UNITED
CASH
MANAGEMENT,
INC.
SEMIANNUAL
REPORT
------------------------------------------
For the six months ended December 31, 1996
<PAGE>
This report is submitted for the general information of the shareholders of
United Cash Management, Inc. It is not authorized for distribution to
prospective investors in the Fund unless accompanied with or preceded by
the United Cash Management, Inc. current prospectus.
<PAGE>
PRESIDENT'S LETTER
DECEMBER 31, 1996
Dear Shareholder:
As President of your Fund, I would like to thank you for your
continued confidence in our products and services. Our goal to provide the
best service possible to our shareholders has not changed since we opened
our doors nearly 60 years ago. Waddell & Reed's team of professionals,
including the Fund's manager, our customer service representatives and your
personal account representative continue to strive to meet your financial
needs.
Waddell & Reed plays a special role in the investment industry. We
take pride in being one of the few financial services firms committed to
locally based account representatives who provide the personal service you
need. When you're ready to evaluate your financial plan to keep up with
life's changes, or to find an answer to a financial question that you may
have, your representative is ready to assist you--when you need it. He or
she is available to help you plan for your retirement, fund a child's
education or make plans for other long-term financial goals.
All of us are committed to helping you meet the financial goals that
are important to you. This is accomplished by our offering investment
products to meet a variety of personal financial objectives, along with the
personal service to make the investment process more convenient and
accessible.
We want to continue to meet your financial needs for many years to
come. Should you have any questions about your account or other financial
issues that are important to you, contact your personal account
representative or your local Waddell & Reed office. They're ready to help
you make the most of your financial future.
Respectfully,
Keith A. Tucker
President
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1996
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
Certificates of Deposit
Domestic - 2.00%
Bankers Trust New York Corp.,
5.47%, 1-7-97 ......................... $10,000 $ 9,997,530
Yankee - 8.41%
Banque Nationale de Paris,
5.31%, 3-6-97 ......................... 10,000 10,000,000
Creditanstalt - Bankverein,
5.38%, 3-7-97 ......................... 10,000 10,000,000
Deutsche Bank AG - New York,
5.71%, 11-7-97 ........................ 10,000 10,000,000
Societe Generale - New York,
5.3%, 2-21-97 ......................... 12,000 12,000,000
Total ................................. 42,000,000
Total Certificates of Deposit - 10.41% 51,997,530
Notes - 7.88%
Capital One Funding Corporation, Series
1996 A (Bank One, Kentucky, NA),
5.84%, 1-2-97 ......................... 13,351 13,351,000
Comerica Bank,
5.5855%, 2-14-97....................... 12,000 12,000,000
PNC Bank, N.A.,
5.5037%, 1-13-97 ...................... 14,000 13,995,738
Total ................................. 39,346,738
TOTAL BANK OBLIGATIONS - 18.29% $ 91,344,268
(Cost: $91,344,268)
CORPORATE OBLIGATIONS
Commercial Paper
Chemicals and Allied Products - 2.00%
BOC Group PLC (The),
5.43%, 1-13-97 ........................ 10,000 9,981,900
Communication - 2.46%
Bell Atlantic Financial Services Inc.:
5.33%, 1-24-97......................... 800 797,276
5.8%, 1-24-97.......................... 7,315 7,287,894
5.53%, 1-29-97......................... 1,000 995,699
GTE Florida Inc.,
6.0%, 1-14-97 ......................... 3,200 3,193,067
Total ................................. 12,273,936
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1996
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
Electric, Gas and Sanitary Services - 4.80%
Duke Power Co.,
6.85%, 1-2-97 ......................... $ 5,000 $ 4,999,049
Michigan Consolidated Gas Co.,
5.41%, 1-10-97 ........................ 10,000 9,986,475
Questar Corp.:
