File No. 811-2922
File No. 2-64526
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. _____
Post-Effective Amendment No. 35
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 30
UNITED CASH MANAGEMENT, INC.
- --------------------------------------------------------------------------------
(Exact Name as Specified in Charter)
6300 Lamar Avenue, Shawnee Mission, Kansas 66202-4200
- --------------------------------------------------------------------------------
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code (913) 236-2000
Kristen A. Richards, P. O. Box 29217, Shawnee Mission, Kansas 66201-9217
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
_____ immediately upon filing pursuant to paragraph (b)
__X__ on August 31, 1999 pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(i)
_____ on (date) pursuant to paragraph (a)(i)
_____ 75 days after filing pursuant to paragraph (a)(ii)
_____ on (date) pursuant to paragraph (a)(ii) of Rule 485
_____ this post-effective amendment designates a new effective date
for a previously filed post-effective amendment
================================================================================
DECLARATION REQUIRED BY RULE 24f-2 (a) (1)
The issuer has registered an indefinite amount of its securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a)(1). Notice for the Registrant's
fiscal year ended June 30, 1999 will be filed on or about September 28, 1999.
<PAGE>
United Cash Management, Inc.
Class A Shares
Class B Shares
Class C Shares
This Fund seeks maximum current income to the extent consistent with stability
of principal by investing in a portfolio of money market instruments meeting
specified quality standards.
The Securities and Exchange Commission has not approved or disapproved the
Fund's securities, or determined whether this Prospectus is accurate or
adequate. It is a criminal offense to state otherwise.
Prospectus
October 4, 1999
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
AN OVERVIEW OF THE FUND.......................................................3
PERFORMANCE....................................................................
FEES AND EXPENSES.............................................................4
THE INVESTMENT PRINCIPLES OF THE FUND.........................................7
Investment Goal, Principal Strategies and Other Investments................7
Risk Considerations of Principal Strategies and Other Investments...........
Year 2000 Issue.............................................................
YOUR ACCOUNT..................................................................9
Choosing a Share Class......................................................
Ways to Set Up Your Account...............................................13
Buying Shares.............................................................19
Minimum Investments.......................................................16
Adding to Your Account....................................................16
Selling Shares............................................................17
Telephone Transactions....................................................26
Shareholder Services......................................................27
Personal Service.......................................................27
Reports................................................................27
Exchanges..............................................................27
Automatic Transactions for Class A, B and C Shareholders...............27
Distributions and Taxes...................................................28
Distributions..........................................................28
Taxes..................................................................29
THE MANAGEMENT OF THE FUND...................................................31
Portfolio Management......................................................32
Management Fee............................................................33
FINANCIAL HIGHLIGHTS...........................................................
</TABLE>
2
<PAGE>
An Overview of the Fund
Goal
United Cash Management, Inc. (the "Fund") seeks maximum current income
consistent with stability of principal.
Principal Strategies
The Fund seeks to achieve its goal by investing in U.S. dollar-denominated,
high-quality money market obligations and instruments. High quality indicates
that the securities will be rated A-1/A-2 by Standard & Poor's or
Prime-1/Prime-2 by Moody's Investor Services, or if unrated, will be of
comparable quality as determined by Waddell & Reed Investment Management Company
("WRIMCO"), the Fund's manager. The Fund seeks, as well, to maintain a net asset
value ("NAV") of $1.00 per share. The Fund will maintain a dollar-weighted
maturity average of 90 days or less, and the Fund will only invest in securities
with a remaining maturity of not more than 397 calendar days.
Principal Risks of Investing in the Fund
Because the Fund owns different types of money market obligations and
instruments, a variety of factors can affect its investment performance, such
as:
o an increase in interest rates, which can cause the value of the Fund's
holdings to decline;
o the credit quality and other conditions of the issuers whose securities the
Fund holds;
o adverse bond market conditions, sometimes in response to general economic
or industry news, that may cause the prices of the Fund's holdings to fall
as part of a broad market decline; and
o the skill of WRIMCO in evaluating and managing the interest rate and credit
risks of the Fund.
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund.
Who May Want to Invest
The Fund is designed for investors who are risk-averse and seek to preserve
principal while earning current income and saving for short-term needs. You
should consider whether the Fund fits your particular investment objectives.
3
<PAGE>
Performance
The bar chart and performance table below provide some indication of the risks
of investing in the Fund by showing changes in the Fund's performance from year
to year and by showing the Fund's average annual returns for the periods shown.
o The bar chart presents the total annual returns for Class A and shows how
performance has varied from year to year over the past ten years.
o The performance table shows Class A average annual returns. No performance
information is provided for Class B or Class C shares since these classes
does not have annual total returns for a full calendar year.
o The bar chart and the performance table assume reinvestment of dividends
and distributions. As with all mutual funds, the Fund's past performance
does not necessarily indicate how it will perform in the future.
Note that the performance information in the chart and table is based on
calendar-year periods, while the information shown in the Financial Highlights
section of this Prospectus and in the Fund's shareholder reports is based on the
Fund's fiscal year.
Chart of Year-by-Year Returns
as of December 31 each year (%)
<TABLE>
<S> <C>
1989 8.76%
1990 7.77%
1991 5.65%
1992 3.16%
1993 2.38%
1994 3.47%
1995 5.30%
1996 4.74%
1997 4.91%
1998 4.97%
</TABLE>
In the period shown in the chart, the highest quarterly return was 2.29% (the
second quarter of 1989) and the lowest quarterly return was 0.54% (the first
quarter of 1994). The Class A return for the year through June 30, 1999 was
2.09%.
Average Annual Total Returns
as of December 31 (%)
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
<S> <C> <C> <C>
Class A Shares of the Fund 4.97% 4.78% 5.09%
</TABLE>
4
<PAGE>
Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
<TABLE>
<CAPTION>
Shareholder Fees Class A Class B Class C
(fees paid directly from Shares Shares Shares
your investment) ------ ------ ------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) None None None
Maximum Deferred Sales
Charge (Load)(1) None 5% 1%
(as a percentage of
lesser of amount
invested or redemption
value)
Annual Fund Operating Expenses(2)
(expenses that are deducted
from Fund assets)
Management Fees 0.40% 0.40% 0.40%
Distribution and
Service (12b-1) Fees(3) None 1.00% 1.00%
Other Expenses 0.44% 0.44% 0.44%
Total Annual Fund
Operating Expenses 0.84% 1.84% 1.840.%
</TABLE>
Example: This example is intended to help you compare the cost of investing in
the shares of the Fund with the cost of investing in other mutual funds. The
example assumes that (a) you invest $10,000 in the particular class for each
time period specified, (b) your investment has a 5% return each year, and (c)
the expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions, your costs would be:
- --------
(1) The contingent deferred sales charge ("CDSC") which is imposed on the lesser
of amount invested or redemption value of Class B shares declines from 5% in the
first calendar year of purchase, to 4% in the second calendar year, to 3% in the
third and fourth calendar years, to 2% in the fifth calendar year, to 1% in the
sixth calendar year and to 0% after the sixth full calendar year. For Class C
shares a 1% CDSC applies to the proceeds of Class C shares redeemed within 12
months.
(2) Management Fees and Total Annual Fund Operating Expenses have been restated
to reflect the change in management fees effective June 30, 1999; otherwise,
expense ratios are based on other Fund-level expenses of the Fund for the fiscal
year ended June 30, 1999, and for Class B and Class C, the expenses attributable
to each class that are anticipated for the current year. Actual expenses may be
greater or less than those shown.
(3)It is possible that long-term Class B and Class C shareholders of the Fund
may bear 12b-1 distribution fees that are more than the maximum asset-based
sales charge permitted under the rules of the National Association of Securities
Dealers, Inc.
5
<PAGE>
<TABLE>
<CAPTION>
If shares are redeemed
at end of period: 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A shares $ 86 $268 $ 466 $1,037
Class B shares $587 $879 $1,095 $1,832
Class C shares $287 $579 $ 995 $2,159
If shares are not redeemed
at end of period: 1 year 3 years 5 years 10 years
Class A shares $ 86 $268 $466 $1,037
Class B shares $187 $579 $995 $1,832
Class C shares $187 $579 $995 $2,159
</TABLE>
6
<PAGE>
The Investment Principles of the Fund
Investment Goal, Principal Strategies and Other Investments
The goal of the Fund is maximum current income consistent with stability of
principal. The Fund seeks to achieve its goal by investing in a diversified
portfolio of high-quality money market instruments in accordance with the
requirements of Rule 2a-7 under the Investment Company Act of 1940, as amended
(the "1940 Act"). There is no guarantee that the Fund will achieve its goal.
The Fund invests only in the following U.S. dollar-denominated money market
obligations and instruments:
o U.S. government obligations (including obligations of U.S. government
agencies and instrumentalities);
o bank obligations and instruments secured by bank obligations, such as
letters of credit;
o commercial paper;
o corporate debt obligations, including variable amount master demand notes;
o Canadian government obligations; and
o certain other obligations (including municipal obligations) guaranteed as
to principal and interest by a bank in whose obligations the Fund may
invest or a corporation in whose commercial paper the Fund may invest.
The Fund only invests in bank obligations if they are obligations of a bank
subject to regulation by the U.S. Government (including branches of these banks)
or obligations of a foreign bank having total assets of at least $500 million,
and instruments secured by any such obligation.
WRIMCO may look at a number of factors in selecting securities for the Fund's
portfolio. These include:
o the credit quality of the particular issuer or guarantor of the security;
o the maturity of the security; and
7
<PAGE>
o the relative value of the security.
Generally, in determining whether to sell a security, WRIMCO will use the same
analysis that it uses in buying securities to determine if the security no
longer offers adequate return or does not comply with Rule 2a-7. WRIMCO may also
sell a security to take advantage of more attractive investment opportunities or
to raise cash.
You will find more information in the Statement of Additional Information
("SAI") about the Fund's valuation.
Risk Considerations of Principal Strategies and Other Investments
Risks exist in any investment. The Fund is subject to market risk, financial
risk and, in some cases, prepayment risk.
o Market risk is the possibility of a change in the price of the security
because of market factors including changes in interest rates. Bonds with
longer maturities are more interest-rate sensitive. For example, if
interest rates increase, the value of a bond with a longer maturity is more
likely to decrease.
o Financial risk is based on the financial situation of the issuer of the
security. The financial risk of the Fund depends on the credit quality of
the underlying securities in which it invests.
o Prepayment risk is the possibility that, during periods of falling interest
rates, a debt security with a high stated interest rate will be prepaid
before its expected maturity date.
Because the Fund owns different types of investments, its performance will be
affected by a variety of factors. In general, the value of the Fund's
investments and the income it may generate will vary from day to day, generally
due to changes in market conditions, interest rates and other company and
economic news. Performance will also depend on WRIMCO's skill in selecting
investments.
Year 2000 Issue
Like other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by WRIMCO and the Fund's other service providers do not properly process
and calculate date-related information and data from and after January 1, 2000.
WRIMCO is taking steps that it believes are reasonably designed to address Year
2000 computer-related problems with respect to the computer systems that it uses
and to obtain assurances that comparable steps are being taken by the Fund's
other major service providers. Although there can be no assurances, WRIMCO
8
<PAGE>
believes these steps will be sufficient to avoid any adverse impact on the Fund.
Similarly, the companies and other issuers in which the Fund invests could be
adversely affected by Year 2000 computer-related problems, and there can be no
assurance that the steps taken, if any, by these issuers will be sufficient to
avoid any adverse impact on the Fund.
9
<PAGE>
Your Account
Choosing a Share Class
This Prospectus offers three classes of shares for the Fund: Class A, Class B
and Class C. Each class has its own sales charge, if any, and expense structure.
The decision as to which class of shares is best suited to your needs depends on
a number of factors that you should discuss with your financial advisor. Some
factors to consider are how much you plan to invest and how long you plan to
hold your investment. For example, if you are investing a substantial amount and
plan to hold your shares for a long time, Class A shares may be the most
appropriate for you. Class B and Class C shares are for temporary investment
purposes in connection with exchanges to or from other funds in the United
Group. Therefore, you may purchase Class B shares and Class C shares only by
exchange, at NAV, of Class B shares or Class C shares of other funds in the
United Group or you may purchase directly if you have established Funds Plus
Service, a regular investment plan to systematically exchange into Class B
shares or Class C shares of one or more funds in the United Group. Since your
objectives may change over time, you may want to consider another class when you
buy additional Fund shares. All of your future investments in the Fund will be
made in the class you select when you open your account, unless you inform the
Fund otherwise, in writing, when you make a future investment.
10
<PAGE>
General Comparison of Classes of Shares
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C>
o No initial sales charge o No initial sales o No initial sales charge
charge
o Funds Plus o Funds Plus Service o Funds Plus Service
Service optional required for direct required for direct
investment investment
o No deferred sales charge o Deferred sales charge o A 1% deferred sales
on shares you sell charge on shares you
within six calendar sell within 12 months
years
o No distribution and o Maximum distribution o Maximum distribution
service (12b-1) fees and service (12b-1) and service (12b-1)
fees of 1.00% fees of 1.00%
o For an investment o Converts to Class A o Does not convert to
of $2,000,000 or more shares by the end Class A shares, so
Waddell & Reed financial of the seventh calendar annual expenses do
advisors will recommend year following the year not decrease
purchase of Class A shares of purchase, thus
due to no sales charge and reducing future annual
lower annual expenses on expenses
Class A shares of other
Funds in the United Group.
o For an investment of
$300,000 or more Waddell
& Reed financial
advisors typically
recommend purchase of
Class A shares due to a
reduced sales charge and
lower annual expenses on
Class A shares of other
Funds in the United
Group.
</TABLE>
The Fund has adopted a Distribution and Service Plan ("Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended, for its Class B and
Class C shares. Under each Plan, the Fund may pay Waddell & Reed, Inc., on an
annual basis, a service fee of up to 0.25% of the average daily net assets of
the affected class to compensate Waddell & Reed, Inc. for providing services to
shareholders of that class and/or maintaining shareholder accounts for that
class and a distribution fee of up to 0.75% of the average daily net assets of
the class to compensate Waddell & Reed, Inc. for distributing shares of that
class. Because a class's fees are paid out of the assets of that class on an
on-going basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
Class A shares are sold without a sales charge.
Contingent Deferred Sales Charge. A CDSC may be assessed against your
redemption amount and paid to Waddell & Reed, Inc. (the "Distributor"),
11
<PAGE>
as further described below. The purpose of the CDSC is to compensate the
Distributor for the costs incurred by it in connection with the sale of the
Fund's shares of that class. The CDSC will not be imposed on shares of that
class representing payment of dividends [or distributions] or on amounts which
represent an increase in the value of a shareholder's account resulting from
capital appreciation above the amount paid for shares of that class purchased
during the CDSC period. For Class B shares, the date of redemption is measured,
in calendar years, from the first calendar year of purchase.
To keep your CDSC as low as possible, each time you place a request to redeem
shares, the Fund assumes that a redemption is made first of shares representing
appreciation on shares other than reinvested distributions, next of shares
representing amounts not subject to a deferred sales charge, including
reinvested distributions, and then of shares that represent the lowest sales
charge.
Unless instructed otherwise, the Fund, when requested to redeem a specific
dollar amount, will redeem additional shares of the particular class equal in
value to the CDSC. For example, should you request a $1,000 redemption and the
applicable CDSC is $27, the Fund will redeem shares having an aggregate NAV of
$1,027, absent different instructions.
Class B shares are not subject to a sales charge when you buy them. You must
establish a Funds Plus Service plan upon direct purchase of Class B shares.
Funds Plus Service is not required if shares are acquired by exchange of Class B
shares of another fund in the United Group. You may pay a contingent deferred
sales charge ("CDSC") if you sell your Class B shares within six calendar years
of their purchase, based on the table below. Class B shares pay an annual 12b-1
service fee of up to 0.25% of average net assets and a distribution fee of up to
0.75% of average net assets. Class B shares will automatically convert to Class
A shares of the Fund by the end of the seventh calendar year following the year
in which the shares were purchased. The Class A shares have lower ongoing
expenses.
The Fund will redeem your Class B shares at their NAV next calculated after
receipt of a written request for redemption in good order, subject to the CDSC
discussed below.
<TABLE>
<CAPTION>
Deferred
Date of Sales
Redemption Charge
<S> <C>
anytime within 1st calendar year 5%
anytime within 2nd calendar year 4%
anytime within 3rd calendar year 3%
12
<PAGE>
anytime within 4th calendar year 3%
anytime within 5th calendar year 2%
anytime within 6th calendar year 1%
after 6th calendar year 0%
</TABLE>
All Class B investments made during a calendar year are deemed a single
investment in the applicable class during that calendar year for purposes of
calculating the CDSC.
Class C shares are not subject to a sales charge when you buy them. You must
establish a Funds Plus Service plan upon direct purchase of Class C shares.
Funds Plus Service is not required if shares are acquired by exchange of Class C
shares of another fund in the United Group. If you sell your Class C shares
within 12 months of buying them, you will pay a 1% CDSC. For purposes of CDSC,
purchases of Class C shares within a month will be considered as being purchased
on the first day of the month. These shares pay an annual 12b-1 service fee of
up to 0.25% of average net assets and distribution fee of up to 0.75% of average
net assets. Over time, these fees will increase the cost of your investment and
may cost you more than if you had bought Class A shares. These shares do not
convert to any other class.
For Class C shares, the CDSC will be applied to the total amount invested that
is not at least twelve months old.
The CDSC, for Class B or Class C shares, will not apply in the following
circumstances:
o redemptions of shares requested within one year of the shareholder's death
or disability, provided the Fund is notified of the death or disability at
the time of the request and furnished proof of such event satisfactory to
the Distributor.
o redemptions of shares made to satisfy required minimum distributions after
age 70-1/2 from a qualified retirement plan, a required minimum
distribution from an individual retirement account, Keogh plan, 457 Plan,
or custodial account under section 403(b)(7) of the Internal Revenue Code
of 1986, as amended ("Code"), or a tax-free return of an excess
contribution, or that otherwise results from the death or disability of the
employee, as well as in connection with redemptions by any tax-exempt
employee benefit plan for which, as a result of a subsequent law or
legislation, the continuation of its investment would be improper.
o redemptions of shares made pursuant to a shareholder's participation in
Funds Plus Service or other systematic withdrawal service adopted
13
<PAGE>
for the Fund. (The service and this exclusion from the CDSC do not apply to
a one-time withdrawal.)
o redemptions of shares of which the proceeds are reinvested in shares (must
be reinvested in the same class as that which was redeemed) of the Fund
within thirty days after such redemption.
o the exercise of certain exchange privileges.
o redemptions effected pursuant to the Fund's right to liquidate a
shareholder's shares if the aggregate NAV of those shares is less than
$250.
o redemptions effected by another registered investment company by virtue of
a merger or other reorganization with the Fund or by a former shareholder
of such investment company of shares of the Fund acquired pursuant to such
reorganization.
These exceptions may be modified or eliminated by the Fund at any time without
prior notice to shareholders, except with respect to redemptions effected
pursuant to the Fund's right to liquidate a shareholder's shares, which requires
certain notices.
The different ways to set up (register) your account are listed below.
Ways to Set Up Your Account
- -------------------------------------------------
Individual or Joint Tenants
For your general investment needs
Individual accounts are owned by one person. Joint accounts have two or more
owners (tenants).
- -------------------------------------------------
Business or Organization
For investment needs of corporations, associations, partnerships, institutions
or other groups
- -------------------------------------------------
Retirement
To shelter your retirement savings from taxes
Retirement plans allow individuals to shelter investment income and capital
gains from current taxes. In addition, contributions to these
14
<PAGE>
accounts (other than Roth IRAs and Education IRAs) may be tax-deductible.
o Individual Retirement Accounts (IRAs) allow an individual under 70-1/2,
with earned income, to invest up to $2,000 per tax year. The maximum annual
contribution for an investor and his or her spouse is $4,000 ($2,000 for
each spouse) or, if less, the couple's combined earned income for the
taxable year.
o Rollover IRAs retain special tax advantages for certain distributions from
employer-sponsored retirement plans.
o Roth IRAs allow certain individuals to make non-deductible contributions
up to $2,000 per year. Withdrawals of earnings may be tax free is the
account is at least five years old and certain other requirements are met.
o Education IRAs are established for the benefit of a minor, with
nondeductible contributions, and permit tax-free withdrawals to pay the
higher education expenses of the beneficiary.
o Simplified Employee Pension Plans (SEP - IRAs) provide small business
owners or those with self-employed income (and their eligible employees)
with many of the same advantages as a Keogh Plan, but with fewer
administrative requirements.
o Keogh Plans allow self-employed individuals to make tax-deductible
contributions for themselves of up to 25% of their annual earned income,
with a maximum of $30,000 per year.
o Pension and Profit-Sharing Plans, including 401(k) Plans, allow
corporations and nongovernmental tax-exempt organizations of all sizes
and/or their employees to contribute a percentage of the employees' wages
or other amounts on a tax-deferred basis. These accounts need to be
established by the administrator or trustee of the plan.
o 403(b) Custodial Accounts are available to employees of public school
systems or certain types of charitable organizations.
o 457 Accounts allow employees of state and local governments and certain
charitable organizations to contribute a portion of their compensation on a
tax-deferred basis.
o Savings Incentive Match Plans for Employees (SIMPLE Plans) can be
established by small employers to contribute to their employees'
15
<PAGE>
retirement accounts and generally involve fewer administrative requirements
than 401(k) or other qualified plans.
- -------------------------------------------------
Gifts or Transfers to a Minor
To invest for a child's education or other future needs
These custodial accounts provide a way to give money to a child and obtain tax
benefits. An individual can give up to $10,000 a year per child free of Federal
transfer tax consequences. Depending on state laws, you can set up a custodial
account under the Uniform Gifts to Minors Act ("UGMA") or the Uniform Transfers
to Minors Act ("UTMA").
- -------------------------------------------------
Trust
For money being invested by a trust
The trust must be established before an account can be opened, or you may use a
trust form made available by Waddell & Reed. Contact your Waddell & Reed
financial advisor for the form.
- -------------------------------------------------
Buying Shares
You may buy Class A, Class B and Class C shares of the Fund through Waddell &
Reed, Inc. and its financial advisors. To open your account you must complete
and sign an application. If you purchase Class B or Class C shares directly
rather than by exchange, you must establish a Funds Plus Service Plan. Your
Waddell & Reed financial advisor can help you with any questions you might have.
To purchase any class of shares by check, make your check, money order, Federal
Reserve draft or other negotiable bank draft payable to Waddell & Reed, Inc.
Mail the check, money order or draft, along with your completed application, to
Waddell & Reed, Inc.
P.O. Box 29217
Shawnee Mission, Kansas
66201-9217.
To purchase Class A shares by wire, you must first obtain an account number by
calling 1-800-366-5465, then mail a completed application to Waddell & Reed,
Inc., P.O. Box 29217, Shawnee Mission, Kansas 66201-9217, or fax it to
913-236-5044. Instruct your bank to wire the amount you wish to invest, along
with the account number and registration, to
16
<PAGE>
UMB Bank, n.a., ABA Number 101000695, United K.C., for United Cash Management,
Inc., FBO Customer Name and Account Number.
The price to buy a share of the Fund, called the offering price, is calculated
every business day.
The offering price of a share (price to buy one share of a particular class)
is the NAV per share of that class.
The NAV of each class will normally remain fixed at $1.00 per share.
The NAV per share is based on a valuation of the Fund's investments at amortized
cost. The amortized cost method of valuation is accomplished by valuing a
security at its cost and thereafter assuming a constant amortization rate to
maturity of any discount or premium.
The Fund is open for business each day the New York Stock Exchange (the "NYSE")
is open. The Fund normally calculates the NAVs of its shares as of the close of
business of the NYSE, normally 4 p.m. Eastern time.
When you place an order to buy shares, your order will be processed at the next
offering price calculated after your order is received and accepted. Note the
following:
o Orders are accepted only at the home office of Waddell & Reed, Inc.
o All of your purchases must be made in U.S. dollars.
o Dividends do not accrue until the Fund has federal funds available to it;
federal funds are monies of a member bank of the Federal Reserve System
held in deposit at a Federal Reserve Bank.
o If you buy shares by check, and then sell those shares by any method other
than by exchange to another fund in the United Group, the payment may be
delayed for up to ten days to ensure that your previous investment has
cleared.
o The Fund does not issue certificates representing Class B or Class C shares
of the Fund and does not normally issue certificates representing Class A
shares.
When you sign your account application, you will be asked to certify that your
Social Security or other taxpayer identification number is correct and whether
you are subject to backup withholding for failing to report income to the
Internal Revenue Service.
17
<PAGE>
Waddell & Reed, Inc. reserves the right to reject any purchase orders, including
purchases by exchange, and it and the Fund reserve the right to discontinue
offering Fund shares for purchase.
Minimum Investments
<TABLE>
<S> <C>
To Open an Account $1,000
For certain exchanges
into [Class A] accounts $100
For certain accounts opened
with Automatic Investment
Service $25
For certain accounts opened
through payroll deductions
for or by employees of WRIMCO,
Waddell & Reed, Inc. and
their affiliates $25
To add to an account $100
For Automatic Investment
Service [(Class A only)] $25
</TABLE>
Adding to Your Account
Subject to the minimums described under "Minimum Investments," you can make
additional investments of any amount at any time.
To add to your Class A account by wire: Instruct your bank to wire the amount
you wish to invest, along with the account number and registration, to UMB Bank,
n.a. ("Bank"), ABA Number 101000695, United K.C., for United Cash Management,
Inc., FBO Customer Name and Account Number.
To add to your account by mail: Make your check, money order, Federal Reserve
draft or other negotiable bank draft payable to Waddell & Reed, Inc. Mail the
check, money order or other draft to Waddell & Reed, Inc., along with a letter
stating your account number, the account registration and the class of shares
that you wish to purchase.
Selling Shares
You can arrange to take money out of your Fund account at any time by selling
(redeeming) some or all of your shares.
To sell shares by written request: Complete an Account Service Request form,
available from your Waddell & Reed financial advisor, or write a letter of
instruction with:
18
<PAGE>
o the name on the account registration;
o the Fund's name;
o the Fund account number;
o the dollar amount or number, and the class, of shares to be redeemed; and
o any other applicable requirements listed in the table below.
Deliver the form or your letter to your Waddell & Reed financial advisor, or
mail it to:
Waddell & Reed Services Company
P.O. Box 29217
Shawnee Mission, Kansas
66201-9217
Unless otherwise instructed, Waddell & Reed Services Company will send a check
to the address on the account.
To sell Class A shares by check: If you have elected this method in your
application or by subsequent authorization, the Fund will provide you with forms
of checks drawn on the Bank. You may make these checks payable to the order of
any payee in any amount of $250 or more.
When you place an order to sell shares, your shares will be sold at the NAV
next calculated, subject to any applicable CDSC, calculated after receipt of a
written request for redemption in good order by Waddell & Reed Services Company
at the address listed above. Note the following:
o If more than one person owns the shares, each owner must sign the written
request.
o If you recently purchased the shares by check, the Fund may delay payment
of redemption proceeds. You may arrange for the bank upon which the
purchase check was drawn to provide to the Fund telephone or written
assurance that the check has cleared and been honored. If you do not,
payment of the redemption proceeds on these shares will be delayed until
the earlier of 10 days or the date the Fund can verify that your purchase
check has cleared and been honored.
o Redemptions may be suspended or payment dates postponed on days when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the Securities and Exchange Commission.
19
<PAGE>
o Payment is normally made in cash, although under extraordinary conditions
redemptions may be made in portfolio securities.
o Redemption by check writing is not available for certain retirement plan
accounts nor is it available for Class B or Class C accounts.
o There is no additional charge for maintaining the check writing privilege
or for processing checks.
o If you have elected the check writing privilege, the Bank will request that
the Fund redeem a sufficient number of full and fractional Class A shares
in your account to cover the amount of the check when a check is presented
to the Bank for payment. You will continue to receive dividends on those
shares equaling the amount being redeemed until such time as the check is
presented to the Bank for payment. No "stop-payment" order can be placed
against the checks. Checks may be dishonored if shares were recently
purchased as discussed above or if the NAV per share has declined so that
there are insufficient shares to be redeemed to cover the amount of the
check.
o As with any redemption of shares, redemption by check writing will, for
Federal income tax purposes, result in a capital gain or loss on shares
redeemed.
20
<PAGE>
Special Requirements for Selling Shares
<TABLE>
<CAPTION>
Account Type Special Requirements
------------ --------------------
<S> <C>
Individual or Joint Tenant The written instructions must be signed by all
persons required to sign for transactions,
exactly as their names appear on the account.
Sole Proprietorship The written instructions must be signed by the
individual owner of the business.
UGMA, UTMA The custodian must sign the written
instructions indicating capacity as custodian.
Retirement Account The written instructions must be signed by a
properly authorized person.
Trust The trustee must sign the written instructions
indicating capacity as trustee. If the
trustee's name is not in the account
registration, provide a currently certified
copy of the trust document.
Business or Organization At least one person authorized by corporate
resolution to act on the account must sign the
written instructions.
Conservator, Guardian
or Other Fiduciary The written instructions must be signed by the
person properly authorized by court order to
act in the particular fiduciary capacity.
</TABLE>
The Fund may require a signature guarantee in certain situations such as:
21
<PAGE>
o a redemption request made by a corporation, partnership or fiduciary;
o a redemption request made by someone other than the owner of record; or
o the check is made payable to someone other than the owner of record.
This requirement is intended to protect you and Waddell & Reed from fraud. You
can obtain a signature guarantee from most banks and securities dealers, but not
from a notary public.
The deferred sales charge will not apply to the proceeds of Class B or Class C
shares which are redeemed and then reinvested in Class B or Class C shares, as
applicable, within thirty days after such redemption. You may do this only once
as to Class B shares of the Fund and once as to Class C shares of the Fund.
The Fund reserves the right to redeem at NAV all of your Fund shares, except
those in retirement plan accounts, if their aggregate NAV is less than $250. The
Fund will give you notice and a 60-day opportunity to purchase a sufficient
number of additional shares to bring the aggregate NAV of your account to $250.
The Fund has the right to charge a fee of $1.75 per month on all accounts with a
NAV of less than $250, except for retirement plan accounts and accounts with an
increase or decrease in NAV within 60 days of such determination.
Telephone Transactions
The Fund and its agents will not be liable for following instructions
communicated by telephone that they reasonably believe to be genuine. The Fund
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. If the Fund fails to do so, the Fund may be liable for
losses due to unauthorized or fraudulent instructions. Current procedures
relating to instructions communicated by telephone include tape recording
instructions, requiring personal identification and providing written
confirmations of transactions effected pursuant to such instructions.
Shareholder Services
Waddell & Reed provides a variety of services to help you manage your account.
Personal Service
Your local Waddell & Reed financial advisor is available to provide personal
service. Additionally, one toll-free call, 1-800-366-5465,
22
<PAGE>
connects you to a Customer Service Representative or our automated customer
telephone service. During normal business hours, our Customer Service staff is
available to answer your questions or update your account records. At almost any
time of the day or night, you may access your account information from a
touch-tone phone, or our website, www.waddell.com, to:
o obtain information about your accounts;
o obtain price information about other funds in the United Group; or
o request duplicate statements; and
o reorder checks (not currently available via the website).
Reports
Statements and reports sent to you include the following:
o confirmation statements (after every purchase, other than those purchases
made through Automatic Investment Service, and after every exchange,
transfer or redemption)
o year-to-date statements (quarterly)
o annual and semiannual reports to shareholders (every six months)
To reduce expenses, only one copy of the most recent annual and semiannual
reports will be mailed to your household, even if you have more than one account
with the Fund. Call the telephone number listed above for Customer Service if
you need additional copies of annual or semiannual reports or account
information.
Exchanges
You may sell your Class A, B or C shares and buy shares of the same class of
other funds in the United Group without the payment of a sales charge if you buy
Class A shares or without payment of a CDSC when you exchange Class B or Class C
shares. For Class B or Class C shares, the time period for the CDSC will
continue to run. In addition, exchanging Class Y shareholders of another fund in
the United Group may buy Class A shares of the Fund.
You may exchange only into funds that are legally permitted for sale in your
state of residence. Note that exchanges out of the Fund may have tax
consequences for you. Before exchanging into a fund, read its prospectus.
23
<PAGE>
The Fund reserves the right to terminate or modify these exchange privileges at
any time, upon notice in certain instances.
Automatic Transactions
Flexible withdrawal service lets you set up ongoing monthly, quarterly,
semiannual or annual redemptions from your account.
Regular Investment Plans allow you to transfer money into or from your Fund
account automatically. While Regular Investment Plans do not guarantee a profit
and will not protect you against loss in a declining market, they can be an
excellent way to invest for retirement, a home, educational expenses and other
long-term financial goals.
Certain restrictions and fees imposed by the plan custodian may also apply for
retirement accounts. Speak with your Waddell & Reed financial advisor for more
information.
Regular Investment Plans
Automatic Investment Service - [Class A]
To move money from your bank account to an existing Fund account
<TABLE>
<CAPTION>
Minimum Amount Minimum Frequency
<S> <C>
$25 Monthly
</TABLE>
Funds Plus Service - Class A, B and C
To move money from the Fund to other funds in the United Group whether in the
same or a different account of the same class
<TABLE>
<CAPTION>
Minimum Amount Minimum Frequency
<S> <C>
$100 Monthly
</TABLE>
Distributions and Taxes
Distributions
The Fund distributes substantially all of its net investment income and net
capital gains to shareholders each year. Usually, dividends are declared daily
and the Fund distributes net investment income monthly on the 27th day of the
month or on the last business day prior to the 27th if the 27th falls on a
weekend or holiday. Dividends declared for a particular day are paid to
shareholders of record on the prior business day. However, dividends declared
for Saturday and Sunday are paid to shareholders of record on the preceding
Thursday. Dividends for each class are distributed from the Fund's net
investment income, which includes accrued interest, earned discount, dividends
and other income earned on portfolio assets less expenses of that class. The
Fund distributes its net short-term capital gains annually but may make more
24
<PAGE>
frequent distributions of such gains if necessary to maintain its NAV per share
at $1.00. The Fund does not expect to realize net long-term capital gains and,
thus, does not anticipate payment of any long-term capital gains distributions.
When shares are completely redeemed, any declared but unpaid dividends on those
shares will be paid at the time of redemption.
Distribution Options. When you open an account, specify on your application how
you want to receive your distributions. The Fund offers three options:
1. Share Payment Option. Your dividends, capital gains and other
distributions with respect to a class will be automatically paid in
additional shares of the same class of the Fund. If you do not indicate a
choice on your application, you will be assigned this option.
2. Income-Earned Option. Your capital gains and other distributions with
respect to a class will be automatically paid in shares of the same class,
but you will be sent a check for each dividend distribution. However, if
the dividend distribution is less than five dollars, the distribution will
be automatically paid in additional shares of the same class of the Fund.
3. Cash Option. You will be sent a check for your dividends, capital gains
and other distributions if the total distribution is equal to or greater
than five dollars. If the distribution is less than five dollars, it will
be automatically paid in additional shares of the same class of the Fund.
For retirement accounts, all distributions are automatically paid in additional
shares.
Taxes
As with any investment, you should consider how your investment in the Fund will
be taxed. If your account is not a tax-deferred retirement account, you should
be aware of the following tax implications:
Taxes on distributions. Dividends from the Fund's investment company taxable
income generally are taxable to you as ordinary income whether received in cash
or paid in additional Fund shares. Distributions of the Fund's net capital
gains, if any, when designated as such, are taxable to you as long-term capital
gains, whether received in cash or paid in additional Fund shares and regardless
of the length of time you have owned your shares. For Federal income tax
purposes, your long-term capital gains generally are taxed at a maximum rate of
20%.
25
<PAGE>
The Fund notifies you after each calendar year-end as to the amounts of
dividends and other distributions paid (or deemed paid) to you for that year.
Withholding. The Fund must withhold 31% of all dividends, capital gains and
other distributions and redemption proceeds payable to individuals and certain
other noncorporate shareholders who do not furnish the Fund with a correct
taxpayer identification number. Withholding at that rate from dividends and
capital gains distributions also is required for shareholders subject to backup
withholding.
State and local income taxes. The portion of the dividends paid by the Fund
attributable to interest earned on its U.S. Government securities generally is
not subject to state and local income taxes, although distributions by the Fund
to its shareholders of net realized gains on the sale of those securities are
fully subject to those taxes. You should consult your tax adviser to determine
the taxability of dividends and other distributions by the Fund in your state
and locality.
The foregoing is only a summary of some of the important Federal tax
considerations generally affecting the Fund and its shareholders; you will find
more information in the SAI. There may be other Federal, state or local tax
considerations applicable to a particular investor. You are urged to consult
your own tax adviser.
26
<PAGE>
The Management of the Fund
Portfolio Management
The Fund is managed by WRIMCO, subject to the authority of the Fund's Board of
Directors. WRIMCO provides investment advice to the Fund and supervises the
Fund's investments. WRIMCO and its predecessors have served as investment
manager to each of the registered investment companies in the United Group of
Mutual Funds, Waddell & Reed Funds, Inc. and Target/United Funds, Inc. since the
inception of the company. WRIMCO is located at 6300 Lamar Avenue, P.O. Box
29217, Shawnee Mission, Kansas 66201-9217.
