United
High Income
Fund, Inc.
SEMIANNUAL
REPORT
-------------------------------------------
For the six months ended September 30, 1994
<PAGE>
This report is submitted for the general information of the shareholders of
United High Income Fund, Inc. It is not authorized for distribution to
prospective investors in the Fund unless accompanied with or preceded by the
United High Income Fund, Inc. current prospectus.
<PAGE>
PRESIDENT'S LETTER
SEPTEMBER 30, 1994
Dear Shareholder:
This report covers the investment performance of your Fund for the six
months ended September 30, 1994.
During the past six months, bond and equity markets have been affected by
increases in interest rates and the fear of higher inflation. We expect these
markets will continue to react to action, if any, taken by the Federal Reserve
to prevent increases in the inflation rate. Although markets have declined
since the beginning of 1994, historically such intermediate and short-term
fluctuations have had limited impact on achieving investors' long-term financial
goals.
Over time, interest rates follow inflation. Once it has been determined
that the rate of economic growth is manageable, the Federal Reserve Board's
actions will be seen as beneficial to combating inflation, which eventually
should lead to interest rates that are more favorable to the markets.
Based on our 57 years in the financial services industry, we believe that
our commitment to professional portfolio management is the key value-added
service we provide: we select and continuously supervise the Fund's investments
using the most up-to-date information and research available to ensure the
investments meet the Fund's stated objectives.
And, we believe our "hands-on" approach to investment management can help
reward the patient investor over the long term. We never forget that we manage
your money.
The following is an in-depth review of your Fund's recent performance. We
believe the information included in this review continues to reflect our aim of
achieving the goals and purposes of the Fund. Thank you for your continued
confidence in our products and services.
Respectfully,
Keith A. Tucker
President
<PAGE>
SHAREHOLDER SUMMARY
- --------------------------------------------------------------
UNITED HIGH INCOME FUND, INC.
PORTFOLIO STRATEGY:
Invests generally in High OBJECTIVE: High level of current
Yield Fixed Income Securities income, with secondary objective of
capital
Maximum 20% Common Stock growth when consistent with the primary
objective.
STRATEGY: Invests generally in debt securities in
lower rating categories as classified by
recognized rating agencies; may also
invest up to 20% in common stocks.
FOUNDED: 1979
DIVIDENDS: PAID MONTHLY
PERFORMANCE SUMMARY
PER SHARE DATA
For the Six Months Ended September 30, 1994
- -------------------------------------------
DIVIDENDS PAID $ .40
=====
NET ASSET VALUE ON
9/30/94 $8.76
3/31/94 9.20
-----
CHANGE PER SHARE ($0.44)
=====
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 9-30-94 -4.11% 1.74%
5-year period ended 9-30-94 6.23% 7.49%
10-year period ended 9-30-94 8.49% 9.13%
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 September 30, 1994, United High Income Fund, Inc. had net assets totaling
$946,640,996 invested in a diversified portfolio of:
86.54% Corporate Debt Securities
9.20% Cash and Cash Equivalents
2.76% Common and Preferred Stocks and Warrants
1.50% United States Government Security
As a shareholder in United High Income Fund, Inc., for every $100 you had
invested on September 30, 1994, your Fund owned:
$52.77 Consumer Bonds
22.79 Basic Industry Bonds
9.20 Cash and Cash Equivalents
6.38 Technological Bonds
3.26 Energy and Energy-Related Bonds
2.76 Common and Preferred Stocks and Warrants
1.50 U.S. Government Security
1.15 Financial Bonds
0.19 Public Utilities Bond
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1994
Shares Value
COMMON AND PREFERRED STOCKS AND WARRANTS
Automotive - 0.50%
Lear Seating Corporation* ............ 257,400 $ 4,729,725
Building - 0.96%
NVR L.P., Warrants* .................. 68,571 94,285
Triangle Pacific Corp.* .............. 660,844 9,044,972
Total ............................... 9,139,257
Hospital Management - 0.27%
LTC Properties, Inc. ................. 100,000 1,362,500
