UNITED FUNDS INC, N-30D, 1995-03-01

UNITED FUNDS INC
N-30D, 1995-03-01

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<PAGE>

UNITED
FUNDS, INC.
United Bond Fund
United Income Fund
United Accumulative Fund
United Science and Technology Fund

ANNUAL
REPORT
-------------------------------------------
For the fiscal year ended December 31, 1994

<PAGE>
This report is submitted for the general information of the shareholders of
United Funds, Inc. It is not authorized for distribution to prospective
investors unless accompanied with or preceded by the United Funds, Inc. current
prospectus.

<PAGE>
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, 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
<PAGE>
UNITED BOND FUND
MANAGER'S LETTER
DECEMBER 31, 1994
- ---------------------------------------------------------------------------

Dear Shareholder:

This report relates to the operation of the United Bond Fund for the fiscal
year ended December 31, 1994. The following discussion, graphs and tables
provide you with information regarding the Fund's performance during that
period.

During the past fiscal year, the Federal Reserve Bank raised interest rates
six times. This action pushed interest rates on short-term bonds from a low of
under 3% in January 1994 to a high of over 6.5% in December 1994. Interest
rates on long-term bonds rose similarly, from a January low of around 6% to a
peak of over 8% in November of 1994.

In response to rising interest rates, we reduced the average maturity of
the Fund's holdings as a means of lessening declines in the Fund's per-share
value. In addition, the Fund increased its exposure to non-investment grade
securities slightly, which increased the average stated yield of the Fund's
holdings. This strategy of emphasizing securities with shorter maturities and
higher stated yields helped the Fund preserve capital in an environment of
declining bond values.

The strategies and techniques we applied resulted in the direction of the
Fund's performance remaining fairly consistent with that of the indexes charted
on the following page. Those indexes reflect the performance of securities that
generally represent the bond market (the Lehman Brothers Government/Corporate
Bond Index or LBGCBI) and the universe of funds with similar objectives (the
Lipper Corporate Debt Funds A-Rated Universe Average). The Fund's performance
was down slightly more than the LBGCBI because the longer average maturity of
the Fund during the earlier portion of the year adversely affected the Fund's
results relative to that index.

In 1995 we anticipate the possibility of an additional increase in short-
term interest rates by the Federal Reserve Bank and a concurrent slowing of
economic growth. These factors should reduce inflation fears and, in
combination, will be encouraging to the bond markets. Therefore, we intend to
shed some of the Fund's non-investment-grade holdings and to extend the Fund's
average maturity as circumstances warrant in the year ahead.

Thank you very much for your continued support and confidence.

Respectfully,
James C. Cusser
Manager, United Bond Fund
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
UNITED BOND FUND,
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX,
AND THE LIPPER COPRPORATE DEBT FUNDS A-RATED UNIVERSE AVERAGE

Average Annual Total Return*
1 year 5 years 10 years
- -11.18% 6.00% 9.31%

Lehman Lipper
Brothers Corporate
Government/ Debt Funds
United Corporate A Rated
Bond Bond Universe
Fund Index Average
------ ----------- ----------
12/31/84 Purchase 9,425 10,000 10,000
12/31/85 11,821 12,133 12,012
12/31/86 13,622 14,024 13,497
12/31/87 14,235 14,347 13,691
12/31/88 15,515 15,436 14,688
12/31/89 17,160 17,632 16,515
12/31/90 17,889 19,095 17,626
12/31/91 21,247 22,174 20,536
12/31/92 22,842 23,853 22,021
12/31/93 25,855 26,491 24,489
12/31/94 24,367 25,561 23,355

- ----- Lehman Bros Gov't/Corp Bond Index -- $25,561
+++++ United Bond Fund** -- $24,367
===== Lipper Corporate Debt Fund A-Rated Universe Average -- $23,355

Past performance is not predictive of future performance. Indexes are
unmanaged.
*Performance data quoted represents past performance and is based on deduction
of a 5.75% sales load on the initial purchase in each of the three periods.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
**The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund.

<PAGE>
SHAREHOLDER SUMMARY
- ----------------------------------------------------------------------
UNITED BOND FUND

PORTFOLIO STRATEGY:
Corporate and government OBJECTIVE: Reasonable return with emphasis on
bonds the preservation of principal.
Maximum 10% Non-Debt
Securities STRATEGY: Invests in bonds issued by companies in
a variety of industries and in
government securities.

FOUNDED: 1964

SCHEDULED DIVIDEND FREQUENCY: MONTHLY

<PAGE>
PERFORMANCE SUMMARY

PER SHARE DATA
For the Fiscal Year Ended December 31, 1994
- -------------------------------------------

DIVIDENDS PAID $ 0.39
======

CAPITAL GAINS
DISTRIBUTION $ 0.02
======

NET ASSET VALUE ON
12/31/94 $5.62 adjusted to: $ 5.64(A)
12/31/93 6.39
------
CHANGE PER SHARE $(0.75)
======

(A)This number includes the capital gains distribution of $0.02 paid in December
1994 added to the actual net asset value on December 31, 1994.

Past performance is not necessarily an indication of future results.

TOTAL RETURN HISTORY

Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 12-31-94 -11.18% -5.76%
5-year period ended 12-31-94 6.00% 7.26%
10-year period ended 12-31-94 9.31% 9.96%

*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, 1994, United Bond Fund had net assets totaling $517,836,320
invested in a diversified portfolio of:

97.08% Bonds
2.92% Cash and Cash Equivalents

As a shareholder of United Bond Fund, for every $100 you had invested on
December 31, 1994, your Fund owned:

Bonds:
Corporate $66.49
U.S. Government 25.97
Other Government 4.30
Municipal Bond 0.32
Cash and Cash Equivalents 2.92

Not all holdings will be represented in the portfolio at all times.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1994

Principal
Amount in
Thousands Value

CORPORATE DEBT SECURITIES
Aerospace - 1.98%
McDonnell Douglas Corporation,
9.25%, 4-1-2002 ....................... $10,000 $ 10,269,600

Airlines - 1.81%
Federal Express Corporation,
7.89%, 9-23-2008 ...................... 10,000 9,357,700

Automotive - 3.67%
General Motors Corporation,
8.8%, 3-1-2021 ........................ 11,600 11,876,428
Toyota Motor Credit Corporation, Medium
Term, Three Year Basket Inverse
Floating Rate,
3.02%, 8-5-96 (A) ..................... 8,000 7,120,000
Total ................................. 18,996,428

Banks and Savings and Loans - 11.85%
Banco Nacional de Commercio Exterior,
7.5%, 7-1-2000 ........................ 3,000 2,422,500
BankAmerica Corporation,
8.125%, 8-15-2004 ..................... 5,000 4,753,550
Bayerische Landesbank Girozentale, NY Branch,
CD, Currency Protected Duetschemark Swap
Rate Inverse Floating Rate,
3.06%, 3-28-97 (B) .................... 5,000 4,450,000
Central Fidelity Banks, Inc.,
8.15%, 11-15-2002 ..................... 5,000 4,831,400
Chevy Chase Savings Bank, F.S.B.,
9.25%, 12-1-2005 ...................... 1,500 1,260,000
Citicorp,
7.75%, 6-15-2006 ...................... 5,000 4,647,150
First Union Corporation,
8.0%, 11-15-2002 ...................... 7,600 7,284,296
Great Western Financial Corporation,
8.6%, 2-1-2002 ........................ 7,000 6,950,440
Kansallis-Osake-Pankki:
9.75%, 12-15-98 ....................... 1,000 1,035,570
10.0%, 5-1-2002 ....................... 5,000 5,366,100
RBSG Capital Corp.,
10.125%, 3-1-2004 ..................... 5,000 5,447,100
Riggs National Corporation,
8.5%, 2-1-2006 ....................... 4,000 3,700,000
Skandia Enskilda Banken, NY Branch Certificate
of Deposit Dollarized Australian Dollar
Reset,
6.125%, 4-5-99 (C) .................... 5,000 4,200,000
Wells Fargo & Company,
8.75%, 5-1-2002 ....................... 5,000 5,029,750
Total ................................. 61,377,856
See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1994

Principal
Amount in
Thousands Value

CORPORATE DEBT SECURITIES (Continued)
Building - 5.37%
Canadian Pacific Forest Products Ltd.,
9.25%, 6-15-2002 ..................... $ 3,000 $ 2,798,520
Cemex, S.A.,
8.875%, 6-10-98 ....................... 2,000 1,740,000
Doman Industries Limited,
8.75%, 3-15-2004 ...................... 2,000 1,765,000
Georgia-Pacific Corporation,
9.5%, 5-15-2022 ....................... 3,000 3,008,550
Noranda Forest Inc.,
7.5%, 7-15-2003 ....................... 3,000 2,765,460
Noranda Inc.,
8.625%, 7-15-2002 ..................... 7,000 6,944,910
Owens-Corning Fiberglas Corporation,
8.875%, 6-1-2002 ...................... 5,000 4,996,650
Del Webb Corporation,
10.875%, 3-31-2000 .................... 4,000 3,800,000
Total ................................. 27,819,090

Canadian Oil - 1.90%
NOVA Corporation of Alberta,
8.5%, 12-15-2012 ...................... 10,000 9,829,400

Chemicals Major - 1.87%
Dow Capital Corporation,
9.0%, 5-15-2010 ....................... 9,550 9,692,486

Domestic Oil - 3.82%
Apache Corporation,
9.25%, 6-1-2002 ....................... 5,000 5,096,700
LASMO (USA) INC.,
7.125%, 6-1-2003 ...................... 5,000 4,448,600
Seagull Energy Corporation,
7.875%, 8-1-2003 ...................... 4,000 3,460,000
Union Texas Petroleum Holdings, Inc.,
8.25%, 11-15-99 ....................... 7,000 6,801,760
Total ................................. 19,807,060

Electrical Equipment - 3.15%
General Electric Capital Corporation:
8.3%, 9-20-2009 ....................... 15,000 15,285,150
8.65%, 5-1-2018 ....................... 1,000 1,008,680
Total ................................. 16,293,830

See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1994

Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Financial - 10.80%
Banc One Credit Card Master Trust,
7.55%, 12-15-99 ....................... $ 5,000 $ 4,929,650
Chrysler Financial Corporation,
12.75%, 11-1-99 ....................... 9,000 10,452,240
Countrywide Mortgage Backed Securities,
Inc., Series 1994-G A5,
6.5%, 4-25-2024 ....................... 10,000 9,198,600
DLJ Mortgage Acceptance Corp.
1994-3 A13,
6.5%, 4-25-2024 ....................... 4,898 4,246,079
Equicon Loan Trust,
7.30%, 2-18-2013 ...................... 4,571 3,948,458
General Motors Acceptance Corporation,
8.875%, 6-1-2010 ...................... 10,000 10,383,100
Greyhound Financial Corporation,
8.79%, 11-15-2001 ..................... 3,000 3,006,450
Residential Funding Mortgage
Securities I, Inc.,
8.0%, 8-25-2020 ....................... 10,000 9,762,500
Total ................................. 55,927,077

Hospital Management - 0.58%
HealthTrust Inc.:
10.75%, 5-1-2002 ...................... 1,500 1,593,750
8.75%, 3-15-2005 ...................... 1,500 1,432,500
Total ................................. 3,026,250

Household Products - 1.92%
Procter & Gamble Company (The),
8.0%, 9-1-2024 ........................ 10,000 9,918,800

Insurance - 0.35%
Reliance Group Holdings, Inc.,
9.0%, 11-15-2000 ...................... 2,000 1,820,000

