UNITED
INTERNATIONAL
GROWTH FUND,
INC.
SEMIANNUAL
REPORT
------------------------------------------
For the six months ended December 31, 1996
<PAGE>
This report is submitted for the general information of the shareholders of
United International Growth Fund, Inc. It is not authorized for
distribution to prospective investors in the Fund unless accompanied with
or preceded by the United International Growth Fund, Inc. current
prospectus.
<PAGE>
PRESIDENT'S LETTER
DECEMBER 31, 1996
Dear Shareholder:
As President of your Fund, I would like to thank you for your
continued confidence in our products and services. Our goal to provide the
best service possible to our shareholders has not changed since we opened
our doors nearly 60 years ago. Waddell & Reed's team of professionals,
including the Fund's manager, our customer service representatives and your
personal account representative continue to strive to meet your financial
needs.
Waddell & Reed plays a special role in the investment industry. We
take pride in being one of the few financial services firms committed to
locally based account representatives who provide the personal service you
need. When you're ready to evaluate your financial plan to keep up with
life's changes, or to find an answer to a financial question that you may
have, your representative is ready to assist you--when you need it. He or
she is available to help you plan for your retirement, fund a child's
education or make plans for other long-term financial goals.
All of us are committed to helping you meet the financial goals that
are important to you. This is accomplished by our offering investment
products to meet a variety of personal financial objectives, along with the
personal service to make the investment process more convenient and
accessible.
We want to continue to meet your financial needs for many years to
come. Should you have any questions about your account or other financial
issues that are important to you, contact your personal account
representative or your local Waddell & Reed office. They're ready to help
you make the most of your financial future.
Respectfully,
Keith A. Tucker
President
<PAGE>
SHAREHOLDER SUMMARY
-----------------------------------------------------------------
UNITED INTERNATIONAL GROWTH FUND, INC.
PORTFOLIO STRATEGY:
Normally at least 80% in OBJECTIVE: Long-term appreciation of
foreign securities. Not capital with realization
more than 75% in securities of income as a secondary
in any one country. consideration.
Maximum of 15% in currency STRATEGY: Invests in securities
exchange contracts (common stocks and/or
debt securities) issued
Cash Reserves by companies or
governments of any
nation. (May purchase
securities subject to
repurchase agreements.
May invest in certain
options.)
The use of cash reserves (often
invested in money market securities)
for defensive purposes is a strategy
that may be utilized by the
International Growth Fund from time
to time.
Moving into cash reserve positions
at times thought to be near a major
stock market peak allows the Fund
the opportunity to capture profits
and attempts to cushion the impact
of market declines. The added
flexibility provided by our CASH
RESERVES STRATEGY has from time to
time been an important element in
our past success and, when deemed
appropriate, may be used in the
management of the portfolio in the
future.
FOUNDED: 1970
SCHEDULED DIVIDEND FREQUENCY: SEMIANNUALLY (June and
December)
<PAGE>
PERFORMANCE SUMMARY - Class A Shares
PER SHARE DATA
For the Six Months Ended December 31, 1996
------------------------------------------
DIVIDEND PAID $0.05
=====
CAPITAL GAINS DISTRIBUTION $0.26
=====
NET ASSET VALUE ON
12/31/96 $9.38 adjusted to:$9.64(A)
6/30/96 8.95
-----
CHANGE PER SHARE $0.69
=====
(A)This number includes the capital gains distribution of $.26 paid in
December 1996 added to the actual net asset value on December 31, 1996.
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
------ ----------- ------------
1-year period ended 12-31-96 11.43% 18.23%
5-year period ended 12-31-96 12.19% 13.53%
10-year period ended 12-31-96 10.27% 10.93%
*Performance data quoted represents past performance and is based on
deduction of 5.75% sales load on the initial purchase in each of the
three periods.
**Performance data quoted in this column represents past performance
without taking into account the sales load deducted on an initial
purchase.