National Health Investors, Inc.,
Preferred, Convertible .............. 46,000 1,167,250
Total ............................... 2,529,750
Leisure Time - 0.28%
Fitzgeralds Gaming Corporation,
Warrants (A)* ....................... 3,500 157,500
FLAGSTAR COMPANIES, INC.* ............ 51,600 445,050
Infinity Broadcasting Corporation* ... 67,500 2,041,875
Servam Corporation* .................. 373,508 3,735
Servam Corporation, Preferred* ....... 100,000 1,000
Total ............................... 2,649,160
Publishing and Advertising - 0.26%
Advanstar Communications Inc. (B)* ... 75,625 2,420,000
Advanstar Communications Inc.,
Warrants (A)* ....................... 1,750 1,750
Total ............................... 2,421,750
Retailing - 0.34%
WestPoint Stevens Inc.* .............. 226,901 3,261,702
Miscellaneous - 0.15%
Consolidated Hydro, Inc., Preferred* . 3,000 1,350,000
Consolidated Hydro, Inc., Warrants (A)* 5,400 32,400
EUA Power Corporation* ............... 9,500 10
WestFed Holdings, Inc., Preferred* ... 185,310 185
WestFed Holdings, Inc., Series B* .... 54,900 55
Total ............................... 1,382,650
TOTAL COMMON AND PREFERRED STOCKS
AND WARRANTS - 2.76% $ 26,113,994
(Cost: $62,188,048)
See Notes to Schedule of Investments on page 15.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Airlines - 1.75%
GP Group, Inc.,
8.75%, 12-15-98 ..................... $ 9,500 $ 7,908,750
NWA, Inc.,
8.625%, 8-1-96 ...................... 9,000 8,685,000
Total ............................... 16,593,750
Automotive - 4.44%
Aftermarket Technology Corp.,
12.0%, 8-1-2004 (A) ................. 3,000 3,060,000
Auburn Hills Trust,
12.375%, 5-1-2020.................... 14,100 18,679,539
Chrysler Corporation,
10.95%, 8-1-2017 .................... 6,000 6,761,100
Doehler-Jarvis Limited Partnership,
11.875%, 6-1-2002 ................... 2,500 2,518,750
Lear Siegler Seating Corp.,
8.25%, 2-1-2002 ..................... 8,000 7,140,000
Motor Wheel Corporation,
11.5%, 3-1-2000 ..................... 2,980 2,950,200
Venture Holdings Trust,
9.75%, 4-1-2004 ..................... 1,000 897,500
Total ............................... 42,007,089
Beverages - 1.29%
Dr Pepper Bottling Company of Texas:
10.25%, 2-15-2000 ................... 2,250 2,295,000
0.0%, 2-15-2003 (C) ................. 3,500 2,467,500
ROYAL CROWN CORPORATION,
9.75%, 8-1-2000 ..................... 8,000 7,400,000
Total ............................... 12,162,500
Biotechnology and Medical Services - 0.98%
Abbey Healthcare Group Incorporated,
9.5%, 11-1-2002 ..................... 2,000 1,835,000
Quorum Health Group, Inc.,
11.875%, 12-15-2002 ................. 7,000 7,455,000
Total................................ 9,290,000
Building - 6.86%
American Standard Inc.:
9.875%, 6-1-2001 .................... 4,500 4,410,000
14.25%, 6-30-2003 ................... 2,406 2,476,688
11.375%, 5-15-2004 .................. 2,000 2,130,000
0.0%, 6-1-2005 (C) .................. 3,250 2,120,625
9.25%, 12-1-2016 .................... 6,000 5,595,000
See Notes to Schedule of Investments on page 15.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Building (Continued)
Beazer Homes USA, Inc.,
9.0%, 3-1-2004 ...................... $ 5,000 $ 4,325,000
Del Webb Corporation:
9.75%, 3-1-2003 ..................... 6,000 5,460,000
9.0%, 2-15-2006 ..................... 2,000 1,650,000
Eagle Industries, Inc.,
0.0%, 7-15-2003 (C) ................. 11,000 6,985,000
Hillsborough Company,
17.0%, 1-1-96 (D) ................... 19,050 15,621,000
NVR L.P.,
11.0%, 4-15-2003 .................... 3,500 3,150,000
Nortek, Inc.,
9.875%, 3-1-2004 .................... 5,000 4,650,000
Triangle Pacific Corp.,
10.5%, 8-1-2003 ..................... 6,500 6,370,000
Total ............................... 64,943,313
Chemicals Major - 1.26%
UCC Investors Holding, Inc.:
10.5%, 5-1-2002 ..................... 9,000 9,270,000
0.0%, 5-1-2005 (C) .................. 4,000 2,660,000
Total ............................... 11,930,000
Chemicals Specialty and Miscellaneous
Technology - 1.55%
Carlisle Plastics, Inc.,
10.25%, 6-15-97 ..................... 5,500 5,500,000
Envirotest Systems Corp.,
9.125%, 3-15-2001 ................... 3,000 2,775,000
LaRoche Industries Inc.,
13.0%, 8-15-2004 .................... 6,500 6,418,750