International Oil - 0.28%
YPF Sociedad Anoima,
8.0%, 2-15-2004........................ 2,000 1,440,000

Leisure Time - 3.89%
Marriott International, Inc.,
6.75%, 12-15-2003 ..................... 5,000 4,409,800
Tele-Communications, Inc.:
6.58%, 2-15-2005 ..................... 3,000 2,772,270
9.8%, 2-1-2012 ....................... 5,000 5,001,050

See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1994

Principal
Amount in
Thousands Value

CORPORATE DEBT SECURITIES (Continued)
Leisure Time (Continued)
Time Warner Incorporated,
7.95%, 2-1-2000 ....................... $ 5,000 $ 4,687,300
Turner Broadcasting System, Inc.,
8.375%, 7-1-2013 ...................... 4,000 3,252,320
Total ................................. 20,122,740

Machinery - 0.41%
Caterpillar, Inc.,
9.375%, 8-15-2011 ..................... 2,000 2,139,360

Multi-Industry - 0.52%
Mark IV Industries, Inc.,
8.75%, 4-1-2003 ....................... 3,000 2,715,000

Public Utilities - Pipelines - 3.95%
Arkla, Inc.,
8.875%, 7-15-99 ....................... 10,000 9,750,000
Coastal Corporation (The),
10.375%, 10-1-2000 .................... 5,000 5,315,950
Tenneco Inc.,
10.375%, 11-15-2000 ................... 5,000 5,368,250
Total ................................. 20,434,200

Publishing and Advertising - 2.15%
News America Holdings Incorporated:
9.125%, 10-15-99 ...................... 5,000 5,039,750
8.25%, 8-10-2018 ...................... 7,000 6,129,270
Total ................................. 11,169,020

Railroads - 1.16%
Penn Central Corporation (The),
10.625%, 4-15-2000 .................... 5,750 6,009,728

Retailing - 0.17%
Penn Traffic Company,
8.625%, 12-15-2003 .................... 1,000 875,000

Steel - 0.95%
USX Corporation,
8.21%, 1-21-2000 ...................... 5,000 4,903,750

Telecommunications - 3.02%
Bell Telephone Company of Pennsylvania (The),
8.35%, 12-15-2030 ..................... 5,000 5,236,850
New England Telephone & Telegraph Company,
7.875%, 11-15-2029 .................... 10,000 10,407,800
Total ................................. 15,644,650

See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1994

Principal
Amount in
Thousands Value

CORPORATE DEBT SECURITIES (Continued)
Tobacco - 0.92%
RJR Nabisco, Inc.,
6.80%, 9-1-2001 ....................... $ 5,000 $ 4,738,600

TOTAL CORPORATE DEBT SECURITIES - 66.49% $344,327,625
(Cost: $369,787,165)

MUNICIPAL BOND - 0.32%
Washington
Washington Public Power Supply System,
Nuclear Project No. 1 Refunding
Revenue Bonds, Series 1993C,
5.375%, 7-1-2015 ...................... 2,000 $ 1,627,500
(Cost: $1,970,444)

OTHER GOVERNMENT SECURITIES
Argentina - 0.28%
Republic of Argentina,
8.375%, 12-20-2003 .................... 2,000 1,425,000

Canada - 2.40%
Hydro Quebec,
8.05%, 7-7-2024 ....................... 5,000 4,807,100
Province of Manitoba,
9.125%, 1-15-2018 ..................... 7,000 7,628,040
Total ................................. 12,435,140

Mexico - 0.62%
United Mexican States,
8.5%, 9-15-2002 ....................... 4,000 3,220,000

Supranational - 1.00%
Inter-American Development Bank,
8.4%, 9-1-2009 ........................ 5,000 5,198,650

TOTAL OTHER GOVERNMENT SECURITIES - 4.30% $ 22,278,790
(Cost: $23,969,755)

See Notes to Schedules of Investments on page 42.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1994

Principal
Amount in
Thousands Value

UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
7.5%, 11-15-2017 ...................... $ 8,000 $ 7,490,000
7.5%, 4-15-2019 ....................... 10,971 9,390,713
Federal National Mortgage Association:
7.0%, 7-25-2006 ....................... 10,000 9,271,800
7.5%, 12-25-2006 ...................... 5,000 4,667,150
7.5%, 9-1-2009 ........................ 9,948 9,521,607
6.5%, 5-25-2018 ....................... 10,000 8,887,500
8.0%, 5-25-2019 ....................... 5,865 5,771,091
7.0%, 8-25-2021 ....................... 10,000 8,900,000
United States Treasury:
6.875%, 10-31-96 ...................... 25,000 24,664,000
6.5%, 5-15-97 ......................... 10,000 9,723,400
5.75%, 10-31-97 ....................... 10,000 9,479,700
11.25%, 2-15-2015 ..................... 10,000 13,212,500
8.875%, 5-15-2017 ..................... 8,000 8,714,960
7.5%, 11-15-2024 ...................... 5,000 4,782,800

TOTAL UNITED STATES GOVERNMENT
SECURITIES - 25.97% $134,477,221
(Cost: $139,327,010)

TOTAL SHORT-TERM SECURITIES - 1.69% $ 8,771,972
(Cost: $8,771,972)

TOTAL INVESTMENT SECURITIES - 98.77% $511,483,108
(Cost: $543,826,346)

CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.23% 6,353,212

NET ASSETS - 100.00% $517,836,320

See Notes to Schedules of Investments on page 42.

<PAGE>
UNITED INCOME FUND
MANAGER'S LETTER
- ---------------------------------------------------------------------------
DECEMBER 31, 1994

Dear Shareholder:

This report relates to the operation of the United Income Fund for the
fiscal year ended December 31, 1994. The following discussion, graphs and
tables provide you with information regarding the Fund's performance during that
period.

During the past fiscal year the performance of the equity markets in the
United States was essentially flat. The primary reason for this was the
significant increase in interest rates caused by Federal Reserve Bank policy.
This was done in an effort to slow economic growth for the purpose of
alleviating the inflationary expectations that arose from a strong economy. The
Federal Reserve Bank increased interest rates six times during 1994, while the
rate of inflation remained low throughout the year.

We believed that the Federal Reserve Bank perceived greater inflationary
pressures than were actually present, particularly in view of several
indications that inflationary pressures actually subsided during 1994. In this
past year's environment of low inflation and rising interest rates, our strategy
was to maintain the structure of the Fund in essentially the same manner as
existed at the beginning of the year. Therefore, we continued to emphasize
companies that we perceived as having the most potential for positive long-term
change, such as automobile companies, corporations with efficient worldwide
distribution systems and domestic companies with international outlets for their
goods and services.

The strategies and techniques we applied resulted in the direction of the
Fund's performance remaining fairly consistent with that of the indexes charted
on the following page. Those indexes reflect the performance of securities that
generally represent the stock market (the S&P 500 Index) and the universe of
funds with similar investment objectives (the Lipper Equity Income Fund Universe
Average). The Fund's performance, like that of equities in general, was
impacted by rising interest rates more than any other factor during the past
fiscal year.

In 1995 we anticipate that inflation will remain low and that the U.S.
economy will continue to grow at a modest but slowing rate. We expect to
continue to pursue the same strategies we have recently employed, which we
believe will produce solid returns in the long term. The search for companies
that have excellent prospects for superior earnings and revenue growth will
continue to be our mission.

Thank you very much for your continued support and confidence.

Respectfully,
Russell E. Thompson
Manager, United Income Fund

<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
UNITED INCOME FUND,
THE S&P 500 INDEX,
AND THE LIPPER EQUITY INCOME FUND UNIVERSE AVERAGE

Average Annual Total Return*
1 year 5 years 10 years
- -7.46% 8.06% 14.72%

Lipper
Equity
Income
United S&P Fund
Income 500 Universe
Fund Index Average
--------- --------- ---------
12/31/84 Purchase 9,425 10,000 10,000
12/31/85 12,630 13,173 12,470
12/31/86 15,422 15,632 14,250
12/31/87 16,528 16,453 13,959
12/31/88 19,804 19,185 15,884
12/31/89 25,249 25,265 19,142
12/31/90 23,873 24,481 17,942
12/31/91 30,948 31,939 22,667
12/31/92 34,650 34,374 24,793
12/31/93 40,212 37,837 28,207
12/31/94 39,484 38,336 27,494

- ----- United Income Fund** -- $39,484
+++++ S&P 500 Index -- $38,336
===== Lipper Equity Income Fund Universe Average -- $27,494

<PAGE>
SHAREHOLDER SUMMARY
- -----------------------------------------------------------------
UNITED INCOME FUND

PORTFOLIO STRATEGY:
Investment quality OBJECTIVE: Current income relative
dividend-paying to changing market
common stocks conditions.

Cash Reserves STRATEGY: Invests principally in common stocks of
large, well-known companies.

The use of cash reserves (often invested
in money market securities) for
defensive purposes is a strategy that
may be utilized by the Income 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: 1940

SCHEDULED DIVIDEND FREQUENCY: QUARTERLY
(MARCH, JUNE, SEPTEMBER, DECEMBER)

<PAGE>
PERFORMANCE SUMMARY

PER SHARE DATA
For the Fiscal Year Ended December 31, 1994
- -------------------------------------------

DIVIDENDS PAID $ 0.36
=======

CAPITAL GAINS
DISTRIBUTION $ 0.63
=======

NET ASSET VALUE ON
12/31/94 $23.34 adjusted to: $ 23.97(A)
12/31/93 24.77
-------
CHANGE PER SHARE $( 0.80)
=======

(A)This number includes the capital gains distribution of $0.63 paid in December
1994 added to the actual net asset value on December 31, 1994.

Past performance is not necessarily an indication of future results.

TOTAL RETURN HISTORY

Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 12-31-94 -7.46% -1.82%
5-year period ended 12-31-94 8.06% 9.35%
10-year period ended 12-31-94 14.72% 15.40%

*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, 1994, United Income Fund had net assets totaling $3,144,904,207
invested in a diversified portfolio of:

89.80% Common Stocks
5.11% Cash and Cash Equivalents
3.57% U.S. Government Securities
0.89% Preferred Stock
0.63% Corporate Debt Securities

As a shareholder of United Income Fund, for every $100 you had invested on
December 31, 1994, your Fund owned:

Basic Industries Stocks $40.87
Technological Stocks 21.69
Consumer Stocks 21.11
Financial Stocks 6.13
Cash and Cash Equivalents 5.11
U.S. Government Securities 3.57
Preferred Stock 0.89
Corporate Debt Securities 0.63

Not all holdings will be represented in the portfolio at all times.

