<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, 1995
<PAGE>
UNITED BOND FUND
MANAGER'S LETTER
DECEMBER 31, 1995
- ---------------------------------------------------------------------------
Dear Shareholder:
This report relates to the operation of the United Bond Fund for the fiscal
year ended December 31, 1995. The following discussion, graphs and tables
provide you with information regarding the Fund's performance during that
period.
During 1995, slowing economic growth resulted in lower interest rates
across the maturity spectrum. Despite a weakening economy, the Federal Reserve
Bank only made minor reductions in interest rates. The relatively restrictive
policy of the Federal Reserve Bank during 1995 fueled expectations of declining
inflation which boosted returns on longer-term bonds. Strong corporate growth
in 1995 resulted in strong relative performance by the corporate bond market.
In response to prevailing economic conditions at the beginning of 1995, the
average maturity of the Fund's portfolio was lengthened. Further, the Fund's
exposure to callable and mortgaged-backed bonds that tend to underperform during
periods of declining interest rates was lowered.
The strategies and techniques we applied resulted in the Fund outperforming
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).
In 1996, we anticipate volatility in the fixed income markets will
continue, albeit at somewhat reduced magnitude relative to the big swings of
1994 and 1995. Congressional action is expected to significantly alter the
federal government's fiscal policy and the uncertainty created by the ongoing
negotiations promises to add some volatility to the markets. We expect the
fixed income markets to place greater emphasis on capital returns than on coupon
and interest returns for corporate bond funds during the coming year. The
uncertainty regarding the course of political, fiscal and monetary policies has
caused us to reduce the duration of the Fund's holdings relative to the
beginning of 1995.
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 CLASS A SHARES,
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX,
AND THE LIPPER CORPORATE DEBT FUNDS A-RATED UNIVERSE AVERAGE
Average Annual Total Return*
1 year 5 years 10 years
13.57% 9.12% 8.88%
Lehman Lipper
United Brothers Corporate
Bond Government/ Debt Funds
Fund Corporate A-Rated
Class A Bond Universe
Shares Index Average
------ ----------- ----------
12/31/85 Purchase 9,425 10,000 10,000
12/31/86 10,860 11,559 11,236
12/31/87 11,349 11,825 11,397
12/31/88 12,370 12,723 12,228
12/31/89 13,682 14,533 13,749
12/31/90 14,262 15,738 14,673
12/31/91 16,940 18,276 17,097
12/31/92 18,212 19,660 18,332
12/31/93 20,614 21,834 20,387
12/31/94 19,428 21,068 19,443
12/31/95 23,411 25,121 23,010
- ----- Lehman Bros Gov't/Corp Bond Index -- $25,121
+++++ United Bond Fund, Class A Shares** -- $23,411
===== Lipper Corporate Debt Fund A-Rated Universe Average -- $23,010
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.
CLASS Y
Aggregate
Total Return for
Life of the Class+
------------------
United Bond Fund
Class Y Shares 7.20%++
Lehman Brothers
Government/Corporate
Bond Index 6.66%+++
Lipper Corporate
Debt Funds
A-Rated Universe Average 6.46%+++
+ Total return for the Class Y Shares may be greater than that of the Class A
Shares because the Fund's Class Y Shares are not subject to a sales load or
12b-1 fees.
++ 6/19/95 (the date the Fund commenced Class Y operations) through 12/31/95.
+++ Because the Fund commenced operations on a date other than at the end of a
month, and partial month calculations of the performance of the Lehman
Brothers Government/Corporate Bond Index (including income) and of the
Lipper Corporate Debt Funds A-Rated Universe Average are not available,
investments in the index and universe average were effected as of June 30,
1995.
<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. (May purchase
securities subject to repurchase
agreements. May invest in certain
options and futures.)
FOUNDED: 1964
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Fiscal Year Ended December 31, 1995
- -------------------------------------------
DIVIDENDS PAID $0.40
=====
NET ASSET VALUE ON
12/31/95 $6.34
12/31/94 5.62
-----
CHANGE PER SHARE $0.72
=====
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 12-31-95 13.57% 20.50%
5-year period ended 12-31-95 9.12% 10.42%
10-year period ended 12-31-95 8.88% 9.52%
*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, 1995, United Bond Fund had net assets totaling $566,477,045
invested in a diversified portfolio of:
97.80% Bonds
2.20% Cash and Cash Equivalents
As a shareholder of United Bond Fund, for every $100 you had invested on
December 31, 1995, your Fund owned:
Bonds:
Corporate $64.87
U.S. Government 27.14
Other Government 5.79
Cash and Cash Equivalents 2.20
Not all holdings will be represented in the portfolio at all times.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Aerospace - 1.96%
Loral Corporation,
7.625%, 6-15-2004 ..................... $ 2,000 $ 2,167,860
McDonnell Douglas Corporation:
8.625%, 4-1-97 ........................ 3,000 3,106,500
9.25%, 4-1-2002 ....................... 5,000 5,822,000
Total ................................. 11,096,360
Airlines - 0.96%
Federal Express Corporation,
7.89%, 9-23-2008 ...................... 5,000 5,444,900
Automotive - 2.18%
General Motors Corporation,
8.8%, 3-1-2021 ........................ 10,000 12,325,300
Banks and Savings and Loans - 11.46%
Bank of Boston Corporation,
6.625%, 12-1-2005 ..................... 5,000 5,086,950
BayBanks, Inc.,
5.812%, 9-30-97 ....................... 5,000 4,991,200
Bayerische Landesbank Girozentale, NY Branch,
CD, Currency Protected Duetschemark Swap
Rate Inverse Floating Rate,
5.235%, 3-28-97 (A) ................... 5,000 4,987,500
Chevy Chase Savings Bank, F.S.B.,
9.25%, 12-1-2005 ...................... 1,500 1,530,000
Citicorp,
7.75%, 6-15-2006 ...................... 5,000 5,558,900
First Union Corporation,
6.55%, 10-15-2035 ..................... 2,000 2,080,060
Kansallis-Osake-Pankki,
10.0%, 5-1-2002 ....................... 6,000 7,178,640
NBD Bank, National Association,
8.25%, 11-1-2024 ...................... 6,000 7,342,620
NationsBank Corporation,
8.57%, 11-15-2024 ..................... 5,000 6,076,700
Riggs National Corporation,
8.5%, 2-1-2006 ....................... 4,000 4,280,000
Skandia Enskilda Banken, NY Branch Certificate
of Deposit Dollarized Australian Dollar
Reset,
4.0%, 4-5-99 .......................... 5,000 4,656,250
SouthTrust Bank of Alabama, N.A.,
7.69%, 5-15-2025 ...................... 5,000 5,506,100
Wells Fargo & Company,
8.75%, 5-1-2002 ....................... 5,000 5,659,300
Total ................................. 64,934,220
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Beverages - 1.79%
Coca-Cola Enterprises Inc.,
0.0%, 6-20-2020 ....................... $50,000 $ 10,146,000
Building - 5.48%
Boise Cascade Office Products Corporation,
9.875%, 2-15-2001 ..................... 2,500 2,757,675
Canadian Pacific Forest Products Ltd.,
9.25%, 6-15-2002 ..................... 4,000 4,483,320
Doman Industries Limited,
8.75%, 3-15-2004 ...................... 3,000 2,842,500
Noranda Forest Inc.,
7.5%, 7-15-2003 ....................... 3,000 3,162,750
Noranda Inc.,
7.0%, 7-15-2005 ....................... 5,000 5,177,400
Owens-Corning Fiberglas Corporation,
8.875%, 6-1-2002 ...................... 5,000 5,601,200
USG Corporation:
9.25%, 9-15-2001 ...................... 2,000 2,140,000
8.5%, 8-1-2005 ........................ 750 776,250
Del Webb Corporation,
10.875%, 3-31-2000 .................... 4,000 4,080,000
Total ................................. 31,021,095
Canadian Oil - 1.46%
NOVA Corporation of Alberta,
8.5%, 12-15-2012 ...................... 7,000 8,266,370
Chemicals Major - 1.69%
Dow Capital Corporation,
9.0%, 5-15-2010 ....................... 8,000 9,596,560
Chemicals Specialty and Miscellaneous Technology - 0.89%
Geon Company (The),
6.875%, 12-15-2005 .................... 5,000 5,017,700
Computers and Office Equipment - 0.26%
Unisys Corporation,
9.75%, 9-15-96 ........................ 1,500 1,455,000
Domestic Oil - 2.57%
Anadarko Petroleum Corporation,
7.25%, 3-15-2025 ...................... 5,000 5,742,750
Seagull Energy Corporation,
7.875%, 8-1-2003 ...................... 3,500 3,482,500
Union Texas Petroleum Holdings, Inc.,
8.25%, 11-15-99 ....................... 5,000 5,320,900
Total ................................. 14,546,150
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Electrical Equipment - 3.16%
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... $15,000 $ 17,918,250
Financial - 11.79%
Banc One Credit Card Master Trust,
7.55%, 12-15-99 ....................... 5,000 5,182,800
Chrysler Financial Corporation,
12.75%, 11-1-99 ....................... 9,000 11,048,220
Countrywide Mortgage Backed Securities,
Inc., Series 1994-G A5,
6.5%, 4-25-2024 ....................... 10,000 9,871,000
DLJ Mortgage Acceptance Corp.,
1994-3 A13,
6.5%, 4-25-2024 ....................... 4,852 4,754,747
Equicon Loan Trust,
7.3%, 2-18-2013 ....................... 4,571 4,653,443
General Motors Acceptance Corporation,
8.875%, 6-1-2010 ...................... 10,000 12,173,100
MBNA Corporation,
6.206%, 5-5-99 ........................ 5,000 4,996,000
Residential Asset Securities Corporation,
Mortgage Pass-Through Certificates,
1995-KS3 Class D,
8.0%, 10-25-2024 ...................... 4,000 4,061,480
Residential Funding Mortgage
Securities I, Inc.,
8.0%, 8-25-2020 ....................... 10,000 10,053,100
Total ................................. 66,793,890
Food and Related - 0.89%
Nabisco, Inc.,
6.8%, 9-1-2001 ........................ 5,000 5,053,300
Hospital Management - 0.93%
Tenet Healthcare Corporation,
8.625%, 12-1-2003 ..................... 5,000 5,250,000
Household Products - 2.20%
Procter & Gamble Company (The),