Total ............................... 14,693,750
Computers and Office Equipment - 0.71%
Corporate Express, Inc.,
9.625%, 3-15-2004 (A) ............... 4,000 3,670,000
Mail-Well Corporation,
10.5%, 2-15-2004 .................... 3,500 3,080,000
Total ............................... 6,750,000
Consumer Electronics and Appliances - 0.45%
Sealy Corporation,
9.5%, 5-1-2003 ...................... 4,500 4,275,000
See Notes to Schedule of Investments on page 15.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Domestic Oil - 1.04%
Clark R & M Holdings, Inc.,
0.0%, 2-15-2000 ..................... $16,800 $ 9,870,000
Drugs and Hospital Supply - 0.74%
General Medical Corporation,
10.875%, 8-15-2003 .................. 7,000 7,035,000
Electronics - 0.41%
Essex Group, Inc.,
10.0%, 5-1-2003 ..................... 4,000 3,890,000
Financial - 0.22%
Gentra Inc.:
11.3%, 5-29-98 (E) .................. $C1,000 740,270
0.0%, 12-31-2001 (C)(E) ............. $C2,500 1,359,500
Total ............................... 2,099,770
Food and Related - 1.97%
General Nutrition, Incorporated,
11.375%, 3-1-2000 ................... $ 5,370 5,880,150
Pilgrim's Pride Corporation,
10.875%, 8-1-2003 ................... 3,500 3,360,000
Specialty Foods Corporation:
10.25%, 8-15-2001 ................... 4,000 3,560,000
11.25%, 8-15-2003 ................... 7,000 5,880,000
Total ............................... 18,680,150
Hospital Management - 4.39%
American Medical International, Inc.:
11.375%, 2-1-95 ..................... 3,000 3,030,000
13.5%, 8-15-2001 .................... 3,000 3,345,000
Charter Medical Corporation,
11.25%, 4-15-2004 (A) ............... 2,000 2,060,000
Hallmark Healthcare Corporation,
10.625%, 11-15-2003 ................. 3,000 3,030,000
Hillhaven Corporation (The),
10.125%, 9-1-2001 ................... 5,000 5,050,000
LTC Properties, Inc.,
8.5%, 1-1-2000 ...................... 3,000 3,015,000
Multicare Companies, Inc. (The),
12.5%, 7-1-2002 ..................... 5,398 5,964,790
Pathmark:
9.625%, 5-1-2003 .................... 10,000 9,050,000
0.0%, 11-1-2003 (C) ................. 7,000 3,465,000
Surgical Health Corporation,
11.5%, 7-15-2004 .................... 3,500 3,578,750
Total ............................... 41,588,540
See Notes to Schedule of Investments on page 15.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Household Products - 2.99%
Exide Corporation:
10.75%, 12-15-2002 .................. $ 4,750 $ 4,892,500
0.0%, 12-15-2004 (C) ................ 4,000 2,860,000
MacAndrews & Forbes Group, Incorporated:
12.25%, 7-1-96 ...................... 10,750 10,750,000
13.0%, 3-1-99 ....................... 9,750 9,774,375
Total................................ 28,276,875
Insurance - 0.93%
American Annuity Group, Inc.:
9.5%, 8-15-2001 ..................... 5,500 5,280,000
11.125%, 2-1-2003 ................... 3,500 3,535,000
Total ............................... 8,815,000
Leisure Time - 18.69%
Act III Broadcasting, Inc.,
9.625%, 12-15-2003 .................. 3,000 2,850,000
Cablevision Industries Corporation:
10.75%, 1-30-2002 ................... 5,500 5,472,500
9.25%, 4-1-2008 ..................... 5,000 4,375,000
California Hotel Finance Corporation,
11.0%, 12-1-2002 .................... 10,000 9,700,000
Century Communications Corp.,
11.875%, 10-15-2003 ................. 6,500 6,825,000
Claridge Hotel and Casino Corporation (The),
11.75%, 2-1-2002 .................... 5,000 3,300,000
COMCAST CELLULAR CORPORATION,
0.0%, 3-5-2000 ...................... 9,300 5,742,750
Comcast Corporation,
9.5%, 1-15-2008 ..................... 8,000 7,320,000
Continental Cablevision, Inc.:
10.625%, 6-15-2002 .................. 2,500 2,525,000
8.875%, 9-15-2005 ................... 8,500 7,650,000
11.0%, 6-1-2007 ..................... 3,800 3,857,000
Embassy Suites, Inc.,
10.875%, 4-15-2002 .................. 2,000 2,110,000
Family Restaurants, Inc.:
9.75%, 2-1-2002 ..................... 5,000 4,400,000
0.00%, 2-1-2004 (C) ................. 3,500 2,065,000
Fitzgeralds Gaming Corporation,
13.0%, 3-15-96 (A) .................. 3,500 2,275,000
FLAGSTAR COMPANIES, INC.:
10.75%, 9-15-2001 ................... 16,500 15,551,250
10.875%, 12-1-2002 .................. 4,500 4,241,250
Foodmaker, Inc.,
9.75%, 6-1-2002 ..................... 3,500 2,931,250
