United
Vanguard
Fund, Inc.
SEMIANNUAL
REPORT
---------------------------------------
For the six months ended March 31, 1995
<PAGE>
This report is submitted for the general information of the shareholders of
United Vanguard Fund, Inc. It is not authorized for distribution to prospective
investors in the Fund unless accompanied with or preceded by the United Vanguard
Fund, Inc. current prospectus.
<PAGE>
PRESIDENT'S LETTER
- -----------------------------------------------------------------
MARCH 31, 1995
Dear Shareholder:
As President of your Fund, I would like to take this opportunity to share
my thoughts on a subject that I believe is very important to all of us; the need
for tax incentives that will help Americans take personal responsibility for
their futures.
Voters all across America sent two clear messages in the elections held in
November 1994. They want their taxes reduced and they want their concern for
financial security addressed without adding new bureaucracies or government
programs. One of the methods to do this is to expand the availability of tax
incentives for individuals to invest in Individual Retirement Accounts. This
could be done in several ways such as:
restoring the universal availability of fully tax-deductible Individual
Retirement Accounts,
allowing non-working spouses to make a full contribution of $2,000 to an
Individual Retirement Account instead of only $250 as currently allowed,
eliminating the taxation on the distribution of earnings from Individual
Retirement Accounts.
All of us recognize that future generations will need to supplement social
security benefits by private savings in order to provide an adequate level of
retirement income. Expanding the benefits of IRA's provides tax incentives to
encourage savings which allows all individuals the opportunity to provide
financial security for themselves and their families. Encouraging savings
through tax incentives has additional indirect benefits. Americans' personal
savings rate has fallen from 8% in the 1960's to just 2% of disposable income
today. Expanding the benefits of IRA's will help reverse this trend, will
increase the amount of U.S. capital available for investment and should make the
U.S. less dependent on capital from foreign sources.
Changes to our current IRA laws, such as the ones I mentioned above, are
being discussed in Congress. I urge you to write to your Members of Congress
and to the President to tell them that you support expanded IRA legislation that
provides incentives and opportunities for all Americans to improve their
financial well being.
Finally, I appreciate your continued confidence in our products and
services.
Respectfully,
Keith A. Tucker
President
<PAGE>
SHAREHOLDER SUMMARY
- --------------------------------------------------------------
United Vanguard Fund, Inc.
PORTFOLIO STRATEGY:
Common stock of companies OBJECTIVE: Appreciation of
thought to have superior capital.
prospects for growth and/or
other unique investment STRATEGY: Invests in securities
characteristics primarily issued by
companies believed to
May invest in Foreign have the potential for
Securities appreciation in
value and seeks to
Cash Reserves achieve proper timing of purchases and
sales relative to market conditions.
(May purchase securities subject to
repurchase agreements. May invest in
certain options and futures.)
The use of cash reserves (often invested
in money market securities) for
defensive purposes is a strategy that
may be utilized by the Vanguard 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: 1969
SCHEDULED DIVIDEND FREQUENCY: SEMIANNUALLY (June and December)
<PAGE>
PERFORMANCE SUMMARY
PER SHARE DATA
For the Six Months Ended March 31, 1995
- ---------------------------------------------
DIVIDEND PAID $0.015
======
CAPITAL GAINS DISTRIBUTION $0.616
======
NET ASSET VALUE ON
3/31/95 $7.26 adjusted to:$7.88 (A)
9/30/94 7.73
-----
CHANGE PER SHARE $0.15
=====
(A)This number includes the capital gains distribution of $0.616 paid in
December 1994 added to the actual net asset value on March 31, 1995.
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 3-31-95 4.62% 11.00%
5-year period ended 3-31-95 8.32% 9.61%
10-year period ended 3-31-95 11.71% 12.37%
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 March 31, 1995, United Vanguard Fund, Inc. had net assets totaling
$1,045,300,532 invested in a diversified portfolio of:
74.36% Common Stocks
25.23% Cash and Cash Equivalents
0.41% Preferred Stock
As a shareholder of United Vanguard Fund, Inc., for every $100 you had invested
on March 31, 1995, your Fund owned:
$40.81 Technological Stocks
25.23 Cash and Cash Equivalents
20.16 Consumer Stocks
8.09 Financial Stocks
5.30 Basic Industries Stocks
0.41 Preferred Stock
<PAGE>
- -----------------------------------------------------------------
These STOCK CATEGORIES are provided as a reference only. Not all categories or
subcategories will be represented in a portfolio at all times. Refer to the
following pages for a more detailed portfolio listing.
