UNITED
FUNDS, INC.
United Accumulative Fund
United Bond Fund
United Income Fund
United Science and Technology Fund
ANNUAL
REPORT
-----------------
December 31, 1999
<PAGE>
UNITED ACCUMULATIVE FUND
MANAGER'S LETTER
DECEMBER 31, 1999
- ---------------------------------------------------------------------------
Dear Shareholder:
This report relates to the operation of the United Accumulative Fund for the
fiscal year ended December 31, 1999. The following discussion, graphs and
tables provide you with information regarding the Fund's performance during that
period.
As we entered 1999, the overall market's prospects appeared not too appealing.
We ended the year with all equity indexes up substantially. The U.S. economy's
acceleration, even in the face of higher interest rates, produced one of the
largest expansions in the postwar period, one that may eventually strain our
productive resources. 1999 was the year for technology. Without exposure to
technology, most equity funds would have underperformed, as 75% of the S&P 500's
returns came from that sector. With little concern for value, risk premium for
equities declined sharply, and valuations for some technology stocks went to
extraordinary levels. Asia, Europe and, to a certain extent, Latin America
recovered faster than anticipated, producing a synchronous worldwide economic
upturn. Stronger growth globally may feed inflationary pressures, but has
certainly already spurred inflation fears. It seems a foregone conclusion, at
least in the early stages, that economic growth in 2000 will remain quite strong
and that the Federal Reserve will be raising short-term interest rates.
As mentioned, a defensive orientation going into 1999 proved unfortunate.
Seemingly safe areas like solid waste and aerospace turned out to be poor
decisions which held back returns in the first half of the year. In the second
half, the Fund's profile was adjusted to a more aggressive stance which resulted
in improved performance.
The strategies and techniques I applied caused the Fund to outperform the S&P
500 Index, but still underperform the Lipper Growth Fund Universe Average for
the year. Both indexes are charted on the following page. The Lipper Index
reflects the universe of funds with similar investment objectives and the S&P
500 Index reflects the performance of securities that generally represent the
stock market.
The big question for the year 2000 is whether value investing will win out over
growth investing. Putting it another way, will investors continue to focus on
very highly-valued growth stocks or will the market broaden out? Short-term, I
tend to favor value over growth. Longer-term, companies that are able to grow
their unit sales should be the winners. Stocks of companies depending on price
increases for top line growth will wither in a low-inflation environment. As
the Internet economy spreads, its impact will continue to put pressure on
corporations to raise prices. As we enter the year 2000, interest rates are
higher and corporate profits growth is expected to decelerate, albeit from a
very rapid pace. Some repositioning towards lower-valued growth companies, such
as pharmaceuticals and energy stocks, seems appropriate.
Thank you very much for your continued support and confidence.
Respectfully,
Antonio Intagliata
Manager, United Accumulative Fund
<PAGE>
Comparison of Change in Value of $10,000 Investment in
United Accumulative Fund, Class A Shares,
The S&P 500 Index
and The Lipper Growth Fund Universe Average
United Lipper
Accumulative Growth
Fund, S&P Fund
Class A 500 Universe
Shares Index Average
------------ ----- --------
12/31/89 Purchase 9,425 10,000 10,000
12/31/90 8,466 9,690 9,453
12/31/91 10,471 12,642 12,830
12/31/92 11,958 13,606 13,827
12/31/93 13,042 14,976 15,318
12/31/94 13,047 15,174 14,978
12/31/95 17,511 20,877 19,541
12/31/96 19,644 25,670 23,266
12/31/97 25,454 34,216 29,068
12/31/98 31,213 44,035 35,540
12/31/99 39,240 53,313 45,710
===== United Accumulative Fund, Class A Shares* -- $39,240
- ----- S&P 500 Index -- $53,313
+++++ Lipper Growth Fund Universe Average -- $45,710
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund and assumes
reinvestment of dividends and distributions.
Average Annual Total Return+
Class A Class B Class C Class Y
---------------------------------------------
Year Ended
12/31/99 18.49% N/A N/A 25.95%
5 Years Ended
12/31/99 23.17% N/A N/A N/A
10 Years Ended
12/31/99 14.65% N/A N/A N/A
Since inception
of Class++
through 12/31/99 N/A 17.89% 20.45% 22.93%
+Performance data quoted represents past performance and is based on deduction
of the maximum applicable sales load for each of the periods. Class A shares
carry a maximum front-end sales load of 5.75%. Class B and Class C shares
carry maximum contingent deferred sales charges of 5% and 1%, respectively.
Total returns reflect share price appreciation, including reinvestment of all
income and capital gains distributions. Investment return and principal value
will fluctuate and an investor's shares, when redeemed, may be worth more or
less than their original cost.
++10/4/99 for Class B shares, 10/6/99 for Class C shares and 7/11/95 for Class Y
shares (the date on which shares were first acquired by shareholders).
Past performance is not predictive of future performance. Indexes are
unmanaged.
<PAGE>
SHAREHOLDER SUMMARY
- -----------------------------------------------------------------
UNITED ACCUMULATIVE FUND
PORTFOLIO STRATEGY:
Appreciation-oriented GOALS: To seek capital growth, with
common stocks current income a secondary objective.
Cash reserves
STRATEGY: Invests primarily in largely capitalized
common stocks of U.S. and foreign
companies.
FOUNDED: 1940
SCHEDULED DIVIDEND FREQUENCY: SEMIANNUALLY
(JUNE AND DECEMBER)
<PAGE>
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Fiscal Year Ended December 31, 1999
- -------------------------------------------
DIVIDENDS PAID $0.03
=====
CAPITAL GAINS DISTRIBUTION $1.15
=====
NET ASSET VALUE ON
12/31/99 $9.14 adjusted to: $10.29(A)
12/31/98 8.28
-----
CHANGE PER SHARE $2.01
=====
(A)This number includes the capital gains distribution of $1.15 paid in December
1999 added to the actual net asset value on December 31, 1999.
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 12-31-99 18.49% 25.72%
5-year period ended 12-31-99 23.17% 24.64%
10-year period ended 12-31-99 14.65% 15.33%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On December 31, 1999, United Accumulative Fund had net assets totaling
$2,254,608,794 invested in a diversified portfolio of:
93.14% Common Stocks
6.86% Cash and Cash Equivalents
As a shareholder of United Accumulative Fund, for every $100 you had invested on
December 31, 1999, your Fund owned:
$40.30 Manufacturing Stocks
17.23 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
15.47 Finance, Insurance and Real Estate Stocks
14.85 Services Stocks
6.86 Cash and Cash Equivalents
4.27 Mining Stocks
1.02 Wholesale and Retail Trade Stocks
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1999
Shares Value
COMMON STOCKS
Business Services - 9.96%
Alcatel (A) ............................ 120,000 $ 27,559,728
America Online, Inc.* .................. 125,000 9,429,687
BroadVision, Inc.* ..................... 125,000 21,257,812
Citrix Systems, Inc.* .................. 300,000 36,890,625
Clear Channel Communications, Inc.* .... 350,000 31,237,500
Getty Images, Inc.* .................... 250,000 12,250,000
Intuit Inc.* ........................... 700,000 41,934,375
Netopia, Inc.* ......................... 200,000 10,918,750
Phone.com, Inc.* ....................... 100,000 11,618,750
Veritas Software Corp.* ................ 150,000 21,464,063
Total ................................. 224,561,290
Chemicals and Allied Products - 9.44%
American Home Products Corporation ..... 1,200,000 47,325,000
Forest Laboratories, Inc.* ............. 1,100,000 67,581,250
Pharmacia & Upjohn, Inc. ............... 1,100,000 49,500,000
Schering-Plough Corporation ............ 1,000,000 42,187,500
Warner-Lambert Company ................. 75,000 6,145,313
Total ................................. 212,739,063
Communication - 16.74%
AT&T Corp. - Liberty Media Group,
Class A* .............................. 700,000 39,725,000
CBS Corporation* ....................... 150,000 9,590,625
Deutsche Telekom AG, ADR ............... 300,000 21,300,000
EchoStar Communications Corporation,
Class A* .............................. 475,000 46,253,125
General Motors Corporation, Class H* ... 250,000 24,000,000
MediaOne Group, Inc.* .................. 1,000,000 76,812,500
Nextel Communications, Inc.* ........... 300,000 30,928,125
Nippon Telegraph and Telephone
Corporation, ADR ...................... 200,000 17,225,000
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 400,000 26,262,500
VoiceStream Wireless Corporation (B)* .. 600,000 85,256,250
Total ................................. 377,353,125
Depository Institutions - 2.46%
Citigroup Inc. ......................... 1,000,000 55,562,500
Electric, Gas and Sanitary Services - 0.49%
Columbia Gas Systems, Inc. ............. 175,000 11,068,750
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1999
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment - 17.62%
Broadcom Corporation, Class A* ......... 150,000 $ 40,851,563
Intel Corporation ...................... 500,000 41,140,625
JDS Uniphase Corporation* .............. 900,000 145,181,250
Maxim Integrated Products, Inc.* ....... 500,000 23,578,125
Nokia Corporation, Series A, ADR ....... 300,000 57,000,000
Nortel Networks Corporation ............ 500,000 50,500,000
Rambus Inc. (B)* ....................... 250,000 16,851,562
Scientific-Atlanta, Inc. ............... 400,000 22,250,000
Total.................................. 397,353,125
Health Services - 3.93%
Columbia/HCA Healthcare Corporation .... 2,000,000 58,625,000
StanCorp Financial Group, Inc. ......... 252,700 6,364,881
Tenet Healthcare Corporation* .......... 1,000,000 23,500,000
Total ................................. 88,489,881
Industrial Machinery and Equipment - 9.60%
Cisco Systems, Inc.* ................... 700,000 74,965,625
Juniper Networks, Inc.* ................ 70,000 23,775,938
Mannesmann AG, Registered Shares (A) ... 200,000 48,249,670
Novellus Systems, Inc.* ................ 250,000 30,632,812
Sun Microsystems, Inc.* ................ 500,000 38,703,125
Total ................................. 216,327,170
Insurance Carriers - 11.60%
Allmerica Financial Corporation ........ 400,000 22,250,000
American General Corporation ........... 500,000 37,937,500
Aon Corporation ........................ 550,000 22,000,000
Chubb Corporation (The) ................ 500,000 28,156,250
Everest Reinsurance Holdings, Inc. ..... 500,000 11,156,250
Liberty Corporation (The) .............. 350,000 14,765,625
Lincoln National Corporation ........... 700,000 28,000,000
Nationwide Financial Services, Class A . 375,000 10,476,563
Oxford Health Plans Inc.* .............. 700,000 8,903,125
ReliaStar Financial Corp. .............. 700,000 27,431,250
SAFECO Corporation* .................... 500,000 12,421,875
St. Paul Companies, Inc. (The) ......... 700,000 23,581,250
Torchmark Corporation .................. 500,000 14,531,250
Total ................................. 261,610,938
Motion Pictures - 0.96%
Time Warner Incorporated ............... 300,000 21,731,250
Nondepository Institutions - 1.41%
CIT Group, Inc. (The), Class A ......... 1,500,000 31,687,500
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1999
Shares Value
COMMON STOCKS (Continued)
Oil and Gas Extraction - 4.27%
Anadarko Petroleum Corporation ......... 900,000 $ 30,712,500
Burlington Resources Incorporated ...... 400,000 13,225,000
USX Corporation - Marathon Group ....... 900,000 22,218,750
Unocal Corporation ..................... 900,000 30,206,250
Total ................................. 96,362,500
Paper and Allied Products - 0.99%
Consolidated Papers, Inc. .............. 700,000 22,268,750
Petroleum and Coal Products - 2.57%
Exxon Mobil Corporation ................ 500,000 40,281,250
Texaco Inc. ............................ 325,000 17,651,563
Total ................................. 57,932,813
Printing and Publishing - 0.08%
Viacom Inc., Class A* .................. 30,000 1,813,125
Wholesale Trade -- Nondurable Goods - 1.02%
U.S. Foodservice* ...................... 1,374,300 23,019,525
TOTAL COMMON STOCKS - 93.14% $2,099,881,305
(Cost: $1,705,049,585)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Commercial Paper
Auto Repair, Services and Parking - 1.06%
PHH Corp.,
7.1%, 1-11-00 ......................... $24,000 23,952,667
Depository Institutions - 1.68%
Deutsche Bank Financial Inc.,
6.75%, 1-6-00 ......................... 20,000 19,981,250
Toronto-Dominion Holdings USA Inc.,
6.9%, 1-10-00 ......................... 10,000 9,982,750
UBS Finance (DE) Inc.,
4.4%, 1-5-00 .......................... 8,000 7,996,089
Total ................................. 37,960,089
Electric, Gas and Sanitary Services - 0.67%
Michigan Consolidated Gas Co.,
5.0%, 1-6-00 .......................... 10,000 9,993,055
Questar Corp.,
6.5%, 1-13-00 ......................... 5,000 4,989,167
Total ................................. 14,982,222
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED ACCUMULATIVE FUND
DECEMBER 31, 1999
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Electronic and Other Electric Equipment - 1.29%
Motorola, Inc.,
5.0%, 1-5-00 .......................... $15,000 $ 14,991,667
Sony Capital Corp.,
6.4%, 1-13-00 ......................... 14,000 13,970,133
Total ................................. 28,961,800
Fabricated Metal Products - 0.10%
Danaher Corporation,
6.49%, Master Note .................... 2,123 2,123,000
Food and Kindred Products - 0.16%
General Mills, Inc.,
6.345%, Master Note ................... 1,638 1,638,000
Ralston Purina Co.,
6.62%, 1-24-00 ........................ 2,000 1,991,541
Total ................................. 3,629,541
Nondepository Institutions - 0.40%
PACCAR Financial Corp.,
5.2757%, Master Note .................. 5,499 5,499,000
Textron Financial Corp.,
8.3%, 1-5-00 .......................... 3,500 3,496,772
Total ................................. 8,995,772
Printing and Publishing - 0.97%
American Greetings Corp.,
6.7%, 1-10-00 ......................... 22,000 21,963,150
Wholesale Trade - Nondurable Goods - 0.66%
Enron Corp.,
6.0%, 1-14-00 ......................... 15,000 14,967,500
Total Commercial Paper - 6.99% 157,535,741
Commercial Paper (backed by irrevocable bank
letter of credit) - 0.33%
Electric, Gas and Sanitary Services
AES Hawaii Inc. (Bank of America NT & SA),
6.2%, 1-21-00 ......................... 7,500 7,474,167
TOTAL SHORT-TERM SECURITIES - 7.32% $ 165,009,908
(Cost: $165,009,908)
TOTAL INVESTMENT SECURITIES - 100.46% $2,264,891,213
(Cost: $1,870,059,493)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.46%) (10,282,419)
NET ASSETS - 100.00% $2,254,608,794
See Notes to Schedules of Investments on page 41.
