UNITED
FUNDS, INC.
United Bond Fund
United Income Fund
United Accumulative Fund
United Science and Technology Fund
SEMIANNUAL
REPORT
--------------------------------------
For the six months ended June 30, 1998
<PAGE>
This report is submitted for the general information of the shareholders of
United Funds, Inc. It is not authorized for distribution to prospective
investors unless accompanied with or preceded by the United Funds, Inc. current
prospectus.
<PAGE>
PRESIDENT'S LETTER
JUNE 30, 1998
Dear Shareholder:
As president of your Fund, I would like to thank you for your continued
confidence as an investor. From every area of Waddell & Reed, including your
personal financial advisor, our goal has been to provide the best service
possible to our shareholders.
While it is impossible to predict the future direction of the markets, there are
some basic principles that we stand by that can help investors achieve their
objectives:
. Develop a financial plan that helps you pinpoint your financial objectives,
and identify specific strategies for turning your dreams into reality. There
is no better way to plan for your future.
. Invest on a regular basis. It can be one of the best ways to invest long
term and provide a hedge against market volatility.
. Adopt a long-term view to take advantage of compounding. The key to
successful investing is time, not timing. The power of compounding is
awesome and, on a long-term basis, can overwhelm any nuances of timing.
. Review your financial plan regularly. Financial planning is an ongoing
process that requires periodic review.
Waddell & Reed is positioned to assist you as you work toward your financial
goals. We will continue to offer quality investment products and personal
service to make the financial planning and investment process convenient and
accessible to you. Our locally based financial advisors are ready to assist you
with your total financial plan to help you plan for your retirement, to help you
meet your education funding goals or to achieve other financial objectives.
We look forward to assisting you in the future. If you have any questions about
your account, wish to review your financial plan or have other financial issues
that are important to you, contact your financial advisor or your local Waddell
& Reed office.
Respectfully,
Robert L. Hechler
President
<PAGE>
SHAREHOLDER SUMMARY
- ----------------------------------------------------------------------
UNITED BOND FUND
PORTFOLIO STRATEGY:
Corporate and government OBJECTIVE: Reasonable return with emphasis on
bonds the preservation of principal.
Maximum 10% Non-Debt
Securities STRATEGY: Invests in bonds issued by companies in
a variety of industries and in
government securities.
FOUNDED: 1964
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
<PAGE>
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Six Months Ended June 30, 1998
- --------------------------------------
DIVIDENDS PAID $0.19
=====
NET ASSET VALUE ON
06/31/98 $6.36
12/31/97 6.32
-----
CHANGE PER SHARE $0.04
=====
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 6-30-98 4.15% 10.50%
5-year period ended 6-30-98 5.41% 6.66%
10-year period ended 6-30-98 8.10% 8.74%
*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 June 30, 1998, United Bond Fund had net assets totaling $535,430,375 invested
in a diversified portfolio of:
97.10% Bonds
2.90% Cash and Cash Equivalents
As a shareholder of United Bond Fund, for every $100 you had invested on June
30, 1998, your Fund owned:
Bonds:
Corporate $63.85
U.S. Government 25.64
Other Government 7.61
Cash and Cash Equivalents 2.90
Not all holdings will be represented in the portfolio at all times.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Chemicals and Allied Products - 4.50%
Dow Capital B.V.,
9.0%, 5-15-2010 ....................... $ 5,000 $ 6,001,250
Dow Chemical Company (The),
8.55%, 10-15-2009 ..................... 5,000 5,855,850
Procter & Gamble Company (The),
8.0%, 9-1-2024 ........................ 10,000 12,225,300
Total ................................. 24,082,400
Communication - 6.08%
Bell Telephone Company of Pennsylvania (The),
8.35%, 12-15-2030 ..................... 5,000 6,304,450
BellSouth Telecommunications, Inc.,
5.85%, 11-15-2045 ..................... 3,000 2,996,580
Jones Intercable, Inc.,
9.625%, 3-15-2002 ..................... 2,500 2,700,000
Tele-Communications, Inc.,
6.58%, 2-15-2005 ...................... 7,500 8,226,075
Teleport Communications Group Inc.,
0.0%, 7-1-2007 (A) .................... 3,500 3,010,000
Turner Broadcasting System, Inc.,
8.375%, 7-1-2013 ...................... 4,000 4,584,720
Viacom International Inc.,
10.25%, 9-15-2001 ..................... 2,500 2,772,900
Videotron Holdings Plc,
0.0%, 7-1-2004 (A) .................... 2,000 1,965,040
Total ................................. 32,559,765
Depository Institutions - 12.50%
AmSouth Bancorporation,
6.75%, 11-1-2025 ...................... 6,000 6,161,220
Chevy Chase Savings Bank, F.S.B.,
9.25%, 12-1-2005 ...................... 1,500 1,522,500
Citicorp,
9.5%, 2-1-2002 ........................ 4,500 4,967,820
First Union Corporation:
6.824%, 8-1-2026 ...................... 7,500 8,428,575
6.55%, 10-15-2035 ..................... 4,500 4,578,930
Kansallis-Osake-Pankki,
10.0%, 5-1-2002 ....................... 6,000 6,764,940
NBD Bank, National Association,
8.25%, 11-1-2024 ...................... 6,000 7,206,180
NationsBank Corporation,
8.57%, 11-15-2024 ..................... 5,000 6,297,400
Riggs National Corporation,
8.5%, 2-1-2006 ........................ 6,000 6,283,260
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Depository Institutions (Continued)
SouthTrust Bank of Alabama, National Association:
5.58%, 2-6-2006 ....................... $ 5,500 $ 5,447,475
7.69%, 5-15-2025 ...................... 5,000 5,927,250
Sovereign Bancorp, Inc.,
8.0%, 3-15-2003 ....................... 2,000 2,084,960
Sumitomo Bank, Limited (The),
9.4%, 12-29-2049 (B) .................. 1,250 1,242,300
Total ................................. 66,912,810
Electric, Gas and Sanitary Services - 8.71%
Cajun Electric Power Cooperative, Inc.,
8.92%, 3-15-2019 ...................... 6,500 6,817,330
California Infrastructure and Economic Development
Bank, Special Purpose Trust:
PG&E-1,
6.42%, 9-25-2008 ...................... 5,000 5,107,050
SCE-1,
6.38%, 9-25-2008 ...................... 5,000 5,059,500
Cleveland Electric Illuminating Co. (The),
9.5%, 5-15-2005 ....................... 4,000 4,418,200
El Paso Electric Company,
7.25%, 2-1-99 ......................... 2,250 2,257,853
Entergy Arkansas, Inc.,
7.5%, 8-1-2007 ........................ 3,750 3,907,762
Niagara Mohawk Power Corporation:
9.5%, 6-1-2000 ........................ 1,500 1,574,880
Series E,
7.375%, 7-1-2003 ...................... 3,000 3,018,750
Pacific Gas & Electric Co.,
6.875%, 12-1-99........................ 4,750 4,763,537
Pennsylvania Power & Light Co.,
9.25%, 10-1-2019 ...................... 4,000 4,289,760
Southern Company Capital Trust I,
8.19%, 2-1-2037........................ 5,000 5,408,300
Total ................................. 46,622,922
Fabricated Metal Products - 0.56%
Mark IV Industries, Inc.,
7.5%, 9-1-2007 ........................ 3,000 2,977,500
Food and Kindred Products - 3.72%
Anheuser-Busch,
7.0%, 9-1-2005 ........................ 3,000 3,111,390
Coca-Cola Enterprises Inc.:
0.0%, 6-20-2020 ....................... 45,000 11,095,200
6.7%, 10-15-2036 ...................... 5,500 5,733,200
Total ................................. 19,939,790
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Food Stores - 0.40%
Kroger Co. (The),
7.65%, 4-15-2007 ...................... $ 2,000 $ 2,152,480
General Merchandise Stores - 0.70%
Fred Meyer, Inc.,
7.15%, 3-1-2003 ....................... 3,750 3,768,488
Health Services - 1.65%
Tenet Healthcare Corporation:
7.875%, 1-15-2003 ..................... 3,500 3,561,250
8.625%, 12-1-2003 ..................... 5,000 5,250,000
Total ................................. 8,811,250
Holding and Other Investment Offices - 0.56%
Bay Apartment Communities, Inc.,
6.5%, 1-15-2005 ....................... 3,000 2,977,110
Instruments and Related Products - 0.71%
Raytheon Co.,
6.45%, 8-15-2002 ...................... 3,750 3,787,200
Insurance Carriers - 0.58%
Reliance Group Holdings, Inc.,
9.0%, 11-15-2000 ...................... 3,000 3,132,750
Lumber and Wood Products - 0.41%
Doman Industries Limited,
8.75%, 3-15-2004 ...................... 2,250 2,199,375
Nondepository Institutions - 9.88%
CHYPS CBO 1997-1 Ltd.,
0.0%, 1-15-2010 (A)(B)................. 8,500 8,553,125
Chrysler Financial Corporation,
12.75%, 11-1-99 ....................... 9,000 9,761,040
Equicon Loan Trust,
7.3%, 2-18-2013 ....................... 4,571 4,690,928
General Motors Acceptance Corporation,
8.875%, 6-1-2010 ...................... 10,000 12,014,600
IMC Home Equity Loan Trust,
6.9%, 1-20-2022 ....................... 4,500 4,567,500
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Nondepository Institutions (Continued)
National Rural Utilities Cooperative Finance Corp.,
6.1%, 12-22-2000 ...................... $ 4,000 $ 4,019,800
Residential Asset Securities Corporation,
Mortgage Pass-Through Certificates,
8.0%, 10-25-2024 ...................... 4,000 4,149,080
Westinghouse Electric Corporation,
8.875%, 6-14-2014 ..................... 4,500 5,132,925
Total ................................. 52,888,998
Oil and Gas Extraction - 3.46%
Anadarko Petroleum Corporation,
7.25%, 3-15-2025 ...................... 5,000 5,591,950
Louis Dreyfus Natural Gas Corp.,
9.25%, 6-15-2004 ...................... 4,500 4,927,500
Mitchell Energy & Development Corp.,
9.25%, 1-15-2002 ...................... 165 178,754
Oryx Energy Company,
10.0%, 4-1-2001 ....................... 3,500 3,806,775
YPF Sociedad Anoima,
8.0%, 2-15-2004 ....................... 4,000 4,029,200
Total ................................. 18,534,179
Paper and Allied Products - 1.29%
Boise Cascade Office Products Corporation,
9.875%, 2-15-2001 ..................... 2,500 2,555,175
Canadian Pacific Forest Products Ltd.,
9.25%, 6-15-2002 ...................... 4,000 4,363,040
Total ................................. 6,918,215
Printing and Publishing - 1.46%
News America Holdings Incorporated,
7.45%, 6-1-2000 ....................... 2,500 2,561,700
Quebecor Printing Capital Corporation,
6.5%, 8-1-2027 ........................ 5,000 5,253,700
Total ................................. 7,815,400
Security and Commodity Brokers - 1.31%
Lehman Brothers Holdings Inc.,
