WADDELL & REED ADVISORS
CASH
MANAGEMENT,
INC.
ANNUAL
REPORT
------------------
September 30, 2000
<PAGE>
CONTENTS
3 Manager's Letter
5 Investments
13 Statement of Assets and Liabilities
14 Statements of Operations
15 Statements of Changes in Net Assets
16 Financial Highlights
20 Notes to Financial Statements
24 Independent Auditors' Report
25 Income Tax Information
26 Directors & Officers
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.
<PAGE>
MANAGER'S LETTER OF CASH MANAGEMENT
-----------------------------------------------------------------
SEPTEMBER 30, 2000
Dear Shareholder,
This report relates to the operation of Waddell & Reed Advisors Cash Management,
Inc. for the fiscal period ended September 30, 2000. The following tables
provide you with information regarding the Fund's performance during that
period, while the following discussion provides you with information regarding
the Fund's performance during the twelve months ended September 30, 2000. The
Fund's board of directors recently approved a change in the Fund's fiscal year-
end from June 30 to September 30.
At the end of 1999, the Federal Reserve was in the midst of increasing interest
rates, which was in 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 had already increased the federal funds rate 50 basis points
during the previous quarter, and went on to increase the funds rate another 25
basis points at its November 16, 1999 meeting. 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 1999.
The new millennium began with the U.S. economy growing at a rate the Federal
Reserve believed unsustainable. Therefore, the Federal Reserve drained 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 a full
percentage point during the first half of 2000. By June 2000, there were signs
that the economy might be slowing, and as the summer progressed, there were more
signs of an economic slowdown. Market sentiment moved from the anticipation of
higher short-term interest rates to the belief that the Federal Reserve would
hold short-term interest rates steady into the first part of the new year.
Over the course of the last year, interest rates have increased by 1.25
percentage points, which helped the Fund's overall yield increase during the
past year. Moreover, the Fund's yield was increased by the rate volatility over
year end, which we used to our advantage.
Because the outlook initially was for increased short-term rates, we invested
the Fund's assets in securities with short maturities and in floating-rate
notes. Securities were also purchased over year-end to take advantage of higher
yields for securities maturing in Y2K. As interest rates increased, securities
with longer maturities were purchased to capitalize on higher yields. As the
market sentiment has shifted to a belief that no rate changes are imminent, we
have remained in higher-yielding securities and floating rate products, which we
believe gives the Fund an advantage over commercial paper.
We kept a shorter average maturity early in the year as interest rate increases
were anticipated, and lengthened the average maturity as rates increased. As
the short-term yield curve has flattened, we have used security selection and
floating-rate securities in an attempt to capture above average yields.
Going forward, we believe the Federal Reserve will refrain from raising interest
rates during the fourth quarter of 2000 and into 2001. Slowing in some sectors
of the economy has given impetus to market sentiment that the Federal Reserve
will not have to increase the federal funds rate further to slow economic
growth. However, the Federal Reserve Board has not yet given indication that it
has seen sufficient signs of slowing economic growth to a level that it deems
non-inflationary. Therefore, it remains uncertain if this cycle of interest
rate increases has ended.
We intend to continue to seek to maintain performance through security selection
that can maximize yield while maintaining our low-risk profile. We also intend
to invest to take advantage of changes in the short-term yield curve and plan to
continue investing in variable-rate securities; however, we intend to extend
maturities to capture higher yields as opportunities present themselves.
In closing, I would like to thank you for your investment, your continued
confidence and your support of Waddell & Reed Advisors Cash Management.