BASIC INDUSTRIES
Airlines
Automotive
Building
Chemicals Major
Electrical Equipment
Engineering and Construction
Machinery
Manufacturers
Metals and Mining
Multi-Industry
Paper
Precious Metals
Railroad Equipment
Railroads
Shipping
Steel
Tire and Rubber
Trucking
CONSUMER
Beverages
Consumer Electronics and Appliances
Food and Related
Hospital Management
Household Products
Leisure Time
Packaging and Containers
Publishing and Advertising
Retailing
Services, Consumer and Business
Textiles and Apparel
Tobacco
ENERGY AND ENERGY-RELATED
Canadian Oil
Coal
Domestic Oil
International Oil
Oil Services
Propane
FINANCIAL
Banks and Savings and Loans
Financial
Insurance
PUBLIC UTILITIES
Electric
Gas
Pipelines
TECHNOLOGICAL
Aerospace
Biotechnology and Medical Services
Chemicals Specialty and Miscellaneous Technology
Computers and Office Equipment
Drugs and Hospital Supply
Electronics
Telecommunications
<PAGE>
THE INVESTMENTS OF
UNITED VANGUARD FUND, INC.
MARCH 31, 1995
Shares Value
COMMON STOCKS
Airlines - 1.20%
Southwest Airlines Co. ................. 700,000 $ 12,512,500
Automotive - 0.46%
Harley-Davidson, Inc. .................. 200,000 4,800,000
Banks and Savings and Loans - 2.00%
HSBC Holdings Plc (A) .................. 1,161,843 13,110,554
Wells Fargo & Company .................. 50,000 7,818,750
Total ................................. 20,929,304
Beverages - 1.49%
PepsiCo, Inc. .......................... 400,000 15,600,000
Biotechnology and Medical Services - 2.53%
Biogen, Inc.* .......................... 300,000 11,850,000
Centocor, Inc.* ........................ 350,000 5,512,500
Chiron Corporation* .................... 61,748 3,311,236
Ventritex, Inc.* ....................... 300,000 5,737,500
Total ................................. 26,411,236
Building - 1.27%
Cemex, S.A., CPO Shares, Series A (A) ... 2,007,500 4,148,143
Metsa-Serla Oy, Series B (A) ........... 249,800 9,180,639
Total ................................. 13,328,782
Chemicals Specialty and Miscellaneous
Technology - 0.54%
Calgon Carbon Corporation .............. 500,000 5,687,500
Computers and Office Equipment - 14.26%
Broderbund Software, Inc.* ............. 325,000 16,859,375
Cerner Corporation* .................... 300,000 14,400,000
First Data Corporation ................. 400,000 20,750,000
General Motors Corporation, Class E .... 500,000 19,437,500
Informix Corporation* .................. 700,000 23,975,000
Microsoft Corporation* ................. 100,000 7,106,200
Oracle Systems Corporation* ............ 600,000 18,712,200
Silicon Graphics, Inc.* ................ 500,000 17,750,000
Sybase, Inc.* .......................... 250,000 10,031,250
Total ................................. 149,021,525
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED VANGUARD FUND, INC.