6.05%, 4-28-2000 ...................... 2,000 2,001,380
Salomon Inc.,
3.65%, 2-14-2002 ...................... 5,000 4,996,650
Total ................................. 6,998,030
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Stone, Clay and Glass Products - 2.01%
Owens-Corning Fiberglas Corporation,
8.875%, 6-1-2002 ...................... $ 5,000 $ 5,333,150
Owens-Illinois, Inc.,
7.15%, 5-15-2005....................... 3,250 3,281,525
USG Corporation,
9.25%, 9-15-2001 ...................... 2,000 2,156,660
Total ................................. 10,771,335
Transportation Equipment - 0.47%
Coltec Industries Inc.,
7.5%, 4-15-2008 (B) ................... 2,500 2,531,250
United States Postal Service - 0.33%
Postal Square Limited Partnership,
6.5%, 6-15-2022 ....................... 1,732 1,773,611
Wholesale Trade -- Durable Goods - 2.56%
Fisher Scientific International Inc.,
7.125%, 12-15-2005 .................... 3,500 3,281,355
Motorola, Inc.,
8.4%, 8-15-2031 ....................... 8,500 10,417,855
Total ................................. 13,699,210
TOTAL CORPORATE DEBT SECURITIES - 63.85% $341,854,068
(Cost: $327,266,277)
OTHER GOVERNMENT SECURITIES
Canada - 6.19%
Hydro Quebec:
8.05%, 7-7-2024 ....................... 10,000 11,897,200
7.4%, 3-28-2025 ....................... 5,000 6,035,500
Province de Quebec:
5.67%, 2-27-2026 ...................... 9,200 9,779,232
6.29%, 3-6-2026 ....................... 5,000 5,422,250
Total ................................. 33,134,182
Korea - 0.30%
Korea Development Bank (The),
6.25%, 5-1-2000 ....................... 1,750 1,604,837
Supranational - 1.12%
Inter-American Development Bank,
8.4%, 9-1-2009 ........................ 5,000 5,989,250
TOTAL OTHER GOVERNMENT SECURITIES - 7.61% $ 40,728,269
(Cost: $36,441,784)
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
JUNE 30, 1998
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
7.5%, 2-15-2007 ....................... $10,000 $ 10,221,800
7.5%, 11-15-2017 ...................... 5,568 5,595,478
6.5%, 9-25-2018 ....................... 2,000 2,018,320
7.0%, 1-15-2019 ....................... 2,000 2,016,860
7.5%, 4-15-2019 ....................... 14,253 14,595,980
7.95%, 12-15-2020 ..................... 8,628 8,738,045
6.25%, 1-15-2021 ...................... 12,000 12,003,720
Federal National Mortgage Association:
5.98%, 6-18-2003 ...................... 1,500 1,500,240
7.0%, 7-25-2006 ....................... 10,000 10,181,200
0.0%, 10-9-2019 ....................... 10,000 2,876,600
7.0%, 9-25-2020 ....................... 2,000 2,048,740
7.0%, 8-25-2021 ....................... 10,000 10,165,600
6.5%, 7-25-2028 ....................... 2,500 2,503,600
Government National Mortgage Association:
7.5%, 7-15-2023 ....................... 4,812 4,951,849
7.5%, 12-15-2023 ...................... 4,487 4,617,458
8.0%, 9-15-2025 ....................... 7,180 7,505,241
7.0%, 7-20-2027 ....................... 345 349,357
7.0%, 9-20-2027 ....................... 5,449 5,519,104
7.75%, 10-15-2031 ..................... 1,981 2,061,283
Tennessee Valley Authority,
5.88%, 4-1-2036 ....................... 3,750 3,898,763
United States Department of Veterans Affairs,
Guaranteed Remic Pass-Through Certificates,
Vendee Mortgage Trust:
1998-1 Class 2-B,
7.0%, 5-15-2005 ....................... 750 774,375
1997-2 Class C,
7.5%, 8-15-2017 ....................... 4,000 4,102,480
United States Treasury:
6.75%, 5-31-99 ........................ 5,000 5,053,900
5.75%, 10-31-2000 ..................... 9,000 9,042,210
5.25%, 1-31-2001 ...................... 5,000 4,968,750
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 25.64% $137,310,953
(Cost: $134,724,783)
TOTAL SHORT-TERM SECURITIES - 0.82% $ 4,380,249
(Cost: $4,380,249)
TOTAL INVESTMENT SECURITIES - 97.92% $524,273,539
(Cost: $502,813,093)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 2.08% 11,156,836
NET ASSETS - 100.00% $535,430,375
See Notes to Schedules of Investments on page 37.
<PAGE>
SHAREHOLDER SUMMARY
- -----------------------------------------------------------------
UNITED INCOME FUND
PORTFOLIO STRATEGY:
Investment quality OBJECTIVE: Maintenance of current income,
dividend-paying subject to market conditions,
common stocks with a secondary objective of
capital growth.
Cash Reserves STRATEGY: Invests principally in common stocks of
companies which have a record of paying
regular dividends or have the potential
for capital growth or which may be
expected to resist market decline.
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. For more information
about the Fund's cash reserves
flexibility, please consult the
Prospectus.
FOUNDED: 1940
SCHEDULED DIVIDEND FREQUENCY: QUARTERLY
(MARCH, JUNE, SEPTEMBER, DECEMBER)
<PAGE>
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Six Months Ended June 30, 1998
(Restated to reflect the 400% stock
dividend effected June 26, 1998.)
- --------------------------------------
DIVIDENDS PAID $0.13
=====
NET ASSET VALUE ON
6/30/98 $8.93
12/31/97 7.59
-----
CHANGE PER SHARE $1.34
=====
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 6-30-98 17.93% 25.12%
5-year period ended 6-30-98 18.64% 20.05%
10-year period ended 6-30-98 16.52% 17.21%
*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 June 30, 1998, United Income Fund had net assets totaling $7,681,043,640
invested in a diversified portfolio of:
71.85% Common Stocks
23.61% Cash and Cash Equivalents
4.25% U.S. Government Securities
0.29% Corporate Debt Securities
As a shareholder of United Income Fund, for every $100 you had invested on June
30, 1998, your Fund owned:
$43.34 Manufacturing Stocks
23.61 Cash and Cash Equivalents
10.53 Finance, Insurance and Real Estate Stocks
7.58 Wholesale and Retail Trade Stocks
6.28 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
4.25 United States Government Securities
3.63 Services Stocks
0.49 Mining Stocks
0.29 Corporate Debt Securities
Not all holdings will be represented in the portfolio at all times.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1998
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 1.12%
Gap, Inc. (The) ........................ 1,400,000 $ 86,275,000
Building Materials and Garden Supplies - 0.76%
Home Depot, Inc. (The) ................. 697,100 57,902,520
Business Services - 1.97%
BMC Software, Inc.* .................... 1,061,100 55,143,245
Microsoft Corporation* ................. 886,400 96,091,078
Total ................................. 151,234,323
Chemicals and Allied Products - 14.93%
Air Products and Chemicals, Inc. ....... 1,429,200 57,168,000
Astra AB, Class A (C) .................. 1,600,000 32,706,295
Colgate-Palmolive Company .............. 787,800 69,375,244
Dow Chemical Company (The) ............. 185,400 17,925,770
du Pont (E.I.) de Nemours and Company .. 1,503,700 112,213,613
Gillette Company (The) ................. 3,139,700 177,980,174
Lilly (Eli) and Company ................ 1,250,000 82,656,250
Monsanto Company ....................... 1,625,200 90,808,050
Novartis, AG (C) ........................ 37,500 62,504,127
PPG Industries, Inc. ................... 1,161,400 80,789,307
Pfizer Inc. ............................ 925,000 100,535,475
Procter & Gamble Company (The) ......... 780,300 71,055,679
Solutia Inc. ........................... 136,000 3,901,432
Warner-Lambert Company ................. 2,700,000 187,312,500
Total ................................. 1,146,931,916
Communication - 3.42%
AirTouch Communications* ............... 900,000 52,312,500
Clear Channel Communications, Inc.* .... 400,100 43,660,913
Cox Communications, Inc., Class A* ..... 1,641,600 79,514,179
SBC Communications Inc. ................ 920,000 36,800,000
WorldCom, Inc.* ........................ 1,037,000 50,131,691
Total ................................. 262,419,283
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Depository Institutions - 4.07%
BankAmerica Corporation ................ 508,500 $ 43,953,215
Chase Manhattan Corporation (The) ...... 1,050,000 79,275,000
Citicorp ............................... 249,800 37,282,650
Credit Suisse Group, Registered
Shares (C) ............................ 200,400 44,664,201
Norwest Corporation .................... 1,139,400 42,585,075
U. S. Bancorp. ......................... 1,500,000 64,500,000
Total ................................. 312,260,141
Electric, Gas and Sanitary Services - 0.98%
Duke Energy Corp. ...................... 1,275,000 75,543,750
Electronic and Other Electric Equipment - 8.12%
Emerson Electric Co. ................... 800,000 48,300,000
General Electric Company ............... 1,970,200 179,288,200
General Instrument Corporation* ........ 2,210,000 59,946,250
Intel Corporation ...................... 1,758,800 130,314,768
Lucent Technologies Inc. ............... 333,300 27,726,227
Maytag Corporation ..................... 1,000,300 49,389,813
Nokia Corporation, Series A (C) ........ 760,000 55,959,854
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 2,542,300 72,930,960
Total ................................. 623,856,072
Food and Kindred Products - 2.35%
Bestfoods .............................. 1,400,000 81,286,800
Coca-Cola Company (The) ................ 536,500 45,870,750
Panamerican Beverages Inc., Class A .... 265,100 8,367,086
PepsiCo, Inc. .......................... 1,099,300 45,276,869
Total ................................. 180,801,505
Food Stores - 2.02%
Kroger Co. (The)* ...................... 1,725,000 73,959,375
Safeway Inc.* .......................... 2,000,000 81,374,000
Total ................................. 155,333,375
Furniture and Fixtures - 0.44%
Lear Corporation* ...................... 653,000 33,506,736
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
General Merchandise Stores - 3.05%
Cifra, S.A. de C.V., Series C (C) ...... 8,000,000 $ 11,115,564
Cifra, S.A. de C.V., Series V (C) ...... 931,604 1,389,835
Dayton Hudson Corporation .............. 1,131,800 54,892,300
Federated Department Stores, Inc.* ...... 760,000 40,897,120
Wal-Mart Stores, Inc. .................. 2,074,700 126,038,025
Total ................................. 234,332,844
Health Services - 0.61%
Tenet Healthcare Corporation* .......... 1,500,000 46,875,000
Industrial Machinery and Equipment - 4.72%
Baker Hughes Incorporated .............. 1,500,000 51,843,000
Case Corporation ....................... 1,214,600 58,604,450
Caterpillar Inc. ....................... 707,100 37,387,913
Cisco Systems, Inc.* ................... 667,800 61,499,705
Deere & Company ........................ 1,299,700 68,721,637