<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 INCOME FUND
DECEMBER 31, 1994

Shares Value

COMMON STOCKS
Aerospace - 0.52%
Boeing Company (The) ................... 350,000 $ 16,362,500

Airlines - 1.56%
AMR Corporation* ....................... 400,000 21,300,000
Southwest Airlines Co. ................. 1,650,000 27,637,500
Total ................................. 48,937,500

Automotive - 7.43%
Chrysler Corporation ................... 1,100,000 53,900,000
Daimler-Benz AG (D) .................... 40,000 19,670,840
Daimler-Benz AG, ADS ................... 154,000 7,584,500
Dana Corporation ....................... 760,000 17,765,000
Eaton Corporation ...................... 500,000 24,750,000
Ford Motor Company ..................... 1,900,000 53,200,000
General Motors Corporation ............. 1,000,000 42,250,000
Magna Group, Inc., Class A ............. 376,500 14,448,188
Total ................................. 233,568,528

Banks and Savings and Loans - 3.75%
Citicorp ............................... 750,000 31,031,250
Deutsche Bank Aktiengesellschaft (D) ... 44,000 20,445,304
First Bank Systems, Inc. ............... 500,000 16,625,000
First Interstate Bancorporation ........ 300,000 20,287,500
Midlantic Corporation .................. 400,000 10,624,800
Skandinaviska Enskilda Banken (D)* ..... 3,300,000 18,866,100
Total ................................. 117,879,954

Beverages - 1.15%
PepsiCo, Inc. .......................... 1,000,000 36,250,000

Biotechnology and Medical Services - 0.71%
Medtronic, Inc. ........................ 400,000 22,250,000

Building - 4.05%
Armstrong World Industries, Inc. ....... 900,000 34,650,000
Georgia-Pacific Corporation ............ 425,000 30,387,500
Louisiana-Pacific Corporation .......... 675,000 18,393,750
Temple-Inland Inc. ..................... 350,000 15,793,750
Weyerhaeuser Company ................... 750,000 28,125,000
Total ................................. 127,350,000

Chemicals Major - 6.37%
Air Products & Chemicals, Inc. ......... 1,150,000 51,318,750
du Pont (E.I.) de Nemours and Company .. 1,000,000 56,250,000
PPG Industries, Inc. ................... 1,250,000 46,406,250
Praxair, Inc. .......................... 1,000,000 20,500,000
Union Carbide Corporation .............. 875,000 25,703,125
Total ................................. 200,178,125

See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1994

Shares Value

COMMON STOCKS (Continued)
Chemicals Specialty and Miscellaneous
Technology - 3.88%
Betz Laboratories, Inc. ................ 500,000 $ 22,125,000
Minnesota Mining and Manufacturing
Company ............................... 500,000 26,687,500
Polaroid Corporation ................... 1,400,000 45,500,000
Xerox Corporation ...................... 280,000 27,720,000
Total ................................. 122,032,500

Computers and Office Equipment - 3.54%
General Motors Corporation, Class E .... 1,000,000 38,500,000
International Business Machines
Corporation ........................... 500,000 36,750,000
Microsoft Corporation* ................. 300,000 18,375,000
Oracle Systems Corporation* ............ 400,000 17,700,000
Total ................................. 111,325,000

Consumer Electronics and Appliances - 1.22%
Whirlpool Corporation .................. 765,000 38,441,250

Electrical Equipment - 2.74%
Emerson Electric Co. ................... 400,000 25,000,000
General Electric Company ............... 1,200,000 61,200,000
Total ................................. 86,200,000

Electronics - 5.09%
AMP Incorporated ....................... 550,000 40,012,500
Applied Materials, Inc.* ............... 865,000 36,330,000
cisco Systems, Inc.* ................... 1,000,000 35,062,000
Intel Corporation ...................... 765,000 48,768,750
Total ................................. 160,173,250

Engineering and Construction - 1.61%
BBC Brown Boveri Baen, Series A (D) .... 25,000 21,447,650
Fluor Corporation ...................... 400,000 17,250,000
Foster Wheeler Corporation ............. 400,000 11,900,000
Total ................................. 50,597,650

See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1994

Shares Value

COMMON STOCKS (Continued)
Financial - 2.38%
Federal Home Loan Mortgage Corporation . 500,000 $ 25,250,000
Federal National Mortgage Association .. 295,200 21,512,700
Grupo Financiero Banamex Accival,
S.A. de C.V., Class B, CPO Shares (D) . 1,000,000 2,800,000
Grupo Financiero Banamex Accival,
S.A. de C.V., Class C (D) ............. 1,000,000 2,880,000
Grupo Financiero Banamex Accival,
S.A. de C.V., Class L (D) ............. 50,000 144,000
Household International, Inc. .......... 600,000 22,275,000
Total ................................. 74,861,700

Food and Related - 1.33%
CPC International Inc. ................. 500,000 26,625,000
Pet Incorporated ....................... 765,000 15,108,750
Total ................................. 41,733,750

Hospital Management - 0.93%
United HealthCare Corporation .......... 650,000 29,331,250

Household Products - 3.58%
Colgate-Palmolive Company .............. 600,000 38,025,000
Gillette Company (The) ................. 500,000 37,375,000
Procter & Gamble Company (The) ......... 600,000 37,200,000
Total.................................. 112,600,000

Leisure Time - 2.33%
Walt Disney Company (The) .............. 700,000 32,287,500
McDonald's Corporation ................. 1,400,000 40,950,000
Total ................................. 73,237,500

Machinery - 7.04%
Caterpillar Inc. ....................... 1,600,000 88,200,000
Clark Equipment Company* ............... 500,000 27,125,000
Deere & Company ........................ 685,000 45,381,250
Ingersoll-Rand Company ................. 400,000 12,600,000
Mannesmann AG (D) ...................... 45,000 12,255,525
Parker Hannifin Corporation ............ 400,000 18,200,000
Trinova Corporation .................... 600,000 17,625,000
Total ................................. 221,386,775

Metals and Mining - 0.55%
Phelps Dodge Corporation ............... 280,000 17,325,000

See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1994

Shares Value

COMMON STOCKS (Continued)
Multi-Industry - 2.11%
ITT Corporation ........................ 750,204 $ 66,486,830

Packaging and Containers - 0.67%
Pilkington PLC (D) ..................... 8,164,516 21,227,742

Paper - 2.19%
International Paper Company ............ 600,000 45,225,000
Union Camp Corporation ................. 500,000 23,562,500
Total ................................. 68,787,500

Railroads - 3.31%
CSX Corporation ........................ 350,000 24,368,750
Conrail Inc. ........................... 600,000 30,300,000
Norfolk Southern Corporation ........... 300,000 18,187,500
Southern Pacific Rail Corporation* ..... 460,000 8,337,500
Union Pacific Corporation .............. 500,000 22,812,500
Total ................................. 104,006,250

Retailing - 9.90%
Cifra, S.A. de C.V., Series C (D) ...... 7,000,000 13,244,000
Circuit City Stores, Inc. .............. 1,600,000 35,600,000
Dayton Hudson Corporation .............. 316,600 22,399,450
Dillard Department Stores, Inc.,
Class A ............................... 950,000 25,412,500
Gap, Inc. (The) ........................ 700,000 21,350,000
Home Depot, Inc. (The) ................. 765,000 35,190,000
Limited, Inc. (The) .................... 750,000 13,593,750
May Department Stores Company (The) .... 1,000,000 33,750,000
Next plc (D) ........................... 5,100,000 20,527,500
Nordstrom, Inc. ........................ 190,000 8,003,750
Penney (J.C.) Company, Inc. ............ 676,000 30,166,500
Sears, Roebuck and Co. ................. 200,000 9,200,000
Tommy Hilfiger Corporation* ............ 280,000 12,635,000
Toys "R" Us Inc.* ...................... 300,000 9,150,000
Wal-Mart Stores, Inc. .................. 1,000,000 21,250,000
Total ................................. 311,472,450

See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1994

Shares Value

COMMON STOCKS (Continued)
Steel - 0.84%
Avesta Sheffield AB (D)* ............... 2,660,063 $ 26,300,043

Telecommunications - 7.95%
AT&T Corporation ....................... 500,000 25,125,000
BellSouth Corporation .................. 315,000 17,049,375
General Instrument Corporation* ........ 1,000,000 30,000,000
MCI Communications Corporation ......... 1,475,000 27,194,575
Motorola, Inc. ......................... 1,700,000 98,387,500
Telefonaktiebolaget LM Ericsson,
Class B, ADR........................... 500,000 27,625,000
Telefonos de Mexico S.A. de C.V., ADR .. 600,000 24,600,000
Total ................................. 249,981,450

Tire and Rubber - 1.07%
Goodyear Tire & Rubber Company (The) ... 1,000,000 33,625,000

TOTAL COMMON STOCKS - 89.80% $2,823,909,497
(Cost: $1,996,644,116)

PREFERRED STOCK - 0.89%
Telecommunications
Nokia Corporation (D) ................... 190,000 $ 27,992,890
(Cost: $18,567,891)

Principal
Amount in
Thousands

CORPORATE DEBT SECURITIES
Banks and Savings and Loans - 0.31%
Morgan Guaranty Trust Company of New York,
7.375%, 2-1-2002 ...................... $10,250 9,680,100

Electrical Equipment - 0.32%
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... 10,000 10,190,100

TOTAL CORPORATE DEBT SECURITIES - 0.63% $ 19,870,200
(Cost: $19,842,401)

See Notes to Schedules of Investments on page 42.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1994
Principal
Amount in
Thousands Value

UNITED STATES GOVERNMENT SECURITIES
United States Treasury:
8.5%, 5-15-97 ......................... $16,000 $ 16,237,440
8.75%, 10-15-97 ....................... 20,000 20,450,000
5.75%, 8-15-2003 ...................... 50,000 43,453,000
10.375%, 11-15-2012 ................... 8,500 10,115,000
9.0%, 11-15-2018 ...................... 20,000 22,096,800

TOTAL UNITED STATES GOVERNMENT
SECURITIES - 3.57% $ 112,352,240
(Cost: $113,838,558)

SHORT-TERM SECURITIES
Commercial Paper
Banks and Savings and Loans - 0.34%
ANZ(DE) Inc.,
6.02%, 1-4-95 ......................... 10,440 10,434,763
U.S. Bancorp,
Master Note ........................... 313 313,000
Total ................................. 10,747,763

Drugs and Hospital Supply - 0.40%
Baxter International Inc.,
6.2%, 1-31-95 ......................... 2,610 2,596,515
Pfizer Inc.,
5.875%, 2-3-95 ........................ 10,000 9,946,146
Total ................................. 12,542,661

Financial - 2.92%
AT&T Capital Corp.,
5.95%, 1-17-95 ........................ 10,805 10,776,427
Associates Corporation of North America,
5.97%, 1-9-95 ......................... 8,910 8,898,179
Dana Credit Corp.,
6.28%, 2-10-95 ........................ 7,860 7,805,155
Kerr-McGee Credit Corp.:
6.15%, 1-11-95 ........................ 1,860 1,856,822
6.2%, 1-11-95 ......................... 9,440 9,423,742
Merrill Lynch & Co. Inc.,
5.8%, 1-9-95 .......................... 10,425 10,411,563
Nestle Capital Corp.,
5.9%, 1-31-95 ......................... 8,985 8,940,824
Sears Roebuck Acceptance Corp.,
6.02%, 1-19-95 ........................ 10,000 9,969,900
Textron Financial Corp.:
5.9%, 1-11-95 ......................... 5,695 5,685,667
6.1%, 1-31-95 ......................... 10,000 9,949,167
USAA Capital Corp.,
5.95%, 1-19-95 ........................ 1,165 1,161,534
USL Capital Corp.,
6.0%, 1-17-95 ......................... 6,790 6,771,893
Total ................................. 91,650,873
See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1994

Principal
Amount in
Thousands Value

SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Food and Related - 0.68%
ConAgra, Inc.:
6.1%, 1-10-95 ......................... $ 1,305 $ 1,303,010
6.14%, 1-17-95 ........................ 3,500 3,490,449
General Mills, Inc.,
Master Note ........................... 3,367 3,367,000
Quaker Oats Co.,
6.18%, 1-4-95 ......................... 11,244 11,238,209
Sara Lee Corporation,
Master Note ........................... 2,104 2,104,000
Total ................................. 21,502,668

Public Utilities - Electric - 0.37%
PS Colorado Credit Corp.,
6.13%, 1-23-95 ........................ 3,030 3,018,649
Pacific Gas & Electric Co.,
5.95%, 2-1-95 ......................... 8,530 8,486,296
Total ................................. 11,504,945

Public Utilities - Gas - 0.20%
Bay State Gas Co.,
5.98%, 1-13-95 ........................ 3,150 3,143,721
Questar Corp.,
5.9%, 1-27-95 ......................... 3,170 3,156,492
Total ................................. 6,300,213

Total Commercial Paper - 4.91% 154,249,123

Commercial Paper (backed by irrevocable bank
letter of credit) - 0.21%
Banks and Savings and Loans
American Bankers Insurance (Barclays
Bank PLC),
6.0%, 1-11-95 ......................... 6,670 6,658,883

TOTAL SHORT-TERM SECURITIES - 5.12% $ 160,908,006
(Cost: $160,908,006)

TOTAL INVESTMENT SECURITIES - 100.01% $3,145,032,833
(Cost: $2,309,800,972)

LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.01%) (128,626)

NET ASSETS - 100.00% $3,144,904,207

See Notes to Schedules of Investments on page 42.

