<PAGE>
United
High Income
Fund, Inc.
SEMIANNUAL
REPORT
-------------------------------------------
For the six months ended September 30, 1995
<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, 1995
Dear Shareholder:
As President of your Fund, I would like to thank you for your continued
confidence in our products and services. We strive to provide the best service
possible to our shareholders: from the Fund's manager, to Waddell & Reed's
customer service representatives, to your personal account representative and
the Waddell & Reed office nearest you.
While personalized service has become increasingly rare in the investment
industry, we remain committed to locally based account representatives who
provide the personal service you need. They are ready to assist you through
regular reviews of your financial plan and to answer any financial questions you
may have. Your account representative is anxious to help you plan for your
retirement, fund a child's education or make plans for other long-term financial
goals.
We want to help you open the door to a better financial future. We will
continue to help you meet your specific financial needs through quality
investment products and personalized service that makes the investment process
more convenient and accessible for you.
Should you have any questions about your account or other financial issues,
contact your personal account representative or your local Waddell & Reed
office. They're ready to help you make the most of your financial future.
Respectfully,
Keith A. Tucker
President
<PAGE>
SHAREHOLDER SUMMARY
- --------------------------------------------------------------
UNITED HIGH INCOME FUND, INC.
PORTFOLIO STRATEGY:
Invests generally in OBJECTIVE: High level of current
High-Risk, High-Yield income, by investing
Fixed Income Securities primarily in a
diversified portfolio of
Maximum 20% Common Stock high-yield, high-risk fixed income
securities, with a secondary objective
of capital 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. (May
purchase securities subject to
repurchase agreements. May invest in
certain options and futures.)
FOUNDED: 1979
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
<PAGE>
PERFORMANCE SUMMARY
PER SHARE DATA
For the Six Months Ended September 30, 1995
- ----------------------------------------
DIVIDENDS PAID $0.38
=====
NET ASSET VALUE ON
9/30/95 $9.02
3/31/95 8.70
-----
CHANGE PER SHARE $0.32
=====
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 9-30-95 5.99% 12.46%
5-year period ended 9-30-95 12.99% 14.33%
10-year period ended 9-30-95 7.57% 8.21%
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 September 30, 1995, United High Income Fund, Inc. had net assets totaling
$968,597,318 invested in a diversified portfolio of:
84.39 Corporate Debt Securities
10.51 Cash and Cash Equivalents
3.40% Common and Preferred Stocks, Rights and Warrants
1.70% United States Government Security
As a shareholder of United High Income Fund, Inc., for every $100 you had
invested on September 30, 1995, your Fund owned:
$52.01 Consumer Bonds
23.00 Basic Industry Bonds
10.51 Cash and Cash Equivalents
5.89 Technological Bonds
3.40 Common and Preferred Stocks, Rights and Warrants
2.18 Energy and Energy-Related Bonds
1.70 United States Government Security
1.28 Financial Bonds
0.03 Public Utilities Bond
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1995
Shares Value
COMMON AND PREFERRED STOCKS, RIGHTS AND WARRANTS
Building - 2.24%
NVR L.P., Warrants* .................. 66,071 $ 148,660
National Health Investors, Inc. ...... 41,630 1,259,307
Triangle Pacific Corp.* .............. 660,844 11,234,348
Walter Industries, Inc.* ............. 710,990 9,065,122
Total ............................... 21,707,437
