of securities which
the Fund may use. The Fund may also use ratings provided by other nationally
recognized statistical rating organizations in determining the securities
eligible for investment.
DESCRIPTION OF BOND AND NOTE RATINGS
Standard & Poor's Ratings Group. A Standard & Poor's corporate or
municipal bond rating is a current assessment of the creditworthiness of an
obligor with respect to a specific obligation. This assessment of
creditworthiness may take into consideration obligors such as guarantors,
insurers or lessees.
The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.
The ratings are based on current information furnished to Standard &
Poor's by the issuer or obtained by Standard & Poor's from other sources it
considers reliable. Standard & Poor's does not perform an audit in connection
with any rating and may, on occasion, rely on unaudited financial information.
The ratings may be changed, suspended or withdrawn as a result of changes in, or
unavailability of, such information, or based on other circumstances.
The ratings are based, in varying degrees, on the following considerations:
1. Likelihood of default -- capacity and willingness of the obligor as
to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation;
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
The following describes the top three rating categories of Standard &
Poor's:
AAA -- Debt rated AAA has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA -- Debt rated AA also qualifies as high quality debt. Capacity to pay
interest and repay principal is very strong, and debt rated AA differs from AAA
issues only in small degree.
A -- Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
Plus (+) or Minus (-) -- To provide more detailed indications of credit
quality, the ratings (except AAA ratings) may be modified by the addition of a
plus or minus sign to show relative standing within the major rating categories.
NR -- Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular type of obligation as a matter of policy.
Debt Obligations of issuers outside the United States and its territories
are rated on the same basis as domestic corporate and municipal issues. The
ratings measure the creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.
A Standard & Poor's note rating reflects the liquidity factors and
market access risks unique to notes. Notes due in 3 years or less will likely
receive a note rating. Notes maturing beyond 3 years will most likely receive a
long-term debt rating. The following criteria will be used in making that
assessment.
--Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).
--Source of payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note.)
Note rating symbols are as follows:
SP-1 Strong capacity to pay principal and interest. Issues determined
to possess very strong characteristics are given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term
of the note.
SP-3 Speculative capacity to pay principal and interest.
Moody's Investors Service. A brief description of the top three categories
of Moody's Investors Service and their meanings are as follows:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Bonds within the above categories which possess the strongest investment
attributes are designated by the symbol "1" following the rating.
Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade (MIG). This distinction is in recognition
of the differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower are uppermost in importance in short-
term borrowing. While various factors of major importance in bond risk are of
lesser importance over the short run. Rating symbols and their meanings follow:
MIG 1 -- This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
MIG 2 -- This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3 -- This designation denotes favorable quality. All security
elements are accounted for but this is lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less well established.
MIG 4 -- This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Standard & Poor's Ratings Group commercial paper rating is a current
assessment of the likelihood of timely payment of debt considered short-term in
the relevant market. Ratings are graded into several categories, ranging from
A-1 for the highest quality obligations to D for the lowest. An A-1 designation
indicates a strong degree of safety regarding timely payment. Those issues
determined to possess extremely strong safety characteristics are denoted with a
plus sign (+) designation. An A-2 rating indicates a satisfactory capacity for
timely payment; however, the relative degree of safety is not as high as for
issues designated A-1.
Moody's Investors Service, Inc. commercial paper ratings are opinions of
the ability of issuers to repay punctually promissory obligations not having an
original maturity in excess of nine months. Moody's employs the designations of
Prime 1, Prime 2 and Prime 3, all judged to be investment grade, to indicate the
relative repayment capacity of rated issuers. Issuers rated Prime 1 have a
superior capacity for repayment of short-term promissory obligations and
repayment capacity will normally be evidenced by (1) lending market positions in
well established industries; (2) high rates of return on funds employed; (3)
conservative capitalization structures with moderate reliance on debt and ample
asset protection; (4) broad margins in earnings coverage of fixed financial
charges and high internal cash generation; and (5) well established access to a
range of financial markets and assured sources of alternate liquidity. Issuers
rated Prime 2 also have a strong capacity for repayment of short-term promissory
obligations as will normally be evidenced by many of the characteristics
described above for Prime 1 issuers, but to a lesser degree. Earnings trends
and coverage ratios, while sound, will be more subject to variation;
capitalization characteristics, while still appropriate, may be more affected by
external conditions; and ample alternate liquidity is maintained.