<PAGE>
UNITED BOND FUND
MANAGER'S LETTER
DECEMBER 31, 1999
- ---------------------------------------------------------------------------
Dear Shareholder:
This report relates to the operation of the United Bond Fund for the fiscal year
ended December 31, 1999. The following discussion, graphs and tables provide
you with information regarding the Fund's performance during that period.
The Fund had a difficult year mainly because of the economic excesses of the
prior year. During the fall of 1998, the world's financial system faced
disaster: a nuclear nation defaulted on its debt, underdeveloped nations could
not find markets for their commodities, and financial market-makers refused to
make markets. Wealth from all over the globe poured into the U.S. Treasury
market as a safe haven. This pushed long-term interest rates near the 4.75%
mark, a low not seen since the Treasury started offering long-term bonds in the
1970s. The world's central bankers flooded the financial systems with paper
money and avoided a meltdown. The price of this salvation was artificially low
interest rates in late 1998. Interest rates rose steadily throughout the year
as the Federal Reserve took back its "easings." The easy transition to the year
2000 further reduced the seeming need for the relative safety of the bond
markets. And the Fed seems to have promised us another rise in short rates
sometime soon into 2000. These factors, plus a continued asset reallocation
away from bonds to equities, combined to make it a tough year for bonds.
The only saving grace was that the Fund did well vis-a-vis its peer funds in
1999. At the beginning of the year, the Fund had about 35% of its portfolio in
so-called put bonds. These bonds become more sensitive to interest rates when
rates fall, thereby producing greater returns than other bonds of the same
starting duration. Conversely, these bonds contract in duration when rates
rise, as in 1999. At the beginning of the year, no put bonds in the Fund's
portfolio were priced to put. Thus, they all acted like long-term bonds, which
are more sensitive to interest rate changes. By the end of the year, more than
half of these put bonds were priced to their respective put dates (about three
to five years). As a result, the Fund's sensitivity to a rising rate
environment was reduced substantially over the year, and this produced better
than average results. Another factor was the Fund's substantial exposure to
corporate bonds, which did well compared to Treasuries over the course of 1999.
As 1998 "pushed out" the interest rate spreads of corporate bonds due to the
liquidity crisis, investors returned to the more risky corporate bonds (vis-a-
vis Treasury market) as the economy settled in 1999, thereby producing better
returns in that segment of the market. Finally, last winter the Fund invested
in some developing market debt. Although it was only a small position, the
developing market debt proved to be a positive contributor to the Fund's
performance.
The strategies and techniques we applied during the year resulted in the Fund's
performance remaining fairly consistent with the Salomon Brothers Broad
Investment Grade Index (reflecting the performance of securities that generally
represent the bond market) and outperforming the universe of funds with similar
objectives (the Lipper Corporate Debt Funds A-Rated Universe Average). Both
indexes are charted on the following page.
The economy is still "hot" and the Federal Reserve seems to have promised more
rate hikes. The world is still recovering from its slow growth over the past
several years, and investors seemingly want to re-allocate from bonds generally,
and U.S. investments specifically. This would seem to bode poorly for U.S.
bonds, which comprise most of the Fund. Making matters worse is that this is an
election year. There is no telling what the candidates may say that could harm
the capital markets. However, if the economy slows or the stock market falters,
the Fund may do well. The Fund is invested largely in investment grade debt --
we have reduced our non-investment grade exposure from about 17% last year to
about 4% currently. When we see signs of economic slowing, or if the Fed goes
too far in raising rates, we anticipate that we will extend our duration by
purchasing longer-term U.S. Treasury bonds and thereby increase our exposure to
declining interest rates.
Thank you very much for your continued support and confidence.
Respectfully,
James C. Cusser
Manager, United Bond Fund
<PAGE>
Comparison of Change in Value of $10,000 Investment in
United Bond Fund, Class A Shares,
Salomon Brothers Broad Investment Grade Index
and The Lipper Corporate Debt Funds A-Rated Universe Average
Lipper
United Salomon Corporate
Bond Brothers Debt Funds
Fund, Broad A-Rated
Class A Investment Universe
Shares Grade Index Average
------ ----------- ----------
12/31/89Purchase 9,425 10,000 10,000
12/31/90 9,825 10,909 10,672
12/31/91 11,670 12,651 12,435
12/31/92 12,546 13,611 13,334
12/31/93 14,201 14,958 14,828
12/31/94 13,384 14,532 14,141
12/31/95 16,128 17,228 16,736
12/31/96 16,644 17,851 17,152
12/31/97 18,270 19,569 18,713
12/31/98 19,598 21,274 20,106
12/31/99 19,385 21,097 19,589
+++++ United Bond Fund, Class A Shares* -- $19,385
..... Salomon Brothers Broad Investment Grade Index -- $21,097
===== Lipper Corporate Debt Funds A-Rated Universe Average -- $19,589
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund and assumes
reinvestment of dividends and distributions.
Average Annual Total Return+
Class A Class B Class C Class Y
---------------------------------------------
Year Ended
12/31/99 -6.77% N/A N/A -0.81%
5 Years Ended
12/31/99 6.42% N/A N/A N/A
10 Years Ended
12/31/99 6.84% N/A N/A N/A
Since inception
of Class++
through 12/31/99 N/A -4.64% -0.86% 5.93%
+Performance data quoted represents past performance and is based on deduction
of the maximum applicable sales load for each of the periods. Class A shares
carry a maximum front-end sales load of 5.75%. Class B and Class C shares
carry maximum contingent deferred sales charges of 5% and 1%, respectively.
Total returns reflect share price appreciation, including reinvestment of all
income and capital gains distributions. Investment return and principal value
will fluctuate and an investor's shares, when redeemed, may be worth more or
less than their original cost.
++9/9/99 for Class B shares, 9/9/99 for Class C shares and 6/19/95 for Class Y
shares (the date on which shares were first acquired by shareholders).
Past performance is not predictive of future performance. Indexes are
unmanaged.
<PAGE>
SHAREHOLDER SUMMARY
- ----------------------------------------------------------------------
UNITED BOND FUND
PORTFOLIO STRATEGY:
Corporate and government GOAL: To seek a reasonable return with
bonds more emphasis on preservation of
capital.
Maximum 10% non-debt
securities STRATEGY: Invests primarily in domestic debt
securities, usually of investment grade
(rated BBB and higher by Standard &
Poor's and Baa and higher by Moody's
Investor Services, Inc.).
FOUNDED: 1964
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
<PAGE>
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Fiscal Year Ended December 31, 1999
- -------------------------------------------
DIVIDENDS PAID $0.35
=====
NET ASSET VALUE ON
12/31/99 $5.97
12/31/98 6.39
------
CHANGE PER SHARE $(0.42)
======
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 12-31-99 -6.77% -1.08%
5-year period ended 12-31-99 6.42% 7.69%
10-year period ended 12-31-99 6.84% 7.48%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On December 31, 1999, United Bond Fund had net assets totaling $505,493,917
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
December 31, 1999, your Fund owned:
Bonds:
Corporate $51.90
U.S. Government 36.17
Other Government 7.53
Cash and Cash Equivalents 4.40
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Chemicals and Allied Products - 2.12%
Procter & Gamble Company (The),
8.0%, 9-1-24 .......................... $10,000 $ 10,740,800
Communication - 3.14%
BellSouth Telecommunications, Inc.,
5.85%, 11-15-45 ....................... 3,000 2,982,750
Cox Trust II,
7.0%, 8-16-04 ......................... 2,500 2,430,525
Jones Intercable, Inc.,
9.625%, 3-15-02 ....................... 2,500 2,598,200
Tele-Communications, Inc.,
8.35%, 2-15-05 ........................ 7,500 7,880,550
Total ................................. 15,892,025
Depository Institutions - 10.65%
AmSouth Bancorporation,
6.75%, 11-1-25 ........................ 6,500 6,216,275
Chevy Chase Savings Bank, F.S.B.,
9.25%, 12-1-05 ........................ 1,500 1,432,500
First Union Corporation:
6.824%, 8-1-26 ........................ 7,500 7,365,225
6.55%, 10-15-35 ....................... 4,500 4,303,440
Kansallis-Osake-Pankki,
10.0%, 5-1-02 ......................... 6,000 6,335,460
National Westminster Bank plc,
7.375%, 10-1-09 ....................... 4,250 4,153,227
NationsBank Corporation,
8.57%, 11-15-24 ....................... 5,000 5,363,800
SouthTrust Bank of Alabama, National Association:
5.58%, 2-6-06 ......................... 7,800 7,704,060
7.69%, 5-15-25 ........................ 5,000 5,004,600
Sovereign Bancorp, Inc.,
8.0%, 3-15-03 ......................... 2,000 1,900,000
Wachovia Corporation,
6.605%, 10-1-25 ....................... 4,250 4,069,035
Total ................................. 53,847,622
Electric, Gas and Sanitary Services - 6.27%
California Infrastructure and Economic Development
Bank, Special Purpose Trust:
PG&E-1,
6.42%, 9-25-08 ........................ 5,000 4,839,600
SCE-1,
6.38%, 9-25-08 ........................ 5,000 4,820,300
Cleveland Electric Illuminating Co. (The),
9.5%, 5-15-05 ......................... 4,000 4,165,120
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Electric, Gas and Sanitary Services (Continued)
Entergy Arkansas, Inc.,
7.5%, 8-1-07 .......................... $ 3,750 $ 3,800,887
Korea Electric Power Corporation,
6.375%, 12-1-03 ....................... 2,500 2,370,975
Niagara Mohawk Power Corporation:
9.5%, 6-1-00 .......................... 1,000 1,011,110
7.375%, 7-1-03 ........................ 4,159 4,140,406
TXU Eastern Funding Company,
6.45%, 5-15-05 ........................ 3,250 3,063,125
Union Electric Co.,
8.25%, 10-15-22 ....................... 3,500 3,501,435
Total ................................. 31,712,958
Electronic and Other Electric Equipment - 1.80%
Motorola, Inc.,
8.4%, 8-15-31 ......................... 8,500 9,100,780
Food and Kindred Products - 3.60%
Anheuser-Busch Companies, Inc.,
7.0%, 9-1-05 .......................... 3,000 2,948,580
Coca-Cola Enterprises Inc.:
0.0%, 6-20-20 ......................... 36,000 7,315,200
6.7%, 10-15-36 ........................ 5,500 5,433,450
Coca-Cola FEMSA, S.A. de C.V.,
8.95%, 11-1-06 ........................ 2,500 2,500,000
Total ................................. 18,197,230
General Merchandise Stores - 1.12%
Fred Meyer, Inc.:
7.15%, 3-1-03 ......................... 3,750 3,702,375
7.45%, 3-1-08 ......................... 2,000 1,947,600
Total ................................. 5,649,975
Health Services - 0.96%
Tenet Healthcare Corporation,
7.875%, 1-15-03 ....................... 5,000 4,850,000
Holding and Other Investment Offices - 2.40%
Bay Apartment Communities, Inc.,
6.5%, 1-15-05 ......................... 3,000 2,775,120
GRUMA, S.A. de C.V.,
7.625%, 10-15-07....................... 3,500 3,053,750
NBD Bank, National Association,
8.25%, 11-1-24 ........................ 6,000 6,310,980
Total ................................. 12,139,850
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Industrial Machinery and Equipment - 0.48%
Coltec Industries Inc.,
7.5%, 4-15-08 ......................... $ 2,500 $ 2,413,375
Insurance Carriers - 0.36%
Reliance Group Holdings, Inc.,
9.0%, 11-15-00 ........................ 2,000 1,800,000
Nondepository Institutions - 7.99%
Asset Securitization Corporation,
7.49%, 4-14-29 ........................ 6,000 5,972,220
CHYPS CBO 1997-1 Ltd.,
6.72%, 1-15-10 (C) .................... 8,500 7,820,000
Equicon Loan Trust,
7.3%, 2-18-13 ......................... 4,571 4,510,087
General Motors Acceptance Corporation,
8.875%, 6-1-10 ........................ 5,500 6,022,720
IMC Home Equity Loan Trust,
6.9%, 1-20-22 ......................... 4,500 4,445,145
Norse CBO, Ltd. and Norse CBO, Inc.,
6.515%, 8-13-10 (C) ................... 3,750 3,503,925
Residential Asset Securities Corporation,
Mortgage Pass-Through Certificates,
8.0%, 10-25-24 ........................ 3,263 3,283,600
Westinghouse Electric Corporation,
8.875%, 6-14-14 ....................... 4,500 4,837,635
Total ................................. 40,395,332
Oil and Gas Extraction - 2.22%
Anadarko Petroleum Corporation,
7.25%, 3-15-25 ........................ 5,000 5,000,900
Mitchell Energy & Development Corp.,
9.25%, 1-15-02 ........................ 165 168,820
