UNITED
CASH
MANAGEMENT,
INC.
ANNUAL
REPORT
---------------------------------------
For the Fiscal Year ended June 30, 1999
<PAGE>
MANAGER'S LETTER
- -----------------------------------------------------------------
JUNE 30, 1999
Dear Shareholder:
This report relates to the operation of United Cash Management, Inc. for the
fiscal year ended June 30, 1999. The following discussion and tables provide
you with information regarding the Fund's performance during that period.
Problems in world financial markets at the beginning of the Fund's fiscal year
caused the Federal Reserve to lower the Federal Funds rate three times in the
fall of 1998. During the first quarter of 1999, rates remained relatively
stable and inflation appeared benign. However, as world markets began to
recover, economic overheating at home became a concern. The fixed income
markets, including the money markets, began to factor in the potential for the
Federal Funds rate to be increased again. On June 30, 1999, the Federal Reserve
Board decided to increase the Federal Funds rate in an attempt to slow the U.S.
economy and decrease the possibility of inflation. At the same time, the Fed
changed its policy directive to neutral.
The management style of the Fund did not change materially in the past fiscal
year. Early in the fiscal year the maturity of the Fund was extended to lock-in
higher yields in anticipation of the Federal Reserve interest rate cuts. We
also continued to hold variable rate securities which reset periodically at
higher rates of interest than comparable fixed rate securities of the same
maturity. Near the end of the fiscal year, we positioned some Fund assets to
take advantage of higher rates of interest.
Short-term rates have the potential to move higher over the Fund's next fiscal
year due to an expected robust U.S. economy and inflationary pressures which
could develop as a result. Year 2000 could bring challenges for the Fund,
including possible changes in money market interest rates, a limited supply of
short-term securities and a need for increased liquidity. We will seek to
maintain performance by monitoring the short-term yield curve and investing in
securities to maximize yield while attempting to maintain a low risk profile.
We will continue to keep a portion of the Fund's assets in very short or
variable rate securities, in anticipation of possible interest rate increases.
We will also seek to position the Fund to maintain liquidity as we move into the
year 2000. As in the past, we will search out securities, such as taxable
municipal bonds, that have enhanced 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.
The Year 2000 information contained in this letter is
being designated as a Year 2000 readiness disclosure
pursuant to the Year 2000 Information and Readiness Act.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
Certificates of Deposit
Domestic - 0.74%
Morgan Guaranty Trust Company of New York,
5.09%, 9-27-99 ........................ $ 5,000 $ 4,999,534
Yankee - 2.98%
Bank Austria - New York,
5.11%, 4-25-2000 ...................... 10,000 9,988,780
UBS AG - Stamford, Connecticut,
5.35%, 5-30-2000 ...................... 10,000 9,993,101
Total ................................. 19,981,881
Total Certificates of Deposit - 3.72% 24,981,415
Commercial Paper - 1.64%
Wells Fargo & Company,
4.82%, 7-14-99 ........................ 11,000 10,980,854
Commercial Paper (backed by irrevocable bank
letter of credit) - 2.21%
Banco Serfin S.A. (Barclays Bank PLC),
5.32%, 8-26-99 ........................ 15,000 14,875,867
Notes - 10.06%
Abbey National Treasury Services PLC,
5.64%, 7-15-99 ........................ 10,000 9,998,551
Harris Trust and Savings Bank,
5.05%, 2-17-2000 ...................... 13,000 12,995,739
J.P. Morgan & Co., Incorporated:
4.8425%, 7-7-99 ....................... 10,000 9,999,903
4.9025%, 7-6-2000 ..................... 10,000 9,997,923
Shawmut National Corporation
(Fleet Financial Group Inc.),
8.625%, 12-15-99 ...................... 7,500 7,617,046
Wells Fargo & Company,
5.31%, 4-3-2000 ....................... 17,000 16,981,731
Total ................................. 67,590,893
TOTAL BANK OBLIGATIONS - 17.63% $118,429,029
(Cost: $118,429,029)
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS
Commercial Paper
Chemicals and Allied Products - 1.48%
Monsanto Company:
4.86%, 7-20-99 ........................ $ 3,000 $ 2,992,305
4.87%, 8-18-99 ........................ 5,000 4,967,533
4.87%, 8-19-99 ........................ 2,000 1,986,743
Total ................................. 9,946,581
Electric, Gas and Sanitary Services - 10.29%
Central Illinois Light Co.:
5.07%, 7-21-99 ........................ 2,952 2,943,685
5.07%, 7-26-99 ........................ 1,110 1,106,092
5.07%, 7-30-99 ........................ 2,726 2,714,866
Idaho Power Co.,
5.5%, 7-8-99 .......................... 1,785 1,783,091
OGE Energy Corp.:
5.13%, 7-2-99 ......................... 8,500 8,498,789
5.55%, 7-8-99 ......................... 11,550 11,537,536
Questar Corp.:
4.93%, 7-2-99 ......................... 12,000 11,998,357
5.33%, 7-2-99 ......................... 1,000 999,852
4.95%, 7-9-99 ......................... 10,700 10,688,230
5.05%, 7-16-99 ........................ 4,900 4,889,690
Southern California Edison Co.,
4.86%, 7-19-99 ........................ 12,000 11,970,840
Total ................................. 69,131,028
Engineering and Management Services - 1.54%
Halliburton Co.,
5.01%,7-23-99 ......................... 10,400 10,368,159
Food and Kindred Products - 0.03%
General Mills, Inc.,
5.075%, Master Note ................... 170 170,000
Food Stores - 1.94%
Albertson's Inc.,
4.9%, 7-6-99 .......................... 13,000 12,991,153
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
Industrial Machinery and Equipment - 0.74%
Deere & Company,
4.99%, 7-19-99 ........................ $ 5,000 $ 4,987,525
Insurance Carriers - 0.74%
Transamerica Finance Corp.,
4.84%, 7-20-99 ........................ 5,000 4,987,228
Nondepository Institutions - 4.89%
Associates Financial Services Co. of
Puerto Rico Inc. (Associates Corp. of North America),
4.87%, 8-17-99 ........................ 22,000 21,860,123
General Electric Capital Corporation,
4.86%, 7-15-99 ........................ 6,000 5,988,660
IBM Credit Corp.,
5.125%, 7-1-99 ........................ 5,000 5,000,000
Total ................................. 32,848,783
Paper and Allied Products - 1.56%
Sonoco Products Co.,
5.8%, 7-1-99........................... 2,500 2,500,000
Westvaco Corp.,
4.85%, 7-8-99 ......................... 8,000 7,992,456
Total ................................. 10,492,456
Total Commercial Paper - 23.21% 155,922,913
Commercial Paper (backed by irrevocable bank
letter of credit)
Chemicals and Allied Products - 1.35%
Formosa Plastics Corp. U.S.A. (Bank of America NT & SA),
4.81%, 7-23-99 ........................ 9,100 9,073,251
Electric, Gas and Sanitary Services - 0.97%
CommEd Fuel Co. Inc. (First National Bank of Chicago),
5.1%, 7-7-99 .......................... 6,532 6,526,448
Oil and Gas Extraction - 2.23%
Louis Dreyfus Corp. (ABN-AMRO Bank N.V.):
4.92%, 7-6-99 ......................... 5,000 4,996,583
4.93%, 7-7-99 ......................... 10,000 9,991,783
Total ................................. 14,988,366
Total Commercial Paper (backed by irrevocable bank
letter of credit) - 4.55% 30,588,065
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Notes
Chemicals and Allied Products - 0.47%
Air Products and Chemicals, Inc.,
8.22%, 12-7-99 ........................ $ 3,100 $ 3,140,684
Electric, Gas and Sanitary Services - 4.02%
Baltimore Gas and Electic Company,
4.9713%, 9-1-99 ....................... 27,000 26,999,703
General Merchandise Stores - 0.75%
Wal-Mart Stores, Inc.,
5.65%, 2-1-2000 ....................... 5,000 5,015,145
Insurance Carriers - 1.26%
Atlantic American Corporation (Wachovia Bank, N.A.),
5.22%, 7-7-99 ......................... 8,500 8,500,000
Motion Pictures - 1.49%
Walt Disney Company (The),
5.6%, 4-17-2000 ....................... 10,000 10,027,382
Nondepository Institutions - 11.48%
American General Finance Corporation,
7.2%, 7-15-99 ......................... 1,800 1,801,463
Associates Corp. of North America,
5.0965%, 7-29-99 ...................... 8,500 8,494,925
Caterpillar Financial Services Corp.:
5.93%, 6-1-2000 ....................... 7,500 7,542,398
8.875%, 6-1-2000 ...................... 3,000 3,094,403
Deere (John) Capital Corp.,
6.43%, 8-9-99 ......................... 10,000 10,006,614
Ford Motor Credit Company,
8.375%, 1-15-2000 ..................... 9,000 9,147,964
General Electric Capital Corporation,
6.66%, 5-1-2000 ....................... 8,700 8,772,590
General Motors Acceptance Corporation:
8.4%, 10-15-99 ........................ 10,270 10,358,044
7.875%, 3-15-2000 ..................... 2,700 2,750,233
6.875%, 6-7-2000 ...................... 10,000 10,109,525
Norwest Financial Inc.,
6.2%, 9-15-99 ......................... 5,000 5,010,877
Total ................................. 77,089,036
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Notes (Continued)
Real Estate - 0.20%
Trap Rock Industries, Inc. (First Union National Bank),
5.3%, 7-7-99 .......................... $ 1,330 $ 1,330,000
Total Notes - 19.67% 132,101,950