See Notes to Schedule of Investments on page 15.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Leisure Time (Continued)
Infinity Broadcasting Corporation,
10.375%, 3-15-2002 .................. $16,000 $ 16,560,000
LaQuinta Motor Inns, Inc.,
9.25%, 5-15-2003 .................... 4,500 4,230,000
MGM Grand Hotel Finance Corp.,
12.0%, 5-1-2002 ..................... 7,000 7,665,000
NewCity Communications, Inc.,
11.375%, 11-1-2003 .................. 2,000 1,955,000
Plitt Theatres, Inc.,
10.875%, 6-15-2004 .................. 4,000 3,980,000
Rogers Cablesystems Limited,
9.625%, 8-1-2002 .................... 4,000 3,880,000
Rogers Communications Incorporated,
10.875%, 4-15-2004 .................. 4,500 4,590,000
Showboat, Inc.,
9.25%, 5-1-2008 ..................... 9,000 7,425,000
Sinclair Broadcast Group, Inc.,
10.0%, 12-15-2003 ................... 1,875 1,814,063
Treasure Island Finance Corp.,
9.875%, 10-1-2000 ................... 11,000 11,440,000
Turner Broadcasting System, Inc.:
12.0%, 10-15-2001 ................... 6,500 6,819,020
8.375%, 7-1-2013 .................... 5,000 4,126,200
Viacom International Inc.:
10.25%, 9-15-2001 ................... 3,000 3,112,500
8.0%, 7-7-2006 ...................... 7,000 6,090,000
Total ............................... 176,877,783
Machinery - 0.42%
Fairfield Manufacturing Company, Inc.,
11.375%, 7-1-2001 ................... 4,000 4,000,000
Metals and Mining - 0.33%
Magma Copper Company,
12.0%, 12-15-2001 ................... 2,850 3,092,250
Multi-Industry - 1.68%
Federal Industries Ltd.,
10.25%, 6-15-2000 ................... 5,500 5,341,875
Jordan Industries, Inc.,
10.375%, 8-1-2003 ................... 7,000 6,387,500
Mark IV Industries, Inc.,
8.75%, 4-1-2003 ..................... 4,500 4,185,000
Total ............................... 15,914,375
See Notes to Schedule of Investments on page 15.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Oil Services - 1.73%
Falcon Drilling, Inc.,
9.75%, 1-15-2001 .................... $ 3,500 $ 3,430,000
Noble Drilling Corporation,
9.25%, 10-1-2003 .................... 4,000 3,850,000
PETROLEUM HEAT AND POWER CO., INC.,
9.375%, 2-1-2006 .................... 3,000 2,700,000
Wainoco Oil Corporation,
12.0%, 8-1-2002 ..................... 6,000 6,360,000
Total ............................... 16,340,000
Packaging and Containers - 5.64%
Anchor Glass Container Corporation,
9.875%, 12-15-2008 .................. 5,000 4,550,000
Container Corporation of America,
11.25%, 5-1-2004 .................... 3,500 3,640,000
Gaylord Container Corporation,
11.5%, 5-15-2001 .................... 8,000 8,180,000
Owens-Illinois, Inc.:
10.25%, 4-1-99 ...................... 5,000 5,100,000
10.0%, 8-1-2002 ..................... 5,000 4,975,000
11.0%, 12-1-2003 .................... 7,500 7,950,000
9.75%, 8-15-2004 .................... 7,500 7,275,000
Silgan Corporation,
0.0%, 12-15-2002 (C) ................ 9,500 7,695,000
Sweetheart Cup Company, Inc.,
10.5%, 9-1-2003 ..................... 4,250 4,037,500
Total ............................... 53,402,500
Paper - 3.22%
Fort Howard Corporation:
9.25%, 3-15-2001 .................... 8,000 7,680,000
0.0%, 11-1-2004 (C) ................. 11,250 11,193,750
9.0%, 2-1-2006 ...................... 2,000 1,710,000
Stone Container Corporation:
10.75%, 10-1-2002 ................... 4,000 4,005,000
11.5%, 10-1-2004 .................... 2,000 2,017,500
Williamhouse-Regency of Delaware, Inc.,
11.5%, 6-15-2005 .................... 4,000 3,880,000
Total ............................... 30,486,250
Propane - 0.49%
National Propane Corporation,
13.125%, 3-1-99 ..................... 4,664 4,675,660
See Notes to Schedule of Investments on page 15.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Public Utilities - Electric - 0.19%
Consolidated Hydro, Inc.,
0.0%, 7-15-2003 (C) ................. $ 3,000 $ 1,791,180
Publishing and Advertising - 1.54%
Big Flower Press, Inc.,
10.75%, 8-1-2003 .................... 6,500 6,045,000
Lamar Advertising Company,
11.0%, 5-15-2003 .................... 2,000 1,960,000
Outdoor Systems, Inc.,
10.75%, 8-15-2003 ................... 7,000 6,580,000
Total ............................... 14,585,000
Railroads - 1.22%
Harmon Industries, Inc.,
12.0%, 8-1-2002 ..................... 3,500 3,780,000
Southern Pacific Rail Corporation,