<PAGE>
UNITED ACCUMULATIVE FUND
MANAGER'S LETTER
DECEMBER 31, 1994
- ---------------------------------------------------------------------------

Dear Shareholder:

This report relates to the operation of the United Accumulative Fund for
the fiscal year ended December 31, 1994. The following discussion, graphs and
tables provide you with information regarding the Fund's performance during that
period.

Stock market conditions and investment performance in 1994 were affected
significantly by the Federal Reserve Bank's policy to raise interest rates in an
effort to alleviate inflationary pressures in the economy. The markets were
also impacted by various other developments, including the election of a
Republican Congress in November and the crisis devaluation of Mexico's currency
in December.

During the past fiscal year, we took a cautious approach. We reduced our
holdings of companies in financial and cyclical industries, and we increased our
holdings of technology and growth stocks. We maintained a significant cash
position most of the year as well.

The strategies and techniques we applied resulted in the direction of the
Fund's performance remaining fairly consistent with that of the indexes charted
on the following page. Those indexes reflect the performance of securities that
generally represent the stock market, (the S&P 500 Index) and the universe of
funds with similar investment objectives (the Lipper Growth Fund Universe
Average). The Fund's performance was impacted by our cautious investment
approach of maintaining significant cash positions.

Our outlook for equities in 1995 is still cautious. We expect the market
to perform better when later in the year the pace of economic growth slows and
the Federal Reserve Bank discontinues its credit tightening efforts. If
conditions evolve as we anticipate, we intend to increase the Fund's equity
holdings. We plan to emphasize technology, telecommunications and consumer
goods companies.

Thank you very much for your continued support and confidence.

Respectfully,
Antonio Intagliata
Manager, United Accumulative Fund

<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
UNITED ACCUMULATIVE FUND,
THE S&P 500 INDEX,
AND THE LIPPER GROWTH FUND UNIVERSE AVERAGE

Average Annual Total Return*
1 year 5 years 10 years
- -5.71% 5.46% 11.68%
Lipper
Growth
United S&P Fund
Accumulative 500 Universe
Fund Index Average
------------ ----- --------
12/31/84 Purchase 9,425 10,000 10,000
12/31/85 11,834 13,173 12,709
12/31/86 13,970 15,632 14,359
12/31/87 14,603 16,453 14,528
12/31/88 17,093 19,185 16,550
12/31/89 21,805 25,265 20,712
12/31/90 19,587 24,481 19,579
12/31/91 24,225 31,939 26,573
12/31/92 27,665 34,374 28,638
12/31/93 30,172 37,837 31,727
12/31/94 30,184 38,336 31,022

- ----- S&P 500 Index -- $38,336
+++++ Lipper Growth Fund Universe Average -- $31,022
===== United Accumulative Fund** -- $30,184

PORTFOLIO STRATEGY:
Appreciation-oriented OBJECTIVE: Long-term appreciation
common stock of capital with a secondary
objective of current income.
Cash Reserves
STRATEGY: Invests mainly in common stocks of
large, well-known companies representing
the major sectors of our economy.

The use of cash reserves (often invested
in money market securities) for
defensive purposes is a strategy that
may be utilized by the Accumulative Fund
from time to time.

FOUNDED: 1940

SCHEDULED DIVIDEND FREQUENCY: SEMIANNUALLY
(JUNE AND DECEMBER)

<PAGE>
PERFORMANCE SUMMARY

PER SHARE DATA
For the Fiscal Year Ended December 31, 1994
- -------------------------------------------

DIVIDENDS PAID $ 0.13
======

CAPITAL GAINS
DISTRIBUTION $ 0.48
======

NET ASSET VALUE ON
12/31/94 $6.58 adjusted to: $ 7.06(A)
12/31/93 7.19
------
CHANGE PER SHARE $(0.13)
======

(A)This number includes the capital gains distribution of $0.48 paid in December
1994 added to the actual net asset value on December 31, 1994.

Past performance is not necessarily an indication of future results.

TOTAL RETURN HISTORY

Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 12-31-94 -5.71% 0.04%
5-year period ended 12-31-94 5.46% 6.72%
10-year period ended 12-31-94 11.68% 12.34%

*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, 1994, United Accumulative Fund had net assets totaling
$967,020,299 invested in a diversified portfolio of:

70.16% Common Stocks
29.06% Cash and Cash Equivalents
0.78% Preferred Stock

As a shareholder of United Accumulative Fund, for every $100 you had invested on
December 31, 1994, your Fund owned:

Technological Stocks $29.35
Cash and Cash Equivalents 29.06
Consumer Stocks 14.04
Basic Industries Stocks 13.00
Financial Stocks 12.76
Public Utilities Stocks 1.01
Preferred Stock 0.78

Not all holdings will be represented in the portfolio at all times.
<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.

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 ACCUMULATIVE FUND
DECEMBER 31, 1994

Shares Value

COMMON STOCKS
Banks and Savings and Loans - 3.38%
City National Corporation .............. 250,000 $ 2,656,250
Crestar Financial Corporation .......... 229,200 8,623,650
First Chicago Corporation .............. 200,000 9,550,000
Grupo Financiero Bancomer, S.A. de
C.V., Class C (D) ..................... 4,500,000 2,475,000
Mercantile Bancorporation Inc. ......... 300,000 9,375,000
Total ................................. 32,679,900

Biotechnology and Medical Services - 0.84%
Centocor, Inc.* ........................ 500,000 8,156,000

Building - 0.60%
United Dominion Realty Trust, Inc. ..... 400,000 5,750,000

Chemicals Major - 3.13%
Air Products & Chemicals, Inc. ......... 300,000 13,387,500
du Pont (E.I.) de Nemours and
Company .............................. 300,000 16,875,000
Total ................................. 30,262,500

Computers and Office Equipment - 5.72%
Cerner Corporation* .................... 78,400 3,469,200
Compuware Corporation* ................. 400,000 14,350,000
General Motors Corporation, Class E .... 300,000 11,550,000
HBO & Company .......................... 200,000 6,875,000
Informix Corporation* .................. 250,000 8,015,500
International Business Machines
Corporation ........................... 150,000 11,025,000
Total ................................. 55,284,700

Drugs and Hospital Supply - 5.00%
Abbott Laboratories .................... 500,000 16,312,500
Baxter International Inc. .............. 400,000 11,300,000
Schering-Plough Corporation ............ 150,000 11,100,000
Warner-Lambert Company ................. 125,000 9,625,000
Total ................................. 48,337,500

Electronics - 10.06%
cisco Systems, Inc.* ................... 300,000 10,518,600
Emerson Electric Co. ................... 350,000 21,875,000
General Electric Company ............... 550,000 28,050,000
Hewlett-Packard Company ................ 100,000 9,987,500
Level One Communications,
Incorporated* ......................... 200,000 3,050,000
Micron Technology Inc. ................. 200,000 8,825,000
Texas Instruments Incorporated ......... 200,000 14,975,000
Total ................................. 97,281,100

See Notes to Schedules of Investments on page 42.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1994

Shares Value

COMMON STOCKS (Continued)
Financial - 1.06%
American Express Company ............... 250,000 $ 7,375,000
Grupo Financiero Banamex Accival,
S.A. de C.V., Class C (D) ............. 1,000,000 2,880,000
Total ................................. 10,255,000

Food and Related - 3.17%
CPC International Inc. ................. 200,000 10,650,000
Pet Incorporated ....................... 500,000 9,875,000
Sara Lee Corporation ................... 400,000 10,100,000
Total ................................. 30,625,000

Hospital Management - 6.27%
American Medical Holdings, Inc.* ....... 400,000 9,650,000
Columbia/HCA Healthcare Corporation .... 583,700 21,305,050
National Medical Enterprises, Inc.* .... 900,000 12,712,500
Sierra Health Services, Inc.* .......... 250,000 7,906,250
United HealthCare Corporation .......... 200,000 9,025,000
Total ................................. 60,598,800

Insurance - 8.32%
American General Corporation ........... 550,000 15,537,500
American Re Corporation* ............... 350,000 11,287,500
First Colony Corporation ............... 400,000 8,950,000
NWNL Companies, Inc. (The) ............. 200,000 5,800,000
National Re Corporation ................ 209,600 5,502,000
SAFECO Corporation ..................... 150,000 7,818,750
SunAmerica Corporation ................. 200,000 7,250,000
TIG Holdings, Inc. ..................... 700,000 13,125,000
USLIFE Corporation ..................... 150,000 5,231,250
Total ................................. 80,502,000

Leisure Time - 3.55%
Comcast Corporation, Class A ........... 600,000 9,412,200
Tele-Communications, Inc., Class A* .... 500,000 10,906,000
Time Warner Incorporated ............... 400,000 14,050,000
Total ................................. 34,368,200

Machinery - 0.41%
Ingersoll-Rand Company ................. 125,000 3,937,500

Metals and Mining - 0.96%
Phelps Dodge Corporation ............... 150,000 9,281,250

Multi-Industry - 2.29%
ITT Corporation ........................ 250,000 22,156,250

Public Utilities - Electric - 1.01%
Peco Energy Company .................... 400,000 9,800,000

See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1994

Shares Value

COMMON STOCKS (Continued)
Railroads - 4.60%
Kansas City Southern Industries,
Inc. .................................. 264,000 $ 8,151,000
Norfolk Southern Corporation ........... 300,000 18,187,500
Southern Pacific Rail Corporation* ..... 500,000 9,062,500
Union Pacific Corporation .............. 200,000 9,125,000
Total ................................. 44,526,000

Retailing - 1.05%
Charming Shoppes Inc. .................. 500,000 3,281,000
Family Dollar Stores, Inc. ............. 550,000 6,875,000
Total ................................. 10,156,000

Steel - 1.01%
Bethlehem Steel Corporation* ........... 250,000 4,500,000
Inland Steel Industries, Inc.* ......... 150,000 5,268,750
Total ................................. 9,768,750

Telecommunications - 7.73%
AT&T Corporation ....................... 500,000 25,125,000
LDDS Communications, Inc.* ............. 150,000 2,925,000
MCI Communications Corporation ......... 700,000 12,905,900
Motorola, Inc. ......................... 250,000 14,468,750
Sprint Corporation ..................... 200,000 5,525,000
Telefonaktiebolaget LM Ericsson,
Class B, ADR .......................... 250,000 13,812,500
Total ................................. 74,762,150

TOTAL COMMON STOCKS - 70.16% $678,488,600
(Cost: $718,167,035)