Oryx Energy Company,
10.0%, 4-1-01 ......................... 3,500 3,607,205
Pemex Finance Ltd.,
5.72%, 11-15-03 ....................... 2,500 2,431,250
Total ................................. 11,208,175
Paper and Allied Products - 2.05%
Canadian Pacific Forest Products Ltd.,
9.25%, 6-15-02 ........................ 4,500 4,639,185
Champion International Corporation,
6.4%, 2-15-26 ......................... 6,100 5,706,611
Total ................................. 10,345,796
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Petroleum and Coal Products - 1.35%
Conoco Inc.,
5.9%, 4-15-04 ......................... $ 3,000 $ 2,864,010
YPF Sociedad Anoima,
8.0%, 2-15-04 ......................... 4,000 3,960,480
Total ................................. 6,824,490
Printing and Publishing - 1.20%
Quebecor Printing Capital Corporation,
6.5%, 8-1-27 .......................... 6,500 6,051,500
Railroad Transportation - 0.98%
CSX Corporation,
6.95%, 5-1-27 ......................... 5,000 4,965,700
Security and Commodity Brokers - 1.02%
Salomon Inc.,
3.65%, 2-14-02 ........................ 5,000 5,161,700
Stone, Clay and Glass Products - 1.71%
Cemex, S.A. de C.V.,
9.5%, 9-20-01 ......................... 3,500 3,578,750
Owens-Illinois, Inc.,
7.15%, 5-15-05......................... 3,250 3,004,918
USG Corporation,
9.25%, 9-15-01 ........................ 2,000 2,046,400
Total ................................. 8,630,068
Transportation Equipment - 0.18%
Federal-Mogul Corporation,
7.75%, 7-1-06 ......................... 1,000 925,930
United States Postal Service - 0.30%
Postal Square Limited Partnership,
6.5%, 6-15-22 ......................... 1,684 1,519,232
TOTAL CORPORATE DEBT SECURITIES - 51.90% $262,372,538
(Cost: $271,134,086)
OTHER GOVERNMENT SECURITIES
Canada - 5.96%
Hydro-Quebec:
8.05%, 7-7-24 ......................... 10,000 10,561,400
7.4%, 3-28-25 ......................... 5,150 5,539,495
Province de Quebec:
5.67%, 2-27-26 ........................ 9,200 9,102,940
6.29%, 3-6-26 ......................... 5,000 4,896,150
Total ................................. 30,099,985
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1999
Principal
Amount in
Thousands Value
OTHER GOVERNMENT SECURITIES (Continued)
Korea - 0.50%
Korea Development Bank (The),
7.9%, 2-1-02 .......................... $ 2,500 $ 2,505,200
Supranational - 1.07%
Inter-American Development Bank,
8.4%, 9-1-09 .......................... 5,000 5,430,950
TOTAL OTHER GOVERNMENT SECURITIES - 7.53% $ 38,036,135
(Cost: $37,513,853)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
7.5%, 2-15-07 ......................... 5,041 5,067,420
6.5%, 9-25-18 ......................... 2,000 1,921,240
7.0%, 1-15-19 ......................... 2,000 1,966,860
7.5%, 4-15-19 ......................... 13,408 13,454,283
6.25%, 1-15-21 ........................ 12,000 11,632,440
Federal National Mortgage Association:
7.0%, 7-25-06 ......................... 8,888 8,871,405
6.09%, 4-1-09 ......................... 4,461 4,074,693
0.0%, 2-12-18 ......................... 4,500 1,228,410
7.0%, 9-25-20 ......................... 2,000 1,973,120
6.5%, 8-25-21 ......................... 2,500 2,411,700
7.0%, 8-25-21 ......................... 10,000 9,850,000
7.0%, 6-1-24 .......................... 5,989 5,790,134
6.0%, 12-1-28 ......................... 6,655 6,087,498
Government National Mortgage Association:
7.5%, 7-15-23 ......................... 2,830 2,812,399
7.5%, 12-15-23 ........................ 3,211 3,191,381
8.0%, 9-15-25 ......................... 4,252 4,320,404
7.0%, 7-20-27 ......................... 249 239,344
7.0%, 9-20-27 ......................... 4,049 3,890,543
7.5%, 7-15-29 ......................... 4,588 4,536,174
7.75%, 10-15-31 ....................... 1,962 1,965,497
Tennessee Valley Authority,
5.88%, 4-1-36 ......................... 3,750 3,513,862
United States Department of Veterans Affairs,
Guaranteed Remic Pass-Through Certificates,
Vendee Mortgage Trust:
1997-2 Class C,
7.5%, 8-15-17 ......................... 4,000 4,011,240
1998-1 Class 2-B,
7.0%, 6-15-19 ......................... 750 744,135
1999-2 Class 1-B,
6.5%, 7-15-19 ......................... 5,500 5,343,580
1999-2 Class 3-B,
6.5%, 2-15-20 ......................... 4,000 3,806,240
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED BOND FUND
DECEMBER 31, 1999
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES (Continued)
United States Treasury:
5.75%, 10-31-00 ....................... $ 3,000 $ 2,991,570
6.625%, 3-31-02 ....................... 12,000 12,082,440
5.5%, 3-31-03 ......................... 5,500 5,363,380
7.5%, 2-15-05 ......................... 7,500 7,822,275
6.5%, 8-15-05 ......................... 5,750 5,750,000
6.5%, 10-15-06 ........................ 14,000 13,962,760
11.25%, 2-15-15 ....................... 2,500 3,533,975
6.125%, 11-15-27 ...................... 20,000 18,612,400
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 36.17% $182,822,802
(Cost: $187,419,092)
TOTAL SHORT-TERM SECURITIES - 3.46% $ 17,490,257
(Cost: $17,490,257)
TOTAL INVESTMENT SECURITIES - 99.06% $500,721,732
(Cost: $513,557,288)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.94% 4,772,185
NET ASSETS - 100.00% $505,493,917
See Notes to Schedules of Investments on page 41.
<PAGE>
UNITED INCOME FUND
MANAGER'S LETTER
- ---------------------------------------------------------------------------
DECEMBER 31, 1999
Dear Shareholder:
This report relates to the operation of the United Income Fund for the fiscal
year ended December 31, 1999. The following discussion, graphs and tables
provide you with information regarding the Fund's performance during that
period.
The stock market was dominated by the technology sector in 1999. Wireless
telecommunications, Internet infrastructure, and Internet service-related
companies enjoyed an extraordinary period of market strength. Interest rates
rose throughout the year. The long-term U.S. Treasury bond began 1999 by
yielding 5.12% and ended the year at 6.48%, a level not seen in over two years.
This rise in interest rates created a very difficult environment for financial
stocks, building-related issues and utilities. The focus of strength in the
stock market remained very narrow, with a few large technology stocks providing
about three-quarters of the gain in the S&P 500 Index. Valuations reached
record levels among the leading stocks. A large majority of stocks, however,
did not participate in the rapid rise in prices that occurred at the end of
1999. In fact, the median S&P stock declined. The U.S. economy was strong in
1999. Consumer confidence indicators were near record highs. Inflation
remained moderate, despite a large increase in petroleum prices.
The Fund's performance was materially affected by our holdings in bonds and our
underweightings in the technology area. The Fund held a position in bonds for
much of 1999 for two reasons: 1) to provide enhanced dividend yield; and 2) as
a defensive investment in response to what we viewed as a growing risk from high
stock valuations. The Fund eliminated virtually all its bond holdings in
November of 1999. The rising trend in interest rates and the growing likelihood
that rates would continue to rise well into 2000 caused us to take this action.
We have maintained meaningful positions in technology stocks, but the Fund is
consciously underweighted in the most extremely valued ones. We have maintained
large holdings in chemicals, energy, drugs, and financial services. These areas
did not perform well in 1999, but represent reasonable value and possess, in
most cases, very strong earnings growth prospects in 2000.
The strategies and techniques we applied resulted in the Fund significantly
outperforming the mutual fund index and underperforming the stock index charted
on the following page. Those indexes reflect the performance of the universe of
funds with similar investment objectives (the Lipper Equity Income Fund Universe
Average) and of securities that generally represent the stock market (the S&P
500 Index). The Fund's performance shortfall relative to the S&P 500 Index can
be primarily attributed to the position in bonds. From January until November,
the Fund maintained a bond position of roughly 15% of the Fund's portfolio.
While this position did serve to enhance the dividend yield of the Fund, the
total return was negatively affected by the decline in bond prices in the
period.
We expect 2000 to be a very volatile year in the stock market. While inflation
in the U.S. remains quite tame, the current high level of business activity and
the very low level of unemployment raise concerns about limits to growth and
Federal Reserve policy. The rapidly expanding trade deficit also represents a
potential problem for the U.S. dollar. A strengthening global economy could
diminish this country's attraction as a "safe haven," further reducing demand
for our currency. We think pharmaceuticals and other large U.S. multinational
companies provide good defensive investments in the event the dollar comes under
pressure. The rapid advances in wireless telecommunications, the Internet, and
electronic commerce will continue to generate change at every level. The future
is heavy with both opportunity and risk. We think the outlook in many sectors
(pharmaceuticals, biotechnology, data storage, wireless telecommunications and
consumer electronics) remains especially compelling. We expect to maintain a
widely diversified portfolio that will also emphasize basic industries, energy,
and financial services -- all areas which should benefit from continued global
economic expansion. We intend to continue reducing positions or avoiding
sectors and individual stocks that represent extremes in valuation relative to
their underlying fundamental business prospects.
Thank you very much for your continued support and confidence.
Respectfully,
James D. Wineland
Manager, United Income Fund
<PAGE>
Comparison of Change in Value of $10,000 Investment in
United Income Fund, Class A Shares,
The S&P 500 Index
and The Lipper Equity Income Fund Universe Average
Lipper
United Equity
Income Income
Fund, S&P Fund
Class A 500 Universe
Shares Index Average
--------- --------- ---------
12/31/89 Purchase 9,425 10,000 10,000
12/31/90 8,912 9,690 9,373
12/31/91 11,553 12,642 11,841
12/31/92 12,935 13,606 12,953
12/31/93 15,011 14,976 14,736
12/31/94 14,739 15,174 14,363
12/31/95 19,104 20,877 18,642
12/31/96 22,996 25,670 22,104
12/31/97 29,286 34,216 28,182
12/31/98 36,322 44,035 31,280
12/31/99 42,283 53,313 32,654
- ----- United Income Fund, Class A Shares* -- $42,283
+++++ S&P 500 Index -- $53,313
===== Lipper Equity Income Fund Universe Average -- $32,654
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund and assumes
reinvestment of dividends and distributions.
Average Annual Total Return+
Class A Class B Class C Class Y
---------------------------------------------
Year Ended
12/31/99 9.72% N/A N/A 16.67%
5 Years Ended
12/31/99 22.01% N/A N/A N/A
10 Years Ended
12/31/99 15.51% N/A N/A N/A
Since inception
of Class++
through 12/31/99 N/A 6.53% 10.53% 21.45%
+Performance data quoted represents past performance and is based on deduction
of the maximum applicable sales load for each of the periods. Class A shares
carry a maximum front-end sales load of 5.75%. Class B and Class C shares
carry maximum contingent deferred sales charges of 5% and 1%, respectively.
Total returns reflect share price appreciation, including reinvestment of all
income and capital gains distributions. Investment return and principal value
will fluctuate and an investor's shares, when redeemed, may be worth more or
less than their original cost.
++10/4/99 for Class B shares, 10/4/99 for Class C shares and 6/19/95 for Class Y
shares (the date on which shares were first acquired by shareholders).
Past performance is not predictive of future performance. Indexes are
unmanaged.
<PAGE>
SHAREHOLDER SUMMARY
- -----------------------------------------------------------------
UNITED INCOME FUND
PORTFOLIO STRATEGY:
Investment quality GOALS: To seek, as a primary goal,
dividend-paying maintenance of current income
common stocks subject to market conditions, with
a secondary goal 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 on common stocks or have the
potential for capital appreciation or
that WRIMCO expects to resist market
decline.
FOUNDED: 1940
SCHEDULED DIVIDEND FREQUENCY: QUARTERLY
(MARCH, JUNE, SEPTEMBER, DECEMBER)
<PAGE>
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Fiscal Year Ended December 31, 1999
- -------------------------------------------
DIVIDENDS PAID $0.08
=====
CAPITAL GAINS DISTRIBUTION $0.52
=====
NET ASSET VALUE ON
12/31/99 $8.13 adjusted to: $8.65(A)
12/31/98 7.52
-----
CHANGE PER SHARE $1.13
=====
(A)This number includes the capital gains distribution of $0.52 paid in December
1999 added to the actual net asset value on December 31, 1999.