TOTAL CORPORATE OBLIGATIONS - 47.43% $318,612,928
(Cost: $318,612,928)
MUNICIPAL OBLIGATIONS
California - 10.42%
California Pollution Control Financing Authority,
Environmental Improvement Revenue Bonds:
Shell Martinez Refining Company Project,
Series 1996 (Taxable) (Shell Oil Company):
4.93%, 7-1-99 ......................... 23,000 23,000,000
4.92%, 7-14-99 ........................ 5,000 5,000,000
Air Products and Chemicals, Inc./ Wilmington
Facility, Taxable Series 1997A (Air Products
and Chemicals, Inc.),
5.0%, 7-7-99 .......................... 13,000 13,000,000
City of Anaheim, California, Certificates
of Participation (1993 Arena Financing
Project), Municipal Adjustable Rate
Taxable Securities (Credit Suisse),
5.075%, 8-11-99 ....................... 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),
5.0%, 8-3-99 .......................... 8,000 8,000,000
Total ................................. 70,000,000
Colorado - 0.98%
Panorama Metropolitan District, Arapahoe
County, Colorado (Taxable/Tax Exempt),
Series 1997A (Banque Nationale de Paris,
San Francisco Branch),
5.65%, 12-1-99 ........................ 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),
5.35%, 7-1-99 ......................... 2,000 2,000,000
Total ................................. 6,575,000
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Indiana - 3.77%
City of Whiting, Indiana, Industrial Sewage
and Solid Waste Disposal Revenue Bonds, Taxable
Series 1995 (Amoco Oil Company Project):
4.93%, 7-1-99 ......................... $16,000 $ 16,000,000
4.9%, 7-14-99 ......................... 9,300 9,300,000
Total ................................. 25,300,000
Kentucky - 1.79%
City of Bardstown, Kentucky, Taxable Variable Rate
Demand Industrial Revenue Bonds:
Series 1994 (R.J. Tower Corporation Project),
(Comerica Bank),
5.15%, 7-1-99 ......................... 8,035 8,035,000
Series 1995 (R.J. Tower Corporation Project),
(Comerica Bank),
5.15%, 7-1-99 ......................... 4,000 4,000,000
Total ................................. 12,035,000
Louisiana - 10.64%
Industrial Development Board of the Parish
Of Calcasieu, Inc., Environmental Revenue
Bonds (CITGO Petroleum Corporation Project),
Series 1996 (Taxable) (West Deutsche Bank),
5.25%, 7-29-99 ........................ 31,800 31,800,000
Industrial District No. 3 of the Parish of West
Baton Rouge, State of Louisiana, Variable Rate
Demand Revenue Bonds Series 1995 (Taxable),
(The Dow Chemical Company Project),
5.1%, 8-5-99 .......................... 23,200 23,200,000
Gulf Coast Industrial Development Authority,
Environmental Facilities Revenue Bonds
(CITGO Petroleum Corporation Project), Taxable
Series 1998 (Royal Bank of Canada),
4.92%, 7-7-99 ......................... 16,500 16,500,000
Total ................................. 71,500,000
New Jersey - 1.90%
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),
5.3%, 7-7-99........................... 12,775 12,775,000
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
New York - 1.99%
The City of New York, General Obligation Bonds,
Fiscal 1995 Series B, Taxable Adjustable Rate
Bonds (Bayerische Landesbank Girozentrale,
New York Branch),
5.145%, 8-5-99 ........................ $10,000 $ 10,000,000
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),
5.19%, 7-1-99 ......................... 3,370 3,370,000
Total ................................. 13,370,000
North Carolina - 0.27%
Wake Forest University, Taxable Variable Rate
Demand Bonds, Series 1997 (Wachovia Bank, N.A.),
5.22%, 7-7-99 ......................... 1,800 1,800,000
Pennsylvania - 3.41%
Montgomery County Industrial Development
Authority, Federally Taxable Variable
Rate Demand Revenue Bonds (Neose
Technologies, Inc. Project), Series
B of 1997 (First Union National Bank),
5.3%, 7-7-99 .......................... 11,035 11,035,000
Berks County Industrial Development Authority
(Commercial Facilities Project), Series
B of 1995 (First Union National Bank),
5.2%, 7-7-99 .......................... 8,160 8,160,000
Philadelphia Authority for Industrial Development,
Variable/Fixed Rate Federally Taxable
Economic Development Bonds (Mother's Work, Inc.),
Series of 1995 (Fleet Financial Group Inc.),
5.2%, 7-7-99 .......................... 3,730 3,730,000
Total ................................. 22,925,000
Texas - 2.37%
Metrocrest Hospital Authority, Series 1989A
(The Bank of New York),
4.993%, 8-2-99 ........................ 16,000 15,928,988
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Washington - 2.19%
Wenatchee Valley Clinic, P.S.,
Floating Rate Taxable Bonds, Series 1998
(U.S. Bank National Association),