Mira Stevovich is primarily responsible for the management of the portfolio of
the Fund. Ms. Stevovich has held her Fund responsibilities since May 1998. She
is Vice President of WRIMCO, Vice President and Assistant Treasurer of the Fund
and Vice President and Assistant Treasurer of other investment companies for
which WRIMCO serves as investment manager. Ms. Stevovich has served as the
Assistant Portfolio Manager for investment companies managed by WRIMCO and its
predecessors since January 1989 and has been an employee of such since March
1987.
Other members of WRIMCO's investment management department provide input on
market outlook, economic conditions, investment research and other
considerations relating to the Fund's investments.
Management Fee
Like all mutual funds, the Fund pays fees related to its daily operations.
Expenses paid out of the Fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted from
shareholder accounts.
The Fund pays a management fee to WRIMCO for providing investment advice and
supervising its investments. The Fund also pays other expenses, which are
explained in the SAI.
The management fee is payable by the Fund at the annual rate of 0.40% of net
assets.
Prior to June 30, 1999, the management fee of the Fund was a group fee
determined on the basis of the combined NAVs of all the funds in the United
Group and then allocated pro rata to the Fund based on its relative net assets
at the annual rates shown in the following table:
27
<PAGE>
Group Fee Rate
<TABLE>
<CAPTION>
Annual
Group Net Group
Asset Level Fee Rate
(all dollars For Each
in millions) Level
- ------------ --------
<S> <C>
From $0
to $750 .51 of 1%
From $750
to $1,500 .49 of 1%
From $1,500
to $2,250 .47 of 1%
From $2,250
to $3,000 .45 of 1%
From $3,000
to $3,750 .43 of 1%
From $3,750
to $7,500 .40 of 1%
From $7,500
to $12,000 .38 of 1%
Over $12,000 .36 of 1%
</TABLE>
Management fees for the fiscal year ended June 30, 1999 were 0.39% of the Fund's
average net assets.
28
<PAGE>
Financial Highlights
The following information is to help you understand the financial performance of
the Fund's Class A* shares for the fiscal periods shown. Certain information
reflects financial results for a single Fund share. "Total return" shows how
much your investment would have increased during each period, assuming
reinvestment of all dividends and distributions. This information has been
audited by Deloitte & Touche LLP, whose independent auditors' report, along with
the Fund's financial statements for the fiscal year ended June 30, 1999, are
included in the SAI, which is available upon request.
For a Class A share outstanding throughout each period:*
<TABLE>
<CAPTION>
For the fiscal year ended June 30,
---------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Class A Per-Share Data
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
======= ======= ======= ======= =======
Class A Ratios/Supplemental Data
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%
</TABLE>
*On September 5, 1995, Fund shares outstanding were designated Class A shares.
29
<PAGE>
United Cash Management, Inc.
<TABLE>
<S> <C>
Custodian Underwriter
UMB Bank, n.a. Waddell & Reed, Inc.
Kansas City, Missouri 6300 Lamar Avenue
P. O. Box 29217
Legal Counsel Shawnee Mission, Kansas
Kirkpatrick & Lockhart LLP 66201-9217
1800 Massachusetts Avenue, N.W. (913) 236-2000
Washington, D. C. 20036 (800) 366-5465
Independent Auditors Shareholder Servicing Agent
Deloitte & Touche LLP Waddell & Reed
1010 Grand Avenue Services Company
Kansas City, Missouri 6300 Lamar Avenue
64106-2232 P. O. Box 29217
Shawnee Mission, Kansas
Investment Manager 66201-9217
Waddell & Reed Investment (913) 236-2000
Management Company (800) 366-5465
6300 Lamar Avenue
P. O. Box 29217 Accounting Services Agent
Shawnee Mission, Kansas Waddell & Reed
66201-9217 Services Company
(913) 236-2000 6300 Lamar Avenue
(800) 366-5465 P. O. Box 29217
Shawnee Mission, Kansas
66201-9217
(913) 236-2000
(800) 366-5465
</TABLE>
30
<PAGE>
United Cash Management, Inc.
Class A Shares
Class B Shares
Class C Shares
October 4, 1999
You can get more information about the Fund in--
o its Statement of Additional Information (SAI) dated October 4, 1999,
which contains detailed information about the Fund, particularly its
investment policies and practices. You may not be aware of important
information about the Fund unless you read both the Prospectus and the SAI.
The current SAI is on file with the Securities and Exchange Commission
(SEC) and it is incorporated into this Prospectus by reference (that is,
the SAI is legally part of the Prospectus).
o its Annual and Semiannual Reports to Shareholders, which detail the
Fund's actual investments and include financial statements as of the close
of the particular annual or semiannual period. The annual report also
contains a discussion of the market conditions and investment strategies
that significantly affected the Fund's performance during the year covered
by the report.
To request a copy of the current SAI or copies of the Fund's most recent Annual
and Semiannual reports, without charge, or for other inquiries, contact the Fund
or Waddell & Reed, Inc. at the address and telephone number below. Copies of the
SAI, Annual and/or Semiannual reports may also be requested via e-mail at
[email protected].
Information about the Fund (including its current SAI and most recent Annual and
Semiannual Reports) is available from the SEC's web site at http://www.sec.gov
and from the SEC's Public Reference Room in Washington, D.C. You can find out
about the operation of the Public Reference Room and applicable copying charges
by calling 1-800-SEC-0330.
The Fund's SEC file number is: 811-2922.
WADDELL & REED, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
913-236-2000
800-366-5465
NUP2010(10-99)
31
<PAGE>
United Cash Management, Inc.
Waddell & Reed Money Market B Shares
Waddell & Reed Money Market C Shares
This Fund seeks maximum current income to the extent consistent with stability
of principal by investing in a portfolio of money market instruments meeting
specified quality standards.
The Securities and Exchange Commission has not approved or disapproved the
Fund's securities, or determined whether this Prospectus is accurate or
adequate. It is a criminal offense to state otherwise.
Prospectus
October 4, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
AN OVERVIEW OF THE FUND...........................................................3
PERFORMANCE........................................................................
FEES AND EXPENSES.................................................................4
THE INVESTMENT PRINCIPLES OF THE FUND.............................................7
Investment Goal, Principal Strategies and Other Investments....................7
Risk Considerations of Principal Strategies and Other Investments...............
Year 2000 Issue.................................................................
YOUR ACCOUNT......................................................................9
Choosing a Share Class..........................................................
Ways to Set Up Your Account...................................................13
Buying Shares.................................................................19
Minimum Investments...........................................................16
Adding to Your Account........................................................16
Selling Shares................................................................17
Telephone Transactions........................................................26
Shareholder Services..........................................................27
Personal Service...........................................................27
Reports....................................................................27
Exchanges..................................................................27
Automatic Transactions for Waddell & Reed Money Market C Shareholders......27
Distributions and Taxes.......................................................28
Distributions..............................................................28
Taxes......................................................................29
THE MANAGEMENT OF THE FUND.......................................................31
Portfolio Management..........................................................32
Management Fee................................................................33
FINANCIAL HIGHLIGHTS...............................................................
</TABLE>
2
<PAGE>
An Overview of the Fund
Goal
United Cash Management, Inc. (the "Fund") seeks maximum current income
consistent with stability of principal.
Principal Strategies
The Fund seeks to achieve its goal by investing in U.S. dollar-denominated,
high-quality money market obligations and instruments. High quality indicates
that the securities will be rated A-1/A-2 by Standard & Poor's or
Prime-1/Prime-2 by Moody's Investor Services, or if unrated, will be of
comparable quality as determined by Waddell & Reed Investment Management Company
("WRIMCO"), the Fund's manager. The Fund seeks, as well, to maintain a net asset
value ("NAV") of $1.00 per share. The Fund will maintain a dollar-weighted
maturity average of 90 days or less, and the Fund will only invest in securities
with a remaining maturity of not more than 397 calendar days.
Principal Risks of Investing in the Fund
Because the Fund owns different types of money market obligations and
instruments, a variety of factors can affect its investment performance, such
as:
o an increase in interest rates, which can cause the value of the Fund's
holdings to decline;
o the credit quality and other conditions of the issuers whose securities the
Fund holds;
o adverse bond market conditions, sometimes in response to general economic
or industry news, that may cause the prices of the Fund's holdings to fall
as part of a broad market decline; and
o the skill of WRIMCO in evaluating and managing the interest rate and credit
risks of the Fund.
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund.
Who May Want to Invest
The Fund is designed for investors who are risk-averse and seek to preserve
principal while earning current income and saving for short-term needs. You
should consider whether the Fund fits your particular investment objectives.
3
<PAGE>
Performance
The bar chart and performance table below provide some indication of the risks
of investing in the Fund by showing changes in the Fund's performance from year
to year and by showing the Fund's average annual returns for the periods shown.
o The bar chart presents the total annual returns for Waddell & Reed Money
Market B (formerly designated Class B) and shows how performance has varied
from year to year over the past three years.
o The performance table shows Waddell & Reed Money Market B average annual
returns. No performance information is provided for Waddell & Reed Money
Market C shares since the class does not have annual total returns for a
full calendar year.
o The bar chart and the performance table assume reinvestment of dividends
and distributions. As with all mutual funds, the Fund's past performance
does not necessarily indicate how it will perform in the future.
Note that the performance information in the chart and table is based on
calendar-year periods, while the information shown in the Financial Highlights
section of this Prospectus and in the Fund's shareholder reports is based on the
Fund's fiscal year.
Chart of Year-by-Year Returns
as of December 31 each year (%)
<TABLE>
<S> <C>
1996 3.88%
1997 4.18%
1998 4.11%
</TABLE>
In the period shown in the chart, the highest quarterly return was 1.07% (the
second quarter of 1997) and the lowest quarterly return was 0.89% (the first
quarter of 1996). The Class B return for the year through June 30, 1999 was
1.67%.
<TABLE>
<CAPTION>
Average Annual Total Returns
as of December 31(%)
1 Year Life of Class*
<S> <C> <C>
Waddell & Reed Money Market
B Shares of the Fund 4.11% 4.06%
</TABLE>
*Since September 5, 1995, for Waddell & Reed Money Market B shares, formerly
designated Class B.
4
<PAGE>
Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
<TABLE>
<CAPTION>
Waddell & Reed Waddell & Reed
Shareholder Fees Money Market B Money Market C
(fees paid directly from Shares Shares
your investment) -------------- --------------
<S> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) None None
Maximum Deferred Sales
Charge (Load)(1) 3% 1%
(as a percentage of
lesser of amount
invested or redemption
value)
Annual Fund Operating Expenses(2)
(expenses that are deducted from Fund assets)
Management Fees 0.40% 0.40%
Distribution and
Service (12b-1) Fees(3) 1.00% 1.00%
Other Expenses 0.21% 0.21%
Total Annual Fund
Operating Expenses 1.61% 1.61%
</TABLE>
Example: This example is intended to help you compare the cost of investing in
the shares of the Fund with the cost of investing in other mutual funds. The
example assumes that (a) you invest $10,000 in the particular class for each
time period specified, (b) your investment has a 5% return each year, and (c)
the expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions, your costs would be:
- --------
(1) The contingent deferred sales charge("CDSC") which is imposed on the lesser
of amount invested or redemption value for Waddell & Reed Money Market B shares,
declines from 3% of the amount invested to 0% after 3 years. For Waddell & Reed
Money Market C shares, a 1% CDSC applies to the proceeds of redemption of these
shares held for less than 12 months.
(2) Management Fees and Total Annual Fund Operating Expenses have been restated
to reflect the change in management fees effective June 30, 1999; otherwise,
expense ratios are based other Fund-level expenses of the Fund for the fiscal
year ended June 30, 1999, and for Waddell & Reed Money Market C, the expenses
that are anticipated for the current year. Actual expenses may be greater or
less than those shown.
(3) It is possible that long-term Waddell & Reed Money Market B and Waddell &
Reed Money Market C shareholders of the Fund may bear 12b-1 distribution fees
that are more than the maximum asset-based sales charge permitted under the
rules of the National Association of Securities Dealers, Inc.
5
<PAGE>
<TABLE>
<CAPTION>
If shares are redeemed
at end of period: 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Waddell & Reed Money
Market B shares $464 $608 $876 $1,911
Waddell & Reed Money
Market C shares $264 $508 $876 $1,911
If shares are not redeemed
at end of period: 1 year 3 years 5 years 10 years
Waddell & Reed Money
Market B shares $164 $508 $876 $1,911
Waddell & Reed Money
Market C shares $164 $508 $876 $1,911
</TABLE>
6
<PAGE>
The Investment Principles of the Fund
Investment Goal, Principal Strategies and Other Investments
The goal of the Fund is maximum current income consistent with stability of
principal. The Fund seeks to achieve its goal by investing in a diversified
portfolio of high-quality money market instruments in accordance with the
requirements of Rule 2a-7 under the Investment Company Act of 1940, as amended
(the "1940 Act"). There is no guarantee that the Fund will achieve its goal.
The Fund invests only in the following U.S. dollar-denominated money market
obligations and instruments:
o U.S. government obligations (including obligations of U.S. government
agencies and instrumentalities);
o bank obligations and instruments secured by bank obligations, such as
letters of credit;
o commercial paper;
o corporate debt obligations, including variable amount master demand notes;
o Canadian government obligations; and
o certain other obligations (including municipal obligations) guaranteed as
to principal and interest by a bank in whose obligations the Fund may
invest or a corporation in whose commercial paper the Fund may invest.
The Fund only invests in bank obligations if they are obligations of a bank
subject to regulation by the U.S. Government (including branches of these banks)
or obligations of a foreign bank having total assets of at least $500 million,
and instruments secured by any such obligation.
WRIMCO may look at a number of factors in selecting securities for the Fund's
portfolio. These include:
o the credit quality of the particular issuer or guarantor of the security;
o the maturity of the security; and
7
<PAGE>
o the relative value of the security.
Generally, in determining whether to sell a security, WRIMCO will use the same
analysis that it uses in buying securities to determine if the security no
longer offers adequate return or does not comply with Rule 2a-7. WRIMCO may also
sell a security to take advantage of more attractive investment opportunities or
to raise cash.
You will find more information in the Statement of Additional Information
("SAI") about the Fund's valuation.
Risk Considerations of Principal Strategies and Other Investments
Risks exist in any investment. The Fund is subject to market risk, financial
risk and, in some cases, prepayment risk.
o Market risk is the possibility of a change in the price of the security
because of market factors including changes in interest rates. Bonds with
longer maturities are more interest-rate sensitive. For example, if
interest rates increase, the value of a bond with a longer maturity is more
likely to decrease.
o Financial risk is based on the financial situation of the issuer of the
security. The financial risk of the Fund depends on the credit quality of
the underlying securities in which it invests.
o Prepayment risk is the possibility that, during periods of falling interest
rates, a debt security with a high stated interest rate will be prepaid
before its expected maturity date.
Because the Fund owns different types of investments, its performance will be
affected by a variety of factors. In general, the value of the Fund's
investments and the income it may generate will vary from day to day, generally
due to changes in market conditions, interest rates and other company and
economic news. Performance will also depend on WRIMCO's skill in selecting
investments.
Year 2000 Issue
Like other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by WRIMCO and the Fund's other service providers do not properly process
and calculate date-related information and data from and after January 1, 2000.
WRIMCO is taking steps that it
8
<PAGE>
believes are reasonably designed to address Year 2000 computer-related problems
with respect to the computer systems that it uses and to obtain assurances that
comparable steps are being taken by the Fund's other major service providers.
Although there can be no assurances, WRIMCO believes these steps will be
sufficient to avoid any adverse impact on the Fund. Similarly, the companies and
other issuers in which the Fund invests could be adversely affected by Year 2000
computer-related problems, and there can be no assurance that the steps taken,
if any, by these issuers will be sufficient to avoid any adverse impact on the
Fund.
9
<PAGE>
Your Account
Choosing a Share Class
This Prospectus offers two classes of shares for the Fund: Waddell & Reed Money
Market B & Waddell & Reed Money Market C. Each class has its own sales charge,
if any, and expense structure. Beginning October 4, 1999, Waddell & Reed Money
Market B shares are available only by exchange of Class B shares of Waddell &
Reed Funds, Inc. Waddell & Reed Money Market C shares are for temporary
investment purposes in connection with exchanges to or from Waddell & Reed
Funds, Inc. Therefore, you may purchase Waddell & Reed Money Market C shares
only by exchange, at NAV, of Class C shares of Waddell & Reed Funds, Inc. or you
may purchase directly if you have established Funds Plus Service, a regular
investment plan to systematically exchange into Class C shares of Waddell & Reed
Funds, Inc.
General Comparison of Classes of Chares
<TABLE>
<CAPTION>
Waddell & Reed Waddell & Reed
Money Market B* Money Market C
- --------------- --------------
<S> <C>
o No initial sales charge o No initial sales charge
o Funds Plus Service optional o Funds Plus Service required for
direct investment
o Deferred sales charge on shares o A 1% deferred sales charge
you sell within three calendar years on shares you sell within twelve
months
o Maximum distribution and service o Maximum distribution and service
(12b-1) fees of 1.00% (12b-1) fees of 1.00%
o Can exchange into Waddell & Reed Funds o Can exchange into Waddell & Reed
without a deferred sales charge Funds without a deferred sales
charge
</TABLE>
*Available only by exchange of your Waddell & Reed Funds, Inc. Class B shares.
No direct investments.
The Fund has adopted a Distribution and Service Plan ("Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended, for its Waddell &
Reed Money Market B and Waddell & Reed Money Market C shares. Under each Plan,
the Fund may pay Waddell & Reed, Inc., on an annual basis, a service fee of up
to 0.25% of the average daily net assets of the affected class to compensate
Waddell & Reed, Inc. for providing services to shareholders of that class and/or
maintaining shareholder accounts for that class and a distribution fee of up to
0.75% of the average daily net assets of the class to compensate Waddell & Reed,
Inc. for distributing shares of that class. Because a class's fees are paid out
of the assets of that class on an on-going basis, over time these fees will
increase the cost of your
10
<PAGE>
investment and may cost you more than paying other types of sales charges.
Contingent Deferred Sales Charge. A CDSC may be assessed against your
redemption amount and paid to Waddell & Reed, Inc. (the "Distributor"), as
further described below. The purpose of the CDSC is to compensate the
Distributor for the costs incurred by it in connection with the sale of the
Fund's shares of that class. The CDSC will not be imposed on shares of that
class representing payment of dividends or distributions or on amounts which
represent an increase in the value of a shareholder's account resulting from
capital appreciation above the amount paid for shares of that class purchased
during the CDSC period. The date of redemption is measured, in calendar years,
from the first calendar year of purchase.
To keep your CDSC as low as possible, each time you place a request to redeem
shares, the Fund assumes that a redemption is made first of shares representing
appreciation on shares other than reinvested distributions, next of shares
representing amounts not subject to a deferred sales charge, including
reinvested distributions, and then of shares that represent the lowest sales
charge.
Unless instructed otherwise, the Fund, when requested to redeem a specific
dollar amount, will redeem additional shares of the particular class equal in
value to the CDSC. For example, should you request a $1,000 redemption and the
applicable CDSC is $27, the Fund will redeem shares having an aggregate NAV of
$1,027, absent different instructions.
Waddell & Reed Money Market B shares (previously known as Class B shares) are
only available for exchange by current Class B shareholders of Waddell & Reed
Funds, Inc. However, you may pay a contingent deferred sales charge ("CDSC") if
you sell your Waddell & Reed Money Market B shares within four calendar years of
their purchase, based on the table below. Waddell & Reed Money Market B shares
pay an annual 12b-1 service fee of up to 0.25% of average net assets and
distribution fee of up to 0.75% of average net assets.
The Fund will redeem your Waddell & Reed Money Market B shares at their NAV next
calculated after receipt of a written request for redemption in good order,
subject to the CDSC discussed below.
<TABLE>
<CAPTION>
Deferred
Date of Sales
Redemption Charge
- ---------- ------
<S> <C>
anytime within
the calendar year
of investment and
the first full
calendar year
after the calendar
year of
investment 3%
anytime within
second
calendar year 2%
anytime within
third
calendar year 1%
after third
calendar year 0%
</TABLE>
The date of redemption is measured, in calendar years, from the first calendar
year of purchase. The CDSC will be applied to the total amount invested during a
calendar year to acquire Waddell & Reed Money Market B shares or the value of
the Waddell & Reed Money Market B shares redeemed, whichever is less. All
Waddell & Reed Money Market B share investments made during a calendar year are
deemed a single investment in the applicable class during that calendar year for
purposes of calculating the CDSC.
Waddell & Reed Money Market C shares are not subject to a sales charge when you
buy them. You must establish a Funds Plus Service plan upon purchase of Waddell
& Reed Money Market C shares if other than by exchange of Class C shares of
Waddell & Reed Funds, Inc. If you sell your Waddell & Reed Money Market C shares
within 12 months of buying these shares, you will pay a 1% CDSC. These shares
pay an annual 12b-1 service fee of up to 0.25% of average net assets and
distribution fee of up to 0.75% of average net assets. Over time, these fees
will increase the cost of your investment and may cost you more than if you had
bought Class A shares. These shares do not convert to any other class.
You may sell your Waddell & Reed Money Market B or Waddell & Reed Money Market C
shares and buy shares of the corresponding class of Waddell & Reed Funds, Inc.,
without payment of a CDSC when you exchange the shares. The time period for the
CDSC will continue to run.
The CDSC, for Waddell & Reed Money Market B or Waddell & Reed Money Market C
shares, will not apply in the following circumstances:
o redemptions of shares requested within one year of the shareholder's death
or disability, provided the Fund is notified of the death or disability at
the time of the request and furnished proof of such event satisfactory to
the Distributor.
o redemptions of shares made to satisfy required minimum distributions after
age 70-1/2 from a qualified retirement plan, a required minimum
distribution from an individual retirement account, Keogh plan, 457 Plan or
custodial account under section 403(b)(7) of the Internal Revenue Code of
1986, as amended ("Code"), or a tax-free return of an excess contribution,
or that otherwise results from the death or disability of the employee, as
well as in connection with redemptions by any tax-exempt employee benefit
plan for which, as a result of a subsequent law or legislation, the
continuation of its investment would be improper.
11
<PAGE>
o redemptions of shares made pursuant to a shareholder's participation in any
systematic withdrawal service adopted for the Fund. (The service and this
exclusion from the CDSC do not apply to a one-time withdrawal.)
o redemptions of shares of which the proceeds are reinvested in shares within
thirty days after such redemption.
o the exercise of certain exchange privileges.
o redemptions effected pursuant to the Fund's right to liquidate a
shareholder's shares if the aggregate NAV of those shares is less than
$250.
o redemptions effected by another registered investment company by virtue of
a merger or other reorganization with the Fund or by a former shareholder
of such investment company of shares of the Fund acquired pursuant to such
reorganization.
These exceptions may be modified or eliminated by the Fund at any time without
prior notice to shareholders, except with respect to redemptions effected
pursuant to the Fund's right to liquidate a shareholder's shares, which requires
certain notices.
The different ways to set up (register) your account are listed below.
Ways to Set Up Your Account
- -------------------------------------------------
Individual or Joint Tenants
For your general investment needs
Individual accounts are owned by one person. Joint accounts have two or more
owners (tenants).
- -------------------------------------------------
Business or Organization
For investment needs of corporations, associations, partnerships, institutions
or other groups
- -------------------------------------------------
Retirement
To shelter your retirement savings from taxes
12
<PAGE>
Retirement plans allow individuals to shelter investment income and capital
gains from current taxes. In addition, contributions to these accounts (other
than Roth IRAs and Education IRAs) may be tax-deductible.
o Individual Retirement Accounts (IRAs) allow an individual under 70 1/2,
with earned income, to invest up to $2,000 per tax year. The maximum annual
contribution for an investor and his or her spouse is $4,000 ($2,000 for
each spouse) or, if less, the couple's combined earned income for the
taxable year.
o Rollover IRAs retain special tax advantages for certain distributions from
employer-sponsored retirement plans.
o Roth IRAs allow certain individuals to make nondeductible contributions up
to $2,000 per year. Withdrawals of earnings may be tax free is the account
is at least five years old and certain other requirements are met.
o Education IRAs are established for the benefit of a minor, with
nondeductible contributions, and permit tax-free withdrawals to pay the
higher education expenses of the beneficiary.
o Simplified Employee Pension Plans (SEP - IRAs) provide small business
owners or those with self-employed income (and their eligible employees)
with many of the same advantages as a Keogh Plan, but with fewer
administrative requirements.
o Keogh Plans allow self-employed individuals to make tax-deductible
contributions for themselves of up to 25% of their annual earned income,
with a maximum of $30,000 per year.
o Pension and Profit-Sharing Plans, including 401(k) Plans, allow
corporations and nongovernmental tax-exempt organizations of all sizes
and/or their employees to contribute a percentage of the employees' wages
or other amounts on a tax-deferred basis. These accounts need to be
established by the administrator or trustee of the plan.
o 403(b) Custodial Accounts are available to employees of public school
systems or certain types of charitable organizations.
o 457 Accounts allow employees of state and local governments and certain
charitable organizations to contribute a portion of their compensation on a
tax-deferred basis.
13
<PAGE>
o Savings Incentive Match Plans for Employees (SIMPLE Plans) can be
established by small employers to contribute to their employees' retirement
accounts and generally involve fewer administrative requirements than
401(k) or other qualified plans.
- -------------------------------------------------
Gifts or Transfers to a Minor
To invest for a child's education or other future needs
These custodial accounts provide a way to give money to a child and obtain tax
benefits. An individual can give up to $10,000 a year per child free of Federal
transfer tax consequences. Depending on state laws, you can set up a custodial
account under the Uniform Gifts to Minors Act ("UGMA") or the Uniform Transfers
to Minors Act ("UTMA").
- -------------------------------------------------
Trust
For money being invested by a trust
The trust must be established before an account can be opened, or you may use a
trust form made available by Waddell & Reed. Contact your Waddell & Reed
financial advisor for the form.
- -------------------------------------------------
Buying Shares
You may buy Waddell & Reed Money Market B shares only by exchange of Class B
shares of Waddell & Reed Funds, Inc. You may buy Waddell & Reed Money Market C
shares through Waddell & Reed, Inc. and its financial advisors. To open your
account you must complete and sign an application. If you purchase Waddell &
Reed Money Market C shares directly rather than by exchange, you must establish
a Funds Plus Service Plan. Your Waddell & Reed financial advisor can help you
with any questions you might have.
To purchase Waddell & Reed Money Market C shares by check, make your check,
money order, Federal Reserve draft or other negotiable bank draft payable to
Waddell & Reed, Inc. Mail the check, money order or draft, along with your
completed application, to
Waddell & Reed, Inc.
P.O. Box 29217
Shawnee Mission, Kansas
66201-9217.
14
<PAGE>
The price to buy a share of the Fund, called the offering price, is calculated
every business day.
The offering price of a share (price to buy one share of a particular class)
is the NAV per share next calculated of that class.
The NAV of each class will normally remain fixed at $1.00 per share.
The NAV per share is based on a valuation of the Fund's investments at amortized
cost. The amortized cost method of valuation is accomplished by valuing a
security at its cost and thereafter assuming a constant amortization rate to
maturity of any discount or premium.
The Fund is open for business each day the New York Stock Exchange (the "NYSE")
is open. The Fund normally calculates the NAVs of its shares as of the close of
business of the NYSE, normally 4 p.m. Eastern time.
When you place an order to buy shares, your order will be processed at the next
offering price calculated after your order is received and accepted. Note the
following:
o Orders are accepted only at the home office of Waddell & Reed, Inc.
o All of your purchases must be made in U.S. dollars.
o Dividends do not accrue until the Fund has federal funds available to it;
federal funds are monies of a member bank of the Federal Reserve System
held in deposit at a Federal Reserve Bank.
o If you buy shares by check, and then sell those shares by any method other
than by exchange to another fund in the United Group, the payment may be
delayed for up to ten days to ensure that your previous investment has
cleared.
o The Fund does not issue certificates representing Waddell & Reed Money
Market B or Waddell & Reed Money Market C shares of the Fund.
When you sign your account application, you will be asked to certify that your
Social Security or other taxpayer identification number is correct and whether
you are subject to backup withholding for failing to report income to the
Internal Revenue Service.
Waddell & Reed, Inc. reserves the right to reject any purchase orders,
including purchases by exchange, and it and the Fund reserve the right to
discontinue offering Fund shares for purchase.
15
<PAGE>
Minimum Investments
For Waddell & Reed Money Market C:
To Open an Account $1,000
For certain accounts opened
with Automatic Investment Service $50
For certain accounts opened through payroll
deductions for or by employees of WRIMCO,
Waddell & Reed, Inc. and their affiliates $25
To Add to an Account $100
Adding to Your Account
Subject to the minimums described under "Minimum Investments," you can make
additional investments of any amount at any time.
To add to your Waddell & Reed Money Market C account by mail: Make your check,
money order, Federal Reserve draft or other negotiable bank draft payable to
Waddell & Reed, Inc. Mail the check, money order or other draft to Waddell &
Reed, Inc., along with a letter stating your account number and the account
registration.
Selling Shares
You can arrange to take money out of your Fund account at any time by selling
(redeeming) some or all of your shares.
To sell shares by written request: Complete an Account Service Request form,
available from your Waddell & Reed financial advisor, or write a letter of
instruction with:
16
<PAGE>
o the name on the account registration;
o the Fund's name;
o the Fund account number;
o the dollar amount or number, and the class, of shares to be redeemed; and
o any other applicable requirements listed in the table below.
Deliver the form or your letter to your Waddell & Reed financial advisor, or
mail it to:
Waddell & Reed Services Company
P.O. Box 29217
Shawnee Mission, Kansas
66201-9217
Unless otherwise instructed, Waddell & Reed Services Company will send a check
to the address on the account.
When you place an order to sell shares, your shares will be sold at the NAV next
calculated, subject to any applicable CDSC, after receipt of a written request
for redemption in good order by Waddell & Reed Services Company at the address
listed above. Note the following:
o If more than one person owns the shares, each owner must sign the written
request.
o If you recently purchased the shares by check, the Fund may delay payment
of redemption proceeds. You may arrange for the bank upon which the
purchase check was drawn to provide to the Fund telephone or written
assurance that the check has cleared and been honored. If you do not,
payment of the redemption proceeds on these shares will be delayed until
the earlier of 10 days or the date the Fund can verify that your purchase
check has cleared and been honored.
o Redemptions may be suspended or payment dates postponed on days when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the Securities and Exchange Commission.
o Payment is normally made in cash, although under extraordinary conditions
redemptions may be made in portfolio securities.
17
<PAGE>
Special Requirements for Selling Shares
<TABLE>
<CAPTION>
Account Type Special Requirements
------------ --------------------
<S> <C>
Individual or Joint Tenant The written instructions must be signed
by all persons required to sign for
transactions, exactly as their names
appear on the account.
Sole Proprietorship The written instructions must be signed
by the individual owner of the
business.
UGMA, UTMA The custodian must sign the written
instructions indicating capacity as
custodian.
Retirement Account The written instructions must be signed
by a properly authorized person.
Trust The trustee must sign the written
instructions indicating capacity as
trustee. If the trustee's name is not
in the account registration, provide a
currently certified copy of the trust
document.
Business or Organization At least one person authorized by
corporate resolution to act on the
account must sign the written
instructions.
Conservator, Guardian or
Other Fiduciary The written instructions must be signed
by the person properly authorized by
court order to act in the particular
fiduciary capacity.
</TABLE>
18
<PAGE>
The Fund may require a signature guarantee in certain situations such as:
o a redemption request made by a corporation, partnership or fiduciary;
o a redemption request made by someone other than the owner of record; or
o the check is made payable to someone other than the owner of record.
This requirement is intended to protect you and Waddell & Reed from fraud. You
can obtain a signature guarantee from most banks and securities dealers, but not
from a notary public.
The deferred sales charge will not apply to the proceeds of Waddell & Reed Money
Market B or Waddell & Reed Money Market C shares which are redeemed and then
reinvested in the Waddell & Reed Money Market B or Waddell & Reed Money Market C
shares, as applicable, within thirty days after such redemption. You may do this
only once as to Waddell & Reed Money Market B shares and Waddell & Reed Money
Market C shares.
The Fund reserves the right to redeem at NAV all of your Fund shares, except
those in retirement plan accounts, if their aggregate NAV is less than $250. The
Fund will give you notice and a 60-day opportunity to purchase a sufficient
number of additional shares to bring the aggregate NAV of your account to $250.
The Fund has the right to charge a fee of $1.75 per month on all accounts with a
NAV of less than $250, except for retirement plan accounts and accounts with an
increase or decrease in NAV within 60 days of such determination.
Telephone Transactions
The Fund and its agents will not be liable for following instructions
communicated by telephone that they reasonably believe to be genuine. The Fund
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. If the Fund fails to do so, the Fund may be liable for
losses due to unauthorized or fraudulent instructions. Current procedures
relating to instructions communicated by telephone include tape recording
instructions, requiring personal identification and providing written
confirmations of transactions effected pursuant to such instructions.
Shareholder Services
Waddell & Reed provides a variety of services to help you manage your account.
19
<PAGE>
Personal Service
Your local Waddell & Reed financial advisor is available to provide personal
service. Additionally, a toll-free call, 1-800-366-5465, connects you to a
Customer Service Representative or our automated customer telephone service.
During normal business hours, our Customer Services staff is available to answer
your questions or update your account records. At almost any time of the day or
night, you may access your account information from a touch-tone phone, or our
website, www.waddell.com, to:
o obtain information about your accounts;
o obtain price information about other funds in the United Group; or
o request duplicate statements.
Reports
Statements and reports sent to you include the following:
o confirmation statements (after every purchase, other than those purchases
made through Automatic Investment Service, and after every exchange,
transfer or redemption)
o year-to-date statements (quarterly)
o annual and semiannual reports to shareholders (every six months)
To reduce expenses, only one copy of the most recent annual and semiannual
reports will be mailed to your household, even if you have more than one account
with the Fund. Call the telephone number listed above for Customer Service if
you need additional copies of annual or semiannual reports or account
information.
Exchanges
You may sell your Waddell & Reed Money Market B or Waddell & Reed Money Market C
shares and buy shares of the corresponding class of Waddell & Reed Funds, Inc.,
without payment of a CDSC when you exchange the shares. The time period for the
CDSC will continue to run.
You may exchange only into funds that are legally permitted for sale in your
state of residence. Note that exchanges out of the Fund may have tax
consequences for you. Before exchanging into a fund, read its prospectus.
20
<PAGE>
The Fund reserves the right to terminate or modify these exchange privileges at
any time, upon notice in certain instances.
Automatic Transactions
Flexible withdrawal service lets you set up ongoing monthly, quarterly,
semiannual or annual redemptions from your account.
Regular Investment Plans allow you to transfer money into (Waddell & Reed Money
Market C only) or from your Fund account automatically. While Regular Investment
Plans do not guarantee a profit and will not protect you against loss in a
declining market, they can be an excellent way to invest for retirement, a home,
educational expenses and other long-term financial goals.
Certain restrictions and fees imposed by the plan custodian may also apply for
retirement accounts. Speak with your Waddell & Reed financial advisor for more
information.
Regular Investment Plan
Funds Plus Service
To move money from the Fund to other funds in the Waddell & Reed Funds, Inc.
whether in the same or a different account of the same class
<TABLE>
<CAPTION>
Minimum Amount Minimum Frequency
<S> <C>
$100 Monthly
</TABLE>
Distributions and Taxes
Distributions
The Fund distributes substantially all of its net investment income and net
capital gains to shareholders each year. Usually, dividends are declared daily
and the Fund distributes net investment income monthly on the 27th day of the
month or on the last business day prior to the 27th if the 27th falls on a
weekend or holiday. Dividends declared for a particular day are paid to
shareholders of record on the prior business day. However, dividends declared
for Saturday and Sunday are paid to shareholders of record on the preceding
Thursday. Dividends for each class are distributed from the Fund's net
investment income, which includes accrued interest, earned discount, dividends
and other income earned on portfolio assets less expenses of that class. The
Fund distributes its net short-term capital gains annually but may make more
frequent distributions of such gains if necessary to maintain its NAV per share
at $1.00. The Fund does not expect to realize net long-term capital gains and,
thus, does not anticipate payment of any long-term capital gains distributions.
When shares are completely redeemed, any
21
<PAGE>
declared but unpaid dividends on those shares will be paid at the time of
redemption.
Distribution Options. When you open an account, specify on your application how
you want to receive your distributions. The Fund offers three options:
1. Share Payment Option. Your dividends, capital gains and other distributions
with respect to a class will be automatically paid in additional shares of
the same class of the Fund. If you do not indicate a choice on your
application, you will be assigned this option.
2. Income-Earned Option. Your capital gains and other distributions with
respect to a class will be automatically paid in shares of the same class,
but you will be sent a check for each dividend distribution. However, if
the dividend distribution is less than five dollars, the distribution will
be automatically paid in additional shares of the same class of the Fund.
3. Cash Option. You will be sent a check for your dividends, capital gains and
other distributions if the total distribution is equal to or greater than
five dollars. If the distribution is less than five dollars, it will be
automatically paid in additional shares of the same class of the Fund.
For retirement accounts, all distributions are automatically paid in additional
shares.
Taxes
As with any investment, you should consider how your investment in the Fund will
be taxed. If your account is not a tax-deferred retirement account, you should
be aware of the following tax implications:
Taxes on distributions. Dividends from the Fund's investment company taxable
income generally are taxable to you as ordinary income whether received in cash
or paid in additional Fund shares. Distributions of the Fund's net capital
gains, if any, when designated as such, are taxable to you as long-term capital
gains, whether received in cash or paid in additional Fund shares and regardless
of the length of time you have owned your shares. For Federal income tax
purposes, your long-term capital gains generally are taxed at a maximum rate of
20%.