Sincerely,
Mira Stevovich,
Manager, Waddell & Reed Advisors Cash Management, Inc.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
Certificates of Deposit - 2.14%
Yankee
Banque Nationale de Paris,
6.88%, 3-29-01 ........................ $10,000 $ 9,986,253
Societe Generale - New York,
6.5725%, 12-7-00 ...................... 9,000 8,999,652
Total ................................. 18,985,905
Commercial Paper - 2.61%
ANZ (DE) Inc.:
6.5%, 11-3-00 ......................... 1,210 1,202,790
6.51%, 11-3-00 ........................ 1,900 1,888,662
Banc One Financial Corp. (Bank One Corporation),
6.56%, 10-4-00 ........................ 20,000 19,989,067
Total ................................. 23,080,519
Notes - 10.10%
Banc One Corp.,
6.67%, 1-3-01 ......................... 14,000 14,000,000
First Bank of South Dakota (U.S. Bank
National Association),
6.69375%, 12-20-00 .................... 10,000 10,001,206
First Chicago NBD Corporation
(Bank One Corporation),
6.785%, 12-20-00 ...................... 5,375 5,379,571
First Union National Bank:
6.68%, 3-7-01 ......................... 14,000 14,000,000
6.6225%, 5-18-01 ...................... 9,000 9,000,000
J.P. Morgan & Co., Incorporated,
6.59%, 10-6-00 ........................ 10,000 10,000,000
Wells Fargo & Company:
6.60%, 12-19-00 ....................... 17,000 16,997,074
6.875%, 5-10-01 ....................... 10,000 9,986,027
Total ................................. 89,363,878
TOTAL BANK OBLIGATIONS - 14.85% $131,430,302
(Cost: $131,430,302)
CORPORATE OBLIGATIONS
Commercial Paper
Chemicals and Allied Products - 1.33%
BOC Group Inc. (DE),
6.73%, 10-3-00 ........................ 11,800 11,795,588
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
Communication - 5.10%
AT&T Corp.:
6.6525%, 10-19-00 ..................... $11,000 $ 11,000,000
6.67%, 3-8-01 ......................... 14,000 14,000,000
British Telecommunications PLC:
6.55%, 10-24-00 ....................... 2,000 1,991,631
6.57%, 2-20-01 ........................ 3,228 3,144,346
SBC Communications Inc.,
6.76%, 10-2-00 ........................ 15,000 14,997,183
Total ................................. 45,133,160
Electric, Gas and Sanitary Services - 5.79%
Allegheny Energy Inc.:
6.72%, 10-2-00 ........................ 8,020 8,018,503
6.55%, 11-8-00 ........................ 3,394 3,370,534
6.55%, 11-20-00 ....................... 10,000 9,909,028
Kansas City Power & Light Company,
6.50%, 11-15-00 ....................... 8,820 8,748,337
Northern Illinois Gas Company,
6.60%, 10-5-00 ........................ 4,790 4,786,487
Pacific Gas & Electric Co.:
6.62%, 10-12-00 ....................... 5,000 4,989,886
6.70%, 10-19-00 ....................... 467 465,436
Questar Corp.,
6.52%, 10-3-00 ........................ 11,000 10,996,016
Total ................................. 51,284,227
Food and Kindred Products - 0.12%
Bestfoods,
6.50%, 10-3-00 ........................ 1,031 1,030,628
Printing and Publishing - 1.68%
Tribune Co.,
6.53%, 11-28-00 ....................... 15,000 14,842,192
Total Commercial Paper - 14.02% 124,085,795
Commercial Paper (backed by irrevocable bank
letter of credit)
Chemicals and Allied Products - 0.67%
Formosa Plastics Corp. U.S.A. (Bank of America N.A.),
6.53%, 11-3-00 ........................ 6,000 5,964,085
Nondepository Institutions - 1.76%
ED&F Man Finance Inc. (Rabobank Nederland):
6.7%, 10-5-00 ......................... 6,314 6,309,300
6.52%, 10-17-00 ....................... 9,300 9,273,050
Total ................................. 15,582,350
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (backed by irrevocable bank
letter of credit) (Continued)
Oil and Gas Extraction - 2.90%
Louis Dreyfus Corp. (Bank of Montreal),
6.53%, 10-23-00 ....................... $ 5,971 $ 5,947,172
Louis Dreyfus Corp. (Dresdner Bank AG):
6.51%, 10-10-00 ....................... 14,749 14,724,996
6.50%, 10-12-00 ....................... 5,000 4,990,069