Investment return and principal value will fluctuate and an investor's
shares, when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On December 31, 1996, United International Growth Fund, Inc. had net assets
totaling $853,618,516 invested in a diversified portfolio of:
86.93% Common Stocks
11.08% Cash and Cash Equivalents
1.99% Preferred Stocks
As a shareholder of United International Growth Fund, Inc., for every $100
you had invested on December 31, 1996, your Fund owned $11.08 in cash and
cash equivalents; the remainder was invested by country and by industry,
respectively, as follows:
$42.21 Europe
22.05 Pacific Basin
16.92 Scandinavia
11.08 Cash and Cash Equivalents
5.38 Mexico
2.36 South America
$30.62 Manufacturing
23.07 Finance, Insurance and Real Estate
15.87 Miscellaneous Investing Institutions
11.08 Cash and Cash Equivalents
6.19 Transportation, Communication, Electric,
Gas and Sanitary Services
4.38 Wholesale and Retail Trade
3.90 Contract Construction
2.74 Services
1.91 Mining
0.24 Agriculture, Forestry and Fisheries
The Manufacturing segment shown above is comprised of the following
industries:
$7.85 Chemicals and Allied Products
6.70 Electronic and Other Electric Equipment
3.61 Industrial Machinery and Equipment
3.23 Transportation Equipment
2.54 Instruments and Related Products
1.62 Fabricated Metal Products
1.46 Printing and Publishing
1.37 Food and Kindred Products
1.26 Miscellaneous Manufacturing Industries
0.77 Stone, Clay and Glass Products
0.20 Rubber and Miscellaneous Plastics Products
0.01 Leather and Leather Products
<PAGE>
THE INVESTMENTS OF
UNITED INTERNATIONAL GROWTH FUND, INC.
DECEMBER 31, 1996
Shares Value
COMMON STOCKS
Argentina - 0.20%
Corcemar S.A., Series B1* .............. 338,522 $ 1,658,758
Australia - 2.18%
News Corporation Limited ............... 563,180 2,972,540
Publishing & Broadcasting PBL .......... 1,000,000 4,864,787
Westpac Banking Corporation Limited .... 1,887,894 10,744,917
Total ................................. 18,582,244
Brazil - 1.08%
Telebras S.A., ADR ...................... 120,000 9,180,000
Denmark - 0.59%
Thorkild Kristensen .................... 66,450 5,028,013
Finland - 2.37%
Nokia Corporation, Series K ............ 350,000 20,258,949
France - 5.73%
Banque Nationale de Paris .............. 200,000 7,742,881
Compagnie Generale de Eaux ............. 85,000 10,537,529
Elf Aquitaine S.A. ..................... 100,000 9,105,983
Groupe Danone .......................... 25,000 3,484,875
Lagardere Groupe S.C.A. ................ 100,000 2,745,484
Louis Dreyfus Citrus* .................. 62,272 2,041,036
Societe Generale ....................... 40,000 4,326,450
Societe Industrielle de Transports
Automobiles S.A. ...................... 42,100 8,928,606
Total ................................. 48,912,844
Germany - 10.47%
CKAG Colonia Konzern AG ................ 77,000 6,356,191
Commerzbank AG ......................... 400,000 10,165,746
Daimler-Benz AG* ....................... 265,000 18,258,044
Depfa Bank ............................. 209,500 9,459,841
GILDEMEISTER Aktiengesellschaft* ....... 40,700 1,785,668
Hoechst AG ............................. 200,000 9,450,764
Mannesmann AG .......................... 31,700 13,743,191
Metallgesellschaft AG* ................. 350,000 7,166,071
Schering AG ............................ 100,000 8,443,289
VBH Holding AG ......................... 205,000 4,570,361
Total ................................. 89,399,166
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
UNITED INTERNATIONAL GROWTH FUND, INC.
DECEMBER 31, 1996
Shares Value
COMMON STOCKS (Continued)
Hong Kong - 9.82%
Amoy Properties Ltd. ................... 6,000,000 $ 8,649,557
Cheung Kong Holdings Ltd. .............. 1,300,000 11,555,369
Cheung Kong Infrastructure Holdings
Limited* .............................. 2,000,000 5,300,924
Dah Sing Financial Holdings Ltd. ....... 1,299,800 5,276,840
Dongfang Electrical Machinery
Co., Ltd. ............................. 9,106,000 3,178,770
First Pacific Company Limited .......... 6,000,000 7,796,238
Guangdong Corporation Limited ..........10,000,000 9,632,168
Guangdong Tannery Ltd.* ................ 500,000 126,059
Guangzhou Investment Company Ltd. ......26,000,000 12,437,779
HSBC Holdings plc ...................... 400,000 8,559,054
Hysan Development Company Limited ...... 1,000,000 3,982,158
JCG Holdings Ltd. ...................... 4,000,000 3,904,583
National Mutual Asia Ltd. .............. 3,634,000 3,453,345
Total ................................. 83,852,844
Indonesia - 1.23%
PT Bimantara Citra, F .................. 1,700,000 2,266,187
PT Semen Cibinong, F ................... 600,000 1,688,531
PT Semen Gresik, F ..................... 1,000,000 3,216,251
Pt Steady Safe Transportation Service, F 2,597,034 3,324,599
Total ................................. 10,495,568
Italy - 1.38%
Fila Holding S.p.A., ADR ............... 30,000 1,743,750
Mediolanum S.p.A.* ..................... 350,000 3,312,533
STET - Societa Financiaria
Telefonica p.a. ....................... 2,000,000 6,757,256
Total ................................. 11,813,539
Japan - 8.17%
Daiichi Corporation .................... 200,000 4,041,102
Eisai Co., Ltd. ........................ 400,000 7,874,968
Honda Motor Co., Ltd. .................. 250,000 7,145,324
Matsushita Electric Industrial ......... 1,000,000 16,319,834
NEC Corporation ........................ 1,000,000 12,088,766
Nintendo Corp., Ltd. ................... 150,000 10,737,415
Promise Co., Ltd. ...................... 80,000 3,937,484
Tokyo Electron Limited ................. 150,000 4,598,049
Xebio Co., Ltd. ........................ 100,000 2,979,017
Total ................................. 69,721,959
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
UNITED INTERNATIONAL GROWTH FUND, INC.
