United
High Income
Fund, Inc.
ANNUAL
REPORT
----------------------------------------
For the fiscal year ended March 31, 1998
<PAGE>
MANAGER'S LETTER
- -----------------------------------------------------------------
MARCH 31, 1998
Dear Shareholder:
This report relates to the operation of United High Income Fund for the
fiscal year ended March 31, 1998. The following discussion, graphs and tables
provide you with information regarding the Fund's performance during that
period.
The past fiscal year was a very busy one in the high yield market.
Enormous demand for high yield bonds provided the capital to absorb the record
issuance of such securities. The spread between high yield bonds and Treasuries
reached all-time lows during the year, but widened back out during the October
selloff in the equity markets. One ongoing trend that gained steam during the
past year was industry consolidation, resulting in substantial merger and
acquisition activity. Another trend was further deregulation of the telephone
industry which led to the creation of many new telephone companies and large
demand for capital to finance the new infrastructures. This industry now
accounts for twelve percent of the Salomon Brothers High Yield Composite Index,
accounted for nineteen percent of new issues in 1997 and was the best performing
sector for the last twelve months.
The investment strategies employed during the past year were to continue to
stay fully invested and to increase the Fund's holdings of "B" rated securities.
Both objectives were achieved by participating in the new issue calendar. The
Fund's holdings in the telecommunications sector contributed to the Fund's
performance. Also benefiting performance were the Fund's equity positions,
which totaled 7.5% of the Fund's assets.
The strategies and techniques we applied resulted in the performance of the
Fund for the fiscal year remaining above the Salomon Brothers High Yield
Composite Index and the Lipper High Current Yield Fund Universe Average, as
charted on the following page. The Salomon Brothers Index reflects the
performance of securities that generally represent the high-yield bond market
and the Lipper index reflects the universe of funds with similar investment
objectives.
Our current outlook for the next fiscal year is a bit cautious. Cash flows
into the high yield market are not expected to be as robust as last year and
some credit quality concerns are developing. Events in Asia and Japan could
lead to some rise in default rates. Strategies for the coming year therefore
include stressing credit quality and concentrating the Fund's holdings on less
cyclically exposed areas.
Thank you very much for your continued support and confidence in our
organization.
Respectfully,
Louise D. Rieke
Manager, United High Income Fund, Inc.
<PAGE>
Comparison of Change in Value of $10,000 Investment in
United High Income Fund, Inc., Class A Shares,
Salomon Brothers High Yield Composite Index
and the Lipper High Current Yield Fund Universe Average
Lipper
United Salomon High
High Brothers Current
Income High Yield
Fund, Yield Fund
Class Composite Universe
A Shares Index Average
--------- ------------- ----------
03/31/88 Purchase 9,425 10,000 10,000
03/31/89 10,264 11,006 10,859
03/31/90 8,665 10,550 10,148
03/31/91 8,887 12,026 10,740
03/31/92 11,706 15,482 13,823
03/31/93 13,429 18,141 15,982
03/31/94 14,597 19,633 17,665
03/31/95 15,097 20,907 17,954
03/31/96 17,235 24,321 20,603
03/31/97 19,121 27,021 22,967
03/31/98 22,570 31,840 26,896
===== United High Income Fund, Class A Shares* -- $22,570
***** Salomon Brothers High Yield Composite Index - $31,840
- ----- Lipper High Current Yield Fund Universe Average -- $26,896
*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.
Annual Average Total Return+
Class A++ Class Y
-----------------------------
Year Ended
3/31/98 11.24% 18.13%
5 Years Ended
3/31/98 9.63% N/A
10 Years Ended
3/31/98 8.48% N/A
Life of Class Y+++ N/A 13.41%
+ Total return for the Class Y shares may be greater than that of the Class A
shares because the Fund's Class Y shares are not subject to a sales load or
12b-1 fees.
++ Performance data quoted represents past performance and is based on
deduction of a 5.75% sales load on the initial purchase in each of the
three periods. Investment return and principal value will fluctuate and an
investor's shares, when redeemed, may be worth more or less than their
original cost.
+++ 1/4/96 (the date on which Fund Class Y shares were first acquired by
shareholders) through 3/31/98.
Past performance is not predictive of future performance. Indexes are
unmanaged.
<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.
FOUNDED: 1979
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
<PAGE>
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Fiscal Year Ended March 31, 1998
- ----------------------------------------
DIVIDENDS PAID $0.82
=====
NET ASSET VALUE ON
3/31/98 $10.04
3/31/97 9.25
------
CHANGE PER SHARE $ 0.79
======
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 3-31-98 11.24% 18.03%
5-year period ended 3-31-98 9.63% 10.94%
10-year period ended 3-31-98 8.48% 9.12%
*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 March 31, 1998, United High Income Fund, Inc. had net assets totaling
$1,105,090,324 invested in a diversified portfolio of:
86.26% Corporate Debt Securities
8.32% Common and Preferred Stocks and Warrants