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 12-31-99 9.72% 16.41%
5-year period ended 12-31-99 22.01% 23.46%
10-year period ended 12-31-99 15.51% 16.19%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On December 31, 1999, United Income Fund had net assets totaling $8,399,134,482
invested in a diversified portfolio of:
93.33% Common Stocks
5.82% Cash and Cash Equivalents
0.44% U.S. Government Security
0.41% Preferred Stock
As a shareholder of United Income Fund, for every $100 you had invested on
December 31, 1999, your Fund owned:
$46.83 Manufacturing Stocks
11.08 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
10.93 Finance, Insurance and Real Estate Stocks
9.45 Wholesale and Retail Trade Stocks
9.40 Services Stocks
5.82 Cash and Cash Equivalents
4.06 Mining Stocks
1.58 Miscellaneous Investing Institutions Stocks
0.44 United States Government Security
0.41 Preferred Stock
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1999
Shares Value
COMMON STOCKS
Amusement and Recreation Services - 1.43%
Walt Disney Company (The) .............. 4,105,000 $ 120,071,250
Building Materials and Garden Supplies - 0.73%
Home Depot, Inc. (The) ................. 891,300 61,109,756
Business Services - 6.49%
America Online, Inc.* .................. 1,007,000 75,965,562
Clear Channel Communications, Inc.* .... 1,420,000 126,735,000
Microsoft Corporation* ................. 2,006,400 234,184,500
Oracle Corporation* .................... 963,000 107,886,094
Total ................................. 544,771,156
Chemicals and Allied Products - 16.37%
Air Products and Chemicals, Inc. ....... 2,051,700 68,860,181
American Home Products Corporation ..... 1,937,900 76,425,931
Biogen, Inc.* .......................... 500,000 42,234,375
Bristol-Myers Squibb Company ........... 494,400 31,734,300
Dow Chemical Company (The) ............. 680,000 90,865,000
du Pont (E.I.) de Nemours and Company .. 2,300,000 151,512,500
Forest Laboratories, Inc.* ............. 723,400 44,443,888
Johnson & Johnson ...................... 944,600 87,965,875
Lilly (Eli) and Company ................ 1,637,700 108,907,050
Merck & Co., Inc. ...................... 1,723,100 115,555,394
Monsanto Company ....................... 2,900,000 103,312,500
Pfizer Inc. ............................ 1,802,000 58,452,375
Pharmacia & Upjohn, Inc. ............... 943,900 42,475,500
Procter & Gamble Company (The) ......... 509,100 55,778,269
Schering-Plough Corporation ............ 1,727,000 72,857,812
Warner-Lambert Company ................. 2,733,900 224,008,931
Total ................................. 1,375,389,881
Communication - 9.43%
Cox Communications, Inc., Class A* ..... 3,001,800 154,592,700
General Motors Corporation, Class H* ... 759,700 72,931,200
MCI WORLDCOM, Inc.* .................... 1,555,500 82,490,109
Nippon Telegraph and Telephone
Corporation (A) ....................... 4,250 72,823,852
SBC Communications Inc. ................ 1,500,000 73,125,000
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 3,419,000 224,478,719
Vodafone Airtouch Public Limited
Company, ADR .......................... 2,250,000 111,375,000
Total ................................. 791,816,580
Depository Institutions - 3.33%
Bank of America Corporation ............ 1,412,000 70,864,750
Chase Manhattan Corporation (The) ...... 1,050,000 81,571,875
Citigroup Inc. ......................... 2,287,500 127,099,219
Total ................................. 279,535,844
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1999
Shares Value
COMMON STOCKS (Continued)
Electric, Gas and Sanitary Services - 0.76%
Duke Energy Corp. ...................... 1,275,000 $ 63,909,375
Electronic and Other Electric Equipment - 11.00%
Analog Devices, Inc.* .................. 1,575,000 146,475,000
General Electric Company ............... 1,657,800 256,544,550
Intel Corporation ...................... 2,804,000 230,716,625
Nokia, AB (A) .......................... 1,370,000 248,400,181
Rambus Inc.* ........................... 623,500 42,027,797
Total ................................. 924,164,153
Fabricated Metal Products - 0.77%
Gillette Company (The) ................. 1,569,900 64,660,256
Food and Kindred Products - 0.53%
PepsiCo, Inc. .......................... 1,268,300 44,707,575
Food Stores - 1.42%
Kroger Co. (The)* ...................... 6,339,000 119,648,625
Furniture and Home Furnishings Stores - 1.55%
Circuit City Stores, Inc. - Circuit
City Group ............................ 2,883,000 129,915,188
General Merchandise Stores - 2.38%
Dayton Hudson Corporation .............. 882,600 64,815,938
Wal-Mart Stores, Inc. .................. 1,950,000 134,793,750
Total ................................. 199,609,688
Holding and Other Investment Offices - 1.58%
ABB Ltd. [Switzerland] (A)* ............ 1,086,070 132,767,643
Industrial Machinery and Equipment - 8.04%
Baker Hughes Incorporated .............. 1,858,000 39,134,125
Cisco Systems, Inc.* ................... 1,629,000 174,455,719
Deere & Company ........................ 1,116,000 48,406,500
Dell Computer Corporation* ............. 1,969,000 100,357,469
EMC Corporation* ....................... 1,404,000 153,387,000
International Business Machines
Corporation ........................... 1,200,000 129,600,000
Sun Microsystems, Inc.* ................ 389,000 30,111,031
Total ................................. 675,451,844
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1999
Shares Value
COMMON STOCKS (Continued)
Instruments and Related Products - 2.70%
Guidant Corporation* ................... 2,400,000 $ 112,800,000
Medtronic, Inc. ........................ 1,944,000 70,834,500
Raytheon Company, Class A .............. 1,747,181 43,351,929
Total ................................. 226,986,429
Insurance Carriers - 3.15%
American International Group, Inc. .... 1,146,187 123,931,469
Aon Corporation ........................ 1,065,000 42,600,000
Chubb Corporation (The) ................ 1,742,600 98,130,163
Total ................................. 264,661,632
Motion Pictures - 1.48%
Time Warner Incorporated ............... 1,711,900 124,005,756
Nondepository Institutions - 4.02%
Associates First Capital Corporation,
Class A ............................... 3,365,870 92,351,058
Fannie Mae ............................. 2,304,000 143,856,000
Freddie Mac ............................ 2,154,800 101,410,275
Total ................................. 337,617,333
Oil and Gas Extraction - 4.06%
Anadarko Petroleum Corporation ......... 1,333,000 45,488,625
Burlington Resources Incorporated ...... 3,700,000 122,331,250
Schlumberger Limited ................... 2,256,000 126,900,000
Transocean Sedco Forex Inc. ............ 436,762 14,713,406
USX Corporation - Marathon Group ....... 1,290,000 31,846,875
Total ................................. 341,280,156
Petroleum and Coal Products - 3.18%
Chevron Corporation .................... 450,000 38,981,250
Exxon Mobil Corporation ................ 1,672,720 134,758,505
Royal Dutch Petroleum Company, NY Shares 1,544,000 93,315,500
Total ................................. 267,055,255
Primary Metal Industries - 0.80%
Alcoa Incorporated ..................... 806,200 66,914,600
Security and Commodity Brokers - 0.43%
Charles Schwab Corporation (The) ....... 943,000 36,187,625
Transportation by Air - 0.64%
AMR Corporation* ....................... 800,000 53,600,000
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1999
Shares Value
COMMON STOCKS (Continued)
Transportation Equipment - 3.44%
Boeing Company (The) ................... 892,500 37,094,531
DaimlerChrysler AG ..................... 713,907 $ 55,863,223
Ford Motor Company ..................... 2,784,100 148,775,344
Lockheed Martin Corporation ............ 2,151,100 47,055,312
Total ................................. 288,788,410
Trucking and Warehousing - 0.25%
United Parcel Service, Inc. ............ 304,400 21,003,600
Wholesale Trade - Nondurable Goods - 3.37%
Cardinal Health, Inc. .................. 2,450,600 117,322,475
Enron Corp. ............................ 1,081,000 47,969,375
Safeway Inc.* .......................... 3,310,000 117,711,875
Total ................................. 283,003,725
TOTAL COMMON STOCKS - 93.33% $7,838,633,335
(Cost: $4,607,214,767)
PREFERRED STOCK - 0.41%
Communication
Cox Communications, Inc., 7.0% Convertible 505,800 $ 34,394,400
(Cost: $25,290,000)
Principal
Amount in
Thousands
UNITED STATES GOVERNMENT SECURITY - 0.44%
United States Treasury,
6.75%, 4-30-00 ........................ $37,000 $ 37,115,440
(Cost: $37,061,401)
SHORT-TERM SECURITIES
Commercial Paper
Auto Repair, Services and Parking - 0.12%
Hertz Corporation (The),
5.675%, 1-10-00 ....................... 10,000 9,985,813
Chemicals and Allied Products - 0.53%
Air Products and Chemicals, Inc.:
6.7%, 1-14-00 ......................... 20,000 19,951,611
6.8%, 1-19-00 ......................... 25,000 24,915,000
Total ................................. 44,866,611
Communication - 0.36%
Dominion Resources Inc.:
6.36%, 1-20-00 ......................... 10,000 9,966,433
6.75%, 1-20-00 ......................... 20,000 19,928,751
Total .................................. 29,895,184
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1999
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Depository Institutions - 0.66%
UBS Finance (DE) Inc.,
4.4%, 1-5-00 .......................... $ 7,500 $ 7,496,333
Wells Fargo & Company,
6.32%, 1-20-00 ........................ 47,900 47,740,227
Total ................................. 55,236,560
Electric, Gas and Sanitary Services - 1.04%
Carolina Power & Light Co.,
6.5%, 1-20-00 ......................... 39,142 39,007,721
Detriot Edison Co.,
6.75%, 1-13-00 ........................ 15,000 14,966,250
Public Service Electric & Gas Co.,
6.75%, 1-13-00 ........................ 2,000 1,995,500
Tampa Electric Co.,
6.5%, 1-19-00 ......................... 10,700 10,665,225
Western Resources, Inc.,
6.85%, 1-27-00 ........................ 20,850 20,746,851
Total ................................. 87,381,547
Electronic and Other Electric Equipment - 0.13%
Sony Capital Corp.,
6.4%, 1-13-00 ......................... 11,000 10,976,533
Fabricated Metal Products - 0.00%
Danaher Corporation,
6.49%, Master Note .................... 336 336,000
Food and Kindred Products - 0.14%
Conagra Inc.,
6.05%, 1-7-00 ......................... 6,725 6,718,219
General Mills, Inc.,
6.345%, Master Note ................... 147 147,000
Ralston Purina Co.,
6.62%, 1-24-00 ........................ 5,000 4,978,853
Total ................................. 11,844,072
Food Stores - 0.12%
Albertson's Inc.,
5.94%, 1-19-00 ........................ 10,000 9,970,300
Industrial Machinery and Equipment - 0.41%
Deere & Company:
6.41%, 1-25-00 ........................ 25,000 24,893,167
6.34%, 1-27-00 ........................ 10,000 9,954,211
Total ................................. 34,847,378
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1999
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Instruments and Related Products - 0.44%
Snap-On Inc.,
6.375%, 1-14-00 ....................... $37,000 $ 36,914,823
Insurance Carriers - 0.42%
SAFECO Credit Co. Inc.:
6.8%, 1-11-00 ......................... 12,000 11,977,333
6.9%, 1-11-00 ......................... 12,975 12,950,132
6.53%, 1-13-00 ........................ 9,991 9,969,253
Total ................................. 34,896,718
Nondepository Institutions - 0.16%
Associates First Capital B.V. (Associates
First Capital Corporation):
5.95%, 1-10-00 ........................ 6,000 5,991,075
6.0%, 1-10-00 ......................... 2,500 2,496,250
Paccar Financial Corp.,
5.2757%, Master Note .................. 1,909 1,909,000
Textron Financial Corp.,
8.3%, 1-5-00 .......................... 3,500 3,496,772
Total ................................. 13,893,097
Paper and Allied Products - 0.18%
Westvaco Corp.,
6.3%, 1-27-00 ......................... 15,000 14,931,750
Personal Services - 0.18%
Block Financial Corp.,
6.18%, 1-31-00 ........................ 15,000 14,922,750
Petroleum and Coal Products - 0.36%
Kerr-McGee Credit LLC,
6.85%, 1-27-00 ........................ 30,000 29,851,583
Total Commercial Paper - 5.25% 440,750,719
Commercial Paper (backed by irrevocable bank
letter of credit)
Electric, Gas and Sanitary Services - 0.09%
AES Hawaii Inc. (Bank of America NT & SA),
6.2%, 1-21-00 ......................... 7,500 7,474,167
Foreign Government - 0.19%
United Mexican States (Barclays Bank PLC),
6.08%, 2-1-00 ......................... 16,000 15,916,231
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED INCOME FUND
DECEMBER 31, 1999
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (backed by irrevocable bank
letter of credit) (Continued)
Oil and Gas Extraction - 0.17%
Louis Dreyfus Corp. (Dresdner Bank AG),
6.5%, 1-18-00 ......................... $15,000 $ 14,953,958
Total Commercial Paper (backed by irrevocable bank
letter of credit) - 0.45% 38,344,356
Municipal Obligations
California - 0.31%
California Pollution Control Financing
Authority, Environmental Improvement
Revenue Bonds (Shell Martinez Refining
Company Project), Series 1996 (Taxable),
6.55%, 1-20-00 ........................ 26,450 26,450,000
Louisiana - 0.10%
Industrial District No. 3 of the Parish of West
Baton Rouge, State of Louisiana, Variable Rate
Demand Revenue Bonds, Series 1995 (Taxable),
(The Dow Chemical Company Project),
6.25%, 1-26-00 ........................ 8,000 8,000,000
Total Municipal Obligations - 0.41% 34,450,000
TOTAL SHORT-TERM SECURITIES - 6.11% $ 513,545,075
(Cost: $513,545,075)
TOTAL INVESTMENT SECURITIES - 100.29% $8,423,688,250
(Cost: $5,183,111,243)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.29%) (24,553,768)
NET ASSETS - 100.00% $8,399,134,482
See Notes to Schedules of Investments on page 41.