22
<PAGE>
The Fund notifies you after each calendar year-end as to the amounts of
dividends and other distributions paid (or deemed paid) to you for that year.
Withholding. The Fund must withhold 31% of all dividends, capital gains and
other distributions and redemption proceeds payable to individuals and certain
other noncorporate shareholders who do not furnish the Fund with a correct
taxpayer identification number. Withholding at that rate from dividends and
capital gains distributions also is required for shareholders subject to backup
withholding.
State and local income taxes. The portion of the dividends paid by the Fund
attributable to interest earned on its U.S. Government securities generally is
not subject to state and local income taxes, although distributions by the Fund
to its shareholders of net realized gains on the sale of those securities are
fully subject to those taxes. You should consult your tax adviser to determine
the taxability of dividends and other distributions by the Fund in your state
and locality.
The foregoing is only a summary of some of the important Federal tax
considerations generally affecting the Fund and its shareholders; you will find
more information in the SAI. There may be other Federal, state or local tax
considerations applicable to a particular investor. You are urged to consult
your own tax adviser.
23
<PAGE>
The Management of the Fund
Portfolio Management
The Fund is managed by WRIMCO, subject to the authority of the Fund's Board of
Directors. WRIMCO provides investment advice to the Fund and supervises the
Fund's investments. WRIMCO and its predecessors have served as investment
manager to each of the registered investment companies in the United Group of
Mutual Funds, Waddell & Reed Funds, Inc. and Target/United Funds, Inc. since the
inception of the company. WRIMCO is located at 6300 Lamar Avenue, P.O. Box
29217, Shawnee Mission, Kansas 66201-9217.
Mira Stevovich is primarily responsible for the management of the portfolio of
the Fund. Ms. Stevovich has held her Fund responsibilities since May 1998. She
is Vice President of WRIMCO, Vice President and Assistant Treasurer of the Fund
and Vice President and Assistant Treasurer of other investment companies for
which WRIMCO serves as investment manager. Ms. Stevovich has served as the
Assistant Portfolio Manager for investment companies managed by WRIMCO and its
predecessors since January 1989 and has been an employee of such since March
1987.
Other members of WRIMCO's investment management department provide input on
market outlook, economic conditions, investment research and other
considerations relating to the Fund's investments.
Management Fee
Like all mutual funds, the Fund pays fees related to its daily operations.
Expenses paid out of the Fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted from
shareholder accounts.
The Fund pays a management fee to WRIMCO for providing investment advice and
supervising its investments. The Fund also pays other expenses, which are
explained in the SAI.
The management fee is payable by the Fund at the annual rate of 0.40% of net
assets.
Prior to June 30, 1999, the management fee of the Fund was a group fee
determined on the basis of the combined NAVs of all the funds in the United
Group and then allocated pro rata to the Fund based on its relative net assets
at the annual rates shown in the following table:
24
<PAGE>
Group Fee Rate
<TABLE>
<CAPTION>
Annual
Group Net Group
Asset Level Fee Rate
(all dollars For Each
in millions) Level
- ------------ --------
<S> <C>
From $0
to $750 .51 of 1%
From $750
to $1,500 .49 of 1%
From $1,500
to $2,250 .47 of 1%
From $2,250
to $3,000 .45 of 1%
From $3,000
to $3,750 .43 of 1%
From $3,750
to $7,500 .40 of 1%
From $7,500
to $12,000 .38 of 1%
Over $12,000 .36 of 1%
</TABLE>
Management fees for the fiscal year ended June 30, 1999 were 0.39% of the Fund's
average net assets.
26
<PAGE>
Financial Highlights
The following information is to help you understand the financial performance of
the Fund's Waddell & Reed Money Market B (formerly, Class B) shares for the
fiscal periods shown. Certain information reflects financial results for a
single Fund share. "Total return" shows how much your investment would have
increased during each period, assuming reinvestment of all dividends and
distributions. This information has been audited by Deloitte & Touche LLP, whose
independent auditors' report, along with the Fund's financial statements for the
fiscal year ended June 30, 1999, are included in the SAI, which is available
upon request.
For a Waddell & Reed Money Market B share outstanding throughout each period:*
<TABLE>
<CAPTION>
For the
For the fiscal year period
ended June 30, from 9/5/95**
------------------------------- through
1999 1998 1997 6/30/96
----- ------ ------ --------
<S> <C> <C> <C> <C>
Waddell & Reed
Money Market B
Per-Share Data
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
======= ======= ======= =======
Waddell & Reed
Money Market B
Ratios/Supplemental Data
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%***
</TABLE>
*As of October 4, 1999 Class B's name was changed to Waddell & Reed
Money Market B.
**Commencement of operations.
***Annualized.
27
<PAGE>
United Cash Management, Inc.
<TABLE>
<S> <C>
Custodian Underwriter
UMB Bank, n.a. Waddell & Reed, Inc.
Kansas City, Missouri 6300 Lamar Avenue
P. O. Box 29217
Legal Counsel Shawnee Mission, Kansas
Kirkpatrick & Lockhart LLP 66201-9217
1800 Massachusetts Avenue, N.W. (913) 236-2000
Washington, D. C. 20036 (800) 366-5465
Independent Auditors Shareholder Servicing Agent
Deloitte & Touche LLP Waddell & Reed
1010 Grand Avenue Services Company
Kansas City, Missouri 6300 Lamar Avenue
64106-2232 P. O. Box 29217
Shawnee Mission, Kansas
Investment Manager 66201-9217
Waddell & Reed Investment (913) 236-2000
Management Company (800) 366-5465
6300 Lamar Avenue
P. O. Box 29217 Accounting Services Agent
Shawnee Mission, Kansas Waddell & Reed
66201-9217 Services Company
(913) 236-2000 6300 Lamar Avenue
(800) 366-5465 P. O. Box 29217
Shawnee Mission, Kansas
66201-9217
(913) 236-2000
(800) 366-5465
</TABLE>
28
<PAGE>
United Cash Management, Inc.
Waddell & Reed Money Market B Shares
Waddell & Reed Money Market C Shares
October 4, 1999
You can get more information about the Fund in--
o its Statement of Additional Information (SAI) dated October 4, 1999, which
contains detailed information about the Fund, particularly its investment
policies and practices. You may not be aware of important information about
the Fund unless you read both the Prospectus and the SAI. The current SAI
is on file with the Securities and Exchange Commission (SEC) and it is
incorporated into this Prospectus by reference (that is, the SAI is legally
part of the Prospectus).
o its Annual and Semiannual Reports to Shareholders, which detail the Fund's
actual investments and include financial statements as of the close of the
particular annual or semiannual period. The annual report also contains a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the year covered by
the report.
To request a copy of the current SAI or copies of the Fund's most recent Annual
and Semiannual reports, without charge, or for other inquiries, contact the Fund
or Waddell & Reed, Inc. at the address and telephone number below. Copies of the
SAI, Annual and/or Semiannual reports may also be requested via e-mail at
[email protected].
Information about the Fund (including its current SAI and most recent Annual and
Semiannual Reports) is available from the SEC's web site at http://www.sec.gov
and from the SEC's Public Reference Room in Washington, D.C. You can find out
about the operation of the Public Reference Room and applicable copying charges
by calling 1-800-SEC-0330.
The Fund's SEC file number is: 811-2922.
WADDELL & REED, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
913-236-2000
800-366-5465
WRP4010(10-99)
29
<PAGE>
UNITED CASH MANAGEMENT, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
(913) 236-2000
October 4, 1999
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information (the "SAI") is not a prospectus.
Investors should read this SAI in conjunction with the prospectus for the Class
A, Class B and Class C shares and the prospectus for the Waddell & Reed Money
Market B shares and the Waddell & Reed Money Market C shares (each, a
"Prospectus") of United Cash Management, Inc. (the "Fund") dated October 4,
1999, which may be obtained from the Fund or its underwriter, Waddell & Reed,
Inc., at the address or telephone number shown above.
<PAGE>
TABLE OF CONTENTS
Performance Information...................................................
Investment Strategies, Policies and Practices.............................
Investment Management and Other Services..................................
Purchase, Redemption and Pricing of Shares................................
Directors and Officers....................................................
Payments to Shareholders..................................................
Taxes ....................................................................
Portfolio Transactions and Brokerage......................................
Other Information.........................................................
Appendix A................................................................
Financial Statements .....................................................
2
<PAGE>
United Cash Management, Inc. is a mutual fund; an investment that pools
shareholders' money and invests it toward a specified goal. In technical terms,
the Fund is an open-end, diversified management company organized as a Maryland
corporation on February 13, 1979.
PERFORMANCE INFORMATION
Waddell & Reed, Inc., the Fund's underwriter, or the Fund may, from time to
time, publish the Fund's yield, effective yield and performance rankings in
advertisements and sales materials. Yield information is also available by
calling the Shareholder Servicing Agent at the telephone number shown on the
inside back cover of the Prospectus.
There are two methods by which yield is calculated for a specified time
period for a class of shares of the Fund. The first method, which results in an
amount referred to as the "current yield," assumes an account containing exactly
one share of the applicable class at the beginning of the period. The net asset
value of this share will be $1.00 except under extraordinary circumstances. The
net change in the value of the account during the period is then determined by
subtracting this beginning value from the value of the account at the end of the
period which will include all dividends accrued for a share of such class;
however, capital changes are excluded from the calculation, i.e., realized gains
and losses from the sale of securities and unrealized appreciation and
depreciation. However, so that the change will not reflect the capital changes
to be excluded, the dividends used in the yield computation may not be the same
as the dividends actually declared, as certain realized gains and losses and,
under unusual circumstances, unrealized gains and losses (see "Purchase,
Redemption and Pricing of Shares"), will be taken into account in the
calculation of dividends actually declared. Instead, the dividends used in the
yield calculation will be those which would have been declared if the capital
changes had not affected the dividends.
This net change in the account value is then divided by the value of the
account at the beginning of the period (i.e., normally $1.00 as discussed above)
and the resulting figure (referred to as the "base period return") is then
annualized by multiplying it by 365 and dividing it by the number of days in the
period with the resulting current yield figure carried to at least the nearest
hundredth of one percent.
The second method results in a figure referred to as the "effective yield."
This represents an annualization of the current yield with dividends reinvested
daily. Effective yield is
3
<PAGE>
calculated by compounding the base period return by adding 1, raising the sum to
a power equal to 365 divided by 7, and subtracting 1 from the result and
rounding the result to the nearest hundredth of one percent according to the
following formula:
365/7
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)] - 1
The yield for the Fund's Class A shares and Waddell & Reed Money Market B
shares (formerly known as Class B) as calculated above for the seven days ended
June 30, 1999, the date of the most recent balance sheet included in the
Prospectus, was 4.43% and 3.19%, respectively, and the effective yield
calculated for the same period was 4.52% and 3.24%, respectively.
Changes in yields (calculated on either basis) primarily reflect different
interest rates received by the Fund as its portfolio securities change. These
different rates reflect changes in current interest rates on money market
instruments. Both yields are affected by portfolio quality, portfolio maturity,
type of instruments held and operating expense ratio.
No performance information is provided for Class B, Class C or Waddell &
Reed Money Market C since they had not commenced operations as of June 30, 1999.
Performance Rankings
Waddell & Reed, Inc. or the Fund also may from time to time publish in
advertisements or sales material performance rankings as published by recognized
independent mutual fund statistical services such as Lipper Analytical Services,
Inc., or by publications of general interest such as Forbes, Money, The Wall
Street Journal, Business Week, Barron's, Fortune or Morningstar Mutual Fund
Values. Each class of the Fund may also compare its performance to that of other
selected mutual funds or selected recognized market indicators such as the
Standard & Poor's 500 Composite Stock Price Index and the Dow Jones Industrial
Average. Performance information may be quoted numerically or presented in a
table, graph or other illustration. In connection with a ranking, the Fund may
provide additional information, such as the particular category to which it
related, the number of funds in the category, the criteria upon which the
ranking is based, and the effect of sales charges, fee waivers and/or expense
reimbursements.
All performance information that the Fund advertises or includes in sales
material is historical in nature and is not
4
<PAGE>
intended to represent or guarantee future results. The value of Fund shares when
redeemed may be more or less than their original cost.
INVESTMENT STRATEGIES, POLICIES AND PRACTICES
This SAI supplements the information contained in the Prospectus and
contains more detailed information about the investment strategies and policies
the Fund's investment manager, Waddell & Reed Investment Management Company
("WRIMCO"), may employ and the types of instruments in which the Fund may
invest, in pursuit of the Fund's goal. A summary of the risks associated with
these instrument types and investment practices is included as well.
WRIMCO might not buy all of these instruments or use all of these
techniques, or use them to the full extent permitted by the Fund's investment
policies and restrictions. WRIMCO buys an instrument or uses a technique only if
it believes that doing so will help the Fund achieve its goal. See "Investment
Restrictions and Limitations" for a listing of the fundamental and
non-fundamental (e.g., operating) investment restrictions and policies of the
Fund.
The Fund may invest only in the money market obligations and instruments
listed below. In addition, as a money market fund and in order for the Fund to
use the "amortized cost method" of valuing its portfolio securities, the Fund
must comply with Rule 2a-7 ("Rule 2a-7") under the Investment Company Act of
1940, as amended (the "1940 Act"). Under Rule 2a-7, investments are limited to
those that are U.S. dollar denominated and that are rated in one of the two
highest rating categories by the requisite nationally recognized statistical
rating organizations(s) ("NRSRO(s)") or are comparable unrated securities. See
Appendix A to this SAI for a description of some of these ratings. In addition,
Rule 2a-7 limits investments in securities of any one issuer (except U.S.
Government securities) to no more than 5% of the Fund's assets. Investments in
securities rated in the second highest rating category by the requisite NRSRO(s)
or comparable unrated securities are limited to no more than 5% of the Fund's
assets, with investment in such securities of any one issuer being limited to
the greater of 1% of the Fund's assets or $1,000,000. In accordance with Rule
2a-7, the Fund may invest in securities with a remaining maturity of not more
than 397 calendar days. See discussion under "Determination of Offering Price."
(1) U.S. Government Obligations: Obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities ("U.S. Government
securities") are high quality
5
<PAGE>
debt instruments issued or guaranteed as to principal or interest by the U.S.
Treasury or an agency or instrumentality of the U.S. Government. These
securities include Treasury Bills (which mature within one year of the date they
are issued), Treasury Notes (which have maturities of one to ten years) and
Treasury Bonds (which generally have maturities of more than ten years). All
such Treasury securities are backed by the full faith and credit of the United
States.
U.S. Government agencies and instrumentalities that issue or guarantee
securities include, but are not limited to, the Federal Housing Administration,
Fannie Mae (formerly, the Federal National Mortgage Association), Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association ("Ginnie Mae"), General
Services Administration, Central Bank for Cooperatives, Federal Home Loan Banks,
Federal Home Loan Mortgage Corporation ("Freddie Mac"), Farm Credit Banks,
Maritime Administration, the Tennessee Valley Authority, the Resolution Funding
Corporation and the Student Loan Marketing Association.
Securities issued or guaranteed by U.S. Government agencies and
instrumentalities are not always supported by the full faith and credit of the
United States. Some, such as securities issued by the Federal Home Loan Banks,
are backed by the right of the agency or instrumentality to borrow from the
Treasury. Others, such as securities issued by Fannie Mae, are supported only by
the credit of the instrumentality and by a pool of mortgage assets. If the
securities are not backed by the full faith and credit of the United States, the
owner of the securities must look principally to the agency issuing the
obligation for repayment and may not be able to assert a claim against the
United States in the event that the agency or instrumentality does not meet its
commitment. The Fund will invest in securities of agencies and instrumentalities
only if WRIMCO is satisfied that the credit risk involved is minimal.
(2) Bank Obligations and Instruments Secured Thereby: Subject to the
limitations described above, time deposits, certificates of deposit, bankers'
acceptances and other bank obligations if they are obligations of a bank subject
to regulation by the U.S. Government (including obligations issued by foreign
branches of these banks) or obligations issued by a foreign bank having total
assets equal to at least U.S. $500,000,000, and instruments secured by any such
obligation; in this SAI, a "bank" includes commercial banks and savings and loan
associations. Time deposits are monies kept on deposit with U.S. banks or other
U.S. financial institutions for a stated period of time at a fixed rate of
interest. At present, bank time deposits are not considered by the Board of
Directors or WRIMCO to be
6
<PAGE>
readily marketable. There may be penalties for the early withdrawal of such time
deposits, in which case, the yield of these investments will be reduced.
(3) Commercial Paper Obligations Including Variable Amount Master Demand
Notes: Commercial paper rated A-1 or A-2 by Standard & Poor's, a division of The
McGraw-Hill Companies, Inc. ("S&P"), or Prime-1 or Prime-2 by Moody's Investors
Service, Inc. ("MIS") or, if not rated, of comparable quality and issued by a
corporation in whose debt obligations the Fund may invest (see 4 below). S&P and
MIS are among the NRSRO's under Rule 2a-7. See Appendix A for a description of
some of these ratings. A variable amount master demand note represents a
borrowing arrangement under a letter agreement between a commercial paper issuer
and an institutional lender.
(4) Corporate Debt Obligations: Corporate debt obligations if they are
rated at least A by S&P or MIS. See Appendix A for a description of some of
these debt ratings.
(5) Canadian Government Obligations: Obligations of, or guaranteed by, the
Government of Canada, a Province of Canada or any agency, instrumentality or
political subdivision of that Government or any Province; however, the Fund may
not invest in Canadian Government obligations if more than 10% of the value of
its total assets would then be so invested, subject to the diversification
requirements of Rule 2a-7. The Fund may not invest in Canadian Government
obligations if they are denominated in Canadian dollars. See "Determination of
Offering Price."
(6) Certain Other Obligations: Obligations other than those listed in 1
through 5 (such as municipal obligations) above only if any such other
obligation is guaranteed as to principal and interest by either a bank in whose
obligations the Fund may invest (see 2 above) or a corporation in whose
commercial paper the Fund may invest (see 3 above) and otherwise permissible
under Rule 2a-7.
The value of the obligations and instruments in which the Fund invests will
fluctuate depending in large part on changes in prevailing interest rates. If
these rates go up after the Fund buys an obligation or instrument, its value may
go down; if these rates go down, its value may go up. Changes in value and yield
based on changes in prevailing interest rates may have different effects on
short-term debt obligations than on long-term obligations. Long-term obligations
(which often have higher yields) may fluctuate in value more than short-term
ones. Changes in interest rates will be more quickly reflected in the yield of a
portfolio of short-term obligations than in the yield of a portfolio of
long-term obligations.
7
<PAGE>
Specific Securities and Investment Practices
Mortgage-Backed and Asset-Backed Securities
Mortgage-Backed Securities. Mortgage-backed securities represent direct or
indirect participations in, or are secured by and payable from, mortgage loans
secured by real property and include single- and multi-class pass-through
securities and collateralized mortgage obligations. Multi-class pass-through
securities and collateralized mortgage obligations are collectively referred to
in this SAI as "CMOs." Some CMOs are directly supported by other CMOs, which in
turn are supported by mortgage pools. Investors typically receive payments out
of the interest and principal on the underlying mortgages. The portions of the
payments that investors receive, as well as the priority of their rights to
receive payments, are determined by the specific terms of the CMO class.
The U.S. Government mortgage-backed securities in which the Fund may invest
include mortgage-backed securities issued or guaranteed as to the payment of
principal and interest (but not as to market value) by Ginnie Mae, Fannie Mae or
Freddie Mac. Other mortgage-backed securities are issued by private issuers,
generally originators of and investors in mortgage loans, including savings
associations, mortgage bankers, commercial banks, investment bankers and special
purpose entities. Payments of principal and interest (but not the market value)
of such private mortgage-backed securities may be supported by pools of mortgage
loans or other mortgage-backed securities that are guaranteed, directly or
indirectly, by the U.S. Government or one of its agencies or instrumentalities,
or they may be issued without any government guarantee of the underlying
mortgage assets but with some form of non-government credit enhancement. These
credit enhancements do not protect investors from changes in market value.
The Fund may invest in mortgage-backed securities as long as WRIMCO
determines that it is consistent with the Fund's goal and investment policies
and subject to the requirements of Rule 2a-7. The Fund may purchase
mortgage-backed securities issued by both government and non-government entities
such as banks, mortgage lenders, or other financial institutions.
The yield characteristics of mortgage-backed securities differ from those
of traditional debt securities. Among the major differences are that interest
and principal payments are made more frequently and that principal may be
prepaid at any time because the underlying mortgage loans generally may be
prepaid at any time. As a result, if the Fund purchases these securities at a
8
<PAGE>
premium, a prepayment rate that is faster than expected will reduce yield to
maturity while a prepayment rate that is slower than expected will have the
opposite effect of increasing yield to maturity. Conversely, if the Fund
purchases these securities at a discount, faster than expected prepayments will
increase, while slower than expected prepayments will reduce, yield to maturity.
Accelerated prepayments on securities purchased by the Fund at a premium also
impose a risk of loss of principal because the premium may not have been fully
amortized at the time the principal is repaid in full.
Timely payment of principal and interest on pass-through securities of
Ginnie Mae (but not those of Freddie Mac or Fannie Mae) is guaranteed by the
full faith and credit of the United States. This is not a guarantee against
market decline of the value of these securities or shares of the Fund. It is
possible that the availability and marketability (i.e., liquidity) of these
securities could be adversely affected by actions of the U.S. Government to
tighten the availability of its credit.
Stripped Mortgage-Backed Securities. The Fund may invest in stripped
securities as long as WRIMCO determines that it is consistent with the Fund's
goal and investment policies and subject to the requirements of Rule 2a-7.
Stripped mortgage-backed securities are created when a U.S. Government agency or
a financial institution separates the interest and principal components of a
mortgage-backed security and sells them as individual securities. The holder of
the "principal-only" security ("PO") receives the principal payments made by the
underlying mortgage-backed security, while the holder of the "interest-only"
security ("IO") receives interest payments from the same underlying security.
For example, interest-only ("IO") classes are entitled to receive all or a
portion of the interest, but none (or only a nominal amount) of the principal
payments, from the underlying mortgage assets. If the mortgage assets underlying
an IO experience greater than anticipated principal prepayments, then the total
amount of interest allocable to the IO class, and therefore the yield to
investors, generally will be reduced. In some instances, an investor in an IO
may fail to recoup all of the investor's initial investment, even if the
security is government guaranteed or considered to be of the highest quality.
Conversely, principal-only ("PO") classes are entitled to receive all or a
portion of the principal payments, but none of the interest, from the underlying
mortgage assets. PO classes are purchased at substantial discounts from par, and
the yield to investors will be reduced if principal payments are slower than
expected. IOs, POs and other CMOs involve special risks, and evaluating them
requires special knowledge.
9
<PAGE>
The Fund has not in the past invested and has no present intention to
invest in these types of securities.
Asset-Backed Securities. Asset-backed securities have structural
characteristics similar to mortgage-backed securities, as discussed above.
However, the underlying assets securing the debt are not first lien mortgage
loans or interests therein, but include assets such as motor vehicle installment
sales contracts, other installment sale contracts, home equity loans, leases of
various types of real and personal property and receivables from revolving
credit (credit card) agreements. Such assets are securitized through the use of
trusts or special purpose corporations. Payments or distributions of principal
and interest may be guaranteed up to a certain amount and for a certain time
period by a letter of credit or pool insurance policy issued by a financial
institution unaffiliated with the issuer, or other credit enhancements may be
present. The value of asset-backed securities may also depend on the
creditworthiness of the servicing agent for the loan pool, the originator of the
loans or the financial institution providing the credit enhancement.
Special Characteristics of Mortgage-Backed and Asset-Backed Securities. The
yield characteristics of mortgage-backed and asset-backed securities differ from
those of traditional debt securities. Among the major differences are that
interest and principal payments are made more frequently, usually monthly, and
that principal may be prepaid at any time because the underlying mortgage loans
or other obligations generally may be prepaid at any time. Prepayments on a pool
of mortgage loans are influenced by a variety of economic, geographic, social
and other factors, including changes in mortgagors' housing needs, job
transfers, unemployment, mortgagors' net equity in the mortgaged properties and
servicing decisions. Generally, however, prepayments on fixed-rate mortgage
loans will increase during a period of falling interest rates and decrease
during a period of rising interest rates. Similar factors apply to prepayments
on asset-backed securities, but the receivables underlying asset-backed
securities generally are of a shorter maturity and thus are likely to experience
substantial prepayments. Such securities, however, often provide that for a
specified time period the issuers will replace receivables in the pool that are
repaid with comparable obligations. If the issuer is unable to do so, repayment
of principal on the asset-backed securities may commence at an earlier date.
The rate of interest on mortgage-backed securities is lower than the
interest rates paid on the mortgages included in the underlying pool due to the
annual fees paid to the servicer of the mortgage pool for passing through
monthly payments to certificate
10
<PAGE>
holders and to any guarantor, and due to any yield retained by the issuer.
Actual yield to the holder may vary from the coupon rate, even if adjustable, if
the mortgage-backed securities are purchased or traded in the secondary market
at a premium or discount. In addition, there is normally some delay between the
time the issuer receives mortgage payments from the servicer and the time the
issuer makes the payments on the mortgage-backed securities, and this delay
reduces the effective yield to the holder of such securities.
Yields on pass-through securities are typically quoted by investment
dealers and vendors based on the maturity of the underlying instruments and the
associated average life assumption. The average life of pass-through pools
varies with the maturities of the underlying mortgage loans. A pool's term may
be shortened by unscheduled or early payments of principal on the underlying
mortgages. Because prepayment rates of individual pools vary widely, it is not
possible to predict accurately the average life of a particular pool. In the
past, a common industry practice has been to assume that prepayments on pools of
fixed rate 30-year mortgages would result in a 12-year average life for the
pool. At present, mortgage pools, particularly those with loans with other
maturities or different characteristics, are priced on an assumption of average
life determined for each pool. In periods of declining interest rates, the rate
of prepayment tends to increase, thereby shortening the actual average life of a
pool of mortgage-related securities. Conversely, in periods of rising interest
rates, the rate of prepayment tends to decrease, thereby lengthening the actual
average life of the pool. Changes in the rate or "speed" of these payments can
cause the value of the mortgage backed securities to fluctuate rapidly. However,
these effects may not be present, or may differ in degree, if the mortgage loans
in the pools have adjustable interest rates or other special payment terms, such
as a prepayment charge. Actual prepayment experience may cause the yield of
mortgage-backed securities to differ from the assumed average life yield.
The market for privately issued mortgage-backed and asset-backed securities
is smaller and less liquid than the market for U.S. Government mortgage-backed
securities. CMO classes may be specifically structured in a manner that provides
any of a wide variety of investment characteristics, such as yield, effective
maturity and interest rate sensitivity. As market conditions change, however,
and especially during periods of rapid or unanticipated changes in market
interest rates, the attractiveness of some CMO classes and the ability of the
structure to provide the anticipated investment characteristics may be reduced.
These changes can result in volatility in the market value and in some instances
reduced liquidity, of the CMO class.
11
<PAGE>
Variable or Floating Rate Instruments
Variable or floating rate instruments (including notes purchased directly
from issuers) bear variable or floating interest rates and may carry rights that
permit holders to demand payment of the unpaid principal balance plus accrued
interest from the issuers or certain financial intermediaries on dates prior to
their stated maturities. Floating rate securities have interest rates that
change whenever there is a change in a designated base rate while variable rate
instruments provide for a specified periodic adjustment in the interest rate.
These formulas are designed to result in a market value for the instrument that
approximates its par value.
When-Issued and Delayed-Delivery Transactions
The Fund may purchase securities in which it may invest on a when-issued or
delayed-delivery basis or sell them on a delayed-delivery basis. In either case
payment and delivery for the securities take place at a future date. The
securities so purchased or sold by the Fund are subject to market fluctuation;
their value may be less or more when delivered than the purchase price paid or
received. When purchasing securities on a when issued or delayed-delivery basis,
the Fund assumes the rights and risks of ownership, including the risk of price
and yield fluctuations. No interest accrues to the Fund until delivery and
payment is completed. When the Fund makes a commitment to purchase securities on
a when-issued or delayed-delivery basis, it will record the transaction and
thereafter reflect the value of the securities in determining its net asset
value per share. When the Fund sells a security on a delayed-delivery basis, the
Fund does not participate in further gains or losses with respect to the
security. When the Fund makes a commitment to sell securities on a
delayed-delivery basis, it will record the transaction and thereafter value the
securities at the sales price in determining the Fund's net asset value per
share. If the other party to a delayed-delivery transaction fails to deliver or
pay for the securities, the Fund could miss a favorable price or yield
opportunity, or could suffer a loss.
Ordinarily the Fund purchases securities on a when-issued or
delayed-delivery basis with the intention of actually taking delivery of the
securities. However, before the securities are delivered to the Fund and before
it has paid for them (the "settlement date"), the Fund could sell the securities
if WRIMCO decided it was advisable to do so for investment reasons. The Fund
will hold aside or segregate cash or other securities, other than those
purchased on a when-issued or delayed-delivery basis, at least equal to the
amount it will have to pay on the settlement date; these other securities may,
however, be sold at or before
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<PAGE>
the settlement date to pay the purchase price of the when-issued or
delayed-delivery securities.
Lending Securities
Securities loans may be made on a short-term or long-term basis for the
purpose of increasing the Fund's income. If the Fund lends securities, the
borrower pays the Fund an amount equal to the dividends or interest on the
securities that the Fund would have received if it had not lent the securities.
The Fund also receives additional compensation.
The Fund makes loans of its securities only to parties deemed by WRIMCO to
be creditworthy.
Any securities loans that the Fund makes must be collateralized in
accordance with applicable regulatory requirements (the "Guidelines"). At the
time of each loan, the Fund must receive collateral equal to no less than 100%
of the market value of the securities loaned. Under the present Guidelines, the
collateral must consist of cash and/or U.S. Government Obligations, at least
equal in value to the market value of the securities lent on each day the loan
is outstanding. If the market value of the lent securities exceeds the value of
the collateral, the borrower must add more collateral so that it at least equals
the market value of the securities lent. If the market value of the securities
decreases, the borrower is entitled to return of the excess collateral. This
policy of 100% collateralization is a fundamental policy that can be changed
only by shareholder vote.
There are two methods of receiving compensation for making loans. The first
is to receive a negotiated loan fee from the borrower. This method is available
for both types of collateral. The second method is to receive interest on the
investment of the cash collateral or to receive interest on the U.S. Government
Obligations used as collateral. Part of the interest received in either case may
be shared with the borrower.
Under the Fund's current securities lending procedures, the Fund may lend
securities only to broker-dealers and financial institutions deemed creditworthy
by WRIMCO. The Fund will make loans only under rules of the New York Stock
Exchange (the "NYSE"), which presently require the borrower to give the
securities back to the Fund within five business days after the Fund gives
notice to do so. The Fund may pay reasonable finder's, administrative and
custodian fees in connection with loans of securities.
There may be risks of delay in receiving additional collateral from the
borrower if the market value of the securities loaned increases, risks of delay
in recovering the securities
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<PAGE>
loaned or even loss of rights in the collateral should the borrower of the
securities fail financially.
Some, but not all, of the Fund's rules are necessary to meet requirements
of certain laws relating to securities loans. These rules will not be changed
unless the change is permitted under these requirements. These requirements do
not cover the present rules, which may be changed without shareholder vote, as
to how the Fund may invest cash collateral.
Repurchase Agreements
The Fund may purchase securities subject to repurchase agreements. The Fund
will not enter into a repurchase transaction that will cause more than 10% of
its net assets to be invested in illiquid investments, which include repurchase
agreements not terminable within seven days. See "Illiquid Investments." A
repurchase agreement is an instrument under which the Fund purchases a security
and the seller (normally a commercial bank or broker-dealer) agrees, at the time
of purchase, that it will repurchase the security at a specified time and price.
The amount by which the resale price is greater than the purchase price reflects
an agreed-upon market interest rate effective for the period of the agreement.
The return on the securities subject to the repurchase agreement may be more or
less than the return on the repurchase agreement.
The majority of the repurchase agreements in which the Fund would engage
are overnight transactions, and the delivery pursuant to the resale typically
will occur within one to five days of the purchase. The primary risk is that the
Fund may suffer a loss if the seller fails to pay the agreed-upon amount on the
delivery date and that amount is greater than the resale price of the underlying
securities and other collateral held by the Fund. In the event of bankruptcy or
other default by the seller, there may be possible delays or expenses in
liquidating the underlying securities or other collateral, decline in their
value and loss of interest. The return on such collateral may be more or less
than that from the repurchase agreement. The Fund's repurchase agreements will
be structured so as to fully collateralize the loans. In other words, the value
of the underlying securities, which will be held by the Fund's custodian bank or
by a third party that qualifies as a custodian under Section 17(f) of the 1940
Act, is and, during the entire term of the agreement, will remain at least equal
to the value of the loan, including the accrued interest earned thereon.
Repurchase agreements are entered into only with those entities approved by
WRIMCO on the basis of criteria established by the Board of Directors.
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<PAGE>
Restricted Securities
Restricted securities are securities that are subject to legal or
contractual restrictions on resale. However, restricted securities generally can
be resold in privately negotiated transactions, pursuant to an exemption from
registration under the Securities Act of 1933, as amended ("1933 Act"), or in a
registered public offering. For example, the Fund may purchase commercial paper
that is issued in reliance on the so-called "private placement" exemption from
registration that is afforded by Section 4(2) ("Section 4(2) paper") of the 1933
Act. Section 4(2) paper is normally resold to other institutional investors
through or with the assistance of investment dealers who make a market in the
Section 4(2) paper, thus providing liquidity.
Where registration of a security is required, the Fund may be obligated to
pay all or part of the registration expense and a considerable period may elapse
between the time it decides to seek registration and the time the Fund may be
permitted to sell a security under an effective registration statement. If,
during such a period, adverse market conditions were to develop, the Fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
There are risks associated with investment in restricted securities in that
there can be no assurance of a ready market for resale. Also, the contractual
restrictions on resale might prevent the Fund from reselling the securities at a
time when such sale would be desirable. Restricted securities in which the Fund
seeks to invest need not be listed or admitted to trading on a foreign or
domestic exchange and may be less liquid than listed securities. Certain
restricted securities, e.g., Section 4(2) paper, may be determined to be liquid
in accordance with guidelines adopted by the Board of Directors. See "Illiquid
Investments".
These restricted securities will be valued in the same manner that other
commercial paper held by the Fund is valued. See "Portfolio Valuation." The Fund
does not anticipate adjusting for any diminution in value of these securities on
account of their restrictive feature because of the existence of an active
market which creates liquidity and because of the availability of actual market
quotations for these restricted securities. In the event that there should cease
to be an active market for these securities or actual market quotations become
unavailable, they will be valued at fair value as determined in good faith by
the Board of Directors.
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<PAGE>
Illiquid Investments
Illiquid investments are investments that cannot be sold or otherwise
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Investments currently
considered to be illiquid include:
(i) repurchase agreements not terminable within seven days;
(ii) fixed time deposits subject to withdrawal penalties other than
overnight deposits;
(iii) securities for which market quotations are not readily available; and
(iv) restricted securities not determined to be liquid pursuant to
guidelines established by the Fund's Board of Directors.
However, illiquid investments do not include any obligations payable at
principal amount plus accrued interest on demand or within seven days after
demand.
If through a change in values, net assets, or other circumstances, the Fund
were in a position where more than 10% of its net assets were invested in
illiquid securities, it would seek to take appropriate steps to protect
liquidity.
Indexed Securities
Subject to the requirements of Rule 2a-7, the Fund may purchase securities
the values of which varies in relation to the value of financial indicators such
as other securities, securities indices or interest rates, as long as the
indexed securities are U.S. dollar denominated. Indexed securities typically,
but not always, are debt securities or deposits whose value at maturity or
coupon rate is determined by reference to a specific instrument or statistic.
The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are indexed and
may also be influenced by interest rate changes in the United States and abroad.
At the same time, indexed securities are subject to the credit risks associated
with the issuer of the security and their values may decline substantially if
the issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying investments. Indexed securities may be positively
or negatively indexed; that is, their maturity value may increase when the
specified index value increases, or their maturity value may decline when the
index increases. Recent issuers of indexed securities have included banks,
corporations, and certain U.S. Government agencies.
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<PAGE>
Foreign Obligations and Instruments
Subject to the diversification requirements applicable to the Fund under
Rule 2a-7, the Fund may invest up to 10% of its total assets in Canadian
Government obligations and may also invest in foreign bank obligations,
obligations of foreign branches of domestic banks, and other obligations
guaranteed by a bank in whose obligations the Fund may invest. Each of these
obligations must be U.S. dollar denominated. Although there is no fundamental
policy limiting the Fund's investment in foreign bank obligations and
obligations of foreign branches of domestic banks, it does not intend to invest
more than 25% of its total assets in a combination of these obligations.
Investments in obligations of domestic branches of foreign banks will not be
considered to be foreign securities if WRIMCO has determined that the nature and
extent of federal and state regulation and supervision of the branch in question
is substantially equivalent to federal and state chartered or domestic banks
doing business in the same jurisdiction.