5.42% Cash and Cash Equivalents
As a shareholder of United High Income Fund, Inc., for every $100 you had
invested on March 31, 1998, your Fund owned:
$29.26 Manufacturing Bonds
25.90 Transportation, Communication, Electric
and Sanitary Services Bonds
14.05 Services Bonds
9.38 Wholesale and Retail Trade Bonds
8.32 Common and Preferred Stocks and Warrants
5.42 Cash and Cash Equivalents
2.58 Mining Bonds
1.60 Agriculture, Forestry and Fisheries Bonds
1.51 Miscellaneous Investing Institutions Bonds
1.44 Finance, Insurance and Real Estate Bonds
0.54 Contract Construction Bonds
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Shares Value
COMMON AND PREFERRED STOCKS AND WARRANTS
Agricultural Production - Livestock - 0.13%
Pilgrim's Pride Corporation .......... 100,000 $ 1,456,200
Communication - 2.25%
Adelphia Communications Corporation,
13.0% Preferred .................... 5,000 595,000
Esat Holdings Limited,
Warrants (A)* ....................... 3,000 120,000
Heartland Wireless Communications,
Inc., Warrants (A)* ................. 12,000 120
IXC Communications, Inc.,
12.5% Preferred ..................... 3,716 4,533,520
Intermedia Communications of
Florida, Inc., 13.5% Preferred ...... 5,761 7,057,265
Iridium LLC, Warrants (A)* ........... 6,500 1,592,500
Jacor Communications, Inc.* .......... 50,000 2,959,350
Microcell Telecommunications Inc.,
Warrants (A)* ....................... 58,000 1,080,540
Primus Telecommunications Group, Incorporated,
Warrants* ........................... 5,000 175,000
Teleport Communications Group Inc.* .. 62,400 3,664,003
Young Broadcasting Inc., Class A* .... 63,000 3,150,000
Total ............................... 24,927,298
Depository Institutions - 0.38%
California Federal Preferred Capital
Corporation, 9.125% Preferred ....... 150,000 4,162,500
Electric, Gas and Sanitary Services - 0.25%
Consolidated Hydro, Inc.,
Class B Warrants* ................... 7,578 15,156
Consolidated Hydro, Inc.,
Class C Warrants* ................... 4,919 7,379
EUA Power Corporation, Contingent
Interest Certificates* .............. 9,500 10
El Paso Electric Company,
11.4% Preferred ..................... 18,715 2,079,704
IntelCom Group Inc., Warrants (A)* ... 20,625 644,531
Total ............................... 2,746,780
Electronic & Other Electric Equipment - 0.03%
Electronic Retailing Systems
International, Inc., Warrants* ...... 6,500 162,500
Powertel, Inc., Warrants* ............ 16,000 188,000
Total ............................... 350,500
Furniture and Fixtures - 0.68%
Lear Corporation* .................... 132,700 7,480,963
General Building Contractors - 1.37%
Walter Industries, Inc.* ............. 710,990 15,197,411
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Shares Value
COMMON AND PREFERRED STOCKS AND
WARRANTS (Continued)
Holding and Other Investment Offices - 0.15%
National Health Investors, Inc. ...... 41,630 $ 1,659,996
Hotels and Other Lodging Places - 0.01%
Fitzgeralds Gaming Corporation,
Warrants (A)* ....................... 17,500 105,000
Lumber and Wood Products - 2.25%
Triangle Pacific Corp.* .............. 660,844 24,864,256
Paper and Allied Products - 0.17%
SF Holdings Group, Inc., Units (A)(B)* 200 1,837,500
Printing and Publishing - 0.65%
PRIMEDIA Inc., 10.0% Preferred ....... 35,000 3,692,500
World Color Press, Inc.* ............. 100,000 3,475,000
Total ............................... 7,167,500
TOTAL COMMON AND PREFERRED STOCKS
AND WARRANTS - 8.32% $ 91,955,904
(Cost: $69,113,597)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Agricultural Production - Crops - 0.90%
Frank's Nursery & Crafts, Inc.,
10.25%, 3-1-2008 (A) ................ $ 5,650 5,621,750
Hines Horticulture, Inc.,
11.75%, 10-15-2005 .................. 3,925 4,317,500
Total ............................... 9,939,250
Agricultural Production - Livestock - 0.33%
Pilgrim's Pride Corporation,
10.875%, 8-1-2003 ................... 3,500 3,648,750
Amusement and Recreation Services - 1.37%
American Skiing Company,
12.0%, 7-15-2006 .................... 4,500 5,062,500
Premier Parks Inc.:
12.0%, 8-15-2003 .................... 1,500 1,670,625
9.25%, 4-1-2006 ..................... 2,000 2,050,000
Trump Hotels & Casino Resorts
Holdings, L.P.,
15.5%, 6-15-2005 .................... 5,500 6,311,250
Total ............................... 15,094,375
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Apparel and Accessory Stores - 0.33%
Wilsons The Leather Experts Inc.,
11.25%, 8-15-2004 ................... $ 3,500 $ 3,605,000
Apparel and Other Textile Products - 1.82%
Consoltex Group Inc.,
11.0%, 10-1-2003 .................... 7,000 7,420,000
Pillowtex Corporation:
10.0%, 11-15-2006 ................... 1,000 1,082,500
9.0%, 12-15-2007 (A) ................ 4,250 4,430,625
WestPoint Stevens Inc.,
9.375%, 12-15-2005 .................. 6,750 7,138,125
Total ............................... 20,071,250
Auto Repair, Services and Parking - 0.64%
Diamond Triumph Auto Glass, Inc.,
9.25%, 4-1-2008 (A) ................. 2,000 2,032,500
Safelite Glass Corp.,
9.875%, 12-15-2006 (A) .............. 4,750 5,070,625
Total ............................... 7,103,125
Automotive Dealers and Service Stations - 0.64%
Chief Auto Parts Inc.,
10.5%, 5-15-2005 .................... 7,000 7,105,000
Building Materials and Garden Supplies - 0.52%
Central Tractor Farm & Country, Inc.,
10.625%, 4-1-2007 ................... 2,500 2,671,875
Reliant Building Products, Inc.,