Hospital Management - 0.15%
LTC Properties, Inc. ................. 100,000 1,450,000
Leisure Time - 0.57%
Fitzgeralds Gaming Corporation,
Warrants (A)* ....................... 14,000 140,000
FLAGSTAR COMPANIES, INC.* ............ 51,600 277,350
Infinity Broadcasting Corporation,
Class A* ............................ 101,250 3,315,938
Servam Corporation* .................. 373,508 3,735
Servam Corporation, Preferred* ....... 100,000 1,000
Sinclair Broadcasting Group, Inc.* ... 8,750 247,187
Trump Hotels & Casino Resorts, Inc.* . 87,500 1,487,500
Total ............................... 5,472,710
Publishing and Advertising - 0.13%
Advanstar Holdings, Inc. (B)* ........ 75,625 1,285,625
Advanstar Holdings, Inc.,
Warrants (A)* ....................... 1,750 1,750
Total ............................... 1,287,375
Services, Consumer and Business - 0.27%
Bell & Howell Holdings Company* ...... 100,000 2,550,000
Miscellaneous - 0.04%
Consolidated Hydro, Inc., Preferred* . 3,000 405,000
Consolidated Hydro, Inc., Warrants (A)* 5,400 5
EUA Power Corporation, Rights* ....... 9,500 10
WestFed Holdings, Inc., Preferred,
Series A* ........................... 185,310 371
WestFed Holdings, Inc., Series B* .... 54,900 110
Total ............................... 405,496
TOTAL COMMON AND PREFERRED STOCKS, RIGHTS
AND WARRANTS - 3.40% $ 32,873,018
(Cost: $64,088,942)
See Notes to Schedule of Investments on pages 16 and 17.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Airlines - 1.81%
GP Group, Inc.,
8.75%, 12-15-98 ..................... $ 9,500 $ 8,455,000
NWA, Inc.,
8.625%, 8-1-96 ...................... 9,000 9,090,000
Total ............................... 17,545,000
Automotive - 3.84%
Auburn Hills Trust,
12.0%, 5-1-2020...................... 14,100 20,712,759
Chrysler Corporation,
10.95%, 8-1-2017 .................... 6,000 6,716,520
Lear Seating Corp.,
8.25%, 2-1-2002 ..................... 8,000 7,780,000
Walbro Corporation,
9.875%, 7-15-2005 (A)................ 2,000 1,960,000
Total ............................... 37,169,279
Beverages - 0.28%
Dr Pepper Holdings, Inc.,
0.0%, 2-15-2003 (C) ................. 3,500 2,747,500
Biotechnology and Medical Services - 0.22%
Abbey Healthcare Group Incorporated,
9.5%, 11-1-2002 ..................... 2,000 2,085,000
Building - 6.12%
American Standard Inc.:
9.875%, 6-1-2001 .................... 4,500 4,770,000
11.375%, 5-15-2004 .................. 2,000 2,200,000
0.0%, 6-1-2005 (C) .................. 10,250 8,328,125
9.25%, 12-1-2016 .................... 6,000 6,180,000
Beazer Homes USA, Inc.,
9.0%, 3-1-2004 ...................... 4,000 3,640,000
Del Webb Corporation:
9.75%, 3-1-2003 ..................... 5,500 5,390,000
9.0%, 2-15-2006 ..................... 2,000 1,855,000
Eagle Industries, Inc.,
0.0%, 7-15-2003 (C) ................. 11,000 8,580,000
NVR L.P.,
11.0%, 4-15-2003 .................... 3,500 3,395,000
Nortek, Inc.,
9.875%, 3-1-2004 .................... 5,000 4,537,500
Triangle Pacific Corp.,
10.5%, 8-1-2003 ..................... 6,500 6,727,500
Walter Industries, Inc.,
12.19%, 3-15-2000 ................... 3,611 3,671,954
Total ............................... 59,275,079
See Notes to Schedule of Investments on pages 16 and 17.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
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 2,980,000
Total ............................... 12,250,000
Chemicals Specialty and Miscellaneous
Technology - 0.73%
LaRoche Industries Inc.,
13.0%, 8-15-2004 .................... 2,000 2,130,000
Scotsman Group, Inc.,
9.5%, 12-15-2000 .................... 3,500 3,491,250
Ucar Global Enterprises Inc.,
12.0%, 1-15-2005 .................... 1,335 1,488,525
Total ............................... 7,109,775