International Business Machines
Corporation ........................... 600,000 68,887,200
Parker Hannifin Corporation ............ 403,900 15,398,688
Total ................................. 362,342,593
Instruments and Related Products - 4.13%
General Motors Corporation, Class H .... 674,700 31,795,238
Guidant Corporation .................... 1,200,000 85,574,400
Medtronic, Inc. ........................ 972,000 61,965,000
Raytheon Company, Class A* ............. 454,381 26,183,705
Xerox Corporation ...................... 1,100,900 111,878,962
Total ................................. 317,397,305
Insurance Carriers - 2.07%
American International Group, Inc. .... 611,300 89,249,800
MGIC Investment Corporation ............ 1,225,000 69,900,950
Total ................................. 159,150,750
Miscellaneous Manufacturing Industries - 0.40%
Tyco International Ltd. ................ 491,500 30,964,500
Miscellaneous Retail - 0.63%
Costco Companies, Inc.* ................ 765,000 48,242,430
Motion Pictures - 1.05%
Time Warner Incorporated ............... 500,000 42,718,500
Walt Disney Company (The) .............. 363,200 38,158,518
Total ................................. 80,877,018
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Nondepository Institutions - 4.39%
Associates First Capital Corporation,
Class A ............................... 762,085 $ 58,585,284
Fannie Mae ............................. 1,805,800 109,702,350
Freddie Mac ............................ 2,800,000 131,773,600
Household International, Inc. .......... 750,000 37,406,250
Total ................................. 337,467,484
Oil and Gas Extraction - 0.49%
Schlumberger Limited ................... 550,000 37,571,600
Paper and Allied Products - 1.02%
Champion International Corporation ..... 500,000 24,593,500
International Paper Company ............ 600,000 25,800,000
Willamette Industries, Inc. ............ 860,000 27,520,000
Total ................................. 77,913,500
Petroleum and Coal Products - 3.04%
British Petroleum Company p.l.c (The), ADR 381,300 33,649,725
Chevron Corporation .................... 450,000 37,377,900
Exxon Corporation ...................... 500,000 35,656,000
Mobil Corporation ...................... 800,000 61,300,000
Royal Dutch Petroleum Company .......... 1,200,000 65,774,400
Total ................................. 233,758,025
Primary Metal Industries - 0.56%
Aluminum Company of America ............ 650,000 42,859,050
Railroad Transportation - 0.42%
Burlington Northern Santa Fe Corporation 325,000 31,951,400
Rubber and Miscellaneous Plastics Products - 0.35%
Goodyear Tire & Rubber Company (The) ... 414,100 26,683,362
Transportation By Air - 1.46%
AMR Corporation* ....................... 800,000 66,600,000
Delta Air Lines, Inc. .................. 350,000 45,237,500
Total ................................. 111,837,500
Transportation Equipment - 3.28%
AlliedSignal Inc. ...................... 813,800 36,112,375
Chrysler Corporation ................... 1,145,000 64,549,375
Dana Corporation ....................... 760,000 40,660,000
Ford Motor Company ..................... 1,000,000 59,000,000
General Motors Corporation ............. 775,000 51,779,300
Total ................................. 252,101,050
TOTAL COMMON STOCKS - 71.85% $5,518,390,032
(Cost: $2,769,882,830)
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Depository Institutions - 0.14%
Morgan Guaranty Trust Company of New York,
7.375%, 2-1-2002 ...................... $10,250 $ 10,694,440
Nondepository Institutions - 0.15%
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... 10,000 11,795,800
TOTAL CORPORATE DEBT SECURITIES - 0.29% $ 22,490,240
(Cost: $20,001,089)
UNITED STATES GOVERNMENT SECURITIES
United States Treasury:
6.75%, 4-30-2000 ...................... 37,000 37,780,330
5.75%, 8-15-2003 ...................... 50,000 50,531,000
10.375%, 11-15-2012 ................... 8,500 11,382,010
7.5%, 11-15-2016 ...................... 80,000 96,037,600
9.0%, 11-15-2018 ...................... 20,000 27,796,800
8.75%, 8-15-2020 ...................... 75,000 103,148,250
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 4.25% $ 326,675,990
(Cost: $312,484,844)
SHORT-TERM SECURITIES
Certificates of Deposit - 0.19%
Bank of America NT & SA,
5.55%, 7-13-98 ........................ 15,000 14,998,841
Commercial Paper
Auto Repair, Services and Parking - 0.65%
Hertz Corp.,
5.58%, 7-10-98 ........................ 50,000 49,930,250
Chemicals and Allied Products - 3.88%
Abbott Laboratories:
5.51%, 7-23-98 ........................ 27,000 26,909,085
5.53%, 7-27-98 ........................ 50,000 49,800,306
du Pont (E.I.) de Nemours and Company:
5.54%, 7-14-98 ........................ 25,000 24,949,986
5.54%, 7-28-98 ........................ 94,000 93,609,430
5.51%, 8-3-98 ......................... 6,200 6,168,685
Monsanto Company,
5.52%, 8-20-98 ........................ 15,000 14,885,000
Pfizer Inc.,
5.51%, 8-3-98 ......................... 31,628 31,468,252
Warner-Lambert Company,
5.7%, 7-2-98 .......................... 50,000 49,992,084
Total ................................. 297,782,828
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1998
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Communication - 0.45%
Bell Atlantic Financial Services, Inc.,
5.55%, 7-24-98 ........................ $35,000 $ 34,875,896
Depository Institutions - 2.28%
Canadian Imperial Holdings Inc.,
5.52%, 7-28-98 ........................ 50,000 49,793,000
Deutsche Bank Financial Inc.,
5.52%, 7-29-98 ........................ 20,000 19,914,133
National Australia Funding (DE) Inc.:
5.54%, 7-24-98 ........................ 25,000 24,911,514
5.54%, 7-27-98 ........................ 50,000 49,799,945
Toronto-Dominion Holdings USA, Inc.,
5.64%, 7-7-98 ......................... 30,550 30,521,283
Total ................................. 174,939,875
Electric, Gas and Sanitary Services - 1.72%
Allegheny Power System Inc.:
5.54%, 7-20-98 ........................ 12,000 11,964,913
5.53%, 9-22-98 ........................ 30,123 29,738,941
Carolina Power & Light Co.,
5.52%, 8-20-98 ........................ 30,000 29,770,000
Commonwealth Edison Co.,
5.75%, 7-24-98 ........................ 6,610 6,585,717
Detroit Edison Company (The),
5.7%, 7-20-98 ......................... 12,850 12,811,343
Georgia Power Co.,
5.7%, 7-6-98 .......................... 2,500 2,498,021
New York State Electric & Gas Corp.,
6.0%, 7-6-98 .......................... 13,600 13,588,667
PacifiCorp,
5.53%, 8-18-98 ........................ 20,000 19,852,533
Public Service Co. of Colorado,
5.66%, 7-10-98 ........................ 1,000 998,585
Public Service Electric & Gas Co.:
5.64%, 7-9-98 ......................... 2,475 2,471,898
5.77%, 7-21-98 ........................ 500 498,397
Western Resources, Inc.,
5.69%, 7-17-98 ........................ 1,180 1,177,016
Total ................................. 131,956,031
Electronic and Other Electric Equipment - 0.32%
General Electric Company,
5.51%, 7-30-98 ........................ 25,000 24,889,035
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1998
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES(Continued)
Commercial Paper (Continued)
Engineering and Management Services - 0.26%
Halliburton Co.,
5.62%, 8-7-98 ......................... $20,000 $ 19,884,478
Fabricated Metal Products - 0.14%
Danaher Corporation,
5.6602%, Master Note .................. 10,423 10,423,000
Food and Kindred Products - 1.52%
Coca-Cola Company (The),
5.49%, 8-5-98 ......................... 37,250 37,051,178
ConAgra, Inc.,
5.86%, 7-10-98 ........................ 5,000 4,992,675
General Mills, Inc.,
5.5152%, Master Note .................. 16,995 16,995,000
Heinz (H. J.) Company,
5.52%, 8-7-98 ......................... 22,500 22,372,350
Hercules Inc.,
5.8%, 7-13-98 ......................... 1,075 1,072,922
McCormick & Co. Inc.,
5.53%, 7-27-98 ........................ 20,000 19,920,122
Ralston Purina Company,
6.5%, 7-1-98 .......................... 14,000 14,000,000
Total ................................. 116,404,247
Food Stores - 0.51%
Albertson's Inc.:
5.56%, 7-16-98 ........................ 19,161 19,116,611
5.53%, 7-23-98 ........................ 20,000 19,932,411
Total ................................. 39,049,022
Furniture and Fixtures - 0.50%
Johnson Controls Inc.,
6.25%, 7-1-98 ......................... 38,180 38,180,000
General Merchandise Stores - 0.05%
Dillard Investment Co. Inc.,
6.3%, 7-2-98 .......................... 4,200 4,199,265
Industrial Machinery and Equipment - 0.49%
Deere & Company,
5.53, 7-31-98 ......................... 36,000 35,834,100
Ingersoll-Rand Company,
5.68%, 7-17-98 ........................ 2,000 1,994,951
Total ................................. 37,829,051
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1998
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES(Continued)
Commercial Paper (Continued)
Instruments and Related Products - 0.70%
Baxter International Inc.,
5.625%, 8-6-98 ........................ $25,000 $ 24,859,375
Honeywell Inc.,
6.1%, 7-1-98 .......................... 29,152 29,152,000
Total ................................. 54,011,375
Insurance Agents, Brokers and Service - 0.14%
Aon Corp.,
5.65%, 7-6-98 ......................... 10,570 10,561,706
Insurance Carriers - 1.87%
Prudential Funding Corp.,
5.58%, 7-9-98 ......................... 50,000 49,938,000
Transamerica Finance Corp.,
5.55%, 7-24-98 ........................ 20,000 19,929,083
USAA Capital Corp.:
5.54%, 7-21-98 ........................ 14,000 13,956,911
5.53%, 8-3-98 ......................... 35,000 34,822,579
5.53%, 8-18-98 ........................ 25,000 24,815,667
Total ................................. 143,462,240
Miscellaneous Retail - 0.38%
Toys "R" Us Inc.:
5.53%, 7-14-98 ........................ 12,200 12,175,637
5.54%, 7-30-98 ........................ 16,919 16,843,494
Total ................................. 29,019,131
Nondepository Institutions - 3.27%
Associates Corporation of North America,
5.53%, 7-27-98 ........................ 20,000 19,920,123
Deere (John) Capital Corp.,
5.56%, 7-10-98 ........................ 38,915 38,860,908
General Electric Capital Corporation:
5.54%, 7-15-98 ........................ 20,300 20,256,265
5.55%, 7-17-98 ........................ 12,800 12,768,427
5.51%, 7-21-98 ........................ 25,000 24,923,472
General Motors Acceptance Corporation:
5.8%, 7-10-98 ......................... 2,700 2,696,085
5.58%, 7-13-98 ........................ 42,000 41,921,880