8.0%, 9-1-2024 ........................ 10,000 12,440,900
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Insurance - 1.12%
Penn Central Corporation (The),
10.625%, 4-15-2000 .................... $ 4,000 $ 4,274,240
Reliance Group Holdings, Inc.,
9.0%, 11-15-2000 ...................... 2,000 2,057,500
Total ................................. 6,331,740
International Oil - 0.33%
YPF Sociedad Anoima,
8.0%, 2-15-2004........................ 2,000 1,880,000
Leisure Time - 4.68%
Jones Intercable, Inc.,
9.625%, 3-15-2002 ..................... 2,500 2,687,500
Marriott International, Inc.,
6.75%, 12-15-2003 ..................... 5,000 5,099,850
Tele-Communications, Inc.,
6.58%, 2-15-2005 ..................... 5,000 5,284,200
Time Warner Incorporated,
7.75%, 6-15-2005 ...................... 5,000 5,205,150
Turner Broadcasting System, Inc.,
8.375%, 7-1-2013 ...................... 4,000 4,152,240
Viacom Inc.,
6.75%, 1-15-2003 ...................... 2,500 2,521,475
Viacom International Inc.,
9.125%, 8-15-99 ....................... 1,500 1,567,500
Total ................................. 26,517,915
Machinery - 0.59%
Joy Technologies Inc.,
10.25%, 9-1-2003 ...................... 3,000 3,360,000
Multi-Industry - 0.55%
Mark IV Industries, Inc.,
8.75%, 4-1-2003 ....................... 3,000 3,120,000
Public Utilities - Pipelines - 2.88%
Arkla, Inc.,
8.875%, 7-15-99 ....................... 5,000 5,363,050
Coastal Corporation (The),
10.375%, 10-1-2000 .................... 5,000 5,843,400
NorAm Energy Corp.,
7.5%, 8-1-2000 ........................ 5,000 5,130,650
Total ................................. 16,337,100
Publishing and Advertising - 0.97%
News America Holdings Incorporated,
9.125%, 10-15-99 ...................... 5,000 5,526,900
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Steel - 0.96%
USX Corporation,
8.21%, 1-21-2000 ...................... $ 5,000 $ 5,413,100
Telecommunications - 2.23%
Bell Telephone Company of Pennsylvania (The),
8.35%, 12-15-2030 ..................... 5,000 6,280,700
Motorola, Inc.,
8.4%, 8-15-2031 ....................... 5,000 6,355,300
Total ................................. 12,636,000
Trucking - 0.89%
Ryder System, Inc.,
6.95%, 12-1-2025 ...................... 5,000 5,032,700
TOTAL CORPORATE DEBT SECURITIES - 64.87% $367,461,450
(Cost: $347,418,052)
OTHER GOVERNMENT SECURITIES
Australia - 0.64%
New South Wales Treasury,
7.0%, 2-1-2000 (B)..................... $A5,000 3,615,374
Canada - 4.07%
Hydro Quebec:
8.05%, 7-7-2024 ....................... $10,000 11,417,600
7.4%, 3-28-2025 ....................... 5,000 5,793,150
Province of Nova Scotia,
8.25%, 11-15-2019 ..................... 5,000 5,817,850
Total ................................. 23,028,600
Supranational - 1.08%
Inter-American Development Bank,
8.4%, 9-1-2009 ........................ 5,000 6,147,400
TOTAL OTHER GOVERNMENT SECURITIES - 5.79% $ 32,791,374
(Cost: $29,614,379)
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1995
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
6.83%, 7-3-2002 ....................... $ 4,500 $ 4,613,220
7.5%, 11-15-2017 ...................... 8,000 8,284,960
7.5%, 4-15-2019 ....................... 11,823 11,911,765
7.95%, 12-15-2020 ..................... 9,000 9,382,500
8.0%, 4-1-2025 ........................ 8,868 9,189,089
Federal National Mortgage Association:
7.09%, 4-1-2004 ....................... 4,500 4,552,020
7.0%, 7-25-2006 ....................... 10,000 10,287,500
7.5%, 12-25-2006 ...................... 5,000 5,276,550
7.5%, 9-1-2009 ........................ 4,937 5,077,789
6.5%, 5-25-2018 ....................... 10,000 9,984,300
7.0%, 8-25-2021 ....................... 10,000 10,234,300
United States Treasury:
5.625%, 1-31-98 ....................... 10,000 10,082,800
7.875%, 11-15-99 ...................... 15,000 16,307,850
7.875%, 8-15-2001 ..................... 15,000 16,753,050
7.5%, 2-15-2005 ....................... 5,000 5,667,200
5.875%, 11-15-2005 .................... 5,000 5,112,500
0.0%, 5-15-2020 ....................... 50,000 11,055,000
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 27.14% $153,772,393
(Cost: $147,580,162)
TOTAL SHORT-TERM SECURITIES - 1.29% $ 7,315,579
(Cost: $7,315,579)
TOTAL INVESTMENT SECURITIES - 99.09% $561,340,796
(Cost: $531,928,172)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.91% 5,136,249
NET ASSETS - 100.00% $566,477,045
See Notes to Schedules of Investments on page 39.
<PAGE>
UNITED INCOME FUND
MANAGER'S LETTER
- ---------------------------------------------------------------------------
DECEMBER 31, 1995
Dear Shareholder:
This report relates to the operation of the United Income Fund for the
fiscal year ended December 31, 1995. The following discussion, graphs and
tables provide you with information regarding the Fund's performance during that
period.
Early in 1995, the Federal Reserve Bank further raised interest rates.
These higher interest rates eventually resulted in slowing economic growth.
However, strong corporate profits growth during 1995, combined with lower
interest rates in the second half, resulted in positive performance for the
stock market for the year.
In the early months of 1995, the Fund was heavily invested in cyclical
issues, such as retail, home improvement and housing stocks. As the year
progressed, we began to place more emphasis on the stocks of companies in the
technology industry, which showed greater promise for growth in the slowing
economy.
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 was positively impacted by its investments in
the technology sector during the first three quarters of 1995. The technology
sell-off during the fourth quarter of 1995 diminished somewhat the Fund's
overall performance for the year relative to the S&P 500 Index.
In 1996, we anticipate that the economy will continue its slow rate of
growth. We further expect the Federal Reserve Bank to lower interest rates in
an effort to spur the economy and avoid a recession. As a result, we intend to
maintain a fully-invested position to take advantage of the anticipated lowering
of interest rates. We will continue to emphasize technology and cyclical stocks
and aggressively search for strong investment opportunities for the Fund in
companies with excellent prospects for superior earnings and revenue growth.
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 CLASS A SHARES,
THE S&P 500 INDEX,
AND THE LIPPER EQUITY INCOME FUND UNIVERSE AVERAGE
Average Annual Total Return*
1 year 5 years 10 years
22.15% 15.10% 14.34%
Lipper
United Equity
Income Income
Fund S&P Fund
Class A 500 Universe
Shares Index Average
--------- --------- ---------
12/31/85 Purchase 9,425 10,000 10,000
12/31/86 11,509 11,867 11,428
12/31/87 12,334 12,490 11,194
12/31/88 14,779 14,564 12,737
12/31/89 18,842 19,180 15,350
12/31/90 17,816 18,584 14,388
12/31/91 23,095 24,246 18,177
12/31/92 25,857 26,095 19,882
12/31/93 30,008 28,723 22,620
12/31/94 29,465 29,103 22,048
12/31/95 38,190 40,039 28,616
- ----- United Income Fund, Class A Shares** -- $38,190
+++++ S&P 500 Index -- $40,039
===== Lipper Equity Income Fund Universe Average -- $28,616
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.
CLASS Y
Aggregate
Total Return for
Life of the Class+
------------------
United Income Fund
Class Y Shares 8.45%++
S&P 500 Index 14.45%+++
Lipper Equity
Income Fund
Universe Average 13.36%+++
+ Total return for the Class Y Shares may be greater than that of the
Class A Shares because the Fund's Class Y Shares are not subject to a
sales load or 12b-1 fees.
++ 6/19/95 (the date the Fund commenced Class Y operations) through 12/31/95.
+++ Because the Fund commenced operations on a date other than at the end of a
month, and partial month calculations of the performance of the S&P 500
Index (including income) and of the Lipper Equity Income Fund Universe
Average are not available, investments in the index and universe average
were effected as of June 30, 1995.
<PAGE>
SHAREHOLDER SUMMARY
- -----------------------------------------------------------------
UNITED INCOME FUND
PORTFOLIO STRATEGY:
Investment quality OBJECTIVE: Maintenance of current income,
dividend-paying subject to changing market
common stocks conditions.
Cash Reserves STRATEGY: Invests principally in common stocks of
companies which have the potential for
capital growth or which may be expected
to resist market decline. (May purchase
securities subject to repurchase
agreements. May invest in certain
options and futures.)
The use of cash reserves (often invested
in money market securities) for
defensive purposes is a strategy that
may be utilized by the 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)
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Fiscal Year Ended December 31, 1995
- -------------------------------------------
DIVIDENDS PAID $0.35
=====
CAPITAL GAINS DISTRIBUTION $0.92
=====
NET ASSET VALUE ON
12/31/95 $28.96 adjusted to: $29.88(A)
12/31/94 23.34
------
CHANGE PER SHARE $6.54
======
(A) This number includes the capital gains distribution of $0.92 paid in
December 1995 added to the actual net asset value on December 31, 1995.
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 12-31-95 22.15% 29.60%
5-year period ended 12-31-95 15.10% 16.47%
10-year period ended 12-31-95 14.34% 15.02%
*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, 1995, United Income Fund had net assets totaling $4,083,420,467
invested in a diversified portfolio of:
92.73% Common Stocks
3.56% Cash and Cash Equivalents
3.15% U.S. Government Securities
0.56% Corporate Debt Securities
As a shareholder of United Income Fund, for every $100 you had invested on
December 31, 1995, your Fund owned:
Basic Industries Stocks $40.28
Technological Stocks 27.68
Consumer Stocks 19.91
Financial Stocks 4.86
Cash and Cash Equivalents 3.56
U.S. Government Securities 3.15
Corporate Debt Securities 0.56
Not all holdings will be represented in the portfolio at all times.