9.375%, 8-15-2005 ................... 7,950 7,736,384
Total ............................... 11,516,384
Retailing - 13.27%
Barnes & Noble, Inc.,
11.875%, 1-15-2003 .................. 6,000 6,517,500
Big V Supermarkets, Inc.,
11.0%, 2-15-2004 .................... 5,000 4,100,000
Bradlees, Inc.,
9.25%, 3-1-2003 ..................... 8,000 7,080,000
COLORTILE, INC.,
10.75%, 12-15-2001 .................. 6,500 6,110,000
Eckerd (Jack) Corporation,
9.25%, 2-15-2004 .................... 5,500 5,280,000
Farm Fresh, Inc.,
12.25%, 10-1-2000 ................... 3,000 2,610,000
General Host Corporation,
11.5%, 2-15-2002 .................... 4,000 3,680,000
Grand Union Company (The):
11.375%, 2-15-99 .................... 6,500 6,028,750
12.25%, 7-15-2002 ................... 7,500 5,568,750
0.0%, 7-15-2004 (C) ................. 16,500 1,815,000
Kroger Co. (The):
9.75%, 2-15-2004 .................... 10,000 10,225,000
9.25%, 1-1-2005 ..................... 3,000 2,985,000
Macy (R.H.) & Co., Inc.,
14.5%, 10-15-98 (D) ................. 6,000 4,200,000
Musicland Stores Corporation,
9.0%, 6-15-2003 ..................... 4,000 3,600,000
See Notes to Schedule of Investments on page 15.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Retailing (Continued)
Orchard Supply Hardware Stores Corporation,
9.375%, 2-15-2002 ................... $ 4,000 $ 3,500,000
P & C Food Markets, Inc.,
11.5%, 10-15-2001 ................... 5,000 5,225,000
Penn Traffic Company:
8.625%, 12-15-2003 .................. 7,000 6,405,000
10.375%, 10-1-2004 .................. 8,500 8,606,250
9.625%, 4-15-2005 ................... 7,000 6,370,000
Safeway Inc.,
10.0%, 12-1-2001 .................... 8,000 8,440,000
Service Merchandise Company, Inc.,
9.0%, 12-15-2004 .................... 6,000 5,250,000
Specialty Retailers, Inc.,
11.0%, 8-15-2003 .................... 5,000 4,775,000
WestPoint Stevens Inc.,
9.375%, 12-15-2005 .................. 8,000 7,220,000
Total ............................... 125,591,250
Services, Consumer and Business - 1.06%
Bell & Howell Company,
10.75%, 10-1-2002 ................... 5,000 5,050,000
Solon Automated Services, Inc.,
12.75%, 7-15-2001 ................... 5,000 4,950,000
Total ............................... 10,000,000
Shipping - 0.37%
Trans Ocean Container Corporation,
12.25%, 7-1-2004 .................... 3,500 3,465,000
Steel - 1.24%
AK Steel, Inc.,
10.75%, 4-1-2004 .................... 5,000 5,037,500
Inland Steel Industries, Inc.,
12.75, 12-15-2002 ................... 6,000 6,735,000
Total ............................... 11,772,500
Telecommunications - 1.99%
CenCall Communications Corp.,
0.0%, 1-15-2004 (C) ................. 7,000 3,395,000
Dial Call Communications, Inc., Units,
0.0%, 4-15-2004 (C)(F) .............. 5,000 2,650,000
Dial Page, Inc.,
12.25%, 2-15-2000 ................... 1,000 1,002,500
MFS Communications Company, Inc.,
0.0%, 1-15-2004 (C) ................. 5,500 3,190,000
See Notes to Schedule of Investments on page 15.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Telecommunications (Continued)
Rogers Cantel Mobile Communications Inc.,
10.75%, 11-1-2001 ................... $ 1,500 $ 1,545,000
Summit Communications Group, Inc.,
10.5%, 4-15-2005 .................... 5,000 5,275,000
USA Mobile Communications, Inc. II,
9.5%, 2-1-2004 ...................... 2,000 1,760,000
Total ............................... 18,817,500
Textiles and Apparel - 1.48%
CMI Industries, Inc.,
9.5%, 10-1-2003 ..................... 4,500 3,780,000
CONSOLTEX GROUP INC.,
11.0%, 10-1-2003 .................... 7,000 6,562,500
JPS Textile Group, Inc.,
10.25%, 6-1-99 ...................... 4,609 3,456,750
Linter Textiles Corporation Limited,
13.75%, 10-1-2000 (D) ............... 17,200 172,000
Total ............................... 13,971,250
TOTAL CORPORATE DEBT SECURITIES - 86.54% $819,199,619
(Cost: $866,360,356)
UNITED STATES GOVERNMENT SECURITY - 1.50%
United States Treasury,
7.5%, 11-15-2016 .................... 15,000 $ 14,207,850
(Cost: $15,118,418)
TOTAL SHORT-TERM SECURITIES - 6.84% $ 64,746,079
(Cost: $64,746,079)
TOTAL INVESTMENT SECURITIES - 97.64% $924,267,542
(Cost: $1,008,412,901)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 2.36% 22,373,454
NET ASSETS - 100.00% $946,640,996
See Notes to Schedule of Investments on page 15.
