UNITED
CASH
MANAGEMENT,
INC.
ANNUAL
REPORT
---------------------------------------
For the fiscal year ended June 30, 1998
<PAGE>
MANAGER'S LETTER
- -----------------------------------------------------------------
JUNE 30, 1998
Dear Shareholder:
This report relates to the operation of United Cash Management, Inc. for
the fiscal year ended June 30, 1998. The following discussion and tables
provide you with information regarding the Fund's performance during that
period.
The past fiscal year was marked by relatively stable money market yields
due largely to an unchanging Federal Reserve policy. The Federal Funds rate
remained at 5.50% the entire year. Although the Federal Reserve Policy
Committee contemplated raising interest rates throughout the year, no change was
made.
In May of this year, I assumed Fund management responsibilities following
the retirement of the former manager. Although there has been a personnel
transition, the strategies and techniques used in the management of the Fund
have remained consistent. We continued to maintain a 25 to 30% position in
floating rate instruments to take advantage of temporary short-term interest
rate increases resulting from market fluctuations. Floating rate instruments
reset quickly upon changes in interest rates. Our average maturity was
increased somewhat over the previous fiscal year, as we took advantage of
opportunities presented by the momentary steepness of the yield curve during
this period of stable Federal Reserve policy.
It is anticipated that short-term interest rates will remain relatively
stable for some time. We believe that the economic environment will not change
substantially in the near term, and should remain one of growth, low inflation
and stable prices. We will seek to maintain performance by identifying new
issuers and new structures to maximize yield while seeking to maintain a low
risk profile. We will continue to include the purchase of securities, such as
taxable municipal bonds, floating rate notes and callable notes, which have
added to the Fund's performance in the past.
Thank you very much for your continued support and confidence in our
organization.
Respectfully,
Mira Stevovich
Manager, United Cash Management, Inc.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1998
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
Certificates of Deposit
Domestic - 6.71%
Bankers Trust New York Corp.:
5.95%, 9-9-98 ......................... $11,000 $10,992,925
5.61%, 3-19-99 ........................ 10,000 9,997,193
Morgan Guaranty Trust Company of New York,
5.8%, 7-28-98 ......................... 15,000 14,996,087
Total ................................. 35,986,205
Yankee - 10.25%
Banque Nationale de Paris - Chicago,
5.73%, 2-11-99 ........................ 10,000 10,000,000
Societe Generale - New York:
5.55%, 2-9-99 ......................... 15,000 14,985,418
5.5712%, 5-26-99 ...................... 5,000 4,996,626
Svenska Handelsbanken - New York,
5.74%, 6-1-99 ......................... 10,000 9,991,432
Westpac Banking Corp. - New York,
5.55%, 1-20-99 ........................ 15,000 14,986,006
Total ................................. 54,959,482
Total Certificates of Deposit - 16.96% 90,945,687
Commercial Paper - 1.12%
J.P. Morgan & Co., Incorporated,
5.52%, 7-6-98 ............................ 6,000 5,995,400
Notes - 3.35%
NationsBank Corp.,
5.57%, 6-25-99 ........................ 10,000 9,995,283
Wachovia Bank, N.A.,
5.895%, 10-2-98 ....................... 8,000 7,992,505
Total ................................. 17,987,788
TOTAL BANK OBLIGATIONS - 21.43% $ 114,928,875
(Cost: $114,928,875)
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS
Commercial Paper
Chemicals and Allied Products - 0.24%
Air Products and Chemicals Inc.,
5.55%, 9-4-98 ......................... $ 1,300 $ 1,286,973