Total ................................. 25,662,237
Total Commercial Paper (backed by irrevocable bank
letter of credit) - 5.33% 47,208,672
Notes
Amusement and Recreation Services - 0.19%
Walt Disney Company (The),
6.375%, 3-30-01 ....................... 1,700 1,692,916
Electric, Gas and Sanitary Services - 3.03%
Baltimore Gas and Electric Company,
6.65%, 12-1-00 ........................ 24,078 24,077,755
Pacificorp (Scot Power),
9.1%, 3-1-01 .......................... 2,750 2,773,384
Total ................................. 26,851,139
General Merchandise Stores - 1.12%
Wal-Mart Stores, Inc.,
5.955%, 6-1-01 ........................ 10,000 9,897,489
Industrial Machinery and Equipment - 1.30%
AP Knitting Elements, Inc. (Wachovia Bank, N.A.),
6.62%, 10-4-00 ........................ 4,500 4,500,000
International Business Machines Corporation,
5.56%, 3-8-01 ......................... 7,000 6,965,446
Total ................................. 11,465,446
Instruments and Related Products - 2.08%
Honeywell International Inc.,
5.75%, 3-15-01 ........................ 18,500 18,408,911
Insurance Carriers - 0.96%
Atlantic American Corporation (Wachovia Bank, N.A.),
6.62%, 10-4-00 ........................ 8,500 8,500,000
Miscellaneous Retail - 1.05%
Todd Shopping Center, L.L.C., Taxable
Variable Rate Demand Bonds, Series 1999
(Wachovia Bank, N.A.),
6.62%, 10-4-00 ........................ 9,300 9,300,000
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Notes (Continued)
Nondepository Institutions - 9.34%
Associates Corp. of North America,
6.76%, 12-14-00 ....................... $ 9,000 $ 9,008,053
Caterpillar Financial Services Corp.:
6.78%, 11-17-00 ....................... 4,000 4,000,625
7.06%, 6-25-01 ........................ 3,000 2,998,147
Deere (John) Capital Corp.:
6.08%, 12-18-00 ....................... 2,865 2,859,652
6.58%, 1-26-01 ........................ 12,500 12,500,000
7.0505%, 8-6-01 ....................... 10,000 9,989,389
Ford Motor Credit Company:
6.375%, 10-6-00 ....................... 4,000 4,000,020
6.93%, 12-20-00 ....................... 1,850 1,852,343
5.67%, 2-15-01 ........................ 1,500 1,494,178
General Motors Acceptance Corporation,
5.4%, 2-26-01 ......................... 9,000 8,952,090
Transamerica Finance Corporation:
6.7725%, 12-12-00 ..................... 14,000 14,000,000
6.6925%, 3-16-01 ...................... 11,000 11,000,000
Total ................................. 82,654,497
Real Estate - 0.14%
Trap Rock Industries, Inc. (First Union National Bank),
6.73%, 10-4-00 ........................ 1,225 1,225,000
Security and Commodity Brokers - 2.10%
Merrill Lynch & Co., Inc.:
6.7%, 2-22-01 ......................... 13,600 13,583,678
6.5%, 4-1-01 .......................... 5,000 4,993,893
Total ................................. 18,577,571
Wholesale Trade - Nondurable Goods - 0.98%
Philip Morris Companies Inc.,
6.0%, 7-15-01 ......................... 8,800 8,719,037
Total Notes - 22.29% 197,292,006
TOTAL CORPORATE OBLIGATIONS - 41.64% $368,586,473
(Cost: $368,586,473)
MUNICIPAL OBLIGATIONS
Arizona - 0.34%
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%, 10-5-00 ......................... 3,000 3,000,000
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
California - 4.38%
City of Anaheim, California, Certificates
of Participation (1993 Arena Financing
Project), Municipal Adjustable Rate
Taxable Securities (Credit Suisse),
6.62%, 10-3-00 ........................ $29,000 $ 29,000,000
California Pollution Control Financing
Authority, Environmental Improvement
Revenue Bonds:
Shell Martinez Refining Company
Project, Series 1996 (Taxable),
6.55%, 11-13-00 ....................... 5,750 5,750,000
Shell Oil Company Project,
Series 1998A (Taxable),
6.56%, 11-6-00 ........................ 4,000 4,000,000
Total ................................. 38,750,000
Colorado - 3.53%
City and County of Denver, Colorado, Department
of Aviation, Airport System, Subordinate