- ---------------------------------------------------------------------------
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, 1995
Shares Value
COMMON STOCKS
Aerospace - 1.22%
Boeing Company (The) ................... 635,000 $ 49,768,125
Airlines - 3.08%
AMR Corporation* ....................... 400,000 29,700,000
Southwest Airlines Co. ................. 2,475,000 57,543,750
USAir Group, Inc.* ..................... 2,900,000 38,425,000
Total ................................. 125,668,750
Automotive - 6.16%
Chrysler Corporation ................... 1,100,000 60,912,500
Dana Corporation ....................... 760,000 22,230,000
Eaton Corporation ...................... 500,000 26,812,500
Ford Motor Company ..................... 1,900,000 55,100,000
General Motors Corporation ............. 1,000,000 52,875,000
Magna International Inc., Class A ...... 376,500 16,283,625
AB Volvo, ADR Series B (C) ............. 850,000 17,405,707
Total ................................. 251,619,332
Banks and Savings and Loans - 2.52%
Citicorp ............................... 750,000 50,437,500
First Bank Systems, Inc. ............... 500,000 24,812,500
Grupo Financiero Bancomer, S.A. de C.V.,
Series B, CPO Shares (C)* ............. 2,000,000 557,356
Skandia Enskilda Banken, Class A (C) ... 3,300,000 27,328,164
Total ................................. 103,135,520
Beverages - 1.37%
PepsiCo, Inc. .......................... 1,000,000 55,875,000
Biotechnology and Medical Services - 1.09%
Medtronic, Inc. ........................ 800,000 44,700,000
Building - 3.25%
Armstrong World Industries, Inc. ....... 900,000 55,800,000
Georgia-Pacific Corporation ............ 425,000 29,165,625
Temple-Inland Inc. ..................... 350,000 15,443,750
Weyerhaeuser Company ................... 750,000 32,437,500
Total ................................. 132,846,875
Chemicals Major - 7.21%
Air Products and Chemicals, Inc. ....... 1,150,000 60,662,500
Dow Chemical Company (The) ............. 575,000 40,465,625
du Pont (E.I.) de Nemours and Company .. 1,000,000 69,875,000
PPG Industries, Inc. ................... 1,250,000 57,187,500
Praxair, Inc. .......................... 1,000,000 33,625,000
Union Carbide Corporation .............. 875,000 32,812,500
Total ................................. 294,628,125
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1995
Shares Value
COMMON STOCKS (Continued)
Chemicals Specialty and Miscellaneous
Technology - 2.19%
Polaroid Corporation ................... 700,000 $ 33,162,500
WMX Technologies, Inc. ................. 600,000 17,925,000
Xerox Corporation ...................... 280,000 38,360,000
Total ................................. 89,447,500
Computers and Office Equipment - 3.68%
Computer Associates International, Inc. 375,000 21,328,125
General Motors Corporation, Class E .... 1,081,000 56,212,000
Microsoft Corporation* ................. 300,000 26,343,600
Oracle Systems Corporation* ............ 1,100,000 46,612,500
Total ................................. 150,496,225
Consumer Electronics and Appliances - 1.00%
Whirlpool Corporation .................. 765,000 40,736,250
Drugs and Hospital Supply - 2.72%
Abbott Laboratories .................... 500,000 20,875,000
Astra AB, Class A (C) ................... 600,000 23,940,375
Baxter International Inc. .............. 500,000 20,937,500
Merck & Co., Inc. ...................... 400,000 26,300,000
Pfizer Inc. ............................ 300,000 18,900,000
Total ................................. 110,952,875
Electrical Equipment - 2.92%
Emerson Electric Co. ................... 400,000 32,700,000
General Electric Company ............... 1,200,000 86,400,000
Total ................................. 119,100,000
Electronics - 9.05%
AMP Incorporated ....................... 1,100,000 42,212,500
Analog Devices, Inc.* .................. 820,000 29,007,500
Applied Materials, Inc.* ............... 1,730,000 68,009,760
cisco Systems, Inc.* ................... 1,000,000 74,687,000
Intel Corporation ...................... 1,530,000 86,922,360
Micron Technology, Inc. ................ 800,000 31,700,000
Teradyne, Inc.* ........................ 750,000 18,750,000
Texas Instruments Incorporated ......... 350,000 18,112,500
Total ................................. 369,401,620
Engineering and Construction - 1.77%
BBC Brown Boveri Ltd, Series A (C) ..... 25,000 28,986,135
Fluor Corporation ...................... 400,000 26,400,000
Foster Wheeler Corporation ............. 400,000 17,000,000
Total ................................. 72,386,135
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1995
Shares Value
COMMON STOCKS (Continued)
Financial - 2.34%
Federal Home Loan Mortgage Corporation . 500,000 $ 41,750,000
Federal National Mortgage Association .. 295,200 36,641,700
Grupo Financiero Banamex Accival,
S.A. de C.V., Class B, CPO Shares (C) . 9,800,000 16,386,261
Grupo Financiero Banamex Accival,
S.A. de C.V., Class L (C) ............. 442,500 648,121
Total ................................. 95,426,082
Food and Related - 0.84%
CPC International Inc. ................. 500,000 34,312,500
Hospital Management - 2.02%
Columbia/HCA Healthcare Corporation .... 375,000 19,031,250
Tenet Healthcare Corporation* ......... 1,000,000 20,750,000
United HealthCare Corporation .......... 650,000 42,575,000
Total ................................. 82,356,250
Household Products - 3.53%
Colgate-Palmolive Company .............. 600,000 42,150,000
Gillette Company (The) ................. 1,000,000 52,125,000
Procter & Gamble Company (The) ......... 600,000 49,800,000
Total.................................. 144,075,000
Leisure Time - 2.56%
Walt Disney Company (The) .............. 700,000 41,300,000
McDonald's Corporation ................. 1,400,000 63,175,000
Total ................................. 104,475,000
Machinery - 6.76%
Case Corporation ....................... 810,000 37,057,500
Caterpillar Inc. ....................... 1,600,000 94,000,000
Deere & Company ........................ 2,055,000 72,438,750
Ingersoll-Rand Company ................. 400,000 14,050,000
Mannesmann AG (C) ...................... 65,000 20,701,185
Parker Hannifin Corporation ............ 600,000 20,550,000
TRINOVA Corporation .................... 600,000 17,175,000
Total ................................. 275,972,435
Multi-Industry - 2.30%
ITT Corporation* ....................... 750,204 39,760,812
ITT Hartford Group, Inc.* .............. 750,204 36,291,118
ITT Industries, Inc. ................... 750,204 18,004,896
Total ................................. 94,056,826
Packaging and Containers - 0.10%
Pilkington PLC (C) ..................... 1,364,516 4,281,945
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1995
Shares Value
COMMON STOCKS (Continued)
Paper - 2.10%
Bowater Incorporated ................... 460,000 $ 16,330,000
International Paper Company ............ 1,200,000 45,450,000
Union Camp Corporation ................. 500,000 23,812,500
Total ................................. 85,592,500
Railroads - 3.20%
CSX Corporation ........................ 700,000 31,937,500
Conrail Inc. ........................... 600,000 42,000,000
Norfolk Southern Corporation ........... 300,000 23,812,500
Union Pacific Corporation .............. 500,000 33,000,000
Total ................................. 130,750,000
Retailing - 7.99%
Cifra, S.A. de C.V., Series C (C)* ..... 8,000,000 8,088,140
Circuit City Stores, Inc. .............. 1,600,000 44,200,000
Dayton Hudson Corporation .............. 316,600 23,745,000
Gap, Inc. (The) ........................ 700,000 29,400,000
General Nutrition Companies, Inc.* ..... 800,000 18,600,000
Home Depot, Inc. (The) ................. 765,000 36,624,375
May Department Stores Company (The) .... 1,000,000 42,250,000
Next plc (C) ........................... 4,200,000 29,752,621
Nordstrom, Inc. ........................ 375,000 15,140,625
Penney (J.C.) Company, Inc. ............ 676,000 32,194,500
Tommy Hilfiger Corporation* ............ 560,000 23,730,000
Wal-Mart Stores, Inc. .................. 1,000,000 22,375,000
Total ................................. 326,100,261
Services, Consumer and Business - 0.50%
Block (H & R), Inc. .................... 500,000 20,250,000
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1995
Shares Value
COMMON STOCKS (Continued)
Steel - 0.42%
Nucor Corporation ...................... 300,000 $ 17,137,500
Telecommunications - 7.73%
AT&T Corporation ....................... 500,000 32,375,000
BellSouth Corporation .................. 93,000 4,045,500
General Instrument Corporation* ........ 750,000 17,531,250
General Motors Corporation, Class H .... 176,100 8,650,912
MCI Communications Corporation ......... 1,875,000 49,100,625
Motorola, Inc. ......................... 1,700,000 96,900,000
Nokia Corporation, Series A (C) ........ 760,000 29,875,175
Telefonaktiebolaget LM Ericsson,
Class B, ADR........................... 2,000,000 39,000,000
Telefonos de Mexico S.A. de C.V., ADR .. 1,200,000 38,250,000
Total ................................. 315,728,462
Tire and Rubber - 1.11%
Goodyear Tire & Rubber Company (The) ... 1,000,000 45,375,000
TOTAL COMMON STOCKS - 92.73% $3,786,652,093
(Cost: $2,225,514,055)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Banks and Savings and Loans - 0.27%
Morgan Guaranty Trust Company of New York,
7.375%, 2-1-2002 ...................... $10,250 10,960,428
Electrical Equipment - 0.29%
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... 10,000 11,945,500
TOTAL CORPORATE DEBT SECURITIES - 0.56% $ 22,905,928
(Cost: $19,907,722)
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1995
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
United States Treasury:
6.75%, 4-30-2000 ...................... $37,000 $ 38,936,580
5.75%, 8-15-2003 ...................... 50,000 50,601,500
10.375%, 11-15-2012 ................... 8,500 11,751,250
9.0%, 11-15-2018 ...................... 20,000 27,240,600
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 3.15% $ 128,529,930
(Cost: $114,725,972)
TOTAL SHORT-TERM SECURITIES - 3.57% $ 145,927,500
(Cost: $145,927,500)
TOTAL INVESTMENT SECURITIES - 100.01% $4,084,015,451
(Cost: $2,506,075,249)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.01%) (594,984)
NET ASSETS - 100.00% $4,083,420,467
See Notes to Schedules of Investments on page 39.
<PAGE>
UNITED ACCUMULATIVE FUND
MANAGER'S LETTER
DECEMBER 31, 1995
- ---------------------------------------------------------------------------
Dear Shareholder:
This report relates to the operation of the United Accumulative Fund for
the fiscal year ended December 31, 1995. The following discussion, graphs and
tables provide you with information regarding the Fund's performance during that
period.
The Fund's performance in 1995 was significantly affected by a long list of
positive developments including, importantly, declining interest rates, rising
corporate profits, a low rate of inflation and balanced budget legislation
sponsored by the newly-Republican Congress.
During the past fiscal year, the Fund moved to a fully invested position
and emphasized cyclical companies. In the first half of 1995, companies in the
financial and technology sectors were emphasized. During the second half of the
year, emphasis on technology issues was reduced in favor of companies with less
sensitivity to the economy.
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). Although the Fund's performance was positive in 1995 and superior to
that of the Lipper index, it was slightly below the S&P 500. The Fund's
performance was impacted favorably by our investment approach of remaining fully
invested throughout much of the year.
Our outlook for equities in 1996, while positive, anticipates somewhat more
moderate rates of gain. We expect a slower rate of domestic economic growth,
moderate inflation, slightly lower interest rates and stable corporate profits.