5.2%, 7-1-99 .......................... 14,700 14,700,000
TOTAL MUNICIPAL OBLIGATIONS - 39.73% $266,908,988
(Cost: $266,908,988)
UNITED STATES GOVERNMENT SECURITY - 0.30%
Federal Farm Credit Bank,
5.24%, 9-29-99 ........................ 2,000 $ 2,000,000
(Cost: $2,000,000)
TOTAL INVESTMENT SECURITIES - 105.09% $705,950,945
(Cost: $705,950,945)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (5.09%) (34,182,639)
NET ASSETS - 100.00% $671,768,306
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, 1999
(In Thousands, Except for Per Share Amounts)
Assets
Investment securities - at value (Note 1) ........ $705,951
Receivables:
Fund shares sold ................................ 6,193
Interest ........................................ 4,273
Prepaid insurance premium ........................ 18
--------
Total assets .................................. 716,435
--------
Liabilities
Payable to Fund shareholders ..................... 42,033
Due to custodian ................................. 2,044
Dividends payable ................................ 273
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 202
Accrued management fee (Note 2) .................. 8
Accrued accounting services fee (Note 2) ......... 6
Accrued service fee (Note 2) ..................... 1
Other ............................................ 100
--------
Total liabilities ............................. 44,667
--------
Total net assets ............................. $671,768
========
Net Assets
$0.01 par value capital stock, authorized -- 5,000,000;
Class A shares outstanding _ 667,155
Class B shares outstanding _ 4,613
Capital stock ................................... $ 6,718
Additional paid-in capital ...................... 665,050
--------
Net assets applicable to outstanding
units of capital ............................. $671,768
========
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, 1999
(In Thousands)
Investment Income
Interest and amortization (Note 1B) .............. $33,893
-------
Expenses (Note 2):
Investment management fee ....................... 2,476
Transfer agency and dividend disbursing -
Class A ........................................ 2,242
Class B ....................................... 7
Custodian fees .................................. 106
Accounting services fee ......................... 70
Distribution fee - Class B ...................... 43
Service fee - Class B ........................... 12
Audit fees ...................................... 11
Legal fees ...................................... 8
Other ........................................... 286
-------
Total expenses ................................ 5,261
-------
Net investment income ........................ 28,632
-------
Net increase in net assets resulting
from operations ........................... $28,632
=======
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,
-------------------------
1999 1998
------------- ------------
Increase in Net Assets
Operations:
Net investment income .............. $ 28,632 $ 25,050
---------- ----------
Net increase in net assets
resulting from operations ....... 28,632 25,050
---------- ----------
Dividends to shareholders
from net investment income:*
Class A ............................ (28,425) (24,935)
Class B ............................ (207) (115)
---------- ----------
(28,632) (25,050)
---------- ----------
Capital share transactions:**
Proceeds from sale of shares:
Class A .......................... 2,528,520 3,626,568
Class B .......................... 12,293 7,455
Proceeds from reinvestment
of dividends:
Class A .......................... 27,258 23,831
Class B .......................... 195 109
Payments for shares redeemed:
Class A .......................... (2,421,463) (3,631,832)
Class B .......................... (11,489) (7,470)
---------- ----------
Net increase in net assets
resulting from capital
share transactions .............. 135,314 18,661
---------- ----------
Total increase .................. 135,314 18,661
Net Assets
Beginning of period ................. 536,454 517,793
---------- ----------
End of period ....................... $ 671,768 $ 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 fiscal year ended June 30,
------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
Net investment
income ........... 0.0455 0.0484 0.0472 0.0487 0.0465
Less dividends
declared ......... (0.0455)(0.0484)(0.0472)(0.0487)(0.0465)
------ ------ ------ ------ ------
Net asset value,
end of period .... $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
Total return........ 4.67% 4.93% 4.80% 5.01% 4.74%
Net assets, end of
period (in
millions) ........ $667 $533 $514 $402 $369
