UNITED
CASH
MANAGEMENT,
INC.
SEMIANNUAL
REPORT
------------------------------------------
For the Six Months ended December 31, 1998
<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, 1998
Dear Shareholder:
As president of your Fund, I would like to thank you for your continued
confidence as an investor. From every area of Waddell & Reed, including your
personal financial advisor, our goal has been to provide the best service
possible to our shareholders.
While it is impossible to predict the future direction of the markets, there are
some basic principles that we stand by that can help investors achieve their
objectives:
. Develop a financial plan that helps you pinpoint your financial objectives,
and identify specific strategies for turning your dreams into reality. There
is no better way to plan for your future.
. Invest on a regular basis. It can be one of the best ways to invest long
term and provide a hedge against market volatility.
. Adopt a long-term view to take advantage of compounding. The key to
successful investing is time, not timing. The power of compounding is
awesome and, on a long-term basis, can overwhelm any nuances of timing.
. Review your financial plan regularly. Financial planning is an ongoing
process that requires periodic review.
Waddell & Reed is positioned to assist you as you work toward your financial
goals. We will continue to offer quality investment products and personal
service to make the financial planning and investment process convenient and
accessible to you. Our locally based financial advisors are ready to assist you
with your total financial plan to help you plan for your retirement, to help you
meet your education funding goals or to achieve other financial objectives.
We look forward to assisting you in the future. If you have any questions about
your account, wish to review your financial plan or have other financial issues
that are important to you, contact your financial advisor or your local Waddell
& Reed office.
Respectfully,
Robert L. Hechler
President
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1998
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
Certificates of Deposit
Domestic - 0.78%
Morgan Guaranty Trust Company of New York,
5.5744%, 9-27-99 ...................... $ 5,000 $ 4,998,577
Yankee - 4.65%
Societe Generale - New York:
5.55%, 2-9-99 ......................... 15,000 14,994,816
5.5394%, 5-26-99 ...................... 5,000 4,998,513
Svenska Handelsbanken - New York,
5.74%, 6-1-99 ......................... 10,000 9,989,235
Total ................................. 29,982,564
Commercial Paper - 3.96%
ANZ (DE) Inc.,
6.1%, 1-4-99 .......................... 25,500 25,487,038
Commercial Paper (backed by irrevocable bank
letter of credit) - 3.00%
Banco Itau S.A. (Barclays Bank PLC),
5.37%, 6-17-99 ........................ 5,000 4,875,446
Banco Serfin S.A. (Barclays Bank PLC),
5.32%, 8-26-99 ........................ 15,000 14,474,650
Total ................................. 19,350,096
Notes - 5.85%
Abbey National Treasury Services PLC,
5.64%, 7-15-99 ........................ 10,000 9,988,871
J.P. Morgan & Co., Incorporated,
5.4819%, 7-7-99 ....................... 10,000 9,996,971
NationsBank Corp.,
4.82%, 6-25-99 ........................ 10,000 9,997,700
Shawmut National Corporation,
(Fleet Financial Group Inc.),
8.625%, 12-15-99 ...................... 7,500 7,743,213
Total ................................. 37,726,755
TOTAL BANK OBLIGATIONS - 18.24% $117,545,030
(Cost: $117,545,030)
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1998
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS
Commercial Paper
Chemicals and Allied Products - 4.05%
Monsanto Company:
5.38%, 1-8-99 ......................... $10,200 $ 10,189,330
5.26%, 1-19-99 ........................ 10,000 9,973,700
5.1%, 3-10-99 ......................... 6,000 5,942,200
Total ................................. 26,105,230
Electric, Gas and Sanitary Services - 11.43%
Allegheny Energy Inc.,
5.17%, 3-4-99 ......................... 18,000 17,839,730
Bay State Gas Co.,
5.5%, 1-19-99 ......................... 10,500 10,471,125
OGE Energy Corp.:
5.95%, 1-4-99 ......................... 2,000 1,999,008
6.5%, 1-7-99 .......................... 6,400 6,393,067
PacifiCorp.,
5.07%, 1-19-99 ........................ 17,200 17,156,398
Questar Corp.:
5.2%, 1-12-99 ......................... 3,200 3,194,916
5.35%, 1-19-99 ........................ 5,400 5,385,555
5.32%, 2-5-99 ......................... 9,500 9,450,864
5.2%, 2-16-99 ......................... 1,800 1,788,040
Total ................................. 73,678,703
Electronic and Other Electric Equipment - 2.02%
Sony Capital Corp.:
5.9%, 1-8-99 .......................... 5,000 4,994,264
5.4%, 1-12-99 ......................... 8,000 7,986,800
Total ................................. 12,981,064
Engineering and Management Services - 3.40%
Halliburton Co.:
5.2%, 1-13-99 ......................... 14,000 13,975,733
5.13%, 2-19-99 ........................ 6,000 5,958,105
5.29%, 2-26-99 ........................ 2,000 1,983,542
Total ................................. 21,917,380
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1998
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
Industrial Machinery and Equipment - 0.78%
Deere & Company,
5.45%, 1-8-99 ......................... $ 5,000 $ 4,994,701
Insurance Carriers - 2.16%
Transamerica Finance Corp.,
5.47%, 1-26-99 ........................ 14,000 13,946,819
Nondepository Institutions - 4.07%
Associates Corp. of North America,
5.35%, 1-20-99 ........................ 3,000 2,991,529
General Motors Acceptance Corporation,
5.35%, 1-4-99 ......................... 7,300 7,296,745
Island Finance Puerto Rico Inc.:
5.4%, 1-29-99 ......................... 2,700 2,688,660
5.23%, 2-5-99 ......................... 3,000 2,984,746
5.38%, 2-5-99.......................... 6,000 5,968,617
5.1%, 2-16-99 ......................... 4,300 4,271,978
Total ................................. 26,202,275
Paper and Allied Products - 1.58%
Sonoco Products Co.,
5.16%, 1-19-99 ........................ 5,000 4,987,100
Westvaco Corp.,
5.3%, 1-12-99 ......................... 5,169 5,160,629
Total ................................. 10,147,729
Personal Services - 4.54%
Block Financial Corp.:
5.2%, 1-8-99 .......................... 6,380 6,373,549
5.1%, 1-21-99 ......................... 8,000 7,977,333
5.35%, 1-29-99 ........................ 10,000 9,958,389
5.25%, 2-26-99 ........................ 5,000 4,959,167
Total ................................. 29,268,438
Total Commercial Paper - 34.03% 219,242,339
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1998
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (backed by irrevocable bank
letter of credit)
Nondepository Institutions - 0.18%
Hyundai Motor Finance Co. (Bank of America NT & SA),
5.475%, 1-29-99 ....................... $ 1,150 $ 1,145,103
Oil and Gas Extraction - 1.31%
Louis Dreyfus Corp. (ABN-AMRO Bank N.V.),
5.8%, 1-15-99 ......................... 8,500 8,480,828
Total Commercial Paper (backed by irrevocable bank
letter of credit) - 1.49% 9,625,931
Notes
Auto Repair, Services and Parking - 2.64%
PHH Corporation:
5.5319%, 2-5-99 ....................... 5,000 4,999,953
4.84%, 2-10-99 ........................ 5,000 4,999,098
4.86%, 3-11-99 ........................ 7,000 6,997,845
Total ................................. 16,996,896
Electric, Gas and Sanitary Services - 4.19%