IBM Credit Corp.:
6.0%, 7-1-98 .......................... 8,890 8,890,000
5.58%, 7-8-98 ......................... 25,000 24,972,875
5.58%, 7-9-98 ......................... 25,000 24,969,000
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1998
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES(Continued)
Commercial Paper (Continued)
Nondepository Institutions (Continued)
Island Finance Puerto Rico Inc.,
5.56%, 8-17-98 ........................ $24,800 $ 24,619,980
Penney (J.C.) Funding Corp.,
5.64%, 7-15-98 ........................ 6,770 6,755,151
Total ................................. 251,554,166
Oil and Gas Extraction - 0.39%
Atlantic Richfield Company:
5.53%, 8-3-98 ......................... 10,000 9,949,308
5.53%, 8-4-98 ......................... 20,000 19,895,545
Total ................................. 29,844,853
Personal Services - 0.35%
Block Financial Corp.,
5.55%, 8-21-98 ........................ 27,000 26,787,713
Petroleum and Coal Products - 0.19%
Union Oil Co. of California,
6.2%, 7-6-98 .......................... 15,000 14,987,083
Primary Metal Industries - 0.38%
Aluminum Company of America,
5.53%, 7-28-98 ........................ 29,700 29,576,820
Printing and Publishing - 1.41%
American Greetings Corp.:
5.6%, 7-2-98 .......................... 16,000 15,997,511
5.55%, 7-8-98 ......................... 20,000 19,978,417
Gannett Co., Inc.,
5.52%, 7-10-98 ........................ 30,779 30,736,525
Times Mirror Co.:
5.55%, 7-23-98 ........................ 12,500 12,457,604
5.55%, 7-29-98 ........................ 29,000 28,874,817
Total ................................. 108,044,874
Security and Commodity Brokers - 0.39%
Merrill Lynch & Co., Inc.,
5.58%, 7-24-98 ........................ 30,000 29,893,050
Textile Mill Products - 0.29%
Sara Lee Corp.,
5.5102%, Master Note .................. 22,437 22,437,000
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1998
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES(Continued)
Commercial Paper (Continued)
Tobacco Products - 0.02%
B.A.T Capital Corp.,
5.75%, 7-14-98 ........................ $ 1,380 $ 1,377,135
Transportation Equipment - 0.21%
Dana Credit Corp.,
5.72%, 7-22-98 ........................ 1,000 996,663
Echlin Inc.:
5.85%, 7-15-98 ........................ 5,000 4,988,625
5.73%, 7-16-98 ........................ 10,000 9,976,125
Total ................................. 15,961,413
Wholesale Trade -- Durable Goods - 0.27%
Motorola, Inc.:
5.55%, 7-10-98 ........................ 10,000 9,986,125
5.55%, 7-14-98 ........................ 11,000 10,977,954
Total ................................. 20,964,079
Wholesale Trade -- Nondurable Goods - 0.19%
Enron Corp.,
5.63%, 7-30-98 ........................ 15,000 14,931,971
Total Commercial Paper - 23.22% $1,783,757,587
Commercial Paper (backed by irrevocable
bank letter of credit) - 0.20%
Agway Financial Corp. (Rabobank Nederland N.V.),
5.66%, 7-7-98 ......................... 15,000 14,985,850
TOTAL SHORT-TERM SECURITIES - 23.61% $1,813,742,278
(Cost: $1,813,742,278)
TOTAL INVESTMENT SECURITIES - 100.00% $7,681,298,540
(Cost: $4,916,111,041)
LIABILITIES, NET OF CASH AND OTHER ASSETS - 0.00% (254,900)
NET ASSETS - 100.00% $7,681,043,640
See Notes to Schedules of Investments on page 37.
<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.
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. For more information
about the Fund's cash reserves
flexibility, please consult the
Prospectus.
FOUNDED: 1940
SCHEDULED DIVIDEND FREQUENCY: SEMIANNUALLY
(JUNE AND DECEMBER)
<PAGE>
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Six Months Ended June 30, 1998
- --------------------------------------
DIVIDEND PAID $0.03
=====
NET ASSET VALUE ON
6/30/98 $9.00
12/31/97 7.77
-----
CHANGE PER SHARE $1.23
=====
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 6-30-98 19.57% 26.87%
5-year period ended 6-30-98 17.40% 18.80%
10-year period ended 6-30-98 14.69% 15.37%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On June 30, 1998, United Accumulative Fund had net assets totaling
$1,834,906,745 invested in a diversified portfolio of:
83.91% Common Stocks
16.09% Cash and Cash Equivalents
As a shareholder of United Accumulative Fund, for every $100 you had invested on
June 30, 1998, your Fund owned:
$29.71 Finance, Insurance and Real Estate Stocks
22.84 Manufacturing Stocks
16.09 Cash and Cash Equivalents
15.72 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
9.90 Services Stocks
5.21 Wholesale and Retail Trade Stocks
0.53 Miscellaneous Investing Institutions Stocks
Not all holdings will be represented in the portfolio at all times.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
JUNE 30, 1998
Shares Value
COMMON STOCKS
Apparel and Other Textile Products - 1.00%
Liz Claiborne, Inc. .................... 350,000 $ 18,309,200
Business Services - 7.83%
America Online, Inc.* .................. 100,000 10,600,000
American Management Systems, Incorporated* 240,000 7,184,880
Automatic Data Processing, Inc. ........ 200,000 14,575,000
BMC Software, Inc.* .................... 400,000 20,787,200
Fiserv, Inc.* .......................... 450,000 19,110,600
ICG Communications, Inc.* .............. 300,000 10,959,300
Microsoft Corporation* ................. 150,000 16,260,900
Nielsen Media Research, Inc. ........... 300,000 18,900,000
Parametric Technology Corporation* ..... 200,000 5,418,600
SunGard Data Systems, Inc.* ............ 400,000 15,300,000
3Com Corporation* ...................... 150,000 4,607,700
Total ................................. 143,704,180
Chemicals and Allied Products - 10.06%
Abbott Laboratories .................... 500,000 20,437,500
Bristol-Myers Squibb Company ........... 200,000 22,987,400
Elan Corporation PLC, ADR* ............. 300,000 19,293,600
Forest Laboratories, Inc.* ............. 500,000 17,875,000
Monsanto Company ....................... 200,000 11,175,000
Pfizer Inc. ............................ 300,000 32,606,100
SangStat Medical Corporation* .......... 40,000 1,257,480
SmithKline Beecham plc ADR ............. 400,000 24,200,000
Warner-Lambert Company ................. 500,000 34,687,500
Total ................................. 184,519,580
Communication - 10.97%
Ameritech Corporation .................. 500,000 22,437,500
Clear Channel Communications, Inc.* .... 200,000 21,825,000
Comcast Corporation, Class A ........... 250,000 10,148,250
Cox Communications, Inc., Class A* ..... 500,000 24,218,500
Heftel Broadcasting Corporation, Class A* 250,000 11,164,000
McLeod USA Incorporated, Class A* ...... 200,000 7,787,400
Qwest Communications International Inc.* 300,000 10,452,900
SBC Communications Inc. ................ 500,000 20,000,000
Sprint Corporation ..................... 300,000 21,150,000
Telebras S.A., ADR ..................... 200,000 21,800,000
Telefonica de Espana, S.A. (C) ......... 400,000 18,528,682
WinStar Communications, Inc.* .......... 275,000 11,807,675
Total ................................. 201,319,907
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Depository Institutions - 8.71%
Banca Popolare Di Brescia (C) .......... 475,000 $ 8,982,946
Credit Suisse Group, Registered Shares (C) 135,000 30,088,160
Credito Italiano S.p.A. (C) ............ 3,500,000 18,330,331
ING Groep N.V. (C) ..................... 325,188 21,310,165
Mellon Bank Corporation ................ 500,000 34,812,500
Norwest Corporation .................... 700,000 26,162,500
UBS AG, Registered Shares* (C) ......... 53,846 20,054,906
Total ................................. 159,741,508
Electric, Gas and Sanitary Services - 4.75%
Allied Waste Industries, Inc. New* ..... 1,100,000 26,364,800
PG&E Corporation ....................... 650,000 20,515,300
Southern Company (The) ................. 700,000 19,380,900
Texas Utilities Company ................ 500,000 20,812,500
Total ................................. 87,073,500
Electronic and Other Electric Equipment - 3.34%
General Electric Company ............... 500,000 45,500,000
Portugal Telecom, S.A., ADS ............ 300,000 15,881,100
Total ................................. 61,381,100
Food and Kindred Products - 2.33%
Archer-Daniels-Midland Company ......... 1,000,000 19,375,000
Ralston-Ralston Purina Group ........... 200,000 23,362,400
Total ................................. 42,737,400
Furniture and Home Furnishings Stores - 1.21%
Williams-Sonoma, Inc. .................. 700,000 22,268,400
General Merchandise Stores - 2.98%
May Department Stores Company (The) .... 370,600 24,274,300
Wal-Mart Stores, Inc. .................. 500,000 30,375,000
Total ................................. 54,649,300
Health Services - 1.14%
Columbia/HCA Healthcare Corporation .... 716,500 20,868,062
Holding and Other Investment Offices - 0.53%
Grupo Financiero Banamex Accival,
S.A. de C.V., B, CPO Shares (C)* ...... 5,000,000 9,741,706
Industrial Machinery and Equipment - 2.98%
Cisco Systems, Inc.* ................... 400,000 36,837,200
EMC Corporation* ....................... 400,000 17,924,800
Total ................................. 54,762,000
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Instruments and Related Products - 1.21%
Bionx Implants, Inc.* .................. 200,000 $ 3,032,000
Medtronic, Inc. ........................ 300,000 19,125,000
Total ................................. 22,157,000
Insurance Carriers - 12.47%
ACE Limited ............................ 500,000 19,531,000
AXA-UAP, ADR ........................... 500,000 28,406,000
Chartwell Re Corporation ............... 500,000 14,718,500
Chubb Corporation (The) ................ 250,000 20,093,750
General Re Corporation ................. 200,000 50,700,000
Liberty Corporation (The) .............. 350,000 17,609,200
Mercury General Corporation ............ 61,200 3,943,544
ReliaStar Financial Corp. .............. 500,000 24,000,000
Travelers Group, Inc. .................. 200,000 12,125,000
United HealthCare Corporation .......... 450,000 28,575,000
Vesta Insurance Group, Inc. ............ 425,000 9,057,600
Total ................................. 228,759,594
Miscellaneous Retail - 1.02%
Rite Aid Corp. ......................... 500,000 18,750,000
Motion Pictures - 0.93%
Time Warner Incorporated ............... 200,000 17,087,400
Nondepository Institutions - 7.58%
CIT Group, Inc. (The), Class A ......... 1,000,000 37,500,000
Fannie Mae ............................. 700,000 42,525,000
Freddie Mac ............................ 700,000 32,943,400
Providian Financial Corporation ........ 333,600 26,208,283
Total ................................. 139,176,683