<PAGE>
UNITED SCIENCE AND TECHNOLOGY FUND
MANAGER'S LETTER
DECEMBER 31, 1999
- ---------------------------------------------------------------------------
Dear Shareholder:
This report relates to the operation of the United Science and Technology Fund
for the fiscal year ended December 31, 1999. The following discussion, graphs
and tables provide you with information regarding the Fund's performance during
that period.
The U.S. economy grew roughly 4.0% in 1999, as measured by real Gross Domestic
Product, with inflation, defined by the Consumer Price Index, at 2.2%. This
compares to 1998 real GDP growth of 4.6% and CPI growth of 1.6%. Industrial
production grew roughly 3.6% for 1999, versus 4.3% last year, and real consumer
spending was a healthy 5.1% compared to the same level in 1998. The importance
of technology in this economic picture is broadening. Excluding technology-
related activity, industrial production would have been far weaker. New data
indicates that productivity is sharply accelerating in the 1990s. Investment in
the Internet and telecommunications sectors have proven to lead to further
productivity gains and technology has taken center stage, accounting for most of
the financial market performance in 1999. It would be easy to dismiss this
technology stock phenomenon as a mania, but strong fundamental developments
underlying it argue for a continuation of a technology-centered market.
The Fund had superior results, with gains in excess of 100%. Investments in E-
commerce grew. Many people shopped on the Internet and businesses transacted
commerce on-line. Once again, large capitalized stocks outperformed smaller
capitalized stocks. The Fund benefited from the deregulation of the
telecommunications industry combined with technological innovation. As more
sectors deregulate and adopt new technology strategies, more companies may
become growth vehicles. Now that Y2K fears have moderated, the spending that
normally would have occurred on web-enabled process should happen. Difficult as
it may seem, emphasis on networking and e-commerce will intensify even more.
The strategies and techniques we applied resulted in the Fund significantly
outperforming the S&P 400 Index (reflecting the performance of securities that
generally represent the non-financial institution portion of the stock market)
and underperforming the Lipper Science & Technology Fund Universe Average
(representing the universe of funds with similar investment objectives). Both
indexes are charted on the following page. The Fund benefited from its large
positions in Internet and related issues. The better-performing sectors were
web-enabling software, networking, especially optical networking stocks and
their component suppliers, business to business software and business to
consumer software stocks.
The Year 2000 will bring political claims and promises as we look toward
ushering in a new President in 2001. The 1990s brought us unparalleled heights
in technology stocks, enormous initial public offerings, and wealth for millions
of people who participated in the markets. It is fair to ask whether the large
role that equities played in the 1990s will continue and whether technology will
still play the same or a more important role. A setback in stock prices may
occur and serious consideration should be given to its probability, timing and
triggers. However, the central role of technology, in our opinion, will stay
large and continue to grow because of the revolutionary capabilities it brings.
Sometimes an industry sector plays a decades-long role in the global economy.
The defense industry played an enormous role in the cold war period. The
automobile and its associated industries transformed economies and peoples'
lives for decades. We think such a period exists now for technology. We will
try to find companies that benefit from the above-mentioned trends and those
with the potential to create such trends in the future.
Thank you very much for your continued support and confidence.
Respectfully,
Abel Garcia
Manager, United Science and Technology Fund
<PAGE>
Comparison of Change in Value of $10,000 Investment in
United Science and Technology Fund, Class A Shares,
The S&P 400 Index
and The Lipper Science & Technology Fund Universe Average
United Lipper
Science and Science &
Technology Technology
Fund, S&P Fund
Class A 400 Universe
Shares Index Average
--------- --------- ----------
12/31/89 Purchase 9,425 10,000 10,000
12/31/90 9,094 9,912 9,706
12/31/91 14,483 12,962 14,118
12/31/92 13,900 13,702 16,099
12/31/93 15,082 14,940 20,000
12/31/94 16,558 15,511 22,541
12/31/95 25,726 20,879 31,077
12/31/96 27,875 25,685 37,055
12/31/97 29,888 33,715 41,111
12/31/98 47,616 45,128 62,651
12/31/99 96,628 56,886 148,794
===== United Science and Technology Fund, Class A Shares* -- $96,628
+++++ S&P 400 Index -- $56,886
- ----- Lipper Science & Technology Fund Universe Average -- $148,794
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund and assumes
reinvestment of dividends and distributions.
Average Annual Total Return+
Class A Class B Class C Class Y
---------------------------------------------
Year Ended
12/31/99 91.27% N/A N/A 103.72%
5 Years Ended
12/31/99 40.63% N/A N/A N/A
10 Years Ended
12/31/99 25.46% N/A N/A N/A
Since inception
of Class++
through 12/31/99 N/A 53.62% 57.70% 39.63%
+Performance data quoted represents past performance and is based on deduction
of the maximum applicable sales load for each of the periods. Class A shares
carry a maximum front-end sales load of 5.75%. Class B and Class C shares
carry maximum contingent deferred sales charges of 5% and 1%, respectively.
Total returns reflect share price appreciation, including reinvestment of all
income and capital gains distributions. Investment return and principal value
will fluctuate and an investor's shares, when redeemed, may be worth more or
less than their original cost.
++10/4/99 for Class B shares, 10/4/99 for Class C shares and 2/27/96 for Class Y
shares (the date on which shares were first acquired by shareholders).
Past performance is not predictive of future performance. Indexes are
unmanaged.
<PAGE>
SHAREHOLDER SUMMARY
- ------------------------------------------------------------------------
UNITED SCIENCE AND TECHNOLOGY FUND
PORTFOLIO STRATEGY:
Technology-related GOAL: To seek long-term capital growth.
stocks
Generally at least 80% STRATEGY: Concentrates its investments
in science or technology primarily in common stock of
securities; may have more science and technology securities
than 20% in debt securities. of U.S. and foreign companies.
Science and technology securities
Cash reserves are securities of companies whose
products, processes or services are, in
WRIMCO's opinion, expected to be
significantly benefited by the use or
commercial application of scientific or
technological discoveries or
developments.
FOUNDED: 1950
SCHEDULED DIVIDEND FREQUENCY: SEMIANNUALLY
(JUNE AND DECEMBER)
<PAGE>
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Fiscal Year Ended December 31, 1999
- -------------------------------------------
CAPITAL GAINS DISTRIBUTION $1.51
=====
NET ASSET VALUE ON
12/31/99 $18.43 adjusted to: $19.94(A)
12/31/98 9.91
------
CHANGE PER SHARE $10.03
======
(A)This number includes the capital gains distribution of $1.51 paid in December
1999 added to the actual net asset value on December 31, 1999.
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 12-31-99 91.27% 102.93%
5-year period ended 12-31-99 40.63% 42.30%
10-year period ended 12-31-99 25.46% 26.21%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On December 31, 1999, United Science and Technology Fund had net assets totaling
$3,795,454,214 invested in a diversified portfolio of:
96.49% Common Stocks
3.51% Cash and Cash Equivalents
As a shareholder of United Science and Technology Fund, for every $100 you had
invested on December 31, 1999, your Fund owned:
$47.97 Services Stocks
35.14 Manufacturing Stocks
9.68 Transportation, Communication, Electric, Gas
and Sanitary Services Stocks
3.51 Cash and Cash Equivalents
2.79 Wholesale and Retail Trade Stocks
0.91 Finance, Insurance and Real Estate Stocks
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1999
Shares Value
COMMON STOCKS
Building Materials and Garden Supplies - 0.95%
Home Depot, Inc. (The) ................. 525,000 $ 35,995,313
Business Services - 44.40%
Acxiom Corporation* .................... 600,000 14,418,750
America Online, Inc.* .................. 1,600,000 120,700,000
BroadVision, Inc.* ..................... 375,000 63,773,438
Citrix Systems, Inc.* .................. 1,000,000 122,968,750
Clarent Corporation* ................... 200,000 15,537,500
Clear Channel Communications, Inc.* .... 547,300 48,846,525
DoubleClick Inc.* ...................... 373,800 94,676,531
eBay Inc.* ............................. 300,000 37,565,625
Getty Images, Inc.* .................... 648,200 31,761,800
HNC Software Inc.* ..................... 600,000 63,581,250
Inktomi Corporation* ................... 940,000 83,366,250
Intuit Inc.* ........................... 1,526,400 91,440,900
Microsoft Corporation* ................. 700,000 81,703,125
Netopia, Inc.* ......................... 500,000 27,296,875
Oracle Corporation* .................... 500,000 56,015,625
Phone.com, Inc.* ....................... 400,000 46,475,000
Sapient Corporation* ................... 105,000 14,795,156
TMP Worldwide Inc.* .................... 500,000 70,843,750
Transaction Systems Architects, Inc.,
Class A* .............................. 600,000 16,818,750
USWeb Corporation* ..................... 600,000 26,681,250
Veritas Software Corp.* ................ 1,500,000 214,640,625
Vignette Corporation* .................. 500,000 81,484,375
Yahoo! Inc.* ........................... 600,000 259,631,250
Total ................................. 1,685,023,100
Chemicals and Allied Products - 5.67%
Biogen, Inc.* .......................... 700,000 59,128,125
Bristol-Myers Squibb Company ........... 400,000 25,675,000
Johnson & Johnson ...................... 400,000 37,250,000
Pfizer Inc. ............................ 700,000 22,706,250
Schering-Plough Corporation ............ 600,000 25,312,500
Warner-Lambert Company ................. 550,000 45,065,625
Total ................................. 215,137,500
Communication - 9.68%
AT&T Corp. - Liberty Media Group,
Class A* .............................. 700,000 39,725,000
COLT Telecom Group plc, ADR* ........... 400,000 81,600,000
Cox Communications, Inc., Class A* ..... 820,000 42,230,000
EchoStar Communications Corporation,
Class A* .............................. 1,200,000 116,850,000
Global TeleSystems Group, Inc.* ........ 434,000 15,027,250
Nextel Communications, Inc.* ........... 456,500 47,062,297
Vodafone Airtouch Public Limited
Company, ADR .......................... 500,000 24,750,000
Total ................................. 367,244,547
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1999
Shares Value
COMMON STOCKS (Continued)
Depository Institutions - 0.91%
Concord EFS, Inc.* ..................... 1,350,000 $ 34,720,313
Electronic and Other Electric Equipment - 18.41%
Analog Devices, Inc.* .................. 1,000,000 93,000,000
Broadcom Corporation, Class A* ......... 450,000 122,554,687
Gemstar International Group Limited* ... 1,400,000 99,662,500
General Electric Company ............... 325,000 50,293,750
Intel Corporation ...................... 785,000 64,590,781
JDS Uniphase Corporation* .............. 413,000 66,622,062
Level 3 Communications, Inc.* .......... 300,000 24,543,750
Nokia Corporation, Series A, ADR ....... 380,000 72,200,000
Nortel Networks Corporation ............ 360,000 36,360,000
Rambus Inc.* ........................... 500,000 33,703,125
STMicroelectronics N.V., NY Shares ..... 232,500 35,209,219
Total ................................. 698,739,874
Engineering and Management Services - 2.81%
Incyte Pharmaceuticals, Inc.* .......... 998,400 59,061,600
Paychex, Inc. .......................... 900,000 35,971,875
Quintiles Transnational Corp.* ......... 626,000 11,678,813
Total ................................. 106,712,288
General Merchandise Stores - 0.64%
Dayton Hudson Corporation .............. 330,000 24,234,375
Industrial Machinery and Equipment - 8.81%
Apple Computer, Inc.* .................. 617,000 63,416,031
Applied Materials, Inc.* ............... 400,000 50,662,500
Cisco Systems, Inc.* ................... 1,289,100 138,054,553
Extreme Networks, Inc.* ................ 300,000 25,087,500
Sun Microsystems, Inc.* ................ 500,000 38,703,125
VA Linux Systems, Inc.* ................ 90,000 18,624,375
Total ................................. 334,548,084
Instruments and Related Products - 2.25%
Medtronic, Inc. ........................ 800,000 29,150,000
Teradyne, Inc.* ........................ 850,000 56,100,000
Total ................................. 85,250,000
Miscellaneous Retail - 1.20%
Amazon.com, Inc.* ...................... 600,000 45,693,750
Motion Pictures - 0.76%
Time Warner Incorporated ............... 400,000 28,975,000
TOTAL COMMON STOCKS - 96.49% $3,662,274,144
(Cost: $1,261,015,901)
See Notes to Schedules of Investments on page 41.
<PAGE>
THE INVESTMENTS OF UNITED SCIENCE AND TECHNOLOGY FUND
DECEMBER 31, 1999
Value
TOTAL SHORT-TERM SECURITIES - 3.65% $ 138,331,307
(Cost: $138,331,307)
TOTAL INVESTMENT SECURITIES - 100.14% $3,800,605,451
(Cost: $1,399,347,208)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.14%) (5,151,237)
NET ASSETS - 100.00% $3,795,454,214
See Notes to Schedules of Investments on page 41.
<PAGE>
UNITED FUNDS, INC.
DECEMBER 31, 1999
Notes to Schedules of Investments
*No dividends were paid during the preceding 12 months.
(A) Listed on an exchange outside the United States.
(B) See Note 7 to financial statements.
(C) 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 December 31, 1999, the value of
these securities amounted to $11,323,925 or 2.24% of net assets for United
Bond Fund.