<PAGE>
REGISTRATION STATEMENT
PART C
OTHER INFORMATION
24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements -- United Cash Management, Inc.
Included in Part B:
-------------------
As of June 30, 1994
Statement of Assets and Liabilities
For the year ended June 30, 1994
Statement of Operations
For each of the two years ended June 30, 1994
Statement of Changes in Net Assets
Schedule I -- Investment Securities as of June 30, 1994
Report of Independent Accountants
Included in Part C:
-------------------
Consent of Independent Accountants
Amended Exhibit A to the Custodian Agreement-EX-99.B8-CMCAA
Amended Exhibit B to the Custodian Agreement-EX-99.B8-CMCAA
Financial Data Schedule-EX-99.B17-CMFDS
Other schedules prescribed by Regulation S-X are not filed because the
required matter is not present or is insignificant.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this Post-
Effective Amendment No. 26 to the Registration Statement on Form N-1A of our
report dated July 29, 1994 relating to the financial statements and the
financial highlights of United Cash Management, Inc., which appears in such
Prospectus. We further consent to the reference to us under the heading
"Financial Highlights" in such Prospectus and to the reference to us under the
heading "Custodial and Auditing Services" in the Statement of Additional
Information constituting part of this Post-Effective Amendment.
PRICE WATERHOUSE LLP
Kansas City, Missouri
September 28, 1994
<PAGE>
(b) Exhibits:
(1) Articles of Incorporation filed May 16, 1979 as Exhibit (b)(1) to
the initial Registration Statement on Form N-1*
(2) Bylaws filed May 16, 1979 as Exhibit (b)(2) to the initial
Registration Statement on Form N-1*
Amendment to Bylaws filed February 27, 1990 as Exhibit No. 1 on
Form SE to Form N-SAR for the period ended December 31, 1989*
Amendment to Bylaws filed October 27, 1990 as Exhibit (b)(2) to
Post-Effective Amendment No. 22 to the Registration Statement on
Form N-1A*
(3) Not applicable
(4) Article FIFTH, Article SEVENTH and Article EIGHTH of the Articles
of Incorporation of the Registrant filed May 16, 1979 as Exhibit
(b)(1) to the initial Registration Statement on Form N-1*;
Article I, Article IV and Article VIII of the Bylaws of the
Registrant filed May 16, 1979 as Exhibit (b)(2) to the initial
Registration Statement on Form N-1*
(5) Investment Management Agreement filed July 17, 1990 as Exhibit
(b)(5) to Post-Effective Amendment No. 21 to the Registration
Statement on Form N-1A*
Assignment of the Investment Management Agreement filed August
24, 1992 as Exhibit No. 3 on Form SE to Form N-SAR for the six
months ended June 30, 1992*
(6) Underwriting Agreement filed February 25, 1982 as Exhibit 6 to
Post-Effective Amendment No. 8 to the Registration Statement on
Form N-1*
(7) Not applicable
(8) Custodian Agreement filed September 24, 1992 as Exhibit (b)(8) on
Form SE to Post-Effective Amendment No. 24 to the Registration
Statement on Form N-1A*
Amended Exhibit A to Custodian Agreement dated July 1, 1994
attached hereto
Amended Exhibit B to Custodian Agreement dated July l, 1994
attached hereto
Amendment to Custodian Agreement dated February 17, 1993 filed
September 29, 1993 as Exhibit (b)(8) to Post-Effective Amendment
No. 25 to the Registration Statement on Form N-1A*
(9) (a) Shareholder Servicing Agreement filed October 24, 1989 as
Exhibit (b)(9)(a) to Post-Effective Amendment No. 19 to the
Registration Statement on Form N-1A*
(b) Fund application filed September 26, 1991 as Exhibit
(b)(9)(b) on Form SE to Post-Effective Amendment No. 23 to
the Registration Statement on Form N-1A*
(c) Accounting Services Agreement filed October 27, 1990 as
Exhibit (b)(5) to Post-Effective Amendment No. 22 to the
Registration Statement on Form N-1A*
- ---------------------------------
*Incorporated herein by reference
(10) Not applicable
(11) Not applicable
(12) Not applicable
(13) Not applicable
(14) (a) Individual Retirement Plan Agreement filed March 9, 1992 as
Exhibit b(14)(a) on Form SE to Post-Effective Amendment No.