<PAGE>
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1994
Notes to Schedule of Investments
No income dividends were paid during the preceding 12 months.
(A) As of September 30, 1994, the following restricted securities were owned:
Shares/
Principal
Acquisition Amount Market
Security Date in 000's Cost Value
-------- ----------- --------------------------------
Advanstar
Communications
Inc., Warrants 3/30/92 1,750$ 0 $ 1,750
Consolidated Hydro, Inc.,
Warrants 6/15/93 5,400 127,817 32,400
Fitzgeralds Gaming
Corporation,
Warrants 3/8/94 3,500 173,565 157,500
Aftermarket Technology
Corp.,
12.0%, 8-1-2004 7/21/94 $3,000 3,000,000 3,060,000
Charter Medical
Corporation,
11.25%, 4-15-2004 5/20/94 2,000 2,035,000 2,060,000
Corporate Express, Inc.,
9.625%, 3-15-2004 2/22/94 2,000 2,000,000 1,835,000
6/13/94 2,000 1,880,000 1,835,000
Fitzgeralds Gaming
Corporation,
13.0%, 3-15-96 3/8/94 3,500 3,326,435 2,275,000
----------------------
$12,542,817$11,256,650
======================
The total market value of restricted securities represents approximately
1.19% of the total net assets at September 30, 1994.
(B) Affiliate as defined by the Investment Company Act of 1940 by reason of
ownership by the Fund of 5% or more of its outstanding voting securities.
(C) The security does not bear interest for an initial period of time and
subsequently becomes interest bearing.
(D) Non-income producing as the issuer has either missed its most recent
interest
payment or declared bankruptcy.
(E) Principal amounts are denominated in the indicated foreign currency where
applicable ($C - Canadian dollar).
(F) Each unit consists of one bond and one warrant.
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 HIGH INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1994
Assets
Investment securities - at value
(Notes 1 and 3) ............................... $ 924,267,542
Cash ........................................... 48,096
Receivables:
Dividends and interest ........................ 19,684,314
Investment securities sold .................... 12,209,049
Fund shares sold .............................. 334,944
Prepaid insurance premium ...................... 71,634
--------------
Total assets ................................ 956,615,579
--------------
Liabilities
Payable for investment securities purchased .... 5,959,760
Payable for Fund shares redeemed ............... 3,688,371
Accrued service fee ............................ 187,380
Accrued transfer agency and dividend
disbursing .................................... 94,833
Accrued accounting services fee ................ 7,083
Other .......................................... 37,156
--------------
Total liabilities ........................... 9,974,583
--------------
Total net assets ........................... $ 946,640,996
==============
Net Assets
$1.00 par value capital stock, authorized --
400,000,000; shares outstanding -- 108,023,338
Capital stock ................................. $ 108,023,338
Additional paid-in capital .................... 1,314,607,881
Accumulated undistributed income (loss):
Accumulated undistributed net investment income 1,123,027
Accumulated undistributed net realized
loss on investment transactions ............. (392,967,891)
Net unrealized depreciation in value of
investments at end of period ................ (84,145,359)
--------------
Net assets applicable to outstanding
units of capital ........................... $ 946,640,996
==============
Net asset value per share (net assets divided
by shares outstanding) ......................... $8.76
=====
See notes to financial statements.
<PAGE>
UNITED HIGH INCOME FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended SEPTEMBER 30, 1994
Investment Income
Income:
Interest ........................................ $47,454,160
Dividends ....................................... 189,023
-----------
Total income .................................. 47,643,183
-----------
Expenses (Note 2):
Investment management fee ....................... 2,760,396
Transfer agency and dividend disbursing ......... 598,853
Service fee ..................................... 432,384
Accounting services fee ......................... 42,500
Legal fees ...................................... 35,490
Custodian fees .................................. 28,536
Audit fees ...................................... 28,426
Other ........................................... 106,240
-----------
Total expenses ................................ 4,032,825
-----------
Net investment income ........................ 43,610,358
-----------
Realized and Unrealized Loss on Investments
Realized net loss on investments ................. (17,500,226)
Unrealized depreciation in value of
investments during the period.................... (30,265,352)
-----------
Net loss on investments ......................... (47,765,578)
-----------
Net decrease in net assets resulting
from operations .............................. $(4,155,220)
===========
See notes to financial statements.