If developments unfold as we anticipate, the Portfolio should perform well as
structured.
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 CLASS A SHARES,
THE S&P 500 INDEX,
AND THE LIPPER GROWTH FUND UNIVERSE AVERAGE
Average Annual Total Return*
1 year 5 years 10 years
26.49% 14.28% 12.43%
United Lipper
Accumulative Growth
Fund S&P Fund
Class A 500 Universe
Shares Index Average
------------ ----- --------
12/31/85 Purchase 9,425 10,000 10,000
12/31/86 11,126 11,867 11,298
12/31/87 11,630 12,490 11,431
12/31/88 13,614 14,564 13,022
12/31/89 17,366 19,180 16,297
12/31/90 15,600 18,584 15,405
12/31/91 19,294 24,246 20,908
12/31/92 22,034 26,095 22,533
12/31/93 24,030 28,723 24,963
12/31/94 24,041 29,103 24,409
12/31/95 32,266 40,039 31,846
- ----- S&P 500 Index -- $40,039
+++++ Lipper Growth Fund Universe Average -- $31,846
===== United Accumulative Fund, Class A Shares** -- $32,266
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.
CLASS Y
Aggregate
Total Return for
Life of the Class+
------------------
United Accumulative Fund
Class Y Shares 11.92%++
S&P 500 Index 10.77%+++
Lipper Growth Fund
Universe Average 6.11%+++
+ Total return for the Class Y Shares may be greater than that of the Class A
Shares because the Fund's Class Y Shares are not subject to a sales load or
12b-1 fees.
++ 7/11/95 (the date the Fund commenced Class Y operations) through 12/31/95.
+++ Because the Fund commenced operations on a date other than at the end of a
month, and partial month calculations of the performance of the S&P 500
Index (including income) and of the Lipper Growth Fund Universe Average are
not available, investments in the index and universe average were effected
as of July 31, 1995.
<PAGE>
SHAREHOLDER SUMMARY
- -----------------------------------------------------------------
UNITED ACCUMULATIVE FUND
PORTFOLIO STRATEGY:
Appreciation-oriented OBJECTIVE: Capital growth, with a secondary
common stocks objective of current income.
Cash Reserves
STRATEGY: Invests mainly in common stocks or
securities convertible into common
stocks. (May purchase securities
subject to repurchase agreements. May
invest in certain options and futures.)
The use of cash reserves (often invested
in money market securities) for
defensive purposes is a strategy that
may be utilized by the Accumulative 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: SEMIANNUALLY
(JUNE AND DECEMBER)
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Fiscal Year Ended December 31, 1995
- -------------------------------------------
DIVIDENDS PAID $0.11
=====
CAPITAL GAINS DISTRIBUTION $0.92
=====
NET ASSET VALUE ON
12/31/95 $7.78 adjusted to:$8.70(A)
12/31/94 6.58
-----
CHANGE PER SHARE $2.12
=====
(A) This number includes the capital gains distribution of $0.92 paid in
December 1995 added to the actual net asset value on December 31, 1995.
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 12-31-95 26.49% 34.21%
5-year period ended 12-31-95 14.28% 15.64%
10-year period ended 12-31-95 12.43% 13.10%
*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, 1995, United Accumulative Fund had net assets totaling
$1,206,782,764 invested in a diversified portfolio of:
95.73% Common Stocks
4.27% Cash and Cash Equivalents
As a shareholder of United Accumulative Fund, for every $100 you had invested on
December 31, 1995, your Fund owned:
Technological Stocks $32.22
Financial Stocks 28.45
Basic Industries Stocks 18.51
Consumer Stocks 14.37
Cash and Cash Equivalents 4.27
Public Utilities Stocks 1.54
Energy and Energy-Related Stocks 0.64
Not all holdings will be represented in the portfolio at all times.
- ---------------------------------------------------------------------------
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 ACCUMULATIVE FUND
DECEMBER 31, 1995
Shares Value
COMMON STOCKS
Airlines - 0.55%
USAir Group, Inc.* ..................... 500,000 $ 6,625,000
Automotive - 1.74%
Federal-Mogul Corporation .............. 333,700 6,548,862
Ford Motor Company ..................... 500,000 14,500,000
Total ................................. 21,048,862
Banks and Savings and Loans - 14.01%
Ahmanson (H. F.) & Company ............. 500,000 13,250,000
Barnett Banks, Inc. .................... 300,000 17,700,000
Boatmen's Bancshares, Inc. ............. 247,100 10,115,533
City National Corporation .............. 350,000 4,900,000
Crestar Financial Corporation .......... 350,000 20,693,750
First Security Corporation* ............ 145,000 5,546,250
Fourth Financial Corporation ........... 140,000 5,705,000
Great Western Financial Corporation .... 500,000 12,750,000
Mercantile Bancorporation Inc. ......... 300,000 13,800,000
Morgan (J.P.) & Co. Incorporated ....... 250,000 20,062,500
Northern Trust Corporation ............. 300,000 16,706,100
Roosevelt Financial Group, Inc. ........ 700,000 13,475,000
Washington Mutual, Inc. ................ 500,000 14,375,000
Total ................................. 169,079,133
Biotechnology and Medical Services - 0.88%
MediSense, Inc.* ....................... 85,300 2,713,564
Owen Healthcare, Inc.* ................. 211,000 5,697,000
Pyxis Corporation* ..................... 150,000 2,203,050
Total ................................. 10,613,614
Building - 1.08%
American Health Prop. (#) .............. 221,200 4,755,800
National Health Investors, Inc. ........ 250,000 8,281,250
Total ................................. 13,037,050
Chemicals Major - 3.45%
du Pont (E.I.) de Nemours and
Company .............................. 400,000 27,950,000
PPG Industries, Inc. ................... 300,000 13,725,000
Total ................................. 41,675,000
Chemicals Specialty and Miscellaneous Technology - 1.75%
Ecolab Inc. ............................ 300,000 9,000,000
Geon Company (The) ..................... 500,000 12,187,500
Total ................................. 21,187,500
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1995
Shares Value
COMMON STOCKS (Continued)
Computers and Office Equipment - 11.35%
Cerner Corporation* .................... 700,000 $ 14,350,000
DST Systems, Inc.* ..................... 300,000 8,550,000
General Motors Corporation, Class E .... 500,000 26,000,000
HBO & Company .......................... 200,000 15,300,000
HPR Inc.* .............................. 86,900 2,607,000
Informix Corporation* .................. 1,000,000 30,062,000
Intuit Inc.* ........................... 210,000 16,406,250
Parametric Technology Corporation* ..... 200,000 13,275,000
PSINET Inc.* ........................... 250,000 5,734,250
Summit Medical Systems, Inc.* .......... 220,900 4,694,125
Total ................................. 136,978,625
Drugs and Hospital Supply - 12.84%
ALZA Corporation* ...................... 344,900 8,536,275
Abbott Laboratories .................... 700,000 29,225,000
Baxter International Inc. ............... 400,000 16,750,000
Johnson & Johnson ...................... 200,000 17,125,000
Lilly (Eli) and Company ................ 400,000 22,500,000
Pfizer Inc. ............................ 250,000 15,750,000
SmithKline Beecham plc, ADR ............ 400,000 22,200,000
United States Surgical Corporation ..... 500,000 10,687,500
Warner-Lambert Company ................. 125,000 12,140,625
Total ................................. 154,914,400
Electrical Equipment - 2.89%
Emerson Electric Co. ................... 250,000 20,437,500
General Electric Company ............... 200,000 14,400,000
Total ................................. 34,837,500
Electronics - 0.42%
Digital Link Corporation* .............. 356,700 5,105,090
Financial - 2.62%
Donaldson, Lufkin & Jenrette, Inc. ..... 200,000 6,250,000
Lehman Brothers Holdings Inc. .......... 100,000 2,125,000
Paine Webber Group Inc. ................ 100,000 2,000,000
Regional Acceptance Corporation* ....... 250,000 2,375,000
Travelers Group, Inc. .................. 300,000 18,862,500
Total ................................. 31,612,500
Food and Related - 2.84%
Archer-Daniels-Midland Company ......... 578,200 10,407,600
Pioneer Hi-Bred International, Inc. .... 150,300 8,360,438
Ralcorp Holdings* ...................... 638,200 15,476,350
Total ................................. 34,244,388
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1995
Shares Value
COMMON STOCKS (Continued)
Hospital Management - 3.73%
Assisted Living Concepts, Inc.* (D) .... 250,000 $ 3,281,250
Beverly Enterprises, Inc.* ............. 1,250,000 13,281,250
Health Systems International, Inc.,
Class A* .............................. 100,000 3,212,500
LTC Properties, Inc. ................... 250,000 3,750,000
Sierra Health Services, Inc.* .......... 350,000 11,112,500
Tenet Healthcare Corporation* .......... 500,000 10,375,000
Total ................................. 45,012,500
Insurance - 11.82%
Allstate Corporation (The) ............. 450,000 18,506,250
American International Group, Inc. ..... 350,000 32,375,000
Berkley (W. R.) Corporation ........... 300,000 16,050,000
General Re Corporation ................. 100,000 15,500,000
Jefferson-Pilot Corporation ............ 150,000 6,975,000
Lincoln National Corporation ........... 400,000 21,500,000
Providian Corporation .................. 150,000 6,112,500
Prudential Reinsurance Holdings, Inc. .. 570,000 13,323,750
TIG Holdings, Inc. ..................... 220,000 6,270,000
USLIFE Corporation ..................... 200,000 5,975,000
Total ................................. 142,587,500
International Oil - 0.64%
ENI S.p.A., ADR* ....................... 225,000 7,706,250
Leisure Time - 5.05%
Boston Chicken, Inc.* .................. 500,000 16,031,000
Comcast Corporation, Class A ........... 900,000 16,368,300