111 to the Registration Statement on Form N-1A of United
Funds, Inc.*
(b) Simplified Employee Pension Plan filed March 9, 1992 as
Exhibit b(14)(b) on Form SE to Post-Effective Amendment No.
111 to the Registration Statement on Form N-1A of United
Funds, Inc.*
(c) Tax Sheltered Account for Employees of Public and Private
Schools and Tax-Exempt Organizations filed March 9, 1992 as
Exhibit (b)(14)(c) on Form SE to Post-Effective Amendment
No. 111 to the Registration Statement on Form N-1A of United
Funds, Inc.*
(d) Tax Sheltered Keogh Retirement Plan for self-employed
individuals, sole proprietors and common partnerships filed
March 9, 1992 as Exhibit (b)(14)(d) on Form SE to Post-
Effective Amendment No. 111 to the Registration Statement on
Form N-1A of United Funds, Inc.*
(e) Defined Contribution filed March 9, 1992 as Exhibit
(b)(14)(e) on Form SE to Post-Effective Amendment No. 111 to
the Registration Statement on Form N-1A of United Funds,
Inc.*
(f) 457 Plan for Public Employees filed March 9, 1992 as Exhibit
(b)(14)(f) on Form SE to Post-Effective Amendment No. 111 to
the Registration Statement on Form N-1A of United Funds,
Inc.*
(g) 401(k) Plan for Public Employees filed March 9, 1992 as
Exhibit (b)(14)(g) on Form SE to Post-Effective Amendment
No. 111 to the Registration Statement on Form N-1A of United
Funds, Inc.*
(15) Not Applicable
(16) Not Applicable
(17) Financial Data Schedule attached hereto
25. Persons Controlled by or under common control with Registrant
-------------------------------------------------------------
None
26. Number of Holders of Securities
-------------------------------
Number of Record Holders as of
Title of Class June 30, 1994
-------------- ------------------------------
Capital Stock 64,317
- ---------------------------------
*Incorporated herein by reference
27. Indemnification
---------------
Reference is made to Article SEVENTH paragraph 6(b) through 6(f) of the
Articles of Incorporation, as amended, of Registrant filed February 25,
1982 as Exhibit (1)(b) to Post-Effective Amendment No. 8 to the
Registration Statement on Form N-1* and to Article IV of the Underwriting
Agreement filed February 25, 1982 as Exhibit (1)(b)(6) to Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1*, each of which
provides indemnification. Also refer to Section 2-418 of the Maryland
General Corporation Law regarding indemnification of directors, officers,
employees and agents.
28. Business and Other Connections of Investment Manager
----------------------------------------------------
Waddell & Reed Investment Management Company is the investment manager of
the Registrant. Under the terms of an Investment Management Agreement
between Waddell & Reed, Inc. and the Registrant, Waddell & Reed, Inc. is to
provide investment management services to the Registrant. Waddell & Reed,
Inc. assigned its investment management duties under this agreement to
Waddell & Reed Investment Management Company on January 8, 1992. Waddell &
Reed Investment Management Company is a corporation which is not engaged in
any business other than the provision of investment management services to
those registered investment companies described in Part A and Part B of
this Post-Effective Amendment.
Each director and executive officer of Waddell & Reed Investment Management
Company has had as his sole business, profession, vocation or employment
during the past two years only his duties as an executive officer and/or
employee of Waddell & Reed Investment Management Company or its
predecessors, except as to persons who are directors and/or officers of the
Registrant and have served in the capacities shown in the Statement of
Additional Information of the Registrant and except for Ronald K. Richey.
Mr. Richey is Chairman of the Board and Chief Executive Officer of
Torchmark Corporation, the parent company of Waddell & Reed, Inc., and
Chairman of the Board of United Investors Management Company, a holding
company of which Waddell & Reed, Inc. is an indirect subsidiary. Mr.