MARCH 31, 1995
Shares Value
COMMON STOCKS (Continued)
Electronics - 10.33%
AMP Incorporated ....................... 700,000 $ 25,200,000
Advanced Micro Devices, Inc.* .......... 400,000 13,550,000
Applied Materials, Inc.* ............... 300,000 16,518,600
cisco Systems, Inc.* ................... 800,000 30,449,600
Silicon Valley Group, Inc.* ............ 550,000 15,537,500
Xilinx, Inc.* .......................... 100,000 6,762,500
Total ................................. 108,018,200
Financial - 3.89%
Federal National Mortgage Association .. 500,000 40,687,500
Hospital Management - 4.62%
Quorum Health Group, Inc.* ............. 300,000 6,206,100
United HealthCare Corporation .......... 900,000 42,075,000
Total ................................. 48,281,100
Household Products - 1.17%
Gillette Company (The) ................. 150,000 12,243,750
Insurance - 2.20%
MBIA, Inc. ............................. 250,000 15,718,750
TIG Holdings, Inc. ..................... 325,000 7,312,500
Total ................................. 23,031,250
Leisure Time - 6.96%
British Sky Broadcasting Group
plc, ADS* ............................. 217,000 5,343,625
Comcast Corporation, Class A* .......... 1,250,000 19,452,500
Walt Disney Company (The) .............. 400,000 21,350,000
Tele-Communications, Inc., Class A* .... 1,000,000 20,937,000
Viacom Inc., Class B* .................. 126,442 5,658,280
Total ................................. 72,741,405
Machinery - 1.23%
Mannesmann AG (A) ...................... 50,000 12,874,991
Multi-Industry - 1.14%
First Pacific Company Limited (A) ...... 9,706,000 7,092,460
Grupo Carso, S.A. de C.V.,
Series 1A (A)*......................... 1,100,000 4,806,927
Total ................................. 11,899,387
Publishing and Advertising - 1.65%
News Corporation Limited (The), ADR .... 900,000 17,212,500
Retailing - 1.08%
Cifra, S.A. de C.V., C (A) ............. 9,315,000 11,257,627
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED VANGUARD FUND, INC.
MARCH 31, 1995
Shares Value
COMMON STOCKS (Continued)
Services, Consumer and Business - 3.19%
Block (H&R), Inc. ...................... 500,000 $ 21,687,500
CUC International Inc.* ................ 300,000 11,662,500
Total ................................. 33,350,000
Telecommunications - 13.15%
General Instrument Corporation* ........ 600,000 20,850,000
MCI Communications Corporation ......... 800,000 16,449,600
MFS Communications Company, Inc.* ...... 500,000 17,562,500
Motorola, Inc. ......................... 500,000 27,312,500
Nokia Corporation (A) .................. 224,800 32,995,400
Petersburg Long Distance Inc.* ......... 225,000 1,335,825
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 200,000 12,362,400
Telefonos de Mexico S.A. de C.V., ADR .. 300,000 8,550,000
Total ................................. 137,418,225
TOTAL COMMON STOCKS - 74.36% $ 777,306,782
(Cost: $600,101,620)
PREFERRED STOCK - 0.41%
Publishing and Advertising
News Corporation Limited (The),
Convertible, ADR ...................... 250,000 $ 4,312,500
(Cost: $6,177,375)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Commercial Paper
Banks and Savings and Loans - 0.04%
U.S. Bancorp,
Master Note ........................... $ 447 447,000
Beverages - 1.63%
Seagram (Joseph E.) & Sons Inc.:
5.97%, 4-19-95 ........................ 5,085 5,069,821
6.02%, 4-27-95 ........................ 12,005 11,952,805
Total ................................. 17,022,626
Consumer Electronics and Appliances - 0.80%
TDK (USA) Corp.,
5.97%, 4-20-95 ........................ 8,350 8,323,691
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED VANGUARD FUND, INC.