DECEMBER 31, 1996
Shares Value
COMMON STOCKS (Continued)
Mexico - 5.38%
bufete industrial, s.a., ADR* .......... 337,500 $ 7,171,875
Desc-Sociedad de Fomento Industrial,
S.A. de C.V., Class B* ................ 1,297,000 7,084,731
Empresas ICA Sociedad Controladora,
S.A. de C.V., ADS* .................... 728,000 10,647,000
Gruma, S.A., Class B* .................. 918,567 5,601,018
Grupo Financiero Banamex Accival, S.A. de
C.V., B, CPO Shares* .................. 700,000 1,477,896
Grupo Financiero Bancomer, S.A. de
C.V., B, CPO Shares* ..................15,279,600 6,114,169
Grupo Financiero Inbursa, S.A. de
C.V., Class B ......................... 531,168 1,815,094
Grupo Televisa, S.A., GDR* ............. 234,900 6,019,312
Total ................................. 45,931,095
Netherlands - 3.01%
Getronics N.V. ......................... 300,000 8,149,435
Koninklijke Boskalis Westminster N.V. .. 500,000 10,136,113
Vendex International N.V. .............. 173,000 7,404,981
Total ................................. 25,690,529
Norway - 1.81%
Orkla, Series A ........................ 118,700 8,259,425
Schibsted AS ........................... 392,000 7,202,164
Total ................................. 15,461,589
Portugal - 0.89%
Banco Totta & Acores, S.A. ............. 100,000 1,885,843
Portugal Telecom, S.A.,
Ordinary Shares ....................... 200,000 5,701,387
Total ................................. 7,587,230
Spain - 2.62%
Banco Santander, S.A. .................. 50,000 3,206,761
Corporation Financiero Alba, S.A. ...... 147,250 14,910,242
Gas Natural SDG, S.A. .................. 18,211 4,244,595
Total ................................. 22,361,598
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
UNITED INTERNATIONAL GROWTH FUND, INC.
DECEMBER 31, 1996
Shares Value
COMMON STOCKS (Continued)
Sweden - 12.15%
Astra AB, Class A ...................... 500,165 $ 24,545,741
Biacore International AB, ADR* ......... 100,000 2,187,500
Diligentia AB* ......................... 272,000 4,258,046
Frontec AB, Class B* ................... 275,000 4,725,499
Kinnevik AB, B Shares .................. 400,000 10,950,925
NCC AB, Series B ....................... 358,000 4,692,005
Nobel Biocare AS ....................... 200,000 3,494,976
Skandia Enskilda Banken, Class A ....... 2,720,000 27,726,809
Skandia Group Insurance Company Ltd.* .. 450,000 12,647,444
Sparbanken Sverige AB, Series A ........ 500,000 8,519,004
Total ................................. 103,747,949
Switzerland - 8.17%
ABB AG ................................. 5,000 6,220,578
Baloise Holdings ....................... 2,000 4,020,025
CS Holding, Registered Shares .......... 172,500 17,723,044
Novartis AG* ........................... 16,000 18,327,615
SMH Swiss Corporation .................. 20,000 12,329,074
Zurich Insurance Company ............... 40,000 11,118,583
Total ................................. 69,738,919
Thailand - 0.65%
Bank of Ayudhya Public Company
Limited (F) ........................... 700,000 1,650,750
Charoen Pokphand Feedmill .............. 209,900 760,893
Matichon Company Ltd. .................. 807,666 2,282,432
Thai Stanley Electric Co. Ltd. ......... 258,500 823,714
Total ................................. 5,517,789
United Kingdom - 9.03%
Abbey National plc ..................... 600,000 7,851,937
Boots Company PLC, F ................... 600,000 6,192,136
COLT Telecom Group plc, ADR* ........... 65,000 1,259,375
Corporate Services Group plc ........... 2,500,000 7,386,884
Dr Solomon's Group PLC, ADR* ........... 60,000 1,016,220
HSBC Holdings plc ...................... 300,000 6,706,006
Rolls-Royce plc ........................ 500,000 2,201,077
Siebe plc .............................. 200,000 3,713,569
Storehouse PLC ......................... 2,000,000 8,855,697
Tomkins plc ............................ 2,000,000 9,249,664
Vodafone Group Plc ..................... 3,600,000 15,231,113
Whitbread and Company, Public Limited
Company ............................... 550,000 7,414,291
Total ................................. 77,077,969
TOTAL COMMON STOCKS - 86.93% $742,018,551
(Cost: $593,858,455)
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
UNITED INTERNATIONAL GROWTH FUND, INC.