Tele-Communications, Inc., Class A* .... 900,000 17,943,300
Wendy's International, Inc. ............ 500,000 10,625,000
Total ................................. 60,967,600
Machinery - 3.10%
Cooper Industries, Inc. ................ 350,000 12,862,500
Ingersoll-Rand Company ................. 250,000 8,781,250
Parker Hannifin Corporation ............ 250,000 8,562,500
TRINOVA Corporation .................... 250,000 7,156,250
Total ................................. 37,362,500
Metals and Mining - 0.99%
Aluminum Company of America ............ 225,000 11,896,875
Multi-Industry - 1.67%
Berkshire Hathaway Inc.* ............... 135 4,333,500
ITT Corporation* ....................... 126,000 6,678,000
ITT Hartford Group, Inc.* .............. 126,000 6,095,250
ITT Industries, Inc. ................... 126,000 3,024,000
Total ................................. 20,130,750
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1995
Shares Value
COMMON STOCKS (Continued)
Public Utilities - Electric - 1.54%
Central and South West Corporation ..... 200,000 $ 5,575,000
Detroit Edison Company (The)* .......... 200,000 6,900,000
Texas Utilities Electric Company ...... 150,000 6,168,750
Total ................................. 18,643,750
Railroads - 3.04%
Conrail Inc. ........................... 250,000 17,500,000
Illinois Central Corporation ........... 500,000 19,187,500
Total ................................. 36,687,500
Retailing - 1.72%
Family Dollar Stores, Inc. ............. 664,500 9,136,875
Mercantile Stores Company, Inc. ........ 250,000 11,562,500
Total ................................. 20,699,375
Services, Consumer and Business - 0.84%
Block (H & R), Inc. .................... 250,000 10,125,000
Telecommunications - 4.98%
Ascend Communications, Inc.* ........... 175,000 14,207,725
MFS Communications Company, Inc.* ...... 350,000 18,725,000
Nokia Corporation, Series A, ADS ....... 700,000 27,212,500
Total ................................. 60,145,225
Textiles and Apparel - 0.19%
Warnaco Group, Inc. (The), Class A ..... 91,400 2,285,000
TOTAL COMMON STOCKS - 95.73% $1,155,208,487
(Cost: $1,054,333,005)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Commercial Paper
Banks and Savings and Loans - 0.10%
U.S. Bancorp,
Master Note ........................... $ 1,233 1,233,000
Consumer Electronics and Appliances - 0.55%
TDK (USA) Corp.,
5.74%, 1-17-96 ........................ 6,660 6,643,010
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1995
Principal
Amount In
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Financial - 2.47%
BHP Finance (U.S.A.) Inc.,
5.62%, 2-21-96 ........................ $ 6,470 $ 6,418,488
Dresdner U.S. Finance Inc.,
5.61%, 1-19-96 ........................ 10,000 9,971,950
PHH Corp.,
5.68%, 1-19-96 ........................ 5,610 5,594,067
USAA Capital Corporation,
5.6%, 2-6-96 .......................... 5,720 5,687,968
USL Capital Corporation,
5.72%, 1-10-96 ........................ 2,100 2,096,997
Total ................................. 29,769,470
Food and Related - 0.63%
ConAgra, Inc.,
5.95%, 1-19-96 ........................ 3,385 3,374,930
General Mills, Inc.,
Master Note ........................... 1,382 1,382,000
Sara Lee Corporation,
Master Note ........................... 2,905 2,905,000
Total ................................. 7,661,930
Multi-Industry - 0.05%
Textron Inc.,
6.0%, 1-29-96 ......................... 625 622,083
Public Utilities - Electric - 0.31%
Western Resources Inc.,
6.0%, 1-19-96 ......................... 3,705 3,693,885
Public Utilities - Gas - 0.17%
Michigan Consolidated Gas Company,
5.8%, 1-10-96 ......................... 2,000 1,997,100
Publishing and Advertising - 0.32%
American Greetings Corporation,
5.67%, 1-18-96 ........................ 3,930 3,919,477
Retailing - 0.20%
Rite Aid Corp.,
5.94%, 1-12-96 ........................ 2,405 2,400,635
Telecommunications - 0.19%
Southwestern Bell Telephone Company,
5.8%, 1-8-96 .......................... 2,280 2,277,429
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1995
Principal
Amount In
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Tobacco - 0.11%
Philip Morris Companies Inc.,
5.6%, 1-19-96 ......................... $ 1,375 $ 1,371,150
Total Commercial Paper - 5.10% 61,589,169
Municipal Obligation - 0.17%
California
Oakland-Alameda County Coliseum Lease
Revenue Bonds (Oakland Coliseum Project),
1995 Series B-1 (Canadian Imperial Bank
of Commerce),
5.88%, 1-12-96 2,000 2,000,000
TOTAL SHORT-TERM SECURITIES - 5.27% $ 63,589,169
(Cost: $63,589,169)
TOTAL INVESTMENT SECURITIES - 101.00% $1,218,797,656
(Cost: $1,117,922,174)
CASH AND OTHER ASSETS, NET OF LIABILITIES - (1.00%) (12,014,892)
NET ASSETS - 100.00% $1,206,782,764
See Notes to Schedules of Investments on page 39.
<PAGE>
UNITED SCIENCE AND TECHNOLOGY FUND
MANAGER'S LETTER
DECEMBER 31, 1995
- ---------------------------------------------------------------------------
Dear Shareholder:
This report relates to the operation of the United Science and Technology
Fund for the fiscal year ended December 31, 1995. The following discussion,
graphs and tables provide you with information regarding the Fund's performance
during that period.
During the past fiscal year, economic conditions were favorable for strong
performances by both the stock and bond markets. Important positives were
moderate growth in the Gross Domestic Product (GDP), low inflation, higher than
expected corporate earnings, low interest rates and stable employment. On the
political front, the newly empowered Republican party's pledge to make long-term
reductions in the federal budget deficit, to lower taxes and to reduce
governmental regulation were also helpful to markets.
The Fund's strategy during 1995 was to identify industries, and companies
within these industries, that we expected to benefit from moderate economic
growth, low inflation and low interest rates. We selected companies which in
our opinion possessed the greatest potential to outperform the major market
indices.
The strategies and techniques we applied resulted in the performance of the
Fund greatly exceeding 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 the selection of stocks in certain
computer-networking, software (including hospital software) and data
communications companies, the timely sale of certain holdings of companies in
the semiconductor industry during the fourth quarter and investments in growth
companies with strong price to earnings multiples.
We anticipate that the current economic conditions of slow GDP growth, low
inflation and low interest rates will continue into 1996. In light of the
anticipated economic climate, the Fund plans to increase its emphasis on sectors
less sensitive to the economy such as the health care industry. In addition, we
may take measures to increase the flexibility of the Fund with respect to the
timing of purchases and sales such as increasing cash reserves and reducing
large holdings to protect stock gains achieved by the Fund in 1995.
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 CLASS A SHARES,
THE S&P 400 INDEX,
AND THE LIPPER SCIENCE & TECHNOLOGY FUND UNIVERSE AVERAGE
Average Annual Total Return*
1 year 5 years 10 years
46.43% 21.67% 16.86%
Lipper
Science &
United Technology
Science and S&P Fund
Technology 400 Universe
Fund Index Average
--------- --------- ----------
12/31/85 Purchase 9,425 10,000 10,000
12/31/86 11,139 11,868 10,778
12/31/87 12,524 12,908 11,043
12/31/88 13,657 14,970 12,035
12/31/89 17,399 19,373 14,703
12/31/90 16,788 19,202 14,271
12/31/91 26,736 25,110 20,758
12/31/92 25,659 26,544 23,671
12/31/93 27,843 28,943 29,407
12/31/94 30,567 30,049 33,143
12/31/95 47,491 40,447 45,694
- ----- Lipper Science & Technology Fund Universe Average -- $45,694
+++++ S&P 400 Index -- $40,447
===== United Science and Technology Fund** -- $47,491
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 SCIENCE AND TECHNOLOGY FUND
PORTFOLIO STRATEGY:
Technology-related OBJECTIVE: Long-term capital growth.
stocks
Generally at least 80% STRATEGY: Invests in common
in science or technology stocks of companies whose
securities; may have more products, processes or services
than 20% in debt securities. are expected to benefit from scientific
or technological discoveries or
developments. (May purchase
securities subject to repurchase
agreements. May invest in certain
options and futures.)
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.
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: 1950
SCHEDULED DIVIDEND FREQUENCY: SEMIANNUALLY
(JUNE AND DECEMBER)
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Fiscal Year Ended December 31, 1995
- -------------------------------------------
CAPITAL GAINS DISTRIBUTION $ 0.71
======
NET ASSET VALUE ON
12/31/95 $22.89 adjusted to:$23.60 (A)
12/31/94 15.21
------
CHANGE PER SHARE $ 8.39
======
(A)This number includes the capital gains distribution of $0.71 paid in December
1995 added to the actual net asset value on December 31, 1995.
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 12-31-95 46.43% 55.37%
5-year period ended 12-31-95 21.67% 23.12%
10-year period ended 12-31-95 16.86% 17.55%
*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, 1995, United Science and Technology Fund had net assets totaling
$820,782,583 invested in a diversified portfolio of:
93.20% Common Stocks
6.80% Cash and Cash Equivalents
As a shareholder of United Science and Technology Fund, for every $100 you had
invested on December 31, 1995, your Fund owned:
Technological Stocks $80.31
Consumer Stocks 7.33
Cash and Cash Equivalents 6.80
Basic Industries Stocks 5.56
Not all holdings will be represented in the portfolio at all times.