Richey's address is 2001 Third Avenue South. The address of the others is
6300 Lamar Avenue, Shawnee Mission, Kansas 66202-4200.
As to each director and officer of Waddell & Reed Investment Management
Company, reference is made to the Prospectus and SAI of this Registrant.
29. Principal Underwriter
---------------------
(a) Waddell & Reed, Inc. is the principal underwriter. It is also the
principal underwriter to the following investment companies:
United Funds, Inc.
United International Growth Fund, Inc.
United Continental Income Fund, Inc.
United Vanguard Fund, Inc.
United Retirement Shares, Inc.
United Municipal Bond Fund, Inc.
United High Income Fund, Inc.
United Government Securities Fund, Inc.
United New Concepts Fund, Inc.
United Gold & Government Fund, Inc.
United Municipal High Income Fund, Inc.
United High Income Fund II, Inc.
TMK/United Funds, Inc.
Waddell & Reed Funds, Inc.
- ---------------------------------
*Incorporated herein by reference
and is depositor of the following unit investment trusts:
United Periodic Investment Plans to acquire shares of United Science
and Energy Fund
United Periodic Investment Plans to acquire shares of United
Accumulative Fund
United Income Investment Programs
United International Growth Investment Programs
United Continental Income Investment Programs
United Vanguard Investment Programs
(b) The information contained in the underwriter's application on form BD,
under the Securities Exchange Act of 1934, is herein incorporated by
reference.
(c) No compensation was paid by the Registrant to any principal
underwriter who is not an affiliated person of the Registrant or any
affiliated person of such affiliated person.
30. Location of Accounts and Records
--------------------------------
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act and
rules promulgated thereunder are under the possession of Mr. Robert L.
Hechler and Ms. Sharon K. Pappas, as officers of the Registrant, each of
whose business address is Post Office Box 29217, Shawnee Mission, Kansas
66201-9217.
31. Management Services
-------------------
There is no service contract other than as discussed in Part A and B of
this Post-Effective Amendment and listed in response to Item (b)(9) hereof.
32. Not applicable
--------------
(a) Not applicable
(b) Not applicable
(c) Not applicable
(d) To the extent that Section 16(c) of the Investment Company Act of
1940, as amended, applies to the Fund, the Fund agrees, if requested
in writing by the shareholders of record of not less than 10% of the
Fund's outstanding shares, to call a meeting of the shareholders of
the Fund for the purpose of voting upon the question of removal of any
director.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and/or the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment pursuant to
rule 485(b) of the Securities Act of 19933, and the Registrant has duly caused
this Post-Effective Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Overland Park, and State of Kansas, on
the 28th day of September, 1994.
UNITED CASH MANAGEMENT, INC.
(Registrant)
By /s/ Keith A. Tucker*
------------------------
Keith A. Tucker, President
Pursuant to the requirements of the Securities Act of 1933, and/or the
Investment Company Act of 1940, this Post-Effective Amendment has been signed
below by the following persons in the capacities and on the date indicated.
