<PAGE>
WADDELL & REED ADVISORS
CASH
MANAGEMENT,
INC.
ANNUAL
REPORT
-------------
June 30, 2000
<PAGE>
MANAGER'S LETTER
-----------------------------------------------------------------
JUNE 30, 2000
Dear Shareholder:
This report relates to the operation of Waddell & Reed Advisors Cash Management,
Inc. for the fiscal year ended June 30, 2000. The following discussion and
tables provide you with information regarding the Fund's performance during that
period.
The beginning of the Fund's fiscal year coincided with the beginning of the
Federal Reserve's recent cycle of increasing interest rates, which was a
response to an apparently "overheated" U.S. economy. This economic growth, it
was feared, would bring increased inflation, as the demand for goods began to
outpace the production of those goods.
The Federal Reserve increased the Federal Funds rate 25 basis points at the June
30, 1999 meeting, then again at the August 24th and November 16th meetings. At
year-end, the Federal Funds rate stood at 5.5 percent. Late in 1999, the
Federal Reserve pumped large amounts of money into the banking system in
preparation for Y2K. At the same time, issuers of short-term securities
structured their borrowings such that they would not be in the market at the
turn of the year. This created interest-rate volatility at year-end.
The new millennium began paradoxically, as the Y2K problems for which the
Federal Reserve had prepared by increasing the money supply had not
materialized, yet the U.S. economy -- which continued to grow at a rate the
Federal Reserve believed unsustainable -- was potentially being fueled by this
excess liquidity. Therefore, the Federal Reserve proceeded to drain the excess
money out of the system, while continuing to increase interest rates in an
attempt to slow the economy. The Federal Funds rate was increased 25 basis
points in February and March of this year, and 50 basis points in May. By June
2000, there were signs that the economy might be slowing somewhat, by which time
the federal funds rate had reached 6.50 percent.
Overall, since the beginning of the Fund's fiscal year, interest rates have
increased by 1.5 percentage points. This alone helped the Fund's overall yield
increase this past fiscal year. Moreover, the Fund's yield was increased by the
rate volatility over year-end, which we used to our advantage.
Since the outlook for short-term interest rates was for increased yields, we
invested the Fund's assets in securities with shorter maturities and in
floating-rate notes. Securities were also purchased over year-end, to take
advantage of higher yields on securities maturing in 2000. Some securities with
longer maturities were purchased, as deemed appropriate, to capitalize on higher
yields.
Going forward, we believe that interest rates should remain high and could
potentially go higher through the remainder of the year and into 2001. Most
likely, the Fed will refrain from raising interest rates in the months prior to
the presidential election, so as to remain apolitical. The determining factor
for short-term interest rates, we feel, will be how soon the U.S. economy
exhibits sufficient signs of slowing to a level that the Federal Reserve deems
non-inflationary. Once that level has been attained, the Federal Reserve should
end its cycle of interest rate increases.
We will seek to maintain performance through security selection that will
maximize yield while maintaining our low-risk profile. We intend to keep a
majority of the Fund's assets in securities with shorter maturities and in
variable-rate securities. However, we may invest in some securities with longer
maturities and higher yields as opportunities present themselves.
Thank you for choosing Waddell & Reed Advisors Cash Management, and we
appreciate your ongoing commitment.