Commercial Paper Taxable Notes, Series 2000B,
6.53%, 12-05-00 ....................... 29,789 29,437,779
Kit Carson County, Colorado, Architectural
Development Revenue Bonds (Taxable), (Midwest
Farms, L.L.C. Project), Series 1997 (Norwest
Bank Minnesota, National Association),
6.7%, 10-5-00 ......................... 1,830 1,830,000
Total ................................. 31,267,779
Florida - 1.06%
City of Gainesville, Florida, Utilities System,
Commercial Paper Notes, Series D
(Federally Taxable), (Suntrust),
6.53%, 11-13-00 ....................... 9,496 9,421,934
Indiana - 1.70%
City of Whiting, Indiana, Industrial Sewage
and Solid Waste Disposal Revenue Bonds,
(Amoco Oil Company Project), Taxable Series 1995
(Amoco Corporation):
6.57%, 11-6-00 ........................ 12,000 12,000,000
6.62%, 11-2-00 ........................ 3,000 3,000,000
Total ................................. 15,000,000
Kentucky - 0.45%
City of Bardstown, Kentucky, Taxable Variable Rate
Demand Industrial Revenue Bonds,
Series 1995 (R.J. Tower Corporation Project),
(Comerica Bank),
6.59%, 10-5-00 ........................ 4,000 4,000,000
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Louisiana - 9.13%
Industrial Development Board of the Parish
Of Calcasieu, Inc., Environmental Revenue
Bonds (CITGO Petroleum Corporation Project),
Series 1996 (Taxable), (Westdeutsche
Landesbank Girozentrale):
6.62%, 12-6-00 ........................ $25,515 $ 25,515,000
6.63%, 12-5-00 ........................ 9,000 9,000,000
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):
6.64%, 11-3-00 ........................ 18,450 18,450,000
6.62%, 11-30-00 ....................... 11,000 11,000,000
Gulf Coast Industrial Development Authority,
Environmental Facilities Revenue Bonds
(CITGO Petroleum Corporation Project), Taxable
Series 1998 (Royal Bank of Canada),
6.63%, 11-6-00 ........................ 16,825 16,825,000
Total ................................. 80,790,000
Massachusetts - 0.44%
Massachusetts Industrial Finance Agency, Taxable
Revenue Bonds (Southcoast Nursing and
Rehabilitation Center Partnership Issue -
Series 1997), (Fleet National Bank),
6.75%, 10-4-00 ........................ 3,900 3,900,000
Mississippi - 0.68%
Mississippi Business Finance Corporation,
Taxable Adjustable Mode, Industrial Development
Revenue Bonds (BenchCraft Project), Series 1999
(Wachovia Bank, N.A.),
6.62%, 10-4-00 ........................ 6,000 6,000,000
New Jersey - 1.35%
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),
6.73%, 10-4-00......................... 11,950 11,950,000
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
New York - 2.64%
The City of New York, General Obligation Bonds,
Fiscal 1995 Series B, Taxable Adjustable Rate
Bonds (Bayerische Landesbank Girozentrale,
New York Branch),
6.61%, 12-04-00 ....................... $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),
6.82%, 10-5-00 ........................ 4,000 4,000,000
Putnam Hospital Center, Multi-Mode Revenue Bonds,
Series 1999 (The Bank of New York),
6.82%, 10-4-00 ........................ 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),
6.82%, 10-5-00 ........................ 3,030 3,030,000
Total ................................. 23,340,000
North Carolina - 0.20%
Wake Forest University, Taxable Variable Rate
Demand Bonds, Series 1997 (Wachovia Bank, N.A.),
6.62%, 10-4-00 ........................ 1,800 1,800,000
Ohio - 1.70%
State of Ohio, Taxable Solid Waste Revenue
Bonds, Series 2000, Taxable (BP Exploration &
Oil Inc. Project - BP Amoco P.L.C. Guarantor),
6.56%, 10-4-00 ........................ 15,000 15,000,000
Pennsylvania - 2.00%
Montgomery County Industrial Development
Authority, Federally Taxable Variable
Rate Demand Revenue Bonds (Neose
Technologies, Inc. Project), Series
B of 1997 (First Union National Bank),
6.619672%, 10-4-00 .................... 9,850 9,850,000
Berks County Industrial Development Authority