- ---------------------------------------------------------------------------
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 SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1995
Shares Value
COMMON STOCKS
Automotive - 0.75%
AB Volvo (C) ........................... 300,000 $ 6,143,191
Biotechnology and Medical Services - 0.76%
Pyxis Corporation* ..................... 200,000 2,937,400
Ventritex, Inc.* ....................... 190,000 3,336,780
Total ................................. 6,274,180
Computers and Office Equipment - 42.98%
Adobe Systems Incorporated ............. 200,000 12,425,000
America Online, Inc.* .................. 540,000 20,148,480
Arbor Software Corporation* ............ 9,000 423,000
AVANT! Corporation* .................... 132,300 2,497,163
Broderbund Software, Inc.* ............. 233,000 14,183,875
Cerner Corporation* .................... 550,000 11,275,000
Computer Associates International,
Inc. .................................. 225,000 12,796,875
DST Systems, Inc.* ..................... 127,500 3,633,750
Elcom International, Inc.* ............. 200,000 3,025,000
First Data Corporation ................. 150,000 10,031,250
General Motors Corporation, Class E .... 325,000 16,900,000
HBO & Company .......................... 401,000 30,676,500
HCIA Inc.* ............................. 200,000 9,325,000
HPR Inc.* .............................. 100,800 3,024,000
Inference Corporation, Class A* ......... 210,000 3,937,500
Informix Corporation* .................. 1,000,000 30,062,000
Intuit Inc.* ........................... 280,000 21,875,000
Learmonth & Burch ADR* ................. 500,000 4,437,500
Macromedia, Inc.* ...................... 470,000 24,469,140
Microsoft Corporation* ................. 123,000 10,800,876
Minnesota Educational Computing
Corporation* .......................... 250,000 6,281,250
NETCOM On-Line Communication Services,
Inc.* ................................. 200,000 7,150,000
Objective Systems Integrators, Inc.* .... 69,600 3,801,900
Oracle Systems Corporation* ............ 300,000 12,712,500
Parametric Technology Corporation* ..... 400,000 26,550,000
Pixar* ................................. 52,500 1,512,630
Pure Software Inc.* .................... 161,700 5,174,400
SQA, Inc.* ............................. 6,000 113,250
Scopus Technology, Inc.* ............... 6,700 167,500
Shiva Corporation* ..................... 221,100 16,140,300
Summit Medical Systems, Inc.* .......... 200,000 4,250,000
Sync Research, Inc.* ................... 100,000 4,562,500
Synopsys, Inc.* ........................ 350,000 13,343,750
UUNET Technologies, Inc.* .............. 80,000 5,060,000
Total ................................. 352,766,889
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1995
Shares Value
COMMON STOCKS (Continued)
Drugs and Hospital Supply - 4.16%
ALZA Corporation* ...................... 200,000 $ 4,950,000
Abbott Laboratories .................... 150,000 6,262,500
OmniCare, Inc. ......................... 300,000 13,425,000
Roche Holdings AG (C) .................. 1,200 9,483,535
Total ................................. 34,121,035
Electrical Equipment - 1.05%
General Electric Company ............... 120,000 8,640,000
Electronics - 17.25%
Applied Materials, Inc.* ............... 320,000 12,579,840
Atmel Corporation* ..................... 460,000 10,235,000
Cascade Communications Corp.* .......... 310,200 26,405,775
cisco Systems, Inc.* ................... 375,600 28,052,437
Digital Link Corporation* .............. 300,000 4,293,600
KEMET Corporation* ..................... 125,000 3,000,000
LSI Logic Corporation* ................. 290,000 9,497,500
Lam Research* .......................... 200,000 9,125,000
Silicon Valley Group, Inc.* ............ 200,000 5,062,400
Summa Four, Inc.* ...................... 250,000 3,375,000
3Com Corporation* ...................... 290,000 13,539,230
VLSI Technology, Inc.* ................. 70,000 1,264,340
Xilinx, Inc.* .......................... 500,000 15,187,500
Total ................................. 141,617,622
Hospital Management - 2.12%
PhyCor, Inc.* .......................... 150,000 7,593,750
United HealthCare Corporation .......... 150,000 9,825,000
Total ................................. 17,418,750
Machinery - 3.76%
Cognex Corporation* .................... 320,000 11,200,000
Deere & Company ........................ 390,000 13,747,500
Parker Hannifin Corporation ............ 172,050 5,892,712
Total ................................. 30,840,212
Services, Consumer and Business - 4.27%
Alternative Resources Corporation* ..... 350,000 10,500,000
Block (H & R), Inc. .................... 100,000 4,050,000
CUC International Inc.* ................ 600,000 20,475,000
Total ................................. 35,025,000
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1995
Shares Value
COMMON STOCKS (Continued)
Telecommunications - 15.16%
Ascend Communications, Inc.* ........... 850,000 $ 69,008,950
DSC Communications Corporation* ........ 200,000 7,400,000
MFS Communications Company, Inc.* ...... 280,000 14,980,000
Motorola, Inc. ......................... 180,000 10,260,000
Nokia Corporation, Series A, ADS ....... 300,000 11,662,500
Tellabs* ............................... 300,000 11,137,500
Total ................................. 124,448,950
Textiles and Apparel - 0.94%
Department 56, Inc.* ................... 200,000 7,675,000
TOTAL COMMON STOCKS - 93.20% $764,970,829
(Cost: $346,811,367)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Banks and Savings and Loans - 0.75%
U.S. Bancorp,
Master Note ........................... $ 180 180,000
Wachovia Corporation,
5.77%, 1-16-96 ........................ 5,995 5,980,587
Total ................................. 6,160,587
Financial - 2.46%
Bell Atlantic Financial Services Inc.,
5.76%, 1-9-96 ......................... 1,210 1,208,451
Kerr-McGee Credit Corp.,
5.7%, 2-6-96 .......................... 11,700 11,633,310
Transamerica Financial Group,
5.72%, 1-11-96 ........................ 7,350 7,338,322
Total ................................. 20,180,083
Food and Related - 1.65%
ConAgra, Inc.,
5.98%, 1-12-96 ........................ 11,725 11,703,576
General Mills, Inc.,
Master Note ........................... 232 232,000
Sara Lee Corporation,
Master Note ........................... 1,620 1,620,000
Total ................................. 13,555,576
See Notes to Schedules of Investments on page 39.
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1995
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Public Utilities - Electric - 1.78%
Pacificorp:
5.74%, 1-12-96 ........................ $ 6,200 $ 6,189,126
5.55%, 2-22-96 ........................ 2,750 2,727,954
Western Resources Inc.:
5.85%, 1-4-96 ......................... 3,655 3,653,218
5.99%, 1-19-96 ........................ 2,000 1,994,010
Total ................................. 14,564,308
Public Utilities - Gas - 0.20%
Questar Corporation,
6.0%, 1-8-96 .......................... 1,625 1,623,104
Tobacco - 0.90%
Philip Morris Companies Inc.,
5.6%, 1-19-96 ......................... 7,435 7,414,182
TOTAL SHORT-TERM SECURITIES - 7.74% $ 63,497,840
(Cost: $63,497,840)
TOTAL INVESTMENT SECURITIES - 100.94% $828,468,669
(Cost: $410,309,207)
CASH AND OTHER ASSETS, NET OF LIABILITIES - (0.94)% (7,686,086)
NET ASSETS - 100.00% $820,782,583
See Notes to Schedules of Investments on page 39.
<PAGE>
Notes to Schedules of Investments
*No income dividends were paid during the preceding 12 months.
(A) Coupon resets semiannually based on 14.13% - 1.5 x (5-year Deutschemark
swap rate). Coupon guaranteed at 3%.
(B) Principal amounts are denominated in the indicated foreign currency where
applicable ($A - Australian Dollar).
(C) Listed on an exchange outside the United States.
(D) Affiliate as defined by the Investment Company Act of 1940 by reason of
ownership by the Fund of 5% or more of its outstanding voting securities.
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>
UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
------------ -------------- -------------- ------------
<S> <C> <C> <C> <C>
Assets
Investment securities --
at value (Notes 1 and 3) ... $561,340,796 $4,084,015,451 $1,218,797,656 $828,468,669
Cash ......................... 4,052 81,632 948 4,705
Receivables:
Investment securities
sold ..................... --- 15,649,573 6,802,539 ---
Dividends and interest ..... 7,871,493 8,062,252 1,956,981 242,265
Fund shares sold ........... 597,187 5,233,842 446,658 3,391,027
Prepaid insurance
premium .................... 15,421 49,926 32,936 10,569
------------ -------------- -------------- ------------
Total assets ............. 569,828,949 4,113,092,676 1,228,037,718 832,117,235
------------ -------------- -------------- ------------
Liabilities
Payable for investment
securities purchased .... --- 10,597,000 11,085,975 ---
Payable for Fund
shares redeemed ......... 3,012,320 16,759,128 9,527,501 10,827,953
Accrued service fee ....... 194,310 1,402,549 403,896 286,518
Accrued transfer agency
and dividend disbursing . 73,440 441,466 98,435 109,191
Accrued accounting
services fee ............ 5,833 8,333 8,333 7,083
Other ..................... 66,001 463,733 130,814 103,907
------------ -------------- -------------- ------------
Total liabilities ....... 3,351,904 29,672,209 21,254,954 11,334,652
------------ -------------- -------------- ------------
Total net assets ...... $566,477,045 $4,083,420,467 $1,206,782,764 $820,782,583
============ ============== ============== ============
Net Assets
$1.00 par value capital stock
Capital stock ........... $ 89,314,140 $ 140,988,723 $ 155,158,736 $ 35,861,356
Additional paid-in
capital ............... 474,620,683 2,336,040,977 924,117,418 360,220,346
Accumulated undistributed
income (loss):
Accumulated undistributed net
investment income ..... 575,962 2,184,484 1,322,673 ---
Accumulated undistributed net
realized gain (loss) on
investment
transactions .......... (27,445,756) 26,267,003 25,308,421 6,541,328
Net unrealized appreciation
of investments
at end of period ...... 29,412,016 1,577,939,280 100,875,516 418,159,553
------------ -------------- -------------- ------------
Net assets applicable to
outstanding units
of capital .......... $566,477,045 $4,083,420,467 $1,206,782,764 $820,782,583
============ ============== ============== ============
Net asset value per share
(net assets divided by
shares outstanding)
Class A ................... $6.34 $28.96 $7.78 $22.89
Class Y ................... $6.34 $28.96 $7.78 $22.89
Capital shares outstanding
Class A ................... 88,836,167 137,269,909 155,074,578 35,861,356
Class Y ................... 477,973 3,718,814 84,158 ---
Capital shares authorized ... 400,000,000 600,000,000 600,000,000 200,000,000
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended DECEMBER 31, 1995
United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment Income (Loss)
Income:
Dividends ............... $ ---- $ 60,846,446 $ 16,326,285 $ 1,955,821
Interest ................ 39,676,688 18,236,047 7,850,613 3,711,014
----------- ------------ ------------ ------------
Total income .......... 39,676,688 79,082,493 24,176,898 5,666,835
----------- ------------ ------------ ------------
Expenses (Note 2):
Investment management fee 2,407,401 20,740,095 6,103,149 4,025,985
Transfer agency and
dividend disbursing
-- Class A ............ 746,244 4,104,581 979,985 931,218
Service fee -- Class A .. 668,365 4,616,319 1,268,218 865,511
Custodian fees .......... 27,105 344,514 57,333 38,584
Accounting services fee . 65,000 100,000 96,250 71,667
Audit fees .............. 17,184 96,327 30,010 16,945
Shareholder servicing
fee -- Class Y ........ 2,493 88,933 471 ---
Legal fees .............. 6,944 51,547 26,458 8,553
Other ................... 104,531 605,080 163,676 139,371
----------- ------------ ------------ ------------
Total expenses ........ 4,045,267 30,747,396 8,725,550 6,097,834
----------- ------------ ------------ ------------
Net investment
income (loss) ..... 35,631,421 48,335,097 15,451,348 (430,999)
----------- ------------ ------------ ------------
Realized and Unrealized
Gain (Loss) on
Investments
Realized net gain
on securities ........... 4,083,731 137,622,658 161,862,782 26,780,476
Realized net gain (loss) on
foreign currency transactions 27,596 (60,510) 1,331 474
----------- ------------ ------------ ------------
Realized net gain
on investments ........ 4,111,327 137,562,148 161,864,113 26,780,950
Unrealized appreciation
in value of
investments during
the period .............. 61,755,254 742,707,419 140,365,483 255,993,038
----------- ------------ ------------ ------------
Net gain on
investments ........... 65,866,581 880,269,567 302,229,596 282,773,988
----------- ------------ ------------ ------------
Net increase
in net assets
resulting
from operations ..... $101,498,002 $928,604,664 $317,680,944 $282,342,989
============ ============ ============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended December 31, 1995
United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
------------ -------------- -------------- ------------
<S> <C> <C> <C> <C>
Increase in Net Assets
Operations:
Net investment
income ................ $ 35,631,421 $ 48,335,097 $ 15,451,348 $ (430,999)
Realized net gain
on investments ........ 4,111,327 137,562,148 161,864,113 26,780,950
Unrealized
appreciation .......... 61,755,254 742,707,419 140,365,483 255,993,038
------------ -------------- -------------- ------------
Net increase
in net assets resulting
from operations ..... 101,498,002 928,604,664 317,680,944 282,342,989
------------ -------------- -------------- ------------
Dividends to shareholders
from:*
Net investment income
Class A ................. (35,740,983) (46,382,026) (14,998,659) ---
Class Y ................. (90,066) (676,269) (4,366) ---
Realized net gain on
investment transactions
Class A ................. --- (121,451,126) (127,689,006) (24,276,021)
Class Y ................. --- (3,204,607) (68,073) ---
------------ -------------- -------------- ------------
(35,831,049) (171,718,028) (142,760,104) (24,276,021)
------------ -------------- -------------- ------------
Capital share
transactions (Note 5) ..... (17,026,228) 181,629,624 64,841,625 66,213,033
------------ -------------- -------------- ------------
Total increase ............ 48,640,725 938,516,260 239,762,465 324,280,001
Net Assets
Beginning of period ....... 517,836,320 3,144,904,207 967,020,299 496,502,582
------------ -------------- -------------- ------------
End of period ............. $566,477,045 $4,083,420,467 $1,206,782,764 $820,782,583
============ ============== ============== ============
Undistributed net
investment income ..... $575,962 $2,184,484 $1,322,673 $---
======== ========== ========== ====
*See "Financial Highlights" on pages 44-50.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
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
------------ -------------- -------------- ------------
<S> <C> <C> <C> <C>
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 44-50.