Sincerely,
Mira Stevovich
Manager, Waddell & Reed Advisors Cash Management, Inc.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
JUNE 30, 2000
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
Certificates of Deposit - 2.39%
Yankee
Banque Nationale de Paris,
6.88%, 3-29-01 ........................ $10,000 $ 9,988,243
Societe Generale - New York,
6.6%, 7-17-00 ......................... 9,000 8,999,272
Total ................................. 18,987,515
Commercial Paper - 3.03%
Banc One Financial Corp. (Bank One Corporation),
6.93%, 7-10-00 ........................ 11,585 11,564,929
UBS Finance (DE) Inc.,
7.1%, 7-5-00 .......................... 12,585 12,575,072
Total ................................. 24,140,001
Notes - 11.82%
Banc One Corp.,
6.67625%, 1-3-01 ...................... 14,000 14,000,000
First Bank of South Dakota (U.S. Bank
National Association),
6.7175%, 12-20-00 ..................... 10,000 10,002,594
First Union National Bank:
6.68%, 3-7-01 ......................... 14,000 14,000,000
6.64875%, 5-18-01 ..................... 9,000 9,000,000
J.P. Morgan & Co., Incorporated:
6.60625%, 7-6-00 ...................... 10,000 9,999,972
6.6325%, 7-6-00 ....................... 10,000 10,000,000
Wells Fargo & Company:
6.7275%, 9-19-00 ...................... 17,000 16,996,114
6.875%, 5-10-01 ....................... 10,000 9,980,668
Total ................................. 93,979,348
TOTAL BANK OBLIGATIONS - 17.24% $137,106,864
(Cost: $137,106,864)
CORPORATE OBLIGATIONS
Commercial Paper
Chemicals and Allied Products - 6.91%
BOC Group Inc. (DE):
6.88%, 7-5-00 ......................... 18,950 18,935,514
6.95%, 7-5-00 ......................... 6,000 5,995,367
Pharmacia Corporation,
7.0%, 7-5-00 .......................... 30,000 29,976,667
Total ................................. 54,907,548
See Notes to Schedule of Investments on page 16.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
Communication - 7.32%
AT&T Corp.,
6.67%, 3-8-01 ......................... $14,000 $ 14,000,000
SBC Communications Inc.,
6.76%, 10-2-00 ........................ 15,000 14,738,050
U S WEST Communications Inc.:
6.85%, 7-5-00 ......................... 3,566 3,563,286
6.8%, 7-11-00 ......................... 15,000 14,971,667
6.85%, 7-12-00 ........................ 3,000 2,993,721
6.8%, 7-18-00 ......................... 8,000 7,974,311
Total ................................. 58,241,035
Electric, Gas and Sanitary Services - 0.50%
Questar Corp.,
6.6%, 7-11-00 ......................... 4,000 3,992,667
Fabricated Metal Products - 0.86%
Danaher Corporation,
6.6738%, Master Note .................. 6,831 6,831,000
Heavy Construction, Excluding Building - 0.63%
Halliburton Co.,
6.57%, 7-10-00 ........................ 5,000 4,991,787
Instruments and Related Products - 1.38%
Honeywell International Inc.:
6.95%, 7-5-00 ......................... 5,000 4,996,139
6.62%, 7-24-00 ........................ 6,000 5,974,623
Total ................................. 10,970,762
Nondepository Institutions - 7.93%
Associates Capital Corp. PLC (Associates
First Capital Corporation),
6.13%, 7-6-00 ......................... 7,000 6,994,040
Island Finance Puerto Rico Inc.:
6.57%, 7-6-00 ......................... 2,250 2,247,947
6.44%, 7-10-00 ........................ 10,000 9,983,900
6.57%, 7-17-00 ........................ 3,000 2,991,240
6.62%, 7-17-00 ........................ 25,000 24,926,444
Transamerica Finance Corporation:
6.62%, 7-17-00 ........................ 7,485 7,462,977
6.635%, 7-18-00 ....................... 8,500 8,473,368
Total ................................. 63,079,916
Printing and Publishing - 0.22%
American Greetings Corp.,
6.6%, 7-11-00 ......................... 1,750 1,746,792