Computers and Office Equipment - 0.76%
Corporate Express, Inc.,
9.125%, 3-15-2004 ................... 4,000 3,950,000
Mail-Well Corporation,
10.5%, 2-15-2004 .................... 3,500 3,395,000
Total ............................... 7,345,000
Domestic Oil - 1.11%
Clark R & M Holdings, Inc.,
0.0%, 2-15-2000 ..................... 16,800 10,773,000
Drugs and Hospital Supply - 1.11%
General Medical Corporation:
10.875%, 8-15-2003 .................. 7,000 7,245,000
12.125%, 8-15-2005 .................. 3,373 3,480,819
Total ............................... 10,725,819
Electronics - 0.40%
Essex Group, Inc.,
10.0%, 5-1-2003 ..................... 4,000 3,880,000
Food and Related - 2.21%
General Nutrition, Incorporated,
11.375%, 3-1-2000 ................... 5,370 5,873,437
Pilgrim's Pride Corporation,
10.875%, 8-1-2003 ................... 3,500 3,307,500
Specialty Foods Corporation:
10.25%, 8-15-2001 ................... 4,000 3,810,000
11.125%, 10-1-2002 (A) .............. 2,000 1,960,000
11.25%, 8-15-2003 ................... 7,000 6,492,500
Total ............................... 21,443,437
See Notes to Schedule of Investments on pages 16 and 17.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Hospital Management - 5.56%
Assisted Living Concepts, Inc.,
7.0%, 7-31-2005 (A) ................. $ 1,000 $ 1,155,000
GranCare, Inc.,
9.375%, 9-15-2005 ................... 1,750 1,763,125
LTC Properties, Inc.:
8.5%, 1-1-2000 ...................... 3,000 3,015,000
8.5%, 1-1-2001 ...................... 3,000 3,007,500
Multicare Companies, Inc. (The),
12.5%, 7-1-2002 ..................... 5,398 6,146,973
Pathmark Stores, Inc.:
9.625%, 5-1-2003 .................... 9,000 8,865,000
0.0%, 11-1-2003 (C) ................. 1,500 971,250
Quorum Health Group, Inc.,
11.875%, 12-15-2002 ................. 7,000 7,735,000
Tenet Healthcare Corporation:
9.625%, 9-1-2002 .................... 14,000 14,805,000
10.125%, 3-1-2005 ................... 6,000 6,345,000
Total ............................... 53,808,848
Household Products - 3.30%
Exide Corporation:
10.75%, 12-15-2002 .................. 4,750 5,058,750
0.0%, 12-15-2004 (C) ................ 4,000 3,160,000
10.0%, 4-15-2005 (A) ................ 2,000 2,110,000
MacAndrews & Forbes Group, Incorporated:
12.25%, 7-1-96 ...................... 10,750 10,803,750
13.0%, 3-1-99 ....................... 9,750 9,798,750
American Safety Razor Company,
9.875%, 8-1-2005 (A) ................ 1,000 1,000,000
Total................................ 31,931,250
Insurance - 1.28%
American Annuity Group, Inc.:
9.5%, 8-15-2001 ..................... 5,500 5,555,000
11.125%, 2-1-2003 ................... 6,500 6,841,250
Total ............................... 12,396,250
Leisure Time - 21.08%
Act III Broadcasting, Inc.,
9.625%, 12-15-2003 .................. 3,000 3,045,000
Alliance Entertainment Corp.,
11.25%, 7-5-2005 (A) ................ 4,500 4,488,750
CAI Wireless Systems, Inc.,
12.25%, 9-15-2002 ................... 3,000 3,112,500
See Notes to Schedule of Investments on pages 16 and 17.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Leisure Time (Continued)
Cablevision Industries Corporation:
10.75%, 1-30-2002 ................... $ 5,500 $ 5,995,000
9.25%, 4-1-2008 ..................... 5,000 5,312,500
California Hotel Finance Corporation,
11.0%, 12-1-2002 .................... 10,000 10,350,000
Century Communications Corporation,
11.875%, 10-15-2003 ................. 6,500 6,906,250
COMCAST CELLULAR CORPORATION,
0.0%, 3-5-2000 ...................... 9,300 7,114,500
COMCAST CORPORATION,
9.5%, 1-15-2008 ..................... 8,000 8,100,000
Continental Cablevision, Inc.:
10.625%, 6-15-2002 .................. 2,500 2,637,500
8.875%, 9-15-2005 ................... 8,500 8,691,250