Signatures Title
----------- -----
/s/Ronald K. Richey* Chairman of the Board September 28, 1994
- ---------------------- ------------------
Ronald K. Richey
/s/Keith A. Tucker* President and Director September 28, 1994
- --------------------- (Principal Executive Officer) ------------------
Keith A. Tucker
/s/Theodore W. Howard* Vice President, Treasurer September 28, 1994
- ---------------------- and Principal Accounting ------------------
Theodore W. Howard Officer
/s/Robert L. Hechler* Vice President and September 28, 1994
- ---------------------- Principal Financial ------------------
Robert L. Hechler Officer
/s/Henry L. Bellmon* Director September 28, 1994
- ---------------------- ------------------
Henry L. Bellmon
/s/Dodds I. Buchanan* Director September 28, 1994
- --------------------- ------------------
Dodds I. Buchanan
/s/Jay B. Dillingham* Director September 28, 1994
- -------------------- ----------------
Jay B. Dillingham
/s/John F. Hayes* Director September 28, 1994
- ------------------- ------------------
John F. Hayes
/s/Glendon E. Johnson Director September 28, 1994
- ------------------- ------------------
Glendon E. Johnson
/s/William T. Morgan* Director September 28, 1994
- ------------------- ------------------
William T. Morgan
/s/Doyle Patterson* Director September 28, 1994
- ------------------- ------------------
Doyle Patterson
/s/Frederick Vogel, III* Director September 28, 1994
- ------------------- ----------------
Frederick Vogel, III
/s/Paul S. Wise* Director September 28, 1994
- ------------------- ------------------
Paul S. Wise
/s/Leslie S. Wright* Director September 28, 1994
- ------------------- ------------------
Leslie S. Wright
*By
Sharon K. Pappas
Attorney-in-Fact
ATTEST:
Amy D. Eisenbeis
Assistant Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That each of the undersigned, UNITED FUNDS,
INC., UNITED INTERNATIONAL GROWTH FUND, INC., UNITED MUNICIPAL BOND FUND, INC.,
UNITED VANGUARD FUND, INC., UNITED HIGH INCOME FUND, INC., UNITED CASH
MANAGEMENT, INC., UNITED NEW CONCEPTS FUND, INC., UNITED GOVERNMENT SECURITIES
FUND, INC., UNITED MUNICIPAL HIGH INCOME FUND, INC., UNITED GOLD & GOVERNMENT
FUND, INC., UNITED HIGH INCOME FUND II, INC., UNITED CONTINENTAL INCOME FUND,
INC., UNITED RETIREMENT SHARES, INC. UNITED ASSET STRATEGY FUND, INC.,
TMK/UNITED FUNDS, INC., WADDELL & REED FUNDS, INC., TORCHMARK INSURED TAX-FREE
FUND, INC. AND TORCHMARK GOVERNMENT SECURITIES FUND, INC. (each hereinafter
called the "Corporation"), and certain directors and officers for the
Corporation, do hereby constitute and appoint KEITH A. TUCKER, ROBERT L.
HECHLER, and SHARON K. PAPPAS, and each of them individually, their true and
lawful attorneys and agents to take any and all action and execute any and all
instruments which said attorneys and agents may deem necessary or advisable to
enable each Corporation to comply with the Securities Act of 1933 and/or the
Investment Company Act of 1940, as amended, and any rules, regulations, orders
or other requirements of the United States Securities and Exchange Commission
thereunder, in connection with the registration under the Securities Act of 1933
and/or the Investment Company Act of 1940, as amended, including specifically,
but without limitation of the foregoing, power and authority to sign the names
of each of such directors and officers in his behalf as such director or officer
has indicated below opposite his signature hereto, to any amendment or
supplement to the Registration Statement filed with the Securities and Exchange
Commission under the Securities Act of 1933 and/or the Investment Company Act of
1940, as amended, and to any instruments or documents filed or to be filed as a
part of or in connection with such Registration Statement; and each of the
undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
Date: September 1, 1994 /s/Keith A. Tucker*
---------------------
Keith A. Tucker, President
/s/Ronald K. Richey* Chairman of the Board September 1, 1994
- -------------------- ---------------
Ronald K. Richey
/s/Keith A. Tucker* President and Director September 1, 1994
- -------------------- (Principal Executive Officer) ---------------
Keith A. Tucker
/s/Theodore W. Howard* Vice President, Treasurer September 1, 1994
- -------------------- and Principal Accounting ---------------
Theodore W. Howard Officer
/s/Robert L. Hechler* Vice President and September 1, 1994
- -------------------- Principal Financial ---------------
Robert L. Hechler Officer
/s/Henry L. Bellmon* Director September 1, 1994
- -------------------- ---------------
Henry L. Bellmon
/s/Dodds I. Buchanan* Director September 1, 1994
- -------------------- ---------------
Dodds I. Buchanan
/s/Jay B. Dillingham* Director September 1, 1994
- -------------------- ---------------
Jay B. Dillingham
/s/John F. Hayes* Director September 1, 1994
- -------------------- ---------------
John F. Hayes
/s/Glendon E. Johnson Director September 1, 1994
- -------------------- ---------------
Glendon E. Johnson
/s/William T. Morgan* Director September 1, 1994
- -------------------- ---------------
William T. Morgan
/s/Doyle Patterson* Director September 1, 1994
- -------------------- ---------------
Doyle Patterson
/s/Frederick Vogel, III* Director September 1, 1994
- -------------------- ---------------
Frederick Vogel, III
/s/Paul S. Wise* Director September 1, 1994
- -------------------- ---------------
Paul S. Wise
/s/Leslie S. Wright* Director September 1, 1994
- -------------------- ---------------
Leslie S. Wright
Attest:
/s/Sharon K. Pappas*
- --------------------
Sharon K. Pappas, Vice President
and Secretary
September 28, 1994
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N. W.