Baltimore Gas and Electric Company,
5.1813%, 3-1-99 ....................... 27,000 26,999,682
Nondepository Institutions - 6.14%
Deere (John) Capital Corp.,
6.43%, 8-9-99 ......................... 10,000 10,042,941
General Electric Capital Corporation,
5.0934%, 6-8-99 ....................... 14,000 13,997,027
General Motors Acceptance Corporation,
8.4%, 10-15-99 ........................ 10,270 10,512,013
Norwest Financial Inc.,
6.2%, 9-15-99 ......................... 5,000 5,039,288
Total ................................. 39,591,269
Real Estate - 0.21%
Trap Rock Industries, Inc. (First Union National Bank),
5.9671%, 1-6-99 ....................... 1,330 1,330,000
Security and Commodity Brokers - 2.33%
Merrill Lynch & Co., Inc.,
5.78%, 4-27-99 ........................ 15,000 15,000,000
Total Notes - 15.51% 99,917,847
TOTAL CORPORATE OBLIGATIONS - 51.03% $328,786,117
(Cost: $328,786,117)
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS
California - 8.54%
California Pollution Control Financing Authority,
Environmental Improvement Revenue Bonds:
Air Products and Chemicals, Inc./ Wilmington
Facility, Taxable Series 1997A (Air Products
and Chemicals, Inc.),
5.35%, 3-11-99 ........................ $13,000 $ 13,000,000
Shell Martinez Refining Company Project,
Series 1996 (Taxable) (Shell Oil Company):
5.28%, 2-5-99 ......................... 8,000 8,000,000
5.25%, 2-8-99 ......................... 5,000 5,000,000
City of Anaheim, California, Certificates
of Participation (1993 Arena Financing
Project), Municipal Adjustable Rate
Taxable Securities (Credit Suisse),
5.28%, 3-1-99 ......................... 21,000 21,000,000
Oakland-Alameda County Coliseum Authority,
Lease Revenue Bonds (Oakland Coliseum Arena
Project), 1996 Series A-1 Variable Rate Lease
Revenue Bonds (Taxable) (Canadian Imperial Bank of
Commerce),
5.35%, 2-5-99 ......................... 8,000 8,000,000
Total ................................. 55,000,000
Colorado - 1.02%
Panorama Metropolitan District, Arapahoe
County, Colorado (Taxable/Tax Exempt),
Series 1997A (Banque Nationale de Paris,
San Francisco Branch),
5.65%, 6-1-99 ......................... 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),
6.0%, 1-7-99 .......................... 2,000 2,000,000
Total ................................. 6,575,000
Indiana - 3.41%
City of Whiting, Indiana, Industrial Sewage
and Solid Waste Disposal Revenue Bonds, Taxable
Series 1995 (Amoco Oil Company Project):
5.25%, 2-12-99 ........................ 16,000 16,000,000
5.23%, 3-8-99 ......................... 6,000 6,000,000
Total ................................. 22,000,000
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Louisiana - 4.53%
Industrial Development Board of the Parish
Of Calcasieu, Inc., Environmental Revenue
Bonds (CITGO Petroleum Corporation Project),
Series 1996 (Taxable) (ABN AMRO Bank N.V.),
5.25%, 3-9-99 ......................... $19,200 $ 19,200,000
Gulf Coast Industrial Development Authority,
Environmental Facilities Revenue Bonds
(CITGO Petroleum Corporation Project), Taxable
Series 1998 (Royal Bank of Canada),
5.45%, 1-14-99 ........................ 10,000 10,000,000
Total ................................. 29,200,000
New Jersey - 1.99%
New Jersey Economic Development Authority,
Federally Taxable Variable Rate Demand/
Fixed Rate Revenue Bonds (The Morey
Organization, Inc. Project), Series of 1997
(First Union National Bank),
6.05%, 1-6-99.......................... 12,835 12,835,000
New York - 1.32%
The City of New York, General Obligation Bonds,
Fiscal 1995 Series B, Taxable Adjustable Rate
Bonds (Bayerische Landesbank Girozentrale,
New York Branch),
5.32%, 3-22-99 ........................ 8,500 8,500,000
Total .................................