11.0%, 6-1-2007 ..................... 3,800 4,199,000
Fitzgeralds Gaming Corporation,
13.0%, 3-15-96 (A) .................. 3,500 2,590,000
FLAGSTAR COMPANIES, INC.:
10.75%, 9-15-2001 ................... 13,250 12,455,000
10.875%, 12-1-2002 .................. 4,500 4,185,000
Granite Broadcasting Corporation,
10.375%, 5-15-2005 (A) .............. 2,500 2,550,000
Harrah's Operating Company, Inc.,
10.875%, 4-15-2002 .................. 2,000 2,155,000
Infinity Broadcasting Corporation,
10.375%, 3-15-2002 .................. 16,000 17,120,000
LaQuinta Motor Inns, Inc.,
9.25%, 5-15-2003 .................... 7,500 7,856,250
MGM Grand Hotel Finance Corp.,
12.0%, 5-1-2002 ..................... 7,000 7,700,000
Marcus Cable Operating Company,
0.0%, 8-1-2004 (C) .................. 10,000 6,800,000
Players International, Inc.,
10.875%, 4-15-2005 (A) .............. 4,000 3,800,000
Plitt Theatres, Inc.,
10.875%, 6-15-2004 .................. 4,000 3,860,000
Premier Parks Inc.,
12.0%, 8-15-2003 (A) ................ 1,500 1,537,500
Rio Hotel & Casino, Inc.,
10.625%, 7-15-2005 (A) .............. 5,000 4,850,000
Rogers Cablesystems Limited,
9.625%, 8-1-2002 .................... 4,000 4,120,000
Rogers Communications Incorporated,
10.875%, 4-15-2004 .................. 4,500 4,680,000
Showboat, Inc.,
9.25%, 5-1-2008 ..................... 9,000 8,505,000
See Notes to Schedule of Investments on pages 16 and 17.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Leisure Time (Continued)
Sinclair Broadcast Group, Inc.:
10.0%, 12-15-2003 ................... $ 1,875 $ 1,903,125
10.0%, 9-30-2005 .................... 4,000 4,070,000
Trump Hotels & Casino Resorts
Holdings, L.P.,
15.5%, 6-15-2005 .................... 5,500 5,445,000
Turner Broadcasting System, Inc.,
8.375%, 7-1-2013 .................... 10,000 10,023,200
Viacom International, Inc.:
10.25%, 9-15-2001 ................... 3,000 3,330,000
8.0%, 7-7-2006 ...................... 15,000 14,700,000
Total ............................... 204,187,325
Machinery - 0.39%
Fairfield Manufacturing Company, Inc.,
11.375%, 7-1-2001 ................... 4,000 3,800,000
Metals and Mining - 0.77%
Magma Copper Company,
12.0%, 12-15-2001 ................... 2,850 3,127,875
Russel Metals Inc.,
10.25%, 6-15-2000 ................... 4,500 4,365,000
Total ............................... 7,492,875
Multi-Industry - 2.17%
Jordan Industries, Inc.,
10.375%, 8-1-2003 ................... 10,500 9,817,500
Mark IV Industries, Inc.,
8.75%, 4-1-2003 ..................... 11,000 11,220,000
Total ............................... 21,037,500
Oil Services - 1.07%
Falcon Drilling, Inc.,
9.75%, 1-15-2001 .................... 3,500 3,500,000
Noble Drilling Corporation,
9.25%, 10-1-2003 .................... 4,000 4,100,000
PETROLEUM HEAT AND POWER CO., INC.,
9.375%, 2-1-2006 .................... 3,000 2,760,000
Total ............................... 10,360,000
Packaging and Containers - 5.69%
Container Corporation of America,
11.25%, 5-1-2004 .................... 3,500 3,701,250
Gaylord Container Corporation:
11.5%, 5-15-2001 .................... 6,000 6,240,000
0.0%, 5-15-2005 (C) ................. 6,000 5,910,000
See Notes to Schedule of Investments on pages 16 and 17.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Packaging and Containers (Continued)
Owens-Illinois, Inc.:
10.25%, 4-1-99 ...................... $ 5,000 $ 5,125,000
10.0%, 8-1-2002 ..................... 5,000 5,150,000
11.0%, 12-1-2003 .................... 7,500 8,240,625
9.75%, 8-15-2004 .................... 7,500 7,687,500
Silgan Corporation,
0.0%, 12-15-2002 (C) ................ 9,500 8,882,500
Sweetheart Cup Company, Inc.,
10.5%, 9-1-2003 ..................... 4,250 4,165,000
Total ............................... 55,101,875
