UNITED
FUNDS, INC.
United Bond Fund
United Income Fund
United Accumulative Fund
United Science and Technology Fund
ANNUAL
REPORT
-------------------------------------------
For the fiscal year ended December 31, 1997
<PAGE>
UNITED BOND FUND
MANAGER'S LETTER
DECEMBER 31, 1997
- ---------------------------------------------------------------------------
Dear Shareholder:
This report relates to the operation of the United Bond Fund for the fiscal year
ended December 31, 1997. The following discussion, graphs and tables provide
you with information regarding the Fund's performance during that period.
Interest rates declined marginally in 1997, rising in the first quarter and
declining for most of the rest of the year. The overall decline in rates was
attributable to a material decline in U.S. inflation and, later in the year, the
financial problems in Asia, as foreign investors sought a safe haven for their
capital and invested in U.S. Dollar Treasury Bonds. Corporate bonds performed
well in the prevailing economic environment. Corporate cash flows were healthy
and, with rising stock prices and lower interest rates, many corporations
tendered for existing debt and substituted lower yield debt or issued equity,
thereby improving the credit quality of borrowers and compressing the spread
between corporate and Treasury debt.
The Fund maintained an above average weighting in corporate bonds relative to
its peers and relevant indexes. These holdings, and an interest rate
sensitivity higher than its peers in a declining interest rate market, helped
the Fund's relative performance. One technique that we continued is the use of
so-called putable bonds (bonds that give the owner the right to sell them back
to the issuing corporation at a stated time prior to maturity). This has the
effect of increasing the sensitivity of bond prices to declining interest rates,
and conversely muting a bond's sensitivity to increasing rates. During periods
in which rates are more volatile, the "imbedded option" in these bonds becomes
more valuable.
The strategies and techniques we applied during the year resulted in the Fund's
performance remaining fairly consistent with the indexes charted on the
following page. Those indexes reflect the performance of securities that
generally represent the bond market (the Salomon Brothers Broad Investment Grade
Bond Index) and the universe of funds with similar objectives (the Lipper
Corporate Debt Funds A-Rated Universe Average). The Fund's low exposure to
Asian bonds aided relative performance late in the year. We have chosen to use
the Salomon Brothers Index beginning with this year's Annual Report to reflect
the performance of the bond market, instead of the Lehman Brothers
Government/Corporate Bond Index that had been presented in prior years. We
believe that the Salomon Brothers Index provides a more accurate basis for
comparing the Fund's performance to the performance of the types of fixed income
securities in which the Fund invests. Both indexes are presented on the
following page in this year's Annual Report for comparison purposes.
We expect several factors to favorably affect the Fund's near-term performance.
The Asian financial crisis should slow the U.S. economy. This, in turn, should
dampen any inflationary pressure, which could encourage the Federal Reserve to
ease short-term interest rates. The extent to which interest rates will decline
depends on how the Asian crisis plays out. With respect to less extraordinary
factors, such as U.S. fiscal policy and world commodity prices, the government
seems to be on a route toward a balanced budget and commodity disruptions, like
oil embargoes, do not appear imminent. Only the overhang of longer-term fiscal
problems like Social Security funding and Medicare financing seems to be keeping
rates from falling to a "normal" relationship to very low levels of inflation.
Given our outlook for a slowing economy, we intend to further increase the
average credit quality of the Fund's portfolio, maintain a longer than normal
sensitivity to interest rates, and maintain a relatively liquid portfolio of
corporate bonds. We will keep a close eye on opportunities abroad as the
disruptions in the Far East may present opportunities for higher yield and
greater total return.
Thank you very much for your continued support and confidence.
Respectfully,
James C. Cusser
Manager, United Bond Fund
<PAGE>
Comparison of Change in Value of $10,000 Investment in
United Bond Fund, Class A Shares,
The Lehman Brothers Government/Corporate Bond Index,
Salomon Brothers Broad Investment Grade Index,
and The Lipper Corporate Debt Funds A-Rated Universe Average
Lehman Lipper
United Brothers Salomon Corporate
Bond Government/ Brothers Debt Funds
Fund Corporate Broad A-Rated
Class A Bond Investment Universe
Shares Index Grade Index Average
------ ----------- ---------- ----------
12/31/87Purchase9,425 10,000 10,000 10,000
12/31/88 10,273 10,759 10,799 10,729
12/31/89 11,362 12,290 12,358 12,063
12/31/90 11,844 13,309 13,482 12,874
12/31/91 14,068 15,455 15,635 15,000
12/31/92 15,124 16,625 16,821 16,085
12/31/93 17,119 18,464 18,485 17,888
12/31/94 16,134 17,816 17,959 17,059
12/31/95 19,442 21,244 21,291 20,189
12/31/96 20,064 21,861 22,061 20,691
12/31/97 22,024 23,994 24,184 22,574
+++++ United Bond Fund, Class A Shares* -- $22,024
- ----- Lehman Bros Gov't/Corp Bond Index -- $23,994
...... Salomon Brothers Broad Investment Grade Index --$24,184
===== Lipper Corporate Debt Funds A-Rated Universe Average -- $22,574
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund and assumes
reinvestment of dividends and distributions.
Average Annual Total Return +
Class A++ Class Y
-----------------------------
Year Ended
12/31/97 3.45% 9.91%
5 Years Ended
12/31/97 6.53% N/A
10 Years Ended
12/31/97 8.21% N/A
Life of Class Y +++ N/A 8.08%
+ Total return for the Class Y shares may be greater than that of the Class A
shares because the Fund's Class Y shares are not subject to a sales load or
12b-1 fees.
++ Performance data quoted represents past performance and is based on
deduction of a 5.75% sales load on the initial purchase in each of the
three periods. Investment return and principal value will fluctuate and an
investor's shares, when redeemed, may be worth more or less than their
original cost.
+++ 6/19/95 (the date on which Fund Class Y shares were first acquired by
shareholders) through 12/31/97.
Past performance is not predictive of future performance. Indexes are
unmanaged.
<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 Fiscal Year Ended December 31, 1997
- -------------------------------------------
DIVIDENDS PAID $0.40
=====
NET ASSET VALUE ON
12/31/97 $6.32
12/31/96 6.14
-----
CHANGE PER SHARE $0.18
=====
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 12-31-97 3.45% 9.77%
5-year period ended 12-31-97 6.53% 7.80%
10-year period ended 12-31-97 8.21% 8.86%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On December 31, 1997, United Bond Fund had net assets totaling $528,695,783
invested in a diversified portfolio of:
95.66% Bonds
4.34% Cash and Cash Equivalents
As a shareholder of United Bond Fund, for every $100 you had invested on
December 31, 1997, your Fund owned:
Bonds:
Corporate $65.12
U.S. Government 23.29
Other Government 7.25
Cash and Cash Equivalents 4.34
Not all holdings will be represented in the portfolio at all times.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Chemicals and Allied Products - 5.36%
Dow Capital B.V.,
9.0%, 5-15-2010 ....................... $ 5,000 $ 5,911,950
Dow Chemical Company (The),
8.55%, 10-15-2009 ..................... 5,000 5,769,300
Procter & Gamble Company (The),
8.0%, 9-1-2024 ........................ 10,000 12,008,700
Rohm & Haas,
9.375%, 11-15-2019 .................... 4,250 4,637,812
Total ................................. 28,327,762
Communication - 6.26%
Bell Telephone Company of Pennsylvania (The),
8.35%, 12-15-2030 ..................... 5,000 6,228,550
BellSouth Telecommunications, Inc.,
5.85%, 11-15-2045 ..................... 3,000 3,019,350
Brooks Fiber Properties, Inc.,
0.0%, 3-1-2006 (A) .................... 3,750 3,112,500
Centel Capital Corporation,
9.0%, 10-15-2019 ...................... 3,000 3,693,780
Jones Intercable, Inc.,
9.625%, 3-15-2002 ..................... 2,500 2,681,250
Tele-Communications, Inc.,
6.58%, 2-15-2005 ...................... 7,500 7,987,875
Turner Broadcasting System, Inc.,
8.375%, 7-1-2013 ...................... 4,000 4,488,080
Videotron Holdings Plc,
0.0%, 7-1-2004 (A) .................... 2,000 1,904,960
Total ................................. 33,116,345
Depository Institutions - 10.72%
AmSouth Bancorporation,
6.75%, 11-1-2025 ...................... 6,000 6,147,780
Chevy Chase Savings Bank, F.S.B.,
9.25%, 12-1-2005 ...................... 1,500 1,545,000
Citicorp,
9.5%, 2-1-2002 ........................ 4,500 5,011,830
J.P. Morgan & Co. Incorporated,
7.54%, 1-15-2027 ...................... 5,000 5,079,300
Kansallis-Osake-Pankki,
10.0%, 5-1-2002 ....................... 6,000 6,818,340
NBD Bank, National Association,
8.25%, 11-1-2024 ...................... 6,000 7,283,400
NationsBank Corporation,
8.57%, 11-15-2024 ..................... 5,000 6,211,450
Riggs National Corporation,
8.5%, 2-1-2006 ........................ 6,000 6,293,160
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (CONTINUED)
Depository Institutions (Continued)
SouthTrust Bank of Alabama, National Association:
5.58%, 2-6-2006 ....................... $ 4,500 $ 4,438,170
7.69%, 5-15-2025 ...................... 5,000 5,758,500
Sovereign Bancorp, Inc.,
8.0%, 3-15-2003 ....................... 2,000 2,077,500
Total ................................. 56,664,430
Electric, Gas and Sanitary Services - 6.68%
Cajun Electric Power Cooperative, Inc.,
8.92%, 3-15-2019 ...................... 5,000 5,387,550
California Infrastructure and Economic Development
Bank Special Purpose Trust:
PG&E-1,
6.42%, 9-25-2008 ...................... 3,500 3,535,560
SCE-1,
6.38%, 9-25-2008 ...................... 4,250 4,289,397
Cleveland Electric Illuminating Co. (The),
9.5%, 5-15-2005 ....................... 4,000 4,436,080
Consolidated Edison Company
of New York, Inc.,
8.05%, 12-15-2027 ..................... 4,500 4,741,110
El Paso Electric Company,
7.25%, 2-1-99 ......................... 2,250 2,260,553
Niagara Mohawk Power,
9.5%, 6-1-2000 ........................ 1,500 1,587,060
Pacific Gas & Electric Co.,
6.875%, 12-1-99........................ 4,750 4,763,205
Pennsylvania Power & Light Co.,
9.25%, 10-1-2019 ...................... 4,000 4,326,440
Total ................................. 35,326,955
Food and Kindred Products - 4.55%
Anheuser-Busch,
7.0%, 9-1-2005 ........................ 3,000 3,053,820
Coca-Cola Enterprises Inc.,
0.0%, 6-20-2020 ....................... 63,500 14,394,180
Hershey Foods,
6.7%, 10-1-2005 ....................... 500 513,770
Nabisco, Inc.,
6.8%, 9-1-2001 ........................ 6,000 6,115,980
Total ................................. 24,077,750
Food Stores - 0.40%
Kroger Co. (The),
7.65%, 4-15-2007 ...................... 2,000 2,137,420
Health Services - 1.66%
Tenet Healthcare Corporation:
7.875%, 1-15-2003 ..................... 3,500 3,543,750
8.625%, 12-1-2003 ..................... 5,000 5,212,500
Total ................................. 8,756,250
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (CONTINUED)
Hotels and Other Lodging Places - 1.89%
Marriott International, Inc.,
7.875%, 4-15-2005 ..................... $ 5,000 $ 5,439,950
RHG Finance Corporation,
8.875%, 10-1-2005 ..................... 4,000 4,545,400
Total ................................. 9,985,350
Instruments and Related Products - 0.71%
Raytheon Co.,
6.45%, 8-15-2002 ...................... 3,750 3,768,413
Insurance Carriers - 0.60%
Reliance Group Holdings, Inc.,
9.0%, 11-15-2000 ...................... 3,000 3,145,020
Lumber and Wood Products - 0.41%
Doman Industries Limited,
8.75%, 3-15-2004 ...................... 2,250 2,148,750
Nondepository Institutions - 14.71%
Associates Corporation of North America,
7.95%, 2-15-2010 ...................... 5,000 5,612,550
CHYPS CBO 1997-1 Ltd.,
6.72%, 1-15-2010 (B)................... 8,500 8,223,750
CWMBS, Inc.,
6.5%, 4-25-2024 ....................... 10,000 9,967,200
Chrysler Financial Corporation,
12.75%, 11-1-99 ....................... 9,000 9,992,880
Equicon Loan Trust,
7.3%, 2-18-2013 ....................... 4,571 4,672,826
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... 5,000 5,780,900
General Motors Acceptance Corporation,
8.875%, 6-1-2010 ...................... 10,000 11,939,700
IMC Home Equity Loan Trust 1997-5 A7,
6.9%, 1-20-2022 ....................... 4,500 4,533,750
National Rural Utilities Cooperative Finance Corp.,
6.1%, 12-22-2000 ...................... 4,000 4,005,000
Residential Asset Securities Corporation,
Mortgage Pass-Through Certificates,
1995-KS3 Class D,
8.0%, 10-25-2024 ...................... 4,000 4,171,560
U S WEST Communications Group,
6.95%, 1-15-2037 ...................... 3,750 3,862,762
Westinghouse Electric Corporation,
8.875%, 6-14-2014 ..................... 4,500 4,998,690
Total ................................. 77,761,568
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (CONTINUED)
Oil and Gas Extraction - 3.53%
Anadarko Petroleum Corporation,
7.25%, 3-15-2025 ...................... $ 5,000 $ 5,457,200
Louis Dreyfus Natural Gas Corp.,
9.25%, 6-15-2004 ...................... 4,500 5,040,000
Mitchell Energy & Development Corp.,
9.25%, 1-15-2002 ...................... 165 179,284
Oryx Energy Company,
10.0%, 4-1-2001 ....................... 3,500 3,844,995
YPF Sociedad Anoima,
8.0%, 2-15-2004 ....................... 4,000 4,130,680
Total ................................. 18,652,159
Paper and Allied Products - 1.31%