Ratio of expenses to
average net
assets ........... 0.83% 0.89% 0.87% 0.91% 0.97%
Ratio of net
investment income
to average net
assets ........... 4.54% 4.84% 4.70% 4.89% 4.68%
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 period
year ended June 30, from 9/5/95*
--------------------- through
1999 1998 1997 6/30/96
------ ------ ------ -------
Net asset value,
beginning of
period ........... $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------
Net investment
income ........... 0.0371 0.0403 0.0407 0.0312
Less dividends
declared ......... (0.0371)(0.0403)(0.0407) (0.0312)
------ ------ ------ ------
Net asset value,
end of period .... $1.00 $1.00 $1.00 $1.00
======= ======= ======= =======
Total return........ 3.79% 4.10% 4.13% 3.15%
Net assets, end of
period (in
millions) ........ $5 $4 $4 $1
Ratio of expenses to
average net
assets ........... 1.60% 1.71% 1.48% 1.88%**
Ratio of net
investment income
to average net
assets ........... 3.77% 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, 1999
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. Until
June 30, 1999, the fee consisted 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 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. Beginning June 30, 1999, the fee is payable by the Fund at the
annual rate of 0.40% of net assets. 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, 1999, 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 Fund 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, 1999, the Distributor received $21,305 in deferred sales charges.
The Fund paid Directors' fees of $22,765, 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, 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, 1999, and the related statement of operations for the fiscal year then
ended, the statements of changes in net assets for each of the two fiscal years
in the period then ended, and the financial highlights for each of the five
fiscal years in the 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 as of June
30, 1999, 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 June 30, 1999, the results of its operations for the
fiscal year then ended, the changes in its net assets for each of the two fiscal
years in the period then ended, and the financial highlights for each of the
five fiscal years in the period then ended in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
August 6, 1999
<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 United Cash Management, Inc. was held on June 22, 1999.
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*
J. Concannon 310,884,934 24,181,613 0
J. Dillingham 310,483,696 24,582,851 0
D. Gardner 310,453,024 24,613,523 0
L. Graves 310,516,021 24,550,526 0
J. Harroz, Jr. 310,388,641 24,677,906 0
J. Hayes 310,045,338 25,021,209 0
R. Hechler 310,502,883 24,563,664 0
H. Herrmann 310,579,756 24,486,791 0
G. Johnson 310,028,035 25,038,512 0
W. Morgan 310,290,436 24,776,111 0
R. Reimer 310,381,474 24,685,073 0
F. Ross, Jr. 310,733,181 24,333,366 0
E. Schwartz 310,555,413 24,511,134 0
K. Tucker 310,573,104 24,493,443 0
F. Vogel III 310,742,586 24,323,961 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*
304,526,867 2,800,344 27,739,336 0
Item 3. To approve or disapprove the amendment to the Fund's investment
management agreement with Waddell & Reed Investment Management Company:
Broker
For Against Abstain Non-Votes*
285,743,208 18,831,196 30,491,210 933
Item 4. To approve or disapprove amendment of the Fund's policy regarding
securities lending:
Broker
For Against Abstain Non-Votes*
286,921,228 13,922,626 34,221,760 933
Item 5. To approve or disapprove the Fund's Articles of Incorporation to
change the par value of Fund shares to $0.001:
Broker
For Against Abstain Non-Votes*
284,410,872 12,285,961 38,369,714 0
*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.
For shareholders who have chosen the Income-Earned option or the Cash option for
their distribution method: if the dividend distribution (for Income-Earned) or
the total distribution (for Cash) is less than five dollars, the distribution
will be automatically paid in additional shares of the same class of the Fund.
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.
<PAGE>
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 Accumulative Fund
United Bond Fund
United Income Fund
United Science and Technology Fund
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 - (913) 236-1303
For Yield Information Only
Toll-Free - (800)366-4953
Local - (913) 236-1307
Our INTERNET address is:
http://www.waddell.com
NUR1010A(6-99)
printed on recycled paper