10.875%, 5-1-2004 ................... 3,000 3,120,000
Total ............................... 5,791,875
Business Services - 2.17%
Adams Outdoor Advertising Limited Partnership,
10.75%, 3-15-2006 ................... 4,250 4,706,875
Coinmach Corporation,
11.75%, 11-15-2005 .................. 5,620 6,294,400
Federal Data Corporation,
10.125%, 8-1-2005 ................... 2,500 2,587,500
Lamar Advertising Company,
9.625%, 12-1-2006 ................... 3,000 3,270,000
UNICCO Service Company,
9.875%, 10-15-2007 .................. 2,000 2,045,000
Universal Outdoor, Inc.,
9.75%, 10-15-2006 ................... 4,500 5,118,750
Total ............................... 24,022,525
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Chemicals and Allied Products - 2.57%
Carson, Inc.,
10.375%, 11-1-2007 .................. $ 2,900 $ 2,987,000
Chattem, Inc.,
8.875%, 4-1-2008 (A) ................ 2,000 2,030,000
Dade International Inc.,
11.125%, 5-1-2006 ................... 2,500 2,793,750
Spinnaker Industries, Inc.,
10.75%, 10-15-2006 .................. 6,000 6,240,000
UCC Investors Holding, Inc.:
10.5%, 5-1-2002 ..................... 9,000 9,990,000
0.0%, 5-1-2005 (C) .................. 4,410 4,365,900
Total ............................... 28,406,650
Coal Mining - 0.39%
AEI Holding Company, Inc.,
10.0%, 11-15-2007 (A) ............... 2,250 2,373,750
Anker Coal Group, Inc.,
9.75%, 10-1-2007 .................... 1,950 1,920,750
Total ............................... 4,294,500
Communication - 22.24%
ACME Television, LLC,
0.0%, 9-30-2004 (A)(C) .............. 7,400 6,086,500
Adelphia Communications Corporation:
10.25%, 7-15-2000 ................... 2,250 2,334,375
12.5%, 5-15-2002 .................... 389 408,450
9.25%, 10-1-2002 .................... 7,000 7,280,000
10.5%, 7-15-2004 .................... 4,000 4,390,000
9.875%, 3-1-2007 .................... 3,000 3,262,500
Allbritton Communications Company,
9.75%, 11-30-2007 ................... 4,500 4,736,250
Allegiance Telecom, Inc., Units,
0.0%, 2-15-2008 (A)(C)(D) ........... 6,000 3,480,000
American Radio Systems Corporation,
9.0%, 2-1-2006 ...................... 3,250 3,477,500
Centennial Cellular Corp.,
10.125%, 5-15-2005 .................. 3,000 3,322,500
Comcast Corporation,
9.5%, 1-15-2008 ..................... 5,250 5,572,088
Comcast UK Cable Partners Limited,
0.0%, 11-15-2007 (C) ................ 9,000 7,470,000
Concentric Network Corporation, Units,
12.75%, 12-15-2007 (A)(E) ........... 4,000 4,600,000
Crown Castle International Corp.,
0.0%, 11-15-2007 (A)(C) ............. 3,000 2,017,500
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Communication (Continued)
Diamond Cable Communications Plc,
0.0%, 12-15-2005 (C) ................ $13,500 $ 10,732,500
Esat Holdings Limited,
0.0%, 2-1-2007 (C) .................. 3,000 2,250,000
Hyperion Telecommunications, Inc.:
0.0%, 4-15-2003 (C) ................. 8,750 6,715,625
12.25%, 9-1-2004 .................... 2,000 2,250,000
ICG Holdings, Inc.,
0.0%, 9-15-2005 (C) ................. 6,250 5,328,125
ITC ^ DeltaCom, Inc.,
8.875%, 3-1-2008 (A) ................ 2,400 2,484,000
Intermedia Communications Inc.,
8.5%, 1-15-2008 (A) ................. 1,000 1,050,000
Intermedia Communications of Florida, Inc.,
0.0%, 5-15-2006 (C).................. 6,000 4,905,000
Iridium LLC:
11.25%, 7-15-2005 (A) ............... 1,400 1,484,000
13.0%, 7-15-2005 .................... 7,900 8,848,000
Jacor Communications, Inc.,
10.125%, 6-15-2006 .................. 2,000 2,190,000
LIN Holdings Corp.,
0.0%, 3-1-2008 (A)(C) ............... 4,000 2,520,000
LIN Television Corporation,
8.375%, 3-1-2008 (A) ................ 6,400 6,448,000
Marcus Cable Co.,
0.0%, 12-15-2005 (C) ................ 5,500 4,991,250
Marcus Cable Operating Company, L.P.,
0.0%, 8-1-2004 (C) .................. 10,000 9,500,000
Microcell Telecommunications Inc.:
0.0%, 6-1-2006 (C) .................. 16,000 11,880,000
0.0%, 10-15-2007 (C) ................ 3,500 1,568,665
Micron Custom Manufacturing Services, Inc.,
9.75%, 3-1-2008 (A) ................. 3,500 3,535,000
Nextel Communications, Inc.:
0.0%, 8-15-2004 (C) ................. 7,500 7,218,750
0.0%, 9-15-2007 (C) ................. 2,500 1,675,000
0.0%, 2-15-2008 (A)(C) .............. 6,400 4,088,000
Primus Telecommunications Group, Incorporated,
11.75%, 8-1-2004 .................... 5,000 5,600,000
Qwest Communications International Inc.,
0.0%, 10-15-2007 (C) ................ 2,750 2,021,250
Rifkin Acquisition Partners, L.L.L.P.,
11.125%, 1-15-2006 .................. 4,000 4,430,000
Rogers Communications Inc.,
9.125%, 1-15-2006 ................... 7,500 7,668,750
SFX Broadcasting, Inc.,
10.75%, 5-15-2006 ................... 3,500 3,867,500
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Communication (Continued)
Salem Communications Corporation,
9.5%, 10-1-2007 ..................... $ 3,425 $ 3,579,125
Satelites Mexicanos, S.A. de C.V.,
10.125%, 11-1-2004 (A) .............. 1,750 1,802,500
Sinclair Broadcasting Group,
9.0%, 7-15-2007 ..................... 4,000 4,170,000
Sprint Spectrum L.P.,
0.0%, 8-15-2006 (C) ................. 8,000 6,640,000
Sullivan Broadcasting Company, Inc.,
10.25%, 12-15-2005 .................. 1,000 1,082,500
Telegroup, Inc.,
0.0%, 11-1-2004 (C) ................. 3,000 2,482,500
Teleport Communications Group Inc.:
9.875%, 7-1-2006 .................... 2,000 2,285,000
0.0%, 7-1-2007 (C) .................. 9,000 7,762,500