Total Commercial Paper - 25.75% 204,761,507
See Notes to Schedule of Investments on page 16.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (backed by irrevocable bank
letter of credit)
Chemicals and Allied Products - 1.87%
Formosa Plastics Corp. U.S.A. (Bank of America N.A.),
6.14%, 7-7-00 ......................... $14,927 $ 14,911,725
Nondepository Institutions - 0.95%
ED&F Man Finance Inc. (Rabobank Nederland):
6.62%, 7-6-00 ......................... 2,600 2,597,609
6.58%, 7-24-00 ........................ 5,000 4,978,981
Total ................................. 7,576,590
Total Commercial Paper (backed by irrevocable bank
letter of credit) - 2.82% 22,488,315
Notes
Amusement and Recreation Services - 0.21%
Walt Disney Company (The),
6.375%, 3-30-01 ....................... 1,700 1,689,224
Communication - 1.26%
AT&T Corp.,
6.24%, 7-13-00 ........................ 10,000 9,999,869
Electric, Gas and Sanitary Services - 3.75%
Baltimore Gas and Electric Company,
6.84%, 9-1-00 ......................... 27,000 26,999,744
Pacificorp (Scot Power),
9.1%, 3-1-01 .......................... 2,750 2,787,448
Total ................................. 29,787,192
Food Stores - 1.89%
Albertson's Inc.,
6.62875%, 7-14-00 ..................... 15,000 14,999,787
General Merchandise Stores - 1.24%
Wal-Mart Stores, Inc.,
5.955%, 6-1-01 ........................ 10,000 9,870,984
Heavy Construction, Excluding Building - 2.48%
Shoosmith Bros., Inc. Taxable Variable Rate
Demand Bond, Series 2000 (Wachovia Bank, N.A.),
6.67%, 7-5-00 ......................... 19,700 19,700,000
Industrial Machinery and Equipment - 1.44%
AP Knitting Elements, Inc. (Wachovia Bank, N.A.),
6.67%, 7-5-00 ......................... 4,500 4,500,000
International Business Machines Corporation,
5.56%, 3-8-01 ......................... 7,000 6,946,540
Total ................................. 11,446,540
See Notes to Schedule of Investments on page 16.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Notes (Continued)
Instruments and Related Products - 2.31%
Honeywell International Inc.,
5.75%, 3-15-01 ........................ $18,500 $ 18,360,325
Insurance Carriers - 1.07%
Atlantic American Corporation (Wachovia Bank, N.A.),
6.67%, 7-5-00 ......................... 8,500 8,500,000
Miscellaneous Retail - 1.19%
Todd Shopping Center, L.L.C., Taxable
Variable Rate Demand Bonds, Series 1999
(Wachovia Bank, N.A.),
6.67%, 7-5-00 ......................... 9,500 9,500,000
Nondepository Institutions - 8.82%
Associates Corp. of North America:
6.375%, 8-15-00 ....................... 2,250 2,250,221
6.91%, 9-14-00 ........................ 9,000 9,010,900
Caterpillar Financial Services Corp.:
6.85%, 11-17-00 ....................... 4,000 4,001,847
7.06%, 6-25-01 ........................ 3,000 2,996,917
Deere (John) Capital Corp.,
6.58%, 1-26-01 ........................ 12,500 12,500,000
Ford Motor Credit Company:
6.375%, 10-6-00 ....................... 4,000 4,001,396
5.67%, 2-15-01 ........................ 1,500 1,490,464
General Motors Acceptance Corporation,
5.4%, 2-26-01 ......................... 9,000 8,922,832
Transamerica Finance Corporation:
6.72%, 7-17-00 ........................ 11,000 11,000,000
6.9625%, 9-2-00 ....................... 14,000 14,000,000
Total ................................. 70,174,577
Real Estate - 0.15%
Trap Rock Industries, Inc. (First Union National Bank),
6.8%, 1-5-00 .......................... 1,225 1,225,000
Security and Commodity Brokers - 2.34%
Merrill Lynch & Co., Inc.:
6.7%, 2-22-01 ......................... 13,600 13,583,530
6.5%, 4-1-01 .......................... 5,000 4,990,240
Total ................................. 18,573,770
Total Notes - 28.15% 223,827,268
