UNITED
FUNDS, INC.
United Accumulative Fund
United Bond Fund
United Income Fund
United Science and Technology Fund
SEMIANNUAL
REPORT
--------------------------------------
For the six months ended June 30, 1999
<PAGE>
This report is submitted for the general information of the shareholders of
United Funds, Inc. It is not authorized for distribution to prospective
investors unless accompanied with or preceded by the United Funds, Inc. current
prospectus.
<PAGE>
PRESIDENT'S LETTER
JUNE 30, 1999
Dear Shareholder:
As president of your Fund, I would like to thank you for your continued
confidence as an investor. I especially want to express our appreciation for
your confidence during our conversion to a new shareholder accounting system.
During this period some of you may have experienced delays in reaching our home
office shareholder services staff and we apologize for any inconvenience and
frustration you experienced.
Our conversion is now complete. Our new system complies with all of the date
requirements for the new millennium. It has the capacity to handle our growing
business and its modern structure will allow us to expand our services available
to you. We have also added to our telephone line capacity and have doubled the
size of our shareholder services staff. We are committed to the goal of
providing the best service possible to our shareholders.
With respect to your investment program, while it is impossible to predict the
future of the markets, there are some basic principles that we stand by that can
help investors achieve their financial goals.
. Work with your financial advisor to develop a comprehensive financial plan.
A comprehensive plan can help you pinpoint your financial objectives and
identify specific strategies for turning your financial dreams into reality.
A financial plan can also help ensure that your investment portfolio is
appropriately diversified. It can be one of the best ways to plan for your
financial future.
. Review your financial plan regularly. Financial planning is an ongoing
process that requires periodic reviews to adapt to life's changes.
. Make regular investments and adopt a long-term investment view. Over the
long term, regular contributions to your investments can smooth out the bumps
of volatility and enable investors to take advantage of the power of
compounding.
Waddell & Reed is positioned to assist you as you work toward your financial
goals. We will continue to offer quality investment products and personal
service to make the financial planning and investment process convenient and
accessible to you. Your financial advisor is ready to assist you in completing
your comprehensive financial plan to reach the financial goals that are most
important to you.
We look forward to assisting you in the future. If you have any questions about
your account, wish to review your financial plan or have other financial issues,
please contact your financial advisor or your local Waddell & Reed office.
Again, thank you for your continued confidence.
Respectfully,
Robert L. Hechler
President
The Year 2000 information contained in this letter is
being designated as a Year 2000 readiness disclosure
pursuant to the Year 2000 Information and Readiness Act.
<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 primarily in large
capitalization common stocks or
securities convertible into common
stocks of U.S. and foreign companies.
FOUNDED: 1940
SCHEDULED DIVIDEND FREQUENCY: SEMIANNUALLY
(JUNE AND DECEMBER)
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Six Months Ended June 30, 1999
- --------------------------------------
DIVIDEND PAID $0.015
======
NET ASSET VALUE ON
6/30/99 $9.09
12/31/98 8.28
-----
CHANGE PER SHARE $0.81
=====
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 6-30-99 9.35% 16.02%
5-year period ended 6-30-99 20.50% 21.94%
10-year period ended 6-30-99 14.20% 14.88%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On June 30, 1999, United Accumulative Fund had net assets totaling
$2,028,730,234 invested in a diversified portfolio of:
98.28% Common Stocks
0.97% Preferred Stock
0.75% Cash and Cash Equivalents
As a shareholder of United Accumulative Fund, for every $100 you had invested on
June 30, 1999, your Fund owned:
$34.51 Manufacturing Stocks
28.89 Finance, Insurance and Real Estate Stocks
19.41 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
6.90 Mining Stocks
6.10 Services Stocks
2.07 Miscellaneous Investing Institutions Stocks
0.97 Preferred Stock
0.75 Cash and Cash Equivalents
0.40 Wholesale and Retail Trade Stocks
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
JUNE 30, 1999
Shares Value
COMMON STOCKS
Business Services - 4.06%
Compuware Corporation* ................. 1,000,000 $ 31,781,250
Microsoft Corporation* ................. 150,000 13,518,750
Oracle Corporation* .................... 1,000,000 37,125,000
Total ................................. 82,425,000
Chemicals and Allied Products - 6.50%
Air Products and Chemicals, Inc. ....... 100,600 4,049,150
Elan Corporation PLC, ADR* ............. 325,000 9,018,750
Hercules Incorporated .................. 300,000 11,793,750
Pharmacia & Upjohn, Inc. ............... 600,000 34,087,500
Praxair, Inc. .......................... 225,000 11,010,938
Rohm and Haas Company .................. 58,000 2,486,750
Schering-Plough Corporation ............ 500,000 26,500,000
SmithKline Beecham plc, ADR ............ 500,000 33,031,250
Total ................................. 131,978,088
Communication - 11.77%
Chancellor Media Corporation, Class A* . 1,100,000 60,603,125
Clear Channel Communications, Inc.* .... 250,000 17,234,375
MediaOne Group, Inc.* .................. 1,000,000 74,375,000
Nextel Communications, Inc.* ........... 500,000 25,109,375
Qwest Communications International Inc.* 500,000 16,546,875
Time Warner Telecom Inc., Class A* ..... 300,000 8,690,625
VoiceStream Wireless Corporation* ...... 800,000 22,775,000
Western Wireless Corporation, Class A* . 500,000 13,515,625
Total ................................. 238,850,000
Depository Institutions - 13.91%
Chase Manhattan Corporation (The) ...... 700,000 60,637,500
Citigroup Inc. ......................... 250,000 11,875,000
Comerica Incorporated .................. 900,000 53,493,750
KeyCorp ................................ 350,000 11,243,750
Mellon Bank Corporation ................ 1,000,000 36,375,000
Mercantile Bankshares Corporation ...... 550,000 19,439,062
Summit Bancorp. ........................ 500,000 20,906,250
U. S. Bancorp. ......................... 750,000 25,500,000
Wells Fargo & Company .................. 1,000,000 42,750,000
Total ................................. 282,220,312
Electric, Gas and Sanitary Services - 2.47%
Allied Waste Industries, Inc., New* .... 2,000,000 39,500,000
Williams Companies, Inc. (The) ......... 250,000 10,640,625
Total ................................. 50,140,625
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment - 3.77%
Cooper Industries, Inc. ................ 150,000 $ 7,800,000
EchoStar Communications Corporation,
Class A* .............................. 150,000 23,020,313
Intel Corporation ...................... 200,000 11,893,750
Tellabs* ............................... 500,000 33,796,875
Total.................................. 76,510,938
Fabricated Metal Products - 0.92%
Lockheed Martin Corporation ............ 500,000 18,625,000
Furniture and Fixtures - 0.56%
Ethan Allen Interiors Inc. ............. 300,000 11,325,000
Health Services - 2.04%
Columbia/HCA Healthcare Corporation .... 1,000,000 22,812,500
Tenet Healthcare Corporation* .......... 1,000,000 18,562,500
Total ................................. 41,375,000
Holding and Other Investment Offices - 2.07%
Equity Office Properties Trust ......... 500,000 12,812,500
Host Marriott Corporation .............. 500,000 5,937,500
"Shell" Transport and Trading
Company, p.l.c. (The), ADR ............ 500,000 23,187,500
Total ................................. 41,937,500
Industrial Machinery and Equipment - 2.77%
AGCO Corporation ....................... 500,000 5,656,250
Cisco Systems, Inc.* ................... 200,000 12,881,250
Deere & Company ........................ 250,000 9,906,250
Ingersoll-Rand Company ................. 150,000 9,693,750
Parker Hannifin Corporation ............ 396,700 18,149,025
Total ................................. 56,286,525
Instruments and Related Products - 2.70%
General Motors Corporation, Class H* ... 500,000 28,125,000
Litton Industries, Inc.* ............... 77,200 5,539,100
Raytheon Company, Class B .............. 300,000 21,112,500
Total ................................. 54,776,600
Insurance Carriers - 10.78%
ACE Limited ............................ 700,000 19,775,000
Allmerica Financial Corporation ........ 300,000 18,243,750
American International Group, Inc. ..... 200,000 23,412,500
Chartwell Re Corporation ............... 500,000 9,312,500
Everest Reinsurance Holdings, Inc. ..... 410,100 13,379,512
Hartford Life, Inc., Class A ........... 325,000 17,103,125
Liberty Corporation (The) .............. 350,000 19,075,000
LifePoint Hospitals, Inc.* ............. 299,999 4,021,862
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Insurance Carriers (Continued)
Lincoln National Corporation ........... 400,000 $ 20,925,000
Nationwide Financial Services, Class A . 375,000 16,968,750
ReliaStar Financial Corp. .............. 500,000 21,875,000
St. Paul Companies, Inc. (The) ......... 300,000 9,543,750
StanCorp Financial Group, Inc.* ........ 700,000 21,000,000
Triad Hospitals, Inc.* ................. 299,999 4,040,612
Total ................................. 218,676,361
Nondepository Institutions - 2.64%
CIT Group, Inc. (The), Class A ......... 1,300,000 37,537,500
Heller Financial, Inc. ................. 575,000 15,992,187
Total ................................. 53,529,687
Oil and Gas Extraction - 6.90%
Anadarko Petroleum Corporation ......... 750,000 27,609,375
Burlington Resources Incorporated ...... 1,100,000 47,575,000
Total, S.A., ADR* ...................... 500,000 32,218,750
USX Corporation - Marathon Group ....... 1,000,000 32,562,500
Total ................................. 139,965,625
Paper and Allied Products - 3.77%
Champion International Corporation ..... 600,000 28,725,000
International Paper Company ............ 550,000 27,775,000
Kimberly-Clark Corporation ............. 350,000 19,950,000
Total ................................. 76,450,000
Petroleum and Coal Products - 5.95%
Coastal Corporation (The) .............. 700,000 28,000,000
Royal Dutch Petroleum Company .......... 500,000 30,125,000
Texaco Inc. ............................ 1,000,000 62,500,000
Total ................................. 120,625,000
Railroad Transportation - 1.07%
Burlington Northern Santa Fe Corporation 700,000 21,700,000
Security and Commodity Brokers - 1.56%
Charles Schwab Corporation (The) ....... 75,000 8,240,625
Goldman Sachs Group, Inc. (The)* ....... 325,000 23,481,250
Total ................................. 31,721,875
Transportation by Air - 4.10%
AMR Corporation* ....................... 200,000 13,650,000
Southwest Airlines Co. ................. 1,500,000 46,687,500
UAL Corporation* ....................... 350,000 22,750,000
Total ................................. 83,087,500
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Transportation Equipment - 7.57%
AlliedSignal Inc. ...................... 350,000 $ 22,050,000
Borg-Warner Automotive, Inc. ........... 375,000 20,625,000
Dana Corporation ....................... 500,000 23,031,250
Federal-Mogul Corporation .............. 450,000 23,400,000
Ford Motor Company ..................... 400,000 22,575,000
General Motors Corporation ............. 500,000 33,000,000
Newport News Shipbuilding Inc. ......... 300,000 8,850,000
Total ................................. 153,531,250
Wholesale Trade -- Nondurable Goods - 0.40%
McKesson HBOC, Inc. .................... 250,000 8,031,250
TOTAL COMMON STOCKS - 98.28% $1,993,769,136
(Cost: $1,919,809,228)
PREFERRED STOCK - 0.97%
Communication
Adelphia Communications Corporation,
5.5%, Convertible* .................... 100,000 $ 19,700,000
(Cost: $20,000,000)
TOTAL SHORT-TERM SECURITIES - 1.53% $ 31,140,692
(Cost: $31,140,692)
TOTAL INVESTMENT SECURITIES - 100.78% $2,044,609,828
(Cost: $1,970,949,920)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.78%) (15,879,594)
NET ASSETS - 100.00% $2,028,730,234
See Notes to Schedules of Investments on page 31.