Telesystem International Wireless Inc.,
0.0%, 11-1-2007 (A)(C) .............. 4,000 2,560,000
Vanguard Cellular Systems, Inc.,
9.375%, 4-15-2006 ................... 4,500 4,747,500
WinStar Communications, Inc.:
0.0%, 10-15-2005 (Convertible) (A)(C) 3,400 4,828,000
0.0%, 3-15-2008 (A)(C) .............. 3,000 3,075,000
10.0%, 3-15-2008 (A)................. 4,750 4,821,250
WorldCom, Inc.:
9.375%, 1-15-2004 ................... 5,883 6,234,215
8.875%, 1-15-2006 ................... 5,534 6,031,949
Total ............................... 245,789,117
Depository Institutions - 0.92%
First Nationwide Holdings Inc.:
9.125%, 1-15-2003 ................... 5,750 6,109,375
12.5%, 4-15-2003 .................... 3,500 4,007,500
Total ............................... 10,116,875
Eating and Drinking Places - 0.56%
Foodmaker, Inc.,
9.25%, 3-1-99 ....................... 2,500 2,531,250
SC International Services, Inc.,
9.25%, 9-1-2007 ..................... 3,475 3,644,406
Total ............................... 6,175,656
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Electric, Gas and Sanitary Services - 1.57%
Allied Waste Industries, Inc.,
0.0%, 6-1-2007 (C) .................. $ 5,000 $ 3,675,000
Allied Waste North America, Inc.,
10.25%, 12-1-2006 ................... 7,250 8,047,500
El Paso Electric Company,
9.4%, 5-1-2011 ...................... 5,000 5,634,450
Total ............................... 17,356,950
Electronic and Other Electric Equipment - 4.40%
Communications & Power Industries, Inc.,
12.0%, 8-1-2005 ..................... 4,000 4,470,000
Communications Instruments, Inc.,
10.0%, 9-15-2004 .................... 2,500 2,606,250
DII Group, Inc. (The),
8.5%, 9-15-2007 ..................... 2,000 2,025,000
Echostar Communications Corporation:
0.0%, 3-15-2004 (C) ................. 6,000 5,475,000
0.0%, 6-1-2004 (C) .................. 3,500 3,360,000
Electronic Retailing Systems
International, Inc.,
0.0%, 2-1-2004 (C) .................. 6,500 3,770,000
Elgar Holdings, Inc.,
9.875%, 2-1-2008 (A) ................ 4,000 4,080,000
InterCel, Inc.,
0.0%, 2-1-2006 (C) .................. 5,000 3,906,250
Motors and Gears, Inc.,
10.75%, 11-15-2006 .................. 2,500 2,728,125
Omnipoint Corporation,
11.625%, 8-15-2006 .................. 5,000 5,500,000
Phase Metrics, Inc.,
10.75%, 2-1-2005 (A) ................ 3,000 3,041,250
Powertel, Inc.,
11.125%, 6-1-2007 ................... 1,500 1,635,000
Telex Communications, Inc.,
10.5%, 5-1-2007 ..................... 2,500 2,362,500
Viasystems, Inc.,
9.75%, 6-1-2007 ..................... 3,500 3,657,500
Total ............................... 48,616,875
Engineering and Management Services - 0.28%
United International Holdings, Inc.,
0.0%, 2-15-2008 (A)(C) .............. 5,000 3,125,000
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Fabricated Metal Products - 2.24%
American Safety Razor Company,
9.875%, 8-1-2005 .................... $ 1,000 $ 1,085,000
Neenah Corporation,
11.125%, 5-1-2007 ................... 5,500 6,105,000
Nortek, Inc.,
9.875%, 3-1-2004 .................... 7,000 7,280,000
Safety Components International, Inc.,
10.125%, 7-15-2007 .................. 6,250 6,539,063
U.S. Can Corporation,
10.125%, 10-15-2006 ................. 3,500 3,727,500
Total ............................... 24,736,563
Food and Kindred Products - 1.40%
B & G Foods, Inc.,
9.625%, 8-1-2007 .................... 4,500 4,623,750
Coca-Cola FEMSA, S.A. de C.V.,
8.95%, 11-1-2006 .................... 3,500 3,648,750
Eagle Family Foods, Inc.,
8.75%, 1-15-2008 (A) ................ 3,500 3,500,000
Southern Foods Group, L.P.,
9.875%, 9-1-2007 (A) ................ 3,450 3,661,313
Total ............................... 15,433,813
Food Stores - 0.89%
Big V Supermarkets, Inc.,
11.0%, 2-15-2004 .................... 5,000 5,175,000
Pueblo Xtra International, Inc.,
9.5%, 8-1-2003 ...................... 4,750 4,631,250
Total ............................... 9,806,250
Forestry - 0.37%
U.S. Timberlands Company, L.P.,
9.625%, 11-15-2007 .................. 3,850 4,032,875
General Building Contractors - 0.54%
NVR L.P.,
11.0%, 4-15-2003 .................... 5,500 5,926,250
Health Services - 3.91%
Genesis ElderCare Acquisition Corp.,
9.0%, 8-1-2007 (A) .................. 5,000 5,125,000
Magellan Health Services, Inc.,
9.0%, 2-15-2008 (A) ................. 2,000 2,015,000
Paragon Health Network, Inc.,
9.5%, 11-1-2007 ..................... 4,000 4,090,000
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Health Services (Continued)
Prime Medical Services, Inc.,
8.75%, 4-1-2008 (A) ................. $ 1,000 $ 1,007,500
Quorum Health Group, Inc.,
8.75%, 11-1-2005 .................... 8,000 8,440,000
Tenet Healthcare Corporation:
9.625%, 9-1-2002 .................... 7,500 8,193,750
10.125%, 3-1-2005 ................... 6,000 6,570,000
8.625%, 1-15-2007 ................... 7,500 7,781,250
Total ............................... 43,222,500
Holding and Other Investment Offices - 1.51%
Grupo Industrial Durango, S.A. de C.V.,
12.625%, 8-1-2003 ................... 8,000 9,090,000
LTC Properties, Inc., Convertible:
8.5%, 1-1-2000 ...................... 3,000 3,851,250
8.5%, 1-1-2001 ...................... 3,000 3,723,750
Total ............................... 16,665,000
Hotels and Other Lodging Places - 2.87%
Boyd Gaming Corporation,
9.25%, 10-1-2003 .................... 3,250 3,469,375
CapStar Hotel Company,