TOTAL CORPORATE OBLIGATIONS - 56.72% $451,077,090
(Cost: $451,077,090)
See Notes to Schedule of Investments on page 16.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
JUNE 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS
Arizona - 0.38%
The Industrial Development Authority of the
County of Maricopa, Taxable Variable Rate
Demand, Multifamily Housing Revenue
Refunding Bonds (Villas Solanas Apartments
Project), Series 2000B,
6.7%, 7-6-00 .......................... $ 3,000 $ 3,000,000
California - 10.14%
California Pollution Control Financing
Authority, Environmental Improvement
Revenue Bonds:
Shell Oil Company Project,
Series 19980A (Taxable),
7.0%, 7-3-00 .......................... 25,000 25,000,000
Shell Martinez Refining Company
Project, Series 1996 (Taxable),
6.63%, 8-3-00 ......................... 5,000 5,000,000
City of Anaheim, California, Certificates
of Participation (1993 Arena Financing
Project), Municipal Adjustable Rate
Taxable Securities (Credit Suisse),
6.65%, 7-10-00 ........................ 29,000 29,000,000
Oakland-Alameda County Coliseum Authority, Lease
Revenue Bonds (Oakland Coliseum Arena Project):
1996 Series A-2 Variable Rate Lease Revenue Bonds
(Taxable), (Canadian Imperial Bank of Commerce),
6.62%, 7-5-00 ......................... 14,600 14,600,000
2000 Series D Variable Rate Lease Revenue Bonds
(Taxable), (First Union National Bank),
6.83%, 7-5-00 ......................... 7,000 7,000,000
Total ................................. 80,600,000
Colorado - 3.96%
City and County of Denver, Colorado, Department
of Aviation, Airport System, Subordinate
Commercial Paper Taxable Notes, Series 2000B,
6.58%, 8-15-00 ........................ 29,789 29,543,985
Kit Carson County, Colorado, Architectural
Development Revenue Bonds (Taxable), (Midwest
Farms, L.L.C. Project), Series 1997 (Norwest
Bank Minnesota, National Association),
6.7%, 7-6-00 .......................... 1,920 1,920,000
Total ................................. 31,463,985
See Notes to Schedule of Investments on page 16.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
JUNE 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Kentucky - 1.51%
City of Bardstown, Kentucky, Taxable Variable Rate
Demand Industrial Revenue Bonds:
Series 1994 (R.J. Tower Corporation Project),
(Comerica Bank),
6.74%, 7-6-00 ......................... $ 8,035 $ 8,035,000
Series 1995 (R.J. Tower Corporation Project),
(Comerica Bank),
6.74%, 7-6-00 ......................... 4,000 4,000,000
Total ................................. 12,035,000
Louisiana - 6.93%
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),
6.67%, 8-7-00 ......................... 39,550 39,550,000
Industrial Development Board of the Parish
Of Calcasieu, Inc., Environmental Revenue
Bonds (CITGO Petroleum Corporation Project),
Series 1996 (Taxable), (Westdeutsche
Landesbank Girozentrale),
6.75%, 9-6-00 ......................... 9,000 9,000,000
Gulf Coast Industrial Development Authority,
Environmental Facilities Revenue Bonds
(CITGO Petroleum Corporation Project), Taxable
Series 1998 (Royal Bank of Canada),
6.57%, 7-7-00 ......................... 6,600 6,600,000
Total ................................. 55,150,000
Massachusetts - 0.49%
Massachusetts Industrial Finance Agency, Taxable
Revenue Bonds (Southcoast Nursing and
Rehabilitation Center Partnership Issue -
Series 1997), (Fleet National Bank),
6.75%, 7-5-00 ......................... 3,900 3,900,000
Mississippi - 0.75%
Mississippi Business Finance Corporation,
Taxable Adjustable Mode, Industrial Development
Revenue Bonds (BenchCraft Project), Series 1999
(Wachovia Bank, N.A.),
6.67%, 7-5-00 ......................... 6,000 6,000,000