<PAGE>
UNITED HIGH INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the For the
six months fiscal year
ended ended
September 30, March 31,
1994 1994
-------------- -------------
Increase (Decrease) in Net Assets
Operations:
Net investment income .......... $ 43,610,358 $ 87,667,603
Realized net gain (loss)
on investments ................ (17,500,226) 24,824,907
Unrealized depreciation ........ (30,265,352) (26,914,040)
-------------- --------------
Net increase (decrease) in net
assets resulting from
operations .................. (4,155,220) 85,578,470
-------------- --------------
Dividends to shareholders from
net investment income* ......... (42,878,830) (86,938,851)
-------------- --------------
Capital share transactions:
Proceeds from sale of shares
(3,828,303 and 9,669,416
shares, respectively) ........ 34,293,396 91,334,327
Proceeds from reinvestment of
dividends (3,927,406 and
7,462,480 shares,
respectively) ................ 35,007,476 70,328,948
Payments for shares redeemed
(9,189,220 and 14,873,492
shares, respectively) ........ (82,244,337) (140,551,472)
-------------- --------------
Net increase (decrease) in net
assets resulting from capital
share transactions .......... (12,943,465) 21,111,803
-------------- --------------
Total increase (decrease) ... (59,977,515) 19,751,422
Net Assets
Beginning of period ............. 1,006,618,511 986,867,089
-------------- --------------
End of period, including
undistributed net investment
income of $1,123,027 and
$391,499, respectively ......... $ 946,640,996 $1,006,618,511
============== ==============
*See "Financial Highlights" on page 19.
See notes to financial statements.
<PAGE>
UNITED HIGH INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
six months For the fiscal year ended March 31,
ended -----------------------------------
9-30-94 1994 1993 1992 1991 1990
------- ------ ------ ------ ------ ------
Net asset value,
beginning of period $9.20 $9.21 $8.82 $7.51 $8.51 $11.63
----- ----- ----- ----- ----- ------
Income from investment
operations:
Net investment
income .......... .40 .80 .83 .95 1.16 1.44
Net realized and
unrealized gain
(loss) on
investments ..... (0.44) (0.01) .40 1.29 (1.00) (3.08)
----- ----- ----- ----- ----- ------
Total from investment
operations ....... (0.04) .79 1.23 2.24 .16 (1.64)
----- ----- ----- ----- ----- ------
Less dividends
declared from net
investment income . (0.40) (0.80) (0.84) (0.93) (1.16) (1.48)
----- ----- ----- ----- ----- ------
Net asset value,
end of period .... $8.76 $9.20 $9.21 $8.82 $7.51 $ 8.51
===== ===== ===== ===== ===== ======
Total return* ...... -0.48% 8.69% 14.72% 31.72% 2.56% -15.57%
Net assets, end
of period (000
omitted) .........$946,641$1,006,619$986,867$910,917$735,376$874,615
Ratio of expenses to
average net assets 0.83%** 0.78% 0.75% 0.79% 0.82% 0.74%
Ratio of net investment
income to average
net assets ....... 8.96%** 8.51% 9.28% 11.56% 14.89% 13.72%
Portfolio turnover
rate ............. 16.61%**54.80% 58.68% 62.12% 30.43% 52.00%
*Total return calculated without taking into account the sales load deducted on
an initial purchase.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED HIGH INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
NOTE 1 -- Significant Accounting Policies
United High Income Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
A. Security valuation -- Each stock and convertible bond is valued at the
latest sale price thereof on the last business day of the fiscal period as
reported by the principal securities exchange on which the issue is traded
or, if no sale is reported for a stock, the average of the latest bid and
asked prices. Bonds, other than convertible bonds, are valued using a
pricing system provided by a major dealer in bonds. Convertible bonds are
valued using this pricing system only on days when there is no sale
reported. Stocks which are traded over-the-counter are priced using NASDAQ
(National Association of Securities Dealers Automated Quotations) which
provides information on bid and asked or closing prices quoted by major
dealers in such stocks. Restricted securities and securities for which
market quotations are not readily available are valued at fair value as
determined in good faith under procedures established by and under the
general supervision of the Fund's Board of Directors. Short-term debt
securities are valued at amortized cost, which approximates market.
B. Security transactions and related investment income -- Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Securities gains and losses are calculated on the
identified cost basis. Original issue discount (as defined in the Internal
Revenue Code), premiums on the purchase of bonds and post-1984 market
discount are amortized for both financial and tax reporting purposes over
the remaining lives of the bonds. Dividend income is recorded on the ex-
dividend date. Interest income is recorded on the accrual basis. See Note
3 -- Investment Security Transactions.
C. Federal income taxes -- It is the Fund's policy to distribute all of its
taxable income and capital gains to its shareholders and otherwise qualify
as a regulated investment company under the Internal Revenue Code. In
addition, the Fund 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.