Boise Cascade Office Products Corporation,
9.875%, 2-15-2001 ..................... 2,500 2,594,450
Canadian Pacific Forest Products Ltd.,
9.25%, 6-15-2002 ...................... 4,000 4,308,880
Total ................................. 6,903,330
Printing and Publishing - 0.52%
Viacom International Inc.,
10.25%, 9-15-2001 ..................... 2,500 2,752,400
Security and Commodity Brokers - 0.94%
Salomon Inc.,
3.65%, 2-14-2002 ...................... 5,000 4,988,050
Stone, Clay and Glass Products - 1.93%
Owens-Corning Fiberglas Corporation,
8.875%, 6-1-2002 ...................... 5,000 5,440,650
Owens-Illinois, Inc.,
7.85%, 5-15-2004 ...................... 2,500 2,626,350
USG Corporation,
9.25%, 9-15-2001 ...................... 2,000 2,140,000
Total ................................. 10,207,000
United States Postal Service - 0.33%
Postal Square Limited Partnership,
6.5%, 7-15-2022 ....................... 1,750 1,754,375
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (CONTINUED)
Wholesale Trade -- Durable Goods - 2.61%
Fisher Scientific International Inc.,
7.125%, 12-15-2005 .................... $ 3,500 $ 3,274,845
Motorola, Inc.,
8.4%, 8-15-2031 ....................... 8,500 10,533,795
Total ................................. 13,808,640
TOTAL CORPORATE DEBT SECURITIES - 65.12% $344,281,967
(Cost: $329,194,429)
OTHER GOVERNMENT SECURITIES
Canada - 6.13%
Hydro Quebec:
8.05%, 7-7-2024 ....................... 10,000 11,512,700
7.4%, 3-28-2025 ....................... 5,000 6,079,250
Province de Quebec:
5.67%, 2-27-2026 ...................... 3,500 3,689,105
6.29%, 3-6-2026 ....................... 5,000 5,155,100
Province of Nova Scotia,
8.25%, 11-15-2019 ..................... 5,000 5,962,650
Total ................................. 32,398,805
Supranational - 1.12%
Inter-American Development Bank,
8.4%, 9-1-2009 ........................ 5,000 5,937,700
TOTAL OTHER GOVERNMENT SECURITIES - 7.25% $ 38,336,505
(Cost: $34,404,421)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
7.5%, 2-15-2007 ....................... 10,000 10,265,600
7.5%, 11-15-2017 ...................... 10,000 10,153,100
7.0%, 1-15-2019 ....................... 2,000 2,043,120
7.5%, 4-15-2019 ....................... 13,730 14,111,896
7.95%, 12-15-2020 ..................... 9,000 9,247,500
Federal National Mortgage Association:
7.0%, 7-25-2006 ....................... 10,000 10,146,800
7.0%, 9-25-2020 ....................... 2,000 2,040,000
7.0%, 8-25-2021 ....................... 10,000 10,121,800
Government National Mortgage Association:
7.5%, 7-15-2023 ....................... 5,773 5,940,383
7.5%, 12-15-2023 ...................... 5,006 5,151,884
8.0%, 9-15-2025 ....................... 8,636 9,072,865
7.0%, 7-20-2027 ....................... 359 360,850
7.0%, 9-20-2027 ....................... 5,562 5,589,630
7.75%, 10-15-2031 ..................... 1,987 2,060,520
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES (Continued)
United States Department of Veterans Affairs,
Guaranteed Remic Pass-Through Certificates,
Vendee Mortgage Trust, 1997-2 Class C,
7.5%, 8-15-2017 ....................... $ 4,000 $ 4,163,720
United States Treasury:
6.75%, 5-31-99 ........................ 7,500 7,610,175
5.75%, 10-31-2000 ..................... 9,000 9,011,250
5.25%, 1-31-2001 ...................... 5,000 4,939,050
0.0%, 2-15-2019 ....................... 4,000 1,122,120
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 23.29% $123,152,263
(Cost: $120,200,214)
TOTAL SHORT-TERM SECURITIES - 3.44% $ 18,181,383
(Cost: $18,181,383)
TOTAL INVESTMENT SECURITIES - 99.10% $523,952,118
(Cost: $501,980,447)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.90% 4,743,665
NET ASSETS - 100.00% $528,695,783
See Notes to Schedules of Investments on page 44.
<PAGE>
UNITED INCOME FUND
MANAGER'S LETTER
- ---------------------------------------------------------------------------
DECEMBER 31, 1997
Dear Shareholder:
This report relates to the operation of the United Income Fund for the fiscal
year ended December 31, 1997. The following discussion, graphs and tables
provide you with information regarding the Fund's performance during that
period.
1997 was the third consecutive year of very positive returns in the major U.S.
stock indexes. The U.S. economy continued to enjoy a remarkable period of
moderate economic growth, strong corporate earnings, low unemployment, high
levels of consumer confidence, declining interest rates and low inflation.
Although sharp currency devaluations and economic turmoil rocked several nations
in Southeast Asia late in the year, the ramifications were not yet clear as 1997
came to a close.
The investment strategy employed in the management of the Fund remained
unchanged. We continued to focus on large, well-managed U.S. corporations that
enjoy dominant positions in their markets on a global basis. While some changes
in the Fund's portfolio do occur frequently, the overall turnover rate is
generally very low relative to other large cap equity income mutual funds.
Throughout 1997, the Fund was overweighted in automotive, chemicals, machinery,
household products, retailing and technology stocks. The Fund carried below
average holdings in energy, financial services and utilities.
The strategies and techniques we applied resulted in the Fund's performance
remaining fairly consistent with that of the Lipper Equity Income Fund Universe
Average and below that of the S&P 500. Those indexes are charted on the
following page and reflect the performance of securities that generally
represent the stock market (the S&P 500 Index) and the universe of funds with
similar investment objectives (the Lipper Equity Income Fund Universe Average).
The Fund's underperformance relative to the S&P 500 can be attributed primarily
in the Fund's investments in areas such as HMOs, semiconductors, semiconductor
equipment, software and paper, all of which came under pressure in the final
quarter of the year.
We expect that many U.S. companies will see meaningful downward earnings
revisions for 1998 as a result of ongoing events in Asia. The perception of a
subdued global economic growth rate dominates the investment outlook as we enter
the new year. We expect economic growth in 1998 to remain moderate and
inflation to remain low. However, we think the concerns regarding economic
difficulties in emerging markets in Asia will serve to reinforce the position of
strength enjoyed by major U.S. corporations. Our strategy remains one of
investing in U.S. companies which represent stability and market leadership.
Although we anticipate slowing global growth in the new year, many powerful
positives remain intact for U.S. stock investments. We will adjust the Fund's
portfolio as the markets evolve; however, our basic emphasis on largely-
capitalized U.S. stocks will remain unchanged.
Thank you very much for your continued support and confidence.
Respectfully,
Russell E. Thompson
James D. Wineland
Managers, United Income Fund
<PAGE>
Comparison of Change in Value of $10,000 Investment in
United Income Fund, Class A Shares,
The S&P 500 Index,
and The Lipper Equity Income Fund Universe Average
Lipper
United Equity
Income Income
Fund, S&P Fund
Class A 500 Universe
Shares Index Average
--------- --------- ---------
12/31/87 Purchase 9,425 10,000 10,000
12/31/88 11,294 11,661 11,378
12/31/89 14,398 15,356 13,712
12/31/90 13,614 14,880 12,853
12/31/91 17,648 19,413 16,237
12/31/92 19,759 20,893 17,761
12/31/93 22,931 22,998 20,206
12/31/94 22,516 23,301 19,696
12/31/95 29,183 32,058 25,563
12/31/96 35,129 39,419 30,309
12/31/97 44,738 52,541 38,644
- ----- United Income Fund, Class A Shares* -- $44,738
+++++ S&P 500 Index -- $52,541
===== Lipper Equity Income Fund Universe Average -- $38,644
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund and assumes
reinvestment of dividends and distributions.
Annual Average Total Return +
Class A++ Class Y
-----------------------------
Year Ended
12/31/97 20.02% 27.49%
5 Years Ended
12/31/97 16.36% N/A
10 Years Ended
12/31/97 16.16% N/A
Life of Class Y +++ N/A 22.31%
+ Total return for the Class Y shares may be greater than that of the Class A
shares because the Fund's Class Y shares are not subject to a sales load or
12b-1 fees.
++ Performance data quoted represents past performance and is based on
deduction of a 5.75% sales load on the initial purchase in each of the
three periods. Investment return and principal value will fluctuate and an
investor's shares, when redeemed, may be worth more or less than their
original cost.
+++ 6/19/95 (the date on which Fund Class Y shares were first acquired by
shareholders) through 12/31/97.
Past performance is not predictive of future performance. Indexes are
unmanaged.
<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 Fiscal Year Ended December 31, 1997
- -------------------------------------------
DIVIDENDS PAID $0.29
=====
CAPITAL GAINS DISTRIBUTION $3.59
=====
NET ASSET VALUE ON
12/31/97 $37.95 adjusted to:$41.54(A)
12/31/96 32.91
------
CHANGE PER SHARE $ 8.63
======
(A) This number includes the capital gains distribution of $3.59 paid in
December 1997 added to the actual net asset value on December 31, 1997.
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 12-31-97 20.02% 27.34%
5-year period ended 12-31-97 16.36% 17.75%
10-year period ended 12-31-97 16.16% 16.85%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On December 31, 1997, United Income Fund had net assets totaling $6,494,989,444
invested in a diversified portfolio of:
91.65% Common Stocks
6.07% Cash and Cash Equivalents
1.94% U.S. Government Securities
0.34% Corporate Debt Securities
As a shareholder of United Income Fund, for every $100 you had invested on
December 31, 1997, your Fund owned:
$61.07 Manufacturing Stocks
10.42 Finance, Insurance and Real Estate Stocks
9.44 Wholesale and Retail Trade Stocks
6.48 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
6.07 Cash and Cash Equivalents
3.13 Services Stocks
1.94 United States Government Securities
1.11 Agriculture, Forestry and Fisheries Stocks
0.34 Corporate Debt Securities
Not all holdings will be represented in the portfolio at all times.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1997
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 1.64%
Gap, Inc. (The) ........................ 3,000,000 $ 106,311,000
Building Materials and Garden Supplies - 1.04%
Home Depot, Inc. (The) ................. 1,147,500 67,559,062
Business Services - 1.29%
Microsoft Corporation* ................. 650,000 83,991,700
Chemicals and Allied Products - 20.10%
Air Products and Chemicals, Inc. ....... 1,150,000 94,515,050
Astra AB, Class A (C) .................. 1,600,000 27,738,901
Avon Products, Inc. .................... 450,000 27,618,750
BetzDearborn Inc. ...................... 563,000 34,377,906
Colgate-Palmolive Company .............. 1,200,000 88,200,000
Dow Chemical Company (The) ............. 575,000 58,362,500
du Pont (E.I.) de Nemours and Company .. 2,000,000 120,124,000
Gillette Company (The) ................. 1,904,000 191,232,048
Lilly (Eli) and Company ................ 1,250,000 87,031,250
Merck & Co., Inc. ...................... 700,000 74,375,000
Monsanto Company ....................... 1,625,200 68,258,400
Novartis AG (C) ......................... 15,625 25,344,775
PPG Industries, Inc. ................... 1,250,000 71,406,250
Pfizer Inc. ............................ 1,300,000 96,930,600
Praxair, Inc. .......................... 500,000 22,500,000
Procter & Gamble Company (The) ......... 1,200,000 95,774,400
Solutia Inc. ........................... 136,000 3,629,432
Union Carbide Corporation .............. 875,000 37,569,875
Warner-Lambert Company ................. 650,000 80,600,000
Total ................................. 1,305,589,137
Communication - 3.49%
AirTouch Communications* ............... 900,000 37,405,800
Cox Communications, Inc.* .............. 1,250,000 50,077,500
Grupo Televisa, S.A., GDR* ............. 525,000 20,310,675
Nokia Corporation, Series A (C) ........ 760,000 53,984,802
SBC Communications Inc. ................ 460,000 33,695,000
WorldCom, Inc.* ........................ 1,037,000 31,401,397
Total ................................. 226,875,174
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1997
Shares Value
COMMON STOCKS (Continued)
Depository Institutions - 5.57%
BankAmerica Corporation ................ 950,000 $ 69,350,000
Chase Manhattan Corporation (The) ...... 525,000 57,487,500
Citicorp ............................... 500,000 63,218,500
Credit Suisse Group, Registered
Shares (C) ............................ 200,400 30,997,468
Norwest Corporation .................... 2,200,000 84,975,000
U. S. Bancorp. ......................... 500,000 55,968,500
Total ................................. 361,996,968
Eating and Drinking Places - 0.09%
TRICON Global Restaurants, Inc.* ....... 200,000 5,812,400
Electric, Gas and Sanitary Services - 1.09%
Duke Energy Corp. ...................... 1,275,000 70,603,125
Electronic and Other Electric Equipment - 9.80%
Aeroquip-Vickers Inc. .................. 464,000 22,764,768
Analog Devices, Inc.* .................. 1,740,000 48,175,380
Emerson Electric Co. ................... 800,000 45,149,600
General Electric Company ............... 2,400,000 176,100,000
Intel Corporation ...................... 2,300,000 161,501,400
Lucent Technologies Inc. ............... 425,000 33,946,875
Maytag Corporation ..................... 1,100,000 41,043,200
NextLevel Systems, Inc.* ............... 1,863,800 33,315,425
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 2,000,000 74,686,000
Total ................................. 636,682,648
Food and Kindred Products - 2.86%
CPC International Inc. ................. 700,000 75,600,000
Coca-Cola Company (The) ................ 560,000 37,310,000