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
DECEMBER 31, 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)$2,264,891 $500,722 $8,423,688 $3,800,605
Cash .............. 25 --- --- 13
Receivables:
Investment securities sold --- --- 17,114 ---
Dividends and interest 1,090 7,446 6,565 300
Fund shares sold .. 1,292 403 5,251 5,971
Prepaid insurance
premium ........... 36 15 65 17
---------- -------- ---------- ----------
Total assets .... 2,267,334 508,586 8,452,683 3,806,906
Liabilities ---------- -------- ---------- ----------
Payable for investment
securities purchased --- --- ---
204
Payable to Fund
shareholders ...... 11,932 2,792 50,197 10,074
Accrued service fee (Note 2) 390 101 1,467 459
Accrued transfer agency and
dividend disbursing (Note 2) 237 81 983 435
Accrued distribution fee (Note 2)35 5 100 100
Due to custodian ... --- 55 283 ---
Accrued management fee (Note 2) 41 7 130 83
Accrued shareholder servicing --
Class Y (Note 2) .. 1 --- 43 4
Accrued accounting
services fee (Note 2) 8 5 8
8
Other .............. 81 46 338
85
---------- -------- ---------- ----------
Total liabilities 12,725 3,092 53,549 11,452
---------- -------- ---------- ----------
Total net assets $2,254,609 $505,494 $8,399,134
$3,795,454
Net Assets ========== ======== ========== ==========
$1.00 par value capital stock:
Capital stock ..... $ 246,577 $ 84,710 $1,033,049 $ 205,880
Additional paid-in
capital .......... 1,531,351 452,467 3,761,018 1,156,099
Accumulated undistributed
income (loss):
Accumulated undistributed
net investment
income .......... 2,558 237 4,374 ---
Accumulated undistributed net
realized gain (loss) on
investment
transactions ..... 79,304 (19,084) 360,167 32,223
Net unrealized appreciation
(depreciation) of
investments ..... 394,819 (12,836) 3,240,526 2,401,252
---------- -------- ---------- ----------
Net assets applicable to
outstanding units
of capital ..... $2,254,609 $505,494 $8,399,134 $3,795,454
========== ======== ========== ==========
Capital shares outstanding:
Class A ............ 245,724 83,921 996,484 203,116
Class B ............ 288 290 1,612 944
Class C ............ 38 48 169 155
Class Y ............ 527 451 34,784 1,665
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 ............ $9.14 $5.97 $8.13 $18.43
Class B ............ $9.12 $5.97 $8.13 $18.37
Class C ............ $9.12 $5.96 $8.13 $18.38
Class Y ............ $9.14 $5.97 $8.13 $18.65
See notes to financial statements.
<PAGE>
UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended DECEMBER 31, 1999
(In Thousands) United
United United United Science and
Accumulative Bond Income Technology
Fund Fund Fund Fund
Investment Income (Loss)------------ --------------------------------------
Income (Note 1B):
Interest and
amortization .... $ 4,861 $35,757 $ 80,752 $ 4,290
Dividends ......... 20,388 --- 69,751 3,730
-------- ------- ---------- ----------
Total income .... 25,249 35,757 150,503 8,020
-------- ------- ---------- ----------
Expenses (Note 2):
Investment
management fee ... 11,970 2,525 44,403 16,102
Service fees:
Class A ......... 4,353 1,246 16,986 4,574
Class B ......... 1 1 4 5
Class C ......... --- --- --- 1
Transfer agency and
dividend disbursing:
Class A ......... 2,242 1,008 9,910 3,770
Class B ......... 2 1 8 13
Class C ......... --- --- 1 2
Distribution fees:
Class A ......... 241 76 947 424
Class B ......... 2 2 11 11
Class C ......... --- --- 1 2
Custodian fees .... 66 17 576 70
Shareholder servicing
-- Class Y ....... 7 4 528 21
Accounting services fee 100 61 100 100
Legal fees ........ 20 5 74 18
Audit fees ........ 18 16 27 19
Other ............. 251 131 915 367
-------- ------- --------- ----------
Total expenses .. 19,273 5,093 74,491 25,499
-------- ------- --------- ----------
Net investment
income (loss) 5,976 30,664 76,012 (17,479)
-------- ------- --------- ----------
Realized and Unrealized
Gain (Loss) on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ..... 265,505 (593) 836,278 288,499
Realized net gain (loss) on foreign
currency transactions (98) --- (336)
36
-------- ---------- ---------- ----------
Realized net gain (loss)
on investments .. 265,407 (593) 835,942 288,535
Unrealized appreciation (depreciation)
in value of investments
during the period.. 201,521 (36,307) 317,336 1,604,183
-------- ---------- ---------- ----------
Net gain (loss) on
investments .... 466,928 (36,900) 1,153,278 1,892,718
-------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from
operations .... $472,904 $(6,236) $1,229,290 $1,875,239
======== ======== ========== ==========
See notes to financial statements.
<PAGE>
UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended DECEMBER 31, 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) ... $ 5,976 $ 30,664 $ 76,012 $ (17,479)
Realized net gain (loss)
on investments .. 265,407 (593) 835,942 288,535
Unrealized appreciation
(depreciation) .. 201,521 (36,307) 317,336 1,604,183
---------- -------- ---------- ----------
Net increase (decrease) in net
assets resulting
from operations. 472,904 (6,236) 1,229,290 1,875,239
---------- -------- ---------- ----------
Distributions to shareholders
from (Note 1E):*
Net investment income:
Class A ......... (5,519) (30,472) (77,099) ---
Class B ......... --- (9) --- ---
Class C ......... --- (1) --- ---
Class Y ......... (20) (148) (4,135) ---
Realized net gains on
investment transactions:
Class A ......... (250,533) --- (486,908) (280,167)
Class B ......... (223) --- (607) (988)
Class C ......... (34) --- (66) (171)
Class Y ......... (530) --- (16,884) (2,276)
---------- -------- ---------- ----------
(256,859) (30,630) (585,699) (283,602)
---------- -------- ---------- ----------
Capital share
transactions (Note 5) 170,527 (14,788) (11,758) 529,334
---------- -------- ---------- ----------
Total increase (decrease) 386,572 (51,654) 631,833 2,120,971
Net Assets
Beginning of period 1,868,037 557,148 7,767,301 1,674,483
---------- -------- ---------- ----------
End of period $2,254,609 $505,494 $8,399,134 $3,795,454
========== ======== ========== ==========
Undistributed
net investment
income .......... $2,558 $237 $4,374 $---
====== ==== ====== ====
*See "Financial Highlights" on pages 46 - 61.
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 46 - 61.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED ACCUMULATIVE FUND
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the fiscal year ended December 31,
-----------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
Net asset value,
beginning of period $8.28 $7.77 $7.75 $7.78 $6.58
---- ---- ---- ---- ----
Income from investment
operations:
Net investment
income .......... 0.03 0.10 0.10 0.11 0.11
Net realized and
unrealized gain on
investments ..... 2.01 1.60 2.14 0.82 2.12
---- ---- ---- ---- ----
Total from investment
operations ....... 2.04 1.70 2.24 0.93 2.23
---- ---- ---- ---- ----
Less distributions:
From net investment
income .......... (0.03) (0.11) (0.09) (0.11) (0.11)
From capital gains (1.15) (1.08) (2.13) (0.85) (0.92)
---- ---- ---- ---- ----
Total distributions (1.18) (1.19) (2.22) (0.96) (1.03)
---- ---- ---- ---- ----
Net asset value,
end of period .... $9.14 $8.28 $7.77 $7.75 $7.78
==== ==== ==== ==== ====
Total return* ...... 25.72% 22.62% 29.58% 12.18% 34.21%
Net assets, end of
period (in
millions) ........ $2,247 $1,864 $1,595 $1,285 $1,206
Ratio of expenses to
average net assets 0.98% 0.88% 0.82% 0.83% 0.80%
Ratio of net investment
income to average
net assets ....... 0.30% 1.12% 1.16% 1.34% 1.42%
Portfolio turnover
rate ............. 372.35%373.78% 313.99%240.37% 229.03%
*Total return calculated without taking into account the sales load deducted
on an initial purchase.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED ACCUMULATIVE FUND
Class B Shares
For a Share of Capital Stock Outstanding
Throughout The Period:
For the
period
from
10/4/99*
through
12/31/99
-------
Net asset value,
beginning of period $8.43
----
Income from investment
operations:
Net investment loss (0.01)
Net realized and
unrealized gain
on investments .. 1.85
----
Total from investment
operations ....... 1.84
----
Less distributions:
From net investment
income .......... (0.00)
From capital gains (1.15)
----
Total distributions (1.15)
----
Net asset value,
end of period .... $9.12
====
Total return ....... 22.89%
Net assets, end of
period (in
millions) ........ $3
Ratio of expenses to
average net assets 2.24%**
Ratio of net investment
loss to average
net assets ....... -1.40%**
Portfolio turnover
rate ............. 372.35%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED ACCUMULATIVE FUND
Class C Shares
For a Share of Capital Stock Outstanding
Throughout The Period:
For the
period
from
10/6/99*
through
12/31/99
-------
Net asset value,
beginning of period $8.53
----
Income from investment
operations:
Net investment loss (0.01)
Net realized and
unrealized gain
on investments .. 1.75
----
Total from investment
operations ....... 1.74
----
Less distributions:
From net investment
income .......... (0.00)
From capital gains (1.15)
----
Total distributions (1.15)
----
Net asset value,
end of period .... $9.12
====
Total return ....... 21.45%
Net assets, end of
period (in
thousands) ....... $347
Ratio of expenses to
average net assets 2.28%**
Ratio of net investment
loss to average
net assets ....... -1.35%**
Portfolio turnover
rate ............. 372.35%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED ACCUMULATIVE FUND
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the fiscal year period
ended December 31, from
----------------------------7/11/95* to
1999 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 0.04 0.12 0.11 0.12 0.05
Net realized and
unrealized gain
on investments .. 2.01 1.59 2.14 0.82 0.87
---- ---- ---- ---- ----
Total from investment
operations ....... 2.05 1.71 2.25 0.94 0.92
---- ---- ---- ---- ----
Less distributions:
From net investment
income .......... (0.04) (0.12) (0.10) (0.12) (0.06)
From capital gains (1.15) (1.08) (2.13) (0.85) (0.92)
---- ---- ---- ---- ----
Total distributions (1.19) (1.20) (2.23) (0.97) (0.98)
---- ---- ---- ---- ----
Net asset value,
end of period .... $9.14 $8.28 $7.77 $7.75 $7.78
==== ==== ==== ==== ====
Total return ....... 25.95% 22.79% 29.67% 12.27% 11.92%
Net assets, end of
period (in
millions) ........ $5 $4 $4 $3 $1
Ratio of expenses to
average net assets 0.80% 0.75% 0.75% 0.74% 0.76%**
Ratio of net investment
income to average
net assets ....... 0.49% 1.21% 1.22% 1.45% 1.24%**
Portfolio turnover
rate ............. 372.35%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 fiscal year ended December 31,
------------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
Net asset value,
beginning of period $6.39 $6.32 $6.14 $6.34 $5.62
---- ---- ---- ---- ----
Income from investment
operations:
Net investment income 0.35 0.38 0.39 0.39 0.40
Net realized and
unrealized gain
(loss) on
investments ..... (0.42) 0.07 0.19 (0.20) 0.72
---- ---- ---- ---- ----
Total from investment
operations ....... (0.07) 0.45 0.58 0.19 1.12
---- ---- ---- ---- ----
Less distributions from
net investment income (0.35) (0.38) (0.40) (0.39) (0.40)
---- ---- ---- ---- ----
Net asset value,
end of period .... $5.97 $6.39 $6.32 $6.14 $6.34
===== ===== ===== ===== =====
Total return* ...... -1.08% 7.27% 9.77% 3.20% 20.50%
Net assets, end of
period (in
millions) ........ $501 $551 $524 $519 $563
Ratio of expenses to
average net assets 0.95% 0.84% 0.77% 0.77% 0.74%
Ratio of net investment
income to average
net assets ....... 5.72% 5.88% 6.34% 6.34% 6.54%
Portfolio turnover
rate ............. 34.12% 33.87% 35.08% 55.74% 66.38%
*Total return calculated without taking into account the sales load deducted
on an initial purchase.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED BOND FUND
Class B Shares
For a Share of Capital Stock Outstanding
Throughout The Period:
For the
period
from
9/9/99*
through
12/31/99
-------
Net asset value,
beginning of period $6.05
----
Income from investment
operations:
Net investment income 0.10
Net realized and
unrealized loss
on investments .. (0.08)
----
Total from investment
operations ....... 0.02
----
Less distributions from
net investment income (0.10)
From capital gains (0.00)
----
Total distributions (0.10)
----
Net asset value,
end of period .... $5.97
====
Total return ....... 0.30%
Net assets, end of
period (in
millions) ........ $2
Ratio of expenses to
average net assets 1.91%**
Ratio of net investment
income to average
net assets ....... 4.93%**
Portfolio turnover
rate ............. 34.12%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED BOND FUND
Class C Shares
For a Share of Capital Stock Outstanding
Throughout The Period:
For the
period
from
9/9/99*
through
12/31/99
-------
Net asset value,
beginning of period $6.05
----
Income from investment
operations:
Net investment income 0.10
Net realized and
unrealized loss
on investments .. (0.09)
----
Total from investment
operations ....... 0.01
----
Less distributions from
net investment income (0.10)
----
Net asset value,
end of period .... $5.96
====
Total return ....... 0.13%
Net assets, end of
period (in
thousands) ....... $289
Ratio of expenses to
average net assets 1.98%**
Ratio of net investment
income to average
net assets ....... 4.87%**
Portfolio turnover
rate ............. 34.12%**
*Commencement of operations.