(Commercial Facilities Project), Series
B of 1995 (First Union National Bank),
6.73%, 10-4-00 ........................ 7,885 7,885,000
Total ................................. 17,735,000
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
SEPTEMBER 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Texas - 2.98%
Metrocrest Hospital Authority, Series 1989A
(The Bank of New York),
6.62%, 10-25-00 ....................... $16,500 $ 16,427,148
Dallas Area Rapid Transit, Sales Tax Revenue
Commercial Paper Notes, Series D
(Westdeutsche Landesbank Girozentrale),
6.54%, 10-11-00 ....................... 10,000 9,981,833
Total ................................. 26,408,981
Virginia - 0.70%
Virginia Health Services, Inc., Taxable
Variable Rate Demand Bonds, Series 1998
(Wachovia Bank, N.A.),
6.62%, 10-4-00 ........................ 6,200 6,200,000
TOTAL MUNICIPAL OBLIGATIONS - 33.28% $294,563,694
(Cost: $294,563,694)
TOTAL INVESTMENT SECURITIES - 89.77% $794,580,469
(Cost: $794,580,469)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 10.23% 90,588,546
NET ASSETS - 100.00% $885,169,015
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
SEPTEMBER 30, 2000
(In Thousands, Except for Per Share Amounts)
Assets
Investment securities - at value (Note 1) ........ $794,580
Cash ............................................ 3,852
Receivables:
Fund shares sold ................................ 90,031
Interest ........................................ 5,685
Prepaid insurance premium ........................ 25
--------
Total assets .................................. 894,173
--------
Liabilities
Payable to Fund shareholders ..................... 8,289
Dividends payable ................................ 406
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 253
Accrued management fee (Note 2) .................. 20
Accrued accounting services fee (Note 2) ......... 8
Accrued service fee (Note 2) ..................... 2
Other ............................................ 26
--------
Total liabilities ............................. 9,004
--------
Total net assets ............................. $885,169
========
Net Assets
$0.01 par value capital stock, authorized -- 5,000,000;
Class A shares outstanding - 874,681
Class B shares outstanding - 2,354
Class C shares outstanding - 1,165
Waddell & Reed Money Market Class C shares
outstanding - 6,969
Capital stock ................................... $ 8,852
Additional paid-in capital ...................... 876,317
--------
Net assets applicable to outstanding
units of capital ............................. $885,169
========
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
(In Thousands)
For the For the
fiscal fiscal year
period ended ended
September 30, June 30,
2000 2000
------------- -----------
Investment Income
Interest and amortization (Note 1B) ... $13,722 $45,003
------- -------
Expenses (Note 2):
Investment management fee .......... 819 3,052
Transfer agency and dividend disbursing:
Class A ........................... 670 2,699
Class B .......................... 2 3
Class C .......................... 1 1
Waddell & Reed Money Market Class C 2 15
Accounting services fee ............ 23 76
Distribution fee:
Class B .......................... 6 13
Class C .......................... 2 2
Waddell & Reed Money Market Class C 15 60
Custodian fees ..................... 22 96
Service fee:
Class B .......................... 2 5
Class C .......................... 1 1
Waddell & Reed Money Market Class C 5 19
Audit fees ......................... 7 11
Legal fees ......................... 2 29
Other .............................. 87 302
------- -------
Total expenses ................... 1,666 6,384
------- -------
Net investment income ........... 12,056 38,619
------- -------
Net increase in net assets resulting
from operations .............. $12,056 $38,619
======= =======
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS CASH MANAGEMENT, INC.