Paper and Allied Products - 0.90%
Consolidated Papers, Inc. .............. 315,000 8,583,750
Mead Corp. ............................. 250,000 7,937,500
Total ................................. 16,521,250
Security and Commodity Brokers - 0.95%
Paine Webber Group Inc. ................ 400,000 17,400,000
Transportation Equipment - 1.02%
Dana Corporation ....................... 350,000 18,725,000
TOTAL COMMON STOCKS - 83.91% $1,539,652,770
(Cost: $1,414,110,421)
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
JUNE 30, 1998
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Commercial Paper
Apparel and Accessory Stores - 0.24%
Limited, Inc. (The),
6.6%, 7-1-98 .......................... $ 4,470 $ 4,470,000
Auto Repair, Services and Parking - 0.68%
PHH Corp.,
5.64%, 7-6-98 ......................... 12,507 12,497,203
Communication - 0.76%
Bell Atlantic Financial Services, Inc.,
5.53%, 7-7-98 ......................... 10,400 10,390,415
Dominion Resources, Inc.,
5.66%, 7-9-98 ......................... 3,590 3,585,484
Total ................................. 13,975,899
Depository Institutions - 1.34%
Deutsche Bank Financial Inc.,
5.51%, 7-8-98 ......................... 16,035 16,017,820
J.P. Morgan & Co. Incorporated,
5.52%, 7-6-98 ......................... 3,000 2,997,700
Toronto-Dominion Holdings USA Inc.,
5.55%, 7-7-98 ......................... 5,650 5,644,774
Total ................................. 24,660,294
Electric, Gas and Sanitary Services - 3.73%
Commonwealth Edison Co.,
5.77%, 7-24-98 ........................ 2,490 2,480,821
Georgia Power Co.,
5.55%, 7-6-98 ......................... 5,742 5,737,574
Houston Industries FinanceCo L.P.,
5.77%, 7-17-98 ........................ 45,000 44,884,600
Western Resources, Inc.:
5.66%, 7-15-98 ........................ 6,495 6,480,704
5.7%, 7-17-98 ......................... 4,820 4,807,789
5.69%, 7-17-98 ........................ 4,000 3,989,885
Total ................................. 68,381,373
Electronic and Other Electric Equipment - 0.82%
Whirlpool Corp.:
5.68%, 7-23-98 ........................ 12,980 12,934,945
5.75%, 7-23-98 ........................ 2,020 2,012,902
Total ................................. 14,947,847
Engineering and Management Services - 0.54%
Halliburton Co.,
5.62%, 7-31-98 ........................ 10,000 9,953,167
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
JUNE 30, 1998
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES(Continued)
Commercial Paper (Continued)
Fabricated Metal Products - 0.09%
Danaher Corporation,
5.6602%, Master Note .................. $ 1,634 $ 1,634,000
Food and Kindred Products - 3.42%
ConAgra, Inc.,
5.65%, 7-15-98 ........................ 24,865 24,810,366
General Mills, Inc.,
5.5152%, Master Note .................. 2,041 2,041,000
Heinz (H.J.) Company,
5.53%, 7-30-98 ........................ 22,000 21,901,996
Ralston Purina Company,
5.7%, 7-17-98 ......................... 13,990 13,954,559
Total ................................. 62,707,921
Industrial Machinery and Equipment - 0.54%
Ingersoll-Rand Company,
5.68%, 7-17-98 ........................ 10,000 9,974,756
Instruments and Related Products - 0.54%
Baxter International Inc.,
5.56%, 7-17-98 ........................ 10,000 9,975,289
Insurance Agents, Brokers and Service - 1.57%
Aon Corp.:
5.58%, 7-17-98 ........................ 17,200 17,157,344
5.65%, 7-17-98 ........................ 11,630 11,600,796
Total ................................. 28,758,140
Insurance Carriers - 2.44%
Transamerica Finance Corp.,
5.52%, 7-23-98 ........................ 45,000 44,848,200
Miscellaneous Retail - 1.09%
Toys 'R' Us Inc.,
5.53%, 7-14-98 ........................ 20,000 19,960,061
Nondepository Institutions - 1.74%
Associates Corporation of North America,
5.53%, 7-27-98 ........................ 10,000 9,960,061
Island Finance Puerto Rico Inc.,
5.54%, 7-24-98 ........................ 15,000 14,946,908
Textron Financial Corp.,
5.7%, 7-13-98 ......................... 7,000 6,986,700
Total ................................. 31,893,669
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
JUNE 30, 1998
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES(Continued)
Commercial Paper (Continued)
Petroleum and Coal Products - 0.61%
Kerr-McGee Credit Corp.,
5.75%, 7-27-98 ........................ $ 11,275 $ 11,228,177
Tobacco Products - 0.50%
B.A.T Capital Corp.:
5.8%, 7-14-98 ......................... 1,100 1,097,696
5.63%, 7-15-98 ........................ 7,000 6,984,674
5.7%, 8-4-98 .......................... 1,000 994,617
Total ................................. 9,076,987
Transportation Equipment - 1.58%
Dana Credit Corp.,
5.72%, 7-22-98 ........................ 17,000 16,943,277
Echlin Inc.,
5.8%, 7-13-98 ......................... 12,125 12,101,558
Total ................................. 29,044,835
TOTAL SHORT-TERM SECURITIES - 22.23% $ 407,987,818
(Cost: $407,987,818)
TOTAL INVESTMENT SECURITIES - 106.14% $1,947,640,588
(Cost: $1,822,098,239)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (6.14%) (112,733,843)
NET ASSETS - 100.00% $1,834,906,745
See Notes to Schedules of Investments on page 37.
<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.
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. For
more information about the Fund's cash
reserves flexibility, please consult the
Prospectus.
FOUNDED: 1950
SCHEDULED DIVIDEND FREQUENCY: SEMIANNUALLY
(JUNE AND DECEMBER)
<PAGE>
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Six Months Ended June 30, 1998
(Restated to reflect the 200% stock
dividend effected June 26, 1998.)
- --------------------------------------
NET ASSET VALUE ON
6/30/98 $ 8.74
12/31/97 6.71
------
CHANGE PER SHARE $ 2.03
======
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 6-30-98 30.90% 38.89%
5-year period ended 6-30-98 21.49% 22.94%
10-year period ended 6-30-98 17.30% 17.99%
*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 June 30, 1998, United Science and Technology Fund had net assets totaling
$1,384,102,309 invested in a diversified portfolio of:
95.43% Common Stocks
4.57% Cash and Cash Equivalents
As a shareholder of United Science and Technology Fund, for every $100 you had
invested on June 30, 1998, your Fund owned:
$46.47 Services Stocks
30.34 Manufacturing Stocks
9.38 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
7.84 Wholesale and Retail Trade Stocks
4.57 Cash and Cash Equivalents
1.40 Finance, Insurance and Real Estate Stocks
Not all holdings will be represented in the portfolio at all times.
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
JUNE 30, 1998
Shares Value
COMMON STOCKS
Building Materials and Garden Supplies - 0.84%
Fastenal Company ....................... 250,000 $ 11,617,000
Business Services - 40.02%
America Online, Inc.* .................. 725,000 76,850,000
American Management Systems, Incorporated* 300,000 8,981,100
BMC Software, Inc.* .................... 800,000 41,574,400
CKS Group, Inc.* ....................... 344,000 6,170,328
Citrix Systems, Inc.* .................. 120,000 8,208,720
Concord EFS, Inc.* ..................... 600,000 15,675,000
EarthLink Network, Inc.* ............... 125,000 9,601,500
FORE Systems, Inc.* .................... 200,000 5,293,600
HBO & Company .......................... 1,250,000 44,101,250
HNC Software Inc.* ..................... 400,000 16,324,800
i2 Technologies, Inc.* ................. 579,500 20,354,937
Intuit Inc.* ........................... 600,000 36,805,800
J. D. Edwards* ......................... 400,000 17,174,800
Manugistics Group Incorporated* ........ 250,000 6,218,750
Microsoft Corporation* ................. 350,000 37,942,100
Networks Associates, Inc.* ............. 450,000 21,529,350
Parametric Technology Corporation* ..... 600,000 16,255,800
Shared Medical Systems Corporation ..... 300,000 22,031,100
Snyder Communications, Inc.* ........... 300,000 13,087,500
Synopsys, Inc.* ........................ 75,000 3,433,575
TMP Worldwide Inc.* .................... 500,000 17,421,500
Transaction Systems Architects, Inc.,
Class A* .............................. 500,000 19,265,500
Veritas Software Corp.* ................ 400,000 16,537,200
Wind River Systems, Inc.* .............. 500,000 17,984,000
Yahoo! Inc.* ........................... 350,000 55,102,950
Total ................................. 553,925,560
Chemicals and Allied Products - 11.96%
Abbott Laboratories .................... 700,000 28,612,500
Pfizer Inc. ............................ 400,000 43,474,800
Roche Holdings AG (C) .................. 1,200 11,803,474
Schering-Plough Corporation ............ 350,000 32,068,750
SmithKline Beecham plc ADR ............. 200,000 12,100,000
Warner-Lambert Company ................. 540,000 37,462,500
Total ................................. 165,522,024
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Communication - 9.38%
AirTouch Communications* ............... 300,000 $ 17,437,500
Clear Channel Communications, Inc.* .... 254,800 27,805,050
COLT Telecom Group plc, ADR* ........... 100,000 16,212,500
Cox Communications, Inc., Class A* ..... 350,000 16,952,950
Intermedia Communications of Florida, Inc.* 800,000 33,524,800
MediaOne Group, Inc.* .................. 400,000 17,574,800
U S WEST Communications, Inc. .......... 8,193 385,071
Total ................................. 129,892,671
Depository Institutions - 1.40%
Credit Suisse Group,
Registered Shares (C) ................. 87,000 19,390,147
Electronic and Other Electric Equipment - 6.91%
Advanced Fibre Communications, Inc.* ... 600,000 24,055,800
Broadcom Corporation, Class A* ......... 64,500 4,752,812
General Electric Company ............... 400,000 36,400,000
RELTEC Corporation* .................... 200,000 8,987,400
Tellabs* ............................... 300,000 21,477,900
Total ................................. 95,673,912
Engineering and Management Services - 4.58%
Incyte Pharmaceuticals, Inc.* .......... 600,000 20,493,600
Paychex, Inc. .......................... 570,000 23,173,920
Quintiles Transnational Corp.* ......... 400,000 19,662,400
Total ................................. 63,329,920
Furniture and Fixtures - 1.30%
Lear Corporation* ...................... 350,000 17,959,200
General Merchandise Stores - 0.88%
Wal-Mart Stores, Inc. .................. 200,000 12,150,000
Health Services - 0.94%
Concentra Managed Care, Inc.* .......... 501,000 13,009,968
Industrial Machinery and Equipment - 3.19%
Cisco Systems, Inc.* ................... 479,700 44,177,012
See Notes to Schedules of Investments on page 37.