Electric, Gas and Sanitary Services - 10.50%
Allegheny Power System Inc.:
5.52%, 7-20-98 ........................ 13,000 12,962,127
5.54%, 7-20-98 ........................ 6,291 6,272,606
Georgia Power Co.,
5.55%, 7-6-98 ......................... 19,000 18,985,354
Idaho Power Co.:
5.62%, 7-9-98 ......................... 1,300 1,298,376
5.58%, 7-16-98 ........................ 2,724 2,717,667
Questar Corp.:
5.56%, 7-10-98 ........................ 6,000 5,991,660
5.6%, 7-21-98 ......................... 1,675 1,669,789
5.61%, 7-30-98 ........................ 2,000 1,990,962
5.63%, 8-7-98 ......................... 4,500 4,473,961
Total ................................. 56,362,502
Engineering and Management Services - 2.78%
Halliburton Co.:
5.62%, 7-28-98 ........................ 5,000 4,978,925
5.62%, 8-7-98 ......................... 10,000 9,942,239
Total ................................. 14,921,164
Food and Kindred Products - 0.06%
General Mills, Inc.,
5.5152%, Master Note .................. 311 311,000
Furniture and Fixtures - 2.91%
Johnson Controls Inc.,
6.35%, 7-1-98 ......................... 15,600 15,600,000
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
General Merchandise Stores - 4.65%
Dillard Investment Co. Inc.:
6.75%, 7-1-98 ......................... $ 1,140 $ 1,140,000
6.3%, 7-2-98 .......................... 7,500 7,498,688
5.75%, 7-7-98 ......................... 3,675 3,671,478
5.78%, 7-7-98 ......................... 3,500 3,496,628
5.85%, 7-7-98 ......................... 4,185 4,180,920
5.78%, 7-20-98 ........................ 5,000 4,984,747
Total ................................. 24,972,461
Metal Mining - 0.19%
BHP Finance (USA) Inc.,
5.73%, 7-16-98 ........................ 1,000 997,613
Nondepository Institutions - 1.62%
Associates Financial Services Co. of Puerto
Rico Inc. (Associates Corp. of North
America, Guarantor):
5.55%, 7-6-98 ......................... 1,400 1,398,921
5.55%, 7-29-98 ........................ 4,000 3,982,733
Island Finance Puerto Rico Inc.,
5.51%, 7-8-98 ......................... 3,300 3,296,464
Total ................................. 8,678,118
Personal Services - 1.22%
Block Financial Corp.:
5.55%, 8-21-98 ........................ 1,600 1,587,420
5.53%, 8-27-98 ........................ 5,000 4,956,221
Total ................................. 6,543,641
Security and Commodity Brokers - 0.19%
Merrill Lynch & Co., Inc.,
6.0%, 7-2-98 .......................... 1,000 999,833
Total Commercial Paper - 24.36% 130,673,305
Commercial Paper (backed by irrevocable bank
letter of credit) - 1.41%
Electric, Gas and Sanitary Services
CommEd Fuel Co. Inc.,
5.53%, 8-14-98 ........................ 7,612 7,560,551
Notes
Auto Repair, Services and Parking - 3.17%
PHH Corporation:
5.5963%, 2-5-99 ....................... 5,000 4,999,707
5.59%, 2-10-99 ........................ 5,000 4,994,947
5.61%, 3-11-99 ........................ 7,000 6,992,098
Total ................................. 16,986,752
Electric, Gas and Sanitary Services - 2.79%
Baltimore Gas and Electric Company,
5.6175%, 9-1-98 ....................... 15,000 15,000,000
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Notes (Continued)
Nondepository Institutions - 2.61%
General Electric Capital Corp.,
5.5625%, 9-8-98 ....................... $14,000 $ 13,993,564
Real Estate - 0.34%
Trap Rock Industries, Inc. (CoreStates Bank,N.A.),
5.6712%, 7-1-98 ....................... 1,825 1,825,000
Security and Commodity Brokers - 2.79%
Merrill Lynch & Co., Inc.,
5.78%, 4-27-99 ........................ 15,000 15,000,000
Wholesale Trade -- Durable Goods - 0.93%
Caterpillar Financial Services Corp.,
5.6875%, 7-22-98 ...................... 5,000 5,000,189
Total Notes - 12.63% 67,805,505
TOTAL CORPORATE OBLIGATIONS - 38.40% $206,039,361
(Cost: $206,039,361)
MUNICIPAL OBLIGATIONS
California - 7.89%