Judiciary Plaza
Washington, D. C. 20549
RE: United Cash Management, Inc.
Post-Effective Amendment No. 26
Dear Sir or Madam:
In connection with the filing of the above-referenced Post-Effective Amendment,
I hereby represent that the Amendment does not contain disclosures which would
render it ineligible to become effective pursuant to paragraph (b) of Rule 485.
Yours truly,
Sharon K. Pappas
General Counsel
SKP:jb
APPENDIX A
This Appendix A relates to the Custodian Agreements between United Missouri
Bank, n.a. and each of the following funds dated the date specified by the
fund's name, as amended:
Fund Date
United Cash Management, Inc. November 26, 1991
United Continental Income Fund, Inc. November 26, 1991
United Gold & Government Fund, Inc. November 26, 1991
United Government Securities Fund, Inc. November 26, 1991
United High Income Fund, Inc. November 26, 1991
United High Income Fund II, Inc. November 26, 1991
United International Growth Fund, Inc. November 26, 1991
United Municipal Bond Fund, Inc. November 26, 1991
United Municipal High Income Fund, Inc. November 26, 1991
United New Concepts Fund, Inc. November 26, 1991
United Retirement Shares, Inc. November 26, 1991
United Vanguard Fund, Inc. November 26, 1991
United Funds, Inc.
United Bond Fund November 26, 1991
United Income Fund November 26, 1991
United Accumulative Fund November 26, 1991
United Science and Technology Fund November 26, 1991
TMK/United Funds, Inc.
High Income Portfolio November 26, 1991
Money Market Portfolio November 26, 1991
Bond Portfolio November 26, 1991
Income Portfolio November 26, 1991
Growth Portfolio November 26, 1991
Balanced Portfolio April 29, 1994
International Portfolio April 29, 1994
Limited-Term Bond Portfolio April 29, 1994
Small Cap Portfolio April 29, 1994
Waddell & Reed Funds, Inc.
Total Return Fund April 24, 1992
Municipal Bond Fund April 24, 1992
Limited-Term Bond Fund April 24, 1992
Global Income Fund April 24, 1992
Growth Fund April 24, 1992
Torchmark Government Securities Fund, Inc. December 9, 1992
Torchmark Insured Tax-Free Fund, Inc. December 9, 1992
The following is a list of Domestic Subcustodians, Foreign Sub-Subcustodian
and Special Subcustodians under the Custodian Agreement as amended:
A. Domestic Subcustodians:
Brown Brothers Harriman & Co.
United Missouri Trust Company of New York
B. Foreign Sub-Subcustodians:
Country Sub-Subcustodian Depository
Argentina Citibank, n.a., Argentina CDV
Australia National Australia Bank Ltd. AUSTRACLEAR, RITs
Austria Creditanstalt Bankverein KONTROLLBANK (OEKB)
Belgium Banque Bruxelles Lambert CIK, BNB
Brazil First National Bank of Boston, Brazil BOVESPA, CLC
Canada Canadian Imperial Bank of Commerce CDS
Chile Citibank, n.a. Chile None
Denmark Den Danske VP
Finland Union Bank of Finland Securities
Association
France Banque Indosuez SICOVAM; Banque De
France
Germany Berliner Handels Und.Frankfurter Bank KASSENVEREIN
Hong Kong HongKong & Shanghai Banking Corp. HongKong Securities
Clearing
Company
Indonesia Citibank, n.a. None
Italy Banca Commerciale Italiana MONTE TITOLI, Banco
D'Italia
Japan Mitsui Trust & Banking Co. JASDEC, Bank of
Japan
Korea Citibank, n.a. Korean Securities
Depository
Corporation (KSD)
Malaysia HongKong & Shanghai Banking Corp. MCD; Bank Negara Malaysia
Mexico Citibank n.a., Mexico INDEVAL; Banco De
Mexico
Netherlands ABN - Amro Bank NECIGER; De Nederlandsche
Bank
Peru Citibank, n.a. Caja De Valores (CAVAL)
Philippines Citibank n.a., Philippines None
Singapore HongKong & Shanghai Banking Corp. CDP
Spain Banco Santander SCLV; Banco De
Espana
Sweden Skandinaviska Enskilda Banken VPC
Switzerland Union Bank of Switzerland SEGA
Thailand HongKong & Shanghai Banking Corp. Share Depository Center
(SDC)
Turkey Citibank, n.a. None
United Kingdom Midland Securities PLC CMO, CGO
C. Special Subcustodians:
Wilmington Trust Co.