<PAGE>
SHAREHOLDER SUMMARY
- ----------------------------------------------------------------------
UNITED BOND FUND
PORTFOLIO STRATEGY:
Corporate and government OBJECTIVE: Reasonable return with emphasis on
bonds the preservation of capital.
Maximum 10% non-debt
securities STRATEGY: Invests primarily in domestic debt
securities, usually of investment grade.
FOUNDED: 1964
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Six Months Ended June 30, 1999
- --------------------------------------
DIVIDENDS PAID $0.18
=====
NET ASSET VALUE ON
06/30/99 $ 6.11
12/31/98 6.39
------
CHANGE PER SHARE $(0.28)
======
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 6-30-99 -4.13% 1.72%
5-year period ended 6-30-99 6.33% 7.59%
10-year period ended 6-30-99 7.01% 7.64%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On June 30, 1999, United Bond Fund had net assets totaling $533,191,072 invested
in a diversified portfolio of:
95.60% Bonds
4.40% Cash and Cash Equivalents
As a shareholder of United Bond Fund, for every $100 you had invested on June
30, 1999, your Fund owned:
Bonds:
Corporate $55.99
U.S. Government 32.30
Other Government 7.31
Cash and Cash Equivalents 4.40
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Chemicals and Allied Products - 2.14%
Procter & Gamble Company (The),
8.0%, 9-1-2024 ........................ $10,000 $11,389,900
Communication - 2.58%
BellSouth Telecommunications, Inc.,
5.85%, 11-15-2045 ..................... 3,000 2,990,250
Jones Intercable, Inc.,
9.625%, 3-15-2002 ..................... 2,500 2,675,000
Tele-Communications, Inc.,
8.35%, 2-15-2005 ...................... 7,500 8,089,350
Total ................................. 13,754,600
Depository Institutions - 12.26%
AmSouth Bancorporation,
6.75%, 11-1-2025 ...................... 6,500 6,411,470
Chevy Chase Savings Bank, F.S.B.,
9.25%, 12-1-2005 ...................... 1,500 1,518,750
First Union Corporation:
6.824%, 8-1-2026 ...................... 7,500 7,598,325
6.55%, 10-15-2035 ..................... 4,500 4,456,845
Kansallis-Osake-Pankki,
10.0%, 5-1-2002 ....................... 6,000 6,502,320
NBD Bank, National Association,
8.25%, 11-1-2024 ...................... 6,000 6,640,320
NationsBank Corporation,
8.57%, 11-15-2024 ..................... 5,000 5,629,950
Riggs National Corporation,
8.5%, 2-1-2006 ........................ 7,000 7,297,290
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Depository Institutions (Continued)
SouthTrust Bank of Alabama, National Association:
5.58%, 2-6-2006 ....................... $ 7,800 $ 7,750,158
7.69%, 5-15-2025 ...................... 5,000 5,360,200
Sovereign Bancorp, Inc.,
8.0%, 3-15-2003 ....................... 2,000 1,990,000
Wachovia Corporation,
6.605%, 10-1-2025 ..................... 4,250 4,189,693
Total ................................. 65,345,321
Electric, Gas and Sanitary Services - 7.43%
California Infrastructure and Economic Development
Bank, Special Purpose Trust:
PG&E-1,
6.42%, 9-25-2008 ...................... 5,000 4,972,400
SCE-1,
6.38%, 9-25-2008 ...................... 5,000 4,946,850
Cleveland Electric Illuminating Co. (The),
9.5%, 5-15-2005 ....................... 4,000 4,265,840
Entergy Arkansas, Inc.,
7.5%, 8-1-2007 ........................ 3,750 3,891,187
Korea Electric Power Corporation,
6.375%, 12-1-2003 ..................... 2,500 2,333,425
Niagara Mohawk Power Corporation:
9.5%, 6-1-2000 ........................ 1,500 1,543,320
7.375%, 7-1-2003 ...................... 5,500 5,594,160
Pacific Gas & Electric Co.,
6.875%, 12-1-99 ....................... 4,750 4,754,085
Pennsylvania Power & Light Co.,
9.25%, 10-1-2019 ...................... 4,000 4,170,920
TXU Eastern Funding Company,
6.45%, 5-15-2005 (A) .................. 3,250 3,139,565
Total ................................. 39,611,752
Food and Kindred Products - 3.94%
Anheuser-Busch Companies, Inc.,
7.0%, 9-1-2005 ........................ 3,000 3,007,020
Coca-Cola Enterprises Inc.:
0.0%, 6-20-2020 ....................... 45,000 10,022,850
6.7%, 10-15-2036 ...................... 5,500 5,545,705
Coca-Cola FEMSA, S.A. de C.V.,
8.95%, 11-1-2006 ...................... 2,500 2,450,000
Total ................................. 21,025,575
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
General Merchandise Stores - 1.09%
Fred Meyer, Inc.:
7.15%, 3-1-2003 ....................... $ 3,750 $ 3,777,787
7.45%, 3-1-2008 ....................... 2,000 2,017,700
Total ................................. 5,795,487
Health Services - 1.58%
Tenet Healthcare Corporation:
7.875%, 1-15-2003 ..................... 3,500 3,430,000
8.625%, 12-1-2003 ..................... 5,000 5,000,000
Total ................................. 8,430,000
Holding and Other Investment Offices - 0.96%
Bay Apartment Communities, Inc.,
6.5%, 1-15-2005 ....................... 3,000 2,875,470
GRUMA, S.A. de C.V.,
7.625%, 10-15-2007..................... 2,500 2,237,500
Total ................................. 5,112,970
Insurance Carriers - 0.57%
Reliance Group Holdings, Inc.,
9.0%, 11-15-2000 ...................... 3,000 3,057,510
Nondepository Institutions - 10.38%
Asset Securitization Corporation,
7.49%, 4-14-2029 ...................... 6,000 6,150,960
CHYPS CBO 1997-1 Ltd.,
6.72%, 1-15-2010 (A) .................. 8,500 8,158,640
Chrysler Financial Corporation,
12.75%, 11-1-99 ....................... 9,000 9,208,710
Equicon Loan Trust,
7.3%, 2-18-2013 ....................... 4,571 4,562,246
General Electric Capital Corporation,
8.625%, 6-15-2008 ..................... 3,500 3,969,735
General Motors Acceptance Corporation,
8.875%, 6-1-2010 ...................... 5,500 6,227,870
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Nondepository Institutions (Continued)
IMC Home Equity Loan Trust,
6.9%, 1-20-2022 ....................... $ 4,500 $ 4,498,560
Norse CBO, Ltd. and Norse CBO, Inc.,
6.515%, 8-13-2010 (A) ................. 3,750 3,543,750
Residential Asset Securities Corporation,
Mortgage Pass-Through Certificates,
8.0%, 10-25-2024 ...................... 4,000 4,066,240
Westinghouse Electric Corporation,
8.875%, 6-14-2014 ..................... 4,500 4,985,685
Total ................................. 55,372,396
Oil and Gas Extraction - 2.86%
Anadarko Petroleum Corporation,
7.25%, 3-15-2025 ...................... 5,000 5,028,900
Mitchell Energy & Development Corp.,
9.25%, 1-15-2002 ...................... 165 171,965
Oryx Energy Company,
10.0%, 4-1-2001 ....................... 3,500 3,690,785
Pemex Finance Ltd.,
5.72%, 11-15-2003 (A) ................. 2,500 2,446,875
YPF Sociedad Anoima,
8.0%, 2-15-2004 ....................... 4,000 3,896,040
Total ................................. 15,234,565
Paper and Allied Products - 1.99%
Canadian Pacific Forest Products Ltd.,
9.25%, 6-15-2002 ...................... 4,500 4,741,245
Champion International Corporation,
6.4%, 2-15-2026 ....................... 6,100 5,884,609
Total ................................. 10,625,854
Petroleum and Coal Products - 0.55%
Conoco Inc.,
5.9%, 4-15-2004 ....................... 3,000 2,927,340
Printing and Publishing - 1.38%
News America Holdings Incorporated,
7.45%, 6-1-2000 ....................... 2,500 2,530,475
Quebecor Printing Capital Corporation,
6.5%, 8-1-2027 ........................ 5,000 4,816,550
Total ................................. 7,347,025
Railroad Transportation - 0.94%
CSX Corporation,
6.95%, 5-1-2027 ....................... 5,000 5,032,500
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Security and Commodity Brokers - 0.96%
Salomon Inc.,
3.65%, 2-14-2002 ...................... $ 5,000 $ 5,107,700
Stone, Clay and Glass Products - 1.64%
Cemex, S.A. de C.V.,
9.5%, 9-20-2001 ....................... 3,500 3,552,500
Owens-Illinois, Inc.,
7.15%, 5-15-2005....................... 3,250 3,124,485
USG Corporation,
9.25%, 9-15-2001 ...................... 2,000 2,094,880
Total ................................. 8,771,865
Transportation Equipment - 0.65%
Coltec Industries Inc.,
7.5%, 4-15-2008 ....................... 2,500 2,506,250
Federal-Mogul Corporation,
7.75%, 7-1-2006 ....................... 1,000 957,510
Total ................................. 3,463,760
United States Postal Service - 0.31%
Postal Square Limited Partnership,
6.5%, 6-15-2022 ....................... 1,701 1,633,679
Wholesale Trade -- Durable Goods - 1.78%
Motorola, Inc.,
8.4%, 8-15-2031 ....................... 8,500 9,502,915
TOTAL CORPORATE DEBT SECURITIES - 55.99% $298,542,714
(Cost: $299,608,171)
OTHER GOVERNMENT SECURITIES
Canada - 5.77%
Hydro-Quebec:
8.05%, 7-7-2024 ....................... 10,000 10,837,300
7.4%, 3-28-2025 ....................... 5,150 5,774,540
Province de Quebec:
5.67%, 2-27-2026 ...................... 9,200 9,190,432
6.29%, 3-6-2026 ....................... 5,000 4,971,450
Total ................................. 30,773,722
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
JUNE 30, 1999
Principal
Amount in
Thousands Value
OTHER GOVERNMENT SECURITIES (Continued)
Korea - 0.47%
Korea Development Bank (The),
7.90%, 2-1-2002 ....................... $ 2,500 $ 2,491,175
Supranational - 1.07%
Inter-American Development Bank,
8.4%, 9-1-2009 ........................ 5,000 5,692,900