MARCH 31, 1995
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Drugs and Hospital Supply - 2.67%
Pfizer Inc.:
5.95%, 4-5-95 ......................... $ 8,585 $ 8,579,324
5.95%, 4-6-95 ......................... 3,290 3,287,281
SmithKline Beecham Corp.,
5.975%, 4-28-95 ....................... 6,565 6,535,581
Warner-Lambert Company:
5.95%, 4-4-95 ......................... 2,295 2,293,862
6.0%, 4-4-95 .......................... 7,170 7,166,415
Total ................................. 27,862,463
Financial - 6.06%
B.A.T. Capital Corp.:
5.98%, 4-20-95 ........................ 7,870 7,845,162
6.0%, 4-20-95 ......................... 7,025 7,002,754
BHP Finance (U.S.A.) Inc.,
6.01%, 4-19-95 ........................ 1,235 1,231,289
Block Financial Corp.,
5.99%, 4-11-95 ........................ 7,695 7,682,196
Caterpillar Financial Services Corp.,
6.15%, 5-3-95 ......................... 10,000 9,945,333
Dana Credit Corp.:
6.12%, 4-21-95 ........................ 7,010 6,986,166
6.25%, 4-28-95 ........................ 4,425 4,404,258
Textron Financial Corp.,
6.14%, 4-7-95 ......................... 15,000 14,984,650
Transamerica Financial Group,
6.0%, 5-23-95 ......................... 3,315 3,286,270
Total ................................. 63,368,078
Food and Related - 3.03%
ConAgra, Inc.,
6.12%, 4-10-95 ........................ 10,545 10,528,866
Heinz (H.J.) Company:
5.97%, 4-20-95 ........................ 6,000 5,981,095
5.99%, 5-5-95 ......................... 3,265 3,246,529
Quaker Oats Co.,
6.12%, 4-13-95 ........................ 10,000 9,979,600
Sara Lee Corporation,
Master Note ........................... 1,940 1,940,000
Total ................................. 31,676,090
Insurance - 0.28%
Aon Corporation,
6.0%, 4-4-95 .......................... 2,980 2,978,510
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED VANGUARD FUND, INC.
MARCH 31, 1995
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Multi-Industry - 1.13%
ITT Corporation,
6.05%, 4-4-95 ......................... $11,825 $ 11,819,038
Paper - 0.63%
Champion International Corporation,
6.1%, 4-17-95 ......................... 6,565 6,547,202
Public Utilities - Electric - 4.24%
PS Colorado Credit Corp.,
6.13%, 4-13-95 ........................ 5,430 5,418,905
Pacificorp:
6.0%, 4-24-95 ......................... 5,265 5,244,818
6.0%, 4-28-95 ......................... 10,360 10,313,380
Southern California Edison Co.,
6.02%, 4-20-95 ........................ 13,380 13,337,489
Western Resources Inc.,
6.12%, 4-6-95 ......................... 10,000 9,991,500
Total ................................. 44,306,092
Public Utilities - Pipeline - 0.28%
Enron Corp.,
6.13%, 4-17-95 ........................ 2,975 2,966,895
Retailing - 1.84%
K Mart Corporation,
6.15%, 4-7-95 ......................... 5,765 5,759,091
Rite Aid Corp.:
6.15%, 4-12-95 ........................ 7,500 7,485,906
6.15%, 4-17-95 ........................ 6,035 6,018,504
Total ................................. 19,263,501
Services, Consumer and Business - 1.06%
Hertz Corp.,
6.0%, 4-24-95 ......................... 11,095 11,052,469
Telecommunications - 0.96%
BellSouth Telecommunications Inc.,
5.97%, 4-4-95 ......................... 10,000 9,995,025
Total Commercial Paper - 24.65% 257,628,680
Municipal Obligations - 0.54%
California
Modesto Irrigation District Financing
Authority, California, Taxable Commercial
Paper Bond Anticipation Notes
(Domestic Water Project), Series
1992A (Bank of America),
6.15%, 5-19-95 ........................ 5,690 5,643,342
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED VANGUARD FUND, INC.
MARCH 31, 1995
Value
TOTAL SHORT-TERM SECURITIES - 25.19% $ 263,272,022
(Cost: $263,272,022)
TOTAL INVESTMENT SECURITIES - 99.96% $1,044,891,304
(Cost: $869,551,017)
CASH AND OTHER ASSETS, NET OF
LIABILITIES - 0.04% 409,228
NET ASSETS - 100.00% $1,045,300,532
Notes to Schedule of Investments
*No income dividends were paid during the preceding 12 months.
(A) Listed on an exchange outside the United States.