Purchasing these securities presents special considerations: reduction of
income by foreign taxes; changes in currency rates and controls (e.g., currency
blockage); lack of public information; lack of uniform accounting, auditing and
financial reporting standards; less volume on foreign exchanges; less liquidity;
greater volatility; less regulation of issuers, exchanges and brokers; greater
difficulties in commencing lawsuits; possibilities in some countries of
expropriation, confiscatory taxation, social instability or adverse diplomatic
developments; and differences (which may be favorable or unfavorable) between
the U.S. economy and foreign economies. Uncertificated foreign securities will
be purchased only if permissible under the custodianship provisions of the 1940
Act.
Investment Restrictions and Limitations
Certain of the Fund's investment restrictions and other limitations are
described in this SAI. The following are the Fund's fundamental investment
limitations set forth in their entirety, which, like the Fund's goal and the
types of money market securities in which the Fund may invest, cannot be changed
without shareholder approval. For this purpose, shareholder approval means the
approval, at a meeting of Fund shareholders, by the lesser of (1) the holders of
67% or more of the Fund's shares represented at the meeting, if more than 50% of
the Fund's outstanding shares are present in person or by proxy or (2) more than
50% of the Fund's outstanding shares. The Fund may not:
(i) Buy commodities or commodity contracts, voting securities, any
mineral related programs or leases, or
17
<PAGE>
oil or gas leases, any shares of other investment companies or any
warrants, puts, calls or combinations thereof;
(ii) Buy real estate nor any nonliquid interest in real estate
investment trusts; however, the Fund may buy obligations or
instruments that it may otherwise buy even though the issuer
invests in real estate or interests in real estate;
(iii) With respect to 75% of its total assets, purchase securities of
any one issuer (other than cash items and "Government securities"
as defined in the 1940 Act) if immediately after and as a result
of such purchase, the value of the holdings of the Fund in the
securities of such issuer exceeds 5% of the value of the Fund's
total assets;
(iv) Buy the securities of companies in any one industry if more than
25% of the Fund's total assets would then be in companies in that
industry, except that U.S. Government obligations and bank
obligations and instruments are not included in this limit;
(v) Make loans other than certain limited types of loans described
herein; the Fund can buy debt securities and other obligations
consistent with its goal and its other investment policies and
restrictions; it can also lend its portfolio securities to the
extent allowed, and in accordance with the requirements, under the
1940 Act and enter into repurchase agreements except as indicated
above (see "Repurchase Agreements" above);
(vi) Invest for the purpose of exercising control or management of
other companies;
(vii) Participate on a joint, or a joint and several, basis in any
trading account in any securities;
(viii) Sell securities short or buy securities on margin; also, the Fund
may not engage in arbitrage transactions;
(ix) Engage in the underwriting of securities;
(x) Borrow to increase income, except to meet redemptions so it will
not have to sell portfolio securities for this purpose. The Fund
may borrow money from banks as a temporary measure or for
extraordinary or emergency purposes but only up to 10% of its
total assets. It can
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<PAGE>
mortgage or pledge its assets in connection with such borrowing
but only up to the lesser of the amounts borrowed or 5% of the
value of the Fund's assets; or
(xi) Issue senior securities.
The following investment restrictions are not fundamental and may be
changed by the Board of Directors without shareholder approval:
(i) The Fund may not purchase the securities of any one issuer (other
than U.S. Government securities) if, as a result of such purchase,
more than 5% of its total assets would be invested in the
securities of any one issuer, as determined in accordance with
Rule 2a-7. The Fund may not invest more than 5% of its total
assets in securities rated in the second highest rating category
by the requisite rating organization(s) or comparable unrated
securities, with investments in such securities of any one issuer
(except U.S. Government securities) limited to the greater of 1%
of the Fund's assets or $1,000,000, as determined in accordance
with Rule 2a-7.
(ii) Subject to the diversification requirements of Rule 2a-7, the Fund
may not invest more than 10% of its total assets in Canadian
Government obligations.
(iii) The Fund does not intend to invest more than 25% of its total
assets in a combination of foreign bank obligations.
(iv) The Fund may not purchase a security if, as a result, more than
10% of its net assets would consist of illiquid investments.
(v) The Fund does not intend to invest more than 50% of its total
assets in Section 4(2) paper determined to be liquid in accordance
with guidelines adopted by the Board of Directors.
(vi) The Fund does not currently intend to invest in the securities of
any issuer (other than securities issued or guaranteed by domestic
or foreign governments or political subdivisions thereof) if, as a
result, more than 5% of its total assets would be invested in the
securities of business enterprises that, including predecessors,
have a record of less than three years of continuous operation.
This restriction does not apply to any obligations issued or
guaranteed by the U.S. government or a state or local government
authority, or
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<PAGE>
their respective instrumentalities, or to CMOs, other
mortgage-related securities, asset-backed securities, indexed
securities or over-the-counter derivative instruments.
(vii) The Fund will not invest in any security whose interest rate or
principal amount to be repaid, or timing of repayments, varies or
floats with the value of a foreign currency, the rate of interest
payable on foreign currency borrowings, or with any interest rate
or currency other than U.S. dollars.
An investment policy or limitation that states a maximum percentage of the
Fund's assets that may be so invested or prescribes quality standards is
typically applied immediately after, and based on, the Fund's acquisition of an
asset. Accordingly, a subsequent change in the asset's value, net assets, or
other circumstances will not be considered when determining whether the
investment complies with the Fund's investment policies and limitations.
Portfolio Turnover
In general, the Fund purchases investments with the expectation of holding
them to maturity. However, the Fund may engage in short-term trading to attempt
to take advantage of short-term market variations. The Fund may also sell
securities prior to maturity to meet redemptions or as a result of a revised
management evaluation of the issuer. The Fund has high portfolio turnover due to
the short maturities of its investments, but this should not affect its net
asset value or income, as brokerage commissions are not usually paid on the
investments which the Fund makes. In the usual calculation of portfolio
turnover, securities of the type in which the Fund invests are excluded.
Consequently, the high turnover which it will have is not comparable to the
turnover rates of most investment companies.
Portfolio Valuation
Under Rule 2a-7, the Fund is permitted to use the "amortized cost method"
for valuing its portfolio securities provided it meets certain conditions. See
"Purchase, Redemption and Pricing of Shares." As a general matter, the primary
conditions imposed under Rule 2a-7 relating to the Fund's portfolio investments
are that the Fund must (i) not maintain a dollar-weighted average portfolio
maturity in excess of 90 days, (ii) limit its investments, including repurchase
agreements, to those instruments which are U.S. dollar denominated and which
WRIMCO, pursuant to guidelines established by the Fund's Board of Directors,
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<PAGE>
determines present minimal credit risks and which are rated in one of the two
highest rating categories by the NRSRO(s), as defined in Rule 2a-7 or, in the
case of any instrument that is not rated, of comparable quality as determined by
the Fund's Board of Directors, (iii) limit its investments in the securities of
any one issuer (except U.S. Government securities) to no more than 5% of its
assets, (iv) limit its investments in securities rated in the second highest
rating category by the requisite NRSRO(s) or comparable unrated securities to no
more than 5% of its assets, (v) limit its investments in the securities of any
one issuer which are rated in the second highest rating category by the
requisite NRSRO(s) or comparable unrated securities to the greater of 1% of its
assets or $1,000,000, and (vi) limit its investments to securities with a
remaining maturity of not more than 397 days. Rule 2a-7 sets forth the method by
which the maturity of a security is determined.
INVESTMENT MANAGEMENT AND OTHER SERVICES
The Management Agreement
The Fund has an Investment Management Agreement (the "Management
Agreement") with Waddell & Reed, Inc. On January 8, 1992, subject to the
authority of the Fund's Board of Directors, Waddell & Reed, Inc. assigned the
Management Agreement and all related investment management duties (and related
professional staff) to WRIMCO, a wholly owned subsidiary of Waddell & Reed, Inc.
Under the Management Agreement, WRIMCO is employed to supervise the investments
of the Fund and provide investment advice to the Fund. The address of WRIMCO and
Waddell & Reed, Inc. is 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission,
Kansas 66201-9217. Waddell & Reed, Inc. is the Fund's underwriter.
The Management Agreement permits Waddell & Reed, Inc. or an affiliate of
Waddell & Reed, Inc. to enter into a separate agreement for transfer agency
services ("Shareholder Servicing Agreement") and a separate agreement for
accounting services ("Accounting Services Agreement") with the Fund. The
Management Agreement contains detailed provisions as to the matters to be
considered by the Fund's Board of Directors prior to approving any Shareholder
Servicing Agreement or Accounting Services Agreement.
Waddell & Reed Financial, Inc.
WRIMCO is a wholly owned subsidiary of Waddell & Reed, Inc. Waddell & Reed,
Inc. is a wholly owned subsidiary of Waddell & Reed Financial Services, Inc., a
holding company. Waddell & Reed Financial Services, Inc. is a wholly owned
subsidiary of Waddell &
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Reed Financial, Inc., a publicly held company. The address of these companies is
6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217.
Waddell & Reed, Inc. and its predecessors have served as investment manager
to each of the registered investment companies in the United Group of Mutual
Funds, except United Asset Strategy Fund, Inc., since 1940 or the company's
inception date, whichever was later, and to Target/United Funds, Inc. since that
fund's inception, until January 8, 1992 when it assigned its duties as
investment manager for these funds (and the related professional staff) to
WRIMCO. WRIMCO has also served as investment manager for Waddell & Reed Funds,
Inc. since its inception in September 1992 and United Asset Strategy Fund, Inc.
since it commenced operations in March 1995. Waddell & Reed, Inc. serves as
principal underwriter for the investment companies in the United Group of Mutual
Funds and Waddell & Reed Funds, Inc. and acts as principal underwriter and
distributor for variable life insurance and variable annuity policies for which
Target/United Funds, Inc. is the underlying investment vehicle.
Shareholder Services
Under the Shareholder Servicing Agreement entered into between the Fund and
Waddell & Reed Services Company (the "Agent"), a subsidiary of Waddell & Reed,
Inc., the Agent performs shareholder servicing functions, including the
maintenance of shareholder accounts, the issuance, transfer and redemption of
shares, distribution of dividends and payment of redemptions, the furnishing of
related information to the Fund and handling of shareholder inquiries. A new
Shareholder Servicing Agreement, or amendments to the existing one, may be
approved by the Fund's Board of Directors without shareholder approval.
Accounting Services
Under the Accounting Services Agreement entered into between the Fund and
the Agent, the Agent provides the Fund with bookkeeping and accounting services
and assistance, including maintenance of the Fund's records, pricing of the
Fund's shares, and preparation of prospectuses for existing shareholders, proxy
statements and certain reports. A new Accounting Services Agreement, or
amendments to an existing one, may be approved by the Fund's Board of Directors
without shareholder approval.
Payments by the Fund for Management, Accounting and Shareholder Services
Under the Management Agreement, for WRIMCO's management services, the Fund
pays WRIMCO a fee as described in the
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<PAGE>
Prospectus. The management fees paid to WRIMCO during the fiscal years ended
June 30, 1999, 1998 and 1997 were $2,476,181, $2,047,383 and $1,910,434,
respectively.
For purposes of calculating the daily fee the Fund does not include money
owed to it by Waddell & Reed, Inc. for shares which it has sold but not yet paid
the Fund. The Fund accrues and pays this fee daily.
Under the Shareholder Servicing Agreement, the Fund pays the Agent a
monthly fee of $1.75 for each shareholder account which was in existence at any
time during the prior month, and $.75 for each shareholder check it processes.
The Fund also pays certain out-of-pocket expenses of the Agent, including long
distance telephone communications costs; microfilm and storage costs for certain
documents; forms, printing and mailing costs; and costs of legal and special
services not provided by Waddell & Reed, Inc., WRIMCO, or the Agent.
Under the Accounting Services Agreement, the Fund pays the Agent a monthly
fee of one-twelfth of the annual fee shown in the following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
Fees paid to the Agent for the fiscal years ended June 30, 1999, 1998 and
1997 were $70,000, $62,500 and $60,000, respectively.
Since the Fund pays a management fee for investment supervision and an
accounting services fee for accounting services as discussed above, WRIMCO and
the Agent, respectively, pay all of their own expenses in providing these
services. Amounts paid by the Fund under the Shareholder Servicing Agreement are
described
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<PAGE>
above. Waddell & Reed, Inc. and affiliates pay the Fund's Directors and officers
who are affiliated with WRIMCO and its affiliates. The Fund pays the fees and
expenses of the Fund's other Directors.
The Fund pays all of its other expenses. These include the costs of
materials sent to shareholders, audit and outside legal fees, taxes, brokerage
commissions, interest, insurance premiums, custodian fees, fees payable by the
Fund under Federal or other securities laws and to the Investment Company
Institute and nonrecurring and extraordinary expenses, including litigation and
indemnification relating to litigation.
Distribution Arrangement
Waddell & Reed, Inc. (the "Distributor") acts as principal underwriter and
distributor of the Fund's shares pursuant to an underwriting agreement
("Agreement"). The Agreement requires the Distributor to use its best efforts to
sell the shares of the Fund but is not exclusive, and permits and recognizes
that the Distributor also distributes shares of other investment companies and
other securities. Shares are sold on a continuous basis. Under this Agreement,
Waddell & Reed, Inc. pays the costs of sales literature, including the costs of
shareholder reports used as sales literature, and the costs of printing the
prospectus furnished to it by the Fund.
These and other expenses of Waddell & Reed, Inc. are not covered by any
sales charge on Class A shares of the Fund. The contingent deferred sales charge
("CDSC"), if any, imposed on Class B shares, Class C shares, Waddell & Reed
Money Market B shares and Waddell & Reed Money Market C shares is designed to
compensate Waddell & Reed, Inc. for distribution of these shares. No portion of
the sales charge is reallowed to dealers. On shares of funds in the United Group
that are sold with sales charges, a major portion of the CDSC for these shares
is paid to Waddell & Reed, Inc.'s financial advisors and managers. Waddell &
Reed, Inc. may compensate its financial advisors as to purchases for which there
is no sales or deferred sales charge.
However, the Agreement recognizes that the Fund may adopt a Distribution
and Service Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. Under
the Plans adopted by the Fund with respect to Class B, Class C, Waddell & Reed
Money Market B and Waddell & Reed Money Market C shares, respectively, the Fund
pays the Distributor daily a distribution fee not to exceed, on an annual
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<PAGE>
basis, 0.75% of the net assets of the affected class and a service fee not to
exceed, on an annual basis, 0.25% of the net assets of the affected class.
The Distributor offers Class B, Class C, Waddell & Reed Money Market B and
Waddell & Reed Money Market C shares of the Fund through its registered
representatives and sales managers (sales force). In distributing shares through
its sales force, the Distributor may pay commissions and/or incentives to the
sales force at or about the time of sale and will incur other expenses including
for prospectuses, sales literature, advertisements, sales office maintenance,
processing of orders and general overhead with respect to its efforts to
distribute the Fund's shares. Each Plan and the Agreement contemplate that the
Distributor may be compensated for these distribution efforts with respect to
the shares of the affected class through the distribution fee. The sales force
may be paid continuing compensation based on the value of the shares of the
affected class held by shareholders to whom the member of the sales force is
assigned to provide personal services, and the Distributor or its subsidiary,
Waddell & Reed Services Company, may also provide services to these shareholders
through telephonic means and written communications. For the fiscal year ended
June 30, 1999, the Fund paid (or accrued) $43,397 and $11,638 to the Distributor
as distribution fees and service fees, respectively, under the Waddell & Reed
Money Market B Plan (formerly, the Class B Plan). The distribution fees were
paid to compensate the Distributor for its expenses relating to sales force
compensation, providing prospectuses and sales literature to prospective
investors, advertising, sales processing, field office expenses and home office
sales management in connection with the distribution of Waddell & Reed Money
Market B shares of the Fund. The service fees were paid to compensate the
Distributor for providing personal services to the Fund's Waddell & Reed Money
Market B shareholders and for the maintenance of Waddell & Reed Money Market B
accounts.
The only Directors or interested persons, as defined in the 1940 Act, of
the Fund who have a direct or indirect financial interest in the operation of a
Plan are the officers and Directors who are also officers of either Waddell &
Reed, Inc. or its affiliate(s) or who are shareholders of Waddell & Reed
Financial, Inc., the indirect parent company of Waddell & Reed, Inc. Each Plan
is anticipated to benefit the Fund and its shareholders of the affected class
through Waddell & Reed, Inc.'s activities not only to distribute the shares of
the affected class but also to provide personal services to shareholders of that
class and thereby promote the maintenance of their accounts with the Fund. The
Fund anticipates that shareholders of a particular class may benefit to the
extent that Waddell & Reed's activities are successful in increasing the assets
of the Fund, through increased
25
<PAGE>
sales or reduced redemptions, or a combination of these, and reducing a
shareholder's share of Fund and class expenses. Increased Fund assets may also
provide greater resources with which to pursue the goal of the Fund. Further,
continuing sales of shares may also reduce the likelihood that it will be
necessary to liquidate portfolio securities, in amounts or at times that may be
disadvantageous to the Fund, to meet redemption demands. In addition, the Fund
anticipates that the revenues from the Plan will provide Waddell & Reed, Inc.
with greater resources to make the financial commitments necessary to continue
to improve the quality and level of services to the Fund and the shareholders of
the affected class.
The Plans and Agreement were approved by the Fund's Board of Directors,
including the Directors who are not interested persons of the Fund or of the
Distributor and who have no direct or indirect financial interest in the
operations of the Plan or any agreement referred to in the Plan (hereafter the
"Plan Directors"). The Waddell & Reed Money Market B Plan was also approved by
the Distributor as the sole shareholder of the Waddell & Reed Money Market B
shares of the Fund at the time.
Among other things, each Plan provides that (i) the Distributor will submit
to the Directors at least quarterly, and the Directors will review, reports
regarding all amounts expended under the Plan and the purposes for which such
expenditures were made, (ii) the Plan will continue in effect only so long as it
is approved at least annually, and any material amendments thereto are approved
by the Directors including the Plan Directors acting in person at a meeting
called for that purpose, (iii) payments by the Fund under the Plan shall not be
materially increased without the affirmative vote of the holders of a majority
of the outstanding shares of the affected class, and (iv) while the Plan remains
in effect, the selection and nomination of the Directors who are Plan Directors
shall be committed to the discretion of the Plan Directors.
For the Fund's fiscal year ended June 30, 1999, the Distributor earned
deferred sales charges in the amount of $ with respect to the Waddell & Reed
Money Market B shares.
Custodial and Auditing Services
The Fund's Custodian is UMB Bank, n.a., Kansas City, Missouri. In general,
the Custodian is responsible for holding the Fund's cash and securities.
Deloitte & Touche LLP, Kansas City, Missouri, the Fund's independent auditors,
audits the Fund's financial statements.
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PURCHASE, REDEMPTION AND PRICING OF SHARES
Determination of Offering Price
The value of each share of a class of the Fund is the net asset value of
the applicable class. The Fund is designed so that the value of each share of
each class of the Fund (the net asset value per share) will remain fixed at
$1.00 per share except under extraordinary circumstances, although this may not
always be possible. This net asset value per share is what you pay for shares
and what you receive when you redeem them prior to the application of the CDSC,
if any, to Class B, Class C, Waddell & Reed Money Market B and Waddell & Reed
Money Market C shares.
The net asset value per share is ordinarily computed once each day that the
NYSE is open for trading as of the close of the regular session of the NYSE
(ordinarily, 4:00 p.m. Eastern time). The NYSE annually announces the days on
which it will not be open for trading. The most recent announcement indicates
that it will not be open on the following days: New Years Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. However, it is possible that the
NYSE may close on other days.
The Fund operates under Rule 2a-7 which permits it to value its portfolio
on the basis of amortized cost. The amortized cost method of valuation is
accomplished by valuing a security at its cost and thereafter assuming a
constant amortization rate to maturity of any discount or premium, and does not
reflect the impact of fluctuating interest rates on the market value of the
security. This method does not take into account unrealized gains or losses.
While the amortized cost method provides some degree of certainty in
valuation, there may be periods during which value, as determined by amortized
cost, is higher or lower than the price the Fund would receive if it sold the
instrument. During periods of declining interest rates, the daily yield on the
Fund's shares may tend to be higher than a like computation made by a fund with
identical investments utilizing a method of valuation based upon market prices
and estimates of market prices for all of its portfolio instruments and changing
its dividends based on these changing prices. Thus, if the use of amortized cost
by the Fund resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in the Fund's shares would be able to obtain a somewhat
higher yield than would result from investment in such a fund, and existing
investors in the Fund's shares would receive less investment income. The
converse would apply in a period of rising interest rates.
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Under Rule 2a-7, the Fund's Board of Directors must establish procedures
designed to stabilize, to the extent reasonably possible, the Fund's price per
share as computed for the purpose of sales and redemptions at $1.00. Such
procedures must include review of the Fund's portfolio holdings by the Board at
such intervals as it may deem appropriate and at such intervals as are
reasonable in light of current market conditions to determine whether the Fund's
net asset value calculated by using available market quotations (see below)
deviates from the per share value based on amortized cost.
For the purpose of determining whether there is any deviation between the
value of the Fund's portfolio based on amortized cost and that determined on the
basis of available market quotations, if there are readily available market
quotations, investments are valued at the mean between the bid and asked prices.
If such market quotations are not available, the investments will be valued at
their fair value as determined in good faith under procedures established by and
under the general supervision and responsibility of the Fund's Board of
Directors, including being valued at prices based on market quotations for
investments of similar type, yield and duration.
Under Rule 2a-7, if the extent of any deviation between the net asset value
per share based upon available market quotations (see above) and the net asset
value per share based on amortized cost exceeds one-half of 1%, the Board must
promptly consider what action, if any, will be initiated. When the Board
believes that the extent of any deviation may result in material dilution or
other unfair results to investors or existing shareholders, it is required to
take such action as it deems appropriate to eliminate or reduce to the extent
reasonably practicable such dilution or unfair results. Such actions could
include the sale of portfolio securities prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity, withholding dividends
or payment of distributions from capital or capital gains, redemptions of shares
in kind, or establishing a net asset value per share using available market
quotations.
The procedures which the Fund's Board of Directors has adopted include
changes in the dividends payable by the Fund under specified conditions, as
further described under "Taxes" and "Payments to Shareholders." The purpose of
this portion of the procedures is to provide for the automatic taking of one of
the actions which the Board of Directors might take should it otherwise be
required to consider taking appropriate action.
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Minimum Initial and Subsequent Investments
For Class A shares, initial investments must be at least $1,000 and for
Class B, Class C, Waddell & Reed Money Market B and Waddell & Reed Money Market
C shares, initial investments must be at least $100 with the exceptions
described in this paragraph. A $50 minimum initial investment pertains to
certain retirement plan accounts and to accounts for which an investor has
arranged, at the time of initial investment, to make subsequent purchases for
the account by having regular monthly withdrawals of $25 or more made from a
bank account. A $25 minimum initial investment pertains to purchases made
through payroll deduction for or by employees of Waddell & Reed, Inc., WRIMCO,
their affiliates or certain retirement plan accounts. With the exception of
automatic withdrawals from a shareholder's bank account, a shareholder may make
subsequent investments of any amount. See "Exchanges."
How to Open an Account
If you are purchasing Class A shares, you can make an initial investment of
$1,000 or more in any of the following ways:
1) By Mail. Complete an application form and mail it to Waddell & Reed,
Inc. at the address indicated on the form. Accompany the form with a check,
money order, Federal Reserve draft or other negotiable bank draft payable to
Waddell & Reed, Inc.
2) By Wire. (a) Telephone Waddell & Reed, Inc. (toll-free phone number on
the inside back cover of the Prospectus) and provide the account registration,
address and social security or tax identification number, the amount being
wired, the name of the wiring bank and the name and telephone number of the
person to be contacted in connection with the order. You will then be provided
with an order number; (b) instruct your bank to wire by the Federal Reserve Wire
Order System the specified amount, along with the order number and registration
to the UMB Bank, n.a.; 101000695, United K.C.; for United Cash Management, Inc.;
(c) complete an application form and mail it to Waddell & Reed, Inc.
[3) Through Broker-dealers. You may, if you wish, purchase your shares
through registered broker-dealers, which may charge their customers a fee for
this service. There is no such fee for investments made by mail or wire, as
described above, or for additional investments made by mail or wire. No such
service fee will be charged for shares purchased through Waddell & Reed,
Inc.][KR - Is this correct? CB]
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[How to Make Additional Investments
You may make additional investments in Class A shares in any amount through
broker-dealers as described above or in either of the following ways:
1) By Mail. Mail a check, money order, Federal Reserve draft or other
negotiable bank draft payable to Waddell & Reed, Inc. at P.O. Box 29217, Shawnee
Mission, Kansas 66201-9217, accompanied by either (i) the detachable form which
accompanies the confirmation of a prior purchase by you, or (ii) a letter
stating your account number, registration, the particular class and stating that
you wish the enclosed check, etc. to be used for the purchase of the stated
shares of United Cash Management, Inc.
2) By Wire. Instruct your bank to wire the specified amount along with the
account number and registration to the UMB Bank, n.a.; 101000695, United K.C.;
for United Cash Management, Inc.
Purchase of the Fund's shares are effective after (i) one of the methods
for purchasing the Fund's shares indicated above has been properly completed and
(ii) UMB Bank, n.a. (the "Bank") has Federal funds available to it. Federal
funds are monies of a member bank with the Federal Reserve System held in
deposit at a Federal Reserve Bank. They represent immediately available cash. If
payment is made by check or otherwise than in Federal funds, it will be
necessary to convert investors' payments into Federal funds, and orders for the
purchase of the Fund's shares, if accepted by Waddell & Reed, Inc., will become
effective on the day Federal funds are received for value by the Bank; this is
normally anticipated to be two business days following receipt of payment by
Waddell & Reed, Inc. The Fund's shares are issued at their net asset value next
determined after the effectiveness of the purchase (i.e., at $1.00 per share
except under extraordinary circumstances as described above).
If you wish to insure that shares will be issued on the same day on which
your payment is made, you should (i) place your order by wire so that it will be
received by the Bank prior to 3:00 p.m. Kansas City time, and (ii) before wiring
the order, phone Waddell & Reed, Inc. at the number on the inside back cover of
the Prospectus to make sure that the wire order as described above is properly
identified. See "Payments to Shareholders -- General" for information regarding
dividend payment.]
[Class B, Class C and Waddell & Reed Money Market C shares may be directly
purchased by mail only.][KR - See note from CB.]
Waddell & Reed, Inc. has the right not to accept any purchase order for the
Fund's shares. Certificates are not normally issued
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<PAGE>
but may be requested for Class A shares. No certificates are issued for Class B,
Class C, Waddell & Reed Money Market B or Waddell & Reed Money Market C shares.
Shareholdings are recorded on the Fund's books whether or not a certificate is
issued.
Flexible Withdrawal Service
If you qualify, you may arrange to receive through the Flexible Withdrawal
Service (the "Service") regular monthly, quarterly, semiannual or annual
payments by redeeming shares on an ongoing basis. Class C or Waddell & Reed
Money Market C shares purchased within the past year remain subject to the CDSC;
however, Class B or Waddell & Reed Money Market B shares redeemed under the
Service are not subject to a CDSC. Applicable forms to start the Service are
available through Waddell & Reed Services Company.
The maximum amount of the withdrawal for monthly, quarterly, semiannual and
annual withdrawals is 2%, 6%, 12% and 24% respectively of the value of your
account at the time the Service is established. The withdrawal proceeds are not
subject to the deferred sales charge, but only within these percentage
limitations. The minimum withdrawal is $50. The Service, and this exclusion from
the deferred sales charge, does not apply to a one-time withdrawal.
If you own Class A, Class B or Class C shares, to qualify for the Service
you must have invested at least $10,000 in shares which you still own of any of
the funds in the United Group; or, you must own Class A, Class B or Class C
shares having a value of at least $10,000. The value for this purpose is the
value at the offering price.
If you own Waddell & Reed Money Market B or Waddell & Reed Money Market C
shares, to qualify for the Service you must have invested at least $10,000 in
Class B or Class C shares which you still own of any of the funds in Waddell &
Reed Funds, Inc.; or, you must own Waddell & Reed Money Market B or Waddell &
Reed Money Market C shares having a value of at least $10,000.
You can choose to have your shares redeemed to receive:
1. a monthly, quarterly, semiannual or annual payment of $50 or more;
2. a monthly payment, which will change each month, equal to one-twelfth of
a percentage of the value of the shares in the Account (you select the
percentage); or
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<PAGE>
3. a monthly or quarterly payment, which will change each month or quarter,
by redeeming a number of shares fixed by you (at least five shares).
Shares are redeemed on the 20th day of the month in which the payment is to
be made (or on the prior business day if the 20th is not a business day).
Payments are made within five days of the redemption.
Retirement plan accounts may be subject to a fee imposed by the plan
custodian for use of their service.
If you have a share certificate for the shares you want to make available
for the Service, you must enclose the certificate with the form initiating the
Service.
The dividends and distributions on shares of a class you have made
available for the Service are paid in additional shares of the Fund of the same
class as that with respect to which they were paid. All payments under the
Service are made by redeeming shares in your account, which may involve a gain
or loss for tax purposes. To the extent that payments exceed dividends and
distributions, the number of shares you own will decrease. When all of the
shares in your account are redeemed, you will not receive any further payments.
Thus, the payments are not an annuity or an income or return on your investment.
You may, at any time, change the manner in which you have chosen to have
shares redeemed; you can change to any one of the other choices originally
available to you. You may, at any time, redeem part or all of the shares in your
account; if you redeem all of the shares, the Service is terminated. The Fund
can also terminate the Service by notifying you in writing.
After the end of each calendar year, information on shares redeemed will be
sent to you to assist you in completing your Federal income tax return.
Exchanges
Class A Share Exchanges
You may exchange Class A shares of the Fund which you have acquired by
exchange for Class A shares of one or more other funds in the United Group
(whose shares are sold with a sales charge) and any shares received in payment
of dividends on those Class A shares of the Fund for Class A shares of any of
the other funds in the United Group, without payment of any additional sales
charge.
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<PAGE>
In addition, you may specify a dollar amount of Class A shares of the Fund
to be automatically exchanged each month into Class A shares of any other fund
in the United Group, provided you already own shares of the fund. The shares
which you designate for automatic exchange into any fund must be worth at least
$100, which may be allocated among funds in the United Group, provided each fund
receives a value of at least $25. A minimum daily balance of $750 is required in
order to maintain such automatic exchange privileges.
Class B and Class C Share Exchanges
You may exchange Class B or Class C shares of the Fund for corresponding
shares of another fund in the United Group without charge.
You may specify a dollar amount of Class B or Class C shares of the Fund to
be automatically exchanged each month into Class B or Class C shares of any
other fund in the United Group, provided you already own Class B or Class C
shares, as applicable, of the fund. The shares which you designate for automatic
exchange into any fund must be worth at least $100, which may be allocated among
funds in the United Group, provided each fund receives a value of at least $25.
A minimum daily balance of $750 is required in order to maintain such automatic
exchange privileges.
The redemption of the Fund's Class B or Class C shares as part of an
exchange is not subject to the deferred sales charge. For purposes of computing
the deferred sales charge, if any, applicable to the redemption of the shares
acquired in the exchange, those acquired shares are treated as having been
purchased when the original redeemed shares were purchased.
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<PAGE>
Waddell & Reed Money Market B and Waddell & Reed Money Market C Share
Exchanges
You may exchange Waddell & Reed Money Market B shares for Class B shares of
Waddell & Reed Funds, Inc. without charge. You may also exchange Waddell & Reed
Money Market C shares for Class C shares of Waddell & Reed Funds, Inc. without
charge.
You may specify a dollar amount of Waddell & Reed Money Market B or Waddell
& Reed Money Market C shares to be automatically exchanged each month into Class
B or Class C shares of any of the funds of Waddell & Reed Funds, Inc., provided
you already own Class B or Class C shares, as applicable, of the fund in Waddell
& Reed Funds, Inc. The Class B or Class C shares that you designate for
automatic exchange must be worth at least $100, which may be allocated among
funds in Waddell & Reed Funds, Inc., provided each fund receives a value of at
least $25. A minimum daily balance of $750 is required in order to maintain such
automatic exchange privileges.
The redemption of Waddell & Reed Money Market B or Waddell & Reed Money
Market C shares of the Fund as part of an exchange is not subject to the
deferred sales charge. For purposes of computing the deferred sales charge, if
any, applicable to the redemption of shares acquired in the exchange, those
acquired shares are treated as having been purchased when the original redeemed
shares were purchased.
General Exchange Information
When you exchange shares, the total shares you receive will have the same
aggregate net asset value as the shares you exchange. The relative values are
those next figured after your exchange request is received in good order.
These exchange rights and other exchange rights concerning other funds in
the United Group or Waddell & Reed Funds, Inc. can in most instances be
eliminated or modified at any time and any such exchange may not be accepted.
[KR - Insert details of Class B conversion. CB]
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<PAGE>
Retirement Plans
As described in the Prospectus, your account may be set up as a funding
vehicle for a retirement plan. For individual taxpayers meeting certain
requirements, Waddell & Reed, Inc. offers model or prototype documents for the
following retirement plans. All of these plans involve investment in shares of
the Fund (or shares of certain other funds in the United Group or Waddell & Reed
Funds, Inc.).
Individual Retirement Accounts (IRAs). Investors having earned income may
set up a plan that is commonly called an IRA. Under a traditional IRA, an
investor can contribute each year up to 100% of his or her earned income, up to
an annual maximum of $2,000 (provided the investor has not reached age 70 1/2).
For a married couple, the annual maximum is $4,000 ($2,000 for each spouse) or,
if less, the couple's combined earned income for the taxable year even if one
spouse had no earned income. Generally, the contributions are deductible unless
the investor (or, if married, either spouse) is an active participant in a
qualified retirement plan or if, notwithstanding that the investor or one or
both spouses so participate, their adjusted gross income does not exceed certain
levels. However, a married investor who is not an active participant, files
jointly with his or her spouse and whose combined adjusted gross income does not
exceed $150,000 is not affected by the spouse's active participant status.
An investor may also use a traditional IRA to receive a rollover
contribution that is either (a) a direct rollover distribution from an
employer's plan or (b) a rollover of an eligible distribution paid to the
investor from an employer's plan or another IRA. To the extent a rollover
contribution is made to a traditional IRA, the distribution will not be subject
to Federal income tax until distributed from the IRA. A direct rollover
generally applies to any distribution from an employer's plan (including a
custodial account under Section 403(b)(7) of the Code, but not an IRA) other
than certain periodic payments, required minimum distributions and other
specified distributions. In a direct rollover, the eligible rollover
distribution is paid directly to the IRA, not to the investor. If, instead, an
investor receives payment of an eligible rollover distribution, all or a portion
of that distribution generally may be rolled over to an IRA within 60 days after
receipt of the distribution. Because mandatory Federal income tax withholding
applies to any eligible rollover distribution which is not paid in a direct
rollover, investors should consult their tax advisers or pension consultants as
to the applicable tax rules. If you already have an IRA, you may have the assets
in that IRA transferred directly to an IRA offered by Waddell & Reed, Inc.
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<PAGE>
Roth IRAs. Investors whose adjusted gross income (or combined adjusted
gross income, if married) does not exceed certain levels may establish and
contribute up to $2,000 per tax year to a Roth IRA. In addition, for an investor
whose adjusted gross income does not exceed $100,000 (and who is not a married
person filing a separate return), certain distributions from traditional IRAs
may be rolled over to a Roth IRA and any of the investor's traditional IRAs may
be converted into a Roth IRA; these rollover distributions and conversions are,
however, subject to Federal income tax.
Contributions to a Roth IRA are not deductible; however, earnings
accumulate tax-free in the Roth IRA, and withdrawals of earnings are not subject
to Federal income tax if the account has been held for at least five years and
the account holder has reached age 59 1/2 (or certain other conditions apply).
Education IRAs. Although not technically for retirement savings, Education
IRAs provide a vehicle for saving for a child's higher education. An Education
IRA may be established for the benefit of any minor, and any person whose
adjusted gross income does not exceed certain levels may contribute up to $500
to an Education IRA (or to each of multiple Education IRAs), provided that no
more than $500 may be contributed for any year to Education IRAs for the same
beneficiary. Contributions are not deductible and may not be made after the
beneficiary reaches age 18; however, earnings accumulate tax-free, and
withdrawals are not subject to tax if used to pay the qualified higher education
expenses of the beneficiary (or a member of his or her family).
Simplified Employee Pension (SEP) plans. Employers can make contributions
to SEP-IRAs established for employees. An employer may contribute up to 15% of
compensation or $24,000, whichever is less, per year for each employee.
Savings Incentive Match Plans for Employees (SIMPLE Plans). An employer
with 100 or fewer employees who does not sponsor another active retirement plan
may sponsor a SIMPLE to contribute to its employees' retirement accounts. A
SIMPLE plan can be funded by either an IRA or a 401(k) plan. In general, an
employer can choose to match employee contributions dollar-for-dollar (up to 3%
of an employee's compensation) or may contribute to all eligible employees 2% of
their compensation, whether or not they defer salary to their retirement plans.
SIMPLE plans involve fewer administrative requirements than 401(k) or other
qualified plans generally.
Keogh Plans. Keogh plans, which are available to self-employed individuals,
are defined contribution plans that may be
36
<PAGE>
either a money purchase plan or a profit-sharing plan. As a general rule, an
investor under a defined contribution Keogh plan can contribute each year up to
25% of his or her annual earned income, with an annual maximum of $30,000.