8.75%, 8-15-2007 .................... 2,500 2,600,000
HMC Acquisition Properties, Inc.,
9.0%, 12-15-2007 .................... 6,000 6,315,000
Prime Hospitality Corp.:
9.25%, 1-15-2006 .................... 4,000 4,260,000
9.75%, 4-1-2007 ..................... 2,500 2,700,000
Showboat, Inc.,
9.25%, 5-1-2008 ..................... 9,000 9,607,500
Station Casinos, Inc.,
10.125%, 3-15-2006 .................. 2,500 2,781,250
Total ............................... 31,733,125
Industrial Machinery and Equipment - 3.95%
American Standard Inc.:
0.0%, 6-1-2005 (C) .................. 12,250 12,617,500
9.25%, 12-1-2016 .................... 1,700 1,759,500
Anchor Lamina Inc. and
Anchor Lamina America, Inc.,
9.875%, 2-1-2008 (A)................. 1,500 1,526,250
Axiohm Transaction Solutions, Inc.,
9.75%, 10-1-2007 .................... 2,000 2,040,000
Columbus McKinnon Corporation,
8.5%, 4-1-2008 (A) .................. 2,000 2,015,000
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Industrial Machinery and Equipment (Continued)
Falcon Building Products, Inc.,
0.0%, 6-15-2007 (C) ................. $11,000 $ 7,590,000
National Equipment Services, Inc.,
10.0%, 11-30-2004 (A) ............... 4,500 4,770,000
Paragon Corporate Holdings, Inc.,
9.625%, 4-1-2008 (A) ................ 3,000 2,992,500
Terex Corporation,
8.875%, 4-1-2008 (A) ................ 6,000 6,030,000
Walbro Corporation,
9.875%, 7-15-2005 ................... 2,400 2,352,000
Total ............................... 43,692,750
Instruments and Related Products - 1.60%
Cole National Group, Inc.,
9.875%, 12-31-2006................... 4,500 4,882,500
Maxxim Medical, Inc.,
10.5%, 8-1-2006 ..................... 9,250 10,221,250
Universal Hospital Services, Inc.,
10.25%, 3-1-2008 (A) ................ 2,500 2,525,000
Total ............................... 17,628,750
Miscellaneous Manufacturing Industries - 0.65%
Amscan Holdings Inc.,
9.875%, 12-15-2007 (A) .............. 3,400 3,561,500
Hedstrom Corporation,
10.0%, 6-1-2007 ..................... 3,500 3,596,250
Total ............................... 7,157,750
Miscellaneous Retail - 1.41%
Big 5 Corp.,
10.875%, 11-15-2007 ................. 2,500 2,568,750
Michaels Stores, Inc.:
6.75%, 1-15-2003 (Convertible)....... 1,000 1,105,000
10.875%, 6-15-2006 .................. 7,800 8,736,000
TravelCenters of America, Inc.,
10.25%, 4-1-2007 .................... 3,000 3,198,750
Total ............................... 15,608,500
Motion Pictures - 2.18%
AMC Entertainment, Inc.,
9.5%, 3-15-2009 ..................... 4,200 4,431,000
Hollywood Theaters, Inc.,
10.625%, 8-1-2007 (A) ............... 7,300 7,957,000
MacAndrews & Forbes Group, Incorporated,
13.0%, 3-1-99 ....................... 3,900 3,900,000
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Motion Pictures (Continued)
Plitt Theatres, Inc.,
10.875%, 6-15-2004 .................. $ 4,000 $ 4,330,000
Regal Cinemas, Inc.,
8.5%, 10-1-2007 ..................... 3,425 3,476,375
Total ............................... 24,094,375
Nondepository Institutions - 0.22%
Delta Financial Corporation,
9.5%, 8-1-2004 ...................... 2,500 2,468,750
Oil and Gas Extraction - 2.19%
Coho Energy, Inc.,
8.875%, 10-15-2007 .................. 7,000 6,580,000
Cross Timbers Oil,
8.75%, 11-1-2009 .................... 2,400 2,460,000
Falcon Drilling, Inc.,
9.75%, 1-15-2001 .................... 5,500 5,720,000
Kelley Oil & Gas Corporation,
10.375%, 10-15-2006 ................. 3,500 3,648,750
Pride Petroleum Services, Inc.,
9.375%, 5-1-2007 .................... 2,000 2,130,000
Vintage Petroleum, Inc.:
9.0%, 12-15-2005 .................... 2,500 2,606,250
8.625%, 2-1-2009 .................... 1,000 1,037,500
Total ............................... 24,182,500
Paper and Allied Products - 2.02%
Container Corporation of America,
11.25%, 5-1-2004 .................... 3,500 3,797,500
Four M Corporation,
12.0%, 6-1-2006 ..................... 3,000 3,191,250
Huntsman Packaging Corporation,
9.125%, 10-1-2007 (A) ............... 1,500 1,531,875
Mail-Well Corporation,
10.5%, 2-15-2004 .................... 3,500 3,762,500
Outsourcing Services Group, Inc.,
10.875%, 3-1-2006 (A) ............... 3,000 3,052,500
Radnor Holdings Corporation,
10.0%, 12-1-2003 .................... 2,000 2,110,000
SF Holdings Group, Inc.,
0.0%, 3-15-2008 (A)(C) .............. 5,750 3,220,000
Sweetheart Cup Company, Inc.,
10.5%, 9-1-2003 ..................... 1,725 1,707,750
Total ............................... 22,373,375
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Personal Services - 0.35%
Prime Succession Acquisition Corp.,
10.75%, 8-15-2004 ................... $ 3,500 $ 3,850,000
Primary Metal Industries - 1.39%
Commonwealth Aluminum Corporation,
10.75%, 10-1-2006 ................... 3,000 3,180,000
Weirton Steel Corporation:
11.375%, 7-1-2004 ................... 3,950 4,266,000
10.75%, 6-1-2005 .................... 1,000 1,063,750
Wheeling-Pittsburgh Corporation,
9.25%, 11-15-2007 (A) ............... 6,750 6,851,250
Total ............................... 15,361,000
Printing and Publishing - 2.19%
American Media Operations, Inc.,
11.625%, 11-15-2004 ................. 4,000 4,340,000
K-III Communications Corporation,
8.5%, 2-1-2006 ...................... 5,000 5,125,000
Perry-Judd's Incorporated,
10.625%, 12-15-2007 (A) ............. 5,250 5,525,625
Viacom International, Inc.,
8.0%, 7-7-2006 ...................... 9,000 9,191,250