The Bank of New York, n.a.
Euroclear
APPENDIX "B"
TO
CUSTODIAN AGREEMENT
BETWEEN
UNITED CASH MANAGEMENT, INC.
AND
UNITED MISSOURI BANK, n.a.
Dated as of November 26, 1991
The Fund shall be responsible for providing the Custodian the net asset
levels the Custodian requires to calculate the net asset portion of the
Custodian's fees. Such determinations shall be based upon the average monthly
assets of each Fund and shall specify the level of domestic assets and foreign
assets by country, as appropriate. Domestic assets shall include all assets
held in the United States including but not limited to American Depository
Receipts. Foreign assets shall include all assets held outside the United
States including but not limited to securities which clear through Euroclear or
Cedel. The Custodian will provide as soon as practicable after receiving the
information provided by the Fund with respect to the net asset level numbers, a
bill for the Fund, including such reasonable detail in support of each bill as
may be reasonably requested by the Fund. As used in this Appendix "B", "United
Funds" shall mean all funds in the United Group of Funds, TMK/United Funds,
Inc., Waddell & Reed Funds, Inc., Torchmark Insured Tax-Free Fund, Inc. and
Torchmark Government Securities Fund, Inc.
DOMESTIC CUSTODY FEE SCHEDULE
A. Annual Fee (combining all domestic assets):
An annual fee to be computed as of month end and payable each month of the
Fund's fiscal year (after receipt of the bill issued to each Fund based
upon its portion of domestic assets), at the annual rate of:
.00025 for the first $100,000,000 of the net assets of the United Funds,
plus
.00015 for the next $900,000,000 of the net assets of the United Funds,
plus
.00010 for the next $1,000,000,000 of the net assets of the United Funds,
plus
.00005 for the next $3,000,000,000 of the net assets of the United Funds,
plus
.000025 for the next $5,000,000,000 of the net assets of the United Funds,
plus
.00001 for any net assets exceeding $10,000,000,000 of the assets of the
United Funds.
B. Portfolio Transaction Fees (billed to each Fund):
(1)For each portfolio transaction* processed through a
Depository (DTC, PTC, Fed) $10.00
(2) For each portfolio transaction* processed through the
New York office (physical settlement) 20.00
(3)For each futures/options contract written 25.00
(4)For each principal/interest paydown 6.00
(5)For each interfund note transaction 5.00
* A portfolio transaction includes a receive, delivery, maturity, free
security movement and corporate action.
C. Earnings Credits:
Positive earnings credits will be applied on all collected custody and cash
management balances of each Fund at the Custodian to earn the Custodian's
daily repurchase agreement rate less reserve requirements and FDIC
premiums. Negative earnings credits will be charged on all uncollected
custody and cash management balances of each Fund at the Custodian's prime
rate less 150 basis points on each day a negative balance occurs. Positive
and/or negative earnings credits will be monitored daily for each Fund and
the net positive or negative amount for each Fund will be included in the
monthly statements. Excess positive credits for each Fund will be carried
forward indefinitely.
D. Out-of-Pocket Expenses (passed directly from Special Subcustodians):
Includes all fees charged by any Special Subcustodian to the Custodian as
Custodian for any assets held at the Special Subcustodian.