PepsiCo, Inc. .......................... 2,000,000 72,874,000
Total ................................. 185,784,000
Food Stores - 0.60%
Kroger Co. (The)* ...................... 1,050,000 38,783,850
Forestry - 1.11%
Georgia-Pacific Corporation ............ 425,000 25,818,750
Georgia-Pacific Corporation, Timber Group* 425,000 9,641,975
Weyerhaeuser Company ................... 750,000 36,796,500
Total ................................. 72,257,225
Furniture and Fixtures - 0.11%
Lear Corporation* ...................... 146,200 6,944,500
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1997
Shares Value
COMMON STOCKS (Continued)
Furniture and Home Furnishings Stores - 0.88%
Circuit City Stores, Inc. .............. 1,600,000 $ 56,899,200
General Merchandise Stores - 3.42%
Cifra, S.A. de C.V., Series C (C) ...... 8,000,000 17,947,447
Dayton Hudson Corporation .............. 949,800 64,170,387
Federated Department Stores, Inc.* ...... 760,000 32,727,120
Wal-Mart Stores, Inc. .................. 2,725,000 107,465,825
Total ................................. 222,310,779
Health Services - 0.77%
Tenet Healthcare Corporation* .......... 1,500,000 49,687,500
Industrial Machinery and Equipment - 11.67%
Applied Materials, Inc.* ............... 1,910,000 57,477,630
Case Corporation ....................... 1,214,600 73,406,780
Caterpillar Inc. ....................... 2,800,000 135,973,600
cisco Systems, Inc.* ................... 1,125,000 62,788,500
Compaq Computer Corporation* ........... 1,125,000 63,491,625
Deere & Company ........................ 2,055,000 119,831,160
Eaton Corporation ...................... 500,000 44,625,000
Hewlett-Packard Company ................ 225,400 14,087,500
Ingersoll-Rand Company ................. 600,000 24,262,200
International Business Machines
Corporation ........................... 600,000 62,737,200
Parker Hannifin Corporation ............ 900,000 41,287,500
United Technologies Corporation ........ 800,000 58,249,600
Total ................................. 758,218,295
Instruments and Related Products - 4.77%
General Motors Corporation, Class H .... 674,700 24,921,394
Guidant Corporation .................... 1,800,000 112,050,000
Medtronic, Inc. ........................ 1,600,000 83,699,200
Raytheon Company, Class A* ............. 454,381 22,406,437
Xerox Corporation ...................... 900,000 66,430,800
Total ................................. 309,507,831
Insurance Carriers - 0.90%
American International Group, Inc. .... 539,200 58,638,000
Miscellaneous Retail - 0.53%
Costco Companies, Inc.* ................ 765,000 34,113,645
Motion Pictures - 1.07%
Walt Disney Company (The) .............. 700,000 69,343,400
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1997
Shares Value
COMMON STOCKS (Continued)
Nondepository Institutions - 3.95%
Associates First Capital Corporation ... 500,000 $ 35,968,500
Fannie Mae ............................. 1,805,800 103,042,560
Freddie Mac ............................ 2,800,000 117,423,600
Total ................................. 256,434,660
Paper and Allied Products - 1.17%
Champion International Corporation ..... 500,000 22,656,000
International Paper Company ............ 600,000 25,875,000
Willamette Industries, Inc. ............ 860,000 27,680,820
Total ................................. 76,211,820
Petroleum and Coal Products - 2.85%
British Petroleum p.l.c (The), ADR ..... 400,000 31,874,800
Exxon Corporation ...................... 500,000 30,593,500
Mobil Corporation ...................... 800,000 57,749,600
Royal Dutch Petroleum Company .......... 1,200,000 65,024,400
Total ................................. 185,242,300
Primary Metal Industries - 0.70%
Aluminum Company of America ............ 650,000 45,743,750
Railroad Transportation - 0.47%
Burlington Northern Santa Fe Corporation 325,000 30,204,525
Rubber and Miscellaneous Plastics Products - 0.98%
Goodyear Tire & Rubber Company (The) ... 1,000,000 63,625,000
Transportation By Air - 1.43%
AMR Corporation* ....................... 400,000 51,400,000
Delta Air Lines, Inc. .................. 350,000 41,671,700
Total ................................. 93,071,700
Transportation Equipment - 6.06%
AlliedSignal Inc. ...................... 1,400,000 54,511,800
Boeing Company (The) ................... 1,270,000 62,149,990
Chrysler Corporation ................... 2,750,000 96,764,250
Dana Corporation ....................... 760,000 36,100,000
Ford Motor Company ..................... 1,500,000 73,030,500
General Motors Corporation ............. 1,175,000 71,234,375
Total ................................. 393,790,915
Wholesale Trade -- Durable Goods - 0.70%
Motorola, Inc. ......................... 800,000 45,649,600
Wholesale Trade -- Nondurable Goods - 0.54%
Safeway Inc.* .......................... 550,000 34,718,750
TOTAL COMMON STOCKS - 91.65% $5,952,602,459
(Cost: $3,145,426,762)
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Depository Institutions - 0.16%
Morgan Guaranty Trust Company of New York,
7.375%, 2-1-2002 ...................... $10,250 $ 10,655,695
Nondepository Institutions - 0.18%
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... 10,000 11,561,800
TOTAL CORPORATE DEBT SECURITIES - 0.34% $ 22,217,495
(Cost: $20,010,806)
UNITED STATES GOVERNMENT SECURITIES
United States Treasury:
6.75%, 4-30-2000 ...................... 37,000 37,843,970
5.75%, 8-15-2003 ...................... 50,000 50,031,000
10.375%, 11-15-2012 ................... 8,500 11,294,375
9.0%, 11-15-2018 ...................... 20,000 27,018,800
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 1.94% $ 126,188,145
(Cost: $114,887,534)
SHORT-TERM SECURITIES
Commercial Paper
Chemicals and Allied Products - 0.62%
duPont (E.I.) de Nemours and Company:
5.75%, 1-21-98 ........................ 10,330 10,297,001
5.75%, 1-23-98 ........................ 25,000 24,912,153
Monsanto Company,
5.82%, 1-15-98 ........................ 5,195 5,183,242
Total ................................. 40,392,396
Communication - 0.70%
Ameritech Corp.,
5.89%, 2-3-98 ......................... 20,430 20,319,695
Bell Atlantic Financial Services Inc.,
5.8%, 1-5-98 .......................... 25,000 24,983,889
Total ................................. 45,303,584
Depository Institutions - 0.51%
Canadian Imperial Holdings Inc.,
5.82%, 1-7-98 ......................... 26,000 25,974,780
National Australia Funding (DE) Inc.,
5.8%, 1-12-98 ......................... 6,920 6,907,736
Total ................................. 32,882,516
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Electric, Gas and Sanitary Services - 1.06%
Carolina Power & Light Co.,
6.1%, 1-21-98 ......................... $ 1,740 $ 1,734,103
Commonwealth Edison Co.:
6.18%, 1-14-98 ........................ 1,460 1,456,742
6.18%, 1-28-98 ........................ 14,620 14,552,236
Florida Power Corp.,
5.77%, 1-29-98 ........................ 8,500 8,461,854
Idaho Power Co.,
5.82%, 1-5-98 ......................... 5,000 4,996,767
Public Service Co. Of Colorado,
6.1%, 1-8-98 .......................... 33,000 32,960,858
Puget Sound Energy Inc.,
6.12%, 1-9-98 ......................... 4,860 4,853,391
Total ................................. 69,015,951
Fabricated Metal Products - 0.00%
Danaher Corporation,
5.7227%, Master Note .................. 110 110,000
Food and Kindred Products - 0.62%
ConAgra Inc.,
6.7%, 1-15-98 ......................... 1,000 997,395
Hercules Inc.,
6.09%, 1-16-98 ........................ 7,655 7,635,575
Seagram (Joseph E.) & Sons Inc.:
5.85%, 1-15-98 ........................ 21,880 21,830,223
6.45%, 1-15-98 ........................ 1,085 1,082,279
5.8%, 2-2-98 .......................... 8,600 8,555,662
Total ................................. 40,101,134
Food Stores - 0.22%
Albertson's Inc.,
5.76%, 1-22-98 ........................ 14,515 14,466,230
Industrial Machinery and Equipment - 0.06%
Hewlett-Packard Company,
5.95%, 1-21-98 ........................ 4,040 4,026,646
Instruments and Related Products - 0.39%
Baxter International Inc.:
6.07%, 1-14-98 ........................ 10,185 10,162,675
6.1%, 1-30-98 ......................... 15,000 14,926,292
Total ................................. 25,088,967
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES(Continued)
Commercial Paper (Continued)
Insurance Agents, Brokers and Service - 0.09%
Aon Corp.,
5.9%, 1-30-98 ......................... $ 5,645 $ 5,618,171
Insurance Carriers - 0.20%
USAA Capital Corp.:
5.9%, 1-21-98 ......................... 9,425 9,394,107
5.72%, 2-3-98 ......................... 3,695 3,675,626
Total ................................. 13,069,733
Motion Pictures - 0.32%
Walt Disney Company (The),
5.7%, 1-13-98 ......................... 20,780 20,740,518
Nondepository Institutions - 0.89%
Deere (John) Capital Corp.,
5.75%, 1-15-98 ........................ 24,640 24,584,902
General Electric Capital Corporation,
5.79%, 1-7-98 ......................... 9,670 9,660,668
Island Finance Puerto Rico Inc.,
5.72%, 1-30-98 ........................ 4,150 4,130,878
Textron Financial Corp.:
6.0%, 1-20-98 ......................... 18,000 17,943,000
6.05%, 2-4-98 ......................... 1,650 1,640,572
Total ................................. 57,960,020
Printing and Publishing - 0.01%
American Greetings Corp.,
5.8%, 1-9-98 .......................... 1,000 998,711
Tobacco Products - 0.42%
B.A.T Capital Corp.:
5.9%, 1-20-98 ......................... 7,055 7,033,031
5.8%, 1-23-98 ......................... 20,070 19,998,863
Total ................................. 27,031,894
TOTAL SHORT-TERM SECURITIES - 6.11% $ 396,806,471
(Cost: $396,806,471)
TOTAL INVESTMENT SECURITIES - 100.04% $6,497,814,570
(Cost: $3,677,131,573)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.04%) (2,825,126)
NET ASSETS - 100.00% $6,494,989,444
See Notes to Schedules of Investments on page 44.
<PAGE>
UNITED ACCUMULATIVE FUND
MANAGER'S LETTER
DECEMBER 31, 1997
- ---------------------------------------------------------------------------
Dear Shareholder:
This report relates to the operation of the United Accumulative Fund for the
fiscal year ended December 31, 1997. The following discussion, graphs and
tables provide you with information regarding the Fund's performance during that
period.
For most of 1997, market conditions were similar to those that prevailed in
1996. The S&P 500 rose considerably, supported by declining interest rates and
rising corporate profits. The market leadership remained with large cap stocks,
primarily in the areas of financials, health care and technology. Early in the
fourth quarter, a financial crisis in Southeast Asia developed that created
quite a bit of volatility in financial markets here and abroad. The crisis was
brought on by excessive availability of cheap capital causing overvaluation in
many Pacific Rim markets. Supply began to outstrip demand, causing returns on
capital to fall, and as a consequence, rapid capital flight.
There was little change in the management style of the Fund for most of the
year, as we maintained our emphasis on the financial services and health care
sectors. When the Asian financial crisis began to unfold, the market reacted
first by de-emphasizing the technology companies and the infrastructure
builders; secondly, the commodity and basic-industry players; and, more
recently, the money center and regional banks. Multinational companies, the
market rage for many years, were generally shunned by investors. U.S. companies
with significant domestic operations were sought after. In response to these
developments, the Fund took steps to avoid multinationals with large Southeast
Asia exposure, became more selective and started building a cash position.
The strategies and techniques we applied resulted in the Fund outperforming the
Lipper Growth Fund Universe Average and underperforming the S&P 500 Index, both
charted on the following page. The Lipper Index reflects the universe of funds
with similar investment objectives and the S&P 500 Index reflects the
performance of securities that generally represent the stock market.
The financial crisis in Southeast Asia should continue to impact the market well
into 1998. Recent events in Southeast Asia are likely to produce a growth
deceleration in the global economy. In mid-1997, inflation was the perceived
risk. As the fourth quarter began, inflation was still a higher probability
than deflation. As we head into 1998, deflation has emerged as the prevailing
danger. The impact of the Southeast Asia turmoil will likely be to lower
commodity prices and create a stronger U.S. Dollar. This could result in a
slowdown in U.S. manufacturing and a much larger U.S. trade deficit. In
response to anticipated market conditions, we expect to decrease the Fund's
exposure in the banking industry, increase the holdings in health care and
continue to de-emphasize technology.
Thank you very much for your continued support and confidence.
Respectfully,
Antonio Intagliata
Manager, United Accumulative Fund
<PAGE>
Comparison of Change in Value of $10,000 Investment in
United Accumulative Fund, Class A Shares,
The S&P 500 Index,
and The Lipper Growth Fund Universe Average
United Lipper
Accumulative Growth
Fund, S&P Fund
Class A 500 Universe
Shares Index Average
------------ ----- --------
12/31/87 Purchase 9,425 10,000 10,000
12/31/88 11,032 11,661 11,392
12/31/89 14,073 15,356 14,257
12/31/90 12,642 14,880 13,477
12/31/91 15,636 19,413 18,291
12/31/92 17,856 20,893 19,713
12/31/93 19,474 22,998 21,839
12/31/94 19,482 23,301 21,354
12/31/95 26,148 32,058 27,860
12/31/96 29,332 39,419 33,170
12/31/97 38,008 52,541 41,441
===== United Accumulative Fund, Class A Shares* -- $38,008
- ----- S&P 500 Index -- $52,541
+++++ Lipper Growth Fund Universe Average -- $41,441
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund and assumes
reinvestment of dividends and distributions.