DECEMBER 31, 1996
Shares Value
PREFERRED STOCKS
Brazil - 1.08%
Banco Itau S.A. ........................21,200,000 $ 9,186,326
Germany - 0.91%
Marschollek, Lautenschlager und
Partner AG............................. 56,190 7,815,834
TOTAL PREFERRED STOCKS - 1.99% $ 17,002,160
(Cost: $13,380,704)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Commercial Paper
Auto Repair, Services and Parking - 0.50%
PHH Corporation,
5.57%, 1-31-97 ........................ $ 4,295 4,275,064
Communication - 2.59%
Bell Atlantic Financial Services, Inc.,
5.33%, 1-24-97 ........................ 5,285 5,267,003
Dominion Resources, Inc.,
5.75%, 1-29-97 ........................ 12,000 11,946,333
GTE Corporation,
5.48%, 1-16-97 ........................ 4,870 4,858,880
Total ................................. 22,072,216
Depository Institutions - 0.01%
U.S. Bancorp,
Master Note ........................... 63 63,000
Electric, Gas and Sanitary Services - 2.87%
Carolina Power & Light,
5.32%, 2-4-97 ......................... 8,745 8,701,061
Pacific Gas and Electric Company,
5.57%, 1-17-97 ........................ 1,630 1,625,965
Pacificorp:
5.33%, 2-3-97 ......................... 5,580 5,552,737
5.35%, 2-4-97 ......................... 5,000 4,974,736
Public Service Electric and Gas Company,
5.6%, 1-9-97 .......................... 2,160 2,157,312
Western Resources, Inc.,
5.8%, 1-10-97 ......................... 1,500 1,497,825
Total ................................. 24,509,636
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
UNITED INTERNATIONAL GROWTH FUND, INC.
DECEMBER 31, 1996
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Food and Kindred Products - 0.29%
General Mills, Inc.,
Master Note ........................... $ 186 $ 186,000
Heinz (H.J.) Company,
5.65%, 2-7-97 ......................... 2,335 2,321,441
Total ................................. 2,507,441
Instruments and Related Products - 0.17%
Baxter International Inc.,
5.53%, 1-17-97 ........................ 1,455 1,451,424
Metal Mining - 0.31%
BHP Finance (USA) Inc.,
5.35%, 1-14-97 ........................ 2,688 2,682,807
Textile Mill Products - 0.01%
Sara Lee Corporation,
Master Note ........................... 65 65,000
Transportation Equipment - 0.31%
Dana Credit Corporation,
5.57%, 2-7-97 ......................... 2,640 2,624,887
Total Commercial Paper - 7.06% 60,251,475
Commercial Paper (backed by irrevocable
bank letter of credit)
Depository Institutions - 0.82%
Banco Nacional de Commercio Exterior
S.N.C. (Societe General),
5.77%, 1-30-97 ........................ 7,035 7,002,301
Electric, Gas and Sanitary Services - 1.85%
AES Barbers Point Inc. (Bank of America
NT & SA):
5.57%, 1-10-97 ........................ 10,000 9,986,075
5.60%, 1-17-97 ........................ 5,830 5,815,490
Total ................................. 15,801,565
Total Commercial Paper (backed by irrevocable
bank letter of credit) - 2.67% 22,803,866
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
UNITED INTERNATIONAL GROWTH FUND, INC.