California Pollution Control Financing Authority,
Environmental Improvement Revenue Bonds:
(Air Products and Chemicals, Inc./ Wilmington
Facility), Taxable Series 1997A (Air Products
and Chemicals, Inc.),
5.63%, 7-13-98 ........................ 11,500 11,500,000
(Shell Martinez Refining Company Project),
Series 1996 (Taxable), (Shell Oil Company),
5.6%, 9-2-98 .......................... 10,000 10,000,000
City of Anaheim, California, Certificates
of Participation (1993 Arena Financing
Project), Municipal Adjustable Rate
Taxable Securities (Credit Suisse),
5.65%, 9-1-98 ......................... 16,000 16,000,000
Community Redevelopment Agency of the City of
Visalia, California, East Visalia Redevelopment
Project, Variable Interest Short Term Adjustable
Securities (Bank of Tokyo, Mitsubishi),
5.76%, 7-2-98.......................... 4,830 4,830,000
Total ................................. 42,330,000
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Colorado - 1.23%
Panorama Metropolitan District, Arapahoe
County, Colorado (Taxable/Tax Exempt),
Series 1997A (Banque Nationale de Paris,
San Francisco Branch),
6.05%, 12-1-98 ........................ $ 4,575 $ 4,575,000
Kit Carson County, Colorado, Architectural
Development Revenue Bonds (Taxable), (Midwest
Farms, L.L.C. Project), Series 1997 (Norwest
Bank Minnesota, National Association),
5.75%, 7-2-98 ......................... 2,000 2,000,000
Total ................................. 6,575,000
Indiana - 2.98%
City of Whiting, Indiana, Industrial Sewage
and Solid Waste Disposal Revenue Bonds, Taxable
Series 1995 (Amoco Oil Company Project),
5.57%, 8-7-98 ......................... 16,000 16,000,000
Kentucky - 1.50%
City of Bardstown, Kentucky, Taxable Variable
Rate Demand Industrial Revenue Bonds, Series 1994
(R.J. Tower Corporation Project), (Comerica Bank),
5.69%, 7-2-98 ......................... 8,035 8,035,000
Louisiana - 2.98%
Industrial Development Board of the Parish
Of Calcasieu, Inc., Environmental Revenue
Bonds (CITGO Petroleum Corporation Project),
Series 1996 (Taxable),(ABN AMRO Bank N.V.),
5.6%, 8-7-98 .......................... 16,000 16,000,000
New Jersey - 2.51%
New Jersey Economic Development Authority,
Federally Taxable Variable Rate Demand/
Fixed Rate Revenue Bonds (The Morey
Organization, Inc. Project), Series of 1997
(CoreStates Bank, N.A.),
5.75%, 7-1-98.......................... 13,470 13,470,000
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
New York - 2.25%
The City of New York, General Obligation Bonds,
Fiscal 1995 Series B, Taxable Adjustable Rate
Bonds (Bayerische Landesbank Girozentrale,
New York Branch),
5.63%, 7-20-98 ........................ $ 8,500 $ 8,500,000
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),
5.76%, 7-2-98 ......................... 3,590 3,590,000
Total ................................. 12,090,000
North Carolina - 0.33%
Wake Forest University, Taxable Variable Rate
Demand Bonds, Series 1997 (Wachovia Bank, N.A.),
5.61%, 7-1-98 ......................... 1,800 1,800,000
Ohio - 2.80%
City of Cleveland, Ohio, Subordinated Income Tax,
Variable Rate Refunding Bonds, Series 1994
(Toronto-Dominion Bank, Houston Branch),
5.62%, 7-8-98 ......................... 15,000 15,000,000
Pennsylvania - 4.48%
Montgomery County Industrial Development
Authority:
Federally Taxable Variable Rate Demand
Revenue Bonds (Neose Technologies,
Inc. Project), Series B of 1997 (CoreStates
Bank, N.A.),
5.75%, 7-1-98 ......................... 7,900 7,900,000
Federally Taxable Variable Rate Demand/
Fixed Rate Revenue Bonds (Collegeville
Inn Project), Series of 1996 (CoreStates Bank,
N.A.),
5.75%, 7-1-98 ......................... 2,430 2,430,000
Taxable Fixed Rate/Variable Rate
Demand Revenue Bonds (410 Horsham
Associates Project), Series of 1995
(Meridian Bank),
5.75%, 7-1-98 ......................... 1,480 1,480,000