Paper - 2.87%
APP International Finance Company B.V.,
11.75%, 10-1-2005 ................... 4,500 4,550,625
Fort Howard Corporation:
9.25%, 3-15-2001 .................... 8,000 7,900,000
9.0%, 2-1-2006 ...................... 2,000 1,880,000
Repap New Brunswick Inc.,
10.625%, 4-15-2005 .................. 3,250 3,298,750
S. D. Warren Company,
12.0%, 12-15-2004 ................... 3,000 3,315,000
Stone Container Corporation,
10.75%, 10-1-2002 ................... 2,750 2,853,125
Williamhouse-Regency of Delaware, Inc.,
11.5%, 6-15-2005 .................... 4,000 3,960,000
Total ............................... 27,757,500
Public Utilities - Electric - 0.03%
Consolidated Hydro, Inc.,
0.0%, 7-15-2003 (C) ................. 500 288,230
Publishing and Advertising - 2.01%
American Media Operations, Inc.,
11.625%, 11-15-2004 ................. 4,000 4,130,000
Big Flower Press, Inc.,
10.75%, 8-1-2003 .................... 6,500 6,597,500
Lamar Advertising Company,
11.0%, 5-15-2003 .................... 2,000 2,020,000
Outdoor Systems, Inc.,
10.75%, 8-15-2003 ................... 7,000 6,755,000
Total ............................... 19,502,500
See Notes to Schedule of Investments on pages 16 and 17.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Railroad Equipment - 0.71%
Harmon Industries, Inc.,
12.0%, 8-1-2002 ..................... $ 3,500 $ 3,718,750
Westinghouse Air Brake Company,
9.375%, 6-15-2005 ................... 3,000 3,120,000
Total ............................... 6,838,750
Railroads - 1.87%
Communications & Power Industries,
Inc.,
12.0%, 8-1-2005 (A) ................. 4,000 4,090,000
IntelCom Group Inc., Units,
0.0%, 9-15-2005 (A)(E) .............. 63 3,468,750
Southern Pacific Rail Corporation,
9.375%, 8-15-2005 ................... 9,700 10,524,500
Total ............................... 18,083,250
Retailing - 9.14%
Big V Supermarkets, Inc.,
11.0%, 2-15-2004 .................... 5,000 4,025,000
Bruno's Inc.,
10.5%, 8-1-2005 ..................... 8,500 8,245,000
Dominick's Finer Foods, Inc.,
10.875%, 5-1-2005 (A) ............... 5,000 5,075,000
Eckerd Corporation,
9.25%, 2-15-2004 .................... 5,500 5,788,750
Kroger Co. (The):
9.75%, 2-15-2004 .................... 10,000 10,750,000
9.25%, 1-1-2005 ..................... 3,000 3,225,000
Orchard Supply Hardware Stores Corporation,
9.375%, 2-15-2002 ................... 4,000 3,700,000
P & C Food Markets, Inc.,
11.5%, 10-15-2001 ................... 5,000 5,050,000
Penn Traffic Company:
8.625%, 12-15-2003 .................. 6,500 5,590,000
10.375%, 10-1-2004 .................. 8,500 8,117,500
9.625%, 4-15-2005 ................... 5,000 4,050,000
Ralphs Grocery Company,
10.45%, 6-15-2004 ................... 6,500 6,353,750
Safeway Inc.,
10.0%, 12-1-2001 .................... 8,000 8,880,000
WestPoint Stevens Inc.,
9.375%, 12-15-2005 .................. 10,000 9,725,000
Total ............................... 88,575,000
See Notes to Schedule of Investments on pages 16 and 17.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Services, Consumer and Business - 1.63%
Bell & Howell Company,
10.75%, 10-1-2002 ................... $ 5,000 $ 5,325,000
Solon Automated Services, Inc.,
12.75%, 7-15-2001 ................... 4,000 4,000,000
United Stationers Supply Co.,
12.75%, 5-1-2005 (A) ................ 6,000 6,420,000
Total ............................... 15,745,000
Shipping - 0.37%
Trans Ocean Container Corporation,
12.25%, 7-1-2004 .................... 3,500 3,570,000
Steel - 0.82%
AK Steel Corporation,
10.75%, 4-1-2004 .................... 1,125 1,202,344
Inland Steel Industries, Inc.,
12.75%, 12-15-2002 .................. 6,000 6,690,000
Total ............................... 7,892,344
Telecommunications - 2.67%
Centennial Cellular Corp.,