TOTAL OTHER GOVERNMENT SECURITIES - 7.31% $ 38,957,797
(Cost: $37,524,730)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
7.5%, 2-15-2007 ....................... 6,396 6,490,419
6.5%, 9-25-2018 ....................... 2,000 1,985,000
7.0%, 1-15-2019 ....................... 2,000 2,000,620
7.5%, 4-15-2019 ....................... 15,360 15,503,472
7.95%, 12-15-2020 ..................... 1,177 1,177,800
6.25%, 1-15-2021 ...................... 12,000 11,861,160
Federal National Mortgage Association:
5.875%, 7-16-2003 ..................... 5,000 4,902,350
7.0%, 7-25-2006 ....................... 10,000 10,065,600
6.09%, 4-1-2009 ....................... 4,484 4,274,328
0.0%, 2-12-2018 ....................... 4,500 1,303,110
7.0%, 9-25-2020 ....................... 2,000 2,007,500
6.5%, 8-25-2021 ....................... 2,500 2,458,200
7.0%, 8-25-2021 ....................... 10,000 10,028,100
7.0%, 6-1-2024 ........................ 6,426 6,351,937
6.0%, 12-1-2028 ....................... 6,891 6,473,590
Government National Mortgage Association:
7.5%, 7-15-2023 ....................... 3,083 3,116,262
7.5%, 12-15-2023 ...................... 3,472 3,509,786
8.0%, 9-15-2025 ....................... 4,796 4,962,764
7.0%, 7-20-2027 ....................... 269 263,893
7.0%, 9-20-2027 ....................... 4,325 4,246,926
7.75%, 10-15-2031 ..................... 1,969 2,092,078
Tennessee Valley Authority,
5.88%, 4-1-2036 ....................... 3,750 3,677,025
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 4,070,000
1998-1 Class 2-B,
7.0%, 6-15-2019 ....................... 750 757,732
1999-2 Class 1-B,
6.5%, 12-1-2020 ....................... 5,500 5,448,410
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
JUNE 30, 1999
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES (Continued)
United States Treasury:
5.75%, 10-31-2000 ..................... $3,000 $3,013,110
5.25%, 1-31-2001 ...................... 5,000 4,984,350
7.5%, 2-15-2005 ....................... 10,000 10,765,600
6.5%, 8-15-2005 ....................... 5,750 5,926,985
6.5%, 10-15-2006 ...................... 24,000 24,780,000
11.25%, 2-15-2015 ..................... 2,500 3,742,175
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 32.30% $172,240,282
(Cost: $174,026,059)
TOTAL SHORT-TERM SECURITIES - 3.15% $ 16,793,609
(Cost: $16,793,609)
TOTAL INVESTMENT SECURITIES - 98.75% $526,534,402
(Cost: $527,952,569)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.25% 6,656,670
NET ASSETS - 100.00% $533,191,072
See Notes to Schedules of Investments on page 31.
<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 primarily in common stocks of
large U.S. and foreign 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.
FOUNDED: 1940
SCHEDULED DIVIDEND FREQUENCY: QUARTERLY
(MARCH, JUNE, SEPTEMBER, DECEMBER)
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Six Months Ended June 30, 1999
- --------------------------------------
DIVIDENDS PAID $0.04
=====
NET ASSET VALUE ON
6/30/99 $7.99
12/31/98 7.52
-----
CHANGE PER SHARE $0.47
=====
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 6-30-99 5.79% 12.25%
5-year period ended 6-30-99 20.07% 21.50%
10-year period ended 6-30-99 15.55% 16.23%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On June 30, 1999, United Income Fund had net assets totaling $8,104,489,930
invested in a diversified portfolio of:
83.70% Common Stocks
13.61% U.S. Government Securities
2.42% Cash and Cash Equivalents
0.27% Corporate Debt Securities
As a shareholder of United Income Fund, for every $100 you had invested on June
30, 1999, your Fund owned:
$47.70 Manufacturing Stocks
13.61 United States Government Securities
10.90 Finance, Insurance and Real Estate Stocks
9.16 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
7.88 Wholesale and Retail Trade Stocks
5.43 Services Stocks
2.42 Cash and Cash Equivalents
2.31 Mining Stocks
0.32 Miscellaneous Investing Institutions Stocks
0.27 Corporate Debt Securities
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1999
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 0.49%
Gap, Inc. (The) ........................ 787,500$ 39,670,313
Building Materials and Garden Supplies - 1.11%
Home Depot, Inc. (The) ................. 1,394,200 89,838,763
Business Services - 2.87%
America Online, Inc.* .................. 255,700 28,254,850
Microsoft Corporation* ................. 1,772,800 159,773,600
SAP AG, ADR ............................ 1,275,900 44,178,038
Total ................................. 232,206,488
Chemicals and Allied Products - 17.19%
ABB AG (B) ............................. 67,000 99,144,309
Air Products and Chemicals, Inc. ....... 1,429,200 57,525,300
Biogen, Inc.* .......................... 667,600 42,955,887
Bristol-Myers Squibb Company ........... 1,345,500 94,773,656
Colgate-Palmolive Company .............. 787,800 77,795,250
du Pont (E.I.) de Nemours and Company .. 2,073,000 141,611,813
Forest Laboratories, Inc.* ............. 80,200 3,709,250
Gillette Company (The) ................. 1,569,900 64,365,900
Lilly (Eli) and Company ................ 1,540,100 110,309,662
Merck & Co., Inc. ...................... 1,492,700 110,459,800
Monsanto Company ....................... 2,100,000 82,818,750
PPG Industries, Inc. ................... 705,300 41,656,781
Pfizer Inc. ............................ 731,300 80,260,175
Pharmacia & Upjohn, Inc. ............... 1,031,900 58,624,819
Procter & Gamble Company (The) ......... 780,300 69,641,775
Schering-Plough Corporation ............ 1,327,000 70,331,000
Warner-Lambert Company ................. 2,700,000 187,312,500
Total ................................. 1,393,296,627
Communication - 5.94%
Clear Channel Communications, Inc.* .... 1,112,000 76,658,500
Cox Communications, Inc., Class A* ..... 3,795,400 139,718,163
MCI WORLDCOM, Inc.* .................... 1,037,000 89,214,406
SBC Communications Inc. ................ 1,500,000 87,000,000
Vodafone Airtouch Public Limited
Company, ADR .......................... 450,000 88,650,000
Total ................................. 481,241,069
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Depository Institutions - 2.46%
Chase Manhattan Corporation (The) ...... 1,050,000 $ 90,956,250
Citigroup Inc. ......................... 2,287,500 108,656,250
Total ................................. 199,612,500
Electric, Gas and Sanitary Services - 2.55%
Duke Energy Corp. ...................... 1,275,000 69,328,125
Texas Utilities Company ................ 3,325,000 137,156,250
Total ................................. 206,484,375
Electronic and Other Electric Equipment - 8.81%
Analog Devices, Inc.* .................. 1,575,000 79,045,312
General Electric Company ............... 1,970,200 222,632,600
Intel Corporation ...................... 2,804,000 166,750,375
Nokia, AB (B) .......................... 1,520,000 133,166,440
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 3,419,000 112,506,469
Total ................................. 714,101,196
Fabricated Metal Products - 1.92%
Lockheed Martin Corporation ............ 4,176,300 155,567,175
Food and Kindred Products - 2.34%
Bestfoods .............................. 1,400,000 69,300,000
Coca-Cola Company (The) ................ 685,500 42,843,750
Panamerican Beverages Inc., Class A .... 1,336,000 31,813,500
Ralston-Ralston Purina Group ........... 1,509,100 45,933,231
Total ................................. 189,890,481
Food Stores - 1.19%
Kroger Co. (The)* ...................... 3,450,000 96,384,375
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
General Merchandise Stores - 2.40%
Dayton Hudson Corporation .............. 565,900 $ 36,783,500
Wal-Mart Stores, Inc. .................. 3,261,000 157,343,250
Total ................................. 194,126,750
Health Services - 0.78%
Tenet Healthcare Corporation* .......... 3,393,700 62,995,556
Holding and Other Investment Offices - 0.32%
Lagardere SCA (B) ...................... 700,000 26,045,789
Industrial Machinery and Equipment - 7.67%
Apple Computer, Inc.* .................. 1,046,700 48,540,713
Case Corporation ....................... 3,329,000 160,208,125
Cisco Systems, Inc.* ................... 2,003,400 129,031,481
Deere & Company ........................ 1,299,700 51,500,612
EMC Corporation* ....................... 1,404,000 77,220,000
International Business Machines
Corporation ........................... 1,200,000 155,100,000
Total ................................. 621,600,931
Instruments and Related Products - 3.94%
General Motors Corporation, Class H* ... 759,700 42,733,125
Guidant Corporation .................... 2,400,000 123,450,000
Medtronic, Inc. ........................ 972,000 75,694,500
Raytheon Company, Class A .............. 1,124,981 77,483,066
Total ................................. 319,360,691
Insurance Carriers - 2.40%
American International Group, Inc. .... 916,950 107,340,459
Chubb Corporation (The) ................ 1,259,000 87,500,500
Total ................................. 194,840,959
Miscellaneous Retail - 0.38%
Costco Companies, Inc.* ................ 382,500 30,611,953
Motion Pictures - 1.78%
Time Warner Incorporated ............... 1,000,000 73,500,000