457 Plans. If an investor is an employee of a state or local government or
of certain types of charitable organizations, he or she may be able to enter
into a deferred compensation arrangement in accordance with Section 457 of the
Code.
TSAs - Custodial Accounts and Title I Plans. If an investor is an employee
of a public school system or of certain types of charitable organizations, he or
she may be able to enter into a deferred compensation arrangement through a
custodian account under Section 403(b) of the Code. Some organizations have
adopted Title I plans, which are funded by employer contributions in addition to
employee deferrals.
Pension and Profit-Sharing Plans, including 401(k) Plans. With a 401(k)
plan, employees can make tax-deferred contributions into a plan to which the
employer may also contribute, usually on a matching basis. An employee may defer
each year up to 25% of compensation, subject to certain annual maximums, which
may be increased each year based on cost-of-living adjustments.
More detailed information about these arrangements and applicable forms are
available from Waddell & Reed, Inc. These plans may involve complex tax
questions as to premature distributions and other matters. Investors should
consult their tax adviser or pension consultant.
Redemptions
The Prospectus gives information as to expedited and regular redemption
procedures. Redemption payments are made within seven days unless delayed
because of certain emergency conditions determined by the Securities and
Exchange Commission, when the NYSE is closed other than for weekends or
holidays, or when trading on the NYSE is restricted. Payment is made in cash,
although under extraordinary conditions redemptions may be made in portfolio
securities. Payment for redemption of shares of the Fund may be made in
portfolio securities when the Fund's Board of Directors determines that
conditions exist making cash payments undesirable. Securities used for payment
of redemptions are valued at the value used in figuring net asset value. There
would be brokerage costs to the redeeming shareholder in selling such
securities. The Fund, however, has elected to be governed by Rule 18f-1 under
the 1940 Act, pursuant to which it is obligated to redeem shares solely in cash
up to the lesser of $250,000 or 1% of
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<PAGE>
its net asset value during any 90-day period for any one shareholder.
Mandatory Redemption of Certain Small Accounts
The Fund has the right to compel the redemption of shares held under any
account or any plan if the aggregate net asset value of such shares (taken at
cost or value as the Board of Directors may determine) is less than $500. The
Board intends to compel redemptions of accounts, except for retirement plan
accounts, in which the total net asset value is less than $250. Shareholders
have 60 days from the date on which the net asset value falls below $250 to
bring the net asset value above $250 in order to avoid mandatory redemption. A
shareholder may also avoid mandatory redemption by initiating a transaction
which either increases or decreases the net asset value of the account. A
dividend payment does not constitute a shareholder initiated transaction for the
purpose of avoiding mandatory redemption.
DIRECTORS AND OFFICERS
The day-to-day affairs of the Fund are handled by outside organizations
selected by the Board of Directors. The Board of Directors has responsibility
for establishing broad corporate policies for the Fund and for overseeing
overall performance of the selected experts. It has the benefit of advice and
reports from independent counsel and independent auditors. The majority of the
Directors are not affiliated with Waddell & Reed, Inc.
The principal occupation during at least the past five years of each
Director and officer is given below. Each of the persons listed through and
including Mr. Vogel is a member of the Fund's Board of Directors. The other
persons are officers but not Board members. For purposes of this section, the
term "Fund Complex" includes each of the registered investment companies in the
United Group of Mutual Funds, Target/United Funds, Inc. and Waddell & Reed
Funds, Inc. Each of the Fund's Directors is also a Director of each of the other
funds in the Fund Complex and each of its officers is also an officer of one or
more of the funds in the Fund Complex.
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<PAGE>
KEITH A. TUCKER*
Chairman of the Board of Directors of the Fund and each of the other funds
in the Fund Complex; Chairman of the Board of Directors, Chief Executive
Officer, Principal Financial Officer and Director of Waddell & Reed Financial,
Inc.; President, Chairman of the Board of Directors and Chief Executive Officer
of Waddell & Reed Financial Services, Inc.; Chairman of the Board of Directors
of WRIMCO, Waddell & Reed, Inc. and Waddell & Reed Services Company; formerly,
President of each of the funds in the Fund Complex; formerly, Chairman of the
Board of Directors of Waddell & Reed Asset Management Company, a former
affiliate of Waddell & Reed Financial, Inc. Date of birth: February 11, 1945.
JAMES M. CONCANNON
950 Docking Road
Topeka, Kansas 66615
Dean and Professor of Law, Washburn University School of Law; Director,
AmVestors CBO II Inc. Date of birth: October 2, 1947.
JOHN A. DILLINGHAM
4040 Northwest Claymont Drive
Kansas City, Missouri 64116
President, JoDill Corp., an agricultural company; President and Director of
Dillingham Enterprises Inc.; formerly, Director and consultant, McDougal
Construction Company; formerly, Instructor at Central Missouri State University;
formerly, Member of the Board of Police Commissioners, Kansas City, Missouri;
formerly, Senior Vice President-Sales and Marketing, Garney Companies, Inc., a
specialty utility contractor. Date of birth: January 9, 1939.
DAVID P. GARDNER
525 Middlefield Road, Suite 200
Menlo Park, California 94025
President of Hewlett Foundation and Chairman of George S. and Delores Dori
Eccles Foundation. Director of First Security Corp., a bank holding company, and
Director of Fluor Corp., a company with interests in coal. Date of birth: March
24, 1933.
LINDA K. GRAVES*
1 South West Cedar Crest Road
Topeka, Kansas 66606
First Lady of Kansas. Partner, Levy and Craig, P.C., a law firm. Date of
birth: July 29, 1953.
JOSEPH HARROZ, JR.
125 South Creekdale Drive
Norman, Oklahoma 73072
General Counsel of the Board of Regents and Adjunct Professor of Law at the
University of Oklahoma College of Law; formerly,
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<PAGE>
Vice President for Executive Affairs of the University of Oklahoma; formerly, an
Attorney with Crowe & Dunlevy, a law firm. Date of birth: January 17, 1967.
JOHN F. HAYES
20 West 2nd Avenue
P. O. Box 2977
Hutchinson, Kansas 67504-2977
Director of Central Bank and Trust; Director of Central Financial
Corporation; Director of Central Properties, Inc.; Chairman of the Board of
Directors, Gilliland & Hayes, P.A., a law firm; formerly, President, Gilliland &
Hayes, P.A. Date of birth: December 11, 1919.
ROBERT L. HECHLER*
President and Principal Financial Officer of the Fund and each of the other
funds in the Fund Complex; Executive Vice President, Chief Operating Officer and
Director of Waddell & Reed Financial, Inc.; Vice President, Chief Operating
Officer, Director and Treasurer of Waddell & Reed Financial Services, Inc.;
Executive Vice President, Principal Financial Officer, Director and Treasurer of
WRIMCO; President, Chief Executive Officer, Principal Financial Officer,
Director and Treasurer of Waddell & Reed, Inc.; President, Director and
Treasurer of Waddell & Reed Services Company; formerly, Vice President of each
of the funds in the Fund Complex; formerly, Director and Treasurer of Waddell &
Reed Asset Management Company, a former affiliate of Waddell & Reed Financial,
Inc. Date of birth: November 12, 1936.
HENRY J. HERRMANN*
Vice President of the Fund and each of the other funds in the Fund Complex;
President, Chief Investment Officer, Treasurer and Director of Waddell & Reed
Financial, Inc.; Vice President, Chief Investment Officer and Director of
Waddell & Reed Financial Services, Inc.; Director of Waddell & Reed, Inc.;
President, Chief Executive Officer, Chief Investment Officer and Director of
WRIMCO; formerly, President, Chief Executive Officer, Chief Investment Officer
and Director of Waddell & Reed Asset Management Company, a former affiliate of
Waddell & Reed Financial, Inc. Date of birth: December 8, 1942.
GLENDON E. JOHNSON
13635 Deering Bay Drive
Unit 284
Miami, Florida 33158
Retired; formerly, Director and Chief Executive Officer of John Alden
Financial Corporation and subsidiaries. Date of birth: February 19, 1924.
40
<PAGE>
WILLIAM T. MORGAN*
928 Glorietta Blvd.
Coronado, California 92118
Retired; formerly, Chairman of the Board of Directors and President of each
of the funds in the Fund Complex then in existence. (Mr. Morgan retired as
Chairman of the Board of Directors and President of the funds in the Fund
Complex then in existence on April 30, 1993); formerly, President, Director and
Chief Executive Officer of WRIMCO and Waddell & Reed, Inc.; formerly, Chairman
of the Board of Directors of Waddell & Reed Services Company. Date of birth:
April 27, 1928.
RONALD C. REIMER
2601 Verona Road
Mission Hills, Kansas 66208
Retired. Co-founder and teacher at Servant Leadership School of Kansas
City; Director of Network Rehabilitation Services; formerly, Employment
Counselor and Director of McCue-Parker Center. Date of birth: August 3, 1934.
FRANK J. ROSS, JR.*
700 West 47th Street
Kansas City, Missouri 64112
Shareholder, Polsinelli, White, Vardeman & Shalton, a law firm. Date of
birth: April 9, 1953.
ELEANOR B. SCHWARTZ
5100 Rockhill Road
Kansas City, Missouri 64113
Professor of Business Administration, University of Missouri-Kansas City;
formerly, Chancellor, University of Missouri-Kansas City. Date of birth: January
1, 1937.
FREDERICK VOGEL III
1805 West Bradley Road
Milwaukee, Wisconsin 53217
Retired. Date of birth: August 7, 1935.
41
<PAGE>
Helge K. Lee
Vice President, Secretary and General Counsel of the Fund and each of the
other funds in the Fund Complex; Secretary and General Counsel of Waddell & Reed
Financial, Inc.; Vice President, Secretary, General Counsel and Director of
Waddell & Reed Financial Services, Inc.; Senior Vice President, Secretary and
General Counsel of WRIMCO and Waddell & Reed, Inc.; Senior Vice President,
Secretary, General Counsel and Director of Waddell & Reed Services Company;
formerly, Executive Vice President, Secretary and Chief Compliance Officer of
LGT Asset Management, Inc. and affiliates; formerly, Senior Vice President,
General Counsel and Secretary of Strong Capital Management, Inc. and affiliates.
Date of birth: March 30, 1946.
Theodore W. Howard
Vice President, Treasurer and Principal Accounting Officer of the Fund and
each of the other funds in the Fund Complex; Vice President of Waddell & Reed
Services Company. Date of birth: July 18, 1942.
John M. Holliday
Vice President of the Fund and other funds in the Fund Complex; Senior Vice
President of WRIMCO; formerly, Senior Vice President of Waddell & Reed Asset
Management Company; formerly, Senior Vice President of Waddell & Reed, Inc. Date
of birth: June 11, 1935.
Mira Stevovich
Vice President and Assistant Treasurer of the Fund, Vice President of one
other fund in the Fund Complex and Assistant Treasurer of all Funds in the Fund
complex; Vice President of WRIMCO. Date of birth: July 30, 1953.
The address of each person is 6300 Lamar Avenue, P.O. Box 29217, Shawnee
Mission, Kansas 66201-9217 unless a different address is given.
The Directors who may be deemed to be interested persons, as defined in the
1940 Act of the Fund's underwriter, Waddell & Reed, Inc. or WRIMCO are indicated
as such by an asterisk.
The Board of Directors has created an honorary position of Director
Emeritus, which position a director may elect after resignation from the Board
provided the director has attained the age of 70 and has served as a director of
the funds in the United Group for a total of at least five years. A Director
Emeritus receives fees in recognition of his or her past services whether or not
services are rendered in his or her capacity as Director Emeritus, but he has no
authority or responsibility with respect to management of the Fund. Messrs.
Henry L. Bellmon, Jay B.
42
<PAGE>
Dillingham, Doyle Patterson, Ronald K. Richey and Paul S. Wise retired as
Directors of the Fund and of each of the funds in the Fund Complex and elected a
position as Director Emeritus.
The funds in the United Group, Target/United Funds, Inc. and Waddell & Reed
Funds, Inc. pay to each Director a total of $48,000 per year, plus $2,500 for
each meeting of the Board of Directors attended plus reimbursement of expenses
of attending such meeting and $500 for each committee meeting attended which is
not in conjunction with a Board of Directors' meeting, other than Directors who
are affiliates of Waddell & Reed, Inc. The fees to the Directors who receive
them are divided among the funds in the United Group, Target/United Funds, Inc.
and Waddell & Reed Funds, Inc. based on their relative size.
During the Fund's fiscal year ended June 30, 1999, the Fund's Directors
received the following fees for service as a director:
COMPENSATION TABLE
Total
Aggregate Compensation
Compensation From Fund
From and Fund
Director Fund Complex*
- -------- ------------ ------------
Robert L. Hechler $ 0 $ 0
Henry J. Herrmann 0 0
Keith A. Tucker 0 0
James M. Concannon 1,518 58,500
John A. Dillingham 1,518 58,500
David P. Gardner 1,109 41,500
Linda K. Graves 1,518 58,500
Joseph Harroz, Jr. 1,075 41,500
John F. Hayes 1,518 58,500
Glendon E. Johnson 1,531 59,000
William T. Morgan 1,518 58,500
Ronald C. Reimer 1,071 41,500
Frank J. Ross, Jr. 1,518 58,500
Eleanor B. Schwartz 1,531 59,000
Frederick Vogel III 1,531 59,000
* No pension or retirement benefits have been accrued as a part of Fund
expenses.
Mr. Gardner was elected as a Director on August 19, 1998. Messrs. Harroz,
Hechler, Herrmann and Reimer were elected as Directors on November 18, 1998. The
officers are paid by Waddell & Reed, Inc. or its affiliates.
43
<PAGE>
Shareholdings
As of July 31, 1999, all of the Fund's Directors and officers as a group
owned less than 1% of the outstanding shares of the Fund. The following table
sets forth information with respect to the Fund, as of July 31, 1999, regarding
the beneficial ownership of the classes of the Fund's shares.
Name and Address Shares owned
of Record or Beneficially
Beneficial Owner Class or of Record Percent
- ------------------- ----- ------------ -------
CS First Boston Corp. Class A %
Attn Robert Plaza
5 World Trade Center
7th Floor
New York NY 10048
Don Cartner Trustee Class B
CPSP Westport Research Assoc
FBO Unallocated Assets
Qualified 401(k) Plan
6102 Arlington
Raytown MO 64133
Bruce N. Jackson & Class B
Donna L. Jackson Co-ttees
U/A dated November 15, 1997
P. O. Box 8173
Fresno CA 93747
Fiduciary Trust Co NH Cust Class B
IRA of Robert Ross
FBO Robert Ross Rollover
1 Gold St. Apt 7C
Hartford CT 06103
PAYMENTS TO SHAREHOLDERS
General
There are two sources for the payments the Fund makes to you as a
shareholder of a class of shares of the Fund, other than payments when you
redeem your shares. The first source is net investment income, which is derived
from the interest and earned discount on the securities the Fund holds, less
expenses (which will vary by class) and amortization of any premium. The second
source is net realized capital gains, which are derived from the
44
<PAGE>
proceeds received from the Fund's sale of securities at a price higher than the
Fund's tax basis (usually cost) in such securities, less losses from sales of
securities at a price lower than the Fund's basis therein; these gains are
expected to be short-term capital gains.
Under the procedures that the Fund's Board of Directors has adopted
relating to amortized cost valuation, the calculation of the daily dividend of a
class will change from that indicated above under certain circumstances. If on
any day there is a deviation of .3 of 1% or more between the net asset value of
a share of a class of the Fund computed on the amortized cost basis and that
computed on an available market price basis, the amount of the deviation will be
added to or subtracted from the dividend for that class for that day if
necessary to reduce the per-share value to within .3 of 1% of $1.00.
If on any day there is insufficient net income to absorb any such
reduction, the Fund's Board of Directors would be required under Rule 2a-7 to
consider taking other action if the deviation after eliminating the dividend for
that day exceeds one-half of 1%. See "Determination of Offering Price." One of
the actions that the Board of Directors might take could be the elimination or
reduction of dividends for more than one day.
Choices You Have on Your Dividends and Distributions
On your application form, you can give instructions that (i) you want cash
for your dividends and distributions, (ii) you want your dividends and
distributions paid in shares of the Fund of the same class as that with respect
to which they were paid, or (iii) you want cash for your dividends and want your
distributions paid in shares of the Fund of the same class as that with respect
to which they were declared. However, a total dividend and/or distribution
amount less than five dollars will be automatically paid in shares of the Fund
of the same class as that with respect to which they were paid. You can change
your instructions at any time. If you give no instructions, your dividends and
distributions (if any) will be paid in shares of the Fund of the same class as
that with respect to which they were paid. All payments in shares are at net
asset value. The net asset value used for this purpose is that computed as of
the payment date for the dividend, although this could be changed by the Board
of Directors.
45
<PAGE>
Even if you get dividends and distributions in cash, you can thereafter
reinvest them (or distributions only) in shares of the Fund of the same class as
that with respect to which they were paid at net asset value next determined
after receipt by Waddell & Reed, Inc., of the amount clearly identified as a
reinvestment. The reinvestment must be within 45 days after the payment.
TAXES
General
The Fund has qualified for treatment as a regulated investment company
("RIC") under the Code, so that it is relieved of Federal income tax on that
part of its investment company taxable income (consisting generally of net
investment income, net short-term capital gains and net gains from certain
foreign currency transactions) that is distributed to its shareholders. To
continue to qualify as a RIC, the Fund must distribute to its shareholders for
each taxable year at least 90% of the sum of its investment company taxable
income ("Distribution Requirement") and must meet several additional
requirements. These requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from options, futures contracts or forward contracts) derived with respect
to its business of investing in securities or those currencies ("Income
Requirement"); (2) at the close of each quarter of the Fund's taxable year, at
least 50% of the value of its total assets must be represented by cash and cash
items, Government securities, securities of other RICs and other securities that
are limited, in respect of any one issuer, to an amount that does not exceed 5%
of the value of the Fund's total assets and that does not represent more than
10% of the issuer's outstanding voting securities ("50% Diversification
Requirement"); and (3) at the close of each quarter of the Fund's taxable year,
not more than 25% of the value of its total assets may be invested in securities
(other than Government securities or the securities of other RICs) of any one
issuer.
If the Fund failed to qualify for treatment as a RIC for any taxable year,
(a) it would be taxed as an ordinary corporation on the full amount of its
taxable income for that year (even if it distributed that income to its
shareholders) and (b) the shareholders would treat all distributions out of its
earnings and profits, including distributions of net capital gain (the excess of
net long-term capital gain over net short-term capital loss), as dividends (that
is, ordinary income). In addition, the Fund
46
<PAGE>
could be required to recognize unrealized gains, pay substantial taxes and
interest, and make substantial distributions before requalifying for RIC
treatment.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to
the extent it fails to distribute by the end of any calendar year substantially
all of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
It is the Fund's policy to pay sufficient dividends and distributions each year
to avoid imposition of the Excise Tax.
PORTFOLIO TRANSACTIONS AND BROKERAGE
One of the duties undertaken by WRIMCO pursuant to the Management Agreement
is to arrange the purchase and sale of securities for the portfolio of the Fund.
Purchases are made directly from issuers or from underwriters, dealers or banks.
Purchases from underwriters include a commission or concession paid by the
issuer to the underwriter. Purchases from dealers will include the spread
between the bid and the asked price. Brokerage commissions are paid primarily
for effecting transactions in securities traded on an exchange and otherwise
only if it appears likely that a better price or execution can be obtained. The
Fund has not effected transactions through brokers and does not anticipate doing
so. The individual who manages the Fund may manage other advisory accounts with
similar investment objectives. It can be anticipated that the manager will
frequently place concurrent orders for all or most accounts for which the
manager has responsibility or WRIMCO may otherwise combine orders for the Fund
with those of other funds in the United Group, Target/United Funds, Inc. and
Waddell & Reed Funds, Inc. or other accounts for which it has investment
discretion. Transactions effected pursuant to such combined orders are averaged
as to price and allocated in accordance with the purchase or sale orders
actually placed for each fund or advisory account, except where the combined
order is not filled completely. In this case, WRIMCO will ordinarily allocate
the transaction pro rata based on the orders placed. Sharing in large
transactions could affect the price the Fund pays or receives or the amount it
buys or sells. However, sometimes a better negotiated commission is available
through combined orders.
To effect the portfolio transactions of the Fund, WRIMCO is authorized to
engage brokers-dealers ("brokers") which, in its best judgment based on all
relevant factors, will implement the policy of the Fund to seek "best execution"
(prompt and reliable execution at the best price obtainable) for reasonable and
competitive commissions. WRIMCO is expected to allocate orders to
47
<PAGE>
brokers or dealers consistent with the interests and policies of the Fund.
Subject to review by the Board of Directors, such policies include the selection
of brokers or dealers which provide execution and/or research services and other
services including pricing or quotation services directly or through others
("research and brokerage services"). If the execution and price offered by more
than one dealer are comparable, the order may be allocated to a dealer which has
provided such services considered by WRIMCO to be useful or desirable for its
investment management of the Fund and/or the other funds and accounts over which
WRIMCO has investment discretion.
Subject to the foregoing considerations, WRIMCO may also consider sales of
the Fund as a factor in the selection of broker-dealers to execute portfolio
transactions. No allocation of brokerage or principal business is made to
provide any other benefits to WRIMCO.
The investment research provided by a particular broker may be useful only
to one or more of the other advisory accounts of WRIMCO and investment research
received for the commissions of those other accounts may be useful both to the
Fund and one or more of such other accounts. To the extent that electronic or
other products provided by such brokers to assist WRIMCO in making investment
management decisions are used for administration or other non-research purposes,
a reasonable allocation of the cost of the product attributable to its
non-research use is made by WRIMCO.
Such investment research (which may be supplied by a third party at the
instance of a broker or dealer) includes information on particular companies and
industries as well as market, economic or institutional activity areas. It
serves to broaden the scope and supplement the research activities of WRIMCO;
serves to make available additional views for consideration and comparisons; and
enables WRIMCO to obtain market information on the price of securities held in
the Fund's portfolio or being considered for purchase.
As of June 30, 1999, the Fund owned J. P. Morgan & Co. Incorporated
securities in the aggregate amount of $19,997,826. J. P. Morgan & Co.
Incorporated is a regular broker of the Fund.
The Fund, WRIMCO and Waddell & Reed, Inc. have adopted a Code of Ethics
which imposes restrictions on the personal investment activities of their
employees, officers and interested directors.
48
<PAGE>
OTHER INFORMATION
The Shares of the Fund
The Fund offers five classes of shares: Class A, Class B, Class C, Waddell
& Reed Money Market B and Waddell & Reed Money Market C. Each class represents
an interest in the same assets of the Fund and differs as follows: each class of
shares has exclusive voting rights on matters appropriately limited to that
class; Class B, Class C, Waddell & Reed Money Market B and Waddell & Reed Money
Market C shares are subject to a CDSC and to an ongoing distribution and service
fee; [Class B shares that have been held by a shareholder for seven years will
convert automatically, in the eighth year, to Class A shares of the Fund, and
such conversion will be made, without charge or fee, on the basis of the
relative net asset values of the two classes][KR - this lang. differs from other
SAIs. CB]; each class may bear differing amounts of certain class-specific
expenses; and each class has a separate exchange privilege. The Fund does not
anticipate that there will be any conflicts between the interests of holders of
the different classes of shares of the Fund by virtue of those classes. On an
ongoing basis, the Board of Directors will consider whether any such conflict
exists and, if so, take appropriate action. Each share of the Fund is entitled
to equal voting, dividend, liquidation and redemption rights, except that due to
the differing expenses borne by the five classes, dividends and liquidation
proceeds of Class B, Class C, Waddell & Reed Money Market B and Waddell & Reed
Money Market C shares are expected to be lower than for Class A shares of the
Fund. Each fractional share of a class has the same rights, in proportion, as a
full share of that class. Shares are fully paid and nonassessable when
purchased.
The Fund does not hold annual meetings of shareholders; however, certain
significant corporate matters, such as the approval of a new investment advisory
agreement or a change in fundamental investment policy, which require
shareholder approval will be presented to shareholders at a meeting called by
the Board of Directors for such purpose.
Special meetings of shareholders may be called for any purpose upon receipt
by the Fund of a request in writing signed by shareholders holding not less than
25% of all shares entitled to vote at such meeting, provided certain conditions
stated in the bylaws are met. There will normally be no meeting of the
shareholders for the purpose of electing directors until such time as less than
a majority of directors holding office have been elected by shareholders, at
time which the directors then in office will call a shareholders' meeting for
the election of directors. To the extent that Section 16(c) of the 1940 Act
49
<PAGE>
applies to the Fund, the directors are required to call a meeting of
shareholders for the purpose of voting upon the question of removal of any
director when requested in writing to do so by the shareholders of record of not
less than 10% of the Fund's outstanding shares.
Each share (regardless of class) has one vote. All shares of the Fund vote
together as a single class, except as to any matter for which a separate vote of
any class is required by the 1940 Act, and except as to any matter which affects
the interests of one or more particular classes, in which case only the
shareholders of the affected classes are entitled to vote, each as a separate
class.
50
<PAGE>
APPENDIX A
The following are descriptions of some of the ratings of securities which
the Fund may use. The Fund may also use ratings provided by other nationally
recognized statistical rating organizations in determining the securities
eligible for investment.
DESCRIPTION OF BOND RATINGS
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. A Standard
& Poor's ("S&P") corporate or municipal bond rating is a current assessment of
the creditworthiness of an obligor with respect to a specific obligation. This
assessment of creditworthiness may take into consideration obligors such as
guarantors, insurers or lessees.
The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.
The ratings are based on current information furnished to S&P by the issuer
or obtained by S&P from other sources it considers reliable. S&P does not
perform an audit in connection with any rating and may, on occasion, rely on
unaudited financial information. The ratings may be changed, suspended or
withdrawn as a result of changes in, or unavailability of, such information, or
based on other circumstances.
The ratings are based, in varying degrees, on the following considerations:
1. Likelihood of default -- capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in
accordance with the terms of the obligation;
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
The top three rating categories of S&P are described below:
AAA -- Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
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<PAGE>
AA -- Debt rated AA also qualifies as high quality debt. Capacity to pay
interest and repay principal is very strong, and debt rated AA differs from AAA
issues only in small degree.
A -- Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
Plus (+) or Minus (-) -- To provide more detailed indications of credit
quality, the ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
NR -- Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
Debt Obligations of issuers outside the United States and its territories
are rated on the same basis as domestic corporate and municipal issues. The
ratings measure the creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.
Moody's Investors Service, Inc. A brief description of the applicable
Moody's Investors Service, Inc. ("MIS") rating symbols and their meanings
follows:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and
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<PAGE>
interest are considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
DESCRIPTION OF NOTE RATINGS
Standard and Poor's, a division of The McGraw-Hill Companies, Inc. A S&P
note rating reflects the liquidity factors and market access risks unique to
notes. Notes maturing in 3 years or less will likely receive a note rating.
Notes maturing beyond 3 years will most likely receive a long-term debt rating.
The following criteria will be used in making that assessment.
-- Amortization schedule (the larger the final maturity relative to other
maturities, the more likely the issue is to be treated as a note).
-- Source of Payment (the more the issue depends on the market for its
refinancing, the more likely it is to be treated as a note.)
The note rating symbols and definitions are as follows:
SP-1 Strong capacity to pay principal and interest. Issues determined
to possess very strong characteristics are given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the
term of the notes.
SP-3 Speculative capacity to pay principal and interest.
Moody's Investors Service, Inc. MIS ratings for state and municipal
short-term obligations will be designated Moody's Investment Grade (MIG). This
distinction is in recognition of the differences between short-term credit risk
and long-term risk. Factors affecting the liquidity of the borrower are
uppermost in importance in short-term borrowing, while various factors of major
importance in bond risk are of lesser importance over the short run. Rating
symbols and their meanings follow:
MIG 1 -- This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
MIG 2 -- This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3 -- This designation denotes favorable quality. All security elements
are accounted for but this is lacking the
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<PAGE>
undeniable strength of the preceding grades. Liquidity and cash flow protection
may be narrow and market access for refinancing is likely to be less well
established.
MIG 4 -- This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Standard & Poor's, a division of The McGraw Hill Companies, Inc. commercial
paper rating is a current assessment of the likelihood of timely payment of debt
considered short-term in the relevant market. Ratings are graded into several
categories, ranging from A-1 for the highest quality obligations to D for the
lowest. Issuers rated A are further referred to by use of numbers 1, 2 and 3 to
indicate the relative degree of safety. Issues assigned an A rating (the highest
rating) are regarded as having the greatest capacity for timely payment. An A-1
designation indicates that the degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation. An A-2 rating
indicates that capacity for timely payment is satisfactory; however, the
relative degree of safety is not as high as for issues designated A-1.
Moody's Investors Service, Inc. commercial paper ratings are opinions of
the ability of issuers to repay punctually promissory obligations not having an
original maturity in excess of nine months. MIS employs the designations of
Prime 1, Prime 2 and Prime 3, all judged to be investment grade, to indicate the
relative repayment capacity of rated issuers. Issuers rated Prime 1 have a
superior capacity for repayment of short-term promissory obligations and
repayment capacity will normally be evidenced by (1) lending market positions in
well established industries; (2) high rates of return on Funds employed; (3)
conservative capitalization structures with moderate reliance on debt and ample
asset protection; (4) broad margins in earnings coverage of fixed financial
charges and high internal cash generation; and (5) well established access to a
range of financial markets and assured sources of alternate liquidity. Issuers
rated Prime 2 also have a strong capacity for repayment of short-term promissory
obligations as will normally be evidenced by many of the characteristics
described above for Prime 1 issuers, but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation; capitalization
characteristics, while still appropriate, may be more affected by external
conditions; and ample alternate liquidity is maintained.
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<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
<TABLE>
<CAPTION>
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
<S> <C> <C>
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)
</TABLE>
See Notes to Schedule of Investments on page .
1
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
<TABLE>
<CAPTION>
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS
Commercial Paper
<S> <C> <C>
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
</TABLE>
See Notes to Schedule of Investments on page .
2
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
<TABLE>
<CAPTION>
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
<S> <C> <C>
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
</TABLE>
See Notes to Schedule of Investments on page .
3
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
<TABLE>
<CAPTION>
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Notes
<S> <C> <C>
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
</TABLE>
See Notes to Schedule of Investments on page .
4
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
<TABLE>
<CAPTION>
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Notes (Continued)
<S> <C> <C>
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
</TABLE>
See Notes to Schedule of Investments on page .
5
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
<TABLE>
<CAPTION>
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
<S> <C> <C>
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
</TABLE>
See Notes to Schedule of Investments on page .
6
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
<TABLE>
<CAPTION>
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
<S> <C> <C>
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
</TABLE>
See Notes to Schedule of Investments on page .
7
<PAGE>
THE INVESTMENTS OF
UNITED CASH MANAGEMENT, INC.
JUNE 30, 1999
<TABLE>
<CAPTION>
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
<S> <C> <C>
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
</TABLE>
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.
8
<PAGE>
UNITED CASH MANAGEMENT, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(In Thousands, Except for Per Share Amounts)
<TABLE>
<CAPTION>
Assets
<S> <C>
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
=====
</TABLE>
See notes to financial statements.
9
<PAGE>
UNITED CASH MANAGEMENT, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended JUNE 30, 1999
(In Thousands)
<TABLE>
<CAPTION>
Investment Income
<S> <C>
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
=======
</TABLE>
See notes to financial statements.
10
<PAGE>
UNITED CASH MANAGEMENT, INC.
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
<TABLE>
<CAPTION>
For the fiscal year ended
June 30,
-----------------------------------
1999 1998
---------- ----------
Increase in Net Assets
<S> <C> <C>
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 ...................................................... $--- $---
==== ====
</TABLE>
*See "Financial Highlights" on pages - .
**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.
11
<PAGE>
UNITED CASH MANAGEMENT, INC.
FINANCIAL HIGHLIGHTS
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
<TABLE>
<CAPTION>
For the fiscal year ended June 30,
---------------------------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
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%
</TABLE>
See notes to financial statements.
12
<PAGE>
UNITED CASH MANAGEMENT, INC.
FINANCIAL HIGHLIGHTS
Class B Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
<TABLE>
<CAPTION>
For the
For the fiscal period
year ended June 30, from 9/5/95*
---------------------------------- through
1999 1998 1997 6/30/96
------ ------ ------ -------
<S> <C> <C> <C> <C>
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%**
</TABLE>
*Commencement of operations.
**Annualized.
See notes to financial statements.
13
<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
14
<PAGE>
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
<TABLE>
<CAPTION>
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
<S> <C>
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
</TABLE>
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
15
<PAGE>
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.
16
<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
17
<PAGE>
REGISTRATION STATEMENT
PART C
OTHER INFORMATION
23. Exhibits: United Cash Management, Inc.
(a) Articles of Incorporation, as amended, filed by EDGAR on October
29, 1998 as EX-99.B1-charter to Post-Effective Amendment No. 33
to the Registration Statement on Form N-1A*
Articles Supplementary filed by EDGAR on July 2, 1999 as
EX-99.B(a)cmartsup to Post-Effective Amendment No. 34 to the
Registration Statement on Form N-1A*
(b) Bylaws, filed by EDGAR on October 29, 1996 as Exhibit
EX-99.B2-cmbylaw to Post-Effective Amendment No. 30 to the
Registration Statement on Form N-1A*
Amendment to Bylaws filed by EDGAR on July 2, 1999 as
EX-99.B(b)cmbylaw2 to Post-Effective Amendment No. 34 to the
Registration Statement on Form N-1A*
(c) Not applicable
(d) Investment Management Agreement, as amended, filed by EDGAR on
July 7, 1995 as Exhibit EX-99.B(5)-cmima to Post-Effective
Amendment No. 28 to the Registration Statement on Form N-1A*
Assignment of the Investment Management Agreement, filed by EDGAR
on July 7, 1995 as Exhibit EX-99.B5-cmassign to Post-Effective
Amendment No. 28 to the Registration Statement on Form N-1A*
Fee Schedule (Exhibit A) to the Investment Management Agreement,
as amended, filed by EDGAR on July 2, 1999 as EX-99.B(d)cmimafee
to Post-Effective Amendment No. 34 to the Registration Statement
on Form N-1A*
(e) Underwriting Agreement, filed by EDGAR on July 7, 1995 as Exhibit
EX-99.B6-cmua to Post-Effective Amendment No. 28 to the
Registration Statement on Form N-1A*
(f) Not applicable
(g) Custodian Agreement, as amended, filed by EDGAR on October 29,
1998 as EX-99.B8-cmca to Post-Effective Amendment No. 33 to the
Registration Statement on Form N-1A*
(h) Accounting Services Agreement, filed by EDGAR on July 7, 1995 as
Exhibit EX-99.B9-cmaca to Post-Effective Amendment No. 28 to the
Registration Statement on Form N-1A*
Fund NAV Application, filed by EDGAR on July 7, 1995 as
<PAGE>
Exhibit EX-99.B9-cmappnav to Post-Effective Amendment No. 28 to
the Registration Statement on Form N-1A*
Shareholder Servicing Agreement, filed by EDGAR on October 29,
1998 as Exhibit EX-99.B(9)-cmssa to Post-Effective Amendment No.
33 to the Registration Statement on Form N-1A*
Compensation Table (Exhibit B) to Shareholder Servicing Agreement
attached hereto as EX-99.B(h)cmssacom
Fidelity Bond Coverage (Exhibit C), as amended, to the
Shareholder Servicing Agreement attached hereto as
EX-99.B(h)cmssafid
Fund Class A, B and C application, (Non-Retirement Plan), as
amended, attached hereto as Exhibit EX-99.B(h)cmappnon
Fund Class A, B and C application, (Retirement Plan) attached
hereto as EX-99.B(h)cmappabc
Waddell & Reed Funds, Inc. Class B and C application,
(Non-Retirement Plan) attached here to as EX-99.B(h)wrbcapp
Waddell & Reed Funds, Inc. Class B and C application,
(Retirement Plan) attached here to as EX-99.B(h)wrbcapp2
(i) Opinion and Consent of Counsel attached hereto as
EX-99.B(i)cmlegopn
(j) Consent of Deloitte & Touche LLP, Independent Accountants,
attached hereto as EX-99.B(j)-cmconsnt
(k) Not applicable
(l) Not applicable
(m) Service Plan, filed by EDGAR on July 7, 1995 as Exhibit
EX-99.B15-cmspcb to Post-Effective Amendment No. 28 to the
Registration Statement on Form N-1A*
Distribution and Service Plan for Class B shares attached hereto
as EX-99.B(m)cmdspb
Distribution and Service Plan for Class C shares attached hereto
as EX-99.B(m)cmdspc
Distribution and Service Plan for United Cash Management, Inc.
for Waddell & Reed Money Market B shares attached hereto as
EX-99.B(m)cmdspmmb
Distribution and Service Plan for United Cash Management, Inc.
for Waddell & Reed Money Market C shares attached hereto as
EX-99.B(m)cmdspmmc
(n) Not applicable
(o) Multiple Class Plan, as amended, attached hereto as Exhibit
EX-99.B(o)cmmcp
24. Persons Controlled by or under common control with Registrant
-------------------------------------------------------------
None
<PAGE>
25. Indemnification
---------------
Reference is made to Article SEVENTH paragraph 6(b) through 6(f) of the
Articles of Incorporation, as amended, filed on October 29, 1998 as
EX.99.B1-charter to Post-Effective Amendment No. 33 to the Registration
Statement on Form N-1A*, and to Article IV of the Underwriting Agreement,
filed July 7, 1995 as EX.99.B6-cmua to Post-Effective Amendment No. 28 to
the Registration Statement on Form N-1A*, each of which provides
indemnification. Also refer to Section 2-418 of the Maryland General
Corporation Law regarding indemnification of directors, officers, employees
and agents.