Annual Average Total Return +
Class A++ Class Y
-----------------------------
Year Ended
12/31/97 22.13% 29.67%
5 Years Ended
12/31/97 14.94% N/A
10 Years Ended
12/31/97 14.28% N/A
Life of Class Y +++ N/A 21.79%
+ Total return for the Class Y shares may be greater than that of the Class A
shares because the Fund's Class Y shares are not subject to a sales load or
12b-1 fees.
++ Performance data quoted represents past performance and is based on
deduction of a 5.75% sales load on the initial purchase in each of the
three periods. Investment return and principal value will fluctuate and an
investor's shares, when redeemed, may be worth more or less than their
original cost.
+++ 7/11/95 (the date on which Fund Class Y shares were first acquired by
shareholders) through 12/31/97.
Past performance is not predictive of future performance. Indexes are
unmanaged.
<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 Fiscal Year Ended December 31, 1997
- -------------------------------------------
DIVIDENDS PAID $0.09
=====
CAPITAL GAINS DISTRIBUTION $2.13
=====
NET ASSET VALUE ON
12/31/97 $7.77 adjusted to: $9.90(A)
12/31/96 7.75
-----
CHANGE PER SHARE $2.15
=====
(A) This number includes the capital gains distribution of $2.13 paid in
December 1997 added to the actual net asset value on December 31, 1997.
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 12-31-97 22.13% 29.58%
5-year period ended 12-31-97 14.94% 16.31%
10-year period ended 12-31-97 14.28% 14.96%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On December 31, 1997, United Accumulative Fund had net assets totaling
$1,599,042,462 invested in a diversified portfolio of:
83.86% Common Stocks
15.50% Cash and Cash Equivalents
0.64% Preferred Stock
As a shareholder of United Accumulative Fund, for every $100 you had invested on
December 31, 1997, your Fund owned:
$35.62 Finance, Insurance and Real Estate Stocks
22.67 Manufacturing Stocks
15.50 Cash and Cash Equivalents
13.71 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
4.51 Wholesale and Retail Trade Stocks
3.16 Miscellaneous Investing Institutions Stocks
2.40 Mining Stocks
1.79 Services Stocks
0.64 Preferred Stock
Not all holdings will be represented in the portfolio at all times.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1997
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 1.13%
Nordstrom, Inc. ......................... 300,000 $ 18,075,000
Business Services - 0.67%
Cerner Corporation* .................... 500,000 10,656,000
Chemicals and Allied Products - 15.38%
American Home Products Corporation ..... 775,000 59,287,500
Centocor, Inc.* ........................ 200,000 6,675,000
Gilead Sciences* ....................... 200,000 7,675,000
Novartis AG, ADR ....................... 900,000 73,068,300
Pfizer Inc. ............................ 500,000 37,281,000
Warner-Lambert Company ................. 500,000 62,000,000
Total ................................. 245,986,800
Communication - 10.44%
Intermedia Communications of Florida, Inc.* 397,800 24,141,289
LCI International, Inc.* ............... 700,000 21,525,000
Southern New England Telecommunications
Corporation ........................... 377,000 18,967,624
Sprint Corporation ..................... 550,000 32,243,750
Telecom Italia S.p.A., ADR ............. 350,000 22,400,000
Teleport Communications Group Inc.* .... 500,000 27,468,500
360. Communications Company* ........... 1,000,000 20,187,000
Total ................................. 166,933,163
Depository Institutions - 17.49%
AmSouth Bancorporation ................. 150,000 8,146,800
BankAmerica Corporation* ............... 550,000 40,150,000
Compass Bancshares, Inc. ............... 150,000 6,571,800
Credit Suisse Group, Registered
Shares (C) ............................ 135,000 20,881,528
Crestar Financial Corporation .......... 400,000 22,800,000
First American Corporation ............. 500,000 24,906,000
First Chicago NBD Corporation .......... 350,000 29,202,950
First Virginia Banks, Inc. ............. 300,000 15,525,000
Fleet Financial Group, Inc. ............ 255,000 19,108,935
Mellon Bank Corporation ................ 550,000 33,343,750
Mercantile Bancorporation Inc. ......... 218,400 13,431,600
Mercantile Bankshares Corporation ...... 310,000 12,012,500
Northern Trust Corporation ............. 100,000 7,000,000
Riggs National Corporation ............. 400,000 10,800,000
Washington Federal Inc. ................ 500,000 15,734,000
Total ................................. 279,614,863
Eating and Drinking Places - 1.05%
Wendys International, Inc. ............. 700,000 16,843,400
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1997
Shares Value
COMMON STOCKS (Continued)
Electric, Gas and Sanitary Services - 3.27%
Columbia Gas System, Inc. (The) ........ 200,000 $ 15,712,400
Sonat Inc. ............................. 800,000 36,600,000
Total ................................. 52,312,400
Food and Kindred Products - 1.51%
Nabisco Holdings, Class A .............. 500,000 24,218,500
General Merchandise Stores - 1.35%
Federated Department Stores, Inc.* ..... 500,000 21,531,000
Health Services - 1.12%
Total Renal Care Holdings, Inc.* ....... 650,000 17,956,250
Holding and Other Investment Offices - 3.16%
Duke Realty Investments, Inc. .......... 300,000 7,275,000
Equity Residential Properties .......... 150,000 7,612,500
Grupo Financiero Banamex Accival,
S.A. de C.V., B, CPO Shares (C)* ...... 2,500,000 7,483,267
Kilroy Realty Corporation .............. 550,000 15,812,500
Mack-Cali Realty Corporation ........... 300,000 12,300,000
Total ................................. 50,483,267
Instruments and Related Products - 1.58%
Baxter International Inc. .............. 500,000 25,218,500
Insurance Agents, Brokers and Service - 3.09%
Humana Inc.* ........................... 1,300,000 26,975,000
Marsh & McLennan Companies, Inc. ....... 300,000 22,368,600
Total ................................. 49,343,600
Insurance Carriers - 9.21%
Chartwell Re Corporation ............... 500,000 16,875,000
Chubb Corporation (The) ................ 500,000 37,812,500
Liberty Corporation (The) .............. 350,000 16,362,500
Ohio Casualty Corporation .............. 350,000 15,793,750
Penn-America Group, Inc. ............... 150,000 3,065,550
ReliaStar Financial Corp. .............. 700,000 28,830,900
Trenwick Group Inc. .................... 500,000 18,437,500
Vesta Insurance Group, Inc. ............ 171,500 10,182,812
Total ................................. 147,360,512
Miscellaneous Retail - 0.98%
Costco Companies, Inc.* ................ 350,000 15,607,550
Nondepository Institutions - 3.79%
CIT Group, Inc. (The), Class A* ........ 500,000 16,125,000
Fannie Mae ............................. 450,000 25,677,900
Freddie Mac ............................ 450,000 18,871,650
Total ................................. 60,674,550
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1997
Shares Value
COMMON STOCKS (Continued)
Oil and Gas Extraction - 2.40%
Schlumberger Limited ................... 250,000 $ 20,125,000
Western Atlas, Inc.* ................... 250,000 18,265,500
Total.................................. 38,390,500
Petroleum and Coal Products - 1.33%
Unocal Corporation ..................... 550,000 21,346,600
Printing and Publishing - 1.16%
Gannett Co., Inc. ...................... 300,000 18,543,600
Security and Commodity Brokers - 2.04%
Bear Stearns Companies Inc. (The) ...... 323,500 15,366,250
Paine Webber Group Inc. ................ 500,000 17,281,000
Total ................................. 32,647,250
Transportation Equipment - 1.71%
Hayes Wheels International, Inc.* ...... 235,000 6,580,000
Northrop Grumman Corporation ........... 180,000 20,700,000
Total ................................. 27,280,000
TOTAL COMMON STOCKS - 83.86% $1,341,023,305
(Cost: $1,223,694,190)
PREFERRED STOCK - 0.64%
Real Estate
Equity Residential Properties, 7.25% ... 400,000 $ 10,250,000
(Cost: $10,012,400)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Commercial Paper
Chemicals and Allied Products - 2.38%
Air Products and Chemicals Inc.,
5.85%, 1-23-98 ........................ $ 4,355 4,339,431
Monsanto Company,
5.82%, 1-15-98 ........................ 26,740 26,679,478
Procter & Gamble Company (The),
5.9%, 1-16-98 ......................... 7,085 7,067,583
Total ................................. 38,086,492
Communication - 1.03%
BellSouth Telecommunications, Inc.,
5.95%, 1-7-98 ......................... 8,195 8,186,873
GTE Corporation,
6.55%, 1-27-98 ........................ 8,330 8,290,595
Total ................................. 16,477,468
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES(Continued)
Commercial Paper (Continued)
Depository Institutions - 1.96%
J.P. Morgan & Co. Incorporated,
5.8%, 2-5-98 .......................... $22,060 $ 21,935,607
Toronto-Dominion Holdings USA Inc.:
5.77%, 1-12-98 ........................ 4,360 4,352,313
5.85%, 1-12-98 ........................ 4,975 4,966,107
Total ................................. 31,254,027
Electric, Gas and Sanitary Services - 3.60%
Bay State Gas Co.,
5.62%, 1-5-98 ......................... 645 644,597
Commonwealth Edison Co.,
6.18%, 1-14-98 ........................ 6,540 6,525,405
Georgia Power Co.,
5.88%, 1-15-98 ........................ 25,000 24,942,833
Public Service Electric & Gas Co.,
5.85%, 2-3-98 ......................... 1,055 1,049,343
Southern California Edison Co.:
5.78%, 1-15-98 ........................ 8,520 8,500,849
5.83%, 1-15-98 ........................ 16,000 15,963,724
Total ................................. 57,626,751
Electronic and Other Electric Equipment - 0.72%
Sony Capital Corp.,
5.86%, 2-4-98 ......................... 7,000 6,961,259
Whirlpool Corp.,
6.5%, 1-5-98 .......................... 4,580 4,576,692
Total ................................. 11,537,951
Fabricated Metal Products - 0.00%
Danaher Corporation,
5.7227%, Master Note .................. 49 49,000
Food and Kindred Products - 1.79%
ConAgra, Inc.,
6.72%, 1-9-98 ......................... 1,970 1,967,058
Heinz (H.J.) Company,
5.8%, 2-10-98 ......................... 17,000 16,890,445
Hercules Inc.:
6.05%, 1-9-98 ......................... 5,425 5,417,707
6.15%, 1-9-98 ......................... 2,770 2,766,214
Seagram (Joseph E.) & Sons Inc.,
5.8%, 2-2-98 .......................... 1,590 1,581,803
Total ................................. 28,623,227
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES(Continued)
Commercial Paper (Continued)
Industrial Machinery and Equipment - 0.10%
Hewlett-Packard Company,
5.77%, 1-5-98 ......................... $ 1,515 $ 1,514,029
Insurance Carriers - 0.25%
Transamerica Finance Corp.,
5.75%, 1-22-98 ........................ 4,005 3,991,567
Metal Mining - 0.38%
BHP Finance (USA) Inc.,
5.72%, 1-13-98 ........................ 6,000 5,988,560
Nondepository Institutions - 2.09%
General Electric Capital Corp.,
5.79%, 1-7-98 ......................... 19,530 19,511,154
Textron Financial Corp.,
6.15%, 1-29-98 ........................ 14,000 13,933,033
Total ................................. 33,444,187
Personal Services - 0.86%
Block Financial Corp.:
5.77%, 1-16-98 ........................ 5,000 4,987,979
5.77%, 1-20-98 ........................ 3,573 3,562,119
5.82%, 2-19-98 ........................ 5,290 5,248,094
Total ................................. 13,798,192
Petroleum and Coal Products - 0.13%
BP America Inc.,
6.1%, 1-21-98 ......................... 2,090 2,082,917
Textile Mill Products - 0.34%
Sara Lee Corporation,
5.5727%, Master Note .................. 5,421 5,421,000
Transportation Equipment - 0.62%
Dana Credit Corp.,
6.03%, 2-2-98 ......................... 10,000 9,946,400
Total Commercial Paper - 16.25% 259,841,768
Municipal Obligations - 0.43%
California
California Pollution Control Financing Authority,
Environmental Improvement Revenue Bonds
(Shell Martinez Refining Company Project),
Series 1996 (Taxable),
5.95%, 1-14-98 ........................ 6,840 6,840,000
TOTAL SHORT-TERM SECURITIES - 16.68% $ 266,681,768
(Cost: $266,681,768)
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1997
Value
TOTAL INVESTMENT SECURITIES - 101.18% $1,617,955,073
(Cost: $1,500,388,358)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (1.18%) (18,912,611)
NET ASSETS - 100.00% $1,599,042,462
See Notes to Schedules of Investments on page 44.
<PAGE>
UNITED SCIENCE AND TECHNOLOGY FUND
MANAGER'S LETTER
DECEMBER 31, 1997
- ---------------------------------------------------------------------------
Dear Shareholder:
This report relates to the operation of the United Science and Technology Fund
for the fiscal year ended December 31, 1997. The following discussion, graphs
and tables provide you with information regarding the Fund's performance during
that period.
1997 presented an economic picture of above average growth and lower than normal
inflation. Politically, the President and Congress were successful in enacting
tax relief legislation, including lower capital gains taxes, but went from two
capital gains tax rates to three. The markets did well, specifically index
funds and large cap funds. Sector funds, including mid cap and small cap funds,
did substantially worse because most of the positive price action was
concentrated in fewer, larger stocks. In the fourth quarter, a currency crisis
affected many Asian markets and economies and the International Monetary Fund
(IMF) was called into action to aid many of these large economies in
restructuring debt obligations. This had a negative impact on Asian, U.S. and
European securities markets and on technology funds in general. Many
technology-based companies export large quantities of goods and services to
Asian countries. The currency crisis stopped the flow of goods and services,
therefore sales and profits of those exposed companies declined and/or the fear
of such a decline brought stocks down.