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Pennsylvania (Continued)
Berks County Industrial Development Authority
(Commercial Facilities Project), Series
B of 1995 (Meridian Bank),
5.75%, 7-1-98 ......................... $ 8,390 $ 8,390,000
Philadelphia Authority for Industrial Development,
Variable/Fixed Rate Federally Taxable
Economic Development Bonds (Mothers Work,
Inc.), Series of 1995 (Meridian Bank),
5.75%, 7-1-98 ......................... 3,825 3,825,000
Total ................................. 24,025,000
South Dakota - 0.47%
Central Plains Clinic Ltd., Floating Rate
Taxable Bonds, Series 1996 (Cooperatieve
Centrale Raiffeisen-Borenleenbank B.A.,
"Rabobank Nederland", New York Branch),
5.65%, 7-27-98 ........................ 2,500 2,500,000
Texas - 3.99%
Metrocrest Hospital Authority, Series 1989A
(The Bank of New York),
5.5696%, 8-4-98........................ 16,000 15,915,838
Gulf Coast Waste Disposal Authority, Pollution
Control Revenue Bonds (Amoco Oil Company
Project), Taxable Series 1995,
5.57%, 7-7-98 ......................... 5,480 5,480,000
Total ................................. 21,395,838
TOTAL MUNICIPAL OBLIGATIONS - 33.41% $179,220,838
(Cost: $179,220,838)
TOTAL INVESTMENT SECURITIES - 93.24% $500,189,074
(Cost: $500,189,074)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 6.76% 36,265,075
NET ASSETS - 100.00% $536,454,149
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
JUNE 30, 1998
(In Thousands, Except for Per Share Amounts)
Assets
Investment securities - at value (Note 1) ........ $500,189
Cash ............................................ 292
Receivables:
Fund shares sold ................................ 40,119
Interest ........................................ 3,962
Prepaid insurance premium ........................ 18
--------
Total assets .................................. 544,580
--------
Liabilities
Payable to Fund shareholders ..................... 7,567
Dividends payable ................................ 298
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 165
Accrued accounting services fee (Note 2) ......... 6
Accrued management fee (Note 2) .................. 5
Accrued service fee (Note 2) ..................... 1
Other ............................................ 84
--------
Total liabilities ............................. 8,126
--------
Total net assets ............................. $536,454
========
Net Assets
$0.01 par value capital stock, authorized -- 5,000,000;
Class A shares outstanding - 532,840
Class B shares outstanding - 3,614
Capital stock ................................... $ 5,365
Additional paid-in capital ...................... 531,089
--------
Net assets applicable to outstanding
units of capital ............................. $536,454
========
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 Fiscal Year Ended JUNE 30, 1998
(In Thousands)
Investment Income
Interest and amortization (Note 1B) .............. $29,702
-------
Expenses (Note 2):
Investment management fee ....................... 2,047
Transfer agency and dividend disbursing -
Class A ........................................ 2,001
Class B ....................................... 5
Custodian fees .................................. 119
Accounting services fee ......................... 63
Distribution fee - Class B ...................... 22
Legal fees ...................................... 16
Audit fees ...................................... 11
Service fee - Class B ........................... 6
Other ........................................... 362
-------
Total expenses ................................ 4,652
-------
Net investment income ........................ 25,050
-------
Net increase in net assets resulting
from operations ........................... $25,050
=======
See notes to financial statements.