26. Business and Other Connections of Investment Manager
----------------------------------------------------
Waddell & Reed Investment Management Company is the investment manager of
the Registrant. Under the terms of an Investment Management Agreement
between Waddell & Reed, Inc. and the Registrant, Waddell & Reed, Inc. is to
provide investment management services to the Registrant. Waddell & Reed,
Inc. assigned its investment management duties under this agreement to
Waddell & Reed Investment Management Company on January 8, 1992. Waddell &
Reed Investment Management Company is a corporation which is not engaged in
any business other than the provision of investment management services to
those registered investment companies described in Part A and Part B of
this Post-Effective Amendment and to other investment advisory clients.
Each director and executive officer of Waddell & Reed Investment Management
Company has had as his sole business, profession, vocation or employment
during the past two years only his duties as an executive officer and/or
employee of Waddell & Reed Investment Management Company or its
predecessors, except as to persons who are directors and/or officers of the
Registrant and have served in the capacities shown in the Statement of
Additional Information of the Registrant. The address of the officers is
6300 Lamar Avenue, Shawnee Mission, Kansas 66202-4200.
As to each director and officer of Waddell & Reed Investment Management
Company, reference is made to the Prospectus and SAI of this Registrant.
27. Principal Underwriter
---------------------
(a) Waddell & Reed, Inc. is the principal underwriter. It is also the
principal underwriter to the following investment companies:
United Funds, Inc.
United International Growth Fund, Inc.
United Continental Income Fund, Inc.
United Vanguard Fund, Inc.
United Retirement Shares, Inc.
United Municipal Bond Fund, Inc.
United High Income Fund, Inc.
<PAGE>
United Government Securities Fund, Inc.
United New Concepts Fund, Inc.
United Municipal High Income Fund, Inc.
United High Income Fund II, Inc.
United Asset Strategy Fund, Inc.
Advantage I
Advantage II
Advantage Plus
Waddell & Reed Funds, Inc.
(b) The information contained in the underwriter's application on Form BD,
under the Securities Exchange Act of 1934, is herein incorporated by
reference.
(c) No compensation was paid by the Registrant to any principal
underwriter who is not an affiliated person of the Registrant or any
affiliated person of such affiliated person.
28. Location of Accounts and Records
--------------------------------
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act and
rules promulgated thereunder are under the possession of Mr. Robert L.
Hechler and Ms. Kristen A. Richards, as officers of the Registrant, each of
whose business address is Post Office Box 29217, Shawnee Mission, Kansas
66201-9217.
29. Management Services
-------------------
There is no service contract other than as discussed in Part A and B of
this Post-Effective Amendment and listed in response to Items 23.(h) and
23.(m) hereof.
30. Not applicable
--------------
Not applicable
- ---------------------------------
*Incorporated herein by reference
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That each of the undersigned, UNITED FUNDS,
INC., UNITED INTERNATIONAL GROWTH FUND, INC., UNITED MUNICIPAL BOND FUND, INC.,
UNITED VANGUARD FUND, INC., UNITED HIGH INCOME FUND, INC., UNITED CASH
MANAGEMENT, INC., UNITED NEW CONCEPTS FUND, INC., UNITED GOVERNMENT SECURITIES
FUND, INC., UNITED MUNICIPAL HIGH INCOME FUND, INC., UNITED GOLD & GOVERNMENT
FUND, INC., UNITED HIGH INCOME FUND II, INC., UNITED CONTINENTAL INCOME FUND,
INC., UNITED RETIREMENT SHARES, INC., UNITED ASSET STRATEGY FUND, INC., UNITED
SMALL CAP FUND, INC., TARGET/UNITED FUNDS, INC. AND WADDELL & REED FUNDS, INC.
(each hereinafter called the "Corporation"), and certain directors and officers
for the Corporation, do hereby constitute and appoint KEITH A. TUCKER, ROBERT L.
HECHLER, and KRISTEN A. RICHARDS, and each of them individually, their true and
lawful attorneys and agents to take any and all action and execute any and all
instruments which said attorneys and agents may deem necessary or advisable to
enable each Corporation to comply with the Securities Act of 1933 and/or the
Investment Company Act of 1940, as amended, and any rules, regulations, orders
or other requirements of the United States Securities and Exchange Commission
thereunder, in connection with the registration under the Securities Act of 1933
and/or the Investment Company Act of 1940, as amended, including specifically,
but without limitation of the foregoing, power and authority to sign the names
of each of such directors and officers in his/her behalf as such director or
officer as indicated below opposite his/her signature hereto, to any
Registration Statement and to any amendment or supplement to the Registration
Statement filed with the Securities and Exchange Commission under the Securities
Act of 1933 and/or the Investment Company Act of 1940, as amended, and to any
instruments or documents filed or to be filed as a part of or in connection with
such Registration Statement or amendment or supplement thereto; and each of the
undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
Date: November 18, 1998 /s/ Robert L. Hechler
----------------------------
Robert L. Hechler, President
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Keith A. Tucker Chairman of the Board November 18, 1998
- ------------------ -----------------
Keith A. Tucker
/s/Robert L. Hechler President, Principal November 18, 1998
- -------------------- Financial Officer and -----------------
Robert L. Hechler Director
/s/Henry J. Herrmann Vice President and November 18, 1998
- -------------------- Director -----------------
Henry J. Herrmann
/s/Theodore W. Howard Vice President, Treasurer November 18, 1998
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- --------------------- and Principal Accounting -----------------
Theodore W. Howard Officer
/s/James M. Concannon Director November 18, 1998
- --------------------- -----------------
James M. Concannon
/s/John A. Dillingham Director November 18, 1998
- --------------------- -----------------
John A. Dillingham
/s/David P. Gardner Director November 18, 1998
- ------------------- -----------------
David P. Gardner
/s/Linda K. Graves Director November 18, 1998
- ------------------ -----------------
Linda K. Graves
/s/Joseph Harroz, Jr. Director November 18, 1998
- --------------------- -----------------
Joseph Harroz, Jr.
/s/John F. Hayes Director November 18, 1998
- ---------------- -----------------
John F. Hayes
/s/Glendon E. Johnson Director November 18, 1998
- --------------------- -----------------
Glendon E. Johnson
/s/William T. Morgan Director November 18, 1998
- -------------------- -----------------
William T. Morgan
/s/Ronald C. Reimer Director November 18, 1998
- ------------------- -----------------
Ronald C. Reimer
/s/Frank J. Ross, Jr. Director November 18, 1998
- --------------------- -----------------
Frank J. Ross, Jr.
/s/Eleanor B. Schwartz Director November 18, 1998
- ---------------------- -----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Eleanor B. Schwartz
/s/Frederick Vogel III Director November 18, 1998
- ---------------------- -----------------
Frederick Vogel III
</TABLE>
Attest:
/s/Kristen A. Richards
- ----------------------
Kristen A. Richards
Assistant Secretary
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and/or the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment pursuant to
rule 485(b) of the Securities Act of 1933, and the Registrant has duly caused
this Post-Effective Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Overland Park, and State of Kansas, on
the 31st day of August, 1999.
UNITED CASH MANAGEMENT, INC.
By /s/ Robert L. Hechler*
----------------------------
Robert L. Hechler, President
Pursuant to the requirements of the Securities Act of 1933, and/or the
Investment Company Act of 1940, this Post-Effective Amendment has been signed
below by the following persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signatures Title
---------- -----
/s/Keith A. Tucker* Chairman of the Board August 31, 1999
- ------------------- ----------------
Keith A. Tucker
/s/Robert L. Hechler* President August 31, 1999
- --------------------- (Principal Financial Officer) ----------------
Robert L. Hechler and Director
/s/Henry J. Herrmann* Vice President and Director August 31, 1999
- --------------------- ----------------
Henry J. Herrmann
/s/Theodore W. Howard* Vice President, Treasurer August 31, 1999
- ---------------------- and Principal Accounting ----------------
Theodore W. Howard Officer
/s/James M. Concannon* Director August 31, 1999
- ---------------------- ----------------
James M. Concannon
/s/John A. Dillingham* Director August 31, 1999
- ---------------------- ----------------
John A. Dillingham
/s/David P. Gardner* Director August 31, 1999
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- -------------------- ----------------
David P. Gardner
/s/Linda K. Graves* Director August 31, 1999
- ------------------- ----------------
Linda Graves
/s/Joseph Harroz, Jr.* Director August 31, 1999
- ---------------------- ----------------
Joseph Harroz, Jr.
/s/John F. Hayes* Director August 31, 1999
- ----------------- ----------------
John F. Hayes
/s/Glendon E. Johnson* Director August 31, 1999
- ---------------------- ----------------
Glendon E. Johnson
/s/William T. Morgan* Director August 31, 1999
- --------------------- ----------------
William T. Morgan
/s/Ronald C. Reimer* Director August 31, 1999
- -------------------- ----------------
Ronald C. Reimer
/s/Frank J. Ross, Jr.* Director August 31, 1999
- ---------------------- ----------------
Frank J. Ross, Jr.
/s/Eleanor B. Schwartz* Director August 31, 1999
- ----------------------- ----------------
Eleanor B. Schwartz
/s/Frederick Vogel III* Director August 31, 1999
- ----------------------- ----------------
Frederick Vogel III
</TABLE>
*By
Robert L. Hechler
Attorney-in-Fact
ATTEST:
Kristen A. Richards
Assistant Secretary
EX-99.B(h)cmssacom
EXHIBIT B
COMPENSATION
Class A Shares
An amount payable on the first day of each month of $1.75 for each account of
the Company which was in existence during any portion of the immediately
preceding month and, in addition, the Company also pays the Agent a monthly fee
of $.75 for each shareholder check it processes.
Class B Shares
An amount payable on the first day of each month of $1.75 for each account of
the Company which was in existence during any portion of the immediately
preceding month.
Class C Shares
An amount payable on the first day of each month of $1.75 for each account of
the Company which was in existence during any portion of the immediately
preceding month.
Waddell & Reed Money Market B Shares
An amount payable on the first day of each month of $1.75 for each account of
the Company which was in existence during any portion of the immediately
preceding month.
Waddell & Reed Money Market C Shares
An amount payable on the first day of each month of $1.75 for each account of
the Company which was in existence during any portion of the immediately
preceding month.
EX-99.B(h)cmssafid
<TABLE>
<CAPTION>
EXHIBIT C
<S> <C> <C> <C>
Bond or
Name of Bond Policy No. Insurer
Investment Company 87015199B ICI
Blanket Bond Form Mutual
Insurance
Company
Fidelity $20,400,000
Audit Expense 50,000
On Premises 20,400,000
In Transit 20,400,000
Forgery or Alteration 20,400,000
Securities 20,400,000
Counterfeit Currency 20,400,000
Uncollectible Items of
Deposit 25,000
Phone-Initiated Transactions 20,400,000
Total Limit 20,400,000
Directors and Officers/ 87015199D ICI
Errors and Omissions Liability Mutual
Insurance Form Insurance
Total Limit $10,000,000 Company
Blanket Lost Instrument Bond (Mail Loss) 30S100639551 Aetna
Life &
casualty
Blanket Undertaking Lost Instrument
Waiver of Probate 42SUN339806 Hartford
Casualty
Insurance
</TABLE>
<TABLE>
<S> <C> <C>
Waddell & Reed, Inc. United Group of Funds Division Office Stamp
P.O. Box 29217 APPLICATION
Shawnee Mission, KS
66201-9217 (NON-RETIREMENT PLAN) Trans Code:________________________
Date Transmitted:__________________
</TABLE>
1 ------------------------------------------------------------------------------
I (We) make application for an account to be established as follows:
REGISTRATION TYPE (check one only)
<TABLE>
<S> <C>
[ ] Single Name [ ] Joint Tenants W/ROS [ ] Declaration of Trust Revocable (Attach CUF 0022)
TOD (Transfer On Death) [ ] Yes [ ] No NOT AVAILABLE IN ILLINOIS
[ ] Uniform Gifts (Transfers) To Minors (UGMA/UTMA) [ ] Other:_______________________________________
[ ] Dated Trust Date of Trust_________________
</TABLE>
------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
__________________
REGISTRATION [ ] NEW ACCOUNT or [ ] NEW FUND FOR EXISTING ACCOUNT | |
(must have same ownership): |__________________|
</TABLE>
<TABLE>
<S> <C>
--------------------------------------------------------------------------------------
Individual Name (exactly as desired)/Trustee/Custodian (Tax-responsible party)
------------------------------------------------------- ------------------------------
[ ] Social Security # or [ ] Taxpayer Identification # Date of Birth (Month/Day/Year)
--------------------------------------------------------------------------------------
Joint Name (if any, exactly as desired)/Co-Trustee/Minor (for UGMA/UTMA)
------------------------------------------------------- ------------------------------
[ ] Social Security # or [ ] Taxpayer Identification # Date of Birth (Month/Day/Year)
</TABLE>
-----------------------------------------------------------------------------
Name of Trust
-----------------------------------------------------------------------------
Mailing Address
-----------------------------------------------------------------------------
City/State/Zip
-----------------------------------------------------------------------------
Telephone (home) Telephone (work) Citizenship (Required in VA)
------------------------------------------------------------------------------
INVESTMENTS Make check payable to Waddell & Reed, Inc.
<TABLE>
<CAPTION>
Monthly Div/C.G. Distr*
Fund Amount AIS (Assumes RR)
(enter code) Enclosed (If Any) RR CC CR
<S> <C> <C> <C> <C> <C> <C>
CLASS OF SHARES ____________
(ONLY ONE) | |
|____________| $_______ $_______ [ ] [ ] [ ]
____________
| |
A [ ] B [ ] C [ ] |____________| $_______ $_______ [ ] [ ] [ ]
____________
| |
IF NOT CHECKED, |____________| $_______ $_______ [ ] [ ] [ ]
ASSUME A ____________
| |
|____________| $_______ $_______ [ ] [ ] [ ]
____________
| |
|____________| $_______ $_______ [ ] [ ] [ ]
Total $_______ Total $_______
</TABLE>
* RR = Reinvest Div/Cap Gain CC = Cash Div/Cap Gain CR = Cash Div/Reinvest
Cap Gain All Dividends/Capital Gains under $5.00 will be Reinvested. See
Section 12 if you wish your distribution to go to another Fund or Account.
<TABLE>
<CAPTION>
FUNDS CODES A B C A B C A B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income 621 121 321 High Income 628 128 328 Asset Strategy 684 184 384
Science & Technology 622 122 322 Vanguard 629 129 329 Cash Management 750 150 350
Accumulative 623 123 323 New Concepts 630 130 330 Government Securities 753 153 353
Bond 624 124 324 High Income II 634 134 334 Municipal Bond 760 160 360
International Growth 625 125 325 Small Cap 677 177 377 Municipal High Income 762 162 362
Continental Income 627 127 327 Retirement Shares 680 180 380
</TABLE>
------------------------------------------------------------------------------
CLASS A ONLY
This purchase is entitled to a reduced sales load charge for the following
reason:
<TABLE>
<S> <C>
[ ] Letter of Intent To Invest $_____________ LOI Number____________
[ ] Cumulative discount number____________ or Rights of Accumulation With Existing Accounts____________
[ ] Identify Other New Accounts Established At This Time:________________________
</TABLE>
------------------------------------------------------------------------------
2 ------------------------------------------------------------------------------
LETTER OF INTENT (CLASS A SHARES ONLY) I agree to the terms of the Letter of
Intent conditions set forth in the Statement of Additional Information
(including the escrowing of shares). Although I am not obligated to do so, it
is my intention to invest over a 13-month period in shares of one or more
United funds in an aggregate amount at least equal to:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[ ] $100,000 [ ] $200,000 [ ] $300,00 [ ] $500,00 [ ] $1,000,000 [ ] $2,000,000 See Section 9
</TABLE>
------------------------------------------------------------------------------
CAP1 Page 1 of 6
<PAGE>
3 ------------------------------------------------------------------------------
BENEFICIARY: For TOD (Transfer On Death) Accounts Only
To designate contingent beneficiaries or per stirpes distribution,
use MRP-0972 or MRP-1588
<TABLE>
<CAPTION>
Full Name of Beneficiary Tax Identification Number Date of Birth Relationship Percent
<S> <C> <C> <C> <C>
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
</TABLE>
------------------------------------------------------------------------------
4 ------------------------------------------------------------------------------
EXPEDITED REDEMPTION: For United Cash Management A [ ] B [ ] C [ ]
<TABLE>
<S> <C>
-------------------------------------------------- -------------------------------------------------
Name & Address of Bank/Financial Institution ABA/Routing # of Bank/Financial Institution
-------------------------------------------------- -------------------------------------------------
Street Customer's Bank Account Number
-------------------------------------------------- -------------------------------------------------
City/State/Zip
</TABLE>
On UCM Accounts where expedited redemption is requested, Waddell & Reed, Inc.
is authorized to honor any requests from anyone for redemption of fund shares
as long as the proceeds are transmitted to the identified account. All wires
must be transmitted exactly as registered on the UCM Account.
------------------------------------------------------------------------------
5 ------------------------------------------------------------------------------
CHECK SERVICE (CLASS "A" SHARES ONLY)
(Complete signature card)
[ ] United Government Securities [ ] United Cash Management (UCM)
SIGNATURE CARD FOR UNITED CASH MANAGEMENT/GOVERNMENT SECURITIES CLASS "A"
SHARES ONLY
The payment of funds on the conditions set forth below is authorized by the
persons signing below (the Shareholder).
UMB BANK, N.A. (the Bank) is authorized by the Shareholder to honor any
checks for not less than $250 presented against this account and is directed
to forward said checks to the redemption agent of United Cash Management,
Inc. and United Government Securities, Inc. (the "Mutual Funds") as authority
to pay the checks. Checks will be paid by redeeming a sufficient number of
shares for which share certificates have not been issued in the Shareholder's
account with the Mutual Funds.
Checks will be subject to the Bank's rules and regulations governing such
checks, including the right of the Bank not to honor checks in amounts
exceeding the value of the Shareholder's account with the Mutual Funds at the
time the check is presented for payment.
Shareholder hereby authorizes the Mutual Funds or their redemption agent to
honor redemption requests presented in the above manner by the Bank.
It is further agreed as follows:
1. Shareholder(s) below waive the right to receive the cancelled check(s)
after each check is processed and the underlying shares of the Mutual
Funds have been redeemed.
2. The account may not be used for any purpose other than the presentment,
forwarding and payment of checks relating to an account in the Mutual
Funds.
3. The Bank reserves the right to change, modify or terminate this agreement
at any time upon notification mailed to the address noted on the reverse
side of this card.
BY SIGNING BELOW, THE SIGNATOR(S) SIGNIFIES HIS (THEIR) AGREEMENT TO BE
SUBJECT TO THE RULES AND REGULATIONS OF UMB BANK, N.A. PERTAINING THERETO AND
AS AMENDED FROM TIME TO TIME, AND TO THE CONDITIONS PRINTED ABOVE.
Authorized Signature(s) "A" SHARES ONLY [ ] Check box if more than one
signature required on checks
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
------------------------------------------------------------------------------
Page 2 of 6
<PAGE>
6 ------------------------------------------------------------------------------
Establish NEW Automatic Investment Service
REGISTRATION INFORMATION
------------------------------------------------
Individual Name (exactly as registered)
------------------------------------------------
Joint Name (if any, exactly as registered)
<TABLE>
<CAPTION>
Fund Draft Is To Begin On
(Enter code) (Month/Day/Year) Draft Amount Special Instructions
<S> <C> <C> <C>
___________
| |
|___________| ____________________ $_____________ ______________________________
___________
| |
|___________| ____________________ $_____________ ______________________________
___________
| |
|___________| ____________________ $_____________ ______________________________
___________
| |
|___________| ____________________ $_____________ ______________________________
___________
| |
|___________| ____________________ $_____________ ______________________________
</TABLE>
Authorization to honor checks drawn by Waddell & Reed, Inc.
As a convenience to me, I hereby request and authorize you to pay and charge
to my or our account identified below, debit entries drawn on the account by
Waddell & Reed, Inc. provided there are sufficient funds in the account to
pay the same on presentation. This authorization shall remain in effect until
revoked by me in writing and until you actually receive such notice. I agree
that you shall be fully protected by honoring any such debit entry. I agree
that your rights in respect to any debit entry shall be the same as if it
were a check signed personally by me. I further agree, that if any such debit
entry be dishonored, whether intentionally or inadvertently, you shall be
under no liability whatsoever.
PLEASE COMPLETE THE FOLLOWING IN ITS ENTIRETY.
<TABLE>
<S> <C>
----------------------------------------------------- -------------------------
NAME OF DEPOSITOR (as shown on bank records(s)) Bank Account Number
----------------------------------------------------- See Section 10
BANK NAME
-----------------------------------------------------
BANK ADDRESS
-----------------------------------------------------
CITY/STATE/ZIP
</TABLE>
------------------------------------------------------------------------------
7 ------------------------------------------------------------------------------
Establish NEW Funds Plus Service
<TABLE>
<S> <C> <C> <C>
___________
REGISTRATION INFORMATION [ ] NEW ACCOUNT W/UCM or [ ] EXISTING ACCOUNT W/UCM |___________|
</TABLE>
-----------------------------------------------------
Individual Name (exactly as registered)
-----------------------------------------------------
Joint Name (if any, exactly as registered)
<TABLE>
<CAPTION>
FUNDS PLUS Service
Account(s) to RECEIVE Fund If new, Is To Begin On FUNDS PLUS
FUNDS PLUS Investment (Enter code) mark box (Month/Day/Year) Investment Amount
<S> <C> <C> <C> <C>
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
</TABLE>
------------------------------------------------------------------------------
Page 3 of 6
<PAGE>
8 ------------------------------------------------------------------------------
Establish NEW Flexible Withdrawal Service (See Section 11)
<TABLE>
<CAPTION>
Fund Changes To Be
(See Reverse Effective Beginning Amount
for Codes) (Month) (Year) Indicate dollars, shares or percentage Frequency Make Payable
<S> <C> <C> <C> <C>
____________ _________________ ______________
| | | | 20 | | | |
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] % [ ] monthly [ ] To registered owner(s)
____________ _________________ ______________
| | | | 20 | | | | [ ] quarterly [ ] To Alternate Payee
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] %
____________ _________________ ______________ [ ] semi-annually [ ] To registered owner(s)
| | | | 20 | | | | at alternate address
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] % [ ] annually
____________ _________________ ______________
| | | | 20 | | | | (If left blank,
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] % annual payments
will be assumed)
</TABLE>
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Designate Alternate Payee or Address (for Electronic Deposits of FWS, see
section 10)
Complete this section if the check is TO BE PAYABLE TO AN ALTERNATE PAYEE
(other than as registered) or SENT TO AN ALTERNATE ADDRESS. If sending FWS to
another fund/account please indicate account/fund. Must be same class.
<TABLE>
<CAPTION>
Alternate Payee Alternate Address (check will be payable as registered and sent to the following)
<S> <C>
---------------------------------------------- ----------------------------------------------
Name or institution C/O Name
---------------------------------------------- ----------------------------------------------
Street Street
---------------------------------------------- ----------------------------------------------
City/State/Zip City/State/Zip
---------------------------------------------- ----------------------------------------------
Bank Account Number (if applicable) Bank Account Number (if applicable)
</TABLE>
------------------------------------------------------------------------------
9 ------------------------------------------------------------------------------
LOI TERMS AND CONDITIONS
1. This Agreement does not bind the investor to buy, or Waddell & Reed, Inc.
to sell, any shares.
2. This Agreement can only be terminated before the 13 months has elapsed by
submitting a written request signed by all owners.
3. Any purchase made under this Agreement will be made at the offering price
applicable to a one-time purchase of the amount the investor has checked
on the front of this Agreement as described in the prospectus of the fund
or funds being purchased.
4. If the amount invested during the 13-month period covered by this
Agreement exceeds the required amount and is large enough to qualify for a
sales charge lower than that available under this Agreement, the lower
sales charge will be applied to the amount invested. Upon termination of
this Agreement, a price adjustment will be made to give effect to the
lower sales charge and the amount of the price adjustment will be
reinvested in additional shares of the fund(s) on the date of termination.
5. If the amount invested during the 13-month period covered by this
Agreement is less than the required amount, the sales charge for the
investments reverts back to that outlined in the Fund Prospectus, as if
the Agreement had not been executed. Waddell & Reed, Inc. will subtract
shares equal in value to the amount of the additional sales charge due
from escrowed shares. The investor hereby irrevocably appoints Waddell &
Reed, Inc. or its successors or assigns, as attorney to surrender for
redemption shares in an amount equal to the additional sales charge owed
on the purchases made. This appointment and the authority granted herein
shall be binding on the heirs, legal representatives, successors and
assigns of the investor.
6. While the value of purchases made prior to the acceptance date of this
Agreement will be considered in determining the Intended Investment, the
sales charge imposed on prior purchases will not be retroactively reduced.
7. Shares purchased directly to United Cash Management, Inc. will not be
considered when determining the net asset value of shares presently held
by the investor as of the date of acceptance of this Agreement, nor for
determining the amount invested under this Agreement. However,
non-commissionable shares are considered for there purposes.
------------------------------------------------------------------------------
Page 4 of 6
<PAGE>
10------------------------------------------------------------------------------
BANK ACCOUNT OR CREDIT UNION INFORMATION (optional)
This information will be used for
[ ] Div / Cap gain distributions taken in cash (Sec. 1)
[ ] Systematic investments (Sec. 6)
[ ] Flexible withdrawals (Sec. 8)
<TABLE>
<S> <C> <C>
--------------------------------------- ---------------------------------------
Checking account Bank or credit union's ABA route number Bank or credit union account number
--------------------------------------- ---------------------------------------
Savings account Bank or credit union's ABA route number Bank or credit union account number
</TABLE>
Tape your voided check or deposit slip here
Bank and credit union routing information
For deposits or withdrawals to your checking account, please tape a voided
check so we may get bank or credit union account information.
For deposits or withdrawals to a savings account, please tape a preprinted
deposit slip. (Do not staple the slips.)
------------------------------------------------------------------------------
11------------------------------------------------------------------------------
FLEXIBLE WITHDRAWAL REQUIREMENTS AND CONSIDERATIONS
1. This application directs Waddell & Reed Services Company to redeem the
amounts listed on the 20th day of the indicated month, or if not a
business day, on the preceding business day.
2. Allow five days from the date your instructions are received in the home
office for processing of any changes and/or initiation of a Flexible
Withdrawal Service.
3. The aggregate total investment, or the present net asset value of the
shareholder's United Group of Funds/or W&R Funds combined accounts should
exceed $10,000. You may add to your account by additional investments of
at least $1,000, except in United Cash Management, Inc., which has no
minimum additional investment amount.
4. Minimum withdrawals for dollars or shares are $50 aggregate or a 5 share
minimum per fund.
5. If withdrawals are to be made monthly, 1/12th of the indicated percentage
of the asset value of the shares in the account will be redeemed. If
withdrawals are to be made quarterly, 1/4th of the indicated percentage of
the asset value of the shares in the account will be redeemed. If
withdrawals are to be made semi-annually, 1/2 of the indicated percentage
will be redeemed.
6. Dividends and capital gains distributions are automatically reinvested.
Information about the federal tax status of shares redeemed through the
Flexible Withdrawal Services will be mailed to shareholders annually.
------------------------------------------------------------------------------
12------------------------------------------------------------------------------
ALTERNATE PAYEE/ADDRESS
To send systematic withdrawals (Section 8) or distributions (Section 1) to a
third party, or to another United Fund account, please fill in the
appropriate information below.
This address will be used for (check one):
[ ] Flexible Withdrawals
[ ] Div/Cap Gains
<TABLE>
<S> <C>
------------------------------------------------------------- To another United Fund
Name
------------------------------------------------------------- ---------------------------------
Address (including apartment or box number) Account # Fund #
Must be to same class of shares
-------------------------------------------------------------
City/State/Zip
</TABLE>
------------------------------------------------------------------------------
Page 5 of 6
<PAGE>
13------------------------------------------------------------------------------
CONFIDENTIAL DATA (Required)
1. Marital Status:__________
(Required in VA)
2. Gross Family Income: $__________
3. Taxable Income: $__________
4. Number of Dependents:__________
5. Occupation:______________________________________________________________
6. Employer Name:___________________________________________________________
7. Employer Address:________________________________________________________
8. Savings and Liquid Assets: $__________
9. Other Assets (excluding home, furnishings, cars): $__________
10. Net Worth (Assets minus liabilities): $__________
11. Are you associated with an NASD Member? [ ] Yes [ ] No
12. Investment Objectives (mark all that apply):
[ ] Retirement Savings [ ] Reserves [ ] College Funds [ ] Buy Major Asset
[ ] Other Needs/Goals (specify in Special Remarks)
13. Special Remarks/Considerations:__________________________________________
_____________________________________________________________________________
14. Residence Address:_______________________________________________________
(if different from Street City State Zip
Mailing Address
on reverse side)
<TABLE>
<S> <C> <C>
(Required in CT)
15. Was this investment solicited by a W&R Advisor/Representative? [ ] Yes [ ] No
(Required in CT)
16. Has any beneficial owner of this account conducted any prior investment activity? [ ] Yes [ ] No
If yes, which owner(s)?_________________________________________________________________________
17. Are proceeds from the sale of another security being used to open this account? [ ] Yes [ ] No
If yes, specify:________________________________________________________________________________
________________________________________________________________________________
</TABLE>
------------------------------------------------------------------------------
14------------------------------------------------------------------------------
ACKNOWLEDGEMENT
o I (We) have received a copy of the current prospectus of the Funds
selected, and agree to the terms therein and herein.
o Under penalties of perjury, I certify that the social security number or
other taxpayer identification number shown in Section 1 is correct (or I
am waiting for a number to be issued to me) and (strike the following if
not true) that I am not subject to backup withholding because (a) I am
exempt from backup withholding, or (b) I have not been notified by the IRS
that I am subject to backup withholding as a result of a failure to report
all interest and dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
o I (we) understand that there maybe a deferred sales charge upon the
redemption of any Class B or C shares held in the account for less than
the time specified in the prospectus.
Signature(s) of Purchasers (all joint purchasers must sign). Sign exactly as
name(s) appear in registration.
"The Internal Revenue Service does not require your consent to any provision
of this document other than the certification required to avoid backup
withholding."
<TABLE>
<S> <C> <C>
------------------------------------- ------------------------------------- -------------------------------------
(Signature) (Printed Name) (Title, if any)
------------------------------------- ------------------------------------- -------------------------------------
(Signature) (Printed Name) (Title, if any)
------------------------------------- --------------------
(Advisor/Representative Signature) (Date)
</TABLE>
_____________________________
| |
Advisor/Representative Number |_____________________________|
------------------------------------------------------------------------------
-----------------------------------------------|
Check Any Items Enclosed With Application |
|
[ ] Declaration Trust Revocable (CUF0022) |
|---------------|
[ ] Additional Applications______ |OSJ: |
|(H.O. USE) |
[ ] Check enclosed #______ | |
| |
[ ] Other:______ | |
-----------------------------------------------|---------------|
Page 6 of 6
<TABLE>
<S> <C> <C>
Waddell & Reed, Inc. United Group of Funds Division Office Stamp
P.O. Box 29217 APPLICATION
Shawnee Mission, KS
66201-9217 RETIREMENT PLAN Trans Code:________________________
ACCOUNT Date Transmitted:__________________
</TABLE>
1 ------------------------------------------------------------------------------
I (We) make application for an account to be established as follows:
PLAN TYPE -- DOCUMENT SPONSORED BY: [ ] W&R [ ] NON-W&R
PLEASE SELECT ONE OF THE FOLLOWING:
<TABLE>
<S> <C> <C>
[ ] IRA (701/050) [ ] Simplified Employee Pension -- SEP (702/050) [ ] 401(k) (401-801) [ ] Simple 401(k) (340)
(CRP0005) (MRP1166KT-Employer and CRP0005-Employee) (MRP0720-Non Inventory)
[ ] Rollover (703/050) [ ] Simple IRA (765/050) [ ] Owner-Only Profit Sharing (132)
(CRP0005) (MRP1659KT-Employer and MRP1699-Employee) (MRP0651 and MRP0651 AP)
[ ] Roth IRA (791/050) [ ] Non Title-1 TSA (773-050) [ ] ORP (773) [ ] Owner-Only Money Purchase (122)
(CRP1695) (MRP1198) (MRP0651 and MRP0651AM)
[ ] Conversion Roth IRA (792/050) [ ] Title-I TSA (724) [ ] 457 Plan (730/731) [ ] Multi Part. Profit Sharing (832/097/098)
(CRP1695) (MRP1198TI-Non Inventory) (MRP1401) (MRP0651 and MRP0651AP)
[ ] Education IRA (793/050) [ ] Church Sponsored TSA (774) [ ] Multi Part. Money Purchase (822/099/100)
(CRP1696) (Non Inventory-Case by Case) (MRP0651 and MRP0651AM)
</TABLE>
------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
__________________
REGISTRATION [ ] NEW ACCOUNT or [ ] NEW FUND FOR EXISTING ACCOUNT | |
(must have same ownership): |__________________|
</TABLE>
<TABLE>
<S> <C> <C> <C>
-----------------------------------------------------------------------------
Trustee/Custodian or Responsible Party (Education IRA Only)
-----------------------------------------------------------------------------
Employer or Business/Organization Name
------------------------------------------------------------ ----------------------------------------------
Participant, Planholder or Beneficiary (Education IRA Only) Plan Year End / Date of Birth (Month/Day/Year)
-----------------------------------------------------------------------------
Mailing Address
-----------------------------------------------------------------------------
City/State/Zip
------------------------- ----------------------- ----------------------------------
Social Security Number Employer Tax ID Number Plan (Trust) Identification Number
------------------------- ----------------------- ----------------------------------
Telephone (home) Telephone (work) Citizenship (Required in VA)
</TABLE>
------------------------------------------------------------------------------
INVESTMENTS Make check payable to Waddell & Reed, Inc.
<TABLE>
<CAPTION>
FUNDS CODES
A B C A B C A B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income 621 121 321 Continental Income 627 127 327 Small Cap 677 177 377
Science & Technology 622 122 322 High Income 628 128 328 Retirement Shares 680 180 380
Accumulative 623 123 323 Vanguard 629 129 329 Asset Strategy 684 184 384
Bond 624 124 324 New Concepts 630 130 330 Cash Management 750 150 350
International Growth 625 125 325 High Income II 634 134 334 Government Securities 753 153 353
</TABLE>
<TABLE>
<CAPTION>
IRA TOP From Monthly
Fund Amount Year of Deductible or Another AIS
(enter code) Enclosed Contribution Non-Deductible Carrier (If Any)
<S> <C> <C> <C> <C> <C> <C>
CLASS OF SHARES ____________
(ONLY ONE) | |
|____________| $_______ ____________ __________ [ ] $_______
____________
| |
A [ ] B [ ] C [ ] |____________| $_______ ____________ __________ [ ] $_______
____________
| |
IF NOT CHECKED, |____________| $_______ ____________ __________ [ ] $_______
ASSUME A ____________
| |
|____________| $_______ ____________ __________ [ ] $_______
____________
| |
|____________| $_______ ____________ __________ [ ] $_______
Total $_______ $_______
</TABLE>
To prevent possible tax penalties, Dividends and Capital gains are
automatically re-invested in Retirement Plan accounts.
------------------------------------------------------------------------------
CAP1771 Page 1 of 6
<PAGE>
------------------------------------------------------------------------------
BENEFICIARY
To designate contingent beneficiaries or per stirpes distribution,
use MRP-0972 or MRP-1588
<TABLE>
<CAPTION>
Full Name of Beneficiary Tax Identification Number Date of Birth Relationship Percent
<S> <C> <C> <C> <C>
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
</TABLE>
------------------------------------------------------------------------------
A SHARES ONLY
This purchase is entitled to a reduced sales load charge for the following
reason:
<TABLE>
<S> <C>
[ ] Existing Letter of Intent To Invest $_____________ LOI Number____________
[ ] Cumulative discount number____________ or Rights of Accumulation With Existing Accounts____________
[ ] Identify Other New Accounts Established At This Time:________________________
</TABLE>
------------------------------------------------------------------------------
2 ------------------------------------------------------------------------------
STATEMENT OF INTENT (A SHARES ONLY) I agree to the terms of the Statement of
Intent conditions set forth in the Statement of Additional Information
(including the escrowing of shares). Although I am not obligated to do so, it
is my intention to invest over a 13-month period in shares of one or more
United funds in an aggregate amount at least equal to:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[ ] $100,000 [ ] $200,000 [ ] $300,00 [ ] $500,00 [ ] $1,000,000 [ ] $2,000,000 See Section 8
</TABLE>
------------------------------------------------------------------------------
3 ------------------------------------------------------------------------------
EXPEDITED REDEMPTION: For United Cash Management A [ ] B [ ] C [ ]
<TABLE>
<S> <C>
-------------------------------------------------- -------------------------------------------------
Name & Address of Bank/Financial Institution ABA/Routing # of Bank/Financial Institution
-------------------------------------------------- -------------------------------------------------
Street Customer's Bank Account Number
-------------------------------------------------- -------------------------------------------------
City/State/Zip
</TABLE>
On UCM Accounts where expedited redemption is requested, Waddell & Reed, Inc.
is authorized to honor any requests from anyone for redemption of fund shares
as long as the proceeds are transmitted to the identified account. All wires
must be transmitted exactly as registered on the UCM Account.