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
For the For the fiscal
fiscal year ended
period ended June 30,
September 30, -----------------
2000 2000 1999
Increase in Net Assets --------- ------ ------
Operations:
Net investment income .......... $12,056 $38,619 $28,632
-------- -------- --------
Net increase in net assets
resulting from operations ... 12,056 38,619 28,632
-------- -------- --------
Dividends to shareholders
from net investment income:*
Class A ........................ (11,900) (38,178) (28,425)
Class B ........................ (40) (81) ---
Class C ........................ (14) (14) ---
Waddell & Reed Money Market
Class C ...................... (102) (346) (207)
-------- -------- --------
(12,056) (38,619) (28,632)
-------- -------- --------
Capital share transactions (Note 3) 89,956 123,445 135,314
-------- -------- --------
Total increase ................. 89,956 123,445 135,314
Net Assets
Beginning of period ............. 795,213 671,768 536,454
-------- -------- --------
End of period ................... $885,169 $795,213 $671,768
======== ======== ========
Undistributed net investment
income ....................... $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 16 - 19.
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
period For the fiscal year ended June 30,
ended -----------------------------------
9/30/00 2000 1999 1998 1997 1996
------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------
Net investment
income ........... 0.0148 0.0511 0.0455 0.0484 0.0472 0.0487
Less dividends
declared ......... (0.0148)(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 $1.00
======= ======= ======= ======= ======= =======
Total return........ 1.50% 5.18% 4.67% 4.93% 4.80% 5.01%
Net assets, end of
period (in
millions) ........ $875 $782 $667 $533 $514 $402
Ratio of expenses to
average net
assets ........... 0.81%* 0.83% 0.83% 0.89% 0.87% 0.91%
Ratio of net
investment income
to average net
assets ........... 5.92%* 5.08% 4.54% 4.84% 4.70% 4.89%
*Annualized.
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 Each Period:
For the For the
fiscal period
period from 9/9/99*
ended through
9/30/00 6/30/00
------- --------
Net asset value,
beginning of
period ........... $1.00 $1.00
------ ------
Net investment
income ........... 0.0133 0.0346
Less dividends
declared ......... (0.0133) (0.0346)
------ ------
Net asset value,
end of period .... $1.00 $1.00
======= =======
Total return........ 1.37% 3.43%
Net assets, end of
period (in
millions) ........ $2 $3
Ratio of expenses to
average net
assets ........... 1.43%** 1.67%**
Ratio of net
investment income
to average net
assets ........... 5.29%** 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 Each Period:
For the For the
fiscal period
period from 9/9/99*
ended through
9/30/00 6/30/00
------- --------
Net asset value,
beginning of
period ........... $1.00 $1.00
------ ------
Net investment
income ........... 0.0126 0.0335
Less dividends
declared ......... (0.0126) (0.0335)
------ ------
Net asset value,
end of period .... $1.00 $1.00
======= =======
Total return ....... 1.29% 3.32%
Net assets, end of
period (in
millions) ........ $1 $1
Ratio of expenses to
average net
assets ........... 1.68%** 1.82%**
Ratio of net
investment income
to average net
assets ........... 5.05%** 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 period
fiscal For the fiscal from
period year ended June 30, 9-5-95*
ended ---------------------------- through
9-30-00 2000 1999 1998 1997 6-30-96
------- ------ ------ ------ ------ -------
Net asset value,
beginning of
period ........... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------
Net investment
income ........... 0.0128 0.0426 0.0371 0.0403 0.0407 0.0312
Less dividends
declared ......... (0.0128)(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 $1.00
======= ======= ======= ======= ======= =======
Total return........ 1.30% 3.86% 3.79% 4.10% 4.13% 3.15%
Net assets, end of
period (in
millions) ........ $7 $9 $5 $4 $4 $1
Ratio of expenses to
average net
assets ........... 1.57%** 1.77% 1.60% 1.71% 1.48% 1.88%**
Ratio of net
investment income
to average net
assets ........... 5.15%** 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
SEPTEMBER 30, 2000
NOTE 1 -- Significant Accounting Policies
Waddell & Reed Advisors 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. Effective for
the fiscal period ended September 30, 2000, the Fund changes its fiscal year end
for both financial reporting and Federal income tax purposes to September 30
from June 30. 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 $ 11,000
From $ 25 to $ 50 $ 22,000
From $ 50 to $ 100 $ 33,000
From $ 100 to $ 200 $ 44,000
From $ 200 to $ 350 $ 55,000
From $ 350 to $ 550 $ 66,000
From $ 550 to $ 750 $ 77,000
From $ 750 to $1,000 $ 93,500
$1,000 and Over $110,000
In addition, for each class of shares in excess of one, the Fund pays
WARSCO a monthly per-class fee equal to 2.5% of the monthly base fee.