10.125%, 5-15-2005 .................. 3,000 3,015,000
Heartland Wireless Communications,
Inc., Units,
13.0%, 4-15-2003 (A)(F) ............. 2,000 2,140,000
MFS Communications Company, Inc.,
0.0%, 1-15-2004 (C) ................. 9,500 7,196,250
Metrocall, Inc.,
10.375%, 10-1-2007 .................. 3,500 3,550,330
Rogers Cantel Mobile Communications Inc.,
10.75%, 11-1-2001 ................... 2,500 2,625,000
Summit Communications Group, Inc.,
10.5%, 4-15-2005 .................... 5,000 5,500,000
USA Mobile Communications, Inc. II,
9.5%, 2-1-2004 ...................... 2,000 1,860,000
Total ............................... 25,886,580
Textiles and Apparel - 1.11%
CMI Industries, Inc.,
9.5%, 10-1-2003 ..................... 4,500 4,140,000
CONSOLTEX GROUP INC.,
11.0%, 10-1-2003 .................... 7,000 6,580,000
Linter Textiles Corporation Limited,
13.75%, 10-1-2000 (D) ............... 17,200 86,000
Total ............................... 10,806,000
See Notes to Schedule of Investments on pages 16 and 17.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1995
Principal
Amount in
Thousands Value
TOTAL CORPORATE DEBT SECURITIES - 84.39% $817,409,966
(Cost: $810,601,785)
UNITED STATES GOVERNMENT SECURITY - 1.70%
United States Treasury,
7.5%, 11-15-2016 .................... $15,000 $ 16,455,450
(Cost: $15,116,578)
TOTAL SHORT-TERM SECURITIES - 7.56% $ 73,252,561
(Cost: $73,252,561)
TOTAL INVESTMENT SECURITIES - 97.05% $939,990,995
(Cost: $963,059,866)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 2.95% 28,606,323
NET ASSETS - 100.00% $968,597,318
See Notes to Schedule of Investments on pages 16 and 17.
<PAGE>
UNITED HIGH INCOME FUND, INC.
SEPTEMBER 30, 1995
Notes to Schedule of Investments
No income dividends were paid during the preceding 12 months.
(A) As of September 30, 1995, the following restricted securities were owned:
Shares/
Principal
Acquisition Amount Market
Security Date in 000's Cost Value
-------- ----------- --------------------------------
Advanstar
Holdings,
Inc., Warrants 3/30/92 1,750$ 0 $ 1,750
Consolidated Hydro, Inc.,
Warrants 6/15/93 5,400 127,817 5
Fitzgeralds Gaming
Corporation,
Warrants 3/8/94 to
9/15/95 14,000 506,065 140,000
Alliance Entertainment Corp.:
11.25%, 7-5-2005 7/18/95 $3,500 3,500,000 3,491,250
7/21/95 1,000 1,007,500 997,500
American Safety Razor Company,
9.875%, 8-1-2005 7/27/95 1,000 1,000,000 1,000,000
Assisted Living Concepts, Inc.,
7.0%, 7-31-2005 8/2/95 1,000 1,000,000 1,155,000
Communications & Power Industries,
Inc.,
12.0%, 8-1-2005 8/2/95 4,000 4,000,000 4,090,000
Dominick's Finer Foods, Inc.,
10.875%, 5-1-2005 4/27/95 3,000 3,000,000 3,045,000
8/2/95 2,000 2,055,000 2,030,000
Exide Corporation:
10.0%, 4-15-2005 4/21/95 2,000 2,000,000 2,110,000
Fitzgeralds Gaming
Corporation,
13.0%, 3-15-96 3/8/94 3,500 3,326,435 2,590,000
Granite Broadcasting Corporation,
10.375%, 5-15-20055/12/95 2,500 2,500,000 2,550,000
Heartland Wireless Communications,
Inc., Units,
13.0%, 4-15-2003 4/20/95 2,000 2,000,000 2,140,000
IntelCom Group Inc., Units,
0.0%, 9-15-2005 8/3/95 63 3,209,000 3,468,750
Players International, Inc.,
10.875%, 4-15-20054/10/95 4,000 4,000,000 3,800,000
Premier Parks Inc.,
12.0%, 8-15-2003 8/10/95 1,500 1,500,000 1,537,500
Rio Hotel & Casino, Inc.,
10.625%, 7-15-20057/18/95 5,000 5,000,000 4,850,000
Specialty Foods Corporation:
11.125%, 10-1-20027/12/95 2,000 2,000,000 1,960,000
United Stationers Supply Co.,
12.75%, 5-1-2005 4/26/95 6,000 6,000,000 6,420,000
Walbro Corporation,
9.875%, 7-15-2005 7/21/95 2,000 1,993,000 1,960,000
----------------------
$49,724,817$49,336,755
======================
The total market value of restricted securities represents approximately
5.09% of the total net assets at September 30, 1995.