See Notes to Schedule of Investments on page 16.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
JUNE 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
New Jersey - 1.52%
New Jersey Economic Development Authority,
Federally Taxable Variable Rate Demand/
Fixed Rate Revenue Bonds (The Morey
Organization, Inc. Project), Series of 1997
(First Union National Bank),
6.83%, 7-5-00.......................... $12,060 $ 12,060,000
New York - 2.95%
The City of New York, General Obligation Bonds,
Fiscal 1995 Series B, Taxable Adjustable Rate
Bonds (Bayerische Landesbank Girozentrale,
New York Branch),
6.75%, 8-17-00 ........................ 12,810 12,810,000
Dutchess County Industrial Development Agency,
Taxable Variable Rate Demand Civic Facility
Revenue Bonds, Series 1999-C (St. Francis'
Hospital, Poughkeepsie, New York Civic Facility),
(The Bank of New York),
6.88%, 7-6-00 ......................... 4,000 4,000,000
Putnam Hospital Center, Multi-Mode Revenue Bonds,
Series 1999 (The Bank of New York),
6.88%, 7-5-00 ......................... 3,500 3,500,000
Town of Hempstead, Industrial Development Agency,
Variable Rate Demand Taxable Industrial
Development Revenue Bonds, Series 1996
(1500 Hempstead TPK, LLC Facility), (The
Bank of New York),
6.88%, 7-6-00 ......................... 3,145 3,145,000
Total ................................. 23,455,000
North Carolina - 0.23%
Wake Forest University, Taxable Variable Rate
Demand Bonds, Series 1997 (Wachovia Bank, N.A.),
6.67%, 7-5-00 ......................... 1,800 1,800,000
Pennsylvania - 2.70%
Montgomery County Industrial Development
Authority, Federally Taxable Variable
Rate Demand Revenue Bonds (Neose
Technologies, Inc. Project), Series
B of 1997 (First Union National Bank),
6.83%, 7-5-00 ......................... 9,850 9,850,000
See Notes to Schedule of Investments on page 16.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
JUNE 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Pennsylvania (Continued)
Berks County Industrial Development Authority
(Commercial Facilities Project), Series
B of 1995 (First Union National Bank),
6.83%, 7-5-00 ......................... $ 7,995 $ 7,995,000
Philadelphia Authority for Industrial Development,
Variable/Fixed Rate Federally Taxable
Economic Development Bonds (Mother's Work, Inc.),
Series of 1995 (Fleet Financial Group Inc.),
6.75%, 7-5-00 ......................... 3,635 3,635,000
Total ................................. 21,480,000
Texas - 1.63%
Metrocrest Hospital Authority, Series 1989A
(The Bank of New York),
6.6%, 7-6-00 .......................... 13,000 12,988,079
Virginia - 0.78%
Virginia Health Services, Inc., Taxable
Variable Rate Demand Bonds, Series 1998
(Wachovia Bank, N.A.),
6.67%, 7-5-00 ......................... 6,200 6,200,000
Washington - 1.77%
Wenatchee Valley Clinic, P.S.,
Floating Rate Taxable Bonds, Series 1998
(U.S. Bank National Association),
6.7%, 7-6-00 .......................... 14,100 14,100,000
TOTAL MUNICIPAL OBLIGATIONS - 35.74% $284,232,064
(Cost: $284,232,064)
UNITED STATES GOVERNMENT SECURITY - 0.13%
Federal Home Loan Bank,
6.6638%, 9-6-00 ....................... 1,000 $ 999,826
(Cost: $999,826)
TOTAL INVESTMENT SECURITIES - 109.83% $873,415,844
(Cost: $873,415,844)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (9.83%) (78,202,899)
NET ASSETS - 100.00% $795,212,945
See Notes to Schedule of Investments on page 16.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
JUNE 30, 2000
Notes to Schedule of Investments
Cost of investments owned is the same as that used for Federal income tax
purposes.
See Note 1 to financial statements for security valuation and other significant
accounting policies concerning investments.