The Fund avoided some of the decline in technology stock prices resulting from
the Asian crisis by having previously sold or reduced positions in companies
that were more at risk, notably semiconductor and personal computer related
issues. The Fund was overweighted in Internet-content-related stocks throughout
the year. Our thought was that low-cost personal computers enable consumers and
businesses easier access to the Internet. The Fund maintained large positions
in the drug industry and related drug distribution, medical devices and hospital
software and systems.
The strategies and techniques we applied resulted in the Fund underperforming
the indexes charted on the following page. Those indexes reflect the
performance of securities that generally represent the non-financial institution
portion of the stock market (the S&P 400 Index) and the universe of funds with
similar investment objectives (the Lipper Science & Technology Fund Universe
Average).
We believe that the Asian crisis will continue to impact the U.S. economy and
markets into 1998. Although the economy appears robust, the underlying trend of
deflation remains a threat to lead to slowing. Corporate profits growth, in our
opinion, will see slowing also. Current low and declining interest rates
counter these affects. In light of the anticipated conditions, we plan to
diversify more into U.S. based companies, with less foreign exposure. However,
this is difficult in technology and health care since many of those products and
services are exported. We plan to maintain a cash position and to protect
shareholder profits by selling appreciated stocks or by putting cash to work in
market declines to capture lower stock prices in those companies the Fund views
as valuable investments. Over the long-term, the Fund should benefit from the
dramatic increases in productivity brought about by new software, computer,
networking devices, biology, drug development and health care improvements.
Thank you very much for your continued support and confidence.
Respectfully,
Abel Garcia
Manager, United Science and Technology Fund
<PAGE>
Comparison of Change in Value of $10,000 Investment in
United Science and Technology Fund Class A Shares,
The S&P 400 Index,
and The Lipper Science & Technology Fund Universe Average
United Lipper
Science and Science &
Technology Technology
Fund, S&P Fund
Class A 400 Universe
Shares Index Average
--------- --------- ----------
12/31/87 Purchase 9,425 10,000 10,000
12/31/88 10,278 11,597 10,899
12/31/89 13,094 15,008 13,315
12/31/90 12,635 14,876 12,923
12/31/91 20,121 19,453 18,798
12/31/92 19,311 20,564 21,435
12/31/93 20,954 22,422 26,630
12/31/94 23,004 23,279 30,014
12/31/95 35,741 31,335 41,379
12/31/96 38,726 38,546 49,338
12/31/97 41,524 50,597 54,739
===== United Science and Technology Fund, Class A Shares* -- $41,524
+++++ S&P 400 Index -- $50,597
- ----- Lipper Science & Technology Fund Universe Average -- $54,739
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund and assumes
reinvestment of dividends and distributions.
Annual Average Total Return +
Class A++ Class Y
-----------------------------
Year Ended
12/31/97 1.06% 7.43%
5 Years Ended
12/31/97 15.17% N/A
10 Years Ended
12/31/97 15.30% N/A
Life of Class Y +++ N/A 5.78%
+ Total return for the Class Y shares may be greater than that of the Class A
shares because the Fund's Class Y shares are not subject to a sales load or
12b-1 fees.
++ Performance data quoted represents past performance and is based on
deduction of a 5.75% sales load on the initial purchase in each of the
three periods. Investment return and principal value will fluctuate and an
investor's shares, when redeemed, may be worth more or less than their
original cost.
+++ 2/27/96 (the date on which Fund Class Y shares were first acquired by
shareholders) through 12/31/97.
Past performance is not predictive of future performance. Indexes are
unmanaged.
<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 Fiscal Year Ended December 31, 1997
- -------------------------------------------
CAPITAL GAINS DISTRIBUTION $4.58
=====
NET ASSET VALUE ON
12/31/97 $20.13 adjusted to:$24.71(A)
12/31/96 23.35
------
CHANGE PER SHARE $ 1.36
======
(A) This number includes the capital gains distribution of $4.58 paid in
December 1997 added to the actual net asset value on December 31, 1997.
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 12-31-97 1.06% 7.22%
5-year period ended 12-31-97 15.17% 16.55%
10-year period ended 12-31-97 15.30% 15.98%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On December 31, 1997, United Science and Technology Fund had net assets totaling
$1,066,793,951 invested in a diversified portfolio of:
92.39% Common Stocks
7.61% Cash and Cash Equivalents
As a shareholder of United Science and Technology Fund, for every $100 you had
invested on December 31, 1997, your Fund owned:
$41.45 Services Stocks
35.60 Manufacturing Stocks
7.61 Cash and Cash Equivalents
7.37 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
6.71 Wholesale and Retail Trade Stocks
1.26 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
DECEMBER 31, 1997
Shares Value
COMMON STOCKS
Building Materials and Garden Supplies - 0.88%
Fastenal Company ....................... 244,600 $ 9,401,690
Business Services - 34.79%
America Online, Inc.* .................. 500,000 44,593,500
Autodesk, Inc. ......................... 325,000 11,984,375
BMC Software, Inc.* .................... 400,000 26,224,800
CKS Group, Inc.* ....................... 400,000 5,662,400
Cendant Corporation* ................... 1,000,000 34,375,000
Concord EFS, Inc.* ..................... 400,000 9,974,800
E*TRADE Group, Inc.* ................... 212,500 4,894,088
HBO & Company .......................... 745,400 35,755,347
HCIA Inc.* ............................. 300,000 3,637,500
HNC Software Inc.* ..................... 270,000 11,660,490
i2 Technologies, Inc.* ................. 279,500 14,752,290
Intuit Inc.* ........................... 510,000 21,069,120
J. D. Edwards* ......................... 252,700 7,501,905
Microsoft Corporation* ................. 175,000 22,613,150
Networks Associates, Inc.* ............. 300,000 15,834,300
Parametric Technology Corporation* ..... 210,000 9,935,520
Primark Corporation* ................... 50,000 2,034,350
Security Dynamics Technologies, Inc.* .. 200,000 7,162,400
Shared Medical Systems Corporation ..... 300,000 19,800,000
TMP Worldwide Inc.* .................... 500,000 11,437,500
Transaction Systems Architects, Inc.* .. 300,000 11,381,100
Veritas Software Corp.* ................ 120,000 6,105,000
Wind River Systems, Inc.* .............. 476,700 18,829,650
Yahoo! Inc.* ........................... 200,000 13,868,600
Total ................................. 371,087,185
Chemicals and Allied Products - 11.90%
Abbott Laboratories .................... 325,000 21,307,650
Lilly (Eli) and Company ................ 400,000 27,850,000
Pfizer Inc. ............................ 400,000 29,824,800
Roche Holdings AG (C) .................. 1,200 11,912,942
Schering-Plough Corporation ............ 300,000 18,637,500
Warner-Lambert Company ................. 140,000 17,360,000
Total ................................. 126,892,892
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1997
Shares Value
COMMON STOCKS (Continued)
Communication - 7.37%
AirTouch Communications* ............... 300,000 $ 12,468,600
COLT Telecom Group plc, ADR* ........... 100,000 4,231,200
Intermedia Communications of Florida, Inc.* 500,000 30,343,500
Teleport Communications Group Inc.* .... 300,000 16,481,100
WorldCom, Inc.* ........................ 500,000 15,140,500
Total ................................. 78,664,900
Depository Institutions - 1.26%
Credit Suisse Group,
Registered Shares (C) ................. 87,000 13,456,985
Electronic and Other Electric Equipment - 12.94%
ADE Corporation* ....................... 179,500 3,141,250
Advanced Fibre Communications, Inc.* ... 600,000 17,550,000
Altera Corp.* .......................... 300,000 9,946,800
ANADIGICS, Inc.* ....................... 99,000 3,007,125
Ciena Corp.* ........................... 100,000 6,125,000
Excel Switching Corporation* ........... 57,000 1,022,409
General Electric Company ............... 400,000 29,350,000
Intel Corporation ...................... 200,000 14,043,600
Linear Technology Corporation .......... 200,000 11,512,400
PairGain Technologies, Inc.* ........... 400,000 7,762,400
Tellabs* ............................... 400,000 21,112,400
Texas Instruments Incorporated ......... 300,000 13,500,000
Total ................................. 138,073,384
Engineering and Management Services - 4.73%
Incyte Pharmaceuticals, Inc.* .......... 410,000 18,296,250
Paychex, Inc. .......................... 330,000 16,767,960
Quintiles Transnational Corp.* ......... 400,000 15,350,000
Total ................................. 50,414,210
Furniture and Fixtures - 1.11%
Lear Corporation* ...................... 250,000 11,875,000
Health Services - 1.93%
Concentra Managed Care, Inc.* .......... 357,200 12,032,996
Vencor, Incorporated* .................. 350,000 8,552,950
Total ................................. 20,585,946
Industrial Machinery and Equipment - 3.16%
Cisco Systems, Inc.* ................... 479,700 26,773,016
Culligan Water Technologies, Inc.* ..... 101,500 5,100,375
Kulicke & Soffa Industries, Inc.* ...... 100,000 1,868,700
Total ................................. 33,742,091
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1997
Shares Value
COMMON STOCKS (Continued)
Instruments and Related Products - 3.78%
Medtronic, Inc. ........................ 400,000 $ 20,924,800
STERIS Corporation* .................... 400,000 19,400,000
Total ................................. 40,324,800
Petroleum and Coal Products - 2.71%
Tosco Corporation ...................... 350,000 13,234,200
Valero Energy Corporation .............. 500,000 15,718,500
Total ................................. 28,952,700
Wholesale Trade -- Durable Goods - 3.70%
Johnson & Johnson ...................... 175,000 11,528,125
OmniCare, Inc. ......................... 900,000 27,900,000
Total ................................. 39,428,125
Wholesale Trade -- Nondurable Goods - 2.13%
Cardinal Health, Inc. .................. 301,966 22,685,196
TOTAL COMMON STOCKS - 92.39% $ 985,585,104
(Cost: $681,046,668)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Commercial Paper
Communication - 1.89%
Ameritech Corp.,
5.89%, 2-3-98 ......................... $20,230 20,120,775
Depository Institutions - 1.90%
National Australia Funding (DE) Inc.,
5.8%, 1-12-98 ......................... 8,545 8,529,856
Toronto-Dominion Holdings USA Inc.,
5.77%, 1-12-98 ........................ 11,775 11,754,240
Total ................................. 20,284,096
Electric, Gas and Sanitary Services - 1.74%
Southern California Edison Company,
5.78%, 1-15-98 ........................ 5,480 5,467,682
Western Resources Inc.,
6.0%, 1-9-98 .......................... 7,330 7,320,227
Wisconsin Electric Power Co.,
5.77%, 2-10-98 ........................ 5,850 5,812,495
Total ................................. 18,600,404
See Notes to Schedules of Investments on page 44.
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Fabricated Metal Products - 0.08%
Danaher Corporation,
5.7227%, Master Note .................. $ 850 $ 850,000
General Merchandise Stores - 1.03%
Dillard Investment Co. Inc.,
5.88%, 1-6-98 ......................... 11,000 10,991,017
Nondepository Institutions - 0.30%
Associates Corporation of North America,
5.77%, 2-9-98 ......................... 3,215 3,194,903
Personal Services - 0.65%
Block Financial Corp.,
5.9%, 1-7-98 .......................... 7,000 6,993,117
Petroleum and Coal Products - 0.38%
BP America Inc.,
5.9%, 1-21-98 ......................... 4,055 4,041,709
Security and Commodity Brokers - 0.23%
Merrill Lynch & Co. Inc.,
5.81%, 1-16-98 ........................ 2,420 2,414,141
Textile Mill Products - 0.04%
Sara Lee Corporation,
5.5727%, Master Note .................. 480 480,000
TOTAL SHORT-TERM SECURITIES - 8.24% $ 87,970,162
(Cost: $87,970,162)
TOTAL INVESTMENT SECURITIES - 100.63% $1,073,555,266
(Cost: $769,016,830)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.63%) (6,761,315)
NET ASSETS - 100.00% $1,066,793,951
See Notes to Schedules of Investments on page 44.
<PAGE>
UNITED FUNDS, INC.
DECEMBER 31, 1997
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 December 31, 1997, the following restricted security was owned:
Principal
Acquisition Amount Market
Security Date in Thousands Cost Value
-------- ----------- --------------------------------
United Bond Fund
CHYPS CBO 1997-1 Ltd.,
6.72%, 1-15-2010 11/25/97 $8,500$8,183,019 $8,223,750
========== ==========
The total market value of restricted securities represents approximately
1.56% of the total net assets at December 31, 1997.