PREFERRED STOCK - 0.78%
Telecommunications
Nokia Corporation, ADS* ................ 100,000 $ 7,500,000
(Cost: $7,311,532)

Principal
Amount in
Thousands

SHORT-TERM SECURITIES
Commercial Paper
Automotive - 2.07%
Hertz Corp.,
6.02%, 1-11-95 ........................ $20,000 19,966,555

Banks and Savings and Loans - 0.16%
U.S. Bancorp,
Master Note ........................... 1,585 1,585,000

See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1994

Principal
Amount in
Thousands Value

SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Computers and Office Equipment - 0.27%
Honeywell Inc.,
6.05%, 1-19-95 ........................ $ 2,595 $ 2,587,150

Consumer Electronics and Appliances - 0.44%
TDK (USA) Corp.,
6.05%, 1-17-95 ........................ 4,300 4,288,438

Drugs and Hospital Supply - 1.26%
Baxter International Inc.,
6.2%, 1-31-95 ......................... 12,215 12,151,889

Financial - 11.52%
AT&T Capital Corp.:
5.8%, 1-4-95 .......................... 3,000 2,998,550
5.98%, 1-4-95 ......................... 3,745 3,743,134
6.0%. 1-6-95 .......................... 8,320 8,313,067
Associates Corporation of North America,
5.97%, 1-9-95 ......................... 5,130 5,123,194
Avco Financial Services Inc.,
5.95%, 1-20-95 ........................ 6,685 6,664,007
Block Financial Corp.,
5.87%, 1-9-95 ......................... 12,425 12,408,792
Caterpillar Financial Services Corp.,
6.0%, 1-23-95 ......................... 4,290 4,274,270
Ford Motor Credit Company,
6.02%, 1-12-95 ........................ 3,685 3,678,222
Merrill Lynch & Co. Inc.,
5.8%, 1-9-95 .......................... 9,475 9,462,788
PHH Corp.,
6.0%, 2-6-95 ......................... 2,940 2,922,360
Penney (J.C.) Financial Corp.,
5.7%, 1-4-95 .......................... 23,491 23,479,842
Philip Morris Capital Corp.,
5.92%, 1-25-95 ........................ 11,600 11,554,219
Textron Financial Corp.,
6.25%, 1-12-95 ........................ 7,900 7,884,913
USAA Capital Corp.,
5.95%, 1-19-95 ........................ 6,840 6,819,651
USL Capital Corp.,
6.0%, 1-17-95 ......................... 2,035 2,029,573
Total ................................. 111,356,582

See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1994

Principal
Amount in
Thousands Value

SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Food and Related - 0.45%
General Mills, Inc.,
Master Note ........................... $ 3,175 $ 3,175,000
Sara Lee Corporation,
Master Note ........................... 1,206 1,206,000
Total ................................. 4,381,000

Public Utilities - Electric - 3.01%
PS Colorado Credit Corp.,
6.2%, 1-6-95 .......................... 2,270 2,268,045
Potomac Electric Power Co.,
6.03%, 1-13-95 ........................ 1,920 1,916,141
Public Service Electric & Gas Co.:
6.05%, 1-6-95 ......................... 10,000 9,991,597
6.05%, 1-18-95 ........................ 15,000 14,957,146
Total ................................. 29,132,929

Public Utilities - Gas - 0.93%
Questar Corp.,
6.0%, 1-3-95 .......................... 9,000 8,997,000

Public Utilities - Pipelines - 0.16%
Enron Corp.,
6.0%, 1-31-95 ......................... 1,585 1,577,075

Publishing and Advertising - 1.45%
Times Mirror Co.,
6.05%, 1-11-95 ........................ 14,040 14,016,405

Retailing - 1.73%
Albertson's Inc.:
5.95%, 1-5-95 ......................... 9,000 8,994,050
5.875%, 1-20-95 ....................... 7,780 7,755,877
Total.................................. 16,749,927

Telecommunications - 3.47%
GTE North Inc.,
6.05%, 1-6-95 ......................... 14,900 14,887,480
US West Communications Inc.,
5.9%, 1-30-95 ......................... 18,700 18,611,123
Total ................................. 33,498,603

Total Commercial Paper - 26.92% 260,288,553

See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1994

Principal
Amount in
Thousands Value

SHORT-TERM SECURITIES (Continued)
Commercial Paper (backed by irrevocable
bank letter of credit) - 1.72%
Banks and Savings and Loans
American Bankers Insurance (Barclays
Bank PLC),
6.0%, 1-11-95 ......................... $16,630 $16,602,283

United States Government Obligation - 1.08%
Federal National Mortgage Association,
6.55%, 1-6-95 ......................... 10,500 10,500,000

TOTAL SHORT-TERM SECURITIES - 29.72% $287,390,836
(Cost: $287,390,836)

TOTAL INVESTMENT SECURITIES - 100.66% $973,379,436
(Cost: $1,012,869,403)

LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.66%) (6,359,137)

NET ASSETS - 100.00% $967,020,299

See Notes to Schedules of Investments on page 42.

<PAGE>
UNITED SCIENCE AND TECHNOLOGY FUND
MANAGER'S LETTER
DECEMBER 31, 1994
- ---------------------------------------------------------------------------

Dear Shareholder:

This report relates to the operation of the United Science and Technology
Fund for the fiscal year ended December 31, 1994. The following discussion,
graphs and tables provide you with information regarding the Fund's performance
during that period.

During the past fiscal year, the stock markets were affected greatly by the
Federal Reserve Bank's policy of raising interest rates to prevent escalations
in the rate of inflation which might accompany a strengthening economy.
Throughout the year, the inflation rate remained low, but rising interest rates
triggered a steep decline in the bond market and only minimal gains in the
overall stock market. Congressional inaction on major health care reform and
the Republican victory in the November elections were viewed as positives by the
stock markets.

The Fund's strategy was to emphasize holdings in the software and health
care industries. We selected companies which in our opinion possessed the
greatest potential to be unaffected by fears and uncertainties which prevailed
throughout 1994.

The strategies and techniques we applied resulted in the direction of the
Fund's performance remaining fairly consistent with that of the indexes charted
on the following page. Those indexes reflect the performance of securities that
generally represent the non-financial institution portion of the stock market
(the S&P 400 Index) and the universe of funds with similar investment objectives
(the Lipper Science & Technology Fund Universe Average). The Fund's performance
was impacted positively during the past fiscal year by its selections of stocks
in certain software and computer-networking companies, as well as some other
cyclical investments.

In 1995 we anticipate that the new Republican Congress will enact
legislation that is advantageous to business and consumers alike. We expect the
growth of the economy to continue at a moderate but slowing pace and the rate of
inflation to remain low. We intend to pursue the same strategies we have
employed, as always, seeking to find the most innovative and fastest-growing
companies.

Thank you very much for your continued support and confidence.

Respectfully,
Abel Garcia
Manager, United Science and Technology Fund

<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
UNITED SCIENCE AND TECHNOLOGY FUND,
THE S&P 500 INDEX,
AND THE LIPPER SCIENCE & TECHNOLOGY FUND UNIVERSE AVERAGE

Average Annual Total Return*
1 year 5 years 10 years
3.47% 10.61% 14.16%

Lipper
Science &
United Technology
Science and S&P Fund
Technology 400 Universe
Fund Index Average
--------- --------- ----------
12/31/84 Purchase 9,425 10,000 10,000
12/31/85 11,591 13,058 12,294
12/31/86 13,699 15,498 13,250
12/31/87 15,401 16,856 13,576
12/31/88 16,795 19,548 14,796
12/31/89 21,397 25,297 18,076
12/31/90 20,646 25,074 17,544
12/31/91 32,879 32,789 25,519
12/31/92 31,555 34,661 29,100
12/31/93 34,241 37,793 36,152
12/31/94 37,591 39,238 40,745

- ----- Lipper Science & Technology Fund Universe Average -- $40,745
+++++ S&P 400 Index -- $39,238
===== United Science and Technology Fund** -- $37,591

<PAGE>
SHAREHOLDER SUMMARY
- ------------------------------------------------------------------------
UNITED SCIENCE AND TECHNOLOGY FUND

PORTFOLIO STRATEGY:
Technology-related OBJECTIVE: Long-term appreciation
stocks of capital.

Generally at least 80% STRATEGY: Invests in common
in science or technology stocks of companies that
securities; may have more are expected to benefit
than 20% in debt securities. from scientific or technological
discoveries or developments.

Cash Reserves The use of cash reserves (often invested
in money market securities) for
defensive purposes is a strategy that
may be utilized by the Science and
Technology Fund from time to time.

FOUNDED: 1950

SCHEDULED DIVIDEND FREQUENCY: SEMIANNUALLY
(JUNE AND DECEMBER)

<PAGE>
PERFORMANCE SUMMARY

PER SHARE DATA
For the Fiscal Year Ended December 31, 1994
- -------------------------------------------

CAPITAL GAINS DISTRIBUTION $ 1.02
======

NET ASSET VALUE ON
12/31/94 $15.21 adjusted to: $16.23(A)
12/31/93 14.83
------
CHANGE PER SHARE $ 1.40
======

(A)This number includes the capital gains distribution of $1.02 paid in December
1994 added to the actual net asset value on December 31, 1994.

Past performance is not necessarily an indication of future results.

TOTAL RETURN HISTORY

Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 12-31-94 3.47% 9.78%
5-year period ended 12-31-94 10.61% 11.93%
10-year period ended 12-31-94 14.16% 14.84%

*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, 1994, United Science and Technology Fund had net assets totaling
$496,502,582 invested in a diversified portfolio of:

85.40% Common Stocks
12.66% Cash and Cash Equivalents
1.51% Preferred Stock
0.43% Corporate Debt Security

As a shareholder of United Science and Technology Fund, for every $100 you had
invested on December 31, 1994, your Fund owned:

Technological Stocks $65.30
Cash and Cash Equivalents 12.66
Consumer Stocks 10.66
Basic Industries Stocks 8.41
Preferred Stock 1.51
Financial Stocks 1.03
Corporate Debt Security 0.43

Not all holdings will be represented in the portfolio at all times.