<PAGE>
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
Assets
Investment securities - at value (Note 1) ........ $873,416
Cash ............................................ 3,806
Receivables:
Fund shares sold ................................ 6,937
Interest ........................................ 4,642
Prepaid insurance premium ........................ 18
--------
Total assets .................................. 888,819
--------
Liabilities
Payable to Fund shareholders ..................... 92,880
Dividends payable ................................ 437
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 239
Accrued management fee (Note 2) .................. 9
Accrued accounting services fee (Note 2) ......... 7
Accrued service fee (Note 2) ..................... 3
Other ............................................ 31
--------
Total liabilities ............................. 93,606
--------
Total net assets ............................. $795,213
========
Net Assets
$0.01 par value capital stock, authorized -- 5,000,000;
Class A shares outstanding - 781,817
Class B shares outstanding - 3,442
Class C shares outstanding - 922
Waddell & Reed Money Market Class C shares
outstanding - 9,032
Capital stock ................................... $ 7,952
Additional paid-in capital ...................... 787,261
--------
Net assets applicable to outstanding
units of capital ............................. $795,213
========
Net asset value, redemption and offering price
per share for all classes ........................ $1.00
=====
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended JUNE 30, 2000
(In Thousands)
Investment Income
Interest and amortization (Note 1B) .............. $45,003
-------
Expenses (Note 2):
Investment management fee ....................... 3,052
Transfer agency and dividend disbursing:
Class A ........................................ 2,699
Class B ....................................... 3
Class C ....................................... 1
Waddell & Reed Money Market Class C ........... 15
Custodian fees .................................. 96
Accounting services fee ......................... 76
Distribution fee:
Class B ....................................... 13
Class C ....................................... 2
Waddell & Reed Money Market Class C ........... 60
Legal fees ...................................... 29
Service fee:
Class B ....................................... 5
Class C ....................................... 1
Waddell & Reed Money Market Class C ........... 19
Audit fees ...................................... 11
Other ........................................... 302
-------
Total expenses ................................ 6,384
-------
Net investment income ........................ 38,619
-------
Net increase in net assets resulting
from operations ........................... $38,619
=======
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
For the fiscal year ended
June 30,
-------------------------
2000 1999
------------- ------------
Increase in Net Assets
Operations:
Net investment income .............. $38,619 $ 28,632
-------- --------
Net increase in net assets
resulting from operations ....... 38,619 28,632
-------- --------
Dividends to shareholders
from net investment income:*
Class A ............................ (38,178) (28,425)
Class B ............................ (81) ---
Class C ............................ (14) ---
Waddell & Reed Money Market
Class C .......................... (346) (207)
-------- --------
(38,619) (28,632)
-------- --------
Capital share transactions (Note 3) . 123,445 135,314
-------- --------
Total increase ...................... 123,445 135,314
Net Assets
Beginning of period ................. 671,768 536,454
-------- --------
End of period ....................... $795,213 $671,768
======== ========
Undistributed net investment
income ........................... $--- $---
==== ====
*See "Financial Highlights" on pages 20 - 23.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
FINANCIAL HIGHLIGHTS
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the fiscal year ended June 30,
----------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
Net investment
income ........... 0.0511 0.0455 0.0484 0.0472 0.0487
Less dividends
declared ......... (0.0511)(0.0455)(0.0484)(0.0472)(0.0487)
------ ------ ------ ------ ------
Net asset value,
end of period .... $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
Total return........ 5.18% 4.67% 4.93% 4.80% 5.01%
Net assets, end of
period (in
millions) ........ $782 $667 $533 $514 $402
Ratio of expenses to
average net
assets ........... 0.83% 0.83% 0.89% 0.87% 0.91%
Ratio of net
investment income
to average net
assets ........... 5.08% 4.54% 4.84% 4.70% 4.89%
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
FINANCIAL HIGHLIGHTS
Class B Shares
For a Share of Capital Stock Outstanding
Throughout The Period:
For the
period
from 9/9/99*
through
6/30/00
--------
Net asset value,
beginning of
period ........... $1.00
------
Net investment
income ........... 0.0346
Less dividends
declared ......... (0.0346)
------
Net asset value,
end of period .... $1.00
=======
Total return........ 3.43%
Net assets, end of
period (in
millions) ........ $3
Ratio of expenses to
average net
assets ........... 1.67%**
Ratio of net
investment income
to average net
assets ........... 4.49%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
FINANCIAL HIGHLIGHTS
Class C Shares
For a Share of Capital Stock Outstanding
Throughout The Period:
For the
period
from 9/9/99*
through
6/30/00
--------
Net asset value,
beginning of
period ........... $1.00
------
Net investment
income ........... 0.0335
Less dividends
declared ......... (0.0335)
------
Net asset value,
end of period .... $1.00
=======
Total return........ 3.32%
Net assets, end of
period (in
millions) ........ $1
Ratio of expenses to
average net
assets ........... 1.82%**
Ratio of net
investment income
to average net
assets ........... 4.45%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
FINANCIAL HIGHLIGHTS (A)
Waddell & Reed Money Market Class C Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the fiscal period
year ended June 30, from 9/5/95*
------------------------------- through
2000 1999 1998 1997 6/30/96
-------- ------ ------ ------ -------
Net asset value,
beginning of
period ........... $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
Net investment
income ........... 0.0426 0.0371 0.0403 0.0407 0.0312
Less dividends
declared ......... (0.0426)(0.0371)(0.0403)(0.0407) (0.0312)
------ ------ ------ ------ ------
Net asset value,
end of period .... $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
Total return........ 3.86% 3.79% 4.10% 4.13% 3.15%
Net assets, end of
period (in
millions) ........ $9 $5 $4 $4 $1
Ratio of expenses to
average net
assets ........... 1.77%** 1.60% 1.71% 1.48% 1.88%**
Ratio of net
investment income
to average net
assets ........... 4.63%** 3.77% 4.03% 4.14% 3.76%**
*Commencement of operations.