Walt Disney Company (The) .............. 2,296,900 70,773,231
Total ................................. 144,273,231
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Nondepository Institutions - 6.04%
Associates First Capital Corporation,
Class A ............................... 2,976,970 $ 131,916,983
Fannie Mae ............................. 2,858,400 195,443,100
Freddie Mac ............................ 2,800,000 162,400,000
Total ................................. 489,760,083
Oil and Gas Extraction - 2.31%
Burlington Resources Incorporated ...... 3,300,000 142,725,000
Schlumberger Limited ................... 700,000 44,581,250
Total ................................. 187,306,250
Petroleum and Coal Products - 3.13%
Chevron Corporation .................... 450,000 42,834,375
Exxon Corporation ...................... 500,000 38,562,500
Mobil Corporation ...................... 800,000 79,200,000
Royal Dutch Petroleum Company .......... 1,544,000 93,026,000
Total ................................. 253,622,875
Primary Metal Industries - 0.99%
Alcoa Incorporated ..................... 1,300,000 80,437,500
Transportation by Air - 0.67%
AMR Corporation* ....................... 800,000 54,600,000
Transportation Equipment - 1.71%
DaimlerChrysler AG ..................... 713,907 63,448,485
Ford Motor Company ..................... 1,332,000 75,174,750
Total ................................. 138,623,235
Wholesale Trade - Durable Goods - 1.09%
Johnson & Johnson ...................... 899,000 88,102,000
Wholesale Trade - Nondurable Goods - 1.22%
Safeway Inc.* .......................... 2,000,000 99,000,000
TOTAL COMMON STOCKS - 83.70% $6,783,601,165
(Cost: $3,687,300,853)
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Depository Institutions - 0.13%
Morgan Guaranty Trust Company of New York,
7.375%, 2-1-2002 ...................... $ 10,250 $ 10,493,540
Nondepository Institutions - 0.14%
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... 10,000 11,185,400
TOTAL CORPORATE DEBT SECURITIES - 0.27% $ 21,678,940
(Cost: $20,055,074)
UNITED STATES GOVERNMENT SECURITIES
Federal National Mortgage Association,
5.9%, 7-9-2003 ........................ 100,000 97,937,000
United States Treasury:
6.75%, 4-30-2000 ...................... 37,000 37,433,640
5.75%, 8-15-2003 ...................... 50,000 50,031,000
6.5%, 10-15-2006 ...................... 50,000 51,625,000
5.625%, 5-15-2008 ..................... 50,000 48,976,500
10.375%, 11-15-2012 ................... 8,500 10,830,870
7.5%, 11-15-2016 ...................... 80,000 90,162,400
9.0%, 11-15-2018 ...................... 20,000 26,025,000
8.75%, 8-15-2020 ...................... 75,000 96,468,750
5.5%, 8-15-2028 (C) ................... 600,000 549,372,000
5.25%, 11-15-2028 ..................... 50,000 44,320,500
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 13.61% $1,103,182,660
(Cost: $1,206,945,392)
TOTAL SHORT-TERM SECURITIES - 2.36% $ 191,367,534
(Cost: $191,367,534)
TOTAL INVESTMENT SECURITIES - 99.94% $8,099,830,299
(Cost: $5,105,668,853)
CASH AND OTHER ASSETS, NET OF LIABILITIES _ 0.06% 4,659,631
NET ASSETS - 100.00% $8,104,489,930
See Notes to Schedules of Investments on page 31.
<PAGE>
SHAREHOLDER SUMMARY
- ------------------------------------------------------------------------
UNITED SCIENCE AND TECHNOLOGY FUND
PORTFOLIO STRATEGY:
Technology-related OBJECTIVE: Long-term capital growth.
stocks
Generally at least 80% STRATEGY: Invests primarily in common
in science or technology stocks of U.S. and foreign
securities; may have more companies whose products,
than 20% in debt securities. processes or services are
expected to benefit from scientific or
technological discoveries or
developments.
Cash reserves
FOUNDED: 1950
SCHEDULED DIVIDEND FREQUENCY: SEMIANNUALLY
(JUNE AND DECEMBER)
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Six Months Ended June 30, 1999
- --------------------------------------
NET ASSET VALUE ON
6/30/99 $12.19
12/31/98 9.91
------
CHANGE PER SHARE $ 2.28
======
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 6-30-99 41.80% 50.45%
5-year period ended 6-30-99 32.44% 34.02%
10-year period ended 6-30-99 20.65% 21.36%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On June 30, 1999, United Science and Technology Fund had net assets totaling
$2,170,091,058 invested in a diversified portfolio of:
96.15% Common Stocks
3.85% Cash and Cash Equivalents
As a shareholder of United Science and Technology Fund, for every $100 you had
invested on June 30, 1999, your Fund owned:
$43.54 Services Stocks
39.63 Manufacturing Stocks
7.47 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
5.09 Wholesale and Retail Trade Stocks
3.85 Cash and Cash Equivalents
0.42 Finance, Insurance and Real Estate Stocks
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
JUNE 30, 1999
Shares Value
COMMON STOCKS
Building Materials and Garden Supplies - 0.97%
Fastenal Company ....................... 400,000 $ 20,950,000
Business Services - 35.79%
Amazon.com, Inc.* ...................... 300,000 37,528,125
America Online, Inc.* .................. 1,000,000 110,500,000
American Management Systems, Incorporated* 115,000 3,683,594
Citrix Systems, Inc.* .................. 1,000,000 56,343,750
Concord EFS, Inc.* ..................... 817,300 34,607,547
EarthLink Network, Inc.* ............... 234,300 14,402,128
eBay Inc.* ............................. 259,500 39,257,484
HNC Software Inc.* ..................... 600,000 18,468,750
Inktomi Corporation* ................... 470,000 61,819,687
Intuit Inc.* ........................... 508,800 45,887,400
Microsoft Corporation* ................. 600,000 54,075,000
Oracle Corporation* .................... 500,000 18,562,500
TMP Worldwide Inc.* .................... 500,000 31,843,750
TenFold Corporation* ................... 368,800 11,617,200
Teradyne, Inc.* ........................ 400,000 28,700,000
Transaction Systems Architects, Inc.,
Class A* .............................. 600,000 23,400,000
USWeb Corporation* ..................... 600,000 13,331,250
Veritas Software Corp.* ................ 500,000 47,484,375
Wind River Systems, Inc.* .............. 825,000 13,225,781
Yahoo! Inc.* ........................... 650,000 111,942,188
Total ................................. 776,680,509
Chemicals and Allied Products - 8.65%
Abbott Laboratories .................... 500,000 22,750,000
Biogen, Inc.* .......................... 700,000 45,040,625
Bristol-Myers Squibb Company ........... 400,000 28,175,000
Pfizer Inc. ............................ 230,000 25,242,500
Schering-Plough Corporation ............ 600,000 31,800,000
Warner-Lambert Company ................. 500,000 34,687,500
Total ................................. 187,695,625
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Communication - 7.47%
Clear Channel Communications, Inc.* .... 547,300 $ 37,729,494
COLT Telecom Group plc, ADR* ........... 400,000 34,387,500
Cox Communications, Inc., Class A* ..... 942,400 34,692,100
Global TeleSystems Group, Inc.* ........ 217,000 17,570,219
Level 3 Communications, Inc.* .......... 300,000 18,037,500
Vodafone Airtouch Public Limited
Company, ADR .......................... 100,000 19,700,000
Total ................................. 162,116,813
Electronic and Other Electric Equipment - 19.86%
ADC Telecommunications, Inc.* .......... 400,600 18,239,819
Analog Devices, Inc.* .................. 1,000,000 50,187,500
Broadcom Corporation, Class A* ......... 500,000 72,265,625
Concord Communications, Inc.* .......... 182,700 8,152,987
EchoStar Communications Corporation,
Class A* .............................. 300,000 46,040,625
Gemstar International Group Limited* ... 720,000 47,025,000
General Electric Company ............... 325,000 36,725,000
Inet Technologies, Inc.* ............... 125,150 2,999,689
Intel Corporation ...................... 750,000 44,601,563
Lucent Technologies Inc. ............... 330,000 22,254,375
Micron Technology, Inc.* ............... 300,000 12,093,750
Nokia Corporation, Series A, ADR ....... 400,000 36,625,000
Tellabs* ............................... 500,000 33,796,875
Total ................................. 431,007,808
Engineering and Management Services - 5.04%
Abacus Direct Corporation* ............. 356,000 32,295,875
Incyte Pharmaceuticals, Inc.* .......... 998,400 26,364,000
Paychex, Inc. .......................... 900,000 28,631,250
Quintiles Transnational Corp.* ......... 525,500 22,054,578
Total ................................. 109,345,703
Fabricated Metal Products - 1.03%
Lockheed Martin Corporation ............ 600,000 22,350,000
General Merchandise Stores - 0.98%
Wal-Mart Stores, Inc. .................. 440,000 21,230,000
Industrial Machinery and Equipment - 7.44%
Apple Computer, Inc.* .................. 600,000 27,825,000
Applied Materials, Inc.* ............... 250,000 18,460,937
Cisco Systems, Inc.* ................... 1,289,100 83,026,097
International Business Machines Corporation 230,000 29,727,500
Juniper Networks, Inc.* ................ 16,800 2,505,825
Total ................................. 161,545,359
See Notes to Schedules of Investments on page 31.