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Instruments and Related Products - 3.68%
Medtronic, Inc. ........................ 400,000 $ 25,500,000
STERIS Corporation* .................... 400,000 25,437,200
Total ................................. 50,937,200
Miscellaneous Manufacturing Industries - 1.14%
Tyco International Ltd. ................ 250,000 15,750,000
Motion Pictures - 0.93%
Time Warner Incorporated ............... 150,000 12,815,550
Petroleum and Coal Products - 1.20%
Valero Energy Corporation .............. 500,000 16,625,000
Transportation Equipment - 0.96%
AlliedSignal Inc. ...................... 300,000 13,312,500
Wholesale Trade -- Durable Goods - 4.08%
Johnson & Johnson ...................... 300,000 22,125,000
OmniCare, Inc. ......................... 900,000 34,312,500
Total ................................. 56,437,500
Wholesale Trade -- Nondurable Goods - 2.04%
Cardinal Health, Inc. .................. 301,966 28,309,312
TOTAL COMMON STOCKS - 95.43% $1,320,834,476
(Cost: $732,487,053)
TOTAL SHORT-TERM SECURITIES - 4.52% $ 62,633,375
(Cost: $62,633,375)
TOTAL INVESTMENT SECURITIES - 99.95% $1,383,467,851
(Cost: $795,120,428)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.05% 634,458
NET ASSETS - 100.00% $1,384,102,309
See Notes to Schedules of Investments on page 37.
<PAGE>
UNITED FUNDS, INC.
JUNE 30, 1998
Notes to Schedules of Investments
*No dividends were paid during the preceding 12 months.
(A) The security does not bear interest for an initial period of time and
subsequently becomes interest bearing.
(B) As of June 30, 1998, the following restricted securities were owned:
Principal
Acquisition Amount Market
Security Date in Thousands Cost Value
-------- ----------- --------------------------------
United Bond Fund
CHYPS CBO 1997-1 Ltd.,
0.00%, 1-15-2010 11/25/97 $8,500$ 8,183,019$ 8,553,125
Coltec Industries Inc.,
7.5%, 4-15-2008 4/8/98 2,500 2,496,175 2,531,250
Sumitomo Bank, Limited (The),
9.4%, 12-29-2049 2/6/98 1,250 1,250,000 1,242,300
----------------------
$11,929,194$12,326,675
======================
The total market value of restricted securities represents 2.3% of the
total net assets at June 30, 1998.
(C) Listed on an exchange outside the United States.
See Note 1 to financial statements for security valuation and other significant
accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and
depreciation of investments owned for Federal income tax purposes.
<PAGE>
UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 United
(In Thousands, Except United United United Science and
for Per Share Amounts) Bond Income Accumulative Technology
Fund Fund Fund Fund
Assets ----------------------------------------
------------
Investment securities --
at value (Notes 1 and 3)$524,274 $7,681,299 $1,947,641 $1,383,468
Cash .............. 8,214 --- 3,354 3
Receivables:
Investment securities sold --- 2,177 21,363 11,947
Dividends and interest 7,131 10,200 1,175
387
Fund shares sold .. 527 7,393 1,115 1,381
Prepaid insurance
premium ........... 14 46 31 9
-------- ---------- ---------- ----------
Total assets .... 540,160 7,701,115 1,974,679 1,397,195
Liabilities -------- ---------- ---------- ----------
Payable for investment
securities purchased 2,501 --- 133,599
---
Payable to Fund
shareholders ...... 1,919 16,581 5,362 12,344
Accrued service fee (Note 2) 193 2,418 566 483
Accrued transfer agency
and dividend disbursing
(Note 2) .......... 63 686 149 182
Accrued management
fee (Note 2) ...... 6 114 27 23
Due to custodian ... --- 26 --- ---
Accrued accounting
services fee (Note 2) 5 8 8 8
Other .............. 43 238 61 52
-------- ---------- ---------- ----------
Total liabilities 4,730 20,071 139,772 13,092
-------- ---------- ---------- ----------
Total net assets $535,430 $7,681,044 $1,834,907 $1,384,103
Net Assets ======== ========== ========== ==========
$1.00 par value capital stock
Capital stock ..... $ 84,187 $ 860,504 $ 203,841 $ 158,433
Additional paid-in
capital .......... 448,562 2,714,263 1,236,546 580,563
Accumulated undistributed
income (loss):
Accumulated undistributed
net investment
income (loss) .... 306 3,911 4,599 (2,675)
Accumulated undistributed net
realized gain (loss) on
investment
transactions ..... (19,085) 1,337,207 264,411 59,442
Net unrealized appreciation
of investments .. 21,460 2,765,159 125,510 588,340
-------- ---------- ---------- ----------
Net assets applicable to
outstanding units
of capital ..... $535,430 $7,681,044 $1,834,907 $1,384,103
======== ========== ========== ==========
Capital shares outstanding
Class A ............ 83,259 815,653 203,303 157,836
Class Y ............ 928 44,851 538 597
Capital shares authorized 600,000 2,000,000 600,000 400,000
Net asset value per share
(net assets divided by
shares outstanding)
Class A ............ $6.36 $8.93 $9.00 $8.74
Class Y ............ $6.36 $8.93 $9.00 $8.78
See notes to financial statements.
<PAGE>
UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1998
(In Thousands) United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
------------ --------------------------------------
Investment Income
Income (Note 1B):
Dividends ......... $ --- $ 39,901 $ 9,948 $ 1,832
Interest and
amortization .... 18,239 15,955 4,464 1,842
------- ---------- -------- --------
Total income .... 18,239 55,856 14,412 3,674
------- ---------- -------- --------
Expenses (Note 2):
Investment
management fee ... 1,120 19,572 4,684 3,572
Transfer agency and
dividend disbursing
-- Class A ..... 399 3,598 781 1,140
Service fees -- Class A 565 6,945 1,693 1,420
Custodian fees .... 9 263 72 34
Accounting services fee 30 50 50 50
Audit fees ........ 9 18 11 10
Shareholder servicing
fee -- Class Y ... 4 272 3 4
Legal fees ........ 1 25 6 4
Distribution
fees -- Class A . 2 19 4 5
Other ............. 44 369 106 110
------- ---------- -------- --------
Total expenses .. 2,183 31,131 7,410 6,349
------- ---------- -------- --------
Net investment
income (loss) 16,056 24,725 7,002 (2,675)
------- ---------- -------- --------
Realized and Unrealized
Gain (Loss) on Investments (Notes 1 and 3)
Realized net gain
on securities ..... 4,162 1,203,167 244,441 40,666
Realized net gain (loss) on foreign
currency transactions --- (141) (80) ---
------- ---------- -------- --------
Realized net gain
on investments .. 4,162 1,203,026 244,361 40,666
Unrealized appreciation
(depreciation) in value
of investments during
the period......... (511) (55,505) 7,943 283,799
------- ---------- -------- --------
Net gain on
investments .... 3,651 1,147,521 252,304 324,465
------- ---------- -------- --------
Net increase
in net assets
resulting from
operations .... $19,707 $1,172,246 $259,306 $321,790
======= ========== ======== ========
See notes to financial statements.
<PAGE>
UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1998 United
(In Thousands) United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
----------------------------------------------------
Increase (Decrease) in Net Assets
Operations:
Net investment
income (loss) ... $ 16,056 $ 24,725 $ 7,002 $ (2,675)
Realized net gain
on investments .. 4,162 1,203,026 244,361 40,666
Unrealized
appreciation
(depreciation) .. (511) (55,505) 7,943 283,799
-------- ---------- ---------- ----------
Net increase in net
assets resulting
from operations. 19,707 1,172,246 259,306 321,790
-------- ---------- ---------- ----------
Distributions to shareholders
from (Note 1E):*
Net investment income
Class A ......... (15,947) (21,182) (6,092) ---
Class Y ......... (173) (1,455) (18) ---
Realized net gains on
investment transactions
Class A ......... --- --- --- ---
Class Y ......... --- --- --- ---
-------- ---------- ---------- ----------
(16,120) (22,637) (6,110) ---
-------- ---------- ---------- ----------
Capital share
transactions (Note 5) 3,147 36,446 (17,331) (4,481)
-------- ---------- ---------- ----------
Total increase (decrease) 6,734 1,186,055 235,865 317,309
Net Assets
Beginning of period 528,696 6,494,989 1,599,042 1,066,794
-------- ---------- ---------- ----------
End of period $535,430 $7,681,044 $1,834,907 $1,384,103
======== ========== ========== ==========
Undistributed
net investment
income (loss) ... $306 $3,911 $4,599 $(2,675)
==== ====== ====== =======
*See "Financial Highlights" on pages 42 - 49.
See notes to financial statements.