Prior to September 1, 2000, the Accounting Services Agreement was as 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 September 30, 2000, W&R
paid no sales commissions.
During the period ended September 30, 2000, the Distributor received
$3,370, $715 and $308 in deferred sales charges for Class B, Class C and Waddell
& Reed Money Market C shares, respectively.
The Fund paid Directors' fees of $6,610, 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 three 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 and Class
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 period For the fiscal
ended year ended June 30,
September 30, --------------------------
2000 2000 1999
------------ ------------ ------------
Value issued from sale
of shares:
Class A ............ $1,354,210 $5,022,749 $2,528,520
Class B ............. 893 8,764 ---
Class C ............. 879 1,548 ---
Waddell & Reed Class B --- 13,885 12,293
Waddell & Reed Class C 340 22,158 ---
Value issued from
reinvestment of dividends:
Class A ............ 11,295 35,182 27,258
Class B ............. 41 75 ---
Class C ............. 13 13 ---
Waddell & Reed Class B --- 173 195
Waddell & Reed Class C 100 139 ---
Value redeemed:
Class A ............ (1,272,641) (4,943,269) (2,421,463)
Class B ............. (2,022) (5,397) ---
Class C ............. (649) (640) ---
Waddell & Reed Class B --- (18,671) (11,489)
Waddell & Reed Class C (2,503) (13,264) ---
-------- ---------- ----------
Increase in
outstanding capital $ 89,956 $ 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.
(the "Fund") as of September 30, 2000, and the related statements of operations
for the fiscal period then ended and the fiscal year ended June 30, 2000, the
statements of changes in net assets for the fiscal period ended September 30,
2000, and each of the two fiscal years in the period ended June 30, 2000, and
the financial highlights for the fiscal period ended September 30, 2000 and for
each of the five fiscal years in the period ended June 30, 2000. 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 September 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 September 30, 2000, the
results of its operations for the fiscal period then ended and the fiscal year
ended June 30, 2000, the changes in its net assets for the fiscal period ended
September 30, 2000, and each of the two fiscal years in the period ended June
30, 2000, and the financial highlights for the fiscal period ended September 30,
2000, and for each of the five fiscal years in the period ended June 30, 2000,
in conformity with accounting principles generally accepted in the United States
of America.
Deloitte & Touche LLP
Kansas City, Missouri
November 3, 2000
<PAGE>
INCOME TAX INFORMATION
September 30, 2000
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>
To all traditional IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from a traditional IRA unless you make a written
election not to have taxes withheld. The election may be made by submitting
forms provided by Waddell & Reed, Inc. which can be obtained from your Waddell &
Reed representative or by submitting Internal Revenue Service Form W-4P. Once
made, an election can be revoked by providing written notice to Waddell & Reed,
Inc. If you elect not to have tax withheld you may be required to make payments
of estimated tax. Penalties may be imposed by the IRS if withholding and
estimated tax payments are not adequate.
DIRECTORS
Keith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, 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 Core Investment Fund
Waddell & Reed Advisors Global Bond Fund, Inc.
Waddell & Reed Advisors Government Securities Fund, Inc.
Waddell & Reed Advisors High Income Fund, Inc.
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.
----------------------------------
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
For more complete information regarding any of the mutual funds in Waddell &
Reed Advisors Funds, including charges and expenses, please obtain the Fund's
prospectus by calling or writing to the number or address listed above. Please
read the prospectus carefully before investing.
NUR1010A(9-00)