6.75%, 1-2-97 ......................... 5,000 4,999,063
5.65%, 1-28-97 ........................ 4,000 3,983,050
Total ................................. 23,967,637
Food and Kindred Products - 0.56%
General Mills, Inc.,
Master Note ........................... 2,796 2,796,000
Insurance Carriers - 1.19%
Transamerica Finance Corporation,
5.38%, 2-7-97 ......................... 6,000 5,966,823
Metal Mining - 1.07%
BHP Finance (USA) Inc.:
5.35%, 1-23-97 ........................ 460 458,496
5.35%, 1-28-97 ........................ 4,905 4,885,318
Total ................................ 5,343,814
Nondepository Institutions - 4.99%
Associates Corporation of North America,
5.31%, 1-13-97 ........................ 10,000 9,982,300
Island Finance Puerto Rico Inc.,
5.55%, 1-31-97 ........................ 5,000 4,976,875
Penney (J.C.) Funding Corp.,
5.4%, 2-7-97 .......................... 10,000 9,944,500
Total ................................. 24,903,675
Personal Services - 2.99%
Block Financial Corp.:
5.43%, 1-22-97 ........................ 5,000 4,984,162
5.55%, 1-27-97 ........................ 10,000 9,959,917
Total ................................. 14,944,079
Textile Mill Products - 0.20%
Sara Lee Corporation,
Master Note ........................... 1,011 1,011,000
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1996
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
Transportation Equipment - 3.48%
Echlin, Inc.:
5.4%, 2-3-97 .......................... $ 6,500 $ 6,467,825
5.55%, 2-18-97 ........................ 11,000 10,918,600
Total ................................. 17,386,425
Total Commercial Paper - 23.74% 118,575,289
Notes
Auto Repair, Services and Parking - 2.60%
PHH Corporation,
5.8105%, 3-26-97 ...................... 13,000 12,998,244
Insurance Carriers - 1.01%
Transamerica Finance Corp.,
6.75%, 8-15-97 ........................ 5,000 5,025,841
Nondepository Institutions - 7.01%
American General Finance Corp.,
5.8%, 4-1-97 .......................... 10,000 9,993,192
Caterpillar Financial Services Corp.,
5.9585%, 1-28-97 ...................... 13,000 13,000,000
Deere (John) Capital Corp.,
5.95%, 6-30-97 ........................ 12,000 11,993,700
Total ................................. 34,986,892
Security and Commodity Brokers - 2.80%
Merrill Lynch & Co., Inc.,
5.6541%, 5-29-97 ...................... 14,000 14,000,000
Total Notes - 13.42% 67,010,977
TOTAL CORPORATE OBLIGATIONS - 37.16% $185,586,266
(Cost: $185,586,266)
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS
California - 9.79%
California Pollution Control Financing
Authority, Environmental Improvement
Revenue Bonds (Shell Martinez Refining
Company Project), Series 1996 (Taxable),
5.52%, 1-2-97 ......................... $15,000 $ 15,000,000
City of Anaheim, California, Certificates
of Participation (1993 Arena Financing
Project), Municipal Adjustable Rate
Taxable Securities (Credit Suisse),
5.56%, 5-1-97 ......................... 15,000 15,000,000
Oakland-Alameda County Coliseum Lease Revenue
Bonds (Oakland Coliseum Project), 1995 Series
B-1 (Canadian Imperial Bank of Commerce),
5.42%, 1-3-97 ......................... 14,000 14,000,000
Community Redevelopment Agency of the City of
Visalia, California, East Visalia Redevelopment
Project, Variable Interest Short Term Adjustable
Securities (National Westminster Bank PLC, San
Francisco Overseas Branch),
5.764%, 1-2-97 ........................ 4,895 4,895,000
Total ................................. 48,895,000
Indiana - 1.00%
City of Whiting, Indiana, Industrial Sewage
and Solid Waste Disposal Revenue Bonds (Amoco
Oil Company Project), Taxable Series 1995,
5.43%, 1-9-97 ......................... 5,000 5,000,000
Kentucky - 0.50%
City of Bardstown, Kentucky, Taxable Variable
Rate Demand Industrial Revenue Bonds, Series 1994
(R.J. Tower Corporation Project), (Comerica Bank),
5.82%, 1-2-97 ......................... 2,500 2,500,000
Louisiana - 3.22%
Industrial District No. 3 of the Parish
of West Baton Rouge, State of Louisiana,
Variable Rate Demand Revenue Bonds (The
Dow Chemical Company Project),