DECEMBER 31, 1996
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Municipal Obligations
Indiana - 0.70%
City of Whiting, Indiana, Industrial
Sewage and Solid Waste Disposal
Revenue Bonds (Amoco Oil Company
Project), Taxable Series 1995,
5.55%, 1-13-97 ........................ $ 6,000 $ 6,000,000
Oregon - 1.17%
City of Portland, Oregon, Pension Reserve
Limited Tax Revenue Bonds (Federally
Taxable), Series 1996 B (Union Bank of
Switzerland),
5.5%, 2-3-97 .......................... 10,000 10,000,000
Total Municipal Obligations - 1.87% 16,000,000
TOTAL SHORT-TERM SECURITIES - 11.60% $ 99,055,341
(Cost: $99,055,341)
TOTAL INVESTMENT SECURITIES - 100.52% $858,076,052
(Cost: $706,294,500)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.52%) (4,457,536)
NET ASSETS - 100.00% $853,618,516
Notes to Schedule of Investments
*No income dividends were paid during the preceding 12 months.
See Note 1 to financial statements for security valuation and other
significant accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and
depreciation of investments owned for Federal income tax purposes.
<PAGE>
UNITED INTERNATIONAL GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investment securities -- at value (Notes 1 and 3) . $858,076,052
Cash ............................................ 1,794,584
Receivables:
Dividends and interest .......................... 1,635,916
Investment securities sold ...................... 1,528,545
Fund shares sold ................................ 1,300,765
Prepaid insurance premium ......................... 20,996
------------
Total assets .................................. 864,356,858
------------
Liabilities
Payable for investment securities purchased ...... 5,050,922
Payable for Fund shares redeemed ............ ..... 5,075,601
Accrued service fee (Note 2) ..................... 295,000
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 189,559
Accrued accounting services fee (Note 2) ......... 7,083
Other ............................................ 120,177
------------
Total liabilities ............................. 10,738,342
------------
Total net assets ............................. $853,618,516
============
Net Assets
$1.00 par value capital stock
Capital stock ................................... $ 91,041,112
Additional paid-in capital ...................... 584,322,164
Accumulated undistributed income:
Accumulated undistributed net investment income 86,647
Accumulated net realized gain on
investment transactions ....................... 26,379,757
Net unrealized appreciation in value
of investments at end of period ............... 151,781,552
Net unrealized appreciation in value of foreign
currency exchange at end of period ............ 7,284
------------
Net assets applicable to outstanding
units of capital ............................. $853,618,516
============
Net asset value per share (net assets divided
by shares outstanding)
Class A .......................................... $9.38
Class Y .......................................... $9.38
Capital shares outstanding
Class A .......................................... 90,421,774
Class Y .......................................... 619,338
Capital shares authorized .......................... 400,000,000
See notes to financial statements.
<PAGE>
UNITED INTERNATIONAL GROWTH FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended DECEMBER 31, 1996
Investment Income
Income (Note 1B):
Dividends (net of foreign withholding
taxes of $443,905) ............................ $3,983,921
Interest ........................................ 2,234,452
-----------
Total income .................................. 6,218,373
-----------
Expenses (Note 2):
Investment management fee ....................... 2,821,497
Transfer agency and dividend
disbursing - Class A .......................... 1,015,006
Service fee - Class A ........................... 690,946
Custodian fees .................................. 455,257
Accounting services fee ......................... 42,500
Audit fees ...................................... 16,200
Legal fees ...................................... 6,393
Shareholder servicing - Class Y ................. 4,183
Other ........................................... 125,476
-----------
Total expenses ................................ 5,177,458
-----------
Net investment income ....................... 1,040,915
-----------
Realized and Unrealized Gain (Loss) on
Investments (Notes 1 and 3)
Realized net gain on securities .................. 41,545,227
Realized net gain on forward currency contracts .. 1,630,514
Realized net loss on foreign currency
transactions .................................... (197,403)
-----------
Realized net gain on investments ................ 42,978,338
-----------
Unrealized appreciation in value of securities
during the period................................ 22,682,721
Unrealized depreciation in value of foreign
currency exchange at end of period .............. (995)
-----------
Unrealized appreciation on investments .......... 22,681,726
-----------
Net gain on investments ....................... 65,660,064
-----------
Net increase in net assets resulting from
operations ................................. $66,700,979
===========
See notes to financial statements.