------------------------------------------------------------------------------
4 ------------------------------------------------------------------------------
Establish NEW Automatic Investment Service ______________
REGISTRATION INFORMATION EXISTING ACCOUNT:| |
|______________|
-----------------------------------------------------------------------------
Individual Name (exactly as registered)
-----------------------------------------------------------------------------
Joint Name (if any, exactly as registered)
<TABLE>
<CAPTION>
Fund Draft Is To Begin On
(Enter code) (Month/Day/Year) Draft Amount Special Instructions
<S> <C> <C> <C>
____________
| |
|____________| ____________________ $___________ ________________________________
____________
| |
|____________| ____________________ $___________ ________________________________
____________
| |
|____________| ____________________ $___________ ________________________________
____________
| |
|____________| ____________________ $___________ ________________________________
____________
| |
|____________| ____________________ $___________ ________________________________
</TABLE>
------------------------------------------------------------------------------
Page 2 of 6
<PAGE>
5 ------------------------------------------------------------------------------
Authorization to honor checks drawn by Waddell & Reed, Inc.
As a convenience to me, I hereby request and authorize you to pay and charge
to my or our account identified below, debit entries drawn on the account by
Waddell & Reed, Inc. provided there are sufficient funds in the account to
pay the same on presentation. This authorization shall remain in effect until
revoked by me in writing and until you actually receive such notice. I agree
that you shall be fully protected by honoring any such debit entry.
I agree that your rights in respect to any debit entry shall be the same as
if it were a check signed personally by me. I further agree, that if any such
debit entry be dishonored, whether intentionally or inadvertently, you shall
be under no liability whatsoever.
PLEASE COMPLETE THE FOLLOWING IN ITS ENTIRETY.
<TABLE>
<S> <C>
----------------------------------------------------- -------------------------
NAME OF DEPOSITOR (as shown on bank records(s)) Bank Account Number
----------------------------------------------------- See Section 9
BANK NAME
-----------------------------------------------------
BANK ADDRESS
-----------------------------------------------------
CITY/STATE/ZIP
</TABLE>
------------------------------------------------------------------------------
6 ------------------------------------------------------------------------------
Establish NEW Funds Plus Service
<TABLE>
<S> <C> <C> <C>
___________
REGISTRATION INFORMATION [ ] NEW ACCOUNT W/UCM or [ ] EXISTING ACCOUNT W/UCM |___________|
</TABLE>
-----------------------------------------------------
Individual Name (exactly as registered)
-----------------------------------------------------
Joint Name (if any, exactly as registered)
<TABLE>
<CAPTION>
FUNDS PLUS Service
Account(s) to RECEIVE Fund If new, Is To Begin On FUNDS PLUS
FUNDS PLUS Investment (Enter code) mark box (Month/Day/Year) Investment Amount
<S> <C> <C> <C> <C>
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
</TABLE>
------------------------------------------------------------------------------
7 ------------------------------------------------------------------------------
Establish NEW Flexible Withdrawal Service (See Section 10)
<TABLE>
<CAPTION>
Fund Changes To Be
(See Reverse Effective Beginning Amount
for Codes) (Month) (Year) Indicate dollars, shares or percentage Frequency Make Payable
<S> <C> <C> <C> <C>
____________ _________________ ______________
| | | | 20 | | | |
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] % [ ] monthly [ ] To registered owner(s)
____________ _________________ ______________
| | | | 20 | | | | [ ] quarterly [ ] To Alternate Payee
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] %
____________ _________________ ______________ [ ] semi-annually [ ] To registered owner(s)
| | | | 20 | | | | at alternate address
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] % [ ] annually
____________ _________________ ______________
| | | | 20 | | | | (If left blank,
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] % annual payments
will be assumed)
</TABLE>
------------------------------------------------------------------------------
Designate Alternate Payee or Address (for Electronic Deposits of FWS, see
section 9)
Complete this section if the check is TO BE PAYABLE TO AN ALTERNATE PAYEE
(other than as registered) or SENT TO AN ALTERNATE ADDRESS. Please provide
voided check if FWS is to be electronically deposited. If sending FWS to
another fund/account please indicate account/fund. Must be same class.
<TABLE>
<CAPTION>
Alternate Payee Alternate Address (check will be payable as registered and sent to the following)
<S> <C>
---------------------------------------------- ----------------------------------------------
Name or institution C/O Name
---------------------------------------------- ----------------------------------------------
Street Street
---------------------------------------------- ----------------------------------------------
City/State/Zip City/State/Zip
---------------------------------------------- ----------------------------------------------
Bank Account Number (if applicable) Bank Account Number (if applicable)
</TABLE>
------------------------------------------------------------------------------
Page 3 of 6
<PAGE>
7 ------------------------------------------------------------------------------
Con't.
TO ESTABLISH Life Expectancy Payment Option For Retirement Plan Accounts
IMPORTANT INFORMATION (read carefully before proceeding)
If this option is selected, the information (joint/single life, age) provided
below will be used to determine the withdrawal amount applicable for the
CURRENT year only. The withdrawal amount will remain unchanged until a change
is authorized by the planholder.
Check applicable box: [ ] Age 70-1/2 or over Retirement planholders who
have reached age 70-1/2 must take a minimum
distribution from their plan in accordance
with IRS regulations. It is NOT necessary to
complete this section to meet IRS minimum
mandatory withdrawal requirement. The minimum
withdrawal will be automatically processed
unless otherwise instructed.
[ ] Prior to age 70-1/2 Enter annual $___________
(Do not enter amount in section below)
If dollar amount is blank, payments will be
calculated on a non-amortized basis, and will
remain unchanged. If amount provided is based
on an amortized life expectancy calculation,
attach UNET worksheet. PAYMENTS MUST CONTINUE
UNTIL THE LATER OF AGE 59-1/2 OR FIVE
SUCCESSIVE YEARS.
Complete applicable information:
<TABLE>
<S> <C>
[ ] SINGLE LIFE OR [ ] JOINT LIFE
Indicate Account Owner's Indicate Account Owner's Date of Birth |__|__|__|__|__|__|
Date of Birth |__|__|__|__|__|__| (Month/Day/Year)
(Month/Day/Year) and Beneficiary's Date of Birth |__|__|__|__|__|__|
(Month/Day/Year)
</TABLE>
<TABLE>
<CAPTION>
Amount Frequency
Fund If blank amount will Indicated monthly,
(See Reverse Effective Beginning be calculated as quarterly, semi-
For Codes) (Month) (Day) described above annually or annually Make Payable
------------ -------------------- -------------------- --------------------- --------------------------
<S> <C> <C> <C> <C>
|__|__|__| |__|__| 2 | 0 |__|__| ________ [ ] [ ] [ ] --------------------- [ ] To Registered owner(s)
(If left blank, annual pay-
ments will be assumed)
|__|__|__| |__|__| 2 | 0 |__|__| ________ [ ] [ ] [ ] [ ] To Alternate Payee*
|__|__|__| |__|__| 2 | 0 |__|__| ________ [ ] [ ] [ ] [ ] To Registered Owner(s) at
alternate address*
|__|__|__| |__|__| 2 | 0 |__|__| ________ [ ] [ ] [ ] *Complete Section 11
</TABLE>
FEDERAL INCOME TAX WITHHOLDING FOR RETIREMENT PLAN ACCOUNTS
Check One:*
A [ ] The undersigned directs that no Federal Income Tax shall be withheld
from the above described Withdrawal.
(Applicable to Retirement Plans only)
B [ ] The undersigned directs that Federal Income Tax be withheld from the
above described Withdrawal.
(Applicable to Retirement Plans only)
*IF NEITHER BLOCK IS SELECTED, FEDERAL INCOME TAXES WILL NOT BE
WITHHELD.
------------------------------------------------------------------------------
8 ------------------------------------------------------------------------------
LOI TERMS AND CONDITIONS
1. This Agreement does not bind the investor to buy, or Waddell & Reed, Inc.
to sell, any shares.
2. This Agreement can only be terminated before the 13 months has elapsed by
submitting a written request signed by all owners.
3. Any purchase made under this Agreement will be made at the offering price
applicable to a one-time purchase of the amount the investor has checked
on the front of this Agreement as described in the prospectus of the fund
or funds being purchased.
4. If the amount invested during the 13-month period covered by this
Agreement exceeds the required amount and is large enough to qualify for a
sales charge lower than that available under this Agreement, the lower
sales charge will be applied to the amount invested. Upon termination of
this Agreement, a price adjustment will be made to give effect to the
lower sales charge and the amount of the price adjustment will be
reinvested in additional shares of the fund(s) on the date of termination.
5. If the amount invested during the 13-month period covered by this
Agreement is less than the required amount, the sales charge for the
investments reverts back to that outlined in the Fund Prospectus, as if
the Agreement had not been executed. Waddell & Reed, Inc. will subtract
shares equal in value to the amount of the additional sales charge due
from escrowed shares. The investor hereby irrevocably appoints Waddell &
Reed, Inc. or its successors or assigns, as attorney to surrender for
redemption shares in an amount equal to the additional sales charge owed
on the purchases made. This appointment and the authority granted herein
shall be binding on the heirs, legal representatives, successors and
assigns of the investor.
6. While the value of purchases made prior to the acceptance date of this
Agreement will be considered in determining the Intended Investment, the
sales charge imposed on prior purchases will not be retroactively reduced.
7. Shares purchased directly to United Cash Management, Inc. will not be
considered when determining the net asset value of shares presently held
by the investor as of the date of acceptance of this Agreement, nor for
determining the amount invested under this Agreement. However,
non-commissionable shares are considered for these purposes.
------------------------------------------------------------------------------
Page 4 of 6
<PAGE>
9 ------------------------------------------------------------------------------
BANK ACCOUNT OR CREDIT UNION INFORMATION (optional)
This information will be used for
[ ] Systematic investments (Sec. 4) [ ] Flexible withdrawals (Sec. 7)
<TABLE>
<S> <C> <C>
-----------------------------------------------------------------------------------
Checking account Bank or credit union's ABA route number Bank or credit union account number
-----------------------------------------------------------------------------------
Savings account Bank or credit union's ABA route number Bank or credit union account number
</TABLE>
Tape your voided check or deposit slip here
Bank and credit union routing information
For deposits or withdrawals to your checking account, please tape a voided
check so we may get bank or credit union account information.
For deposits or withdrawals to a savings account, please tape a preprinted
deposit slip.
(Do not staple the slips.)
------------------------------------------------------------------------------
10------------------------------------------------------------------------------
FLEXIBLE WITHDRAWAL REQUIREMENTS AND CONSIDERATIONS
1. This application directs Waddell & Reed Services Company to redeem the
amounts listed on the 20th day of the indicated month, or if not a
business day, on the preceding business day.
2. Allow five days from the date your instructions are received in the home
office for processing of any changes and/or initiation of a Flexible
Withdrawal Service.
3. The aggregate total investment, or the present net asset value of the
shareholder's United Group of Funds/or W&R Funds combined accounts should
exceed $10,000. You may add to your account by additional investments of
at least $1,000, except in United Cash Management, Inc., which has no
minimum additional investment amount.
4. Minimum withdrawals for dollars or shares are $50 aggregate or a 5 share
minimum per fund.
5. If withdrawals are to be made monthly, 1/12th of the indicated percentage
of the asset value of the shares in the account will be redeemed. If
withdrawals are to be made quarterly, 1/4th of the indicated percentage of
the asset value of the shares in the account will be redeemed. If
withdrawals are to be made semi-annually, 1/2 of the indicated percentage
will be redeemed.
6. Dividends and capital gains distributions are automatically reinvested.
Information about the federal tax status of shares redeemed through the
Flexible Withdrawal Services will be mailed to shareholders annually.
------------------------------------------------------------------------------
11------------------------------------------------------------------------------
ALTERNATE PAYEE/ADDRESS
To send systematic withdrawals (Section 7) to a third party, or to another
United Fund account, please fill in the appropriate information below.
This address will be used for (check one):
[ ] Flexible Withdrawals
[ ] Div/Cap Gains
<TABLE>
<S> <C>
------------------------------------------------------------- To another United Fund
Name
------------------------------------------------------------- ---------------------------------
Address (including apartment or box number) Account # Fund #
Must be to same class of shares
-------------------------------------------------------------
City/State/Zip
</TABLE>
------------------------------------------------------------------------------
Page 5 of 6
<PAGE>
13------------------------------------------------------------------------------
CONFIDENTIAL DATA (Required)
1. Marital Status:__________
(Required in VA)
2. Gross Family Income: $__________
3. Taxable Income: $__________
4. Number of Dependents:__________
5. Occupation:______________________________________________________________
6. Employer Name:___________________________________________________________
7. Employer Address:________________________________________________________
8. Savings and Liquid Assets: $__________
9. Other Assets (excluding home, furnishings, cars): $__________
10. Net Worth (Assets minus liabilities): $__________
11. Are you associated with an NASD Member? [ ] Yes [ ] No
12. Investment Objectives (mark all that apply):
[ ] Retirement Savings [ ] Reserves [ ] College Funds [ ] Buy Major Asset
[ ] Other Needs/Goals (specify in Special Remarks)
13. Special Remarks/Considerations:__________________________________________
_____________________________________________________________________________
14. Residence Address:_______________________________________________________
(if different from Street City State Zip
Mailing Address
on reverse side)
<TABLE>
<S> <C> <C>
(Required in CT)
15. Was this investment solicited by a W&R Advisor/Representative? [ ] Yes [ ] No
(Required in CT)
16. Has any beneficial owner of this account conducted any prior investment activity? [ ] Yes [ ] No
If yes, which owner(s)?_________________________________________________________________________
17. Are proceeds from the sale of another security being used to open this account? [ ] Yes [ ] No
If yes, specify:________________________________________________________________________________
________________________________________________________________________________
</TABLE>
------------------------------------------------------------------------------
14------------------------------------------------------------------------------
ACKNOWLEDGEMENT
o I (We) have received a copy of the current prospectus of the Funds
selected, and agree to the terms therein and herein.
o Under penalties of perjury, I certify that the social security number or
other taxpayer identification number shown in Section 1 is correct (or I
am waiting for a number to be issued to me) and (strike the following if
not true) that I am not subject to backup withholding because (a) I am
exempt from backup withholding, or (b) I have not been notified by the IRS
that I am subject to backup withholding as a result of a failure to report
all interest and dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
o I (we) understand that there maybe a deferred sales charge upon the
redemption of any class B or C shares held in the account for less than
the time specified in the prospectus.
Signature(s) of Purchasers (all joint purchasers must sign). Sign exactly as
name(s) appear in registration.
"The Internal Revenue Service does not require your consent to any provision
of this document other than the certification required to avoid backup
withholding."
<TABLE>
<S> <C> <C>
------------------------------------- ------------------------------------- -------------------------------------
(Signature) (Printed Name) (Title, if any)
------------------------------------- ------------------------------------- -------------------------------------
(Signature) (Printed Name) (Title, if any)
------------------------------------- --------------------
(Advisor/Representative Signature) (Date)
</TABLE>
_____________________________
| |
Advisor/Representative Number |_____________________________|
------------------------------------------------------------------------------
-----------------------------------------------|
Check Any Items Enclosed With Application |
|
[ ] Declaration Trust Revocable (CUF0022) |
|---------------|
[ ] Additional Applications______ |OSJ: |
|(H.O. USE) |
[ ] Check enclosed #______ | |
| |
[ ] Other:______ | |
-----------------------------------------------|---------------|
Page 6 of 6
<TABLE>
<S> <C> <C>
Waddell & Reed, Inc. Waddell & Reed Funds Division Office Stamp
P.O. Box 29217 APPLICATION
Shawnee Mission, KS
66201-9217 (NON-RETIREMENT PLAN) Trans Code:________________________
Date Transmitted:__________________
</TABLE>
1 ------------------------------------------------------------------------------
I (We) make application for an account to be established as follows:
REGISTRATION TYPE (check one only)
<TABLE>
<S> <C>
[ ] Single Name [ ] Joint Tenants W/ROS [ ] Declaration of Trust Revocable (Attach CUF 0022)
TOD (Transfer On Death) [ ] Yes [ ] No NOT AVAILABLE IN ILLINOIS
[ ] Uniform Gifts (Transfers) To Minors (UGMA/UTMA) [ ] Other:_______________________________________
[ ] Dated Trust Date of Trust_________________
</TABLE>
------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
__________________
REGISTRATION [ ] NEW ACCOUNT or [ ] NEW FUND FOR EXISTING ACCOUNT | |
(must have same ownership): |__________________|
</TABLE>
<TABLE>
<S> <C>
--------------------------------------------------------------------------------------
Individual Name (exactly as desired)/Trustee/Custodian (Tax-responsible party)
------------------------------------------------------- ------------------------------
[ ] Social Security # or [ ] Taxpayer Identification # Date of Birth (Month/Day/Year)
--------------------------------------------------------------------------------------
Joint Name (if any, exactly as desired)/Co-Trustee/Minor (for UGMA/UTMA)
------------------------------------------------------- ------------------------------
[ ] Social Security # or [ ] Taxpayer Identification # Date of Birth (Month/Day/Year)
</TABLE>
-----------------------------------------------------------------------------
Name of Trust
-----------------------------------------------------------------------------
Mailing Address
-----------------------------------------------------------------------------
City/State/Zip
-----------------------------------------------------------------------------
Telephone (home) Telephone (work) Citizenship (Required in VA)
------------------------------------------------------------------------------
INVESTMENTS Make check payable to Waddell & Reed, Inc.
"B" SHARES NOT AVAILABLE FOR PURCHASE
<TABLE>
<CAPTION>
Monthly Div/C.G. Distr*
Fund Amount AIS (Assumes RR)
(enter code) Enclosed (If Any) RR CC CR
<S> <C> <C> <C> <C> <C> <C>
CLASS OF SHARES ____________
(ONLY ONE) | |
|____________| $_______ $_______ [ ] [ ] [ ]
____________
| |
B [ ] C [ ] |____________| $_______ $_______ [ ] [ ] [ ]
____________
| |
|____________| $_______ $_______ [ ] [ ] [ ]
____________
| |
|____________| $_______ $_______ [ ] [ ] [ ]
____________
| |
|____________| $_______ $_______ [ ] [ ] [ ]
Total $_______ Total $_______
</TABLE>
* RR = Reinvest Div/Cap Gain CC = Cash Div/Cap Gain CR = Cash Div/Reinvest
Cap Gain All Dividends/Capital Gains under $5.00 will be Reinvested.
See Section 7 if you wish your distributions to go to other Fund or
Account.
<TABLE>
<CAPTION>
FUNDS CODES B C B C
<S> <C> <C> <C> <C> <C>
W&R Total Return 101 301 W&R Asset Strategy 106 306
W&R Growth 102 302 Cash Management 107 307
W&R Limited-Term Bond 103 303 W&R Science & Technology 108 308
W&R Municipal Bond 104 304 W&R High Income 109 309
W&R International Growth 105 305
</TABLE>
------------------------------------------------------------------------------
BENEFICIARY: For TOD (Transfer On Death) Accounts Only
To designate contingent beneficiaries or per stirpes distribution,
use MRP-0972 or MRP-1588
<TABLE>
<CAPTION>
Full Name of Beneficiary Tax Identification Number Date of Birth Relationship Percent
<S> <C> <C> <C> <C>
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
</TABLE>
------------------------------------------------------------------------------
WRF3000 Page 1 of 4
<PAGE>
2 ------------------------------------------------------------------------------
EXPEDITED REDEMPTION: For Cash Management B [ ] C [ ]
<TABLE>
<S> <C>
-------------------------------------------------- -------------------------------------------------
Name & Address of Bank/Financial Institution ABA/Routing # of Bank/Financial Institution
-------------------------------------------------- -------------------------------------------------
Street Customer's Bank Account Number
-------------------------------------------------- -------------------------------------------------
City/State/Zip
</TABLE>
On Cash Management Accounts where expedited redemption is requested, Waddell
& Reed, Inc. is authorized to honor any requests from anyone for redemption
of fund shares as long as the proceeds are transmitted to the identified
account. All wires must be transmitted exactly as registered on the Cash
Management Account.
------------------------------------------------------------------------------
3 ------------------------------------------------------------------------------
Establish NEW Automatic Investment Service
REGISTRATION INFORMATION
------------------------------------------------
Individual Name (exactly as registered)
------------------------------------------------
Joint Name (if any, exactly as registered)
<TABLE>
<CAPTION>
Fund Draft Is To Begin On
(Enter code) (Month/Day/Year) Draft Amount Special Instructions
<S> <C> <C> <C>
___________
| |
|___________| ____________________ $_____________ ______________________________
___________
| |
|___________| ____________________ $_____________ ______________________________
___________
| |
|___________| ____________________ $_____________ ______________________________
___________
| |
|___________| ____________________ $_____________ ______________________________
___________
| |
|___________| ____________________ $_____________ ______________________________
</TABLE>
Authorization to honor checks drawn by Waddell & Reed, Inc.
As a convenience to me, I hereby request and authorize you to pay and charge
to my or our account identified below, debit entries drawn on the account by
Waddell & Reed, Inc. provided there are sufficient funds in the account to
pay the same on presentation. This authorization shall remain in effect until
revoked by me in writing and until you actually receive such notice. I agree
that you shall be fully protected by honoring any such debit entry. I agree
that your rights in respect to any debit entry shall be the same as if it
were a check signed personally by me. I further agree, that if any such debit
entry be dishonored, whether intentionally or inadvertently, you shall be
under no liability whatsoever.
PLEASE COMPLETE THE FOLLOWING IN ITS ENTIRETY.
<TABLE>
<S> <C>
----------------------------------------------------- -------------------------
NAME OF DEPOSITOR (as shown on bank records(s)) Bank Account Number
----------------------------------------------------- Please tape your voided
BANK NAME check or deposit slip in
Section 6
-----------------------------------------------------
BANK ADDRESS
-----------------------------------------------------
CITY/STATE/ZIP
</TABLE>
------------------------------------------------------------------------------
4 ------------------------------------------------------------------------------
Establish NEW Funds Plus Service (must be same class)
<TABLE>
<S> <C> <C> <C>
___________
REGISTRATION INFORMATION [ ] NEW ACCOUNT W/CM or [ ] EXISTING ACCOUNT W/CM |___________|
</TABLE>
-----------------------------------------------------
Individual Name (exactly as registered)
-----------------------------------------------------
Joint Name (if any, exactly as registered)
<TABLE>
<CAPTION>
FUNDS PLUS Service
Account(s) to RECEIVE Fund If new, Is To Begin On FUNDS PLUS
FUNDS PLUS Investment (Enter code) mark box (Month/Day/Year) Investment Amount
<S> <C> <C> <C> <C>
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
</TABLE>
------------------------------------------------------------------------------
Page 2 of 4
<PAGE>
5 ------------------------------------------------------------------------------
Establish NEW Flexible Withdrawal Service
<TABLE>
<CAPTION>
Fund Changes To Be
(See Reverse Effective Beginning Amount
for Codes) (Month) (Year) Indicate dollars, shares or percentage Frequency Make Payable
<S> <C> <C> <C> <C>
____________ _________________ ______________
| | | | 20 | | | |
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] % [ ] monthly [ ] To registered owner(s)
____________ _________________ ______________
| | | | 20 | | | | [ ] quarterly [ ] To Alternate Payee
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] %
____________ _________________ ______________ [ ] semi-annually [ ] To registered owner(s)
| | | | 20 | | | | at alternate address
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] % [ ] annually
____________ _________________ ______________
| | | | 20 | | | | (If left blank,
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] % annual payments
will be assumed)
</TABLE>
------------------------------------------------------------------------------
Designate Alternate Payee or Address (for Electronic Deposits of FWS, see
Section 6)
Complete this section if the check is TO BE PAYABLE TO AN ALTERNATE PAYEE
(other than as registered) or SENT TO AN ALTERNATE ADDRESS. Please provide
voided check if FWS is to be electronically deposited. If sending FWS to
another fund/account please indicate account/fund. Must be same class.
<TABLE>
<CAPTION>
Alternate Payee Alternate Address (check will be payable as registered and sent to the following)
<S> <C>
---------------------------------------------- ----------------------------------------------
Name or institution C/O Name
---------------------------------------------- ----------------------------------------------
Street Street
---------------------------------------------- ----------------------------------------------
City/State/Zip City/State/Zip
---------------------------------------------- ----------------------------------------------
Bank Account Number (if applicable) Bank Account Number (if applicable)
</TABLE>
FLEXIBLE WITHDRAWAL REQUIREMENTS AND CONSIDERATIONS
1. This application directs Waddell & Reed Services Company to redeem the
amounts listed on the 20th day of the indicated month, or if not a
business day, on the preceding business day.
2. Allow five days from the date your instructions are received in the home
office for processing of any changes and/or initiation of a Flexible
Withdrawal Service.
3. The aggregate total investment, or the present net asset value of the
shareholder's W&R Funds combined accounts should exceed $10,000. You may
add to your account by additional investments of at least $1,000, except
in Cash Management, Inc., which has no minimum additional investment
amount.
4. Minimum withdrawals for dollars or shares are $50 aggregate or a 5 share
minimum per fund.
5. If withdrawals are to be made monthly, 1/12th of the indicated percentage
of the asset value of the shares in the account will be redeemed. If
withdrawals are to be made quarterly, 1/4th of the indicated percentage of
the asset value of the shares in the account will be redeemed. If
withdrawals are to be made semi-annually, 1/2 of the indicated percentage
will be redeemed.
6. Dividends and capital gains distributions are automatically reinvested.
Information about the federal tax status of shares redeemed through the
Flexible Withdrawal Services will be mailed to shareholders annually.
------------------------------------------------------------------------------
6 ------------------------------------------------------------------------------
BANK ACCOUNT OR CREDIT UNION INFORMATION (optional)
This information will be used for
<TABLE>
<S> <C> <C>
[ ] Div/Cap gain distributions (Sec. 1) [ ] Systematic investments (Sec. 3) [ ] Flexible withdrawals (Sec. 5)
</TABLE>
<TABLE>
<S> <C> <C>
-----------------------------------------------------------------------------------
Checking account Bank or credit union's ABA route number Bank or credit union account number
-----------------------------------------------------------------------------------
Savings account Bank or credit union's ABA route number Bank or credit union account number
</TABLE>
Tape your voided check or deposit slip here
Bank and credit union routing information
For deposits or withdrawals to your checking account, please tape a voided
check so we may get bank or credit union account information.
For deposits or withdrawals to a savings account, please tape a preprinted
deposit slip.
(Do not staple the slips.)
------------------------------------------------------------------------------
Page 3 of 4
<PAGE>
7 ------------------------------------------------------------------------------
ALTERNATE PAYEE/ADDRESS
To send systematic withdrawals (Section 5) or distributions (Section 1) to a
third party, or to another United Fund account, please fill in the
appropriate information below.
<TABLE>
<S> <C> <C>
This address will be used for (check one): [ ] Flexible Withdrawals [ ] Div/Cap Gains
</TABLE>
<TABLE>
<S> <C>
------------------------------------------------------------- To another United Fund
Name
------------------------------------------------------------- ---------------------------------
Address (including apartment or box number) Account # Fund #
Must be to same class of shares
-------------------------------------------------------------
City/State/Zip
</TABLE>
------------------------------------------------------------------------------
8 ------------------------------------------------------------------------------
CONFIDENTIAL DATA (Required)
1. Marital Status:__________
(Required in VA)
2. Gross Family Income: $__________
3. Taxable Income: $__________
4. Number of Dependents:__________
5. Occupation:______________________________________________________________
6. Employer Name:___________________________________________________________
7. Employer Address:________________________________________________________
8. Savings and Liquid Assets: $__________
9. Other Assets (excluding home, furnishings, cars): $__________
10. Net Worth (Assets minus liabilities): $__________
11. Are you associated with an NASD Member? [ ] Yes [ ] No
12. Investment Objectives (mark all that apply):
[ ] Retirement Savings [ ] Reserves [ ] College Funds [ ] Buy Major Asset
[ ] Other Needs/Goals (specify in Special Remarks)
13. Special Remarks/Considerations:__________________________________________
_____________________________________________________________________________
14. Residence Address:_______________________________________________________
(if different from Street City State Zip
Mailing Address
on reverse side)
<TABLE>
<S> <C> <C>
(Required in CT)
15. Was this investment solicited by a W&R Advisor/Representative? [ ] Yes [ ] No
(Required in CT)
16. Has any beneficial owner of this account conducted any prior investment activity? [ ] Yes [ ] No
If yes, which owner(s)?_________________________________________________________________________
(Required in CT)
17. Are proceeds from the sale of another security being used to open this account? [ ] Yes [ ] No
If yes, specify:________________________________________________________________________________
</TABLE>
------------------------------------------------------------------------------
9 ------------------------------------------------------------------------------
ACKNOWLEDGEMENT
o I (We) have received a copy of the current prospectus of the Funds
selected, and agree to the terms therein and herein.
o Under penalties of perjury, I certify that the social security number or
other taxpayer identification number shown in Section 1 is correct (or I
am waiting for a number to be issued to me) and (strike the following if
not true) that I am not subject to backup withholding because (a) I am
exempt from backup withholding, or (b) I have not been notified by the IRS
that I am subject to backup withholding as a result of a failure to report
all interest and dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
o I (we) understand that there may be a deferred sales charge upon the
redemption of any class B or C shares held in the account for less than
the time specified in the Fund prospectus.
Signature(s) of Purchasers (all joint purchasers must sign). Sign exactly as
name(s) appear in registration.
"The Internal Revenue Service does not require your consent to any provision
of this document other than the certification required to avoid backup
withholding."
<TABLE>
<S> <C> <C>
------------------------------------- ------------------------------------- -------------------------------------
(Signature) (Printed Name) (Title, if any)
------------------------------------- ------------------------------------- -------------------------------------
(Signature) (Printed Name) (Title, if any)
------------------------------------- --------------------
(Advisor/Representative Signature) (Date)
</TABLE>
_____________________________
| |
Advisor/Representative Number |_____________________________|
|---------------|
|OSJ: |
|(H.O. USE) |
| |
| |
| |
|---------------|
|----------------------------------------------|
|Check Any Items Enclosed With Application |
| |
|[ ] Declaration Trust Revocable (CUF0022) |
| |
|[ ] Additional Applications______ |
| |
|[ ] Check enclosed #______ |
| |
|[ ] Other:______ |
|----------------------------------------------|
------------------------------------------------------------------------------
Page 4 of 4
<TABLE>
<S> <C> <C>
Waddell & Reed, Inc. Waddell & Reed Funds Division Office Stamp
P.O. Box 29217 APPLICATION
Shawnee Mission, KS
66201-9217 RETIREMENT PLAN Trans Code:________________________
ACCOUNT Date Transmitted:__________________
</TABLE>
1 ------------------------------------------------------------------------------
I (We) make application for an account to be established as follows:
PLAN TYPE -- DOCUMENT SPONSORED BY: [ ] W&R [ ] NON-W&R
PLEASE SELECT ONE OF THE FOLLOWING:
<TABLE>
<S> <C> <C>
[ ] IRA (701/050) [ ] Simplified Employee Pension -- SEP (702/050) [ ] 401(k) (401-801) [ ] Simple 401(k) (340)
(CRP0005) (MRP1166KT-Employer and CRP0005-Employee) (MRP0720-Non Inventory)
[ ] Rollover (703/050) [ ] Simple IRA (765/050) [ ] Owner-Only Profit Sharing (132)
(CRP0005) (MRP1659KT-Employer and MRP1699-Employee) (MRP0651 and MRP0651 AP)
[ ] Roth IRA (791/050) [ ] Non Title-1 TSA (773-050) [ ] ORP (773) [ ] Owner-Only Money Purchase (122)
(CRP1695) (MRP1198) (MRP0651 and MRP0651AM)
[ ] Conversion Roth IRA (792/050) [ ] Title-I TSA (724) [ ] 457 Plan (730/731) [ ] Multi Part. Profit Sharing (832/097/098)
(CRP1695) (MRP1198TI-Non Inventory) (MRP1401) (MRP0651 and MRP0651AP)
[ ] Education IRA (793/050) [ ] Church Sponsored TSA (774) [ ] Multi Part. Money Purchase (822/099/100)
(CRP1696) (Non Inventory-Case by Case) (MRP0651 and MRP0651AM)
</TABLE>
------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
__________________
REGISTRATION [ ] NEW ACCOUNT or [ ] NEW FUND FOR EXISTING ACCOUNT | |
(must have same ownership): |__________________|
</TABLE>
<TABLE>
<S> <C> <C> <C>
-----------------------------------------------------------------------------
Trustee/Custodian or Responsible Party (Education IRA Only)
-----------------------------------------------------------------------------
Employer or Business/Organization Name
------------------------------------------------------------ ----------------------------------------------
Participant, Planholder or Beneficiary (Education IRA Only) Plan Year End / Date of Birth (Month/Day/Year)
-----------------------------------------------------------------------------
Mailing Address
-----------------------------------------------------------------------------
City/State/Zip
------------------------- ----------------------- ----------------------------------
Social Security Number Employer Tax ID Number Plan (Trust) Identification Number
--------------------------------------------------------------------------------------
Telephone (home) Telephone (work) Citizenship (Required in VA)
</TABLE>
------------------------------------------------------------------------------
INVESTMENTS Make check payable to Waddell & Reed, Inc.
B Shares not available for purchase
<TABLE>
<CAPTION>
FUNDS CODES
B C B C
<S> <C> <C> <C> <C> <C>
W&R Total Return 101 301 W&R Asset Strategy 106 306
W&R Growth 102 302 Cash Management 107 307
W&R Limited-Term Bond 103 303 W&R Science & Technology 108 308
W&R International Growth 105 305 W&R High Income 109 309
</TABLE>
<TABLE>
<CAPTION>
IRA TOP From Monthly
Fund Amount Year of Deductible or Another AIS
(enter code) Enclosed Contribution Non-Deductible Carrier (If Any)
<S> <C> <C> <C> <C> <C> <C>
CLASS OF SHARES ____________
(ONLY ONE) | |
|____________| $_______ ____________ __________ [ ] $_______
____________
| |
B [ ] C [ ] |____________| $_______ ____________ __________ [ ] $_______
____________
| |
|____________| $_______ ____________ __________ [ ] $_______
____________
| |
|____________| $_______ ____________ __________ [ ] $_______
____________
| |
|____________| $_______ ____________ __________ [ ] $_______
Total $_______ $_______
</TABLE>
To prevent possible tax penalties, Dividends and Capital gains are
automatically re-invested in Retirement Plan accounts.
------------------------------------------------------------------------------
WRF 3001 Page 1 of 6
<PAGE>
2 ------------------------------------------------------------------------------
BENEFICIARY
To designate contingent beneficiaries or per stirpes distribution,
use MRP-0972 or MRP-1588
<TABLE>
<CAPTION>
Full Name of Beneficiary Tax Identification Number Date of Birth Relationship Percent
<S> <C> <C> <C> <C>
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
---------------------------- ----------------------------- -----/-----/----- ---------------- -----------%
MO DA YR
</TABLE>
------------------------------------------------------------------------------
3 ------------------------------------------------------------------------------
EXPEDITED REDEMPTION: For United Cash Management B [ ] C [ ]
<TABLE>
<S> <C>
-------------------------------------------------- -------------------------------------------------
Name & Address of Bank/Financial Institution ABA/Routing # of Bank/Financial Institution
-------------------------------------------------- -------------------------------------------------
Street Customer's Bank Account Number
-------------------------------------------------- -------------------------------------------------
City/State/Zip
</TABLE>
On UCM Accounts where expedited redemption is requested, Waddell & Reed, Inc.
is authorized to honor any requests from anyone for redemption of fund shares
as long as the proceeds are transmitted to the identified account. All wires
must be transmitted exactly as registered on the UCM Account.
------------------------------------------------------------------------------
4 ------------------------------------------------------------------------------
Establish NEW Automatic Investment Service ______________
REGISTRATION INFORMATION EXISTING ACCOUNT:| |
|______________|
-----------------------------------------------------------------------------
Individual Name (exactly as registered)
-----------------------------------------------------------------------------
Joint Name (if any, exactly as registered)
<TABLE>
<CAPTION>
Fund Draft Is To Begin On
(Enter code) (Month/Day/Year) Draft Amount Special Instructions
<S> <C> <C> <C>
____________
| |
|____________| ____________________ $___________ ________________________________
____________
| |
|____________| ____________________ $___________ ________________________________
____________
| |
|____________| ____________________ $___________ ________________________________
____________
| |
|____________| ____________________ $___________ ________________________________
____________
| |
|____________| ____________________ $___________ ________________________________
</TABLE>
Authorization to honor checks drawn by Waddell & Reed, Inc.
As a convenience to me, I hereby request and authorize you to pay and charge
to my or our account identified below, debit entries drawn on the account by
Waddell & Reed, Inc. provided there are sufficient funds in the account to
pay the same on presentation. This authorization shall remain in effect until
revoked by me in writing and until you actually receive such notice. I agree
that you shall be fully protected by honoring any such debit entry.
I agree that your rights in respect to any debit entry shall be the same as
if it were a check signed personally by me. I further agree, that if any such
debit entry be dishonored, whether intentionally or inadvertently, you shall
be under no liability whatsoever.