Total ............................... 24,181,875
Railroad Transportation - 0.30%
TFM, S.A. de C.V.:
10.25%, 6-15-2007 ................... 1,000 1,042,500
0.0%, 6-15-2009 (C) ................. 3,500 2,257,500
Total ............................... 3,300,000
Real Estate - 0.30%
Delco Remy International, Inc.,
10.625%, 8-1-2006 ................... 3,000 3,300,000
Rubber and Miscellaneous Plastics Products - 1.32%
Burke Industries, Inc.,
10.0%, 8-15-2007 .................... 1,500 1,599,375
Furon Company,
8.125%, 3-1-2008 (A) ................ 1,900 1,916,625
Graham Packaging Company and GPC Capital Corp. I,
8.75%, 1-15-2008 (A) ................ 7,000 7,105,000
Graham Packaging Holdings Company and
GPC Capital Corp. II,
0.0%, 1-15-2009 (A)(C) .............. 2,000 1,270,000
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Rubber and Miscellaneous Plastics Products (Continued)
LDM Technologies, Inc.,
10.75%, 1-15-2007 ................... $ 2,500 $ 2,712,500
Total ............................... 14,603,500
Social Services - 0.28%
KinderCare Learning Centers, Inc.,
9.5%, 2-15-2009 ..................... 3,000 3,078,750
Textile Mill Products - 3.08%
Avondale Mills, Inc.,
10.25%, 5-1-2006 .................... 3,500 3,832,500
Collins & Aikman Products Co.,
11.5%, 4-15-2006 .................... 11,000 12,375,000
Delta Mills, Inc.,
9.625%, 9-1-2007 (A) ................ 5,725 5,968,312
Galey & Lord, Inc.,
9.125%, 3-1-2008 (A) ................ 9,000 9,135,000
Glenoit Corporation,
11.0%, 4-15-2007 (A) ................ 2,500 2,731,250
Total ............................... 34,042,062
Transportation Equipment - 0.63%
Aetna Industries, Inc.,
11.875%, 10-1-2006 .................. 4,000 3,840,000
Westinghouse Air Brake Company,
9.375%, 6-15-2005 ................... 3,000 3,165,000
Total ............................... 7,005,000
Transportation Services - 0.64%
Holt Group, Inc. (The),
9.75%, 1-15-2006 (A) ................ 1,000 1,015,000
Transportacion Maritima Mexicana, S.A. de C.V.,
10.0%, 11-15-2006 ................... 6,100 6,107,625
Total ............................... 7,122,625
Trucking and Warehousing - 0.72%
Iron Mountain Incorporated,
10.125%, 10-1-2006 .................. 1,500 1,657,500
Pierce Leahy Corp.,
9.125%, 7-15-2007 ................... 6,000 6,322,500
Total ............................... 7,980,000
Water Transportation - 0.43%
Equimar Shipholdings Ltd.,
9.875%, 7-1-2007 .................... 5,000 4,712,500
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Wholesale Trade - Durable Goods - 1.58%
Alvey Systems, Inc.,
11.375%, 1-31-2003 .................. $ 2,500 $ 2,687,500
Aviation Sales Company,
8.125%, 2-15-2008 (A) ............... 900 886,500
Exide Corporation,
10.0%, 4-15-2005 .................... 7,500 7,856,250
Holmes Products Corp.,
9.875%, 11-15-2007 (A) .............. 2,000 2,075,000
Sealy Mattress Company,
0.0%, 12-15-2007 (A)(C) ............. 6,000 3,960,000
Total ............................... 17,465,250
Wholesale Trade - Nondurable Goods - 3.45%
Color Spot Nurseries Inc.,
10.5%, 12-15-2007 ................... 4,000 4,005,000
Core-Mark International, Inc.,
11.375%, 9-15-2003 .................. 3,500 3,771,250
Corporate Express, Inc.,
9.125%, 3-15-2004 ................... 5,000 5,150,000
Fleming Companies, Inc.,
10.5%, 12-1-2004 .................... 3,500 3,753,750
Gaylord Container Corporation,
9.375%, 6-15-2007 (A) ............... 7,000 7,017,500
LaRoche Industries Inc.,
9.5%, 9-15-2007 (A) ................. 4,000 3,960,000
Nebraska Book Company, Inc.,
8.75%, 2-15-2008 (A) ................ 6,000 6,000,000
Pharmerica Inc.,
8.375%, 4-1-2008 (A) ................ 2,000 2,020,000
Richmont Marketing Specialists Inc.,
10.125%, 12-15-2007 (A) ............. 2,400 2,502,000
Total ............................... 38,179,500
TOTAL CORPORATE DEBT SECURITIES - 86.26% $ 953,207,961
(Cost: $899,273,047)
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
THE INVESTMENTS OF
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES
Electric, Gas and Sanitary Services - 0.41%
Bay State Gas Co.,
5.54%, 4-17-98 ...................... $ 4,500 $ 4,488,920
Food and Kindred Products - 0.08%
General Mills, Inc.,
5.5425% Master Note ................. 888 888,000
Industrial Machinery and Equipment - 0.33%
Ingersoll-Rand Company,
5.59%, 4-6-98 ....................... 3,705 3,702,123
Insurance Carriers - 0.70%
Transamerica Finance Corp.,
5.48%, 4-9-98 ....................... 7,775 7,765,532
Oil and Gas Extraction - 0.59%
Enron Corp.,
5.65%, 4-9-98 ....................... 6,490 6,481,851
Printing and Publishing - 1.99%
Viacom International Inc.:
6.0%, 4-3-98 ........................ 7,660 7,657,447
5.92%, 4-6-98 ....................... 4,380 4,376,399
5.85%, 4-17-98 ...................... 10,000 9,974,000
Total ............................... 22,007,846
Textile Mill Products - 0.04%
Sara Lee Corporation,
5.5375%, Master Note ................ 408 408,000
Tobacco Products - 0.70%
B.A.T. Capital Corp.,
5.65%, 4-17-98 ...................... 7,785 7,765,451
Wholesale Trade - Nondurable Goods - 0.44%
Safeway Inc.,
5.72%, 4-14-98 ...................... 4,835 4,825,013
TOTAL SHORT-TERM SECURITIES - 5.28% $ 58,332,736
(Cost: $58,332,736)
TOTAL INVESTMENT SECURITIES - 99.86% $1,103,496,601
(Cost: $1,026,719,380)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.14% 1,593,723
NET ASSETS - 100.00% $1,105,090,324
See Notes to Schedule of Investments on pages 22-25.