<PAGE>
UNITED INTERNATIONAL GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the For the
six months fiscal year
ended ended
December 31, June 30,
1996 1996
Increase in Net Assets ------------ ------------
Operations:
Net investment income ...............$ 1,040,915 $ 6,477,989
Realized net gain on investments .... 42,978,338 35,468,930
Unrealized appreciation ............. 22,681,726 39,040,862
------------ ------------
Net increase in net assets
resulting from operations ........ 66,700,979 80,987,781
------------ ------------
Dividends to shareholders from (Note 1F):*
Net investment income
Class A ........................... (4,349,685) (5,719,358)
Class Y ........................... (38,699) (22,311)
Realized gains on securities transactions
Class A ........................... (22,183,487) (46,756,060)
Class Y ........................... (151,819) (4,319)
------------ ------------
(26,723,690) (52,502,048)
------------ ------------
Capital share transactions
Proceeds from sale of shares:
Class A (30,563,842 and 47,085,595
shares, respectively) ............ 276,830,484 410,226,754
Class Y (62,863 and 591,404
shares, respectively) ............ 571,280 5,052,415
Proceeds from reinvestment of dividends
and/or capital gains distribution:
Class A (2,902,022 and 6,447,921
shares, respectively)............. 26,147,096 51,649,557
Class Y (21,145 and 3,058
shares, respectively) ............ 190,519 26,631
Payments for shares redeemed:
Class A (29,230,321 and 45,588,818
shares, respectively) ............(266,140,190) (398,231,010)
Class Y (16,124 and 43,008
shares, respectively) ............ (145,779) (371,574)
------------ ------------
Net increase in net assets resulting
from capital share transactions 37,453,410 68,352,773
------------ ------------
Total increase ................. 77,430,699 96,838,506
Net Assets
Beginning of period .................. 776,187,817 679,349,311
------------ ------------
End of period ........................ $853,618,516 $776,187,817
============ ============
Undistributed net investment
income ............................ $86,647 $3,434,116
======= ==========
*See "Financial Highlights" on pages 16-17.
See notes to financial statements.
<PAGE>
UNITED INTERNATIONAL GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
six
months For the fiscal year ended June 30,
ended ----------------------------------
12/31/96 1996 1995 1994 1993 1992
-------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $8.95 $8.68 $8.98 $7.16 $7.10 $5.94
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... .01 .08 .07 .04 .07 .08
Net realized and
unrealized gain on
investments ..... .73 .86 .60 2.32 .11 1.20
----- ----- ----- ----- ----- -----
Total from investment
operations ...... .74 .94 .67 2.36 .18 1.28
----- ----- ----- ----- ----- -----
Less distributions:
Dividends from net
investment
income .......... (0.05) (0.07) (0.04) (0.04) (0.07) (0.09)
Distribution from
capital gains ... (0.26) (0.60) (0.93) (0.50) (0.05) (0.03)
----- ----- ----- ----- ----- -----
Total distributions (0.31) (0.67) (0.97) (0.54) (0.12) (0.12)
----- ----- ----- ----- ----- -----
Net asset value,
end of period .... $9.38 $8.95 $8.68 $8.98 $7.16 $7.10
===== ===== ===== ===== ===== =====
Total return* ...... 8.35% 11.70% 7.98% 33.31% 2.62% 21.59%
Net assets, end of
period (000
omitted) .........$847,811$771,252$679,349$572,456$336,382$322,534
Ratio of expenses
to average net
assets ........... 1.29%** 1.25% 1.25% 1.20% 1.18% 1.18%
Ratio of net
investment income
to average net
assets ........... 0.26%** 0.89% 0.86% 0.57% 1.07% 1.17%
Portfolio turnover
rate ............. 49.64% 58.64% 57.45% 83.76% 94.22% 112.82%
Average commission
rate paid ........ $0.0247
*Total return calculated without taking into account the sales load
deducted on an initial purchase.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED INTERNATIONAL GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout the Period:
For the For the
six period
months from 9/27/95*
ended through
12/31/96 6/30/96
-------- --------
Net asset value,
beginning of period $8.95 $9.21
------ ------
Income from investment
operations:
Net investment
income .......... .03 .12
Net realized and
unrealized gain
on investments... .73 .30
------ ------
Total from investment
operations ........ .76 .42
------ ------
Less distributions:
Dividends from net
investment
income........... (0.07) (0.08)
Distribution from
capital gains.... (0.26) (0.60)
------ ------
Total distributions. (0.33) (0.68)
------ ------
Net asset value,
end of period ..... $9.38 $8.95
====== ======
Total return ....... 8.53% 5.44%
Net assets, end of
period (000
omitted) ......... $5,808 $4,936
Ratio of expenses
to average net
assets ............ 1.02%** 0.98%**
Ratio of net
investment income
to average net
assets ............ 0.53%** 2.60%**
Portfolio
turnover rate ..... 49.64% 58.64%**
Average commission
rate paid ........ $0.0247
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED INTERNATIONAL GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1 -- Significant Accounting Policies
United International Growth Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a diversified, open-end
management investment company. Its investment objective is the long-term
appreciation of your investment. Realization of income is a secondary
goal. 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 -- Each stock and convertible bond is valued at the
latest sale price thereof on the last business day of the fiscal
period as reported by the principal securities exchange on which the
issue is traded or, if no sale is reported for a stock, the average of
the latest bid and asked prices. Bonds, other than convertible bonds,
are valued using a pricing system provided by a pricing service or
dealer in bonds. Convertible bonds are valued using this pricing
system only on days when there is no sale reported. Stocks which are
traded over-the-counter are priced using Nasdaq (National Association
of Securities Dealers Automated Quotations System) which provides
information on bid and asked or closing prices quoted by major dealers
in such stocks. Securities for which quotations are not readily
available are valued as determined in good faith in accordance with
procedures established by and under the general supervision of the
Fund's Board of Directors. Short-term debt securities are valued at
amortized cost, which approximates market.