Series 1995 (Taxable):
5.41%, 1-3-97 ......................... 6,100 6,100,000
5.45%, 1-17-97 ........................ 10,000 10,000,000
Total ................................. 16,100,000
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Michigan - 0.37%
Crystal Enterprises, Inc., Crystal Mountain Resort,
Taxable Variable Rate Demand Notes, Series 1995
(NBD Bank),
5.82%, 1-2-97 ......................... $ 1,855 $ 1,855,000
Missouri - 0.27%
The Industrial Development Authority
of the County of St. Louis,
Missouri, Series 1991B (Citibank
of New York),
6.2891%, 1-2-97 ....................... 1,335 1,335,000
New York - 6.67%
Health Insurance Plan of Greater New York
(Morgan Guaranty Trust Company of New York),
5.8%, 1-1-97 .......................... 21,500 21,500,000
The City of New York, General Obligation Bonds,
Fiscal 1995 Series B, Taxable Adjustable Rate
Bonds (Bayerische Landesbank Girozentrale,
New York Branch),
5.58%, 1-15-97 ........................ 8,000 8,000,000
Town of Hempstead, Industrial Development Agency,
Variable Rate Demand Taxable Industrial Development
Revenue Bonds, Series 1996 (1500 Hempstead TPK,
LLC Facility), (The Bank of New York),
5.814%, 1-2-97 ........................ 3,800 3,800,000
Total ................................. 33,300,000
Ohio - 0.98%
City of Cleveland, Ohio, Subordinated Income Tax,
Variable Rate Refunding Bonds, Series 1994,
(Union Bank of Switzerland, New York Branch and
Credit Suisse, New York Branch),
5.56%, 2-4-97 ......................... 4,900 4,900,000
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Pennsylvania - 2.04%
Berks County Industrial Development Authority
(Commercial Facilities Project), Series
B of 1995 (Meridian Bank),
5.75%, 1-1-97 ......................... $ 5,230 $ 5,230,000
Philadelphia Authority for Industrial Development,
Variable/Fixed Rate Federally Taxable
Economic Development Bonds (Mothers Work,
Inc.), Series of 1995 (Meridian Bank),
5.75%, 1-1-97 ......................... 3,915 3,915,000
Montgomery County Industrial Development
Authority, Taxable Fixed Rate/Variable
Rate Demand Revenue Bonds (410 Horsham
Associates Project), Series of 1995
(Meridian Bank),
5.75%, 1-1-97 ......................... 1,050 1,050,000
Total ................................. 10,195,000
South Dakota - 2.37%
Central Plains Clinic Ltd., Floating Rate
Taxable Bonds, Series 1996 (Cooperatieve
Centrale Raiffeisen-Borenleenbank B.A.,
"Rabobank Nederland", New York Branch),
5.55%, 1-21-97 ........................ 11,850 11,850,000
Texas - 6.25%
Metrocrest Hospital Authority, Series 1989A
(The Bank of New York),
5.4059%, 3-3-97 ....................... 15,000 14,862,599
Gulf Coast Waste Disposal Authority, Pollution
Control Revenue Bonds (Amoco Oil Company
Project), Taxable Series 1995,
5.4%, 1-21-97 ......................... 10,000 10,000,000
Lower Neches Valley Authority, Industrial
Development Corporation (Texas), Variable
Rate Sewage Facilities Revenue Bonds,
Series 1995A (Taxable) (Mobil Oil Refining
Corporation Project),
5.4%, 1-21-97 ......................... 6,340 6,340,000
Total ................................. 31,202,599
TOTAL MUNICIPAL OBLIGATIONS - 33.46% $167,132,599
(Cost: $167,132,599)
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1996
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT OBLIGATIONS
Federal Home Loan Banks,
5.82%, 11-6-97 ........................ $ 3,000 $ 3,000,221
Federal National Mortgage Association,
5.15%, 6-20-97......................... 10,000 9,995,400
Student Loan Marketing Association,
5.52%, 1-7-97.......................... 15,000 15,000,000
TOTAL UNITED STATES GOVERNMENT OBLIGATIONS - 5.61% $ 27,995,621
(Cost: $27,995,621)
TOTAL INVESTMENT SECURITIES - 94.52% $472,058,754
(Cost: $472,058,754)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 5.48% 27,380,043
NET ASSETS - 100.00% $499,438,797
Notes to Schedule of Investments
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
DECEMBER 31, 1996
Assets
Investment securities - at value (Note 1) ........ $472,058,754
Cash ............................................ 301,224