**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>
FINANCIAL HIGHLIGHTS OF
UNITED BOND FUND
Class A Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the fiscal year ended December 31,
--------------------------------------
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
Net asset value,
beginning of period $5.62 $6.39 $6.31 $6.32 $5.80
----- ----- ----- ----- -----
Income from investment
operations:
Net investment income 0.40 0.39 0.41 0.45 0.47
Net realized and
unrealized gain
(loss) on
investments ..... 0.72 (0.75) 0.41 0.00 0.56
----- ----- ----- ----- -----
Total from investment
operations ....... 1.12 (0.36) 0.82 0.45 1.03
----- ----- ----- ----- -----
Less distributions:
Dividends from net
investment income (0.40) (0.39) (0.41) (0.46) (0.47)
Distribution from
capital gains .. (0.00) (0.02) (0.33) (0.00) (0.04)
----- ----- ----- ----- -----
Total distributions (0.40) (0.41) (0.74) (0.46) (0.51)
----- ----- ----- ----- -----
Net asset value,
end of period .... $6.34 $5.62 $6.39 $6.31 $6.32
===== ===== ===== ===== =====
Total return* ...... 20.50% -5.76% 13.19% 7.50% 18.78%
Net assets, end of
period (000
omitted) ......... $563,445$517,836$641,668$589,946$524,404
Ratio of expenses to
average net assets 0.74% 0.72% 0.65% 0.64% 0.65%
Ratio of net investment
income to average
net assets ....... 6.54% 6.60% 6.14% 7.29% 7.96%
Portfolio turnover
rate ............. 66.38% 127.11% 175.39% 115.17% 318.76%
*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 BOND FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout the Period:
For the
period from
June 19, 1995
to December 31, 1995
--------------------
Net asset value,
beginning of period $6.11
----
Income from investment
operations:
Net investment income 0.21
Net realized and
unrealized gain
on investments .. 0.22
----
Total from investment
operations ....... 0.43
----
Less distributions:
Dividends from net
investment income (0.20)
Distribution from
capital gains ... (0.00)
----
Total distributions (0.20)
----
Net asset value,
end of period .... $6.34
=====
Total return ....... 7.20%
Net assets, end of
period (000
omitted) ......... $3,032
Ratio of expenses to
average net assets 0.63%*
Ratio of net investment
income to average
net assets ....... 6.41%*
Portfolio turnover
rate ............. 66.38%
*Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED INCOME FUND
Class A Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the fiscal year ended December 31,
--------------------------------------
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
Net asset value,
beginning of period $23.34 $24.77 $22.05 $20.44 $16.46
------ ------ ------ ------ ------
Income from investment
operations:
Net investment income 0.36 .36 .40 .46 .51
Net realized and
unrealized gain
(loss) on
investments ..... 6.53 (0.80) 3.11 1.96 4.29
------ ------ ------ ------ ------
Total from investment
operations ....... 6.89 (0.44) 3.51 2.42 4.80
------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income (0.35) (0.36) (0.40) (0.46) (0.53)
Distribution from
capital gains ... (0.92) (0.63) (0.39) (0.35) (0.29)
------ ------ ------ ------ ------
Total distributions (1.27) (0.99) (0.79) (0.81) (0.82)
------ ------ ------ ------ ------
Net asset value,
end of period .... $28.96 $23.34 $24.77 $22.05 $20.44
====== ====== ====== ====== ======
Total return* ...... 29.60% -1.82% 16.05% 11.96% 29.64%
Net assets, end of
period (000
omitted) ......... $3,975,717$3,144,904$3,060,073$2,537,161 $2,150,986
Ratio of expenses to
average net assets 0.83% 0.74% 0.66% 0.65% 0.66%
Ratio of net investment
income to average
net assets ....... 1.31% 1.45% 1.70% 2.19% 2.71%
Portfolio turnover
rate ............. 17.59% 18.54% 21.70% 19.25% 24.68%
*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
Class Y Shares
For a Share of Capital Stock Outstanding Throughout the Period:
For the
period from
June 19, 1995
to December 31, 1995
--------------------
Net asset value,
beginning of period $27.73
-----
Income from investment
operations:
Net investment income 0.21
Net realized and
unrealized gain
on investments .. 2.14
-----
Total from investment
operations ....... 2.35
-----
Less distributions:
Dividends from net
investment income (0.20)
Distribution from
capital gains ... (0.92)
-----
Total distributions (1.12)
-----
Net asset value,
end of period .... $28.96
======
Total return ....... 8.45%
Net assets, end of
period (000
omitted) ......... $107,703
Ratio of expenses to
average net assets 0.74%*
Ratio of net investment
income to average
net assets ....... 1.36%*
Portfolio turnover
rate ............. 17.59%
*Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED ACCUMULATIVE FUND
Class A Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the fiscal year ended December 31,
--------------------------------------
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
Net asset value,
beginning of period $6.58 $7.19 $7.50 $7.15 $6.03
----- ----- ----- ----- -----
Income from investment
operations:
Net investment income .11 .13 .11 .16 .19
Net realized and
unrealized gain
(loss) on
investments ..... 2.12 (0.13) .55 .85 1.22
----- ----- ----- ----- -----
Total from investment
operations ........ 2.23 0.00 .66 1.01 1.41
----- ----- ----- ----- -----
Less distributions:
Dividends from net
investment income (0.11) (0.13) (0.11) (0.16) (0.20)
Distribution from
capital gains ... (0.92) (0.48) (0.84) (0.50) (0.09)
Distribution in
excess of capital
gains ........... (0.00) (0.00) (0.02) (0.00) (0.00)
----- ----- ----- ----- -----
Total distributions (1.03) (0.61) (0.97) (0.66) (0.29)
----- ----- ----- ----- -----
Net asset value,
end of period .... $7.78 $6.58 $7.19 $7.50 $7.15
===== ===== ===== ===== =====
Total return* ...... 34.21% 0.04% 9.06% 14.20% 23.68%
Net assets, end of
period (000
omitted) ......... $1,206,128$967,020$1,033,774$992,924$904,635
Ratio of expenses to
average net assets 0.80% 0.71% 0.65% 0.62% 0.63%
Ratio of net investment
income to average
net assets ....... 1.42% 1.76% 1.34% 2.13% 2.79%
Portfolio turnover
rate ............. 229.03% 205.40% 230.29% 194.41% 241.11%
*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
Class Y Shares
For a Share of Capital Stock Outstanding Throughout the Period:
For the
period from
July 11, 1995
to December 31, 1995
--------------------
Net asset value,
beginning of period $7.84
-----
Income from investment
operations:
Net investment income 0.05
Net realized and
unrealized gain
on investments .. 0.87
-----
Total from investment
operations ....... 0.92
-----
Less distributions:
Dividends from net
investment income (0.06)
Distribution from
capital gains ... (0.92)
-----
Total distributions (0.98)
-----
Net asset value,
end of period .... $7.78
=====
Total return ....... 11.92%
Net assets, end of
period (000
omitted) ......... $655
Ratio of expenses to
average net assets 0.76%*
Ratio of net investment
income to average
net assets ....... 1.24%*
Portfolio turnover
rate ............. 229.03%
*Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED SCIENCE AND TECHNOLOGY FUND
Class A Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the fiscal year ended December 31,
--------------------------------------
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
Net asset value,
beginning of period .. $15.21 $14.83 $14.64 $15.42 $10.27
------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income (loss) ... (0.01) .00 .01 .03 .10
Net realized and
unrealized gain
(loss) on
investments ..... 8.40 1.40 1.21 (0.66) 5.90
------ ------ ------ ------ ------
Total from investment
operations ....... 8.39 1.40 1.22 (0.63) 6.00
------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income (0.00) (0.00) (0.01) (0.03) (0.10)
Distribution from
capital gains ... (0.71) (1.02) (0.95) (0.12) (0.75)
Distribution in
excess of capital
gains ........... (0.00) (0.00) (0.07) (0.00) (0.00)
------ ------ ------ ------ ------
Total distributions (0.71) (1.02) (1.03) (0.15) (0.85)
------ ------ ------ ------ ------
Net asset value,
end of period .... $22.89 $15.21 $14.83 $14.64 $15.42
====== ====== ====== ====== ======
Total return* ...... 55.37% 9.78% 8.51% -4.03% 59.25%
Net assets, end of
period (000
omitted) ......... $820,783 $496,503 $446,611 $428,806 $405,380
Ratio of expenses to
average net assets 0.93% 0.96% 0.91% 0.87% 0.85%
Ratio of net investment
income to average
net assets ....... -0.07% 0.00% 0.06% 0.24% 0.75%
Portfolio turnover
rate ............. 32.89% 64.39% 68.38% 45.79% 59.24%
*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, 1995
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. At December 31, 1995, United Science and Technology Fund
reclassified $449,234 from accumulated undistributed net realized gain
(loss) on investment transactions; of this amount, $430,539 was
reclassified into undistributed net investment income and $18,695 was
reclassified into additional paid-in capital. In addition, for each of the
Funds, the following amounts were reclassified between accumulated
undistributed net investment income and accumulated undistributed net
realized gain on investment transactions:
Increase (Decrease) Increase (Decrease
Undistributed Undistributed
Net Investment Net Realized
Income Gain
----------------- ------------------
United Bond Fund $ 27,596 $(27,596)
United Income Fund (60,510) 60,510
United Accumulative Fund 1,331 (1,331)
United Science and
Technology Fund 474 (474)
Net investment income, net realized gains and net assets were not affected
by these changes.