(A)
**Annualized.
See Note 3.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 1 -- Significant Accounting Policies
Waddell & Reed Advisors Cash Management, Inc. (the "Fund"), formerly United
Cash Management, Inc., 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 accounting principles
generally accepted in the United States of America.
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 accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates.
NOTE 2 -- Investment Management and Payments to Affiliated Persons
The Fund pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business. The fee is
payable by the Fund at the annual rate of 0.40% of net assets. The Fund accrues
and pays this fee daily.
Pursuant to assignment of the Investment Management Agreement between the
Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly owned subsidiary of W&R, serves as the Fund's
investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed Services
Company ("WARSCO"), a wholly owned subsidiary of W&R. Under the agreement,
WARSCO acts as the agent in providing accounting services and assistance to the
Fund and pricing daily the value of shares of the Fund. For these services, the
Fund pays WARSCO a monthly fee of one-twelfth of the annual fee shown in the
following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
Under the Shareholder Servicing Agreement, with respect to Class A, Class
B, Class C and Waddell & Reed Money Market C shares, the Fund pays WARSCO a
monthly fee of $1.75 for each shareholder account which was in existence at any
time during the prior month and, for Class A shares, $.75 for each shareholder
check it processes. The Fund also reimburses W&R and WARSCO for certain out-of-
pocket costs.
The Fund has adopted 12b-1 plans for Class B, Class C and Waddell & Reed
Money Market C shares. Under the plans, the Fund pays W&R daily a distribution
fee not to exceed, on an annual 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. During the period ended June 30, 2000, W&R paid
no sales commissions.
During the period ended June 30, 2000, the Distributor received $2,664,
$1,209 and $11,250 in deferred sales charges for Class B, Class C and Waddell &
Reed Money Market C shares, respectively.
The Fund paid Directors' fees of $25,744, 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
The Fund offers four classes of shares: Class A, Class B, Class C 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
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, at the end of the
seventh calendar year following the first year of purchase, 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; each class may bear
differing amounts of certain class-specific expenses; and each class has a
separate exchange privilege. A comprehensive discussion of the terms under
which shares of each class are offered is contained in the Prospectus and the
Statement of Additional Information for the Fund.
Income, non-class specific expenses, and realized and unrealized gains and
losses are allocated daily to each class of shares based on the value of their
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity.
Waddell & Reed Money Market Class B shares were combined with Waddell &
Reed Money Market Class C shares effective March 24, 2000 and were redesignated
Waddell & Reed Money Market Class C shares.
Transactions in capital stock are summarized below. Amounts are in
thousands. The number of shares transacted during the periods corresponds to the
dollar amounts included in this table because shares are recorded at $1.00 per
share.
For the fiscal
year ended June 30,
--------------------------
2000 1999
------------ ------------
Value issued from sale
of shares:
Class A ............ $5,022,749 $2,528,520
Class B ............. 8,764 ---
Class C ............. 1,548 ---
Waddell & Reed Class B 13,885 12,293
Waddell & Reed Class C 22,158 ---
Value issued from
reinvestment of dividends:
Class A ............ 35,182 27,258
Class B ............. 75 ---
Class C ............. 13 ---
Waddell & Reed Class B 173 195
Waddell & Reed Class C 139 ---
Value redeemed:
Class A ............ (4,943,269) (2,421,463)
Class B ............. (5,397) ---
Class C ............. (640) ---
Waddell & Reed Class B (18,671) (11,489)
Waddell & Reed Class C (13,264) ---
-------- ----------
Increase in
outstanding capital $123,445 $ 135,314
======== ==========
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Waddell & Reed Advisors Cash Management, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Waddell & Reed Advisors Cash Management, Inc.