PLEASE COMPLETE THE FOLLOWING IN ITS ENTIRETY.
<TABLE>
<S> <C>
----------------------------------------------------- -------------------------
NAME OF DEPOSITOR (as shown on bank records(s)) Bank Account Number
----------------------------------------------------- See Section 5
BANK NAME
-----------------------------------------------------
BANK ADDRESS
-----------------------------------------------------
CITY/STATE/ZIP
</TABLE>
------------------------------------------------------------------------------
Page 2 of 6
<PAGE>
5 ------------------------------------------------------------------------------
BANK ACCOUNT OR CREDIT UNION INFORMATION (optional)
This information will be used for
[ ] Systematic investments (Sec. 4) [ ] Flexible withdrawals (Sec. 8)
<TABLE>
<S> <C>
Checking account -----------------------------------------------------------------------------------
Savings account -----------------------------------------------------------------------------------
</TABLE>
Tape your voided check or deposit slip here
Bank and credit union routing information
For deposits or withdrawals to your checking account, please tape a voided
check so we may get bank or credit union account information.
For deposits or withdrawals to a savings account, please tape a preprinted
deposit slip.
(Do not staple the slips.)
------------------------------------------------------------------------------
6 ------------------------------------------------------------------------------
Establish NEW Funds Plus Service (must be in same class)
<TABLE>
<S> <C> <C> <C>
___________
REGISTRATION INFORMATION [ ] NEW ACCOUNT W/UCM or [ ] EXISTING ACCOUNT W/UCM |___________|
</TABLE>
-----------------------------------------------------
Individual Name (exactly as registered)
-----------------------------------------------------
Joint Name (if any, exactly as registered)
<TABLE>
<CAPTION>
FUNDS PLUS Service
Account(s) to RECEIVE Fund If new, Is To Begin On FUNDS PLUS
FUNDS PLUS Investment (Enter code) mark box (Month/Day/Year) Investment Amount
<S> <C> <C> <C> <C>
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
_____________________________ __________
| | | | [ ]
|_____________________________| |__________| __________________ $__________________
</TABLE>
------------------------------------------------------------------------------
7 ------------------------------------------------------------------------------
ALTERNATE PAYEE/ADDRESS
To send systematic withdrawals (Section 8) to a third party, or to another
W&R Fund account, please fill in the appropriate information below.
This address will be used for (check one):
[ ] Flexible Withdrawals
[ ] Div/Cap Gains
<TABLE>
<S> <C>
------------------------------------------------------------- To another W&R Fund
Name
------------------------------------------------------------- ---------------------------------
Address (including apartment or box number) Account # Fund #
Must be to same class of shares
-------------------------------------------------------------
City/State/Zip
</TABLE>
------------------------------------------------------------------------------
Page 3 of 6
<PAGE>
8 ------------------------------------------------------------------------------
Establish NEW Flexible Withdrawal Service (See Section 10)
<TABLE>
<CAPTION>
Fund Changes To Be
(See Reverse Effective Beginning Amount
for Codes) (Month) (Year) Indicate dollars, shares or percentage Frequency Make Payable
<S> <C> <C> <C> <C>
____________ _________________ ______________
| | | | 20 | | | |
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] % [ ] monthly [ ] To registered owner(s)
____________ _________________ ______________
| | | | 20 | | | | [ ] quarterly [ ] To Alternate Payee
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] %
____________ _________________ ______________ [ ] semi-annually [ ] To registered owner(s)
| | | | 20 | | | | at alternate address
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] % [ ] annually
____________ _________________ ______________
| | | | 20 | | | | (If left blank,
|____________| |_____|______|____| |______________| [ ] $ [ ] SH [ ] % annual payments
will be assumed)
</TABLE>
------------------------------------------------------------------------------
TO ESTABLISH Life Expectancy Payment Option For Retirement Plan Accounts
IMPORTANT INFORMATION (read carefully before proceeding)
If this option is selected, the information (joint/single life, age) provided
below will be used to determine the withdrawal amount applicable for the
CURRENT year only. The withdrawal amount will remain unchanged until a change
is authorized by the planholder.
Check applicable box: [ ] Age 70-1/2 or over
Retirement planholders who have reached age
70-1/2 must take a minimum distribution from
their plan in accordance with IRS regulations.
It is NOT necessary to complete this section
to meet IRS minimum mandatory withdrawal
requirement. The minimum withdrawal will be
automatically processed unless otherwise
instructed.
[ ] Prior to age 70-1/2 Enter annual $___________
(Do not enter amount in section below)
If dollar amount is blank, payments will be
calculated on a non-amortized basis, and will
remain unchanged. If amount provided is based
on an amortized life expectancy calculation,
attach UNET worksheet. PAYMENTS MUST CONTINUE
UNTIL THE LATER OF AGE 59-1/2 OR FIVE
SUCCESSIVE YEARS.
Complete applicable information:
<TABLE>
<S> <C>
[ ] SINGLE LIFE OR [ ] JOINT LIFE
Indicate Account Owner's Indicate Account Owner's Date of Birth |__|__|__|__|__|__|
Date of Birth |__|__|__|__|__|__| (Month/Day/Year)
(Month/Day/Year) and Beneficiary's Date of Birth |__|__|__|__|__|__|
(Month/Day/Year)
</TABLE>
<TABLE>
<CAPTION>
Amount Frequency
Fund If blank, amount will Indicated monthly,
(See Reverse Effective Beginning be calculated as quarterly, semi-
For Codes) (Month) (Year) described above annually or annually Make Payable
------------ ------------------- --------------------- --------------------- --------------------------
<S> <C> <C> <C> <C>
________
|__|__|__| |__|__| 2 | 0 |__|__| ________ [ ] [ ] [ ] --------------------- [ ] To Registered owner(s)
(If left blank, annual pay-
________ ments will be assumed)
|__|__|__| |__|__| 2 | 0 |__|__| ________ [ ] [ ] [ ] [ ] To Alternate Payee*
________
|__|__|__| |__|__| 2 | 0 |__|__| ________ [ ] [ ] [ ] [ ] To Registered Owner(s) at
________ alternate address*
|__|__|__| |__|__| 2 | 0 |__|__| ________ [ ] [ ] [ ]
*Complete Section 9
</TABLE>
------------------------------------------------------------------------------
FEDERAL INCOME TAX WITHHOLDING FOR RETIREMENT PLAN ACCOUNTS
Check One:*
A [ ] The undersigned directs that no Federal Income Tax shall be withheld
from the above described Withdrawal.
(Applicable to Retirement Plans only)
B [ ] The undersigned directs that Federal Income Tax be withheld from the
above described Withdrawal.
(Applicable to Retirement Plans only)
*IF NEITHER BLOCK IS SELECTED, FEDERAL INCOME TAXES WILL NOT BE
WITHHELD.
------------------------------------------------------------------------------
9 ------------------------------------------------------------------------------
Designate Alternate Payee or Address (for Electronic Deposits of FWS, see
section 5)
Complete this section if the check is TO BE PAYABLE TO AN ALTERNATE PAYEE
(other than as registered) or SENT TO AN ALTERNATE ADDRESS. Please provide
voided check if FWS is to be electronically deposited. If sending FWS to
another fund/account please indicate account/fund. Must be same class.
<TABLE>
<CAPTION>
Alternate Payee Alternate Address (check will be payable as registered and sent to the following)
<S> <C>
---------------------------------------------- ----------------------------------------------
Name or institution C/O Name
---------------------------------------------- ----------------------------------------------
Street Street
---------------------------------------------- ----------------------------------------------
City/State/Zip City/State/Zip
---------------------------------------------- ----------------------------------------------
Bank Account Number (if applicable) Bank Account Number (if applicable)
</TABLE>
------------------------------------------------------------------------------
Page 4 of 6
<PAGE>
10------------------------------------------------------------------------------
FLEXIBLE WITHDRAWAL REQUIREMENTS AND CONSIDERATIONS
1. This application directs Waddell & Reed Services Company to redeem the
amounts listed on the 20th day of the indicated month, or if not a
business day, on the preceding business day.
2. Allow five days from the date your instructions are received in the home
office for processing of any changes and/or initiation of a Flexible
Withdrawal Service.
3. The aggregate total investment, or the present net asset value of the
shareholder's United Group of Funds/or W&R Funds combined accounts should
exceed $10,000. You may add to your account by additional investments of
at least $1,000, except in United Cash Management, Inc., which has no
minimum additional investment amount.
4. Minimum withdrawals for dollars or shares are $50 aggregate or a 5 share
minimum per fund.
5. If withdrawals are to be made monthly, 1/12th of the indicated percentage
of the asset value of the shares in the account will be redeemed. If
withdrawals are to be made quarterly, 1/4th of the indicated percentage of
the asset value of the shares in the account will be redeemed. If
withdrawals are to be made semi-annually, 1/2 of the indicated percentage
will be redeemed.
6. Dividends and capital gains distributions are automatically reinvested.
Information about the federal tax status of shares redeemed through the
Flexible Withdrawal Services will be mailed to shareholders annually.
------------------------------------------------------------------------------
11------------------------------------------------------------------------------
CONFIDENTIAL DATA (Required)
1. Marital Status:__________
(Required in VA)
2. Gross Family Income: $__________
3. Taxable Income: $__________
4. Number of Dependents:__________
5. Occupation:______________________________________________________________
6. Employer Name:___________________________________________________________
7. Employer Address:________________________________________________________
8. Savings and Liquid Assets: $__________
9. Other Assets (excluding home, furnishings, cars): $__________
10. Net Worth (Assets minus liabilities): $__________
11. Are you associated with an NASD Member? [ ] Yes [ ] No
12. Investment Objectives (mark all that apply):
[ ] Retirement Savings [ ] Reserves [ ] College Funds [ ] Buy Major Asset
[ ] Other Needs/Goals (specify in Special Remarks)
13. Special Remarks/Considerations:__________________________________________
_____________________________________________________________________________
14. Residence Address:_______________________________________________________
(if different from Street City State Zip
Mailing Address
on reverse side)
<TABLE>
<S> <C> <C>
15. Was this investment solicited by a W&R Advisor/Representative? [ ] Yes [ ] No
(Required in CT)
16. Has any beneficial owner of this account conducted any prior investment activity? [ ] Yes [ ] No
If yes, which owner(s)?_________________________________________________________________________
17. Are proceeds from the sale of another security being used to open this account? [ ] Yes [ ] No
If yes, specify:________________________________________________________________________________
________________________________________________________________________________
</TABLE>
------------------------------------------------------------------------------
Page 5 of 6
<PAGE>
12------------------------------------------------------------------------------
ACKNOWLEDGEMENT
o I (We) have received a copy of the current prospectus of the Funds
selected, and agree to the terms therein and herein.
o Under penalties of perjury, I certify that the social security number or
other taxpayer identification number shown in Section 1 is correct (or I
am waiting for a number to be issued to me) and (strike the following if
not true) that I am not subject to backup withholding because (a) I am
exempt from backup withholding, or (b) I have not been notified by the IRS
that I am subject to backup withholding as a result of a failure to report
all interest and dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
o I (we) understand that there may be a deferred sales charge upon the
redemption of any class B or C shares held in the account for less than
the time specified in the prospectus.
Signature(s) of Purchasers (all joint purchasers must sign). Sign exactly as
name(s) appear in registration.
"The Internal Revenue Service does not require your consent to any provision
of this document other than the certification required to avoid backup
withholding."
<TABLE>
<S> <C> <C>
------------------------------------- ------------------------------------- -------------------------------------
(Signature) (Printed Name) (Title, if any)
------------------------------------- ------------------------------------- -------------------------------------
(Signature) (Printed Name) (Title, if any)
------------------------------------- --------------------
(Advisor/Representative Signature) (Date)
</TABLE>
_____________________________
| |
Advisor/Representative Number |_____________________________|
------------------------------------------------------------------------------
-----------------------------------------------|
Check Any Items Enclosed With Application |
|
[ ] Declaration Trust Revocable (CUF0022) |
|---------------|
[ ] Additional Applications______ |OSJ: |
|(H.O. USE) |
[ ] Check enclosed #______ | |
| |
[ ] Other:______ | |
-----------------------------------------------|---------------|
Page 6 of 6
EX-99.B(i)cmlegopn
August 31, 1999
United Cash Management, Inc.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
RE: United Cash Management, Inc.
Post-Effective Amendment No. 35
Dear Sir or Madam:
In connection with the public offering of shares of Capital Stock of United Cash
Management, Inc. (the "Fund"), I have examined such corporate records and
documents and have made such further investigation and examination as I deemed
necessary for the purpose of this opinion.
It is my opinion that the indefinite number of shares of such Capital Stock
covered by the Fund's Registration Statement on Form N-1A, when issued and paid
for in accordance with the terms of the offering, as set forth in the Prospectus
and Statement of Additional Information forming a part of the Registration
Statement, will be, when such Registration shall have become effective, legally
issued, fully paid and non-assessable by the Fund.
I hereby consent to the filing of this opinion as an Exhibit to the said
Registration Statement and to the reference to me in such Statement of
Additional Information.
Yours truly,
Helge K. Lee
General Counsel
HKL/fr
EX-99.B(j)cmconsnt
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 35 to Registration
Statement No. 2-64526 of United Cash Management, Inc. on Form N-1A of our report
dated August 6, 1999 appearing in the Prospectus, which is part of such
Registration Statement, and to the reference to us under the caption "Financial
Highlights" in the Prospectuses.
Deloitte & Touche LLP
Kansas City, Missouri
August 25, 1999
EX-99.B(m)cmdspb
UNITED CASH MANAGEMENT, INC.
DISTRIBUTION AND SERVICE PLAN
FOR CLASS B SHARES
(Adopted on August 18, 1999)
This Plan is adopted by United Cash Management, Inc. (the "Fund") pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act") to
provide for payment by the Fund of certain expenses in connection with the
distribution of the Fund's Class B shares and the service and maintenance of
Class B shareholder accounts. Payments under the Plan are to be made to Waddell
& Reed, Inc. ("W&R") which serves as the principal underwriter for the Fund
under the terms of an underwriting agreement pursuant to which it shall offer
and sell the Class B shares of the Fund at net asset value.
DISTRIBUTION FEE
The Fund is authorized to pay to W&R an amount not to exceed on an annual basis
.75 of 1% of the average net assets of Class B shares as a "distribution fee" to
finance the distribution of Class B shares payable to W&R daily or at such other
intervals as the board of directors may determine.
SERVICE FEE
The Fund is authorized to pay to W&R an amount not to exceed on an annual basis
.25 of 1% of the average net assets of Class B shares as a "service fee" to
finance shareholder servicing by W&R or its affiliated companies to encourage
and foster the maintenance of Class B shareholder accounts. The amounts shall be
payable to W&R daily or at such other intervals as the board of directors may
determine.
NASD DEFINITION
For purposes of this Plan, the distribution fee may be considered as a sales
charge that is deducted from the net assets of Class B net assets and does not
include the service fee. The service fee may be considered a payment made by the
Fund for personal service and/or maintenance of Class B shareholder accounts, as
such is now defined by the National Association of Securities Dealers, Inc.
("NASD"), provided however, if the NASD adopts a definition of "service fee" for
purposes of Rule 2830 of the NASD Conduct Rules that differs from the definition
of "service fee" as presently used or if the NASD adopts a related definition
intended to define the same concept, the definition of "service fee" as used
herein shall be automatically amended to conform to the NASD definition.
QUARTERLY REPORTS
W&R shall provide to the board of directors of the Fund and the board of
directors shall review at least quarterly a written
<PAGE>
report of the amounts so expended of the distribution fee and the service fee
paid to it under this Plan with respect to Class B shares and the purposes for
which such expenditures were made.
APPROVAL OF PLAN
This Plan shall not become effective until it has been approved by a vote of the
board of directors of the Fund and by the directors who are not interested
persons of the Fund and have no direct or indirect financial interest in the
operation of the Plan or any agreement related to this Plan (other than as
directors or shareholders of the Fund) ("independent directors") cast in person
at a meeting called for the purpose of voting on such Plan.
CONTINUANCE
This Plan shall continue in effect for a period of one (1) year and thereafter
from year-to-year only so long as such continuance is approved by the directors,
including the independent directors, as specified hereinabove for the adoption
of a Plan by the directors and independent directors.
DIRECTOR CONTINUATION
In considering whether to adopt, continue or implement this Plan, the directors
shall have a duty to request and evaluate, and W&R shall have a duty to furnish,
such information as may be reasonably necessary to an informed determination of
whether this Plan should be adopted, implemented or continued.
TERMINATION
This Plan may be terminated at any time by a vote of a majority of the
independent directors of the Fund or by a vote of the majority of the
outstanding Class B shares of the Fund without penalty. On termination, the
payment of all distribution and service fees shall cease, and the Fund shall
have no obligation to W&R to reimburse it for any expenditure it has made or may
make to distribute Class B shares or service Class B shareholder accounts.
AMENDMENTS
This Plan may not be amended to increase materially the amount to be spent for
distribution of Class B shares, personal service and/or maintenance of
shareholder accounts without shareholder approval of the Class B shareholders,
and all material amendments of this Plan must be approved in the manner
prescribed for the adoption of the Plan by the directors and independent
directors as provided hereinabove. The distribution and service fees may,
however, be reduced by action of the board of directors without shareholder
approval.
<PAGE>
DIRECTORS
While this Plan is in effect, the selection and nomination of the directors who
are not interested persons of the Fund shall be committed to the discretion of
the directors who are not interested persons of the Fund.
RECORDS
Copies of the Plan, agreements and reports made pursuant to this Plan shall be
preserved as provided in Rule 12b-1(f) under the Act.
EX-99.B(m)cmdspc
UNITED CASH MANAGEMENT, INC.
DISTRIBUTION AND SERVICE PLAN
FOR CLASS C SHARES
(Adopted on August 18, 1999)
This Plan is adopted by United Cash Management, Inc. (the "Fund") pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act") to
provide for payment by the Fund of certain expenses in connection with the
distribution of the Fund's Class C shares and the service and maintenance of
Class C shareholder accounts. Payments under the Plan are to be made to Waddell
& Reed, Inc. ("W&R") which serves as the principal underwriter for the Fund
under the terms of an underwriting agreement pursuant to which it shall offer
and sell the Class C shares of the Fund at net asset value.
DISTRIBUTION FEE
The Fund is authorized to pay to W&R an amount not to exceed on an annual basis
.75 of 1% of the average net assets of Class C shares as a "distribution fee" to
finance the distribution of Class C shares payable to W&R daily or at such other
intervals as the board of directors may determine.
SERVICE FEE
The Fund is authorized to pay to W&R an amount not to exceed on an annual basis
.25 of 1% of the average net assets of Class C shares as a "service fee" to
finance shareholder servicing by W&R or its affiliated companies to encourage
and foster the maintenance of Class C shareholder accounts. The amounts shall be
payable to W&R daily or at such other intervals as the board of directors may
determine.
NASD DEFINITION
For purposes of this Plan, the distribution fee may be considered as a sales
charge that is deducted from the net assets of Class C net assets and does not
include the service fee. The service fee may be considered a payment made by the
Fund for personal service and/or maintenance of Class C shareholder accounts, as
such is now defined by the National Association of Securities Dealers, Inc.
("NASD"), provided however, if the NASD adopts a definition of "service fee" for
purposes of Rule 2830 of the NASD Conduct Rules that differs from the definition
of "service fee" as presently used or if the NASD adopts a related definition
intended to define the same concept, the definition of "service fee" as used
herein shall be automatically amended to conform to the NASD definition.
<PAGE>
QUARTERLY REPORTS
W&R shall provide to the board of directors of the Fund and the board of
directors shall review at least quarterly a written report of the amounts so
expended of the distribution fee and the service fee paid to it under this Plan
with respect to Class C shares and the purposes for which such expenditures were
made.
APPROVAL OF PLAN
This Plan shall not become effective until it has been approved by a vote of the
board of directors of the Fund and by the directors who are not interested
persons of the Fund and have no direct or indirect financial interest in the
operation of the Plan or any agreement related to this Plan (other than as
directors or shareholders of the Fund) ("independent directors") cast in person
at a meeting called for the purpose of voting on such Plan.
CONTINUANCE
This Plan shall continue in effect for a period of one (1) year and thereafter
from year-to-year only so long as such continuance is approved by the directors,
including the independent directors, as specified hereinabove for the adoption
of a Plan by the directors and independent directors.
DIRECTOR CONTINUATION
In considering whether to adopt, continue or implement this Plan, the directors
shall have a duty to request and evaluate, and W&R shall have a duty to furnish,
such information as may be reasonably necessary to an informed determination of
whether this Plan should be adopted, implemented or continued.
TERMINATION
This Plan may be terminated at any time by a vote of a majority of the
independent directors of the Fund or by a vote of the majority of the
outstanding Class C shares of the Fund without penalty. On termination, the
payment of all distribution and service fees shall cease, and the Fund shall
have no obligation to W&R to reimburse it for any expenditure it has made or may
make to distribute Class C shares or service Class C shareholder accounts.
AMENDMENTS
This Plan may not be amended to increase materially the amount to be spent for
distribution of Class C shares personal service and/or maintenance of
shareholder accounts without shareholder approval of the Class C shareholders,
and all material amendments of this Plan must be approved in the manner
prescribed for the adoption of the Plan by the directors and independent
directors as provided hereinabove. The distribution and service fees may,
<PAGE>
however, be reduced by action of the board of directors without shareholder
approval.
DIRECTORS
While this Plan is in effect, the selection and nomination of the directors who
are not interested persons of the Fund shall be committed to the discretion of
the directors who are not interested persons of the Fund.
RECORDS
Copies of the Plan, agreements and reports made pursuant to this Plan shall be
preserved as provided in Rule 12b-1(f) under the Act.
EX-99.B(m)cmdspmmb
UNITED CASH MANAGEMENT, INC.
DISTRIBUTION AND SERVICE PLAN
FOR WADDELL & REED MONEY MARKET B SHARES
(Adopted on September 5, 1995)
This Plan is adopted by United Cash Management, Inc. (the "Fund") pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act") to
provide for payment by the Fund of certain expenses in connection with the
distribution of the Fund's Waddell & Reed Money Market B shares, (formerly Class
B shares) and the service and maintenance of Waddell & Reed Money Market B
shareholder accounts. Payments under the Plan are to be made to Waddell & Reed,
Inc. ("W&R") which serves as the principal underwriter for the Fund under the
terms of an underwriting agreement pursuant to which it shall offer and sell the
Waddell & Reed Money Market B shares of the Fund at net asset value.
DISTRIBUTION FEE
The Fund is authorized to pay to W&R an amount not to exceed on an annual basis
.75 of 1% of the average net assets of Waddell & Reed Money Market B shares as a
"distribution fee" to finance the distribution of Waddell & Reed Money Market B
shares payable to W&R daily or at such other intervals as the board of directors
may determine.
SERVICE FEE
The Fund is authorized to pay to W&R an amount not to exceed on an annual basis
.25 of 1% of the average net assets of Class B shares as a "service fee" to
finance shareholder servicing by W&R or its affiliated companies to encourage
and foster the maintenance of Waddell & Reed Money Market B shareholder
accounts. The amounts shall be payable to W&R daily or at such other intervals
as the board of directors may determine.
NASD DEFINITION
For purposes of this Plan, the distribution fee may be considered as a sales
charge that is deducted from the net assets of Waddell & Reed Money Market B net
assets and does not include the service fee. The service fee may be considered a
payment made by the Fund for personal service and/or maintenance of Waddell &
Reed Money Market B shareholder accounts, as such is now defined by the National
Association of Securities Dealers, Inc. ("NASD"), provided however, if the NASD
adopts a definition of "service fee" for purposes of Rule 2830 of the NASD
Conduct Rules that differs from the definition of "service fee" as presently
used or if the NASD adopts a related definition intended to define the same
concept, the definition of "service fee" as used herein shall be automatically
amended to conform to the NASD definition.
<PAGE>
QUARTERLY REPORTS
W&R shall provide to the board of directors of the Fund and the board of
directors shall review at least quarterly a written report of the amounts so
expended of the distribution fee and the service fee paid to it under this Plan
with respect to Waddell & Reed Money Market B shares and the purposes for which
such expenditures were made.
APPROVAL OF PLAN
This Plan shall not become effective until it has been approved by a vote of at
least a majority of the outstanding Waddell & Reed Money Market B shares of the
Fund (as defined in the Act) and by a vote of the board of directors of the Fund
and by the directors who are not interested persons of the Fund and have no
direct or indirect financial interest in the operation of the Plan or any
agreement related to this Plan (other than as directors or shareholders of the
Fund) ("independent directors") cast in person at a meeting called for the
purpose of voting on such Plan.
CONTINUANCE
This Plan shall continue in effect for a period of one (1) year and thereafter
from year-to-year only so long as such continuance is approved by the directors,
including the independent directors, as specified hereinabove for the adoption
of a Plan by the directors and independent directors.
DIRECTOR CONTINUATION
In considering whether to adopt, continue or implement this Plan, the directors
shall have a duty to request and evaluate, and W&R shall have a duty to furnish,
such information as may be reasonably necessary to an informed determination of
whether this Plan should be adopted, implemented or continued.
TERMINATION
This Plan may be terminated at any time by a vote of a majority of the
independent directors of the Fund or by a vote of the majority of the
outstanding Waddell & Reed Money Market B shares of the Fund without penalty. On
termination, the payment of all distribution and service fees shall cease, and
the Fund shall have no obligation to W&R to reimburse it for any expenditure it
has made or may make to distribute Waddell & Reed Money Market B shares or
service Waddell & Reed Money Market B shareholder accounts.
AMENDMENTS
This Plan may not be amended to increase materially the amount to be spent for
distribution of Waddell & Reed Money Market B shares personal service and/or
maintenance of shareholder accounts without shareholder approval of the Waddell
& Reed Money Market B shareholders, and all material amendments of this Plan
must be approved in the manner prescribed for the adoption of the Plan by the
directors and independent directors as provided hereinabove.
<PAGE>
The distribution and service fees may, however, be reduced by action of the
board of directors without shareholder approval.
DIRECTORS
While this Plan is in effect, the selection and nomination of the directors who
are not interested persons of the Fund shall be committed to the discretion of
the directors who are not interested persons of the Fund.
RECORDS
Copies of the Plan, agreements and reports made pursuant to this Plan shall be
preserved as provided in Rule 12b-1(f) under the Act.
As amended August 18, 1999
EX-99.B(m)cmdspmmc
UNITED CASH MANAGEMENT, INC.
DISTRIBUTION AND SERVICE PLAN
FOR WADDELL & REED MONEY MARKET C SHARES
(Adopted on August 18, 1999)
This Plan is adopted by United Cash Management, Inc. (the "Fund") pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act") to
provide for payment by the Fund of certain expenses in connection with the
distribution of the Fund's Waddell & Reed Money Market C shares and the service
and maintenance of Waddell & Reed Money Market C shareholder accounts. Payments
under the Plan are to be made to Waddell & Reed, Inc. ("W&R") which serves as
the principal underwriter for the Fund under the terms of an underwriting
agreement pursuant to which it shall offer and sell the Waddell & Reed Money
Market C shares of the Fund at net asset value.
DISTRIBUTION FEE
The Fund is authorized to pay to W&R an amount not to exceed on an annual basis
.75 of 1% of the average net assets of Waddell & Reed Money Market C shares as a
"distribution fee" to finance the distribution of Waddell & Reed Money Market C
shares payable to W&R daily or at such other intervals as the board of directors
may determine.
SERVICE FEE
The Fund is authorized to pay to W&R an amount not to exceed on an annual basis
.25 of 1% of the average net assets of Waddell & Reed Money Market C shares as a
"service fee" to finance shareholder servicing by W&R or its affiliated
companies to encourage and foster the maintenance of Waddell & Reed Money Market
C shareholder accounts. The amounts shall be payable to W&R daily or at such
other intervals as the board of directors may determine.
NASD DEFINITION
For purposes of this Plan, the distribution fee may be considered as a sales
charge that is deducted from the net assets of Waddell & Reed Money Market C net
assets and does not include the service fee. The service fee may be considered a
payment made by the Fund for personal service and/or maintenance of Waddell &
Reed Money Market C shareholder accounts, as such is now defined by the National
Association of Securities Dealers, Inc. ("NASD"), provided however, if the NASD
adopts a definition of "service fee" for purposes of Rule 2830 of the NASD
Conduct Rules that differs from the definition of "service fee" as presently
used or if the NASD adopts a related definition intended to define the same
concept, the definition of "service fee" as used herein shall be automatically
amended to conform to the NASD definition.
<PAGE>
QUARTERLY REPORTS
W&R shall provide to the board of directors of the Fund and the board of
directors shall review at least quarterly a written report of the amounts so
expended of the distribution fee and the service fee paid to it under this Plan
with respect to Waddell & Reed Money Market C shares and the purposes for which
such expenditures were made.
APPROVAL OF PLAN
This Plan shall not become effective until it has been approved by a vote of the
board of directors of the Fund and by the directors who are not interested
persons of the Fund and have no direct or indirect financial interest in the
operation of the Plan or any agreement related to this Plan (other than as
directors or shareholders of the Fund) ("independent directors") cast in person
at a meeting called for the purpose of voting on such Plan.
CONTINUANCE
This Plan shall continue in effect for a period of one (1) year and thereafter
from year-to-year only so long as such continuance is approved by the directors,
including the independent directors, as specified hereinabove for the adoption
of a Plan by the directors and independent directors.
DIRECTOR CONTINUATION
In considering whether to adopt, continue or implement this Plan, the directors
shall have a duty to request and evaluate, and W&R shall have a duty to furnish,
such information as may be reasonably necessary to an informed determination of
whether this Plan should be adopted, implemented or continued.
TERMINATION
This Plan may be terminated at any time by a vote of a majority of the
independent directors of the Fund or by a vote of the majority of the
outstanding Waddell & Reed Money Market C shares of the Fund without penalty. On
termination, the payment of all distribution and service fees shall cease, and
the Fund shall have no obligation to W&R to reimburse it for any expenditure it
has made or may make to distribute Waddell & Reed Money Market C shares or
service Waddell & Reed Money Market C shareholder accounts.
AMENDMENTS
This Plan may not be amended to increase materially the amount to be spent for
distribution of Waddell & Reed Money Market C shares personal service and/or
maintenance of shareholder accounts without shareholder approval of the Waddell
& Reed Money Market C shareholders, and all material amendments of this Plan
must be approved in the manner prescribed for the adoption of the Plan by the
directors and independent directors as provided hereinabove. The distribution
and service fees may, however, be reduced by action of the board of directors
without shareholder approval.
<PAGE>
DIRECTORS
While this Plan is in effect, the selection and nomination of the directors who
are not interested persons of the Fund shall be committed to the discretion of
the directors who are not interested persons of the Fund.
RECORDS
Copies of the Plan, agreements and reports made pursuant to this Plan shall be
preserved as provided in Rule 12b-1(f) under the Act.
EX-99.B(o)cmmcp
UNITED CASH MANAGEMENT, INC.
MULTIPLE CLASS PLAN PURSUANT TO RULE 18f-3
This Multiple Class Plan ("Plan") pursuant to Rule 18f-3 under the
Investment Company Act of 1940, as amended ("1940 Act"), sets forth the multiple
class structure for United Cash Management, Inc. ("Fund"). The Fund's initial
multiple class structure was approved by the Board of Directors of United Cash
Management, Inc. on February 8, 1995, under an order of exemption issued by the
Securities and Exchange Commission on January 11, 1995. Subsequent to such
approval, Rule 18f-3 under the 1940 Act was adopted. It was determined that the
Fund operate under Rule 18f-3, and this Plan was adopted pursuant to Rule 18f-3.
This Plan describes the classes of shares of stock of the Fund -- Class A shares
and Waddell & Reed Money Market B shares -- offered to the public on or after
September 5, 1995 ("Implementation Date"), (prior to October 1, 1999, Waddell &
Reed Money Market B shares were known as Class B shares); and Class B shares,
Class C shares and Waddell & Reed Money Market C shares -- offered to the public
on or after October 1, 1999.
General Description of the Classes:
Class A Shares. Class A shares will be sold to the general public without a
sales charge. Class A shares will not be subject to a fee charged under a Plan
adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1 Plan"). All of
the shares of the Fund issued pursuant to a Fund prospectus effective prior to
the Implementation Date and that are outstanding on the Implementation Date will
be designated as Class A shares.
Class B Shares. Class B shares will be sold without an initial sales charge
and subject to a contingent deferred sales charge, which will be imposed on
redemption proceeds. The maximum contingent deferred sales charge will be 5.0%
and will decline 1% per year after the first full calendar year after investment
to 0% after seven years, as follows: in the first year, the contingent deferred
sales charge will be 5%; in the second year, 4%; in the third and fourth years,
3%; in the fifth year, 2%; in the sixth year, 1%; and in the seventh year, 0%.
Class B shares will also be subject to distribution and service fees charged
pursuant to a Distribution and Service Plan adopted pursuant to Rule 12b-1 that
provides for a maximum service fee of 0.25% and a maximum distribution fee of
0.75% of the average annual net assets of the Class B shares of the Fund. Class
B shares convert automatically into Class A shares in the eighth year held.
Class C Shares. Class C shares will be sold without a sales charge and
subject to a contingent deferred sales charge of 1% if the shares are redeemed
within twelve months of purchase. Class C shares will be subject to distribution
and service fees charged pursuant to a Distribution and Service Plan adopted
pursuant to Rule 12b-1 that provides for a maximum service fee of 0.25% and a
<PAGE>
maximum distribution fee of 0.75% of the average annual net assets of the Class
C shares of the Fund.
Waddell & Reed Money Market B. Waddell & Reed Money Market B shares will be
sold subject to a contingent deferred sales charge, which will be imposed on
redemption proceeds. The maximum contingent deferred sales charge will be 3.0%
and will decline 1% per year after the first full calendar year after investment
to 0% after four years. Waddell & Reed Money Market B shares will also be
subject to distribution and service fees charged pursuant to a Distribution and
Service Plan adopted pursuant to Rule 12b-1 that provides for a maximum service
fee of 0.25% and a maximum distribution fee of 0.75% of the average annual net
assets of the Waddell & Reed Money Market B shares of the Fund. Waddell & Reed
Money Market B shares that have been held by a shareholder for eight years will
convert automatically to Class A shares of the Fund. This conversion will be
made, without charge or fee, on the basis of the relative net asset values of
the two Classes. Waddell & Reed Money Market B shares will be available for
purchase only by exchange of shares of Waddell & Reed Funds, Inc.
Waddell & Reed Money Market C. Waddell & Reed Money Market C shares will be
sold subject to a contingent deferred sales charge of 1% if the shares are
redeemed within twelve months of purchase. Waddell & Reed Money Market C shares
will be subject to distribution and service fees charged pursuant to a
Distribution and Service Plan adopted pursuant to Rule 12b-1 that provides for a
maximum service fee of 0.25% and a maximum distribution fee of 0.75% of the
average annual net assets of the Waddell & Reed Money Market C shares of the
Fund.
Expense Allocations of Each Class:
In addition to the difference with respect to 12b-1 fees, each Class may
also pay a different amount of the following other expenses:
(a) stationery, printing, postage and delivery expenses related to
preparing and distributing materials such as shareholder reports,
prospectuses, and proxy statements to current shareholders of a specific
Class of shares;
(b) Blue Sky registration fees incurred by a specific Class of shares;
(c) SEC registration fees incurred by a specific Class of shares;
(d) expenses of administrative personnel and services required to
support the shareholders of a specific Class of shares;
(e) Directors' fees or expenses incurred as a result of issues
relating to a specific Class of shares;
(f) accounting expenses relating solely to a specific Class of shares;
<PAGE>
(g) auditors' fees, litigation expenses, and legal fees and expenses
relating to a specific Class of shares; and
(h) expenses incurred in connection with shareholders meetings as a
result of issues relating to a specific Class of shares.
The expenses listed above may, but are not required to, be directly
attributed and charged to a particular Class. The shareholder servicing fees and
other expenses listed above that are attributed and charged to a particular
Class are borne on a pro rata basis by the outstanding shares of that Class.
Certain Fund expenses that may be attributable to the Fund, but not a
particular Class, are allocated based on the relative daily net assets of the
Classes.
Exchange Privileges:
Class A shares of the Fund may be exchanged for Class A shares of any other
fund in the United Group of Mutual Funds.
Class B shares of the Fund may be exchanged for Class B shares of any other
fund in the United Group of Mutual Funds.
Class C shares of the Fund may be exchanged for Class C shares of any other
fund in the United Group of Mutual Funds.
Waddell & Reed Money Market B shares may be exchanged for Class B shares of
any fund in Waddell & Reed Funds, Inc.
Waddell & Reed Money Market C shares may be exchanged for Class C shares of
any fund in Waddell & Reed Funds, Inc.
These exchange privileges may be modified or terminated by the Fund, and
exchanges may only be made into funds that are legally registered for sale in
the investor's state of residence.
Additional Information:
This Plan is qualified by and subject to the terms of the then current
prospectus for the applicable Class; provided, however, that none of the terms
set forth in any such prospectus shall be inconsistent with the terms of the
Classes contained in this Plan. The prospectus and Statement of Additional
Information for each Class contains additional information about that Class and
the Fund's multiple class structure.
Adopted July 7, 1995
As amended October 18, 1995; and further
amended August 18, 1999,
effective October 1, 1999.