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 VANGUARD FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1995
Assets
Investment securities -- at value
(Notes 1 and 3) ................................. $1,044,891,304
Cash ............................................ 21,714
Receivables:
Investment securities sold ...................... 10,042,276
Fund shares sold ................................ 1,505,100
Dividends and interest .......................... 1,248,921
Prepaid insurance premium ........................ 31,352
--------------
Total assets .................................. 1,057,740,667
--------------
Liabilities
Payable for investment securities purchased ...... 9,423,820
Payable for Fund shares redeemed ................. 2,577,941
Accrued service fee .............................. 228,133
Accrued transfer agency and dividend
disbursing ...................................... 134,104
Accrued accounting services fee .................. 8,333
Other ............................................ 67,804
--------------
Total liabilities ............................. 12,440,135
--------------
Total net assets ............................. $1,045,300,532
==============
Net Assets
$1.00 par value capital stock, authorized --
400,000,000; shares outstanding -- 144,028,641
Capital stock ................................... $ 144,028,641
Additional paid-in capital ...................... 672,343,760
Accumulated undistributed income:
Accumulated undistributed net investment
income ......................................... 3,892,082
Accumulated undistributed net realized gain on
investment transactions ....................... 49,695,713
Net unrealized appreciation in value of
investments at end of period ................... 175,340,336
--------------
Net assets applicable to outstanding
units of capital ............................. $1,045,300,532
==============
Net asset value per share (net assets divided
by shares outstanding) ........................... $7.26
=====
See notes to financial statements.
UNITED VANGUARD FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended MARCH 31, 1995
Investment Income
Income:
Interest ........................................ $ 7,132,844
Dividends ....................................... 3,859,259
------------
Total income .................................. 10,992,103
------------
Expenses (Note 2):
Investment management fee ....................... 3,658,362
Transfer agency and dividend disbursing ......... 845,270
Service fee ..................................... 696,375
Custodian fees .................................. 108,322
Accounting services fee ......................... 50,000
Audit fees ...................................... 18,660
Legal fees ...................................... 17,207
Other ........................................... 109,440
------------
Total expenses ................................ 5,503,636
------------
Net investment income ........................ 5,488,467
------------
Realized and Unrealized Gain (Loss) on Investments
Realized net gain on securities .................. 53,413,148
Realized net gain on foreign currency
transactions .................................... 14,080
------------
Realized net gain on investments ................ 53,427,228
Unrealized depreciation in value of investments
during the period ............................... (35,587,607)
------------
Net gain on investments ....................... 17,839,621
------------
Net increase in net assets resulting
from operations ............................ $23,328,088
============
See notes to financial statements.
<PAGE>
UNITED VANGUARD FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the For the
six months fiscal year
ended ended
March 31, September 30,
1995 1994
------------ ------------
Increase in Net Assets
Operations:
Net investment income ............ $ 5,488,467 $ 356,304
Realized net gain on
investments .................... 53,427,228 77,998,361
Unrealized appreciation
(depreciation) ................. (35,587,607) 30,273,787
-------------- --------------
Net increase in net assets
resulting from operations ..... 23,328,088 108,628,452
-------------- --------------
Dividends to shareholders from:*
Net investment income ............ (1,981,566) (2,315,396)
Realized gains on securities
transactions ................... (81,376,309) (22,767,798)
-------------- --------------
(83,357,875) (25,083,194)
-------------- --------------
Capital share transactions:
Proceeds from sale of shares
(7,474,493 and 11,403,314
shares, respectively) .......... 55,161,351 83,173,561
Proceeds from reinvestment of
dividends and/or capital gains
distribution (11,728,777 and
3,461,005 shares, respectively) . 82,101,441 24,607,745
Payments for shares redeemed
(6,309,838 and 13,569,912 shares,
respectively) .................. (46,195,354) (98,880,083)
-------------- --------------
Net increase in net assets
resulting from capital
share transactions ............ 91,067,438 8,901,223
-------------- --------------
Total increase ................ 31,037,651 92,446,481
Net Assets
Beginning of period ............... 1,014,262,881 921,816,400
-------------- --------------
End of period, including undistributed
net investment income of $3,892,082
and $371,101, respectively ....... $1,045,300,532 $1,014,262,881
============== ==============
*See "Financial Highlights" on page 15.
See notes to financial statements.
<PAGE>
UNITED VANGUARD FUND, INC.