<PAGE>
UNITED HIGH INCOME FUND, INC.
MARCH 31, 1998
Notes to Schedule of Investments
*No income dividends were paid during the preceding 12 months.
(A) As of March 31, 1998, the following restricted securities were owned:
Principal
Acquisition Amount Market
Security Date in 000's Cost Value
-------- ----------- --------------------------------
Esat Holdings Limited,
Warrants 1/20/97 3,000$ 90,757$ 120,000
Fitzgeralds Gaming
Corporation, 3/8/94 to
Warrants 12/15/95 17,500 541,065 105,000
Heartland Wireless
Communications,
Inc., Warrants 4/20/95 12,000 74,000 120
IntelCom Group Inc.,
Warrants 12/8/95 20,625 80,225 644,531
Iridium LLC, Warrants7/11/97 3,500 198,086 857,500
7/15/97 3,000 170,483 735,000
Microcell Telecommunications
Inc., Warrants 6/13/96 58,000 710,466 1,080,540
SF Holdings Group,
Inc., Units 3/11/98 200 1,800,000 1,837,500
ACME Television, LLC,
0.0%, 9-30-2004 9/24/97 $7,400 5,385,942 6,086,500
AEI Holding Company, Inc.,
10.0%, 11-15-2007 11/6/97 2,250 2,250,000 2,373,750
Allegiance Telecom, Inc., Units,
0.0%, 2-15-2008 1/29/98 6,000 3,377,220 3,480,000
Amscan Holdings Inc.,
9.875%, 12-15-200712/15/97 2,400 2,400,000 2,514,000
1/9/98 1,000 1,038,750 1,047,500
Anchor Lamina Inc. and
Anchor Lamina America, Inc.,
9.875%, 2-1-2008 1/30/98 1,500 1,500,000 1,526,250
Aviation Sales Company,
8.125%, 2-15-2008 2/11/98 900 894,555 886,500
Chattem, Inc.,
8.875%, 4-1-2008 3/20/98 2,000 2,000,000 2,030,000
Columbus McKinnon Corporation,
8.5%, 4-1-2008 3/26/98 2,000 1,994,680 2,015,000
Concentric Network Corporation, Units,
12.75%, 12-15-2007 12/15/97 4,000 4,000,000 4,600,000
Crown Castle International Corp.,
0.0%, 11-15-2007 11/20/97 3,000 1,792,950 2,017,500
Delta Mills, Inc.,
9.625%, 9-1-2007 8/20/97 4,225 4,241,250 4,404,562
8/21/97 1,500 1,507,500 1,563,750
Diamond Triumph Auto Glass, Inc.,
9.25%, 4-1-2008 3/25/98 2,000 2,000,000 2,032,500
Eagle Family Foods, Inc.,
8.75%, 1-15-2008 2/10/98 3,500 3,530,625 3,500,000
Elgar Holdings, Inc.,
9.875%, 2-1-2008 1/30/98 4,000 4,000,000 4,080,000
Frank's Nursery & Crafts, Inc.,
10.25%, 3-1-2008 2/23/98 5,650 5,650,000 5,621,750
Furon Company,
8.125%, 3-1-2008 2/26/98 1,900 1,900,000 1,916,625
Galey & Lord, Inc.,
9.125%, 3-1-2008 2/19/98
to 2/27/98 9,000 8,979,375 9,135,000
Gaylord Container Corporation,
9.375%, 6-15-2007 2/13/98 6,000 6,000,000 6,015,000
2/18/98 1,000 991,250 1,002,500
Genesis ElderCare Acquisition Corp.,
9.0%, 8-1-2007 8/4/97 3,500 3,480,575 3,587,500
9/10/97 1,500 1,481,250 1,537,500
Glenoit Corporation,
11.0%, 4-15-2007 3/26/97 2,500 2,495,225 2,731,250
Graham Packaging Company and GPC
Capital Corp. I,
8.75%, 1-15-2008 1/23/98 3,000 3,000,000 3,045,000
1/26/98 4,000 4,062,500 4,060,000
Graham Packaging Holdings Company and
GPC Capital Corp. II,
0.0%, 1-15-2009 1/26/98 2,000 1,255,000 1,270,000
Hollywood Theaters, Inc.,
10.625%, 8-1-20077/31/97 to
1/16/98 7,300 7,674,250 7,957,000
Holmes Products Corp.,
9.875%, 11-15-2007 11/19/97 2,000 2,000,000 2,075,000
Holt Group, Inc. (The),
9.75%, 1-15-2006 1/14/98 1,000 1,000,000 1,015,000
Huntsman Packaging Corporation,
9.125%, 10-1-2007 9/29/97 1,500 1,530,000 1,531,875
ITC ^ DeltaCom, Inc.,
8.875%, 3-1-2008 2/26/98 2,400 2,397,600 2,484,000
Intermedia Communications Inc.,
8.5%, 1-15-2008 1/8/98 1,000 1,025,000 1,050,000
Iridium LLC,
11.25%, 7-15-2005 10/9/97 1,400 1,400,000 1,484,000
LIN Holdings Corp.,
0.0%, 3-1-2008 2/18/98 4,000 2,457,000 2,520,000
LIN Television Corporation,
8.375%, 3-1-2008 2/18/98 6,400 6,385,024 6,448,000
LaRoche Industries Inc.,
9.5%, 9-15-2007 9/18/97 4,000 3,982,080 3,960,000
Magellan Health Services, Inc.,
9.0%, 2-15-2008 2/5/98 2,000 2,000,000 2,015,000
Micron Custom Manufacturing Services, Inc.,
9.75%, 3-1-2008 2/19/98 3,500 3,500,000 3,535,000
National Equipment Services, Inc.,
10.0%, 11-30-200411/20/97 4,000 3,950,680 4,240,000
1/14/98 500 511,875 530,000
Nebraska Book Company, Inc.,
8.75%, 2-15-2008 2/10/98 5,000 5,010,313 5,000,000
2/19/98 1,000 1,000,000 1,000,000
Nextel Communications, Inc.,
0.0%, 2-15-2008 2/10/98 6,400 3,952,000 4,088,000
Outsourcing Services Group, Inc.,
10.875%, 3-1-2006 2/26/98 3,000 3,000,000 3,052,500
Paragon Corporate Holdings, Inc.,
9.625%, 4-1-2008 3/27/98 3,000 3,000,000 2,992,500
Perry-Judd's Incorporated,
10.625%, 12-15-200712/10/97
to 2/9/98 5,250 5,418,750 5,525,625
Pharmerica Inc.,
8.375%, 4-1-2008 3/25/98 2,000 2,000,000 2,020,000
Phase Metrics, Inc.,
10.75%, 2-1-2005 1/23/98 3,000 3,000,000 3,041,250
Pillowtex Corporation,
9.0%, 12-15-2007 12/15/97 2,500 2,500,000 2,606,250
12/16/97 1,750 1,780,625 1,824,375
Prime Medical Services, Inc.,
8.75%, 4-1-2008 3/24/98 1,000 995,000 1,007,500
Richmont Marketing Specialists Inc.,
10.125%, 12-15-2007 12/16/97 2,400 2,400,000 2,502,000
SF Holdings Group, Inc.,
0.0%, 3-15-2008 3/5/98 3,000 1,615,380 1,680,000
3/6/98 2,750 1,519,375 1,540,000