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Instruments and Related Products - 2.65%
Guidant Corporation .................... 209,300$ 10,765,869
Medtronic, Inc. ........................ 400,000 31,150,000
STERIS Corporation* .................... 800,000 15,500,000
Total ................................. 57,415,869
Insurance Carriers - 0.42%
Rambus Inc.* ........................... 100,000 9,215,625
Motion Pictures - 2.71%
AT&T Corp. - Liberty Media Group,
Class A* .............................. 600,000 22,050,000
Time Warner Incorporated ............... 500,000 36,750,000
Total ................................. 58,800,000
Wholesale Trade -- Durable Goods - 1.81%
Johnson & Johnson ...................... 400,000 39,200,000
Wholesale Trade -- Nondurable Goods - 1.33%
Cardinal Health, Inc. .................. 450,000 28,856,250
TOTAL COMMON STOCKS - 96.15% $2,086,409,561
(Cost: $1,070,469,896)
TOTAL SHORT-TERM SECURITIES - 3.54% $ 76,897,674
(Cost: $76,897,674)
TOTAL INVESTMENT SECURITIES - 99.69% $2,163,307,235
(Cost: $1,147,367,570)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.31% 6,783,823
NET ASSETS - 100.00% $2,170,091,058
See Notes to Schedules of Investments on page 31.
<PAGE>
UNITED FUNDS, INC.
JUNE 30, 1999
Notes to Schedules of Investments
*No dividends were paid during the preceding 12 months.
(A) Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may be resold in transactions exempt from registration, normally
to qualified institutional buyers. At June 30, 1999, the value of these
securities amounted to $17,288,830 or 3.24% of net assets for United Bond
Fund.
(B) Listed on an exchange outside the United States.
(C) See Note 7 to financial statements.
See Note 1 to financial statements for security valuation and other significant
accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and
depreciation of investments owned for Federal income tax purposes.
<PAGE>
UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 United
(In Thousands, Except United United United Science and
for Per Share Amounts)Accumulative Bond Income Technology
Fund Fund Fund Fund
Assets ----------------------------------------
------------
Investment securities --
at value (Notes 1 and 3)$2,044,610 $526,534 $8,099,830 $2,163,307
Cash .............. 61 2 7,600 1,790
Receivables:
Investment securities sold51,006 --- 2,470 6,424
Dividends and interest 1,992 7,860 28,595 258
Fund shares sold .. 1,616 746 6,344 2,657
Prepaid insurance
premium ........... 31 14 46 10
---------- -------- ---------- ----------
Total assets .... 2,099,316 535,156 8,144,885 2,174,446
Liabilities ---------- -------- ---------- ----------
Payable for investment
securities purchased 66,236 --- 16,709 ---
Payable to Fund
shareholders ...... 3,478 1,660 20,590 3,371
Accrued service fee (Note 2) 369 97 1,436 361
Accrued transfer agency
and dividend disbursing
(Note 2) .......... 217 85 954 312
Accrued distribution fee (Note 2)46 14 182 59
Accrued management
fee (Note 2) ...... 37 8 127 50
Accrued accounting
services fee (Note 2) 8 5 8 8
Other .............. 195 96 389 194
---------- -------- ---------- ----------
Total liabilities 70,586 1,965 40,395 4,355
---------- -------- ---------- ----------
Total net assets $2,028,730 $533,191 $8,104,490 $2,170,091
Net Assets ========== ======== ========== ==========
$1.00 par value capital stock
Capital stock ..... $ 223,273 $ 87,224 $1,014,624 $ 177,948
Additional paid-in
capital .......... 1,364,234 464,935 3,646,987 752,965
Accumulated undistributed
income (loss):
Accumulated undistributed
net investment
income (loss) ... 3,279 67 10,491 (6,382)
Accumulated undistributed net
realized gain (loss) on
investment
transactions ..... 364,298 (17,617) 438,255 229,625
Net unrealized appreciation
(depreciation) of
investments ..... 73,646 (1,418) 2,994,133 1,015,935
---------- -------- ---------- ----------
Net assets applicable to
outstanding units
of capital ..... $2,028,730 $533,191 $8,104,490 $2,170,091
========== ======== ========== ==========
Capital shares outstanding
Class A ............ 222,798 86,844 972,640 177,179
Class Y ............ 475 380 41,984 769
Capital shares authorized 500,000 300,000 2,000,000 400,000
Net asset value per share
(net assets divided by
shares outstanding)
Class A ............ $9.09 $6.11 $7.99 $12.19
Class Y ............ $9.09 $6.11 $7.99 $12.31
See notes to financial statements.
<PAGE>
UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1999
(In Thousands) United
United United United Science and
Accumulative Bond Income Technology
Fund Fund Fund Fund
Investment Income ------------ --------------------------------------
Income (Note 1B):
Interest and
amortization .... $ 3,052 $17,836 $ 40,148 $ 1,674
Dividends ......... 10,296 --- 38,650 1,812
-------- ------- ------- --------
Total income .... 13,348 17,836 78,798 3,486
-------- ------- ------- --------
Expenses (Note 2):
Investment
management fee ... 5,156 1,140 21,123 5,482
Service fees -- Class A 2,124 610 8,368 2,049
Transfer agency and
dividend disbursing
-- Class A ..... 1,063 496 4,718 1,681
Distribution
fees -- Class A . 168 59 695 261
Custodian fees .... 26 9 287 17
Shareholder servicing
fee -- Class Y ... 4 2 277 7
Accounting services fee 50 31 50 50
Legal fees ........ 12 3 44 10
Audit fees ........ 10 10 11 10
Other ............. 229 115 897 337
-------- ------- ------- --------
Total expenses .. 8,842 2,475 36,470 9,904
-------- ------- ------- --------
Net investment
income (loss) 4,506 15,361 42,328 (6,418)
-------- ------- ------- --------
Realized and Unrealized
Gain (Loss) on Investments (Notes 1 and 3)
Realized net gain
on securities ..... 299,179 874 409,901 184,856
Realized net gain (loss) on foreign
currency transactions (102) --- (393) 36
-------- ---------- -------- --------
Realized net gain
on investments .. 299,077 874 409,508 184,892
Unrealized appreciation (depreciation)
in value of investments
during the period.. (119,653) (24,890) 70,943 218,866
-------- ---------- -------- --------
Net gain (loss) on
investments .... 179,424 (24,016) 480,451 403,758
-------- ---------- -------- --------
Net increase (decrease) in net
assets resulting from
operations .... $183,930 $(8,655) $522,779 $397,340
======== ======== ======== ========
See notes to financial statements.
<PAGE>
UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended JUNE 30, 1999 United
(In Thousands) United United United Science and
Accumulative Bond Income Technology
Fund Fund Fund Fund
----------------------------------------------------
Increase (Decrease) in Net Assets
Operations:
Net investment
income (loss) ... $ 4,506 $ 15,361 $ 42,328 $ (6,418)
Realized net gain
on investments .. 299,077 874 409,508 184,892
Unrealized appreciation
(depreciation) .. (119,653) (24,890) 70,943 218,866
---------- -------- ---------- ----------
Net increase (decrease) in net
assets resulting
from operations. 183,930 (8,655) 522,779 397,340
---------- -------- ---------- ----------
Distributions to shareholders
from (Note 1E):*
Net investment income:
Class A ......... (3,333) (15,433) (39,031) ---
Class Y ......... (11) (64) (2,345) ---
Realized net gains on
investment transactions:
Class A ......... --- --- --- ---
Class Y ......... --- --- --- ---
---------- -------- ---------- ----------
(3,344) (15,497) (41,376) ---
---------- -------- ---------- ----------
Capital share
transactions (Note 5) (19,893) 195 (144,214) 98,268
---------- -------- ---------- ----------
Total increase (decrease) 160,693 (23,957) 337,189 495,608
Net Assets
Beginning of period 1,868,037 557,148 7,767,301 1,674,483
---------- -------- ---------- ----------
End of period $2,028,730 $533,191 $8,104,490 $2,170,091
========== ======== ========== ==========
Undistributed
net investment
income (loss) ... $3,279 $67 $10,491 $(6,382)
====== === ======= =======
*See "Financial Highlights" on pages 36 - 43.
See notes to financial statements.