<PAGE>
UNITED CASH MANAGEMENT, INC.
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
For the fiscal year ended
June 30,
-------------------------
1998 1997
------------- ------------
Increase in Net Assets
Operations:
Net investment income .............. $ 25,050 $ 22,264
-------- --------
Net increase in net assets
resulting from operations ....... 25,050 22,264
-------- --------
Dividends to shareholders
from net investment income:*
Class A (24,935) (22,156)
Class B (115) (108)
-------- --------
(25,050) (22,264)
-------- --------
Capital share transactions:**
Proceeds from sale of shares:
Class A .......................... 3,626,568 3,102,133
Class B .......................... 7,455 14,994
Proceeds from reinvestment
of dividends:
Class A .......................... 23,831 21,290
Class B .......................... 109 95
Payments for shares redeemed:
Class A .......................... (3,631,832) (3,011,159)
Class B .......................... (7,470) (12,199)
-------- --------
Net increase in net assets
resulting from capital
share transactions .............. 18,661 115,154
-------- --------
Total increase .................. 18,661 115,154
Net Assets
Beginning of period ................. 517,793 402,639
-------- --------
End of period ....................... $536,454 $517,793
======== ========
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 fiscal year ended June 30,
------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
Net investment
income ........... 0.0484 0.0472 0.0487 0.0465 0.0252
Less dividends
declared ......... (0.0484)(0.0472)(0.0487)(0.0465)(0.0252)
------ ------ ------ ------ ------
Net asset value,
end of period .... $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
Total return........ 4.93% 4.80% 5.01% 4.74% 2.55%
Net assets, end of
period (000
omitted) ......... $532,840$514,272$402,009$368,800$316,920
Ratio of expenses to
average net
assets ........... 0.89% 0.87% 0.91% 0.97% 1.04%
Ratio of net
investment income
to average net
assets ........... 4.84% 4.70% 4.89% 4.68% 2.51%
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 fiscal year period
ended June 30, from 9/5/95*
----------------------- through
1998 1997 6/30/96
-------- -------- --------
Net asset value,
beginning of
period ........... $1.00 $1.00 $1.00
------ ------ ------
Net investment
income ........... 0.0403 0.0407 0.0312
Less dividends
declared ......... (0.0403) (0.0407) (0.0312)
------ ------ ------
Net asset value,
end of period .... $1.00 $1.00 $1.00
======= ======= =======
Total return........ 4.10% 4.13% 3.15%
Net assets, end of
period (000
omitted) ......... $3,614 $3,521 $630
Ratio of expenses to
average net
assets ........... 1.71% 1.48% 1.88%**
Ratio of net
investment income
to average net
assets ........... 4.03% 4.14% 3.76%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED CASH MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
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 397 days. 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 $19.9
billion of combined net assets at June 30, 1998) 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 June 30, 1998, 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 June 30, 1998, the Distributor received $20,559 in deferred sales charges.
The Fund paid Directors' fees of $18,261, which are included in other
expenses.
W&R is an indirect subsidiary of Torchmark Corporation, a holding company,
and Waddell & Reed Financial, Inc., a holding company, and a direct subsidiary
of Waddell & Reed Financial Services, Inc., a holding company.
NOTE 3 -- 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. (the "Fund") as of
June 30, 1998, and the related statements of operations for the fiscal year then
ended and changes in net assets for each of the fiscal years in the two-year
period then ended, and the financial highlights for each of the fiscal years in
the five-year 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at June
30, 1998 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 audits provide 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 June 30, 1998, the results of its operations, the changes
in its net assets and the financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
August 7, 1998
<PAGE>
INCOME TAX INFORMATION
Dividends are taxable to shareholders and are reportable in your Federal
income tax returns for the years in which the dividends were received or
reinvested.