North Carolina - 0.28%
Wake Forest University, Taxable Variable Rate
Demand Bonds, Series 1997 (Wachovia Bank, N.A.),
5.58%, 1-6-99 ......................... 1,800 1,800,000
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Pennsylvania - 3.70%
Montgomery County Industrial Development
Authority:
Federally Taxable Variable Rate Demand
Revenue Bonds (Neose Technologies,
Inc. Project), Series B of 1997 (First Union
National Bank),
6.05%, 1-6-99 ......................... $ 7,900 $ 7,900,000
Federally Taxable Variable Rate Demand/
Fixed Rate Revenue Bonds (Collegeville
Inn Project), Series of 1996 (First Union
National Bank),
6.05%, 1-6-99 ......................... 2,360 2,360,000
Taxable Fixed Rate/Variable Rate
Demand Revenue Bonds (410 Horsham
Associates Project), Series of 1995
(First Union National Bank),
6.05%, 1-6-99 ......................... 1,480 1,480,000
Berks County Industrial Development Authority
(Commercial Facilities Project), Series
B of 1995 (First Union National Bank),
6.05%, 1-6-99 ......................... 8,375 8,375,000
Philadelphia Authority for Industrial Development,
Variable/Fixed Rate Federally Taxable
Economic Development Bonds (Mothers Work,
Inc.), Series of 1995 (First Union National Bank),
5.6712%, 1-6-99 ....................... 3,730 3,730,000
Total ................................. 23,845,000
Texas - 2.47%
Metrocrest Hospital Authority, Series 1989A
(The Bank of New York),
5.2843%, 2-2-99 ....................... 16,000 15,924,846
Washington - 2.33%
Wenatchee Valley Clinic, P.S.,
Floating Rate Taxable Bonds, Series 1998
(U.S. Bank National Association),
5.8%, 1-7-99 .......................... 15,000 15,000,000
TOTAL MUNICIPAL OBLIGATIONS - 29.59% $190,679,846
(Cost: $190,679,846)
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
DECEMBER 31, 1998
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES - 1.17%
Federal Home Loan Bank,
5.235%, 10-5-99 ....................... $ 5,565 $ 5,565,000
Federal Farm Credit Bank,
5.24%, 9-29-99 ........................ 2,000 2,000,000
Total ................................. $ 7,565,000
(Cost: $7,565,000)
TOTAL INVESTMENT SECURITIES - 100.03% $644,575,993
(Cost: $644,575,993)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.03%) (226,520)
NET ASSETS - 100.00% $644,349,473
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, 1998
(In Thousands, Except for Per Share Amounts)
Assets
Investment securities - at value (Note 1) ........ $644,576
Cash ............................................ 4,227
Receivables:
Fund shares sold ................................ 4,113
Interest ........................................ 3,213
Prepaid insurance premium ........................ 20
--------
Total assets .................................. 656,149
--------
Liabilities
Payable to Fund shareholders ..................... 8,962
Dividends payable ................................ 2,505
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 228
Accrued management fee (Note 2) .................. 7
Accrued accounting services fee (Note 2) ......... 6
Accrued distribution fee (Note 2) ................ 1
Accrued service fee (Note 2) ..................... 1
Other ............................................ 90
--------
Total liabilities ............................. 11,800
--------
Total net assets ............................. $644,349
========
Net Assets
$0.01 par value capital stock, authorized -- 5,000,000;
Class A shares outstanding - 636,679
Class B shares outstanding - 7,670
Capital stock ................................... $ 6,443
Additional paid-in capital ...................... 637,906
--------
Net assets applicable to outstanding
units of capital ............................. $644,349
========
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, 1998
(In Thousands)
Investment Income
Interest and amortization (Note 1B) .............. $17,148
-------
Expenses (Note 2):
Investment management fee ....................... 1,205
Transfer agency and dividend disbursing -
Class A ........................................ 1,056
Class B ....................................... 3
Custodian fees .................................. 74
Accounting services fee ......................... 35
Distribution fee - Class B ...................... 22
Audit fees ...................................... 7
Service fee - Class B ........................... 4
Legal fees ...................................... 3
Other ........................................... 143
-------
Total expenses ................................ 2,552
-------
Net investment income ........................ 14,596
-------
Net increase in net assets resulting
from operations ........................... $14,596
=======
See notes to financial statements.
<PAGE>
UNITED CASH MANAGEMENT, INC.