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 are calculated
on the identified cost basis. Original issue discount (as defined in
the Internal Revenue Code), premiums on the purchase of bonds and
post-1984 market discount are amortized for both financial and tax
reporting purposes over the remaining lives of the bonds. Dividend
income is recorded on the ex-dividend date except that certain
dividends from foreign securities are recorded as soon as the Fund is
informed of the ex-dividend date. Interest income is recorded on the
accrual basis. See Note 3 -- Investment Securities Transactions.
C. Foreign currency translations -- All assets and liabilities
denominated in foreign currencies are translated into U.S. dollars
daily. Purchases and sales of investment securities and accruals of
income and expenses are translated at the rate of exchange prevailing
on the date of the transaction. For assets and liabilities other than
investments in securities, net realized and unrealized gains and
losses from foreign currency translations arise from changes in
currency exchange rates. The Fund combines fluctuations from currency
exchange rates and fluctuations in market value when computing net
realized and unrealized gain or loss from investments.
D. Forward foreign currency exchange contracts -- A forward foreign
currency exchange contract (Forward Contract) is an obligation to
purchase or sell a specific currency at a future date at a fixed
price. Forward Contracts are "marked-to-market" daily at the
applicable translation rates and the resulting unrealized gains or
losses are reflected in the Fund's financial statements. Gains or
losses are realized by the Fund at the time the forward contract is
extinguished. Contracts may be extinguished by either entry into a
closing transaction or by delivery of the currency. Risks may arise
from the possibility that the other party will not complete the
obligations of the contract and from unanticipated movements in the
value of the foreign currency relative to the U.S. dollar. The Fund
uses forward contracts to attempt to reduce the overall risk of its
investments.
E. 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. In addition, the Fund intends to pay
distributions as required to avoid imposition of excise tax.
Accordingly, provision has not been made for Federal income taxes.
See Note 4 -- Federal Income Tax Matters.
F. Dividends and distributions -- Dividends and distributions to
shareholders are recorded by the Fund on the record date. Net
investment income distributions and capital gains distributions are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
due to differing treatments for items such as deferral of wash sales
and post-October losses, foreign currency transactions, net operating
losses and expiring capital loss carryforwards.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
NOTE 2 -- Investment Management and Payments to Affiliated Persons
The Fund pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business. The
fee consists of two elements: (i) a "Specific" fee computed on net asset
value as of the close of business each day at the annual rate of .30% of
net assets and (ii) a "Group" fee computed each day on the combined net
asset values of all of the funds in the United Group of mutual funds
(approximately $15.1 billion of combined net assets at December 31, 1996)
at annual rates of .51% of the first $750 million of combined net assets,
.49% on that amount between $750 million and $1.5 billion, .47% between
$1.5 billion and $2.25 billion, .45% between $2.25 billion and $3 billion,
.43% between $3 billion and $3.75 billion, .40% between $3.75 billion and
$7.5 billion, .38% between $7.5 billion and $12 billion, and .36% of that
amount over $12 billion. The Fund accrues and pays this fee daily.
Pursuant to assignment of the Investment Management Agreement between
the Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment
Management Company ("WRIMCO"), a wholly-owned subsidiary of W&R, serves as
the Fund's investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed
Services Company ("WARSCO"), a wholly-owned subsidiary of W&R. Under the
agreement, WARSCO acts as the agent in providing accounting services and
assistance to the Fund and pricing daily the value of shares of the Fund.
For these services, the Fund pays WARSCO a monthly fee of one-twelfth of
the annual fee shown in the following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
For Class A shares, the Fund also pays WARSCO a monthly per account
charge for transfer agency and dividend disbursement services of $1.3125
for each shareholder account which was in existence at any time during the
prior month, plus $0.30 for each account on which a dividend or
distribution of cash or shares had a record date in that month. With
respect to Class Y shares, the Fund pays WARSCO a monthly fee at an annual
rate of .15% of the average daily net assets of the class for the preceding
month. The Fund also reimburses W&R and WARSCO for certain out-of-pocket
costs.