GLOBAL CUSTODY FEE SCHEDULE
A. Annual Fee (combining all foreign assets):
An annual fee to be computed as of month end and payable each month of the
Fund's fiscal year (after receipt of the bill issued to each Fund based
upon its portion of global assets), at the annual rate of:
.0035 on all assets held in countries assigned to category 5 below, plus
.0014 on all assets held in countries assigned to category 4 below, plus
.0012 on the first $500,000,000 remaining global assets, plus
.0010 on the remaining global assets in excess of $500,000,000.
B. Portfolio Transaction Fees (billed to each Fund)*:
Category 1: $30.00
Belgium, Canada, Japan, Netherlands
Category 2: 60.00
Austria, Denmark, Germany, Ireland, Italy, Sweden, United Kingdom
Category 3: 90.00
Australia, Finland, France, Greece, Hong Kong, Indonesia, Malaysia, New
Zealand,
Norway, Philippines, Portugal, Singapore, Spain, Switzerland, Thailand
Category 4: 30.00
Argentina, Brazil, Chile, India, Mexico, Peru, Turkey
Category 5: 60.00
Korea
Miscellaneous Cash Transactions 10.00
* A portfolio transaction includes a receive, delivery, maturity, free
security movement and corporate action.
C. Out-of-Pocket Expenses (passed directly from Brown Brothers Harriman &
Co.):
Including, but not limited to, telex, legal, telephone, postage, and direct
expenses, including but not limited to, emerging markets subcustodian
custody fees and transaction charges (Category 4 above), tax reclaim,
customized systems programming, certificate fees, duties, and registration
fees.
D. Short-term Dollar Denominated Global Assets--Eurodollar CDs, Time Deposits
(billed to each Fund):
(1)An annual fee to be computed as of month end and payable each month of
the Fund's fiscal year (after receipt of the bill issued to the Fund
based upon its portion of short-term dollar denominated assets), at the
annual rate of:
.0004 on all short-term dollar denominated assets of the United Funds.
(2)Portfolio Transaction Fees (billed to each Fund)*:
Eurodollar Time Deposits/CDs will be assessed the following charges:
First Chicago Clearing Centre-Trades with Members $136.00
First Chicago Clearing Centre-Trades with Non-members 153.00
First Chicago Clearing Centre-Income Collection 64.00
E. Euroclear Eligible Issues (billed to each Fund):
(1)An annual fee to be computed as of month end and payable each month of
the Fund's fiscal year (after receipt of the bill
issued to the Fund based upon its portion of Euroclear issues), at the annual
rate of:
2.5 basis points on all United Funds Euroclear assets held in account
at United Missouri Bank, n.a.
(2) Portfolio Transaction Fees (billed to each Fund)*:
Euroclear $60.00
* A portfolio transaction includes a receive, delivery, maturity, free
security movement and corporate action.
[ARTICLE] 6
[LEGEND]
The schedule contains summary financial information extracted from the annual
report to shareholders dated June 30, 1994 and is qualified in its entirety by
reference to such financial statements.
[/LEGEND]
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] JUN-30-1994
[PERIOD-END] JUN-30-1994
[INVESTMENTS-AT-COST] 316,180,983
[INVESTMENTS-AT-VALUE] 316,180,983
[RECEIVABLES] 3,320,335
[ASSETS-OTHER] 579,156
[OTHER-ITEMS-ASSETS] 26,567
[TOTAL-ASSETS] 320,107,041
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 3,187,401
[TOTAL-LIABILITIES] 3,187,401
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 313,750,444
[SHARES-COMMON-STOCK] 316,919,640
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 316,919,640
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 11,658,916
[OTHER-INCOME] 0
[EXPENSES-NET] 3,405,162
[NET-INVESTMENT-INCOME] 8,253,754
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 8,253,754
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 8,253,754
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 421,971,836
[NUMBER-OF-SHARES-REDEEMED] 463,748,538
[SHARES-REINVESTED] 8,072,255
[NET-CHANGE-IN-ASSETS] (33,704,447)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1,372,977
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 3,405,162
[AVERAGE-NET-ASSETS] 328,520,409
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] .03
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] .03
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] 1.04
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