(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>
<TABLE>
UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES United
DECEMBER 31, 1997 United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
Assets ------------ -------------- -------------- --------------
Investment securities --
at value (Notes 1 and 3) $523,952,118 $6,497,814,570 $1,617,955,073 $1,073,555,266
Cash ..................... --- --- --- 4,549
Receivables:
Investment securities sold --- 20,334,806 --- 1,837,439
Dividends and interest 6,846,984 7,168,003 1,709,774 568,001
Fund shares sold ......... 888,584 7,097,178 1,053,539 961,113
Prepaid insurance
premium .................. 16,368 62,728 35,732 13,225
------------ -------------- -------------- --------------
Total assets ........... 531,704,054 6,532,477,285 1,620,754,118 1,076,939,593
Liabilities ------------ -------------- -------------- --------------
Payable for investment
securities purchased --- 2,197,852 20,759,792 ---
Payable to Fund
shareholders ............. 2,679,261 31,747,789 73,837 9,452,513
Accrued service fee (Note 2) 207,098 2,549,745 602,681 393,121
Accrued transfer agency
and dividend disbursing
(Note 2) ................. 61,766 629,395 150,945 207,035
Accrued management
fee (Note 2) ............. 6,172 97,186 23,933 17,444
Due to custodian .......... 10,733 26,608 22,950 ---
Accrued accounting
services fee (Note 2) .... 5,000 8,333 8,333 8,333
Other ..................... 38,241 230,933 69,185 67,196
------------ -------------- -------------- --------------
Total liabilities 3,008,271 37,487,841 21,711,656 10,145,642
------------ -------------- -------------- --------------
Total net assets $528,695,783 $6,494,989,444 $1,599,042,462 $1,066,793,951
Net Assets ============ ============== =============== ==============
$1.00 par value capital stock
Capital stock ............ $ 83,692,392 $ 171,163,106 $ 205,830,288 $ 53,005,490
Additional paid-in
capital ................. 445,909,085 3,367,156,982 1,251,888,135 690,471,195
Accumulated undistributed
income (loss):
Accumulated undistributed
net investment
income ................. 369,716 1,964,249 3,786,861 ---
Accumulated undistributed net
realized gain (loss) on
investment
transactions ............ (23,247,081) 134,040,474 19,970,463 18,775,979
Net unrealized appreciation
of investments ......... 21,971,671 2,820,664,633 117,566,715 304,541,287
------------ --------------- -------------- --------------
Net assets applicable to
outstanding units
of capital ............ $528,695,783 $6,494,989,444 $1,599,042,462 $1,066,793,951
============ ============== ============== ==============
Net asset value per share
(net assets divided by
shares outstanding)
Class A ................... $6.32 $37.95 $7.77 $20.13
Class Y ................... $6.32 $37.95 $7.77 $20.21
Capital shares
outstanding
Class A ................... 82,881,735 163,272,437 205,368,815 52,791,385
Class Y ................... 810,657 7,890,669 461,473 214,105
Capital shares authorized ... 400,000,000 600,000,000 600,000,000 200,000,000
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended DECEMBER 31, 1997
United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
------------ -------------- ------------ ------------
Investment Income
Income (Note 1B):
Dividends ................ $ --- $ 75,978,463 $ 19,278,199 $ 3,405,630
Interest and
amortization ........... 36,844,690 18,616,823 9,900,758 5,043,858
------------ -------------- ------------ ------------
Total income ........... 36,844,690 94,595,286 29,178,957 8,449,488
------------ -------------- ------------ ------------
Expenses (Note 2):
Investment
management fee .......... 2,221,667 32,837,940 8,111,304 5,997,091
Transfer agency and
dividend disbursing
-- Class A ............ 818,069 6,811,413 1,525,434 2,181,649
Service fee -- Class A ... 749,908 8,740,306 2,042,469 1,617,788
Custodian fees ........... 17,074 384,819 86,176 57,891
Accounting services fee .. 60,000 100,000 100,000 93,750
Audit fees ............... 15,415 25,598 17,850 18,010
Shareholder servicing
fee -- Class Y .......... 8,952 374,630 6,002 7,019
Legal fees ............... 6,296 69,847 17,088 12,308
Other .................... 102,186 829,845 191,753 253,103
------------ -------------- ------------ ------------
Total expenses ......... 3,999,567 50,174,398 12,098,076 10,238,609
------------ -------------- ------------ ------------
Net investment
income (loss) ........ 32,845,123 44,420,888 17,080,881 (1,789,121)
------------ -------------- ------------ ------------
Realized and Unrealized
Gain (Loss) on Investments (Notes 1 and 3)
Realized net gain
on securities ............ 2,969,351 621,709,672 312,008,177 193,782,308
Realized net gain (loss) on foreign
currency transactions .... --- (162,511) 54,791 (109,327)
------------ -------------- ------------ ------------
Realized net gain
on investments ......... 2,969,351 621,547,161 312,062,968 193,672,981
Unrealized appreciation
(depreciation) in value
of investments during
the period ............... 11,847,471 724,668,926 45,070,341 (115,957,441)
------------ -------------- ------------ ------------
Net gain on
investments ........... 14,816,822 1,346,216,087 357,133,309 77,715,540
------------ -------------- ------------ ------------
Net increase
in net assets
resulting from
operations ........... $47,661,945 $1,390,636,975 $374,214,190 $ 75,926,419
============ ============== ============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended December 31, 1997 United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
------------ -------------- -------------- --------------
Increase (Decrease) in Net Assets
Operations:
Net investment
income (loss) .......... $ 32,845,123 $ 44,420,888 $ 17,080,881 $ (1,789,121)
Realized net gain
on investments ......... 2,969,351 621,547,161 312,062,968 193,672,981
Unrealized
appreciation
(depreciation) ......... 11,847,471 724,668,926 45,070,341 (115,957,441)
------------ -------------- -------------- --------------
Net increase in net
assets resulting
from operations ....... 47,661,945 1,390,636,975 374,214,190 75,926,419
------------ -------------- -------------- --------------
Distributions to shareholders
from (Note 1E):*
Net investment income
Class A ................ (32,938,829) (43,070,623) (14,624,558) ---
Class Y ................ (339,238) (2,161,477) (34,484) ---
Realized net gains on
investment transactions
Class A ................ --- (534,500,984) (344,991,667) (194,627,909)
Class Y ................ --- (25,550,868) (761,195) (789,437)
------------ -------------- -------------- --------------
(33,278,067) (605,283,952) (360,411,904) (195,417,346)
------------ -------------- -------------- --------------
Capital share
transactions (Note 5) .... (16,340,506) 707,873,108 297,373,384 202,647,531
------------ -------------- -------------- --------------
Total increase (decrease) (1,956,628) 1,493,226,131 311,175,670 83,156,604
Net Assets
Beginning of period ........ 530,652,411 5,001,763,313 1,287,866,792 983,637,347
------------ -------------- -------------- --------------
End of period .............. $528,695,783 $6,494,989,444 $1,599,042,462 $1,066,793,951
============ ============== ============== ==============
Undistributed
net investment
income ................. $369,716 $1,964,249 $3,786,861 $---
============ ============== ============== ==============
*See "Financial Highlights" on pages 49 - 56.
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended DECEMBER 31, 1996 United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
------------ -------------- -------------- ------------
Increase (Decrease) in Net Assets
Operations:
Net investment
income (loss) .......... $ 34,027,031 $ 47,099,480 $ 16,547,981 $ (3,044,925)
Realized net gain
on investments ......... 1,490,998 276,135,291 155,572,364 71,735,912
Unrealized
appreciation
(depreciation) ......... (19,287,816) 518,056,427 (28,379,142) 2,339,175
------------ -------------- -------------- ------------
Net increase in net
assets resulting
from operations ....... 16,230,213 841,291,198 143,741,203 71,030,162
------------ -------------- -------------- ------------
Distributions to shareholders
from (Note 1E):*
Net investment income
Class A ................ (33,563,721) (44,582,972) (16,526,936) ---
Class Y ................ (498,286) (1,535,780) (39,149) ---
Realized net gains on
investment transactions
Class A ................ --- (223,378,753) (126,903,435) (57,680,201)
Class Y ................ --- (6,868,127) (256,540) (174,464)
------------ -------------- -------------- ------------
(34,062,007) (276,365,632) (143,726,060) (57,854,665)
------------ -------------- -------------- ------------
Capital share
transactions (Note 5) .... (17,992,840) 353,417,280 81,068,885 149,679,267
------------ -------------- -------------- ------------
Total increase (decrease) (35,824,634) 918,342,846 81,084,028 162,854,764
Net Assets
Beginning of period ........ 566,477,045 4,083,420,467 1,206,782,764 820,782,583
------------ -------------- -------------- ------------
End of period .............. $530,652,411 $5,001,763,313 $1,287,866,792 $983,637,347
============ ============== ============== ============
Undistributed
net investment
income ................. $802,660 $2,937,972 $1,310,231 $---
============ ============== ============== ============
*See "Financial Highlights" on pages - .
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED BOND FUND
Class A Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the fiscal year ended December 31,
-------------------------------------------------
1997 1996 1995 1994 1993
----- ----- ----- ----- -----
Net asset value,
beginning of period ..... $6.14 $6.34 $5.62 $6.39 6.31
---- ---- ---- ---- ----
Income from investment
operations:
Net investment income ... 0.39 0.39 0.40 0.39 0.41
Net realized and
unrealized gain
(loss) on
investments ........... 0.19 (0.20) 0.72 (0.75) 0.41
---- ---- ---- ---- ----
Total from investment
operations ............. 0.58 0.19 1.12 (0.36) 0.82
---- ---- ---- ---- ----
Less distributions:
From net investment
income ................ (0.40) (0.39) (0.40) (0.39) (0.41)
From capital gains ...... (0.00) (0.00) (0.00) (0.02) (0.33)
---- ---- ---- ---- ----
Total distributions ...... (0.40) (0.39) (0.40) (0.41) (0.74)
---- ---- ---- ---- ----
Net asset value,
end of period .......... $6.32 $6.14 $6.34 $5.62 $6.39
===== ===== ===== ===== =====
Total return* ............ 9.77% 3.20% 20.50% -5.76% 13.19%
Net assets, end of
period (000
omitted) ............... $523,574 $518,873 $563,445 $517,836 $641,668
Ratio of expenses to
average net assets ...... 0.77% 0.77% 0.74% 0.72% 0.65%
Ratio of net investment
income to average
net assets ............ 6.34% 6.34% 6.54% 6.60% 6.14%
Portfolio turnover
rate .................. 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.
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
For the fiscal year ended period from
------------------------------ 6/19/95* to
12/31/97 12/31/96 12/31/95
---------- ---------- -----------
Net asset value,
beginning of period .... $6.14 $6.34 $6.11
---- ---- ----
Income from investment
operations:
Net investment income .. 0.42 0.40 0.21
Net realized and
unrealized gain (loss)
on investments ....... 0.17 (0.20) 0.22
---- ---- ----
Total from investment
operations ............ 0.59 0.20 0.43
---- ---- ----
Less distributions:
From net investment
income ............... (0.41) (0.40) (0.20)
From capital gains ..... (0.00) (0.00) (0.00)
---- ---- ----
Total distributions ..... (0.41) (0.40) (0.20)
---- ---- ----
Net asset value,
end of period ......... $6.32 $6.14 $6.34
==== ==== ====
Total return ............ 9.91% 3.35% 7.20%
Net assets, end of
period (000
omitted) .............. $5,122 $11,779 $3,032
Ratio of expenses to
average net assets ..... 0.64% 0.62% 0.63%**
Ratio of net investment
income to average
net assets ............ 6.48% 6.52% 6.41%**
Portfolio turnover
rate .................. 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 fiscal year ended December 31,
-------------------------------------------------
1997 1996 1995 1994 1993
----- ----- ----- ----- -----
Net asset value,
beginning of period .... $32.91 $28.96 $23.34 $24.77 $22.05
----- ----- ----- ----- -----
Income from investment
operations:
Net investment income .. 0.28 0.33 0.36 0.36 0.40
Net realized and
unrealized gain
(loss) on
investments .......... 8.64 5.53 6.53 (0.80) 3.11
----- ----- ----- ----- -----
Total from investment
operations ............ 8.92 5.86 6.89 (0.44) 3.51
----- ----- ----- ----- -----
Less distributions:
From net investment
income ............... (0.29) (0.32) (0.35) (0.36) (0.40)
From capital gains ..... (3.59) (1.59) (0.92) (0.63) (0.39)
----- ----- ----- ----- -----
Total distributions ..... (3.88) (1.91) (1.27) (0.99) (0.79)
----- ----- ----- ----- -----
Net asset value,
end of period ......... $37.95 $32.91 $28.96 $23.34 $24.77
====== ====== ====== ====== ======
Total return* ........... 27.34% 20.36% 29.60% -1.82% 16.05%
Net assets, end of
period (000
omitted) .............. $6,195,522 $4,850,419 $3,975,717 $3,144,904 $3,060,073
Ratio of expenses to
average net assets ..... 0.84% 0.86% 0.83% 0.74% 0.66%
Ratio of net investment
income to average
net assets ............ 0.74% 1.03% 1.31% 1.45% 1.70%
Portfolio turnover
rate .................. 33.59% 22.24% 17.59% 18.54% 21.70%
Average commission
rate paid ........ $0.0534 $0.0496
*Total return calculated without taking into account the sales load deducted
on an initial purchase.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED INCOME FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
For the fiscal year ended period from
------------------------- 6/19/95* to
12/31/97 12/31/96 12/31/95
---------- ---------- -----------
Net asset value,
beginning of period .... $32.91 $28.96 $27.73
----- ----- -----
Income from investment
operations:
Net investment income .. 0.33 0.36 0.21
Net realized and
unrealized gain
on investments ....... 8.64 5.54 2.14
----- ----- -----
Total from investment
operations ............ 8.97 5.90 2.35
----- ----- -----
Less distributions:
From net investment
income................ (0.34) (0.36) (0.20)
From capital gains ..... (3.59) (1.59) (0.92)
----- ----- -----
Total distributions (3.93) (1.95) (1.12)
----- ----- -----
Net asset value,
end of period ......... $37.95 $32.91 $28.96
===== ===== =====
Total return ............ 27.49% 20.53% 8.45%
Net assets, end of
period (000
omitted) .............. $299,467 $151,344 $107,703
Ratio of expenses to
average net assets ..... 0.72% 0.73% 0.74%**
Ratio of net investment
income to average
net assets ............ 0.85% 1.17% 1.36%**
Portfolio turnover
rate .................. 33.59% 22.24% 17.59%**
Average commission
rate paid ............. $0.0534 $0.0496
*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 fiscal year ended December 31,
-----------------------------------------------