Receivables:
Fund shares sold ................................ 32,399,610
Interest ........................................ 3,507,863
Prepaid insurance premium ........................ 19,572
------------
Total assets .................................. 508,287,023
------------
Liabilities
Payable for Fund shares redeemed ................. 8,610,479
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 167,065
Dividends payable ................................ 8,573
Accrued accounting services fee (Note 2) ......... 5,000
Accrued service fee (Note 2) ..................... 1,096
Other ............................................ 56,013
------------
Total liabilities ............................. 8,848,226
------------
Total net assets ............................. $499,438,797
============
Net Assets
$0.01 par value capital stock, authorized -- 5,000,000,000;
Class A shares outstanding -- 497,613,063;
Class B shares outstanding -- 1,825,734
Capital stock ................................... $ 4,994,388
Additional paid-in capital ...................... 494,444,409
------------
Net assets applicable to outstanding
units of capital ............................. $499,438,797
============
Net asset value, redemption and offering price
per share for Class A and Class B ................ $1.00
=====
See notes to financial statements.
<PAGE>
UNITED CASH MANAGEMENT, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended DECEMBER 31, 1996
Investment Income
Interest (Note 1B) ............................... $12,642,850
-----------
Expenses (Note 2):
Investment management fee ....................... 927,083
Transfer agency and dividend disbursing -
Class A ........................................ 879,381
Custodian fees .................................. 39,231
Accounting services fee ......................... 30,000
Legal fees ...................................... 20,287
Audit fees ...................................... 9,604
Distribution fee - Class B ...................... 5,541
Service fee - Class B ........................... 1,517
Shareholder servicing fee - Class B ............. 841
Other ........................................... 178,706
-----------
Total expenses ................................ 2,092,191
-----------
Net investment income ........................ 10,550,659
-----------
Net increase in net assets resulting
from operations ........................... $10,550,659
===========
See notes to financial statements.
<PAGE>
UNITED CASH MANAGEMENT, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the For the
six months fiscal year
ended ended
December 31, June 30,
1996 1996
------------ -----------
Increase in Net Assets
Operations:
Net investment income ..............$ 10,550,659 $20,127,724
------------ ------------
Net increase in net assets
resulting from operations ....... 10,550,659 20,127,724
------------ ------------
Dividends to shareholders
from net investment income:*
Class A (10,521,461) (20,115,214)
Class B (29,198) (12,510)
------------ ------------
(10,550,659) (20,127,724)
------------ ------------
Capital share transactions:**
Proceeds from sale of shares:
Class A ..........................1,467,373,2082,162,044,174
Class B .......................... 2,050,473 1,209,660
Proceeds from reinvestment
of dividends:
Class A .......................... 10,328,304 19,534,491
Class B .......................... 27,767 11,555
Payments for shares redeemed:
Class A ..........................(1,382,097,352)(2,148,369,622)
Class B .......................... (882,601) (591,120)
------------ ------------
Net increase in net assets
resulting from capital
share transactions .............. 96,799,799 33,839,138
------------ ------------
Total increase .................. 96,799,799 33,839,138
Net Assets
Beginning of period ................. 402,638,998 368,799,860
------------ ------------
End of period .......................$499,438,797 $402,638,998
============ ============
Undistributed net investment
income ........................... $--- $---
==== ====
*See "Financial Highlights" on pages 13-14.