**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 fiscal year For the
ended December 31,period from
---------------------------- 6/19/95* to
1999 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 0.40 0.39 0.42 0.40 0.21
Net realized and
unrealized gain (loss)
on investments .. (0.45) 0.07 0.17 (0.20) 0.22
---- ---- ---- ---- ----
Total from investment
operations ....... (0.05) 0.46 0.59 0.20 0.43
---- ---- ---- ---- ----
Less distributions from
net investment income (0.37) (0.39) (0.41) (0.40) (0.20)
---- ---- ---- ---- ----
Net asset value,
end of period .... $5.97 $6.39 $6.32 $6.14 $6.34
==== ==== ==== ==== ====
Total return ....... -0.81% 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 0.69% 0.61% 0.64% 0.62% 0.63%**
Ratio of net investment
income to average
net assets ....... 6.00% 6.10% 6.48% 6.52% 6.41%**
Portfolio turnover
rate ............. 34.12% 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 fiscal year ended December 31,
-----------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
Net asset value,
beginning of period $7.52 $7.59 $6.58 $5.79 $4.67
---- ---- ----- ----- -----
Income from investment
operations:
Net investment income 0.08 0.20 0.06 0.07 0.07
Net realized and
unrealized gain on
investments ..... 1.13 1.66 1.73 1.10 1.30
---- ----- ----- ----- -----
Total from investment
operations ....... 1.21 1.86 1.79 1.17 1.37
---- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.08) (0.19) (0.06) (0.06) (0.07)
From capital gains (0.52) (1.74) (0.72) (0.32)(0.18)
---- ----- ----- ----- -----
Total distributions (0.60) (1.93) (0.78) (0.38) (0.25)
---- ----- ----- ----- -----
Net asset value,
end of period .... $8.13 $7.52 $7.59 $6.58 $5.79
====== ====== ====== ====== ======
Total return** ..... 16.41% 24.02% 27.34% 20.36% 29.60%
Net assets, end of
period (in
millions) ........ $8,102 $7,368 $6,196 $4,851 $3,976
Ratio of expenses to
average net assets 0.94% 0.89% 0.84% 0.86% 0.83%
Ratio of net investment
income to average
net assets ....... 0.94% 1.11% 0.74% 1.03% 1.31%
Portfolio turnover
rate ............. 53.79% 49.29% 33.59% 22.24% 17.59%
*Per-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.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED INCOME FUND
Class B Shares
For a Share of Capital Stock Outstanding
Throughout The Period:
For the
period
from
10/4/99*
through
12/31/99
-------
Net asset value,
beginning of period $7.77
----
Income from investment
operations:
Net investment loss (0.00)
Net realized and
unrealized gain
on investments .. 0.88
----
Total from investment
operations ....... 0.88
----
Less distributions:
From net investment
income .......... (0.00)
From capital gains (0.52)
----
Total distributions (0.52)
----
Net asset value,
end of period .... $8.13
====
Total return ....... 11.53%
Net assets, end of
period (in
millions) ........ $13
Ratio of expenses to
average net assets 2.18%**
Ratio of net investment
loss to average
net assets ....... -0.59**
Portfolio turnover
rate ............. 53.79%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED INCOME FUND
Class C Shares
For a Share of Capital Stock Outstanding
Throughout The Period:
For the
period
from
10/4/99*
through
12/31/99
-------
Net asset value,
beginning of period $7.77
----
Income from investment
operations:
Net investment loss (0.00)
Net realized and
unrealized gain
on investments .. 0.88
----
Total from investment
operations ....... 0.88
----
Less distributions:
From net investment
income .......... (0.00)
From capital gains (0.52)
----
Total distributions (0.52)
----
Net asset value,
end of period .... $8.13
====
Total return ....... 11.53%
Net assets, end of
period (in
millions) ........ $1
Ratio of expenses to
average net assets 2.23%**
Ratio of net investment
loss to average
net assets ....... -0.63%**
Portfolio turnover
rate ............. 53.79%**
*Commencement of operations.
**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 fiscal year For the
ended December 31, period from
---------------------------- 6/19/95** to
1999 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 0.10 0.24 0.07 0.07 0.04
Net realized and
unrealized gain
on investments .. 1.13 1.66 1.73 1.11 0.42
----- ----- ----- ----- -----
Total from investment
operations ....... 1.23 1.90 1.80 1.18 0.46
----- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.10) (0.23) (0.07) (0.07) (0.04)
From capital gains (0.52) (1.74) (0.72) (0.32) (0.18)
----- ----- ----- ----- -----
Total distributions (0.62) (1.97) (0.79) (0.39) (0.22)
----- ----- ----- ----- -----
Net asset value,
end of period .... $8.13 $7.52 $7.59 $6.58 $5.79
===== ===== ===== ===== =====
Total return ....... 16.67% 24.27% 27.49% 20.53% 8.45%
Net assets, end of
period (in
millions) ........ $283 $399 $299 $151 $107
Ratio of expenses to
average net assets 0.73% 0.71% 0.72% 0.73% 0.74%***
Ratio of net investment
income to average
net assets ....... 1.18% 1.29% 0.85% 1.17% 1.36%***
Portfolio turnover
rate ............. 53.79% 49.29% 33.59% 22.24% 17.59%***
*Per-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 fiscal year ended December 31,
--------------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
Net asset value,
beginning of period $ 9.91 $6.71 $7.78 $7.63 $5.07
----- ---- ----- ----- -----
Income from investment
operations:
Net investment loss (0.09) (0.03) (0.01) (0.02) (0.00)
Net realized and
unrealized gain on
investments ..... 10.12 3.93 0.46 0.66 2.80
----- ---- ----- ----- -----
Total from investment
operations ....... 10.03 3.90 0.45 0.64 2.80
----- ---- ----- ----- -----
Less distributions from
capital gains .... (1.51) (0.70) (1.52) (0.49) (0.24)
----- ---- ----- ----- -----
Net asset value,
end of period .... $18.43 $9.91 $6.71 $7.78 $7.63
====== ===== ====== ====== ======
Total return** ..... 102.93% 59.31% 7.22% 8.35% 55.37%
Net assets, end of
period (in
millions) ........ $3,744 $1,668 $1,063 $981 $821
Ratio of expenses to
average net assets 1.16% 1.05% 1.02% 0.98% 0.93%
Ratio of net investment
loss to average
net assets ....... -0.79% -0.37% -0.18% -0.33% -0.07%
Portfolio turnover
rate ............. 40.35% 55.70% 87.68% 33.90% 32.89%
*Per-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.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED SCIENCE AND TECHNOLOGY FUND
Class B Shares
For a Share of Capital Stock Outstanding
Throughout The Period:
For the
period
from
10/4/99*
through
12/31/99
-------
Net asset value,
beginning of period $12.64
-----
Income from investment
operations:
Net investment loss (0.04)
Net realized and
unrealized gain
on investments .. 7.28
-----
Total from investment
operations ....... 7.24
-----
Less distributions from
capital gains .... (1.51)
-----
Net asset value,
end of period .... $18.37
=====
Total return ....... 58.62%
Net assets, end of
period (in
millions) ........ $17
Ratio of expenses to
average net assets 2.64%**
Ratio of net investment
loss to average
net assets ....... -2.35%**
Portfolio turnover
rate ............. 40.35%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
UNITED SCIENCE AND TECHNOLOGY FUND
Class C Shares
For a Share of Capital Stock Outstanding
Throughout The Period:
For the
period
from
10/4/99*
through
12/31/99
-------
Net asset value,
beginning of period $12.64
-----
Income from investment
operations:
Net investment loss (0.04)
Net realized and
unrealized gain
on investments .. 7.29
-----
Total from investment
operations ....... 7.25
-----
Less distributions from
from capital gains (1.51)
-----
Net asset value,
end of period .... $18.38
=====
Total return ....... 58.70%
Net assets, end of
period (in
millions) ........ $3
Ratio of expenses to
average net assets 2.42%**
Ratio of net investment
loss to average
net assets ....... -2.19%**
Portfolio turnover
rate ............. 40.35%**
*Commencement of operations.
**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 fiscal year For the
ended December 31, period from
-------------------- 2/27/96** to
1999 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 ............ (0.04) (0.01) (0.00) (0.01)
Net realized and
unrealized gain
on investments .. 10.22 3.95 0.47 0.27
----- ---- ----- -----
Total from investment
operations ....... 10.18 3.94 0.47 0.26
----- ---- ----- -----
Less distributions from
capital gains .... (1.51) (0.70) (1.52) (0.49)
----- ---- ----- -----
Net asset value,
end of period .... $18.65 $9.98 $6.74 $7.79
===== ==== ===== =====
Total return ....... 103.72% 59.71% 7.43% 3.25%
Net assets, end of
period (in
millions) ........ $31 $6 $4 $3
Ratio of expenses to
average net assets 0.95% 0.79% 0.85% 0.80%***
Ratio of net investment
loss to average
net assets ....... -0.59% -0.12% -0.01% -0.12%***
Portfolio turnover
rate ............. 40.35% 55.70% 87.68% 33.90%***
*Per-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
DECEMBER 31, 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 (loss) 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. At December 31, 1999, United Science and
Technology Fund reclassified $17,443,356 between accumulated undistributed
net investment income and accumulated undistributed net realized gain on
investment transactions. Net investment income, net realized gains and net
assets were not affected by this change.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
NOTE 2 -- Investment Management And Payments To Affiliated Persons
The Corporation pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business. The fee
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%
Prior to 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.
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, Class B and Class C shares, the Corporation 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 $35,273,006. With respect to Class A, Class B and Class C
shares, W&R paid sales commissions of $21,190,954 and all expenses in connection
with the sale of the Corporation's shares, except for registration fees and
related expenses.
A contingent deferred sales charge (``CDSC'') may be assessed against a
shareholder's redemption amount of Class B and Class C shares and is paid to
W&R. The purpose of the deferred sales charge is to compensate W&R for the
costs incurred by W&R in connection with the sale of a fund's shares. With
respect to Class B shares, the amount of the CDSC will be the following percent
of the total amount invested during a calendar year to acquire the shares or the
value of the shares redeemed, whichever is less. Redemption at any time during
the first calendar year of investment, 5%; the second calendar year, 4%; the
third calendar year, 3%; the fourth calendar year, 3%; the fifth calendar year,
2%; the sixth calendar year, 1% and thereafter, 0%. If Class C shares are sold
within 12 months of buying these shares, a 1% CDSC will be imposed. The
deferred sales charge will not be imposed on shares representing payment of
dividends or distributions or on amounts which represent an increase in the
value of the shareholder's account resulting from capital appreciation above the
amount paid for shares purchased during the deferred sales charge period.
During the period ended December 31, 1999, W&R received the following amounts in
deferred sales charges from Class B and Class C shares.
Class B Class C
United Accumulative Fund $ 96 $---
United Bond Fund 1 65
United Income Fund 437 58
United Science and
Technology Fund 391 32
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.
Under the Distribution and Service Plan adopted by the Corporation for
Class B shares and Class C shares, respectively, each Fund may pay Waddell &
Reed, Inc. a service fee not to exceed .25% and a distribution fee not to exceed
.75% of a Fund's average annual net assets attributable to that class, paid
monthly, to compensate Waddell & Reed, Inc. for its services in connection with
the distribution of shares of that class and/or the service and/or maintenance
of shareholder accounts of that class. The Class B Plan and the Class C Plan
each permit Waddell & Reed, Inc. to receive compensation, through the
distribution fee and service fee, respectively, for its distribution activities
for that class, which are similar to the distribution activities described with
respect to the Class A Plan, and for its activities in providing personal
services to shareholders of that class and/or maintaining shareholder accounts
of that class, which are similar to the corresponding activities for which it is
entitled to reimbursement under the Class A Plan.
The Corporation paid Directors' fees of $459,244, 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 December 31, 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 $7,056,318,925 $73,318,852$3,544,216,574$1,091,254,903
Purchases of U.S. Government
obligations --- 100,085,983 560,658,182 ---
Purchases of short-term
securities 4,497,576,4101,193,555,3867,816,842,3973,065,336,811
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 7,025,010,786 110,107,5483,050,312,467 867,068,931
Proceeds from maturities and
sales of U.S. Government
obligations 199,577,344 82,351,3761,602,793,476 ---
Proceeds from maturities and sales
of short-term securities4,408,528,4741,189,229,9297,842,462,2873,054,306,348
For Federal income tax purposes, cost of investments owned at December 31,
1999 and the related appreciation (depreciation) were as follows:
Aggregate
Appreciation
Cost AppreciationDepreciation (Depreciation)
-------------- --------------------------------------
United Accumulative
Fund $1,873,721,507$ 468,359,591$(77,189,885)$391,169,706
United Bond Fund 513,653,172 2,903,670(15,835,110) (12,931,440)
United Income Fund 5,183,111,2433,500,668,908(260,091,901)3,240,577,007
United Science and
Technology Fund 1,399,347,7232,435,883,110(34,625,382)2,401,257,728
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 Accumulative Fund, United Income Fund and
United Science and Technology Fund realized capital gain net income of
$268,545,845, $836,278,477 and $271,055,351, respectively, during the year ended
December 31, 1999, a portion of which was paid to shareholders during the period
ended December 31, 1999. 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 $159,085 during the year ended December 31,
1999, which included the effect of certain losses deferred into the next fiscal
year (see discussion below). This capital gain net income was entirely offset by
utilization of capital loss carryovers. Remaining capital loss carryovers of
United Bond Fund aggregated $18,314,931 as of December 31, 1999, and are
available to offset future realized capital gain net income for Federal income
tax purposes but, if not utilized, will expire as follows: $18,234,028 at
December 31, 2002 and $80,903 at December 31, 2003.