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 SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1994

Shares Value

COMMON STOCKS
Automotive - 1.72%
Borg-Warner Automotive, Inc. ........... 115,000 $ 2,889,375
AB Volvo (D) ........................... 300,000 5,649,900
Total ................................. 8,539,275

Biotechnology and Medical Services - 1.80%
Centocor, Inc.* ........................ 200,000 3,262,400
Ventritex, Inc.* ....................... 210,000 5,656,770
Total ................................. 8,919,170

Computers and Office Equipment - 29.62%
America Online, Inc.* .................. 86,000 4,816,000
Broderbund Software, Inc.* ............. 300,000 14,100,000
Cerner Corp.* .......................... 246,000 10,885,500
Computer Associates International,
Inc. .................................. 150,000 7,275,000
Compuware Corporation* ................. 202,000 7,246,750
First Data Corporation ................. 150,000 7,106,250
General Motors Corporation, Class E .... 330,000 12,705,000
HBO & Company .......................... 280,000 9,625,000
Informix Corporation* .................. 600,000 19,237,200
Intuit* ................................ 70,000 4,672,500
Macromedia, Inc.* ...................... 155,000 3,991,250
Microsoft Corporation* ................. 133,000 8,146,250
Oracle Systems Corporation* ............ 240,000 10,620,000
Parametric Technology Corporation* ..... 400,000 13,750,000
ParcPlace Systems, Inc.* ............... 212,500 4,794,425
Shiva Corporation* ..................... 39,600 1,579,050
Synopsys, Inc.* ........................ 150,000 6,525,000
Total ................................. 147,075,175

Consumer Electronics and Appliances - 0.69%
Rival Company (The) .................... 200,000 3,450,000

Drugs and Hospital Supply - 5.77%
Abbott Laboratories .................... 150,000 4,893,750
OmniCare, Inc. ......................... 150,000 6,581,250
Roche Holdings AG (D) .................. 1,200 5,798,318
Schering-Plough Corporation ............ 50,000 3,700,000
Warner-Lambert Company ................. 100,000 7,700,000
Total ................................. 28,673,318

See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1994

Shares Value

COMMON STOCKS (Continued)
Electrical Equipment - 1.23%
General Electric Company ............... 120,000 $ 6,120,000

Electronics - 14.94%
Advanced Technology Materials Inc.* .... 127,500 741,030
Applied Materials, Inc.* ............... 160,000 6,720,000
Atmel Corporation* ..................... 190,000 6,353,030
Cascade Communications Corp.* .......... 111,600 6,877,350
cisco Systems, Inc.* ................... 375,600 13,169,287
Lam Research* .......................... 200,000 7,425,000
Micron Technology, Inc. ................ 110,000 4,853,750
Summa Four, Inc.* ...................... 200,000 5,300,000
Texas Instruments Incorporated ......... 75,000 5,615,625
3Com Corporation* ...................... 120,000 6,187,440
Xilinx, Inc.* .......................... 185,000 10,938,125
Total ................................. 74,180,637

Engineering and Construction - 0.33%
Grupo Tribasa, S.A. de C.V., ADS* ...... 100,000 1,662,500

Hospital Management - 5.60%
Columbia/HCA Healthcare Corporation .... 125,000 4,562,500
Mid Atlantic Medical Services, Inc.* ... 300,000 6,862,500
Sierra Health Services, Inc. ........... 232,000 7,337,000
United HealthCare Corporation .......... 200,000 9,025,000
Total ................................. 27,787,000

Insurance - 1.03%
Insurance Auto Auctions, Inc.* ......... 165,000 5,115,000

Leisure Time - 1.06%
CBS Inc. ............................... 60,000 3,322,500
Grupo Televisa S.A. de C.V., CPO
Shares (D) ............................ 120,000 1,932,000
Total ................................. 5,254,500

Machinery - 5.13%
Cognex Corporation* .................... 260,000 6,792,500
Deere & Company ........................ 130,000 8,612,500
Parker Hannifin Corporation ............ 114,700 5,218,850
Trinova Corporation .................... 165,000 4,846,875
Total ................................. 25,470,725

See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1994

Shares Value

COMMON STOCKS (Continued)
Services, Consumer and Business - 3.31%
Alternative Resources Corporation* ..... 150,000 $ 4,687,500
CUC International Inc.* ................ 350,000 11,725,000
Total ................................. 16,412,500

Telecommunications - 13.17%
Applied Digital Access, Inc.* .......... 200,000 5,100,000
Ascend Communications, Inc.* ........... 240,000 9,810,000
DSC Communications Corporation* ........ 200,000 7,212,400
LDDS Communications, Inc.* ............. 150,000 2,925,000
MFS Communications Company, Inc.* ...... 230,000 7,590,000
Motorola, Inc. ......................... 150,000 8,681,250
Ortel Corporation* ..................... 207,000 5,433,750
Rogers Cantel Mobile Communications
Inc., Class B* ........................ 200,000 5,850,000
Telefonaktiebolaget LM Ericsson,
Class B, ADR .......................... 80,000 4,420,000
Tellabs* ............................... 150,000 8,343,750
Total ................................. 65,366,150

TOTAL COMMON STOCKS - 85.40% $424,025,950
(Cost: $265,535,174)

PREFERRED STOCK - 1.51%
Telecommunications
Nokia Corporation, ADS* ................ 100,000 $ 7,500,000
(Cost: $4,118,004)

Principal
Amount in
Thousands
CORPORATE DEBT SECURITY - 0.43%
Financial
American Express Company,
6.25%, 10-15-96 ....................... $1,838 $ 2,131,243
(Cost: $1,837,500)

SHORT-TERM SECURITIES
Commercial Paper
Automotive - 0.90%
Echlin Inc.,
5.9%, 1-18-95 ......................... 4,500 4,487,463

Banks and Savings and Loans - 0.32%
U.S. Bancorp,
Master Note ........................... 1,570 1,570,000

See Notes to Schedules of Investments on page 42.
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1994

Principal
Amount in
Thousands Value

SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Computers and Office Equipment - 1.89%
Honeywell Inc.,
6.05%, 1-19-95 ........................ $ 9,405 $ 9,376,550

Consumer Electronics and Appliances - 0.30%
TDK (USA) Corp.,
5.88%, 1-20-95 ........................ 1,500 1,495,345

Financial - 5.65%
AT&T Capital Corp.,
5.98%, 1-4-95 ......................... 2,855 2,853,577
BHP Finance (USA) Inc.:
6.0%, 1-6-95 .......................... 5,000 4,995,833
6.02%, 1-31-95 ........................ 3,700 3,681,438
Dana Credit Corp.,
6.28%, 2-10-95 ........................ 1,710 1,698,068
Ford Motor Credit Company,
5.86%, 1-30-95 ........................ 3,640 3,622,817
General Electric Capital Company,
6.0%, 2-17-95 ......................... 2,965 2,941,774
Textron Financial Corp.,
6.25%, 1-12-95 ........................ 4,600 4,591,215
USL Capital Corp.,
6.0%, 1-17-95 ......................... 3,705 3,695,120
Total ................................. 28,079,842

Food and Related - 0.83%
ConAgra, Inc.,
6.0%, 1-11-95 ......................... 2,575 2,570,709
General Mills, Inc.,
Master Note ........................... 170 170,000
Sara Lee Corporation,
Master Note ........................... 1,378 1,378,000
Total ................................. 4,118,709

Insurance - 1.31%
Aon Corporation,
5.97%, 1-17-95 ........................ 6,500 6,482,754

Paper - 0.93%
Champion International Corporation:
6.2%, 1-9-95 .......................... 2,000 1,997,244
5.95%, 2-3-95 ......................... 2,635 2,620,628
Total ................................. 4,617,872

See Notes to Schedules of Investments on page 42.

<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1994

Principal
Amount in
Thousands Value

SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Retailing - 0.60%
Rite Aid Corp.,
6.1%, 1-19-95 ......................... $ 3,000 $ 2,990,850

TOTAL SHORT-TERM SECURITIES - 12.73% $ 63,219,385
(Cost: $63,219,385)

TOTAL INVESTMENT SECURITIES - 100.07% $496,876,578
(Cost: $334,710,063)

LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.07%) (373,996)

NET ASSETS - 100.00% $496,502,582

Notes to Schedules of Investments

*No income dividends were paid during the preceding 12 months.

(A) Coupon resets semiannually based on the arithmetic mean of two-year swap
rates in four nations: Italy, France, Spain and the United Kingdom,
determined by the following formula (minimum coupon of 0%): 19.65% - 2 x
(average two-year swap rate in the aforementioned nations).

(B) Coupon resets semiannually based on 14.13% - 1.5 x (5-year Deutschemark
swap rate). Coupon guaranteed at 3%.

(C) Coupon resets on 4-5-95 based on the greater of 4% and 4% + 5 x (6.65% - 3-
year Australian Dollar swap rate). After 4-5-95 the coupon becomes fixed.
Minimum coupon - 4%, maximum coupon - 7.5%.

(D) 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>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES United
DECEMBER 31, 1994 United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
-------------------------------------------------------------
Assets Investment securities --
at value (Notes 1 and 3) $511,483,108 $3,145,032,833 $973,379,436 $496,876,578
Cash .............. 10,475 12,190 84,860 8,574
Receivables:
Dividends and interest 9,075,289 7,410,297 1,546,648 230,293
Investment securities
sold ............ --- 7,018,773 --- 1,501,250
Fund shares sold .. 350,426 3,106,177 260,918 500,124
Prepaid insurance
premium ........... 20,172 67,754 40,077 13,624
------------ -------------- ------------ ------------
Total assets .... 520,939,470 3,162,648,024 975,311,939 499,130,443
Liabilities ------------ -------------- ------------ ------------
Payable for Fund
shares redeemed ... 2,875,295 11,625,907 6,396,885 1,918,509
Payable for investment
securities purchased --- 4,550,625 1,460,625
443,950
Accrued service fee . 105,961 654,420 180,242 96,767
Accrued transfer agency
and dividend disbursing 65,042 558,228 151,202 86,482
Accrued accounting
services fee....... 5,000 8,333 7,083 5,000
Other .............. 51,852 346,304 95,603 77,153
------------ -------------- ------------ ------------
Total liabilities 3,103,150 17,743,817 8,291,640 2,627,861
------------ -------------- ------------ ------------
Total net assets $517,836,320 $3,144,904,207 $967,020,299 $496,502,582
Net Assets ============ ============== ============ ============
$1.00 par value capital stock
Capital stock ..... $ 92,169,870 $ 134,763,916 $146,939,028 $ 32,637,049
Additional paid-in
capital .......... 488,791,181 2,160,636,160 867,495,501 297,212,925
Accumulated undistributed
income (loss):
Accumulated undistributed net
investment income 747,994 968,192 873,019 ---
Accumulated undistributed net
realized gain (loss) on
investment
transactions ..... (31,529,487) 13,304,078 (8,797,282) 4,486,093
Net unrealized appreciation
(depreciation) of investments
at end of period . (32,343,238) 835,231,861 (39,489,967) 162,166,515
------------ -------------- ------------- -----------
Net assets applicable to
outstanding units
of capital ..... $517,836,320 $3,144,904,207 $967,020,299 $496,502,582
============ ============== ============ ============
Net asset value per share
(net assets divided by
shares outstanding) $5.62 $23.34 $6.58 $15.21
Sales load (offering price X 5.75%) .34 1.42 .40 .93
----- ------ ----- ------
Offering price per share (net asset
value divided by 94.25%) $5.96 $24.76 $6.98 $16.14
===== ====== ===== ======
Capital shares
outstanding ........ 92,169,870 134,763,916 146,939,028 32,637,049
Capital shares authorized 260,000,000 300,000,000 340,000,000 100,000,000

On sales of $100,000 or more the sales load is reduced as set forth in the
Prospectus.
See notes to financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended DECEMBER 31, 1994
United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
------------ --------------------------------------
Investment Income
Income:
Dividends ......... $ --- $ 54,030,661 $16,412,728 $ 1,791,830
Interest .......... 41,837,180 15,251,196 8,322,216 2,494,035
----------- ------------ ----------- -----------
Total income .... 41,837,180 69,281,857 24,734,944 4,285,865
----------- ------------ ----------- -----------
Expenses (Note 2):
Investment
management fee ... 2,552,094 15,069,003 4,773,506 2,777,832
Transfer agency and
dividend disbursing 791,880 4,148,972 1,114,555
815,589
Service fee ....... 542,722 3,114,608 880,968 466,139
Custodian fees .... 38,203 415,478 102,588 54,497
Accounting services fee 66,667 100,000 92,500 60,000
Audit fees ........ 37,702 51,517 40,411 28,077
Legal fees ........ 12,175 71,619 3,759 10,900
Other ............. 93,359 472,601 138,078 91,527
----------- ------------ ----------- -----------

Total expenses .. 4,134,802 23,443,798 7,146,365 4,304,561
----------- ------------ ----------- -----------
Net investment
income (loss) 37,702,378 45,838,059 17,588,579 (18,696)
----------- ------------ ----------- -----------
Realized and Unrealized
Gain (Loss) on
Investments
Realized net gain (loss)
on securities ..... (31,512,111) 89,293,945 60,126,808 37,605,690
Unrealized appreciation
(depreciation) in value
of investments during
the period......... (41,557,487) (195,072,068) (77,231,909) 6,830,120
------------ ------------ ----------- -----------
Net gain (loss) on
investments ..... (73,069,598) (105,778,123) (17,105,101) 44,435,810
------------ ------------ ----------- -----------
Net increase (decrease)
in net assets
resulting
from operations. $(35,367,220) $(59,940,064) $ 483,478 $44,417,114
============ ============ =========== ===========
</TABLE>
See notes to financial statements.