As principal underwriter for the Fund's shares, W&R received direct
and indirect gross sales commissions for Class A shares (which are not an
expense of the Fund) of $1,663,049, out of which W&R paid sales commissions
of $938,871 and all expenses in connection with the sale of Fund shares,
except for registration fees and related expenses.
Under a Service Plan for Class A shares adopted by the Fund pursuant
to Rule 12b-1 under the Investment Company Act of 1940, the Fund may pay
monthly a fee to W&R in an amount not to exceed .25% of the Fund's Class A
average annual net assets. The fee is to be paid to reimburse W&R for
amounts it expends in connection with the provision of personal services to
Fund shareholders and/or maintenance of shareholder accounts.
The Fund paid Directors' fees of $15,199.
W&R is an indirect subsidiary of Torchmark Corporation, a holding
company, and United Investors Management Company, a holding company, and a
direct subsidiary of Waddell & Reed Financial Services, Inc., a holding
company.
NOTE 3 -- Investment Securities Transactions
Purchases of investment securities, other than U.S. Government and
short-term securities, aggregated $356,434,943 while proceeds from
maturities and sales aggregated $393,969,857. Purchases of short-term
securities aggregated $696,431,017 while proceeds from maturities and sales
aggregated $638,288,576. No U.S. Government securities were bought or sold
during the period.
For Federal income tax purposes, cost of investments owned at December
31, 1996 was $706,294,500, resulting in net unrealized appreciation of
$151,781,552, of which $168,844,914 related to appreciated securities and
$17,063,362 related to depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net
income of $38,813,642 during its fiscal year ended June 30, 1996, of which
a portion was paid to shareholders during the period ended June 30, 1996.
Remaining capital gain net income has been distributed to Fund
shareholders.
Internal Revenue Code regulations permit the Fund to defer into its
next fiscal year net foreign currency losses, net capital losses or net
long-term capital losses incurred between each November 1 and the end of
its fiscal year ("post-October losses"). From November 1, 1995 through
June 30, 1996, the Fund incurred foreign currency losses of $435,952, which
will be deferred to the fiscal year ending June 30, 1997.
NOTE 5 -- Commencement of Multiclass Operations
On July 4, 1995, the Fund was authorized to offer investors a choice of
two classes of shares, Class A and Class Y, each of which has equal rights
as to assets and voting privileges. Class Y shares are not subject to a
sales charge on purchases; they are not subject to a Rule 12b-1 Service
Plan and have a separate transfer agency and dividend disbursement services
fee structure. 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, non-class specific expenses and realized and unrealized gains
and losses are allocated daily to each class of shares based on the value
of relative net assets as of the beginning of each day adjusted for the
prior day's capital share activity.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
United International Growth Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of United International Growth Fund,
Inc., as of December 31, 1996, the related statements of operations and
changes in net assets for the six-month period then ended, and the
financial highlights for the six-month 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 audit. The
financial statements and the financial highlights of the Fund for each of
the years in the five-year period ended June 30, 1996 were audited by other
auditors whose report, dated August 5, 1996, expressed an unqualified
opinion on those statements and financial highlights.
We conducted our audit 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 at December 31, 1996 by correspondence with the custodian
and brokers. 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 audit
provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the United
International Growth Fund, Inc. as of December 31, 1996, the results of its
operations, the changes in its net assets, and the financial highlights for
the six-month period then ended in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
February 7, 1997
<PAGE>
To all IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from an 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
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
William L. Rogers, Los Angeles, California
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
OFFICERS
Keith A. Tucker, President
Robert L. Hechler, Vice President
Henry J. Herrmann, Vice President
Theodore W. Howard, Vice President and Treasurer
Thomas A. Mengel, Vice President
Sharon K. Pappas, Vice President and Secretary
Carl E. Sturgeon, Vice President
<PAGE>
THE UNITED GROUP OF MUTUAL FUNDS
United Cash Management, Inc.
United Government Securities Fund, Inc.
United Bond Fund
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Continental Income Fund, Inc.
United Retirement Shares, Inc.
United Asset Strategy Fund, Inc.
United Income Fund
United Accumulative Fund
United Vanguard Fund, Inc.
United New Concepts Fund, Inc.
United Science and Technology Fund
United International Growth Fund, Inc.
United Gold & Government 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
(800) 366-5465
Our INTERNET address is:
http://www.waddell.com
NUR1002SA(12-96)
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