F. The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
NOTE 2 -- Investment Management And Payments To Affiliated Persons
The Corporation 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 $13.6 billion of
combined net assets at December 31, 1995) at annual rates of .51% of the first
$750 million of combined net assets, .49% on that amount between $750 million
and $1.5 billion, .47% between $1.5 billion and $2.25 billion, .45% between
$2.25 billion and $3 billion, .43% between $3 billion and $3.75 billion, .40%
between $3.75 billion and $7.5 billion, .38% between $7.5 billion and $12
billion, and .36% of that amount over $12 billion. The Corporation 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
For Class A shares, 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. With respect to Class Y shares, the
Corporation pays WARSCO a monthly fee at an annual rate of .15% of the average
daily net assets of the class for the preceding month. The 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 for Class A shares (which are not an
expense of the Corporation) of $18,952,707, out of which W&R paid sales
commissions of $10,611,402 and all expenses in connection with the sale of the
Corporation's shares, except for registration fees and related expenses.
Under a Service Plan for Class A shares 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 $224,666.
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, 1995
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 $185,722,108$ 657,857,236$2,337,338,500$245,940,282
Purchases of U.S. Government
securities 161,542,010 37,872,969 --- ---
Purchases of short-term
securities 321,281,5181,796,909,5331,941,967,010 804,408,104
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 202,331,295 584,247,1652,179,813,636 196,749,559
Proceeds from maturities and
sales of U.S. Government
securities 158,670,827 37,857,813 --- ---
Proceeds from maturities and sales
of short-term securities 323,408,4231,819,691,5512,160,927,856 807,504,916
For Federal income tax purposes, cost of investments owned at December 31,
1995 and the related appreciation (depreciation) were as follows:
Aggregate
Cost AppreciationDepreciation Appreciation
-------------- --------------------------------------
United Bond Fund $ 531,928,173$ 30,530,707$ 1,118,084$ 29,412,623
United Income Fund 2,506,075,2491,624,793,741 46,853,539 1,577,940,202
United Accumulative
Fund 1,117,922,174 135,508,422 34,632,940 100,875,482
United Science and
Technology Fund 410,392,673 441,686,409 23,610,413 418,075,996
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, United Science and Technology
Fund and United Accumulative Fund realized capital gain net income of
$137,622,658, $23,260,417 and $152,961,921, respectively, during the year ended
December 31, 1995. A portion of the capital gain net income was paid to
shareholders during the year ended December 31, 1995. Remaining capital gain
net income will be distributed to the Fund's shareholders. For Federal income
tax purposes, United Bond Fund realized capital losses of $80,903 during the
year ended December 31, 1995. This amount is available to offset future
realized capital gain net income through December 31, 2003. Remaining prior
year capital loss carryforwards of United Bond Fund aggregated $27,347,477,
which are available to offset future capital gain net income through December
31, 2002.
NOTE 5 -- Commencement of Multiclass Operations
On June 17, 1995, each Fund within the Corporation was authorized to offer
investors a choice of two classes of shares, Class A and Class Y, each of which
has equal rights as to assets and voting privileges with respect to each Fund.
Class Y shares are not subject to a sales charge on purchases; they are not
subject to a Rule 12b-1 Service Plan and have a separate transfer agency and
dividend disbursement services fee structure. A comprehensive discussion of the
terms under which shares of either class are offered is contained in the
prospectus and the Statement of Additional Information for the Corporation.
United Income Fund and United Bond Fund commenced multiclass operations on June
19, 1995 and United Accumulative Fund commenced multiclass operations on July
11, 1995. United Science and Technology Fund had not commenced multiclass
operations as of December 31, 1995.
Income, non-class specific expenses and realized and unrealized gains and
losses are allocated daily to each class of shares based on the value of
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity.
Transactions in capital stock for the fiscal year ended December 31, 1995
are summarized below.
United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
----------- ------------ ------------------------
Shares issued from sale
of shares:
Class A ............ 7,903,177 13,156,068 3,690,645 15,272,219
Class Y ............ 494,273 3,737,901 76,842 ---
Shares issued from
reinvestment of
dividends and/or capital
gains distribution:
Class A ............ 4,996,291 5,453,592 17,417,933 1,060,921
Class Y ............ 14,634 133,843 9,457 ---
Shares redeemed:
Class A ............ (16,233,171) (16,103,667) (12,973,028)(13,108,833)
Class Y ............ (30,934) (152,930) (2,141) ---
----------- ----------- ---------- ----------
Increase (decrease) in
outstanding capital
shares:
Class A ............ (3,333,703) 2,505,993 8,135,550 3,224,307
Class Y ............ 477,973 3,718,814 84,158 ---
----------- ----------- ---------- ----------
Total for Fund .... (2,855,730) 6,224,807 8,219,708 3,224,307
========= ========== ========= =========
Value issued from sale
of shares:
Class A ............ $47,524,601 $358,973,863 $28,187,349$315,997,134
Class Y ............ 3,026,041 104,695,114 600,969 ---
Value issued from
reinvestment of
dividends and/or capital
gains distribution:
Class A ............ 29,904,406 155,645,364 133,229,799 23,096,462
Class Y ............ 90,066 3,880,877 72,439 ---
Value redeemed:
Class A ............ (97,382,064) (437,078,074) (97,231,889)(272,880,563)
Class Y ............ (189,278) (4,487,520) (17,042) ---
----------- ------------ ----------- -----------
Increase (decrease) in
outstanding capital:
Class A ............ ($19,953,057) $ 77,541,153 $64,185,259 $66,213,033
Class Y ............ 2,926,829 104,088,471 656,366 ---
----------- ----------- ---------- ----------
Total for fund .. ($17,026,228) $181,629,624 $64,841,625 $66,213,033
=========== ============ =========== ===========
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, 1995, the results of its operations for
the year then ended and 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, 1995 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
Price Waterhouse LLP
Kansas City, Missouri
February 8, 1996
<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 1995 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
Class A
01-13-95 $0.033 $0.0330 $0.0000 $0.0000 $0.0330 $0.0000
02-10-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
03-17-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
04-13-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
05-12-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
06-16-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
07-16-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
08-11-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
09-15-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
10-13-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
11-17-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
12-15-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
------- ------- ------- ------- ------- -------
$0.396 $0.3960 $0.0000 $0.0000 $0.3960 $0.0000
======= ======= ======= ======= ======= =======
United Bond Fund
Class Y
07-16-95 $0.033 $0.0330 $0.0000 $0.0000 $0.0330 $0.0000
08-11-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
09-15-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
10-13-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
11-17-95 0.033 0.0330 0.0000 0.0000 0.0330 0.0000
12-15-95 0.036 0.0360 0.0000 0.0000 0.0360 0.0000
------- ------- ------- ------- ------- -------
$0.201 $0.2010 $0.0000 $0.0000 $0.2010 $0.0000
======= ======= ======= ======= ======= =======
United Income Fund
Class A
03-17-95 $0.080 $0.0800 $0.0000 $0.0800 $0.0000 $0.0000
06-16-95 0.080 0.0800 0.0000 0.0800 0.0000 0.0000
09-15-95 0.080 0.0800 0.0000 0.0800 0.0000 0.0000
12-15-95 1.023 0.1080 0.9150 0.1080 0.0000 0.9150
------- ------- ------- ------- ------- -------
$1.263 $0.3480 $0.9150 $0.3480 $0.0000 $0.9150
======= ======= ======= ======= ======= =======
United Income Fund
Class Y
09-15-95 $0.081 0.0810 0.0000 0.0810 0.0000 0.0000
12-15-95 1.031 0.1160 0.9150 0.1160 0.0000 0.9150
------- ------- ------- ------- ------- -------
$1.112 $0.1970 $0.9150 $0.1970 $0.0000 $0.9150
======= ======= ======= ======= ======= =======
PER-SHARE AMOUNTS REPORTABLE AS:
----------------------------------------------------
For Individuals For Corporations
------------------- ----------------------------------
Record Ordinary Long-Term Non- Long-Term
Date Total IncomeCapital GainQualifyingQualifyingCapital Gain
- ----------- ----- ---------------------------------------------------
United Accumulative Fund
Class A
06-16-95 $0.050 $0.0500 $0.0000 $0.0494 $0.0006 $0.0000
12-15-95 0.977 0.9770 0.0000 0.0570 0.9200 0.0000
------- ------- ------- ------- ------- -------
$1.027 $1.0270 $0.0000 $0.1064 $0.9206 $0.0000
======= ======= ======= ======= ======= =======
United Accumulative Fund
Class Y
12-15-95 $0.979 $0.9790 $0.0000 $0.0590 $0.9200 $0.0000
------- ------- ------- ------- ------- -------
$0.979 $0.9790 $0.0000 $0.0590 $0.9200 $0.0000
======= ======= ======= ======= ======= =======
United Science and Technology Fund
Class A
12-15-95 $0.705 $0.0886 $0.6164 $0.0000 $0.0886 $0.6164
======= ======= ======= ======= ======= =======
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>
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.
To all IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from an IRA unless you make a written election not to
have taxes withheld. The election may be made by submitting forms provided by
Waddell & Reed, Inc. which can be obtained from your Waddell & Reed
representative or by submitting Internal Revenue Service form W-4P. Once made,
an election can be revoked by providing written notice to Waddell & Reed, Inc.
If you elect not to have tax withheld you may be required to make payments of
estimated tax. Penalties may be imposed by the IRS if withholding and estimated
tax payments are not adequate.
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
Jay B. Dillingham, Kansas City, Missouri
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
James B. Judd, Kansas City, Missouri
William T. Morgan, Los Angeles, California
Doyle Patterson, Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
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 Municipal High Income Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Continental Income Fund, Inc.
United Retirement Shares, Inc.
United Asset Strategy Fund, Inc.
United Income Fund
United Accumulative Fund
United Vanguard Fund, Inc.
United New Concepts Fund, Inc.
United Science and Technology Fund
United International Growth Fund, Inc.
United Gold & Government Fund, Inc.
- ------------------------------------
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
(913) 236-1303
Our INTERNET address is:
http://www.waddell.com
NUR1000A(12-95)
printed on recycled paper