(formerly United Cash Management, Inc.) (the "Fund") as of June 30, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000, 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
Waddell & Reed Advisors Cash Management, Inc. as of June 30, 2000, 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 accounting principles generally accepted in the United States of
America.
Deloitte & Touche LLP
Kansas City, Missouri
August 4, 2000
<PAGE>
INCOME TAX INFORMATION
Dividends are taxable to shareholders and are reportable in your Federal
income tax returns for the years in which the dividends were received or
reinvested.
Statements as to the tax status of each investor's dividends will be mailed
annually.
Dividends are declared and recorded by the Fund on each day the New York
Stock Exchange is open for business.
Shareholders are advised to consult with their tax advisers concerning the
tax treatment of dividends from the Fund.
Corporations:
The dividends are not eligible for the dividends received deduction.
<PAGE>
This report is submitted for the general information of the shareholders of
Waddell & Reed Advisors Cash Management, Inc. It is not authorized for
distribution to prospective investors in the Fund unless accompanied with or
preceded by the Waddell & Reed Advisors Cash Management, Inc. current
prospectus.
To all traditional IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from a traditional IRA unless you make a written
election not to have taxes withheld. The election may be made by submitting
forms provided by Waddell & Reed, Inc. which can be obtained from your Waddell &
Reed representative or by submitting Internal Revenue Service Form W-4P. Once
made, an election can be revoked by providing written notice to Waddell & Reed,
Inc. If you elect not to have tax withheld you may be required to make payments
of estimated tax. Penalties may be imposed by the IRS if withholding and
estimated tax payments are not adequate.
<PAGE>
DIRECTORS
Keith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, San Mateo, California
Linda K. Graves, Topeka, Kansas
Joseph Harroz, Jr., Norman, Oklahoma
John F. Hayes, Hutchinson, Kansas
Robert L. Hechler, Overland Park, Kansas
Henry J. Herrmann, Overland Park, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Ronald C. Reimer, Mission Hills, Kansas
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Frederick Vogel III, Milwaukee, Wisconsin
OFFICERS
Robert L. Hechler, President
Henry J. Herrmann, Vice President
Theodore W. Howard, Vice President and Treasurer
Kristen A. Richards, Vice President and Secretary
Daniel C. Schulte, Vice President
Mira Stevovich, Vice President
<PAGE>
The Waddell & Reed Advisors Group of Mutual Funds
Waddell & Reed Advisors Accumulative Fund
Waddell & Reed Advisors Asset Strategy Fund, Inc.
Waddell & Reed Advisors Bond Fund
Waddell & Reed Advisors Cash Management, Inc.
Waddell & Reed Advisors Continental Income Fund, Inc.
Waddell & Reed Advisors Government Securities Fund, Inc.
Waddell & Reed Advisors High Income Fund, Inc.
Waddell & Reed Advisors High Income Fund II, Inc.
Waddell & Reed Advisors Income Fund
Waddell & Reed Advisors International Growth Fund, Inc.
Waddell & Reed Advisors Municipal Bond Fund, Inc.
Waddell & Reed Advisors Municipal High Income Fund, Inc.
Waddell & Reed Advisors New Concepts Fund, Inc.
Waddell & Reed Advisors Retirement Shares, Inc.
Waddell & Reed Advisors Science and Technology Fund
Waddell & Reed Advisors Small Cap Fund, Inc.
Waddell & Reed Advisors Tax-Managed Equity Fund, Inc.
Waddell & Reed Advisors Vanguard Fund, Inc.
W&R Funds, Inc.
Asset Strategy Fund
High Income Fund
International Growth Fund
Large Cap Growth Fund
Limited-Term Bond Fund
Money Market Fund
Municipal Bond Fund
Mid Cap Growth Fund
Science and Technology Fund
Small Cap Growth Fund
Tax-Managed Equity Fund
Total Return Fund
----------------------------------
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
Toll-Free - (800)366-5465
Local - (913) 236-1303
Our INTERNET address is:
http://www.waddell.com
NUR1010A(6-00)