<PAGE>
UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended DECEMBER 31, 1998 United
(In Thousands) United United United Science and
Accumulative Bond Income Technology
Fund Fund Fund Fund
----------------------------------------------------
Increase in Net Assets
Operations:
Net investment
income (loss) ... $ 19,519 $ 31,745 $ 82,228 $ (4,737)
Realized net gain
on investments .. 259,891 4,756 1,363,007 139,225
Unrealized
appreciation .... 75,732 1,500 102,526 492,528
-------- ---------- ---------- ----------
Net increase in net
assets resulting
from operations. 355,142 38,001 1,547,761 627,016
-------- ---------- ---------- ----------
Distributions to shareholders
from (Note 1E):*
Net investment income:
Class A ......... (20,979) (31,553) (69,402) ---
Class Y ......... (50) (359) (4,557) ---
Realized net gains on
investment transactions:
Class A ......... (214,379) --- (1,392,072) (108,718)
Class Y ......... (421) --- (76,922) (380)
-------- ---------- ---------- ----------
(235,829) (31,912) (1,542,953) (109,098)
-------- ---------- ---------- ----------
Capital share
transactions (Note 5) 149,682 22,363 1,267,504 89,771
-------- ---------- ---------- ----------
Total increase .... 268,995 28,452 1,272,312 607,689
Net Assets
Beginning of period 1,599,042 528,696 6,494,989 1,066,794
---------- -------- ---------- ----------
End of period $1,868,037 $557,148 $7,767,301 $1,674,483
========== ======== ========== ==========
Undistributed
net investment
income .......... $2,219 $203 $9,932 $---
====== ==== ====== ====
*See "Financial Highlights" on pages 36 - 43.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED ACCUMULATIVE FUND
Class A Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
six months For the fiscal year ended December 31,
ended --------------------------------------
6/30/99 1998 1997 1996 1995 1994
---------- ----- ----- ----- ----- -----
Net asset value,
beginning of period $8.28 $7.77 $7.75 $7.78 $6.58 $7.19
---- ---- ---- ---- ---- ----
Income from investment
operations:
Net investment
income .......... 0.02 0.10 0.10 0.11 0.11 0.13
Net realized and
unrealized gain
(loss) on
investments ..... 0.81 1.60 2.14 0.82 2.12 (0.13)
---- ---- ---- ---- ---- ----
Total from investment
operations ....... 0.83 1.70 2.24 0.93 2.23 0.00
---- ---- ---- ---- ---- ----
Less distributions:
From net investment
income .......... (0.02) (0.11) (0.09) (0.11) (0.11) (0.13)
From capital gains (0.00) (1.08) (2.13) (0.85) (0.92) (0.48)
---- ---- ---- ---- ---- ----
Total distributions (0.02) (1.19) (2.22) (0.96) (1.03) (0.61)
---- ---- ---- ---- ---- ----
Net asset value,
end of period .... $9.09 $8.28 $7.77 $7.75 $7.78 $6.58
==== ==== ==== ==== ==== ====
Total return* ...... 9.97% 22.62% 29.58% 12.18% 34.21% 0.04%
Net assets, end of
period (in
millions) ........ $2,025 $1,864 $1,595 $1,285 $1,206 $967
Ratio of expenses to
average net assets 0.93%** 0.88% 0.82% 0.83% 0.80% 0.71%
Ratio of net investment
income to average
net assets ....... 0.47%** 1.12% 1.16% 1.34% 1.42% 1.76%
Portfolio turnover
rate ............. 207.86% 373.78%313.99% 240.37%229.03% 205.40%
*Total return calculated without taking into account the sales load deducted
on an initial purchase.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED ACCUMULATIVE FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
six For the fiscal year For the
months ended December 31, period from
ended -------------------- 7/11/95* to
6/30/99 1998 1997 1996 12/31/95
------- ----- ----- ----- -----------
Net asset value,
beginning of period $8.28 $7.77 $7.75 $7.78 $7.84
---- ---- ---- ---- ----
Income from investment
operations:
Net investment income 0.03 0.12 0.11 0.12 0.05
Net realized and
unrealized gain
on investments .. 0.80 1.59 2.14 0.82 0.87
---- ---- ---- ---- ----
Total from investment
operations ....... 0.83 1.71 2.25 0.94 0.92
---- ---- ---- ---- ----
Less distributions:
From net investment
income .......... (0.02) (0.12) (0.10) (0.12) (0.06)
From capital gains (0.00) (1.08) (2.13) (0.85) (0.92)
---- ---- ---- ---- ----
Total distributions (0.02) (1.20) (2.23) (0.97) (0.98)
---- ---- ---- ---- ----
Net asset value,
end of period .... $9.09 $8.28 $7.77 $7.75 $7.78
==== ==== ==== ==== ====
Total return ....... 10.06% 22.79% 29.67% 12.27% 11.92%
Net assets, end of
period (in
millions) ........ $4 $4 $4 $3 $1
Ratio of expenses to
average net assets 0.74%** 0.75% 0.75% 0.74% 0.76%**
Ratio of net investment
income to average
net assets ....... 0.66%** 1.21% 1.22% 1.45% 1.24%**
Portfolio turnover
rate ............. 207.86% 373.78%313.99% 240.37% 229.03%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED BOND FUND
Class A Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
six months For the fiscal year ended December 31,
ended --------------------------------------
6/30/99 1998 1997 1996 1995 1994
---------- ----- ----- ----- ----- -----
Net asset value,
beginning of period $6.39 $6.32 $6.14 $6.34 $5.62 $6.39
---- ---- ---- ---- ---- ----
Income from investment
operations:
Net investment income 0.18 0.38 0.39 0.39 0.40 0.39
Net realized and
unrealized gain
(loss) on
investments ..... (0.28) 0.07 0.19 (0.20) 0.72 (0.75)
---- ---- ---- ---- ---- ----
Total from investment
operations ....... (0.10) 0.45 0.58 0.19 1.12 (0.36)
---- ---- ---- ---- ---- ----
Less distributions:
From net investment
income .......... (0.18) (0.38) (0.40) (0.39) (0.40) (0.39)
From capital gains (0.00) (0.00) (0.00) (0.00) (0.00) (0.02)
---- ---- ---- ---- ---- ----
Total distributions (0.18) (0.38) (0.40) (0.39) (0.40) (0.41)
---- ---- ---- ---- ---- ----
Net asset value,
end of period .... $6.11 $6.39 $6.32 $6.14 $6.34 $5.62
===== ===== ===== ===== ===== =====
Total return* ...... -1.64% 7.27% 9.77% 3.20% 20.50% -5.76%
Net assets, end of
period (in
millions) ........ $531 $551 $524 $519 $563 $518
Ratio of expenses to
average net assets 0.91%** 0.84% 0.77% 0.77% 0.74% 0.72%
Ratio of net investment
income to average
net assets ....... 5.67%** 5.88% 6.34% 6.34% 6.54% 6.60%
Portfolio turnover
rate ............. 19.66% 33.87% 35.08% 55.74% 66.38% 127.11%
*Total return calculated without taking into account the sales load deducted
on an initial purchase.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED BOND FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
six For the fiscal year For the
months ended December 31, period from
ended -------------------- 6/19/95* to
6/30/99 1998 1997 1996 12/31/95
------- ----- ----- ----- ----------
Net asset value,
beginning of period $6.39 $6.32 $6.14 $6.34 $6.11
---- ---- ---- ---- ----
Income from investment
operations:
Net investment income 0.22 0.39 0.42 0.40 0.21
Net realized and
unrealized gain (loss)
on investments .. (0.31) 0.07 0.17 (0.20) 0.22
---- ---- ---- ---- ----
Total from investment
operations ....... (0.09) 0.46 0.59 0.20 0.43
---- ---- ---- ---- ----
Less distributions:
From net investment
income .......... (0.19) (0.39) (0.41) (0.40) (0.20)
From capital gains (0.00) (0.00) (0.00) (0.00) (0.00)
---- ---- ---- ---- ----
Total distributions (0.19) (0.39) (0.41) (0.40) (0.20)
---- ---- ---- ---- ----
Net asset value,
end of period .... $6.11 $6.39 $6.32 $6.14 $6.34
==== ==== ==== ==== ====
Total return ....... -1.50% 7.54% 9.91% 3.35% 7.20%
Net assets, end of
period (in
millions) ........ $2 $6 $5 $12 $3
Ratio of expenses to
average net assets 0.64%** 0.61% 0.64% 0.62% 0.63%**
Ratio of net investment
income to average
net assets ....... 5.94%** 6.10% 6.48% 6.52% 6.41%**
Portfolio turnover
rate ............. 19.66% 33.87% 35.08% 55.74% 66.38%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED INCOME FUND
Class A Shares
For a Share of Capital Stock Outstanding Throughout Each Period:*
For the
six months For the fiscal year ended December 31,
ended --------------------------------------
6/30/99 1998 1997 1996 1995 1994
---------- ----- ----- ----- ----- -----
Net asset value,
beginning of period $7.52 $7.59 $6.58 $5.79 $4.67 $4.95
---- ---- ----- ----- ----- -----
Income from investment
operations:
Net investment income 0.04 0.20 0.06 0.07 0.07 0.08
Net realized and
unrealized gain
(loss) on
investments ..... 0.47 1.66 1.73 1.10 1.30 (0.16)
---- ----- ----- ----- ----- -----
Total from investment
operations ....... 0.51 1.86 1.79 1.17 1.37 (0.08)
---- ----- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.04) (0.19) (0.06) (0.06) (0.07) (0.07)
From capital gains (0.00) (1.74) (0.72) (0.32) (0.18) (0.13)
---- ----- ----- ----- ----- -----
Total distributions (0.04) (1.93) (0.78) (0.38) (0.25) (0.20)
---- ----- ----- ----- ----- -----
Net asset value,
end of period .... $7.99 $7.52 $7.59 $6.58 $5.79 $4.67
====== ====== ====== ====== ====== ======
Total return** ..... 6.80% 24.02% 27.34% 20.36% 29.60% -1.82%
Net assets, end of
period (in
millions) ........ $7,769 $7,368 $6,196 $4,851 $3,976 $3,145
Ratio of expenses to
average net assets 0.94%***0.89% 0.84% 0.86% 0.83% 0.74%
Ratio of net investment
income to average
net assets ....... 1.07%***1.11% 0.74% 1.03% 1.31% 1.45%
Portfolio turnover
rate ............. 17.18% 49.29% 33.59% 22.24% 17.59% 18.54%
*Per-share and share amounts have been adjusted retroactively to
reflect the 400% stock dividend effected June 26, 1998.
**Total return calculated without taking into account the sales load
deducted on an initial purchase.
***Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED INCOME FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:*
For the
six For the fiscal year For the
months ended December 31, period from
ended -------------------- 6/19/95** to
6/30/99 1998 1997 1996 12/31/95
------- ----- ----- ----- -----------
Net asset value,
beginning of period $7.52 $7.59 $6.58 $5.79 $5.55
----- ----- ----- ----- -----
Income from investment
operations:
Net investment income 0.05 0.24 0.07 0.07 0.04
Net realized and
unrealized gain
on investments .. 0.47 1.66 1.73 1.11 0.42
----- ----- ----- ----- -----
Total from investment
operations ....... 0.52 1.90 1.80 1.18 0.46
----- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.05) (0.23) (0.07) (0.07) (0.04)
From capital gains (0.00) (1.74) (0.72) (0.32) (0.18)
----- ----- ----- ----- -----
Total distributions (0.05) (1.97) (0.79) (0.39) (0.22)
----- ----- ----- ----- -----
Net asset value,
end of period .... $7.99 $7.52 $7.59 $6.58 $5.79
===== ===== ===== ===== =====
Total return ....... 6.94% 24.27% 27.49% 20.53% 8.45%
Net assets, end of
period (in
millions) ........ $335 $399 $299 $151 $107
Ratio of expenses to
average net assets 0.72%***0.71% 0.72% 0.73% 0.74%***
Ratio of net investment
income to average
net assets ....... 1.30%***1.29% 0.85% 1.17% 1.36%***
Portfolio turnover
rate ............. 17.18% 49.29% 33.59% 22.24% 17.59%***
*Per-share and share amounts have been adjusted retroactively to
reflect the 400% stock dividend effected June 26, 1998.