(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) Each unit consists of 10 Senior Discount notes and 33 Warrants.
(F) Each unit consists of 1,000 Senior Notes and six Warrants.
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, 1995
Assets
Investment securities - at value
(Notes 1 and 3) ............................... $ 939,990,995
Cash ........................................... 135,685
Receivables:
Investment securities sold .................... 23,173,125
Dividends and interest ........................ 19,095,715
Fund shares sold .............................. 443,271
Prepaid insurance premium ...................... 67,151
--------------
Total assets ................................ 982,905,942
--------------
Liabilities
Payable for investment securities purchased .... 10,250,000
Payable for Fund shares redeemed ............... 3,591,913
Accrued service fee ............................ 183,530
Accrued transfer agency and dividend
disbursing .................................... 98,285
Accrued accounting services fee ................ 7,083
Other .......................................... 177,813
--------------
Total liabilities ........................... 14,308,624
--------------
Total net assets ........................... $ 968,597,318
==============
Net Assets
$1.00 par value capital stock, authorized --
500,000,000; shares outstanding -- 107,418,549
Capital stock ................................. $ 107,418,549
Additional paid-in capital .................... 1,309,906,292
Accumulated undistributed income (loss):
Accumulated undistributed net investment income 3,477,477
Accumulated undistributed net realized
loss on investment transactions ............. (429,136,129)
Net unrealized depreciation in value of
investments at end of period ................ (23,068,871)
--------------
Net assets applicable to outstanding
units of capital ........................... $ 968,597,318
==============
Net asset value per share (net assets divided
by shares outstanding) ......................... $9.02
=====
See notes to financial statements.
<PAGE>
UNITED HIGH INCOME FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended SEPTEMBER 30, 1995
Investment Income
Income:
Interest ........................................ $46,886,863
Dividends ....................................... 113,057
-----------
Total income .................................. 46,999,920
-----------
Expenses (Note 2):
Investment management fee ....................... 2,712,593
Transfer agency and dividend disbursing ......... 552,252
Service fee ..................................... 457,587
Legal fees ...................................... 98,795
Accounting services fee ......................... 42,500
Audit fees ...................................... 27,925
Custodian fees .................................. 17,162
Other ........................................... 90,272
-----------
Total expenses ................................ 3,999,086
-----------
Net investment income ........................ 43,000,834
-----------
Realized and Unrealized Gain (Loss) on Investments
Realized net loss on investments ................. (14,739,213)
Unrealized appreciation in value of
investments during the period.................... 47,520,625
-----------
Net gain on investments ......................... 32,781,412
-----------
Net increase in net assets resulting
from operations .............................. $75,782,246
===========
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,
1995 1995
-------------- -------------
Increase (Decrease) in Net Assets
Operations:
Net investment income .......... $ 43,000,834 $ 85,909,957
Realized net loss on
investments ................... (14,739,213) (38,935,982)
Unrealized appreciation
(depreciation) ............... 47,520,625 (16,709,489)
------------ --------------
Net increase in net assets
resulting from operations ... 75,782,246 30,264,486
------------ --------------
Dividends to shareholders from
net investment income* ......... (41,263,060) (84,555,022)
------------ --------------
Capital share transactions:
Proceeds from sale of shares
(4,003,142 and 7,942,722
shares, respectively) ........ 35,756,227 69,649,781
Proceeds from reinvestment of
dividends (3,821,443 and
7,920,844 shares,
respectively) ................ 34,052,060 69,202,582
Payments for shares redeemed
(7,755,870 and 17,970,581
shares, respectively) ........ (69,306,091) (157,604,402)
------------ --------------
Net increase (decrease) in net
assets resulting from capital
share transactions .......... 502,196 (18,752,039)
------------ --------------
Total increase (decrease) ... 35,021,382 (73,042,575)
Net Assets
Beginning of period ............. 933,575,936 1,006,618,511
------------ --------------
End of period, including
undistributed net investment
income of $3,477,477 and
$1,739,703, respectively ....... $968,597,318 $ 933,575,936
============ ==============
*See "Financial Highlights" on page 21.