<PAGE>
<TABLE>
<APTION>
<S> <C> <C> <C> <C>
UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended December 31, 1994 United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
-------------------------------------------------------------
Increase (Decrease) in Net Assets
Operations:
Net investment
income (loss) ... $ 37,702,378 $ 45,838,059 $ 17,588,579 $ (18,696)
Realized net gain (loss)
on investments .. (31,512,111) 89,293,945 60,126,808 37,605,690
Unrealized appreciation
(depreciation) .. (41,557,487) (195,072,068) (77,231,909) 6,830,120
------------- -------------- -------------- -----------
Net increase (decrease)
in net assets resulting
from operations. (35,367,220) (59,940,064) 483,478 44,417,114
------------- -------------- ------------- ------------
Dividends to shareholders:*
From net investment
income .......... (37,265,097) (45,590,722) (17,169,923) ---
From realized net gain on
investment transactions (1,836,092) (82,751,883) (65,811,797) (31,199,630)
------------- -------------- -------------- -----------
(39,101,189) (128,342,605) (82,981,720) (31,199,630)
------------- -------------- -------------- -----------
Capital share
transactions**..... (49,363,402) 273,113,600 15,744,243 36,674,458
------------- ------------- -------------- ------------
Total increase
(decrease) ...... (123,831,811) 84,830,931 (66,753,999) 49,891,942
Net Assets
Beginning of period 641,668,131 3,060,073,276 1,033,774,298 446,610,640
------------ -------------- -------------- ------------
End of period $517,836,320 $3,144,904,207 $ 967,020,299 $496,502,582
============ ============== ============== ============
Undistributed net
investment income $747,994 $968,192 $873,019 $---
======== ======== ======== ====
*See "Financial Highlights" on pages 47-50.
**Shares issued from sale
of shares ......... 6,077,476 17,223,202 4,792,033 4,101,127
Shares issued from
reinvestment of
dividends and/or capital
gains distribution 5,555,134 4,993,419 11,799,943
2,041,497
Shares redeemed..... (19,918,276) (10,996,133) (13,397,312) (3,619,095)
---------- --------- --------- ---------
Increase (decrease) in
outstanding capital
shares ............ (8,285,666) 11,220,488 3,194,664 2,523,529
========== ========== ========= =========
Value issued from sale
of shares.......... $36,518,090 $427,435,360 $34,385,640 $61,082,518
Value issued from
reinvestment of
dividends and/or capital
gains distribution. 32,793,687 118,100,262 77,407,382 29,601,725
Value redeemed ..... (118,675,179) (272,422,022) (96,048,779)(54,009,785)
------------ ------------ ----------- -----------
Increase (decrease) in
outstanding capital $(49,363,402) $273,113,600 $15,744,243 $36,674,458
============ ============ =========== ===========
See notes to financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended DECEMBER 31, 1993 United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
-------------------------------------------------------------
Increase in Net Assets
Operations:
Net investment income $ 38,703,166 $ 47,298,116 $ 13,631,477 $ 245,702
Realized net gain
on investments .. 42,273,683 72,262,232 99,077,252 19,831,519
Unrealized appreciation
(depreciation) .. (4,437,167) 297,996,504 (24,457,177) 14,872,734
------------- -------------- -------------- -----------
Net increase in net
assets resulting
from operations. 76,539,682 417,556,852 88,251,552 34,949,955
------------- -------------- -------------- -----------
Dividends to shareholders:*
From net investment
income .......... (38,417,817) (47,391,411) (14,057,190) (289,842)
From realized net gain
on investment
transactions ..... (31,560,821) (47,069,010) (107,396,676) (26,791,116)
In excess of realized net
gain from investment
transactions ..... --- --- (3,112,293) (2,023,716)
------------ -------------- -------------- -----------
(69,978,638) (94,460,421) (124,566,159) (29,104,674)
------------ -------------- -------------- -----------
Capital share
transactions**..... 45,161,486 199,815,817 77,165,152 11,958,973
------------ -------------- -------------- -----------
Total increase .... 51,722,530 522,912,248 40,850,545 17,804,254
Net Assets
Beginning of period 589,945,601 2,537,161,028 992,923,753 428,806,386
------------ -------------- -------------- ------------
End of period ...... $641,668,131 $3,060,073,276 $1,033,774,298 $446,610,640
============ ============== ============== ============
Undistributed net
investment income $310,713 $720,855 $454,363 $103,749
======== ======== ======== ========
*See "Financial Highlights" on pages 47-50.
**Shares issued from sale
of shares ......... 10,823,257 15,138,889 8,005,063 2,391,048
Shares issued from
reinvestment of
dividends and/or
distributions ..... 9,135,589 3,568,938 16,395,920 1,897,450
Shares redeemed..... (13,016,181) (10,230,919) (13,035,089) (3,465,411)
---------- ---------- ---------- ---------
Increase in
outstanding capital
shares ............ 6,942,665 8,476,908 11,365,894 823,087
========== ========== ========== =========
Value issued from sale
of shares.......... $72,085,126 $354,349,326 $ 61,908,432 $34,447,164
Value issued from
reinvestment of
dividends and/or
distributions ..... 59,457,945 85,633,675 116,166,594 27,467,139
Value redeemed ..... (86,381,585) (240,167,184) (100,909,874)(49,955,330)
----------- ------------ ------------ -----------
Increase in outstanding
capital ........... $45,161,486 $199,815,817 $ 77,165,152 $11,958,973
=========== ============ ============ ===========
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED BOND FUND
For a Share of Capital Stock Outstanding Throughout Each Period:

For the fiscal year ended December 31,
------------------------------------
1994 1993 1992 1991 1990
----- ----- ----- ----- -----
Net asset value,
beginning of period $6.39 $6.31 $6.32 $5.80 $6.07
---- ---- ---- ---- ----
Income from investment
operations:
Net investment income .39 .41 .45 .47 .50
Net realized and
unrealized gain
(loss) on
investments ..... (0.75) .41 .00 .56 (0.26)
---- ---- ---- ---- ----
Total from investment
operations ....... (0.36) .82 .45 1.03 .24
---- ---- ---- ---- ----
Less distributions:
Dividends from net
investment income (0.39) (0.41) (0.46) (0.47) (0.50)
Distribution from
capital gains ... (0.02) (0.33) (0.00) (0.04) (0.01)
---- ---- ---- ---- ----
Total distributions (0.41) (0.74) (0.46) (0.51) (0.51)
---- ---- ---- ---- ----
Net asset value,
end of period .... $5.62 $6.39 $6.31 $6.32 $5.80
===== ===== ===== ===== =====
Total return* ...... -5.76% 13.19% 7.50% 18.78% 4.24%
Net assets, end of
period (000
omitted) ......... $517,836$641,668$589,946$524,404$439,487
Ratio of expenses to
average net assets 0.72% 0.65% 0.64% 0.65% 0.67%
Ratio of net investment
income to average
net assets ....... 6.60% 6.14% 7.29% 7.96% 8.54%
Portfolio turnover
rate ............. 127.11%175.39% 115.17%318.76% 294.66%

*Total return calculated without taking into account the sales load deducted
on an initial purchase.
See notes to financial statements.

<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED INCOME FUND
For a Share of Capital Stock Outstanding Throughout Each Period:

For the fiscal year ended December 31,
------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
Net asset value,
beginning of period $24.77 $22.05 $20.44 $16.46 $18.69
----- ----- ----- ----- -----
Income from investment
operations:
Net investment income .36 .40 .46 .51 .61
Net realized and
unrealized gain
(loss) on
investments ..... (0.80) 3.11 1.96 4.29 (1.61)
----- ----- ----- ----- -----
Total from investment
operations ....... (0.44) 3.51 2.42 4.80 (1.00)
----- ----- ----- ----- -----
Less distributions:
Dividends from net
investment income (0.36) (0.40) (0.46) (0.53) (0.63)
Distribution from
capital gains ... (0.63) (0.39) (0.35) (0.29) (0.60)
----- ----- ----- ----- -----
Total distributions (0.99) (0.79) (0.81) (0.82) (1.23)
----- ----- ----- ----- -----
Net asset value,
end of period .... $23.34 $24.77 $22.05 $20.44 $16.46
====== ====== ====== ====== ======
Total return* ...... -1.82% 16.05% 11.96% 29.64% -5.45%
Net assets, end of
period (000
omitted) ......... $3,144,904$3,060,073$2,537,161$2,150,986$1,578,543
Ratio of expenses to
average net assets 0.74% 0.66% 0.65% 0.66% 0.68%
Ratio of net investment
income to average
net assets ....... 1.45% 1.70% 2.19% 2.71% 3.44%
Portfolio turnover
rate ............. 18.54% 21.70% 19.25% 24.68% 30.94%

*Total return calculated without taking into account the sales load deducted
on an initial purchase.
See notes to financial statements.

<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED ACCUMULATIVE FUND
For a Share of Capital Stock Outstanding Throughout Each Period:

For the fiscal year ended December 31,
------------------------------------
1994 1993 1992 1991 1990
----- ------ ------ ------ ------
Net asset value,
beginning of period $7.19 $7.50 $7.15 $6.03 $7.12
----- ----- ----- ----- -----
Income from investment
operations:
Net investment income .13 .11 .16 .19 .28
Net realized and
unrealized gain
(loss) on
investments ..... (0.13) .55 .85 1.22 (0.99)
----- ----- ----- ----- -----
Total from investment
operations ....... 0.00 .66 1.01 1.41 (0.71)
----- ----- ----- ----- -----
Less distributions:
Dividends from net
investment income (0.13) (0.11) (0.16) (0.20) (0.29)
Distribution from
capital gains ... (0.48) (0.84) (0.50) (0.09) (0.09)
Distribution in
excess of capital
gains............ (0.00) (0.02) (0.00) (0.00) (0.00)
----- ----- ----- ----- -----
Total distributions (0.61) (0.97) (0.66) (0.29) (0.38)
----- ----- ----- ----- -----
Net asset value,
end of period .... $6.58 $7.19 $7.50 $7.15 $6.03
===== ===== ===== ===== =====
Total return* ...... 0.04% 9.06% 14.20% 23.68% -10.17%
Net assets, end of
period (000
omitted) ......... $967,020$1,033,774$992,924$904,635$767,218
Ratio of expenses to
average net assets 0.71% 0.65% 0.62% 0.63% 0.64%
Ratio of net investment
income to average
net assets ....... 1.76% 1.34% 2.13% 2.79% 4.12%
Portfolio turnover
rate ............. 205.40%230.29% 194.41%241.11% 288.64%

*Total return calculated without taking into account the sales load deducted
on an initial purchase.

See notes to financial statements.