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
For the For the
six months fiscal year
ended ended
December 31, June 30,
1998 1998
------------ -----------
Increase in Net Assets
Operations:
Net investment income .............. $ 14,596 $ 25,050
-------- --------
Net increase in net assets
resulting from operations ....... 14,596 25,050
-------- --------
Dividends to shareholders
from net investment income:*
Class A ............................ (14,486) (24,935)
Class B ............................ (110) (115)
-------- --------
(14,596) (25,050)
-------- --------
Capital share transactions:**
Proceeds from sale of shares:
Class A .......................... 1,340,943 3,626,568
Class B .......................... 9,552 7,455
Proceeds from reinvestment
of dividends:
Class A .......................... 14,442 23,831
Class B .......................... 110 109
Payments for shares redeemed:
Class A .......................... (1,251,546) (3,631,832)
Class B .......................... (5,606) (7,470)
-------- --------
Net increase in net assets
resulting from capital
share transactions .............. 107,895 18,661
-------- --------
Total increase .................. 107,895 18,661
Net Assets
Beginning of period ................. 536,454 517,793
-------- --------
End of period ....................... 644,349 $536,454
======== ========
Undistributed net investment
income ........................... $--- $---
==== ====
*See "Financial Highlights" on pages 14 - 15.
**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 ----------------------------------
12/31/98 1998 1997 1996 1995 1994
-------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------
Net investment
income ........... 0.0245 0.0484 0.0472 0.0487 0.0465 0.0252
Less dividends
declared ......... (0.0245)(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 $1.00
======= ======= ======= ======= ======= =======
Total return........ 2.53% 4.93% 4.80% 5.01% 4.74% 2.55%
Net assets, end of
period (in
millions) ........ $636 $533 $514 $402 $369 $317
Ratio of expenses to
average net
assets ........... 0.83%* 0.89% 0.87% 0.91% 0.97% 1.04%
Ratio of net
investment income
to average net
assets ........... 4.77%* 4.84% 4.70% 4.89% 4.68% 2.51%
*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 fiscal For the
six year ended period
months June 30, from 9/5/95*
ended -------------- through
12/31/98 1998 1997 6/30/96
-------- ------ ------ --------
Net asset value,
beginning of
period ........... $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------
Net investment
income ........... 0.0203 0.0403 0.0407 0.0312
Less dividends
declared ......... (0.0203)(0.0403)(0.0407) (0.0312)
------ ------ ------ ------
Net asset value,
end of period .... $1.00 $1.00 $1.00 $1.00
======= ======= ======= =======
Total return........ 2.09% 4.10% 4.13% 3.15%
Net assets, end of
period (in
millions) ........ $8 $4 $4 $1
Ratio of expenses to
average net
assets ........... 1.54%** 1.71% 1.48% 1.88%**
Ratio of net
investment income
to average net
assets ........... 4.03%** 4.03% 4.14% 3.76%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED CASH MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 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 $21.0 billion of
combined net assets at December 31, 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 December 31, 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 December 31, 1998, the Distributor received $24,993 in deferred sales
charges.
The Fund paid Directors' fees of $10,391, which are included in other expenses.
W&R is a subsidiary of 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 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 Fund, 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
December 31, 1998, and the related statement of operations for the six-month
period then ended, the statement of changes in net assets for the six-month
period then ended and the fiscal year ended June 30, 1998, and the financial
highlights for the six-month period ended December 31, 1998 and for each of the
five fiscal years in the period ended June 30, 1998. 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 as of
December 31, 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of United
Cash Management, Inc. as of December 31, 1998, the results of its operations for
the six-month period then ended, the changes in its net assets for the six-month
period then ended and the fiscal year ended June 30, 1998, and the financial
highlights for the six-month period ended December 31, 1998, and for each of the
five fiscal years in the period ended June 30, 1998, in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
February 5, 1999
<PAGE>
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 K. Graves, Topeka, Kansas
Joseph Harroz, Jr., Norman, Oklahoma
John F. Hayes, Hutchinson, Kansas
Robert L. Hechler, Overland Park, Kansas
Henry J. Herrmann, Overland Park, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Ronald C. Reimer, Mission Hills, Kansas
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Frederick Vogel III, Milwaukee, Wisconsin
OFFICERS
Robert L. Hechler, President
Henry J. Herrmann, Vice President
John M. Holliday, Vice President
Theodore W. Howard, Vice President and Treasurer
Helge K. Lee, 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
NUR1010SA(12-98)
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