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 -----------------------------------
9-30-95 1995 1994 1993 1992 1991
------- ------ ------ ------ ------ ------
Net asset value,
beginning of period $8.70 $9.20 $9.21 $8.82 $7.51 $8.51
----- ----- ----- ----- ----- ------
Income from investment
operations:
Net investment
income .......... .40 .80 .80 .83 .95 1.16
Net realized and
unrealized gain
(loss) on
investments ..... .30 (0.51) (0.01) .40 1.29 (1.00)
----- ----- ----- ----- ----- ------
Total from investment
operations ....... .70 .29 .79 1.23 2.24 .16
----- ----- ----- ----- ----- ------
Less dividends
declared from net
investment income . (0.38) (0.79) (0.80) (0.84) (0.93) (1.16)
----- ----- ----- ----- ----- ------
Net asset value,
end of period .... $9.02 $8.70 $9.20 $9.21 $8.82 $7.51
===== ===== ===== ===== ===== =====
Total return* ...... 8.22% 3.41% 8.69% 14.72% 31.72% 2.56%
Net assets, end
of period (000
omitted) .........$968,597$933,576$1,006,619$986,867$910,917$735,376
Ratio of expenses to
average net assets 0.83%** 0.84% 0.78% 0.75% 0.79% 0.82%
Ratio of net investment
income to average
net assets ....... 8.92%** 9.07% 8.51% 9.28% 11.56% 14.89%
Portfolio turnover
rate ............. 30.32%**18.94% 54.80% 58.68% 62.12% 30.43%
*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, 1995
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 $13.3 billion of
combined net assets at September 30, 1995) 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
$981,885, out of which W&R paid sales commissions of $555,841 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 $18,097.
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 $131,168,986 while proceeds from
maturities and sales aggregated $136,752,238. Purchases of short-term
securities aggregated $498,452,217 while proceeds from maturities and sales of
short-term securities aggregated $494,347,456. 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,
1995 was $962,068,320, resulting in net unrealized depreciation of $22,077,325,
of which $41,902,949 related to appreciated securities and $63,980,274 related
to depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized net capital losses of
$38,929,250 during its fiscal year ended March 31, 1995, of which $20,966,497
was deferred to the year ending March 31, 1996 (see discussion below). Capital
loss carryovers aggregated $394,421,964 at March 31, 1995 and are available to
offset future realized capital gain net income for Federal income tax purposes
through March 31, 1997; $325,242,583 of this amount is available through March
31, 1998; $303,657,326 is available through March 31, 1999; $131,987,156 is
available through March 31, 2000: and $17,962,753 is available through March 31,
2003.
Internal Revenue Code regulations permit the Fund to defer into its next
fiscal year net capital losses incurred between each November 1 and the end of
its next fiscal year ("post-October losses"). From November 1, 1994 through
March 31, 1995, the Fund incurred net capital losses of $20,966,497 which have
been deferred to the fiscal year ending March 31, 1996.
<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, 1995, 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, 1995 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
November 3, 1995
<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
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
James B. Judd, Kansas City, Missouri
William T. Morgan, Los Angeles, California
Doyle Patterson, Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
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 Municipal High Income Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Continental Income Fund, Inc.
United Retirement Shares, Inc.
United Asset Strategy Fund, Inc.
United Income Fund
United Accumulative Fund
United Vanguard Fund, Inc.
United New Concepts Fund, Inc.
United Science and Technology Fund
United International Growth Fund, Inc.
United Gold & Government Fund, Inc.
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
Our INTERNET address is:
http://www.waddell.com
NUR1009SA(9-95)
printed on recycled paper