<PAGE>
UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended December 31, 1997 United
(In Thousands) United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
----------------------------------------------------
Increase (Decrease) in Net Assets
Operations:
Net investment
income (loss) ... $ 32,845 $ 44,421 $ 17,081 $ (1,789)
Realized net gain
on investments .. 2,969 621,547 312,063 193,673
Unrealized
appreciation
(depreciation) .. 11,848 724,669 45,070 (115,958)
-------- ---------- ---------- ----------
Net increase in net
assets resulting
from operations. 47,662 1,390,637 374,214 75,926
-------- ---------- ---------- ----------
Distributions to shareholders
from (Note 1E):*
Net investment income
Class A ......... (32,939) (43,071) (14,625) ---
Class Y ......... (339) (2,161) (34) ---
Realized net gains on
investment transactions
Class A ......... --- (534,501) (344,992) (194,628)
Class Y ......... --- (25,551) (761) (789)
-------- ---------- ---------- ----------
(33,278) (605,284) (360,412) (195,417)
-------- ---------- ---------- ----------
Capital share
transactions (Note 5) (16,341) 707,873 297,373 202,648
-------- ---------- ---------- ----------
Total increase (decrease) (1,957) 1,493,226 311,175 83,157
Net Assets
Beginning of period 530,653 5,001,763 1,287,867 983,637
-------- ---------- ---------- ----------
End of period $528,696 $6,494,989 $1,599,042 $1,066,794
======== ========== ========== ==========
Undistributed
net investment
income .......... $370 $1,964 $3,787 $---
==== ====== ====== ====
*See "Financial Highlights" on pages 42 - 49.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED BOND FUND
Class A Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
six months For the fiscal year ended December 31,
ended --------------------------------------
6/30/98 1997 1996 1995 1994 1993
---------- ----- ----- ----- ----- -----
Net asset value,
beginning of period $6.32 $6.14 $6.34 $5.62 $6.39 $6.31
---- ---- ---- ---- ---- ----
Income from investment
operations:
Net investment income 0.19 0.39 0.39 0.40 0.39 0.41
Net realized and
unrealized gain
(loss) on
investments ..... 0.04 0.19 (0.20) 0.72 (0.75) 0.41
---- ---- ---- ---- ---- ----
Total from investment
operations ....... 0.23 0.58 0.19 1.12 (0.36) 0.82
---- ---- ---- ---- ---- ----
Less distributions:
From net investment
income .......... (0.19) (0.40) (0.39) (0.40) (0.39) (0.41)
From capital gains (0.00) (0.00) (0.00) (0.00) (0.02) (0.33)
---- ---- ---- ---- ---- ----
Total distributions (0.19) (0.40) (0.39) (0.40) (0.41) (0.74)
---- ---- ---- ---- ---- ----
Net asset value,
end of period .... $6.36 $6.32 $6.14 $6.34 $5.62 $6.39
===== ===== ===== ===== ===== =====
Total return* ...... 3.72% 9.77% 3.20% 20.50% -5.76% 13.19%
Net assets, end of
period (in
millions) ........ $529 $524 $519 $563 $518 $642
Ratio of expenses to
average net assets 0.83%** 0.77% 0.77% 0.74% 0.72% 0.65%
Ratio of net investment
income to average
net assets ....... 6.07%** 6.34% 6.34% 6.54% 6.60% 6.14%
Portfolio turnover
rate ............. 20.51% 35.08% 55.74% 66.38%127.11% 175.39%
*Total return calculated without taking into account the sales load deducted
on an initial purchase.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED BOND FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
six For the fiscal year For the
months ended December 31, period from
ended ------------------ 6/19/95* to
6/30/98 1997 1996 12/31/95
------- ----- ----- ----------
Net asset value,
beginning of period $6.32 $6.14 $6.34 $6.11
---- ---- ---- ----
Income from investment
operations:
Net investment income 0.20 0.42 0.40 0.21
Net realized and
unrealized gain (loss)
on investments .. 0.04 0.17 (0.20) 0.22
---- ---- ---- ----
Total from investment
operations ....... 0.24 0.59 0.20 0.43
---- ---- ---- ----
Less distributions:
From net investment
income........... (0.20) (0.41) (0.40) (0.20)
From capital gains (0.00) (0.00) (0.00) (0.00)
---- ---- ---- ----
Total distributions (0.20) (0.41) (0.40) (0.20)
---- ---- ---- ----
Net asset value,
end of period .... $6.36 $6.32 $6.14 $6.34
==== ==== ==== ====
Total return ....... 4.11% 9.91% 3.35% 7.20%
Net assets, end of
period (in
millions) ........ $6 $5 $12 $3
Ratio of expenses to
average net assets 0.61%** 0.64% 0.62% 0.63%**
Ratio of net investment
income to average
net assets ....... 6.29%** 6.48% 6.52% 6.41%**
Portfolio turnover
rate ............. 20.51% 35.08% 55.74% 66.38%**
*Commencement of operations.
**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
six months For the fiscal year ended December 31,
ended --------------------------------------
6/30/98 1997 1996 1995 1994 1993
---------- ----- ----- ----- ----- -----
Net asset value,
beginning of period $7.59 $6.58 $5.79 $4.67 $4.95 $4.41
---- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment income 0.13 0.06 0.07 0.08 0.07 0.08
Net realized and
unrealized gain
(loss) on
investments ..... 1.34 1.73 1.10 1.30 (0.16) 0.62
----- ----- ----- ----- ----- -----
Total from investment
operations ....... 1.47 1.79 1.17 1.37 (0.08) 0.70
----- ----- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.13) (0.06) (0.06) (0.07) (0.07) (0.08)
From capital gains (0.00) (0.72) (0.32) (0.18) (0.13) (0.08)
----- ----- ----- ----- ----- -----
Total distributions (0.13) (0.78) (0.38) (0.25) (0.20) (0.16)
----- ----- ----- ----- ----- -----
Net asset value,
end of period .... $8.93 $7.59 $6.58 $5.79 $4.67 $4.95
===== ===== ===== ===== ===== =====
Total return** ..... 18.01% 27.34% 20.36% 29.60% -1.82% 16.05%
Net assets, end of
period (in
millions) ........ $7,281 $6,196 $4,851 $3,976 $3,145 $3,060
Ratio of expenses to
average net assets 0.87%***0.84% 0.86% 0.83% 0.74% 0.66%
Ratio of net investment
income to average
net assets ....... 0.68%***0.74% 1.03% 1.31% 1.45% 1.70%
Portfolio turnover
rate ............. 17.05% 33.59% 22.24% 17.59% 18.54% 21.70%
Average commission
rate paid ........ $0.0635 $0.0534$0.0496
*Per-share and share amounts have been adjusted retroactively to
refect the 400% stock dividend effected June 26, 1998.
**Total return calculated without taking into account the sales load
deducted on an initial purchase.
***Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED INCOME FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:*
For the For the fiscal
six year ended For the
months December 31, period from
ended ------------- 6/19/95** to
6/30/98 1997 1996 12/31/95
-------- ----- ----- -----------
Net asset value,
beginning of period $7.59 $6.58 $5.79 $5.55
----- ----- ----- -----
Income from investment
operations:
Net investment income 0.17 0.07 0.07 0.04
Net realized and
unrealized gain
on investments .. 1.34 1.73 1.11 0.42
----- ----- ----- -----
Total from investment
operations ....... 1.51 1.80 1.18 0.46
----- ----- ----- -----
Less distributions:
From net investment
income........... (0.17) (0.07) (0.07) (0.04)
From capital gains (0.00) (0.72) (0.32) (0.18)
----- ----- ----- -----
Total distributions (0.17) (0.79) (0.39) (0.22)
----- ----- ----- -----
Net asset value,
end of period .... $8.93 $7.59 $6.58 $5.79
===== ===== ===== =====
Total return ....... 18.11% 27.49% 20.53% 8.45%
Net assets, end of
period (in
millions) ........ $400 $299 $151 $107
Ratio of expenses to
average net assets 0.71%*** 0.72% 0.73% 0.74%***
Ratio of net investment
income to average
net assets ....... 0.84%*** 0.85% 1.17% 1.36%***
Portfolio turnover
rate ............. 17.05% 33.59% 22.24% 17.59%***
Average commission
rate paid ........ $0.0635 $0.0534 $0.0496
*Per-share and share amounts have been adjusted retroactively to
reflect the 400% stock dividend effected June 26, 1998.
**Commencement of operations.
***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
six months For the fiscal year ended December 31,
ended --------------------------------------
6/30/98 1997 1996 1995 1994 1993
---------- ----- ----- ----- ----- -----
Net asset value,
beginning of period $7.77 $7.75 $7.78 $6.58 $7.19 $7.50
---- ---- ---- ---- ---- ----
Income from investment
operations:
Net investment
income........... 0.03 0.10 0.11 0.11 0.13 0.11
Net realized and
unrealized gain
(loss) on
investments ..... 1.23 2.14 0.82 2.12 (0.13) 0.55
---- ---- ---- ---- ---- ----
Total from investment
operations ....... 1.26 2.24 0.93 2.23 0.00 0.66
---- ---- ---- ---- ---- ----
Less distributions:
From net investment
income .......... (0.03) (0.09) (0.11) (0.11) (0.13) (0.11)
From capital gains (0.00) (2.13) (0.85) (0.92) (0.48) (0.84)
In excess of
capital gains.... (0.00) (0.00) (0.00) (0.00) (0.00) (0.02)
---- ---- ---- ---- ---- ----
Total distributions (0.03) (2.22) (0.96) (1.03) (0.61) (0.97)
---- ---- ---- ---- ---- ----
Net asset value,
end of period .... $9.00 $7.77 $7.75 $7.78 $6.58 $7.19
===== ===== ===== ===== ===== =====
Total return* ...... 16.23% 29.58% 12.18% 34.21% 0.04% 9.06%
Net assets, end of
period (in
millions) ........ $1,830 $1,595 $1,285 $1,206 $967 $1,034
Ratio of expenses to
average net assets 0.86%** 0.82% 0.83% 0.80% 0.71% 0.65%
Ratio of net investment
income to average
net assets ....... 0.81%** 1.16% 1.34% 1.42% 1.76% 1.34%
Portfolio turnover
rate ............. 193.41% 313.99%240.37% 229.03%205.40% 230.29%
Average commission
rate paid ........ $0.0578 $0.0565$0.0575
*Total return calculated without taking into account the sales load deducted
on an initial purchase.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED ACCUMULATIVE FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the For the fiscal
six year ended For the
months December 31, period from
ended -------------- 7/11/95* to
6/30/98 1997 1996 12/31/95
-------- ----- ----- -----------
Net asset value,
beginning of period $7.77 $7.75 $7.78 $7.84
---- ---- ---- ----
Income from investment
operations:
Net investment income 0.03 0.11 0.12 0.05
Net realized and
unrealized gain
on investments .. 1.23 2.14 0.82 0.87
---- ---- ---- ----
Total from investment
operations ....... 1.26 2.25 0.94 0.92
---- ---- ---- ----
Less distributions:
From net investment
income........... (0.03) (0.10) (0.12) (0.06)
From capital gains (0.00) (2.13) (0.85) (0.92)
---- ---- ---- ----
Total distributions (0.03) (2.23) (0.97) (0.98)
---- ---- ---- ----
Net asset value,
end of period .... $9.00 $7.77 $7.75 $7.78
===== ===== ===== =====
Total return ....... 16.27% 29.67% 12.27% 11.92%
Net assets, end of
period (in
millions) ........ $5 $4 $3 $1
Ratio of expenses to
average net assets 0.76%** 0.75% 0.74% 0.76%**
Ratio of net investment
income to average
net assets ....... 0.90%** 1.22% 1.45% 1.24%**
Portfolio turnover
rate ............. 193.41% 313.99% 240.37% 229.03%**
Average commission
rate paid ........ $0.0578 $0.0565 $0.0575
*Commencement of operations.
**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
six months For the fiscal year ended December 31,
ended --------------------------------------
6/30/98 1997 1996 1995 1994 1993
---------- ----- ----- ----- ----- -----
Net asset value,
beginning of period $6.71 $7.78 $7.63 $5.07 $4.94 $4.88
---- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income (loss) ... (0.02) (0.01) (0.02) (0.00) 0.00 0.00
Net realized and
unrealized gain on
investments ..... 2.05 0.46 0.66 2.80 0.47 0.40
---- ----- ----- ----- ----- -----
Total from investment
operations ....... 2.03 0.45 0.64 2.80 0.47 0.40
---- ----- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
From capital gains (0.00) (1.52) (0.49) (0.24) (0.34) (0.32)
In excess of
capital gains ... (0.00) (0.00) (0.00) (0.00) (0.00) (0.02)
---- ----- ----- ----- ----- -----
Total distributions (0.00) (1.52) (0.49) (0.24) (0.34) (0.34)
---- ----- ----- ----- ----- -----
Net asset value,
end of period .... $8.74 $6.71 $7.78 $7.63 $5.07 $4.94
===== ===== ===== ===== ===== =====
Total return** ..... 30.25% 7.22% 8.35% 55.37% 9.78% 8.51%
Net assets, end of
period (in
millions) ........ $1,379 $1,063 $981 $821 $497 $447
Ratio of expenses to
average net assets 1.06%***1.02% 0.98% 0.93% 0.96% 0.91%
Ratio of net investment
income (loss) to average
net assets ....... -0.45%***-0.18%-0.33% -0.07% 0.00% 0.06%
Portfolio turnover
rate ............. 28.32% 87.68% 33.90% 32.89% 64.39% 68.38%
Average commission
rate paid ........ $0.0542 $0.0586$0.0538
*Per-share and share amounts have been adjusted retroactively to
reflect the 200% stock dividend effected June 26, 1998.