1997 1996 1995 1994 1993
----- ----- ----- ----- -----
Net asset value,
beginning of period $7.75 $7.78 $6.58 $7.19 $7.50
---- ---- ---- ---- ----
Income from investment
operations:
Net investment
income................ 0.10 0.11 0.11 0.13 0.11
Net realized and
unrealized gain
(loss) on
investments .......... 2.14 0.82 2.12 (0.13) 0.55
---- ---- ---- ---- ----
Total from investment
operations ............ 2.24 0.93 2.23 0.00 0.66
---- ---- ---- ---- ----
Less distributions:
From net investment
income ............... (0.09) (0.11) (0.11) (0.13) (0.11)
From capital gains (2.13) (0.85) (0.92) (0.48) (0.84)
In excess of
capital gains ........ (0.00) (0.00) (0.00) (0.00) (0.02)
---- ---- ---- ---- ----
Total distributions (2.22) (0.96) (1.03) (0.61) (0.97)
---- ---- ---- ---- ----
Net asset value,
end of period ......... $7.77 $7.75 $7.78 $6.58 $7.19
==== ==== ==== ==== ====
Total return* ........... 29.58% 12.18% 34.21% 0.04% 9.06%
Net assets, end of
period (000
omitted) .............. $1,595,457 $1,285,227 $1,206,128 $967,020 $1,033,774
Ratio of expenses to
average net assets ..... 0.82% 0.83% 0.80% 0.71% 0.65%
Ratio of net investment
income to average
net assets ............ 1.16% 1.34% 1.42% 1.76% 1.34%
Portfolio turnover
rate .................. 313.99% 240.37% 229.03% 205.40% 230.29%
Average commission
rate paid ............. $0.0565 $0.0575
*Total return calculated without taking into account the sales load deducted
on an initial purchase.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED ACCUMULATIVE FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the fiscal year ended period from
------------------------- 7/11/95* to
12/31/97 12/31/96 12/31/95
---------- ---------- -----------
Net asset value,
beginning of period .... 7.75 $7.78 $7.84
---- ---- ----
Income from investment
operations:
Net investment income .. 0.11 0.12 0.05
Net realized and
unrealized gain
on investments ....... 2.14 0.82 0.87
---- ---- ----
Total from investment
operations ............ 2.25 0.94 0.92
---- ---- ----
Less distributions:
From net investment
income................ (0.10) (0.12) (0.06)
From capital gains ..... (2.13) (0.85) (0.92)
---- ---- ----
Total distributions ..... (2.23) (0.97) (0.98)
---- ---- ----
Net asset value,
end of period ......... $7.77 $7.75 $7.78
==== ==== ====
Total return ............ 29.67% 12.27% 11.92%
Net assets, end of
period (000
omitted) .............. $3,585 $2,640 $655
Ratio of expenses to
average net assets ..... 0.75% 0.74% 0.76%**
Ratio of net investment
income to average
net assets ............ 1.22% 1.45% 1.24%**
Portfolio turnover
rate .................. 313.99% 240.37% 229.03%**
Average commission
rate paid ............. $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 fiscal year ended December 31,
--------------------------------------
1997 1996 1995 1994 1993
----- ----- ----- ----- -----
Net asset value,
beginning of period ... $23.35 $22.89 $15.21 $14.83 $14.64
----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income (loss) ....... (0.03) (0.07) (0.01) 0.00 0.01
Net realized and
unrealized gain on
investments ......... 1.39 2.00 8.40 1.40 1.21
----- ----- ----- ----- -----
Total from investment
operations ........... 1.36 1.93 8.39 1.40 1.22
----- ----- ----- ----- -----
Less distributions:
From net investment
income .............. (0.00) (0.00) (0.00) (0.00) (0.01)
From capital gains .... (4.58) (1.47) (0.71) (1.02) (0.95)
In excess of
capital gains ....... (0.00) (0.00) (0.00) (0.00) (0.07)
----- ----- ----- ----- -----
Total distributions .... (4.58) (1.47) (0.71) (1.02) (1.03)
----- ----- ----- ----- -----
Net asset value,
end of period ........ $20.13 $23.35 $22.89 $15.21 $14.83
====== ====== ====== ====== ======
Total return* .......... 7.22% 8.35% 55.37% 9.78% 8.51%
Net assets, end of
period (000
omitted) ............. $1,062,467 $980,547 $820,783 $496,503 $446,611
Ratio of expenses to
average net assets .... 1.02% 0.98% 0.93% 0.96% 0.91%
Ratio of net investment
income to average
net assets ........... -0.18% -0.33% -0.07% 0.00% 0.06%
Portfolio turnover
rate ................. 87.68% 33.90% 32.89% 64.39% 68.38%
Average commission
rate paid ............ $0.0586 $0.0538
*Total return calculated without taking into account the sales load deducted
on an initial purchase.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED SCIENCE AND TECHNOLOGY FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the For the
fiscal period from
year ended 2/27/96* to
12/31/97 12/31/96
---------- ----------
Net asset value,
beginning of period ... $23.38 $24.05
----- -----
Income from investment
operations:
Net investment
loss ................ (0.00) (0.02)
Net realized and
unrealized gain
on investments ...... 1.41 0.82
----- -----
Total from investment
operations ........... 1.41 0.80
----- -----
Less distributions:
From net investment
income .............. (0.00) (0.00)
From capital gains .... (4.58) (1.47)
----- -----
Total distributions .... (4.58) (1.47)
----- -----
Net asset value,
end of period ........ $20.21 $23.38
===== =====
Total return ........... 7.43% 3.25%
Net assets, end of
period (000
omitted) ............. $4,327 $3,090
Ratio of expenses to
average net assets .... 0.85% 0.80%**
Ratio of net investment
income to average
net assets ........... -0.01% -0.12%**
Portfolio turnover
rate ................. 87.68% 33.90%**
Average commission
rate paid ............ $0.0586 $0.0538
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
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 or closing prices quoted by major dealers in such stocks.
Securities for which quotations are not readily available are valued as
determined in good faith in accordance with procedures established by and
under the general supervision of the Corporation's Board of Directors.
Short-term debt securities are valued at amortized cost, which approximates
market.
B. Security transactions and related investment income -- Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Securities gains and losses are calculated on the
identified cost basis. Original issue discount (as defined in the Internal
Revenue Code), premiums on the purchase of bonds and post-1984 market
discount are amortized for both financial and tax reporting purposes over
the remaining lives of the bonds. Dividend income is recorded on the ex-
dividend date except that certain dividends from foreign securities are
recorded as soon as the Corporation is informed of the ex-dividend date.
Interest income is recorded on the accrual basis. See Note 3 -- Investment
Securities Transactions.
C. Foreign currency translations -- All assets and liabilities denominated in
foreign currencies are translated into U.S. dollars daily. Purchases and
sales of investment securities and accruals of income and expenses are
translated at the rate of exchange prevailing on the date of the
transaction. For assets and liabilities other than investments in
securities, net realized and unrealized gains and losses from foreign
currency translations arise from changes in currency exchange rates. The
Corporation combines fluctuations from currency exchange rates and
fluctuations in market value when computing net realized and unrealized
gain or loss from investments.
D. Federal income taxes -- It is the Corporation's policy to distribute all of
its taxable income and capital gains to its shareholders and otherwise
qualify as a regulated investment company under 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
carryforwards. At December 31, 1997, United Science and Technology Fund
reclassified $1,898,448 between additional paid-in-capital and
undistributed net investment income. In addition, for each of the Funds,
the following amounts were reclassified between accumulated undistributed
net investment income and accumulated undistributed net realized gain on
investment transactions.
Increase Increase
(Decrease) (Decrease)
Undistributed Undistributed
Net Investment Net Realized
Income Gain
------ ------
United Income Fund $(162,511) $162,511
United Accumulative Fund 54,791 (54,791)
United Science and Technology Fund (109,327) 109,327
Net investment income, net realized gains and net assets were not affected
by these changes.
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 $17.8 billion of
combined net assets at December 31, 1997) 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 $28,736,826, out of which W&R paid sales commissions of
$16,627,651 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 $321,632, which are included in
other expenses.
W&R is an indirect subsidiary of Torchmark Corporation, a holding company,
and United Investors Management Company, a holding company, and a direct
subsidiary of Waddell & Reed Financial Services, Inc., a holding company.
NOTE 3 -- Investment Securities Transactions
Investment securities transactions for the period ended December 31, 1997
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 $128,181,313$1,936,936,021$4,055,830,225$797,167,769
Purchases of U.S. Government
securities 46,907,126 --- --- ---
Purchases of short-term
securities 249,805,2952,346,850,0393,167,343,5751,588,489,713
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 138,860,4042,084,253,1304,298,932,265 815,123,642
Proceeds from maturities and
sales of U.S. Government
securities 52,321,215 --- --- ---
Proceeds from maturities and sales
of short-term securities 250,573,8652,107,048,5802,969,969,9111,572,758,792
For Federal income tax purposes, cost of investments owned at December 31,
1997 and the related appreciation were as follows:
Aggregate
Cost AppreciationDepreciation Appreciation
-------------- --------------------------------------
United Bond Fund $ 501,980,447$ 22,275,152$ (303,481)$ 21,971,671
United Income Fund 3,677,131,5732,841,782,134(21,099,137) 2,820,682,997
United Accumulative 1,500,388,358 134,297,136(16,730,421) 117,566,715
Fund
United Science and
Technology Fund 769,016,830 360,251,075(55,712,639) 304,538,436
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
carryforwards. Remaining prior year capital loss carryforwards 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 fiscal year ended December 31, 1997
are summarized below.
United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
----------- ------------ ------------------------
Shares issued from sale
of shares:
Class A ............ 6,890,848 22,609,422 8,676,214 32,462,059
Class Y ............ 195,545 3,328,299 51,857 71,281
Shares issued from
reinvestment of
dividends and/or capital
gains distribution:
Class A ............ 4,598,290 14,525,036 44,000,209 9,928,643
Class Y ............ 48,642 741,519 104,354 41,858
Shares redeemed:
Class A ............ (13,058,549) (21,267,365) (13,115,628)(31,598,843)
Class Y ............ (1,350,485) (778,441) (35,296) (31,198)
---------- ---------- ---------- ----------
Increase (decrease) in
outstanding capital
shares:
Class A ............ (1,569,411) 15,867,093 39,560,795 10,791,859
Class Y ............ (1,106,298) 3,291,377 120,915 81,941
---------- ---------- ---------- ----------
Total for Fund .... (2,675,709) 19,158,470 39,681,710 10,873,800
========== ========== ========== ==========
Value issued from sale
of shares:
Class A ............ $42,624,034 $862,082,128 $ 77,295,991$749,062,722
Class Y ............ 1,204,170 120,863,457 450,168 1,701,306
Value issued from
reinvestment of
dividends and/or capital
gains distribution:
Class A ............ 28,302,450 542,416,253 335,422,948 186,553,441
Class Y ............ 299,565 27,712,409 795,679 789,437
Value redeemed:
Class A ............ (80,507,229) (814,233,373) (116,278,756)(734,711,669)
Class Y ............ (8,263,496) (30,967,766) (312,646) (747,706)
----------- ------------ ------------------------
Increase (decrease) in
outstanding capital:
Class A ............ (9,580,745) 590,265,008 296,440,183 200,904,494
Class Y ............ (6,759,761) 117,608,100 933,201 1,743,037
----------- ------------ ------------------------
Total for Fund .... $(16,340,506) $707,873,108 $297,373,384$202,647,531
=========== ============ ========================
Transactions in capital stock for the fiscal year ended December 31, 1996
are summarized below.
United
United United United Science and
Bond Income Accumulative Technology
Fund Fund Fund Fund
----------- ------------ ------------------------
Shares issued from sale
of shares:
Class A ............ 6,465,124 16,133,571 8,009,525 27,427,545
Class Y ............ 1,782,344 1,298,483 379,703 139,882
Shares issued from
reinvestment of
dividends and/or capital
gains distribution:
Class A ............ 4,659,208 7,718,525 17,504,459 2,334,666
Class Y ............ 44,921 258,999 38,631 7,370
Shares redeemed:
Class A ............ (15,509,353) (13,716,661) (14,780,542)(23,624,041)
Class Y ............ (388,283) (677,004) (161,934) (15,088)
---------- ---------- ---------- ----------
Increase (decrease) in
outstanding capital
shares:
Class A ............ (4,385,021) 10,135,435 10,733,442 6,138,170
Class Y ............ 1,438,982 880,478 256,400 132,164
---------- ---------- ---------- ----------
Total for Fund .... (2,946,039) 11,015,913 10,989,842 6,270,334
========== ========== ========== ==========
Value issued from sale
of shares:
Class A ............ $39,560,061 $509,911,318 $ 64,177,016$676,558,274
Class Y ............ 10,740,902 40,986,800 3,050,529 3,450,514
Value issued from
reinvestment of
dividends and/or capital
gains distribution:
Class A ............ 28,366,563 250,527,856 133,871,990 55,192,015
Class Y ............ 272,967 8,403,907 295,689 174,465
Value redeemed:
Class A ............ (94,554,914) (435,082,498) (118,996,801)(585,325,217)
Class Y ............ (2,378,419) (21,330,103) (1,329,538) (370,784)
------------ ------------ ------------------------
Increase (decrease) in
outstanding capital:
Class A ............ (26,628,290) 325,356,676 79,052,205 146,425,072
Class Y ............ 8,635,450 28,060,604 2,016,680 3,254,195
------------ ------------ ------------------------
Total for Fund .... $(17,992,840) $353,417,280 $ 81,068,885$149,679,267
============ ============ ========================
<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 & Technology Fund (collectively the
"Funds"), comprising United Funds, Inc., as of December 31, 1997, and the
related statements of operations for the year then ended and changes in net
assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period then ended.
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
December 31, 1997 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 December 31, 1997, 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
February 6, 1998
<PAGE>
INCOME TAX INFORMATION
The amounts of the dividends and long-term capital gains below, multiplied by
the number of shares owned by you on the record dates, will give you the total
amounts to be reported in your 1997 Federal income tax return.