**The number of shares transacted during the periods corresponds to the
amounts included in this statement because shares are recorded at $1.00
per share.
See notes to financial statements.
<PAGE>
UNITED CASH MANAGEMENT, INC.
FINANCIAL HIGHLIGHTS
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
six
months For the fiscal year ended June 30,
ended ----------------------------------
12/31/96 1996 1995 1994 1993 1992
-------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------
Net investment
income ........... 0.0234 0.0487 0.0465 0.0252 0.0251 0.0434
Less dividends
declared ......... (0.0234)(0.0487)(0.0465)(0.0252)(0.0251)(0.0434)
------ ------ ------ ------ ------ ------
Net asset value,
end of period .... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= ======= =======
Total return........ 2.38% 5.01% 4.74% 2.55% 2.57% 4.41%
Net assets, end of
period (000
omitted) .........$497,613$402,009$368,800$316,920$350,624$448,127
Ratio of expenses to
average net
assets ........... 0.91%* 0.91% 0.97% 1.04% 1.06% 0.99%
Ratio of net
investment income
to average net
assets ........... 4.60%* 4.89% 4.68% 2.51% 2.56% 4.36%
*Annualized.
See notes to financial statements.
<PAGE>
UNITED CASH MANAGEMENT, INC.
FINANCIAL HIGHLIGHTS
Class B Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the For the
six period
months from 9/5/95*
ended through
12/31/96 6/30/96
-------- --------
Net asset value,
beginning of
period ........... $1.00 $1.00
------ ------
Net investment
income ........... 0.0201 0.0312
Less dividends
declared ......... (0.0201) (0.0312)
------ ------
Net asset value,
end of period .... $1.00 $1.00
======= =======
Total return........ 2.04% 3.15%
Net assets, end of
period (000
omitted) ......... $1,826 $630
Ratio of expenses to
average net
assets ........... 1.51%** 1.88%**
Ratio of net
investment income
to average net
assets ........... 4.00%** 3.76%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED CASH MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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. Its investment objective is to seek maximum current
income to the extent consistent with stability of principal by investing in
a portfolio of money market instruments meeting specified quality
standards. 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 Subchapter M of 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.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
NOTE 2 -- Investment Management and Payments to Affiliated Persons
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 $15.1 billion of combined net assets at December 31, 1996)
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
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 has adopted a 12b-1 plan for Class B shares under which W&R,
principal underwriter and sole distributor of the Fund's shares, is
compensated in an amount calculated and payable daily up to 1% annually of
the Fund's average daily net assets for Class B shares. This fee consists
of two elements: (i) up to 0.75% may be paid to the Distributor (W&R) for
distribution services and distribution expenses including commissions paid
by the Distributor to its sales representatives and managers and (ii) up to
0.25% may be paid to reimburse the Distributor for continuing payments made
to the Distributor's representatives and managers, its administrative costs
in overseeing these payments, and the expenses of WARSCO in providing
certain personal services to shareholders. During the period ended
December 31, 1996, the Distributor received $7,058 in 12b-1 payments.
During this same period W&R paid no sales commissions.