<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED SCIENCE AND TECHNOLOGY FUND
For a Share of Capital Stock Outstanding Throughout Each Period:

For the fiscal year ended December 31,
--------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
Net asset value,
beginning of period $14.83 $14.64 $15.42 $10.27 $11.72
------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income .......... 0.00 .01 .03 .10 .24
Net realized and
unrealized gain
(loss) on
investments ..... 1.40 1.21 (0.66) 5.90 (0.65)
------ ------ ------ ------ ------
Total from investment
operations ....... 1.40 1.22 (0.63) 6.00 (0.41)
------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income 0.00 (0.01) (0.03) (0.10) (0.25)
Distribution from
capital gains ... (1.02) (0.95) (0.12) (0.75) (0.79)
Distribution in
excess of capital
gains ........... 0.00 (0.07) (0.00) (0.00) (0.00)
------ ------ ------ ------ ------
Total distributions (1.02) (1.03) (0.15) (0.85) (1.04)
------ ------ ------ ------ ------
Net asset value,
end of period .... $15.21 $14.83 $14.64 $15.42 $10.27
====== ====== ====== ====== ======
Total return* ...... 9.78% 8.51% -4.03% 59.25% -3.51%
Net assets, end of
period (000
omitted) ......... $496,503$446,611$428,806$405,380$239,077
Ratio of expenses to
average net assets 0.96% 0.91% 0.87% 0.85% 0.90%
Ratio of net investment
income to average
net assets ....... 0.00% 0.06% 0.24% 0.75% 2.06%
Portfolio turnover
rate ............. 64.39% 68.38% 45.79% 59.24% 63.86%

*Total return calculated without taking into account the sales load deducted
on an initial purchase.
See notes to financial statements.

<PAGE>
UNITED FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994

NOTE 1 -- Significant Accounting Policies

United Funds, Inc. (the "Corporation") is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
The Corporation issues four classes of capital shares; each class represents
ownership of a separate mutual fund. The assets belonging to each Fund are held
separately by the Custodian. The capital shares of each Fund represent a pro
rata beneficial interest in the principal, net income and realized and
unrealized capital gains or losses of its respective investments and other
assets. The following is a summary of significant accounting policies
consistently followed by the Corporation 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
reported. 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. 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
Corporation'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 Corporation 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
Corporation 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 Corporation'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 Corporation 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 each 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. During the period, United Science and Technology Fund
reclassified $103,749 into accumulated undistributed net realized gain
(loss) on investment transactions and foreign currency transactions; of
this amount, $85,053 was reclassified from accumulated undistributed net
investment income and $18,696 was reclassified from additional paid-in
capital.

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 .03% of net assets for
United Bond Fund, .15% of net assets for United Income Fund and United
Accumulative Fund, and .20% for United Science and Technology Fund; 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 $11.0 billion of
combined net assets at December 31, 1994) 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
Corporation and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment
Management Company ("WRIMCO"), a wholly-owned subsidiary of W&R, serves as the
Corporation's investment manager.

The Corporation 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 Corporation and pricing daily the value of shares of the
Corporation. For these services, each of the four Funds 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 Fund
------------------------- ------------------
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 Corporation also pays WARSCO a 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 Corporation also reimburses W&R and WARSCO for certain out-of-pocket
costs.

As principal underwriter for the Corporation's shares, W&R received direct
and indirect gross sales commissions (which are not an expense of the
Corporation) of $19,687,406, out of which W&R paid sales commissions of
$11,086,618 and all expenses in connection with the sale of the Corporation's
shares, except for registration fees and related expenses.

Under a Service Plan adopted by the Corporation pursuant to Rule 12b-1
under the Investment Company Act of 1940, the Corporation may pay monthly a fee
to W&R in an amount not to exceed .25% of the Corporation'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 Corporation paid Directors' fees of $187,403.

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

Investment securities transactions for the period ended December 31, 1994
are summarized as follows:

United
United United United Science and
Bond IncomeAccumulative Technology
Fund Fund Fund Fund
----------- ------------------------ ------------
Purchases of investment
securities, excluding
short-term and U.S.
Government securities $407,864,496$ 626,558,878$1,675,348,938$258,087,558
Purchases of U.S. Government
securities 286,708,313 45,607,813 --- ---
Purchases of short-term
securities 441,413,8701,711,536,1132,717,352,467 652,190,616
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 448,822,323 562,282,8991,895,883,782 284,527,161
Proceeds from maturities and
sales of U.S. Government
securities 274,093,082 --- --- ---
Proceeds from maturities and sales
of short-term securities 465,105,2771,632,825,0262,555,293,938 624,134,331

For Federal income tax purposes, cost of investments owned at December 31,
1994 and the related appreciation (depreciation) were as follows:

Aggregate
Cost AppreciationDepreciation Appreciation
(Depreciation)
-------------- --------------------------------------
United Bond Fund $ 543,826,346 $ 508,996$(32,852,234)$(32,343,238)
United Income Fund 2,309,800,972 893,000,319(57,768,458) 835,231,861
United Accumulative
Fund 1,012,869,403 17,320,376(56,810,343) (39,489,967)
United Science and
Technology Fund 334,813,214 167,873,959 (5,810,595) 162,063,364

NOTE 4 -- Federal Income Tax Matters

The Corporation's income and expenses attributed to each Fund and the gains
and losses on security transactions of each Fund have been attributed to that
Fund for Federal income tax purposes as well as for accounting purposes. For
Federal income tax purposes, United Income Fund and United Science and
Technology Fund realized capital gain net income of $89,293,944 and $35,769,799,
respectively, during the year ended December 31, 1994. A portion of the capital
gain net income was paid to shareholders during the year ended December 31,
1994. Remaining capital gain net income will be distributed to the Fund's
shareholders. For Federal income tax purposes, United Accumulative Fund
realized capital gain net income of $65,889,572 during the year ended December
31,1 994. The capital gain net income was paid to shareholders during the year
ended December 31, 1994. For Federal income tax purposes, United Bond Fund
realized capital losses of $27,347,477 during the year ended December 31, 1994.
This amount is available to offset future ralized capital gain net income
through December 31, 2002.

Internal Revenue Code regulations permit each Fund to defer into its next
fiscal year 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, 1994 through December 31, 1994, United Accumulative Fund and United
Bond Fund incurred post-October losses of $8,900,860 and $4,164,635,
respectively, which have been deferred to the fiscal year ending December 31,
1995.

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
United Funds, Inc.

In our opinion, the accompanying statement of assets and liabilities, including
the schedules 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 each of the four mutual funds
(United Bond Fund, United Income Fund, United Accumulative Fund and United
Science and Technology Fund) comprising United Funds, Inc. (hereafter referred
to as the "Corporation") at December 31, 1994, the results of its operations for
the year 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 financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Corporation'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 December 31, 1994 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
January 31, 1995

<PAGE>
INCOME TAX INFORMATION

The amounts of the dividends and long-term capital gains below, multiplied by
the number of shares owned by you on the record dates, will give you the total
amounts to be reported in your 1994 Federal income tax return.

PER-SHARE AMOUNTS REPORTABLE AS:
----------------------------------------------------
For Individuals For Corporations
------------------- ----------------------------------
Record Ordinary Long-Term Non- Long-Term
Date Total IncomeCapital GainQualifyingQualifyingCapital Gain
- ----------- ----- ---------------------------------------------------
United Bond Fund
01-14-94 $0.032 $0.0320 $0.0000 $0.0000 $0.0320 $0.0000
02-11-94 0.032 0.0320 0.0000 0.0000 0.0320 0.0000
03-11-94 0.032 0.0320 0.0000 0.0000 0.0320 0.0000
04-15-94 0.032 0.0320 0.0000 0.0000 0.0320 0.0000
05-13-94 0.032 0.0320 0.0000 0.0000 0.0320 0.0000
06-17-94 0.032 0.0320 0.0000 0.0000 0.0320 0.0000
07-15-94 0.032 0.0320 0.0000 0.0000 0.0320 0.0000
08-12-94 0.032 0.0320 0.0000 0.0000 0.0320 0.0000
09-16-94 0.032 0.0320 0.0000 0.0000 0.0320 0.0000
10-14-94 0.032 0.0320 0.0000 0.0000 0.0320 0.0000
11-11-94 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
12-16-94 0.056 0.0380 0.0180 0.0000 0.0380 0.0180
------- ------- ------- ------- ------- -------
$0.409 $0.3910 $0.0180 $0.0000 $0.3910 $0.0180
======= ======= ======= ======= ======= =======
United Income Fund
03-11-94 $0.090 $0.0900 $0.0000 $0.0900 $0.0000 $0.0000
06-17-94 0.080 0.0800 0.0000 0.0800 0.0000 0.0000
09-16-94 0.090 0.0900 0.0000 0.0900 0.0000 0.0000
12-16-94 0.727 0.0949 0.6321 0.0949 0.0000 0.6321
------- ------- ------- ------- ------- -------
$0.987 $0.3549 $0.6321 $0.3549 $0.0000 $0.6321
======= ======= ======= ======= ======= =======
United Accumulative Fund
06-17-94 $0.040 $0.0400 $0.0000 $0.0361 $0.0039 $0.0000
12-16-94 0.568 0.3580 0.2100 0.0767 0.2813 0.2100
------- ------- ------- ------- ------- -------
$0.608 $0.3980 $0.2100 $0.1128 $0.2852 $0.2100
======= ======= ======= ======= ======= =======
United Science and Technology Fund
12-16-94 $1.021 $0.0000 $1.0210 $0.0000 $0.0000 $1.0210
======= ======= ======= ======= ======= =======

CORPORATION DEDUCTIONS -- Under Federal tax law, the amounts reportable as
Qualifying Dividends are eligible for the dividends received deduction in the
year received as provided by Section 243 of the Internal Revenue Code.

Shareholders are advised to consult with their tax advisor concerning the tax
treatment of dividends and distributions from the Fund.

<PAGE>
To the Shareholders of United Income Fund
and United Accumulative Fund:

United Income Fund and United Accumulative Fund held a special meeting of
shareholders on November 21, 1994. The matters voted upon at the meeting were:

Item 1 To ratify the selection of Price Waterhouse LLP as independent
accountants of the Fund for its current fiscal year

Item 2 To eliminate the Fund's fundamental investment restriction regarding
investments in restricted securities

Item 3 To amend the Fund's Investment Management Agreement to change the
"specific" fee paid by the Fund to Waddell & Reed Investment Management
Company

The results of the voting were as follows:

Affirmative Against Abstain
UNITED ACCUMULATIVE FUND
Item 1 72,306,295 884,093 3,665,277
Item 2 59,633,928 9,432,507 7,641,358
Item 3 55,679,372 12,770,088 8,258,333
There were 147,872 broker non-votes.

UNITED INCOME FUND
Item 1 69,044,694 667,688 3,977,724
Item 2 57,301,298 8,705,276 7,551,186
Item 3 50,981,277 14,260,832 8,315,651
There were 132,346 broker non-votes.

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>
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
James C. Cusser, Vice President
Abel Garcia, Vice President
Robert L. Hechler, Vice President
Henry J. Herrmann, Vice President
John M. Holliday, Vice President
Theodore W. Howard, Vice President and Treasurer
Antonio Intagliata, Vice President
Sharon K. Pappas, Vice President and Secretary
Carl E. Sturgeon, Vice President
Russell E. Thompson, 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 Continental Income Fund, Inc.
United Income Fund
United Municipal High Income Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
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.
United Retirement Shares, 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

NUR1000A(12-94)
printed on recycled paper