FINANCIAL HIGHLIGHTS
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
six For the fiscal year ended
months September 30,
ended ------------------------------------
3/31/95 1994 1993 1992 1991 1990
------- ------ ------ ------ ------ ------
Net asset value,
beginning of period $7.73 $7.10 $6.03 $6.36 $5.18 $6.91
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... .04 .00 .04 .06 .14 .17
Net realized and
unrealized gain
(loss) on
investments...... .12 .83 1.07 (0.10) 1.39 (0.95)
----- ----- ----- ----- ----- -----
Total from investment
operations ........ .16 .83 1.11 (0.04) 1.53 (0.78)
----- ----- ----- ----- ----- -----
Less distributions:
Dividends from net
investment
income........... (0.01) (0.02) (0.04) (0.09) (0.14) (0.22)
Distribution from
capital gains.... (0.62) (0.18) (0.00) (0.20) (0.21) (0.73)
----- ----- ----- ----- ----- -----
Total distributions. (0.63) (0.20) (0.04) (0.29) (0.35) (0.95)
----- ----- ----- ----- ----- -----
Net asset value,
end of period ..... $7.26 $7.73 $7.10 $6.03 $6.36 $5.18
===== ===== ===== ===== ===== =====
Total return*....... 2.39% 11.86% 18.38% -0.58% 30.88% -12.67%
Net assets, end of
period (000
omitted) .........$1,045,301$1,014,263$921,816$843,978$875,293$679,765
Ratio of expenses
to average net
assets ............ 1.08%** 1.05% 0.97% 0.96% 0.97% 0.98%
Ratio of net
investment income
to average net
assets ............ 1.07%** 0.04% 0.50% 0.96% 2.28% 2.85%
Portfolio
turnover rate ..... 38.65%**36.70% 62.12% 84.82%173.44% 161.54%
*Total return calculated without taking into account the sales load
deducted on an initial purchase.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED VANGUARD FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
NOTE 1 -- Significant Accounting Policies
United Vanguard Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
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 major dealer in bonds. Convertible bonds are
valued using this pricing system only on days when there is no sale re-
ported. Stocks which are traded over-the-counter are priced using NASDAQ
(National Association of Securities Dealers Automated Quotations) which
provides information on bid and asked or closing prices quoted by major
dealers in such stocks. 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. Dividend income is recorded on the ex-dividend
date. Interest income is recorded on the accrual basis. See Note 3 --
Investment Security 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. 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 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.
E. 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. At October 1, 1994, $23,090 was reclassified between
undistributed net investment income and accumulated undistributed net
realized gain on investment transactions.
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 $11.5 billion of
combined net assets at March 31, 1995) 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
The Fund also pays WARSCO a monthly per account charge for transfer agency
and dividend disbursement services of $1.0208 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. 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 (which are not an expense of the Fund) of
$1,852,422, out of which W&R paid sales commissions of $1,035,923 and all
expenses in connection with the sale of Fund shares, except for registration
fees and related expenses.
Under a Service Plan 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 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 $18,324.
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 Security Transactions
Purchases of investment securities, other than U.S. Government and short-
term securities, aggregated $150,078,128 while proceeds from maturities and
sales aggregated $168,721,067. Purchases of short-term securities aggregated
$1,543,201,488 while proceeds from maturities and sales aggregated
$1,446,664,000. There were no transactions in U.S. Government securities during
the period.
For Federal income tax purposes, cost of investments owned at March 31,
1995 was $869,551,017, resulting in net unrealized appreciation of $175,340,287
of which $197,081,754 related to appreciated securities and $21,741,467 related
to depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income of
$77,830,586 during the fiscal year ended September 30, 1994, which has been paid
to shareholders.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
United Vanguard Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of United Vanguard Fund, Inc. (the
"Fund") at March 31, 1995, the results of its operations for the six months then
ended and the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and the financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at March
31, 1995 by correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Kansas City, Missouri
May 5, 1995
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
Jay B. Dillingham, Kansas City, Missouri
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Los Angeles, California
Doyle Patterson, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
Leslie S. Wright, Birmingham, Alabama
OFFICERS
Keith A. Tucker, President
Robert L. Hechler, Vice President
Henry J. Herrmann, Vice President
Theodore W. Howard, Vice President and Treasurer
Sharon K. Pappas, Vice President and Secretary
Carl E. Sturgeon, Vice President
James D. Wineland, Vice President
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.
<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
(913) 236-1303
NUR1005SA(3-95)
printed on recycled paper