Internal Revenue Code regulations permits each Fund to defer into its next
fiscal year net capital losses or net long-term capital losses incurred between
each November 1 and the end of its fiscal year ("post-October losses"). From
November 1, 1999 through December 31, 1999, United Bond Fund incurred net
capital losses of $655,692, which have been deferred to the fiscal year ending
December 31, 2000.
NOTE 5 -- Multiclass Operations
Each Fund is authorized to offer four classes of shares, Class A, Class B,
Class C and Class Y, each of which have equal rights as to assets and voting
privileges. Class Y shares are not subject to a sales charge on purchases, are
not subject to a Rule 12b-1 Distribution and Service Plan and are subject to a
separate transfer agency and dividend disbursement services fee structure. A
comprehensive discussion of the terms under which shares of each class are
offered is contained in the Prospectus and the Statement of Additional
Information for the Fund.
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 their
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 period ended December 31, 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 ............ 20,269,569 74,230,647 95,817,631 70,704,260
Class B ............. 274,559 332,561 1,568,086
888,155
Class C ............. 33,975 61,935 161,689
145,074
Class Y ............ 304,162 356,828 6,514,737 1,483,445
Shares issued from
reinvestment of dividends and/or
capital gains distribution:
Class A ............ 28,018,888 4,401,669 67,006,166 16,066,243
Class B ............. 26,403 1,572 77,440
59,765
Class C ............. 4,051 195 8,454
10,356
Class Y ............ 65,137 23,012 2,656,148 94,104
Shares redeemed:......
Class A ............ (27,718,702) (80,926,223) (146,623,896)(52,059,525)
Class B ............. (12,853) (44,450) (33,784)
(4,204)
Class C ............. (5) (13,625) (938)
(556)
Class Y ............ (291,514) (917,224) (27,430,321) (504,503)
---------- ----------- ---------- ----------
Increase (decrease) in
outstanding capital
shares ............. 20,973,670 (2,493,103) (278,588)
36,882,614
========== =========== ========== ==========
Value issued from sale
of shares:
Class A ............ $176,177 $455,677 $ 746,043 $884,275
Class B ............. 2,464 2,000 12,526
13,812
Class C ............. 309 372 1,289
2,282
Class Y ............ 2,560 2,207 50,345 18,437
Value issued from
reinvestment of dividends and/or
capital gains distribution:
Class A ............ 236,622 27,368 524,162 266,218
Class B ............. 223 9 606
988
Class C ............. 34 1 66
171
Class Y ............ 550 141 20,760 1,577
Value redeemed:
Class A ............ (245,823) (496,408) (1,151,669) (652,677)
Class B ............. (122) (266) (277)
(72)
Class C ............. (---)* (81) (8)
(10)
Class Y ............ (2,467) (5,808) (215,601) (5,667)
-------- -------- --------- --------
Increase (decrease) in
outstanding capital $170,527 $(14,788) $ (11,758) $529,334
======== ======== ========= ========
*Amount not shown due to rounding.
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 in
outstanding capital
shares ............. 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 in
outstanding capital $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 December 31, 1999, securities with a market value of $64,899,219 (which
are included in the accompanying schedule of investments) had been loaned under
agreements whereby the Accumulative Fund held as collateral securities with a
market value of $64,408,907 and had required additional collateral of
$1,880,000, in accordance with the agreement. The additional collateral was
received on January 3, 2000. 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
December 31, 1999, Accumulative Fund and United Income Fund derived
approximately $83,573 and $888,184, respectively, 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 December 31, 1999, and the related
statements of operations for the fiscal year then ended, the statements of
changes in net assets for each of the two fiscal years in the period then ended,
and the financial highlights for each of the five fiscal years in the period
then ended. These financial statements and the financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 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 December 31, 1999,
the results of their operations for the fiscal year then ended, the changes in
their net assets for each of the two fiscal years in the period then ended, and
the financial highlights for each of the five fiscal years in the period then
ended, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
February 4, 2000
<PAGE>
INCOME TAX INFORMATION
The amounts of the dividends and long-term capital gains below, multiplied by
the number of shares owned by you on the record dates, will give you the total
amounts to be reported in your 1999 Federal income tax return.
PER-SHARE AMOUNTS REPORTABLE AS:
--------------------------------------------------------------------
For Individuals For Corporations
-----------------------------------------------------------
Record Ordinary Long-Term Non- Long-Term
Date Total Income Capital Gain QualifyingQualifyingCapital Gain
- ----------- ------------- --------------- ----------------------------
United Accumulative Fund
Class A
06-09-99 $0.015 $0.0150 $ --- $0.0122 $0.0028 $ ---
12-15-99 1.156 1.1557 0.0003 0.0394 1.1163 0.0003
------ ------- ------- ------- ------- -------
$1.171 $1.1707 $0.0003 $0.0516 $1.1191 $0.0003
====== ======= ======= ======= ======= =======
United Accumulative Fund
Class B
12-15-99 $1.146 $1.1457 $0.0003 $ --- $1.1457 $0.0003
------ ------- ------- ------- ------- -------
$1.146 $1.1457 $0.0003 $ --- $1.1457 $0.0003
====== ======= ======= ======= ======= =======
United Accumulative Fund
Class C
12-15-99 $1.146 $1.1457 $0.0003 $ --- $1.1457 $0.0003
------ ------- ------- ------- ------- -------
$1.146 $1.1457 $0.0003 $ --- $1.1457 $0.0003
====== ======= ======= ======= ======= =======
United Accumulative Fund
Class Y
06-09-99 $0.022 $0.0220 $ --- $0.0179 $0.0041 $ ---
12-15-99 1.166 1.1657 0.0003 0.0200 1.1457 0.0003
------ ------- ------- ------- ------- -------
$1.188 $1.1877 $0.0003 $0.0379 $1.1498 $0.0003
====== ======= ======= ======= ======= =======
United Bond Fund
Class A
01-13-99 $0.030 $0.0300 $--- $--- $0.0300 $---
02-10-99 .030 0.0300 --- --- 0.0300 ---
03-10-99 .030 0.0300 --- --- 0.0300 ---
04-14-99 .030 0.0300 --- --- 0.0300 ---
05-12-99 .029 0.0290 --- --- 0.0290 ---
06-09-99 .028 0.0280 --- --- 0.0280 ---
07-14-99 .029 0.0290 --- --- 0.0290 ---
08-11-99 .029 0.0290 --- --- 0.0290 ---
09-15-99 .029 0.0290 --- --- 0.0290 ---
10-13-99 .029 0.0290 --- --- 0.0290 ---
11-10-99 .029 0.0290 --- --- 0.0290 ---
12-15-99 .029 0.0290 --- --- 0.0290 ---
------ ------- ------- ------- ------- -------
$0.351 $0.3510 $--- $--- $0.3510 $---
====== ======= ======= ======= ======= =======
PER-SHARE AMOUNTS REPORTABLE AS:
-----------------------------------------------------------------
For Individuals For Corporations
---------------------------------------------------------
Record Ordinary Long-Term Non- Long-Term
Date Total Income Capital Gain QualifyingQualifyingCapital Gain
- ----------- ------------- --------------- ----------------------------
United Bond Fund
Class B
09-15-99 $0.029 $0.0290 $--- $--- $0.0290 $---
10-13-99 .023 0.0230 --- --- 0.0230 ---
11-10-99 .024 0.0240 --- --- 0.0240 ---
12-15-99 .022 0.0220 --- --- 0.0220 ---
------ ------- ------- ------- ------- -------
$0.098 $0.0980 $--- $--- $0.0980 $---
====== ======= ======= ======= ======= =======
United Bond Fund
Class C
09-15-99 $0.029 $0.0290 $--- $--- $0.0290 $---
10-13-99 .023 0.0230 --- --- 0.0230 ---
11-10-99 .024 0.0240 --- --- 0.0240 ---
12-15-99 .022 0.0220 --- --- 0.0220 ---
------ ------- ------- ------- ------- -------
$0.098 $0.0980 $--- $--- $0.0980 $---
====== ======= ======= ======= ======= =======
United Bond Fund
Class Y
01-13-99 $0.032 $0.0320 $--- $--- $0.0320 $---
02-10-99 .031 0.0310 --- --- 0.0310 ---
03-10-99 .031 0.0310 --- --- 0.0310 ---
04-14-99 .031 0.0310 --- --- 0.0310 ---
05-12-99 .031 0.0310 --- --- 0.0310 ---
06-09-99 .030 0.0300 --- --- 0.0300 ---
07-14-99 .031 0.0310 --- --- 0.0310 ---
08-11-99 .030 0.0300 --- --- 0.0300 ---
09-15-99 .030 0.0300 --- --- 0.0300 ---
10-13-99 .030 0.0300 --- --- 0.0300 ---
11-10-99 .030 0.0300 --- --- 0.0300 ---
12-15-99 .031 0.0310 --- --- 0.0310 ---
------ ------- ------- ------- ------- -------
$0.368 $0.3680 $--- $--- $0.3680 $---
====== ======= ======= ======= ======= =======
United Income Fund
Class A
03-10-99 $0.020 $0.0200 $ --- $0.0158 $0.0042 $ ---
06-09-99 .020 0.0200 --- 0.0164 0.0036 ---
09-15-99 .020 0.0200 --- 0.0164 0.0036 ---
12-15-99 .536 0.0200 0.5160 0.0164 0.0036 0.5160
------ ------- ------- ------- ------- -------
$0.596 $0.0800 $0.5160 $0.0650 $0.0150 $0.5160
====== ======= ======= ======= ======= =======
PER-SHARE AMOUNTS REPORTABLE AS:
----------------------------------------------------------------
For Individuals For Corporations
---------------------------------------------------------
Record Ordinary Long-Term Non- Long-Term
Date Total Income Capital Gain QualifyingQualifyingCapital Gain
- ----------- ------------- --------------- ----------------------------
United Income Fund
Class B
12-15-99 $0.516 $--- $0.5160 $--- $--- $0.5160
------ ------- ------- ------- ------- -------
$0.516 $--- $0.5160 $--- $--- $0.5160
====== ======= ======= ======= ======= =======
United Income Fund
Class C
12-15-99 $0.516 $--- $0.5160 $--- $--- $0.5160
------ ------- ------- ------- ------- -------
$0.516 $--- $0.5160 $--- $--- $0.5160
====== ======= ======= ======= ======= =======
United Income Fund
Class Y
03-10-99 $0.025 $0.0250 $ --- $0.0197 $0.0053 $ ---
06-09-99 .025 0.0250 --- 0.0205 0.0045 ---
09-15-99 .024 0.0240 --- 0.0197 0.0043 ---
12-15-99 .540 0.0240 0.5160 0.0197 0.0043 0.5160
------ ------- ------- ------- ------- -------
$0.614 $0.0980 $0.5160 $0.0796 $0.0184 $0.5160
====== ======= ======= ======= ======= =======
United Science and Technology Fund
Class A
12-15-99 $1.511 $0.0231 $1.4879 $--- $0.0231 $1.4879
------ ------- ------- ------- ------- -------
$1.511 $0.0231 $1.4879 $--- $0.0231 $1.4879
====== ======= ======= ======= ======= =======
United Science and Technology Fund
Class B
12-15-99 $1.511 $0.0231 $1.4879 $--- $0.0231 $1.4879
------ ------- ------- ------- ------- -------
$1.511 $0.0231 $1.4879 $--- $0.0231 $1.4879
====== ======= ======= ======= ======= =======
United Science and Technology Fund
Class C
12-15-99 $1.511 $0.0231 $1.4879 $--- $0.0231 $1.4879
------ ------- ------- ------- ------- -------
$1.511 $0.0231 $1.4879 $--- $0.0231 $1.4879
====== ======= ======= ======= ======= =======
United Science and Technology Fund
Class Y
12-15-99 $1.511 $0.0231 $1.4879 $--- $0.0231 $1.4879
------ ------- ------- ------- ------- -------
$1.511 $0.0231 $1.4879 $--- $0.0231 $1.4879
====== ======= ======= ======= ======= =======
CORPORATION DEDUCTIONS -- Under Federal tax law, the amounts reportable as
Qualifying Dividends are eligible for the dividends received deduction in the
year received as provided by Section 243 of the Internal Revenue Code.
Shareholders are advised to consult with their tax advisor concerning the tax
treatment of dividends and distributions from the Fund.
<PAGE>
Shareholder Meeting Results
A special meeting of 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>
This report is submitted for the general information of the shareholders of
United Funds, Inc. It is not authorized for distribution to prospective
investors unless accompanied with or preceded by the United Funds, Inc. current
prospectus.
To all traditional IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from a traditional IRA unless you make a written
election not to have taxes withheld. The election may be made by submitting
forms provided by Waddell & Reed, Inc. which can be obtained from your Waddell &
Reed representative or by submitting Internal Revenue Service Form W-4P. Once
made, an election can be revoked by providing written notice to Waddell & Reed,
Inc. If you elect not to have tax withheld you may be required to make payments
of estimated tax. Penalties may be imposed by the IRS if withholding and
estimated tax payments are not adequate.
DIRECTORS
Keith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, San Mateo, 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
Kristen A. Richards, Vice President and Secretary
Daniel C. Schulte, Vice President
James D. Wineland, Vice President
<PAGE>
THE UNITED GROUP OF MUTUAL FUNDS
- -------------------------------------------------------------------
United Accumulative Fund
United Asset Strategy Fund, Inc.
United Bond Fund
United Cash Management, Inc.
United Continental Income Fund, Inc.
United Government Securities Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Income Fund
United International Growth Fund, Inc.
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United New Concepts Fund, Inc.
United Retirement Shares, Inc.
United Science and Technology Fund
United Small Cap Fund, Inc.
United Vanguard 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
NUR1000A(12-99)
printed on recycled paper