A contingent deferred sales charge may be assessed against a
shareholder's redemption amount of Class B shares and paid to the
Distributor, W&R. The purpose of the deferred sales charge is to
compensate the Distributor for the costs incurred by the Distributor in
connection with the sale of a Fund's shares. The amount of the deferred
sales charge will be the following percent of the total amount invested
during a calendar year to acquire the shares or the value of the shares
redeemed, whichever is less. Redemption at any time during the calendar
year of investment and the first full calendar year after the calendar year
of investment, 3%; the second full calendar year, 2%; the third full
calendar year, 1%; and thereafter, 0%. All investments made during a
calendar year shall be deemed as a single investment during the calendar
year for purposes of calculating the deferred sales charge. The deferred
sales charge will not be imposed on shares representing payment of
dividends or distributions or on amounts which represent an increase in the
value of the shareholder's account resulting from capital appreciation
above the amount paid for shares purchased during the deferred sales charge
period. During the period ended December 31, 1996, the Distributor
received $9,494 in deferred sales charges.
The Fund paid Directors' fees of $8,677.
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.
NOTE 3 -- Commencement of Multiclass Operations
On September 5, 1995, the Fund was authorized to offer investors a choice
of two classes of shares, Class A and Class B, each of which has equal
rights as to assets and voting privileges. Class A shares are not subject
to a sales charge on purchases or a contingent deferred sales charge on
redemption; they are not subject to a Rule 12b-1 Service Plan. A
comprehensive discussion of the terms under which shares of either class
are offered is contained in the Prospectus and the Statement of Additional
Information for the Fund.
Income and non-class specific expenses are allocated daily to each
class of shares based on the value of relative net assets as of the
beginning of each day adjusted for the prior day's capital share activity.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
United Cash Management, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of United Cash
Management, Inc., as of December 31, 1996, the related statements of
operations and changes in net assets for the six-month period then
ended, and the financial highlights for the six-month period then
ended. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and the
financial highlights based on our audit. The financial statements
and the financial highlights of the Fund for each of the periods in
the five-year period ended June 30, 1996 were audited by other
auditors whose report, dated August 5, 1996, expressed an
unqualified opinion on those statements and financial highlights.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and the financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned at December 31, 1996 by correspondence with the
custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
United Cash Management, Inc. as of December 31, 1996, the results of
its operations, the changes in its net assets, and the financial
highlights for the six-month period then ended in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
February 7, 1997
<PAGE>
To all IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from an IRA unless you make a written election
not to have taxes withheld. The election may be made by submitting forms
provided by Waddell & Reed, Inc. which can be obtained from your Waddell &
Reed representative or by submitting Internal Revenue Service form W-4P.
Once made, an election can be revoked by providing written notice to
Waddell & Reed, Inc. If you elect not to have tax withheld you may be
required to make payments of estimated tax. Penalties may be imposed by
the IRS if withholding and estimated tax payments are not adequate.
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
William L. Rogers, Los Angeles, California
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
OFFICERS
Keith A. Tucker, President
Robert L. Hechler, Vice President
Henry J. Herrmann, Vice President
John M. Holliday, Vice President
Theodore W. Howard, Vice President and Treasurer
Sharon K. Pappas, Vice President and Secretary
Richard K. Poettgen, Vice President
<PAGE>
The United Group of Mutual Funds
United Asset Strategy Fund, Inc.
United Cash Management, Inc.
United Continental Income Fund, Inc.
United Funds, Inc.
United Bond Fund
United Income Fund
United Accumulative Fund
United Science and Technology Fund
United Gold & Government Fund, Inc.
United Government Securities Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United International Growth Fund, Inc.
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United New Concepts Fund, Inc.
United Retirement Shares, Inc.
United Vanguard Fund, Inc.
Waddell & Reed Funds, Inc.
Asset Strategy Fund
Growth Fund
International Growth Fund
Limited-Term Bond Fund
Municipal Bond Fund
Total Return Fund
----------------------------------
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
Toll-Free - (800)366-5465
Local - 236-1303
For Yield Information Only
Toll-Free - (800)366-4953
Local - 236-1307
Our INTERNET address is:
http://www.waddell.com
NUR1010SA(12-96)
printed on recycled paper