**Total return calculated without taking into account the sales load deducted
on an initial purchase.
***Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED SCIENCE AND TECHNOLOGY FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:*
For the
six For the For the
months fiscal period from
ended year ended 2/27/96** to
6/30/98 12/31/97 12/31/96
-------- ---------- ----------
Net asset value,
beginning of period $6.74 $7.79 $8.02
---- ----- -----
Income from investment
operations:
Net investment
loss ............ (0.01) (0.00) (0.01)
Net realized and
unrealized gain
on investments .. 2.05 0.47 0.27
---- ----- -----
Total from investment
operations ....... 2.04 0.47 0.26
---- ----- -----
Less distributions:
From net investment
income .......... (0.00) (0.00) (0.00)
From capital gains (0.00) (1.52) (0.49)
---- ----- -----
Total distributions (0.00) (1.52) (0.49)
---- ----- -----
Net asset value,
end of period .... $8.78 $6.74 $7.79
===== ===== =====
Total return ....... 30.33% 7.43% 3.25%
Net assets, end of
period (in
millions) ........ $5 $4 $3
Ratio of expenses to
average net assets 0.81%*** 0.85% 0.80%***
Ratio of net investment
loss to average
net assets ....... -0.20%*** -0.01% -0.12%***
Portfolio turnover
rate ............. 28.32% 87.68% 33.90%***
Average commission
rate paid ........ $0.0542 $0.0586 $0.0538
*Per-share and share amounts have been adjusted retroactively
to reflect the 200% stock dividend effected June 26, 1998.
**Commencement of operations.
***Annualized.
See notes to financial statements.
<PAGE>
UNITED FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
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 series of capital shares; each series 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 pricing service or dealer in bonds.
Convertible bonds are valued using this pricing system only on days when
there is no sale reported. Stocks which are traded over-the-counter are
priced using the Nasdaq Stock Market, which provides information on bid and
asked 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 Subchapter M of 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
carryovers.
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 $19.9 billion of
combined net assets at June 30, 1998) 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 $1.3125 for each
shareholder account which was in existence at any time during the prior month,
plus $0.30 for each account on which a dividend or distribution of cash or
shares had a record date in that month. With respect to Class Y shares, the
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 gross
sales commissions for Class A shares (which are not an expense of the
Corporation) of $17,854,781, out of which W&R paid sales commissions of
$10,362,407 and all expenses in connection with the sale of the Corporation's
shares, except for registration fees and related expenses.
Under a Distribution and Service Plan for Class A shares adopted by the
Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund
may pay monthly a distribution and/or service fee to W&R in an amount not to
exceed .25% of the Fund's average annual net assets. The fee is to be paid to
reimburse W&R for amounts it expends in connection with the distribution of the
Class A shares and/or provision of personal services to Fund shareholders and/or
maintenance of shareholder accounts.
The Corporation paid Directors' fees of $184,310, which are included in
other expenses.
W&R is an indirect subsidiary of Torchmark Corporation, a holding company,
and Waddell & Reed Financial, Inc., 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 June 30, 1998 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 $ 86,892,949$ 941,494,079$3,037,452,188$336,790,061
Purchases of U.S. Government
securities 28,891,940 197,587,500 --- ---
Purchases of short-term
securities 167,044,9705,017,525,4361,635,504,514 608,453,378
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 90,979,5192,518,995,6173,101,482,655 325,949,419
Proceeds from maturities and
sales of U.S. Government
securities 14,494,095 --- --- ---
Proceeds from maturities and sales
of short-term securities 181,267,7403,610,820,6731,498,530,088 635,533,678
For Federal income tax purposes, cost of investments owned at June 30, 1998
and the related appreciation were as follows:
Aggregate
Cost AppreciationDepreciation Appreciation
-------------- --------------------------------------
United Bond Fund $502,813,093 $22,046,799 $(586,353) $21,460,446
United Income Fund 4,916,111,0412,799,532,798(34,345,299) 2,765,187,499
United Accumulative 1,822,098,239 158,601,841(33,059,492) 125,542,349
Fund
United Science and 795,120,428 602,641,873(14,294,450) 588,347,423
Technology Fund
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 Accumulative Fund and
United Science and Technology Fund realized capital gain net income of
$621,709,672, $311,820,858 and $193,782,308, respectively, during the year ended
December 31, 1997, a portion of which was paid to shareholders during the period
ended December 31, 1997. Remaining capital gain net income will be distributed
to each Fund's shareholders. For Federal income tax purposes, United Bond Fund
realized capital gain net income of $2,969,351 during the year ended December
31, 1997, which was entirely offset by utilization of capital loss carryovers.
Remaining prior year capital loss carryovers of United Bond Fund aggregated
$23,229,705 as of December 31, 1997, and are available to offset future capital
gain net income as follows: $23,148,802 through December 31, 2002 and $80,903
through December 31, 2003.
NOTE 5 -- 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 Distribution and 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 commenced multiclass operations on February 27, 1996.
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 six months ended June 30, 1998 are
summarized below. Dollar amounts are in thousands.
United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
----------- ------------ ------------------------
Shares issued from sale
of shares:
Class A ............ 4,765,898 55,173,865 9,460,042 48,723,623
Class Y ............ 122,480 7,514,168 87,310 85,305
Shares issued from
reinvestment of dividends:
Class A ............ 2,184,771 2,286,325 642,451 ---
Class Y ............ 27,234 169,541 2,023 ---
Shares redeemed:
Class A ............ (6,573,818) (58,168,969) (12,168,563)(49,261,457)
Class Y ............ (31,991) (2,285,995) (12,166) (130,735)
---------- ---------- ---------- ----------
Increase (decrease) in
outstanding capital
shares:
Class A ............ 376,851 (708,779) (2,066,070) (537,834)
Class Y ............ 117,723 5,397,714 77,167 (45,430)
---------- ---------- ---------- ----------
Total for Fund .... 494,574 4,688,935 (1,988,903) (583,264)
========== ========== ========== ==========
Value issued from sale
of shares:
Class A ............ $30,246 $466,695 $80,821 $373,686
Class Y ............ 776 60,662 743 666
Value issued from
reinvestment of dividends:
Class A ............ 13,844 19,634 5,618 ---
Class Y ............ 172 1,455 18 ---
Value redeemed:
Class A ............ (41,688) (492,864) (104,426) (377,785)
Class Y ............ (203) (19,136) (105) (1,048)
----------- ------------ ------------------------
Increase (decrease) in
outstanding capital:
Class A ............ 2,402 (6,535) (17,987) (4,099)
Class Y ............ 745 42,981 656 (382)
----------- ------------ ------------------------
Total for Fund .... $ 3,147 $ 36,446 $(17,331) $(4,481)
=========== ============ ========================
Transactions in capital stock for the fiscal year ended December 31, 1997
are summarized below. Dollar amounts are in thousands.
United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
----------- ------------ ------------------------
Shares issued from sale
of shares:
Class A ............ 6,890,848 113,047,110 8,676,214 97,386,177
Class Y ............ 195,545 16,641,495 51,857 213,843
Shares issued from
reinvestment of
dividends and/or capital
gains distribution:
Class A ............ 4,598,290 72,625,180 44,000,209 29,785,929
Class Y ............ 48,642 3,707,595 104,354 125,574
Shares redeemed:
Class A ............ (13,058,549) (106,336,825) (13,115,628)(94,796,529)
Class Y ............ (1,350,485) (3,892,205) (35,296) (93,594)
---------- ---------- ---------- ----------
Increase (decrease) in
outstanding capital
shares:
Class A ............ (1,569,411) 79,335,465 39,560,795 32,375,577
Class Y ............ (1,106,298) 16,456,885 120,915 245,823
---------- ---------- ---------- ----------
Total for Fund .... (2,675,709) 95,792,350 39,681,710 32,621,400
========== ========== ========== ==========
Value issued from sale
of shares:
Class A ............ $42,624 $862,082 $ 77,296 $749,063
Class Y ............ 1,204 120,864 450 1,701
Value issued from
reinvestment of
dividends and/or capital
gains distribution:
Class A ............ 28,302 542,416 335,423 186,554
Class Y ............ 299 27,712 796 790
Value redeemed:
Class A ............ (80,507) (814,233) (116,279) (734,712)
Class Y ............ (8,263) (30,968) (313) (748)
----------- ------------ ------------------------
Increase (decrease) in
outstanding capital:
Class A ............ (9,581) 590,265 296,440 200,905
Class Y ............ (6,760) 117,608 933 1,743
----------- ------------ ------------------------
Total for Fund .... $(16,341) $707,873 $297,373 $202,648
=========== ============ ========================
Note 6 -- Stock Dividend
The Corporation's Board of Directors approved on February 11, 1998 a stock
dividend of 400% on United Income Fund and 200% on United Science and Technology
Fund effected on June 26, 1998. Authorized shares of United Income Fund were
accordingly increased by 1,400,000,000 and United Bond Fund and United
Accumulative Fund each reallocated 100,000,000 shares to United Science and
Technology Fund.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
United Funds, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedule of investments, of United Bond Fund, United Income Fund, United
Accumulative Fund, and United Science and Technology Fund (collectively the
"Funds"), comprising United Funds, Inc., as of June 30, 1998, and the related
statements of operations for the six-month period then ended and changes in net
assets for the six-month period then ended and the fiscal year ended December
31, 1997, and the financial highlights for the periods presented. These
financial statements and the financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at June
30, 1998 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
respective Funds comprising United Funds, Inc. as of June 30, 1998, the results
of their operations, the changes in their net assets, and the financial
highlights for the respective stated periods in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
August 7, 1998
<PAGE>
To all traditional IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from a traditional IRA unless you make a written
election not to have taxes withheld. The election may be made by submitting
forms provided by Waddell & Reed, Inc. which can be obtained from your Waddell &
Reed representative or by submitting Internal Revenue Service Form W-4P. Once
made, an election can be revoked by providing written notice to Waddell & Reed,
Inc. If you elect not to have tax withheld you may be required to make payments
of estimated tax. Penalties may be imposed by the IRS if withholding and
estimated tax payments are not adequate.
DIRECTORS
Keith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, Menlo Park, California
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Ronald K. Richey, Birmingham, Alabama
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
OFFICERS
Robert L. Hechler, President
James C. Cusser, Vice President
Abel Garcia, 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
Russell E. Thompson, Vice President
James D. Wineland, Vice President
<PAGE>
THE UNITED GROUP OF MUTUAL FUNDS
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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.
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FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
(800) 366-5465
Our INTERNET address is:
http://www.waddell.com
NUR1000SA(6-98)
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