**Commencement of operations.
***Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED SCIENCE AND TECHNOLOGY FUND
Class A Shares
For a Share of Capital Stock Outstanding Throughout Each Period:*
For the
six months For the fiscal year ended December 31,
ended --------------------------------------
6/30/99 1998 1997 1996 1995 1994
---------- ----- ----- ----- ----- -----
Net asset value,
beginning of period $ 9.91 $6.71 $7.78 $7.63 $5.07 $4.94
----- ---- ----- ----- ----- -----
Income from investment
operations:
Net investment loss (0.04) (0.03) (0.01) (0.02) (0.00) 0.00
Net realized and
unrealized gain on
investments ..... 2.32 3.93 0.46 0.66 2.80 0.47
----- ---- ----- ----- ----- -----
Total from investment
operations ....... 2.28 3.90 0.45 0.64 2.80 0.47
----- ---- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
From capital gains (0.00) (0.70) (1.52) (0.49) (0.24) (0.34)
----- ---- ----- ----- ----- -----
Total distributions (0.00) (0.70) (1.52) (0.49) (0.24) (0.34)
----- ---- ----- ----- ----- -----
Net asset value,
end of period .... $12.19 $9.91 $6.71 $7.78 $7.63 $5.07
====== ===== ====== ====== ====== ======
Total return** ..... 23.01% 59.31% 7.22% 8.35% 55.37% 9.78%
Net assets, end of
period (in
millions) ........ $2,161 $1,668 $1,063 $981 $821 $497
Ratio of expenses to
average net assets 1.07%***1.05% 1.02% 0.98% 0.93% 0.96%
Ratio of net investment
loss to average
net assets ....... -0.69%***-0.37%-0.18% -0.33% -0.07% 0.00%
Portfolio turnover
rate ............. 23.61% 55.70% 87.68% 33.90% 32.89% 64.39%
*Per-share and share amounts have been adjusted retroactively to
reflect the 200% stock dividend effected June 26, 1998.
**Total return calculated without taking into account the sales load deducted
on an initial purchase.
***Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED SCIENCE AND TECHNOLOGY FUND
Class Y Shares
For a Share of Capital Stock Outstanding Throughout Each Period:*
For the
For the fiscal year
six year ended For the
months December 31, period from
ended ------------- 2/27/96** to
6/30/99 1998 1997 12/31/96
------- ----- ----- ----------
Net asset value,
beginning of period $9.98 $6.74 $7.79 $8.02
---- ---- ----- -----
Income from investment
operations:
Net investment
loss ............ (0.02) (0.01) (0.00) (0.01)
Net realized and
unrealized gain
on investments .. 2.35 3.95 0.47 0.27
---- ---- ----- -----
Total from investment
operations ....... 2.33 3.94 0.47 0.26
---- ---- ----- -----
Less distributions:
From net investment
income .......... (0.00) (0.00) (0.00) (0.00)
From capital gains (0.00) (0.70) (1.52) (0.49)
---- ---- ----- -----
Total distributions (0.00) (0.70) (1.52) (0.49)
---- ---- ----- -----
Net asset value,
end of period .... $12.31 $9.98 $6.74 $7.79
==== ==== ===== =====
Total return ....... 23.35% 59.71% 7.43% 3.25%
Net assets, end of
period (in
millions) ........ $9 $6 $4 $3
Ratio of expenses to
average net assets 0.80%***0.79% 0.85% 0.80%***
Ratio of net investment
loss to average
net assets ....... -0.42%***-0.12%-0.01% -0.12%***
Portfolio turnover
rate ............. 23.61% 55.70% 87.68% 33.90%***
*Per-share and share amounts have been adjusted retroactively
to reflect the 200% stock dividend effected June 26, 1998.
**Commencement of operations.
***Annualized.
See notes to financial statements.
<PAGE>
UNITED FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE 1 -- Significant Accounting Policies
United Funds, Inc. (the "Corporation") is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
The Corporation issues four series of capital shares; each series represents
ownership of a separate mutual fund. The assets belonging to each Fund are held
separately by the Custodian. The capital shares of each Fund represent a pro
rata beneficial interest in the principal, net income and realized and
unrealized capital gains or losses of its respective investments and other
assets. The following is a summary of significant accounting policies
consistently followed by the Corporation in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
A. Security valuation -- Each stock and convertible bond is valued at the
latest sale price thereof on the last business day of the fiscal period as
reported by the principal securities exchange on which the issue is traded
or, if no sale is reported for a stock, the average of the latest bid and
asked prices. Bonds, other than convertible bonds, are valued using a
pricing system provided by a pricing service or dealer in bonds.
Convertible bonds are valued using this pricing system only on days when
there is no sale reported. Stocks which are traded over-the-counter are
priced using the Nasdaq Stock Market, which provides information on bid and
asked prices quoted by major dealers in such stocks. Securities for which
quotations are not readily available are valued as determined in good faith
in accordance with procedures established by and under the general
supervision of the Corporation's Board of Directors. Short-term debt
securities are valued at amortized cost, which approximates market.
B. Security transactions and related investment income -- Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Securities gains and losses are calculated on the
identified cost basis. Original issue discount (as defined in the Internal
Revenue Code), premiums on the purchase of bonds and post-1984 market
discount are amortized for both financial and tax reporting purposes.
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 business day following record date. Net
investment income distributions and capital gains distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are due to
differing treatments for items such as deferral of wash sales and post-
October losses, foreign currency transactions, net operating losses and
expiring capital loss carryovers.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
NOTE 2 -- Investment Management And Payments To Affiliated Persons
The Corporation pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business. Until
June 30, 1999, the fee consisted 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
.15% of net assets for United Accumulative Fund and United Income Fund, .03% of
net assets for United Bond 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 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. Beginning June 30, 1999, the
fee is payable by each Fund at the following annual rates:
Annual
Fund Net Asset Breakpoints Rate
------------------------------------------------------------------
United Accumulative Fund Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
United Bond Fund Up to $500 Million .525%
Over $500 Million up to $1 Billion .500%
Over $1 Billion up to $1.5 Billion .450%
Over $1.5 Billion .400%
United Income Fund Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion up to $6 Billion .550%
Over $6 Billion .500%
United Science and
Technology Fund Up to $1 Billion .850%
Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
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 $19,368,447, out of which W&R paid sales commissions of
$11,295,897 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 $232,641, which are included in
other expenses.
W&R is a subsidiary of Waddell & Reed Financial, Inc., a holding company,
and a direct subsidiary of Waddell & Reed Financial Services, Inc., a holding
company.
NOTE 3 -- Investment Securities Transactions
Investment securities transactions for the period ended June 30, 1999 are
summarized as follows:
United
United United United Science and
Accumulative Bond Income Technology
Fund Fund Fund Fund
----------- ------------------------ ------------
Purchases of investment
securities, excluding
short-term and U.S.
Government securities $3,885,837,403 $ 52,046,592$1,437,329,852$ 564,289,694
Purchases of U.S. Government
securities --- 50,100,043 --- ---
Purchases of short-term
securities 2,306,581,164 542,066,2822,250,637,2121,253,427,698
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 3,653,708,598 60,873,3451,314,816,702 427,242,674
Proceeds from maturities and
sales of U.S. Government
securities 199,577,344 46,948,706 --- ---
Proceeds from maturities and sales
of short-term securities2,349,803,321 537,888,3052,587,678,4521,301,414,460
For Federal income tax purposes, cost of investments owned at June 30, 1999
and the related appreciation (depreciation) were as follows:
Aggregate
Appreciation
Cost AppreciationDepreciation (Depreciation)
-------------- --------------------------------------
United Accumulative
Fund $1,970,949,920$ 145,940,039$(72,280,131) $73,659,908
United Bond Fund 527,952,569 7,267,408 (8,685,575) (1,418,167)
United Income Fund 5,105,668,8533,193,229,382(199,067,936)2,994,161,446
United Science and
Technology Fund 1,147,368,0851,035,516,932(19,577,782)1,015,939,150
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
$1,363,307,370, $260,569,759 and $139,112,131, respectively, during the year
ended December 31, 1998, a portion of which was paid to shareholders during the
period ended December 31, 1998. 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 $4,755,689 during the year
ended December 31, 1998, which was entirely offset by utilization of capital
loss carryovers. Remaining capital loss carryovers of United Bond Fund
aggregated $18,474,016 as of December 31, 1998, and are available to offset
future realized capital gain net income for Federal income tax purposes but will
expire if not utilized as follows: $18,393,113 at December 31, 2002 and $80,903
at December 31, 2003.
NOTE 5 -- Multiclass Operations
On June 17, 1995, each Fund within the Corporation was authorized to offer
investors two classes of shares, Class A and Class Y, each of which has equal
rights as to assets and voting privileges with respect to each Fund. Class Y
shares are not subject to a sales charge on purchases; they are not subject to a
Rule 12b-1 Distribution and Service Plan and have a separate transfer agency and
dividend disbursement services fee structure. A comprehensive discussion of the
terms under which shares of either class are offered is contained in the
prospectus and the Statement of Additional Information for the Corporation.
United Income Fund and United Bond Fund commenced multiclass operations on June
19, 1995 and United Accumulative Fund commenced multiclass operations on July
11, 1995. United Science and Technology Fund commenced multiclass operations on
February 27, 1996.
Income, non-class specific expenses and realized and unrealized gains and
losses are allocated daily to each class of shares based on the value of
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity.