Statements as to the tax status of each investor's dividends will be mailed
annually.
Dividends are declared and recorded by the Fund on each day the New York
Stock Exchange is open for business.
Shareholders are advised to consult with their tax advisers concerning the
tax treatment of dividends from the Fund.
Corporations:
The dividends are not eligible for the dividends received deduction.
<PAGE>
Shareholder Meeting Results
A special meeting of shareholders of United Cash Management, Inc. was held on
July 24, 1997. The matters voted upon by the shareholders and the resulting
votes for each matter are presented below.
Item 1. To elect the Board of Directors;
Broker
For Withheld Non-Votes*
Henry L. Bellmon 251,735,518 7,330,939 0
Dodds I. Buchanan 252,103,632 6,962,825 0
James M. Concannon 252,047,098 7,019,359 0
John A. Dillingham 252,019,170 7,047,287 0
Linda Graves 251,629,545 7,436,912 0
John F. Hayes 251,839,061 7,227,396 0
Glendon E. Johnson 251,888,751 7,177,706 0
William T. Morgan 251,937,573 7,128,884 0
Ronald K. Richey 250,052,900 9,013,557 0
William L. Rogers 252,043,906 7,022,551 0
Frank J. Ross, Jr. 252,020,014 7,046,443 0
Eleanor B. Schwartz 252,082,705 6,983,752 0
Keith A. Tucker 252,078,802 6,987,655 0
Frederick Vogel III 252,098,752 6,967,705 0
Paul S. Wise 251,801,015 7,265,442 0
Item 2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent accountants for its current fiscal year;
Broker
For Against Abstain Non-Votes*
244,909,856 2,579,58911,577,012 0
Item 3. To approve or disapprove changes to certain of its fundamental
investment policies and restrictions:
3.1 Elimination of Fundamental Restriction Regarding Restricted
Securities
Broker
For Against Abstain Non-Votes*
216,041,036 6,386,37620,370,018 16,269,027
3.2 Modification of Fundamental Restriction Regarding Diversification
of Assets
Broker
For Against Abstain Non-Votes*
216,103,686 6,301,01820,392,726 16,269,027
3.3 Elimination of Fundamental Restriction Regarding Investments in
Issuers Whose Securities are Owned by Certain Persons
Broker
For Against Abstain Non-Votes*
216,059,926 6,367,48620,370,018 16,269,027
3.4 Modification of Fundamental Policy Regarding Loans
Broker
For Against Abstain Non-Votes*
216,087,504 6,339,90820,370,018 16,269,027
Item 4. To modify the Fund's fundamental policy regarding portfolio
maturity.
Broker
For Against Abstain Non-Votes*
213,759,938 8,011,09321,026,399 16,269,027
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the beneficial
owner or other persons entitled to vote nor has discretionary power to vote on a
particular matter.
<PAGE>
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.
To all traditional IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from a traditional IRA unless you make a written
election not to have taxes withheld. The election may be made by submitting
forms provided by Waddell & Reed, Inc. which can be obtained from your Waddell &
Reed representative or by submitting Internal Revenue Service Form W-4P. Once
made, an election can be revoked by providing written notice to Waddell & Reed,
Inc. If you elect not to have tax withheld you may be required to make payments
of estimated tax. Penalties may be imposed by the IRS if withholding and
estimated tax payments are not adequate.
DIRECTORS
Keith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, Menlo Park, California
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Ronald K. Richey, Birmingham, Alabama
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
OFFICERS
Robert L. Hechler, 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
Mira Stevovich, 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
High Income Fund
International Growth Fund
Limited-Term Bond Fund
Municipal Bond Fund
Science and Technology Fund
Total Return Fund
- ----------------------------------
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
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
NUR1010A(6-98)
printed on recycled paper