D. Dividends and distributions -- Dividends and distributions to shareholders
are recorded by the Fund on the record date. Net investment income
distributions and capital gains distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences are due to differing treatments
for items such as deferral of wash sales and post-October losses, foreign
currency transactions, net operating losses and expiring capital loss
carryforwards.
NOTE 2 -- Investment Management and Payments to Affiliated Persons
The Fund pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business. The fee
consists of two elements: (i) a "Specific" fee computed on net asset value as
of the close of business each day at the annual rate of .15% of net assets and
(ii) a "Group" fee computed each day on the combined net asset values of all of
the funds in the United Group of mutual funds (approximately $11.2 billion of
combined net assets at September 30, 1994) 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 Fund accrues and pays
this fee daily.
Pursuant to assignment of the Investment Management Agreement between the
Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly-owned subsidiary of W&R, serves as the Fund's
investment manager.
The Fund 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
Fund and pricing daily the value of shares of the Fund. For these services, the
Fund 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 Level
------------------------- -------------------
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
The Fund also pays WARSCO a monthly per account charge for transfer agency
and dividend disbursement services of $1.0208 for each shareholder account which
was in existence at any time during the prior month plus $0.30 for each account
on which a dividend or distribution of cash or shares had a record date in that
month. The Fund also reimburses W&R and WARSCO for certain out-of-pocket costs.
As principal underwriter for the Fund's shares, W&R received direct and
indirect gross sales commissions (which are not an expense of the Fund) of
$1,091,768, out of which W&R paid sales commissions of $611,584 and all expenses
in connection with the sale of Fund shares, except for registration fees and
related expenses.
Under a Service Plan adopted by the Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940, the Fund may pay monthly a 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
provision of personal services to Fund shareholders and/or maintenance of
shareholder accounts.
The Fund paid Directors' fees of $18,315.
W&R is an indirect subsidiary of Torchmark Corporation, a holding company,
and United Investors Management Company, a holding company, and a direct
subsidiary of Waddell & Reed Financial Services, Inc., a holding company.
NOTE 3 -- Investment Security Transactions
Purchases of investment securities, other than U.S. Government obligations
and short-term securities, aggregated $74,689,693 while proceeds from maturities
and sales aggregated $121,956,103. Purchases of short-term securities
aggregated $373,774,508 while proceeds from maturities and sales of short-term
securities aggregated $355,102,915. There were no purchases or sales of U.S.
Government securities during the period.
For Federal income tax purposes, cost of investments owned at September 30,
1994 was $1,007,421,355 resulting in net unrealized depreciation of $83,153,813,
of which $25,889,391 related to appreciated securities and $109,043,204 related
to depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $24,824,907 during its fiscal year ended March 31, 1994, which was entirely
offset by utilization of capital loss carryovers. Remaining prior year capital
loss carryovers aggregated $376,459,212 at March 31, 1994. This amount is
available to offset future realized capital gain net income for Federal income
tax purposes through March 31, 1997; $307,279,830 of this amount is available
through March 31, 1998; $285,694,573 is available through March 31, 1999; and
$114,024,403 is available through March 31, 2000.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
United High Income Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of United High Income Fund, Inc. (the
"Fund") at September 30, 1994, the results of its operations for the six months
then ended and the changes in its net assets and the financial highlights for
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 1994 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
Kansas City, Missouri
October 31, 1994
- -----------------------------------------------------------------
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
Jay B. Dillingham, Kansas City, Missouri
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Los Angeles, California
Doyle Patterson, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel, III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
Leslie S. Wright, Birmingham, Alabama
OFFICERS
Keith A. Tucker, President
Robert L. Hechler, Vice President
Henry J. Herrmann, Vice President
John M. Holliday, Vice President
Theodore W. Howard, Vice President and Treasurer
Sharon K. Pappas, Vice President and Secretary
Louise D. Rieke, Vice President
Carl E. Sturgeon, Vice President
To all IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from an IRA unless you make a written election not to
have taxes withheld. The election may be made by submitting forms provided by
Waddell & Reed, Inc. which can be obtained from your Waddell & Reed
representative or by submitting Internal Revenue Service form W-4P. Once made,
an election can be revoked by providing written notice to Waddell & Reed, Inc.
If you elect not to have tax withheld you may be required to make payments of
estimated tax. Penalties may be imposed by the IRS if withholding and estimated
tax payments are not adequate.
<PAGE>
The United Group of Mutual Funds
United Cash Management, Inc.
United Government Securities Fund, Inc.
United Bond Fund
United Municipal Bond Fund, Inc.
United Continental Income Fund, Inc.
United Income Fund
United Municipal High Income Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Accumulative Fund
United Vanguard Fund, Inc.
United New Concepts Fund, Inc.
United Science and Technology Fund
United International Growth Fund, Inc.
United Gold & Government Fund, Inc.
United Retirement Shares, Inc.
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
(913) 236-1303
NUR1009SA(9-94)
printed on recycled paper