PER-SHARE AMOUNTS REPORTABLE AS:
--------------------------------------------------------------------
For Individuals For Corporations
-------------------------------------------------------------
- --
Record OrdinaryLong-Term Capital Gain Non- Long-Term
Date Total Income 28% Rate 20% RateQualifyingQualifyingCapital Gain
- ----------- ------------- -------- ---------------------------------------
United Bond Fund
Class A
01-17-97 $0.032 $0.0320 $0.0000 $0.0000 $0.0000 $0.0320 $0.0000
02-14-97 0.032 0.0320 0.0000 0.0000 0.0000 0.0320 0.0000
03-14-97 0.032 0.0320 0.0000 0.0000 0.0000 0.0320 0.0000
04-11-97 0.032 0.0320 0.0000 0.0000 0.0000 0.0320 0.0000
05-16-97 0.032 0.0320 0.0000 0.0000 0.0000 0.0320 0.0000
06-13-97 0.032 0.0320 0.0000 0.0000 0.0000 0.0320 0.0000
07-11-97 0.032 0.0320 0.0000 0.0000 0.0000 0.0320 0.0000
08-15-97 0.032 0.0320 0.0000 0.0000 0.0000 0.0320 0.0000
09-12-97 0.032 0.0320 0.0000 0.0000 0.0000 0.0320 0.0000
10-17-97 0.032 0.0320 0.0000 0.0000 0.0000 0.0320 0.0000
11-14-97 0.032 0.0320 0.0000 0.0000 0.0000 0.0320 0.0000
12-12-97 0.045 0.0450 0.0000 0.0000 0.0000 0.0450 0.0000
------ ------- ------- ------- ------- ------- -------
$0.397 $0.3970 $0.0000 $0.0000 $0.0000 $0.3970 $0.0000
====== ======= ======= ======= ======= ======= =======
United Bond Fund
Class Y
01-17-97 $0.032 $0.0320 $0.0000 $0.0000 $0.0000 $0.0320 $0.0000
02-14-97 0.033 0.0330 0.0000 0.0000 0.0000 0.0330 0.0000
03-14-97 0.033 0.0330 0.0000 0.0000 0.0000 0.0330 0.0000
04-11-97 0.032 0.0320 0.0000 0.0000 0.0000 0.0320 0.0000
05-16-97 0.033 0.0330 0.0000 0.0000 0.0000 0.0330 0.0000
06-13-97 0.033 0.0330 0.0000 0.0000 0.0000 0.0330 0.0000
07-11-97 0.033 0.0330 0.0000 0.0000 0.0000 0.0330 0.0000
08-15-97 0.033 0.0330 0.0000 0.0000 0.0000 0.0330 0.0000
09-12-97 0.032 0.0320 0.0000 0.0000 0.0000 0.0320 0.0000
10-17-97 0.033 0.0330 0.0000 0.0000 0.0000 0.0320 0.0000
11-14-97 0.033 0.0330 0.0000 0.0000 0.0000 0.0330 0.0000
12-12-97 0.045 0.0450 0.0000 0.0000 0.0000 0.0450 0.0000
------ ------- ------- ------- ------- ------- -------
$0.405 $0.4050 $0.0000 $0.0000 $0.0000 $0.4050 $0.0000
====== ======= ======= ======= ======= ======= =======
<PAGE>
PER-SHARE AMOUNTS REPORTABLE AS:
--------------------------------------------------------------------
For Individuals For Corporations
-------------------------------------------------------------
- --
Record OrdinaryLong-Term Capital Gain Non- Long-Term
Date Total Income 28% Rate 20% RateQualifyingQualifyingCapital Gain
- ----------- ------------- -------- ---------------------------------------
United Income Fund
Class A
03-14-97 $0.070 $0.0700 $0.0000 $0.0000 $0.0700 $0.0000 $0.0000
06-13-97 0.070 0.0700 0.0000 0.0000 0.0700 0.0000 0.0000
09-12-97 0.070 0.0700 0.0000 0.0000 0.0700 0.0000 0.0000
12-12-97 3.668 0.1489 1.9320 1.5871 0.0800 0.0689 3.5191
------ ------- ------- ------- ------- ------- -------
$3.878 $0.3589 $1.9320 $1.5871 $0.2900 $0.0689 $3.5191
====== ======= ======= ======= ======= ======= =======
United Income Fund
Class Y
03-14-97 $0.078 $0.0780 $0.0000 $0.0000 $0.0780 $0.0000 $0.0000
06-13-97 0.083 0.0830 0.0000 0.0000 0.0830 0.0000 0.0000
09-12-97 0.084 0.0840 0.0000 0.0000 0.0840 0.0000 0.0000
12-12-97 3.679 0.1599 1.9320 1.5871 0.0910 0.0689 3.5191
------ ------- ------- ------- ------- ------- -------
$3.924 $0.4049 $1.9320 $1.5871 $0.3360 $0.0689 $3.5191
====== ======= ======= ======= ======= ======= =======
United Accumulative Fund
Class A
06-13-97 $0.040 $0.0400 $0.0000 $0.0000 $0.0400 $0.0000 $0.0000
12-12-97 2.180 1.7773 0.3681 0.0346 0.0501 1.7272 0.4027
------ ------- ------- ------- ------- ------- -------
$2.220 $1.8173 $0.3681 $0.0346 $0.0901 $1.7272 $0.4027
====== ======= ======= ======= ======= ======= =======
United Accumulative Fund
Class Y
06-13-97 $0.043 $0.0430 $0.0000 $0.0000 $0.0430 $0.0000 $0.0000
12-12-97 2.184 1.7813 0.3681 0.0346 0.0540 1.7273 0.4027
------ ------- ------- ------- ------- ------- -------
$2.227 $1.8243 $0.3681 $0.0346 $0.0970 $1.7273 $0.4027
====== ======= ======= ======= ======= ======= =======
United Science and Technology Fund
Class A
06-13-97 $0.000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000
12-12-97 4.580 0.0000 2.9541 1.6259 0.0000 0.0000 4.5800
------ ------- ------- ------- ------- ------- -------
$4.580 $0.0000 $2.9541 $1.6259 $0.0000 $0.0000 $4.5800
====== ======= ======= ======= ======= ======= =======
United Science and Technology Fund
Class Y
06-13-97 $0.000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000
12-12-97 4.580 0.0000 2.9541 1.6259 0.0000 0.0000 4.5800
------ ------- ------- ------- ------- ------- -------
$4.580 $0.0000 $2.9541 $1.6259 $0.0000 $0.0000 $4.5800
====== ======= ======= ======= ======= ======= =======
CORPORATION DEDUCTIONS -- Under Federal tax law, the amounts reportable as
Qualifying Dividends are eligible for the dividends received deduction in the
year received as provided by Section 243 of the Internal Revenue Code.
Shareholders are advised to consult with their tax advisor concerning the tax
treatment of dividends and distributions from the Fund.
<PAGE>
Shareholder Meeting Results
A special meeting of shareholders of United Funds, Inc. Accumulative Fund, Bond
Fund, Income Fund and Science and Technology Fund was held on July 24, 1997.
The matters voted upon by the shareholders and the resulting votes for each
matter are presented below.
Item 1. To elect the Board of Directors;
Broker
For Withheld Non-Votes*
Henry L. Bellmon 239,609,693 4,638,282 0
Dodds I. Buchanan 240,078,714 4,169,261 0
James M. Concannon 239,992,869 4,255,106 0
John A. Dillingham 239,966,331 4,281,644 0
Linda Graves 239,608,691 4,639,284 0
John F. Hayes 239,615,154 4,632,821 0
Glendon E. Johnson 239,633,866 4,614,109 0
William T. Morgan 239,896,609 4,351,366 0
Ronald K. Richey 239,777,691 4,470,284 0
William L. Rogers 239,912,782 4,335,193 0
Frank J. Ross, Jr. 240,005,579 4,242,396 0
Eleanor B. Schwartz 239,895,527 4,352,448 0
Keith A. Tucker 239,980,700 4,267,275 0
Frederick Vogel III 240,097,330 4,150,645 0
Paul S. Wise 239,666,796 4,581,179 0
Item 2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent accountants for its current fiscal year;
Broker
For Against Abstain Non-Votes*
232,981,596 1,477,741 9,788,638 0
Item 3. To approve or disapprove changes to certain of its fundamental
investment policies and restrictions:
3.1 Elimination of Fundamental Restriction Regarding Restricted
Securities
Broker
For Against AbstainNon-Votes*
Accumulative Fund 82,252,688 2,482,768 7,321,199 260,714
Bond Fund 42,874,271 745,391 2,898,457 122,559
Income Fund 75,715,671 1,955,541 5,560,494 328,595
Science and Technology Fund19,436,751656,0091,567,16869,699
3.2 Modification of Fundamental Restriction Regarding Diversification
of Assets
Broker
For Against AbstainNon-Votes*
Accumulative Fund 82,291,892 2,444,723 7,320,040 260,714
Bond Fund 42,867,370 746,988 2,903,761 122,559
Income Fund 75,713,754 1,957,360 5,560,592 328,595
Science and Technology Fund19,433,272659,4881,567,16869,699
3.3 Elimination of Fundamental Restriction Regarding Unseasoned Issuers
Broker
For Against AbstainNon-Votes*
Accumulative Fund 82,251,690 2,485,394 7,319,571 260,714
Bond Fund 42,864,758 754,904 2,898,457 122,559
Income Fund 75,671,560 1,999,326 5,560,820 328,595
Science and Technology Fund19,436,788655,9721,567,16869,699
3.4 Modification and/or Elimination of Fundamental Restrictions
Regarding Options, Commodities, Forward Contracts and/or Futures
Contracts
Broker
For Against AbstainNon-Votes*
Accumulative Fund 82,174,161 2,543,577 7,338,917 260,714
Bond Fund 42,809,249 807,070 2,901,800 122,559
Income Fund 74,808,017 2,858,989 5,564,700 328,595
Science and Technology Fund19,402,895688,5671,568,46669,699
3.5 Elimination of Fundamental Restriction Regarding Mortgaging or
Pledging Securities
Broker
For Against AbstainNon-Votes*
Accumulative Fund 82,208,929 2,522,043 7,325,683 260,714
Bond Fund 42,833,113 786,549 2,898,457 122,559
Income Fund 75,637,335 2,035,186 5,559,184 328,595
Science and Technology Fund19,421,330671,5291,567,07069,699
3.6 Modification of Fundamental Restriction Regarding Margin Purchases
of Securities
Broker
For Against AbstainNon-Votes*
Accumulative Fund 82,244,121 2,491,708 7,320,826 260,714
Bond Fund 42,859,001 760,661 2,898,457 122,559
Income Fund 75,655,930 2,016,324 5,559,451 328,595
Science and Technology Fund19,419,930672,9291,567,07069,699
3.7 Modification of Fundamental Restriction Regarding Short Sales of
Securities
Broker
For Against AbstainNon-Votes*
Accumulative Fund 82,267,728 2,472,521 7,316,407 260,714
Bond Fund 42,845,893 773,769 2,898,457 122,559
Income Fund 75,673,836 1,989,262 5,568,607 328,595
Science and Technology Fund19,433,194659,6641,567,07069,699
3.8 Elimination of Fundamental Restriction Regarding Investment in
Warrants and Rights
Broker
For Against AbstainNon-Votes*
Accumulative Fund 82,253,561 2,477,411 7,325,683 260,714
Bond Fund 42,858,201 761,461 2,898,457 122,559
Income Fund 75,700,207 1,970,234 5,561,264 328,595
Science & Technology Fund19,437,366655,4931,567,070 69,699
3.9 Elimination of Fundamental Restriction Regarding Arbitrage
Transactions
Broker
For Against AbstainNon-Votes*
Accumulative Fund 82,242,454 2,494,630 7,319,570 260,714
Bond Fund 42,849,989 769,673 2,898,457 122,559
Income Fund 75,674,249 1,991,763 5,565,694 328,595
Science and Technology Fund19,424,492668,3671,567,07069,699
3.10 Elimination of Fundamental Restriction Regarding Investments in
Issuers Whose Securities are Owned by Certain Persons
Broker
For Against AbstainNon-Votes*
Accumulative Fund 82,263,017 2,474,068 7,319,572 260,714
Bond Fund 42,867,615 752,047 2,898,457 122,559
Income Fund 75,709,764 1,957,277 5,564,665 328,595
Science and Technology Fund19,437,872654,8861,567,16869,699
3.11 Modification of Fundamental Policy Regarding Loans
Broker
For Against AbstainNon-Votes*
Accumulative Fund 82,309,259 2,426,198 7,321,199 260,714
Bond Fund 42,863,011 756,651 2,898,457 122,559
Income Fund 75,736,943 1,935,177 5,559,585 328,595
Science and Technology Fund19,443,737648,5531,567,63869,699
Item 4. For United Income Fund only: To approve a change in the Fund's
goal;
Broker
For Against Abstain Non-Votes*
74,256,290 3,151,388 5,824,027 328,595
Item 5. To amend the terms of the service plan adopted pursuant to Rule
12b-1 under the Investment Company Act of 1940.
Broker
For Against AbstainNon-Votes*
Accumulative Fund 79,563,171 2,836,396 9,478,506 111,279
Bond Fund 41,197,141 925,531 3,899,297 32,082
Income Fund 67,501,083 2,753,234 6,990,407 75,426
Science and Technology Fund18,786,611740,6102,031,68220,017
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the beneficial
owner or other persons entitled to vote nor has discretionary power to vote on a
particular matter.
<PAGE>
This report is submitted for the general information of the shareholders of
United Funds, Inc. It is not authorized for distribution to prospective
investors unless accompanied with or preceded by the United Funds, Inc. current
prospectus.
To all 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
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
William L. Rogers, Los Angeles, California
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
OFFICERS
Keith A. Tucker, President
James C. Cusser, Vice President
Abel Garcia, Vice President
Robert L. Hechler, Vice President
Henry J. Herrmann, Vice President
John M. Holliday, Vice President
Theodore W. Howard, Vice President and Treasurer
Antonio Intagliata, Vice President
Sharon K. Pappas, Vice President and Secretary
Carl E. Sturgeon, Vice President
Russell E. Thompson, Vice President
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
NUR1000A(12-97)
printed on recycled paper