Transactions in capital stock for the six month period ended June 30, 1999
are summarized below. Dollar amounts are in thousands.
United
United United United Science and
Accumulative Bond Income Technology
Fund Fund Fund Fund
----------- ------------ ------------------------
Shares issued from sale
of shares:
Class A ............ 10,392,424 35,459,848 58,837,191 29,950,598
Class Y ............ 272,538 169,663 4,465,215 554,347
Shares issued from
reinvestment of dividends:
Class A ............ 312,188 2,180,598 4,580,834 ---
Class Y ............ 1,181 10,335 304,499 ---
Shares redeemed:
Class A ............ (13,060,403) (37,010,516) (71,061,411)(21,176,199)
Class Y ............ (248,321) (788,774) (15,829,092) (378,048)
---------- ----------- ---------- ----------
Increase (decrease) in
outstanding capital
shares:
Class A ............ (2,355,791) 629,930 (7,643,386) 8,774,399
Class Y ............ 25,398 (608,776) (11,059,378) 176,299
---------- ----------- ---------- ----------
Total for Fund .... (2,330,393) 21,154 (18,702,764) 8,950,698
========== =========== ========== ==========
Value issued from sale
of shares:
Class A ............ $ 89,427 $221,320 $ 452,088 $322,661
Class Y ............ 2,283 1,071 34,084 5,680
Value issued from
reinvestment of dividends:
Class A ............ 2,777 13,983 35,336 ---
Class Y ............ 10 64 2,345 ---
Value redeemed:
Class A ............ (112,307) (231,211) (547,189) (226,232)
Class Y ............ (2,083) (5,032) (120,878) (3,841)
-------- -------- --------- --------
Increase (decrease) in
outstanding capital:
Class A ............ (20,103) 4,092 (59,765) 96,429
Class Y ............ 210 (3,897) (84,449) 1,839
-------- -------- --------- --------
Total for Fund .... $(19,893) $ 195 $(144,214) $ 98,268
======== ======== ========= ========
Transactions in capital stock for the fiscal year ended December 31, 1998
are summarized below. Dollar amounts are in thousands.
United
United United United Science and
Accumulative Bond Income Technology
Fund Fund Fund* Fund*
----------- ------------ ------------------------
Shares issued from sale
of shares:
Class A ............ 15,967,129 31,835,303 100,626,223 77,529,963
Class Y ............ 103,049 216,958 10,384,489 130,439
Shares issued from
reinvestment of dividends
and/or capital gains distribution:
Class A ............ 27,472,978 4,341,736 185,178,374 11,704,260
Class Y ............ 59,740 56,607 11,152,791 42,644
Shares redeemed:
Class A ............ (23,654,895) (32,844,203) (121,882,974) (79,203,331)
Class Y ............ (175,077) (95,711) (7,947,287) (223,072)
---------- ---------- ---------- ----------
Increase (decrease) in
outstanding capital
shares:
Class A ............ 19,785,212 3,332,836 163,921,623 10,030,892
Class Y ............ (12,288) 177,854 13,589,993 (49,989)
---------- ---------- ----------- ----------
Total for Fund .... 19,772,924 3,510,690 177,511,616 9,980,903
========== ========== =========== ==========
Value issued from sale
of shares:
Class A ............ $136,894 $202,677 $ 849,389 $618,721
Class Y ............ 876 1,379 85,082 1,031
Value issued from
reinvestment of dividends
and/or capital gains distribution:
Class A ............ 216,773 27,530 1,351,806 103,357
Class Y ............ 472 359 81,473 379
Value redeemed:
Class A ............ (203,897) (208,970) (1,035,016) (631,968)
Class Y ............ (1,436) (612) (65,230) (1,749)
-------- -------- ---------- --------
Increase (decrease) in
outstanding capital:
Class A ............ 149,770 21,237 1,166,179 90,110
Class Y ............ (88) 1,126 101,325 (339)
-------- -------- ---------- --------
Total for Fund .... $149,682 $ 22,363 $1,267,504 $ 89,771
======== ======== ========== ========
* Share transactions prior to June 27, 1998 have been adjusted to effect
the stock dividend of June 26, 1998.
Note 6 -- Stock Dividend
The Corporation's Board of Directors approved on February 11, 1998 a stock
dividend of 400% on United Income Fund and 200% on United Science and Technology
Fund effected on June 26, 1998. Authorized shares of United Income Fund were
accordingly increased by 1,400,000,000 and United Accumulative Fund and United
Bond Fund each reallocated 100,000,000 shares to United Science and Technology
Fund.
Note 7 -- Securities Loaned
On June 30, 1999, securities with a market value of $549,372,000 (which are
included in the accompanying schedule of investments) had been loaned under
agreements whereby the Income Fund received securities with a market value of
$562,900,619 as collateral. The aggregate amount of such loans must be
continuously secured by 100% of the market value of the securities loaned. The
Fund derives income from its securities lending activities. These agreements
may be terminated by the borrower or the Fund upon proper notice. In the event
the borrower fails to deliver the securities within five business days, the Fund
has the right to use the collateral to purchase similar or other securities.
During the period ended June 30, 1999, Income Fund derived approximately
$492,776 of income, net of related expenses, from its securities lending
activities.
<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 schedules of investments, of United Accumulative Fund, United Bond Fund,
United Income Fund and United Science and Technology Fund (collectively the
"Funds") comprising United Funds, Inc. as of June 30, 1999, and the related
statements of operations for the six-month period then ended, the statements of
changes in net assets for the six-month period then ended and fiscal year ended
December 31, 1998, and the financial highlights for the six-month period ended
June 30, 1999, and for each of the five fiscal years in the period ended
December 31, 1998. 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 as of June
30, 1999 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of each
of the respective Funds comprising United Funds, Inc. as of June 30, 1999, the
results of their operations for the six-month period then ended, the changes in
their net assets for the six-month period then ended and fiscal year ended
December 31, 1998 and the financial highlights for the six-month period ended
June 30, 1999, and for each of the five fiscal years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
August 6, 1999
<PAGE>
Shareholder Meeting Results
A special meeting of United Funds, Inc. was held on June 22, 1999. 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*
J. Concannon 766,236,697 26,067,006 0
J. Dillingham 766,311,136 25,992,567 0
D. Gardner 765,061,072 27,242,631 0
L. Graves 765,684,420 26,619,283 0
J. Harroz, Jr. 764,641,284 27,662,419 0
J. Hayes 763,762,443 28,541,260 0
R. Hechler 765,385,510 26,918,193 0
H. Herrmann 765,532,543 26,771,160 0
G. Johnson 763,571,351 28,732,352 0
W. Morgan 765,053,066 27,250,637 0
R. Reimer 764,684,981 27,618,722 0
F. Ross, Jr. 766,149,299 26,154,404 0
E. Schwartz 765,567,221 26,736,482 0
K. Tucker 765,997,639 26,306,064 0
F. Vogel III 766,109,647 26,194,056 0
Item 2. To ratify the selection of Deloitte & Touche LLP as the
Corporation's independent accountants for its current fiscal year:
Broker
For Against Abstain Non-Votes*
755,150,103 6,050,375 31,103,225 0
Item 3. To approve or disapprove the amendment to the Funds' investment
management agreement with Waddell & Reed Investment Management Company:
Broker
For Against Abstain Non-Votes*
Accumulative Fund 107,237,189 7,974,570 5,886,415 367,991
Bond Fund 42,159,756 2,353,745 2,365,349 79,095
Income Fund 469,602,084 36,425,789 27,012,445 1,764,592
Science and Technology
Fund 77,790,631 6,647,435 4,287,419 349,198
Item 4. To approve or disapprove amendment of the Funds' policy regarding
securities lending:
Broker
For Against Abstain Non-Votes*
Accumulative Fund 106,836,181 5,846,583 8,415,410 367,991
Bond Fund 42,460,929 1,399,002 3,018,919 79,095
Income Fund 475,423,018 22,155,968 35,461,332 1,764,592
Science and Technology
Fund 78,925,600 4,171,811 5,628,074 349,198
Item 5. To approve or disapprove the Corporation's Articles of
Incorporation to change the par value of Fund shares to $0.001:
Broker
For Against Abstain Non-Votes*
700,581,958 29,827,015 61,858,582 36,148
*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>
For shareholders who have chosen the Income-Earned option or the Cash option for
their distribution method: if the dividend distribution (for Income-Earned) or
the total distribution (for Cash) is less than five dollars, the distribution
will be automatically paid in additional shares of the same class of the Fund.
Any person who was a holder of an uncompleted Plan on May 30, 1996, with a face
amount of less than $12,000, may purchase Class A shares of the Fund
corresponding to such Plan at NAV, up to the amount representing the unpaid
balance of the Plan, if the purchase order is so designated.
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.
<PAGE>
DIRECTORS
Keith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, Menlo Park, California
Linda K. Graves, Topeka, Kansas
Joseph Harroz, Jr., Norman, Oklahoma
John F. Hayes, Hutchinson, Kansas
Robert L. Hechler, Overland Park, Kansas
Henry J. Herrmann, Overland Park, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Ronald C. Reimer, Mission Hills, Kansas
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Frederick Vogel III, Milwaukee, Wisconsin
OFFICERS
Robert L. Hechler, President
James C. Cusser, Vice President
Abel Garcia, Vice President
Henry J. Herrmann, Vice President
John M. Holliday, Vice President
Theodore W. Howard, Vice President and Treasurer
Antonio Intagliata, Vice President
Helge K. Lee, Vice President and Secretary
James D. Wineland, Vice President
<PAGE>
THE UNITED GROUP OF MUTUAL FUNDS
- -------------------------------------------------------------------
United Cash Management, Inc.
United Government Securities Fund, Inc.
United Bond Fund
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Continental Income Fund, Inc.
United Retirement Shares, Inc.
United Asset Strategy Fund, Inc.
United Income Fund
United Accumulative Fund
United Vanguard Fund, Inc.
United New Concepts Fund, Inc.
United Science and Technology Fund
United International Growth Fund, Inc.
- ------------------------------------
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
(800) 366-5465
Our INTERNET address is:
http://www.waddell.com
NUR1000SA(6-99)
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