Safelite Glass Corp.,
9.875%, 12-15-200612/13/96
to 3/25/98 4,750 4,904,375 5,070,625
Satelites Mexicanos, S.A. de C.V.,
10.125%, 11-1-20041/22/98 1,750 1,750,000 1,802,500
Sealy Mattress Company,
0.0%, 12-15-2007 12/11/97 5,000 2,947,150 3,300,000
2/13/98 1,000 660,000 660,000
Southern Foods Group, L.P.,
9.875%, 9-1-2007 8/27/97 3,450 3,450,000 3,661,313
Telesystem International Wireless Inc.,
0.0%, 11-1-2007 10/22/97 4,000 2,396,600 2,560,000
Terex Corporation,
8.875%, 4-1-2008 3/24/98 5,000 5,030,760 5,025,000
3/27/98 1,000 1,006,250 1,005,000
United International Holdings, Inc.,
0.0%, 2-15-2008 1/30/98 5,000 2,953,450 3,125,000
Universal Hospital Services, Inc.,
10.25%, 3-1-2008 2/23/98 2,500 2,500,000 2,525,000
Wheeling-Pittsburgh Corporation,
9.25%, 11-15-2007 3/31/98 6,750 6,876,563 6,851,250
WinStar Communications, Inc.:
0.0%, 10-15-2005 (Convertible)
10/9/97 1,900 1,691,000 2,698,000
10/14/97 1,500 1,402,500 2,130,000
0.0%, 3-15-2008 3/25/98 3,000 3,090,000 3,075,000
10.0%, 3-15-2008 3/17/98 4,750 4,750,000 4,821,250
------------------------
$207,287,329$216,494,941
========================
The total market value of restricted securities represents 19.59% of the
total net assets at March 31, 1998.
(B) Each Unit of SF Holdings consists of one share of 13.75% exchangeable
preferred stock due 2009 and 37 shares of class C common stock, par value
$0.001 per share.
(C) The security does not bear interest for an initial period of time and
subsequently becomes interest bearing.
(D) Each Unit of Allegiance Telecom consists of one 11.75% senior discount note
due 2008 and one warrant to purchase 0.0034224719 shares of common stock,
par value $0.01 per share.
(E) Each Unit of Concentric Network consists of $1,000 principal amount of
12.75% senior notes due 2007 and one warrant to purchase 6.34 shares of
common stock, par value $0.001 per share.
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
MARCH 31, 1998
Assets
Investment securities -- at value
(Notes 1 and 3) ............................... $1,103,496,601
Cash ........................................... 4,048,564
Receivables:
Dividends and interest ........................ 18,505,330
Investment securities sold .................... 1,798,125
Fund shares sold .............................. 1,296,975
Prepaid insurance premium ...................... 58,995
--------------
Total assets ................................ 1,129,204,590
--------------
Liabilities
Payable for investment securities purchased .... 18,647,125
Payable to Fund shareholders ................... 4,872,187
Accrued service fee (Note 2) ................... 216,063
Accrued transfer agency and dividend
disbursing (Note 2) ........................... 94,265
Accrued management fee (Note 2) ................ 16,428
Accrued accounting services fee (Note 2) ....... 8,333
Other .......................................... 259,865
--------------
Total liabilities ........................... 24,114,266
--------------
Total net assets ........................... $1,105,090,324
==============
Net Assets
$1.00 par value capital stock
Capital stock ................................. $ 110,049,097
Additional paid-in capital .................... 1,247,310,804
Accumulated undistributed income (loss):
Accumulated undistributed net investment income 1,438,004
Accumulated undistributed net realized
loss on investment transactions ............. (330,484,802)
Net unrealized appreciation in value of
investments ................................. 76,777,221
--------------
Net assets applicable to outstanding
units of capital ........................... $1,105,090,324
==============
Net asset value per share (net assets divided
by shares outstanding)
Class A .......................................... $10.04
Class Y .......................................... $10.04
Capital shares outstanding
Class A .......................................... 109,727,436
Class Y .......................................... 321,661
Capital shares authorized .......................... 500,000,000
See notes to financial statements.
<PAGE>
UNITED HIGH INCOME FUND, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended MARCH 31, 1998
Investment Income
Income (Note 1B):
Interest and amortization ....................... $95,066,857
Dividends ....................................... 2,225,546
------------
Total income .................................. 97,292,403
------------
Expenses (Note 2):
Investment management fee ....................... 5,773,843
Service fee - Class A ........................... 1,501,001
Transfer agency and dividend disbursing - Class A 1,254,940
Accounting services fee ......................... 98,750
Custodian fees .................................. 21,219
Audit fees ...................................... 20,112
Legal fees ...................................... 12,272
Shareholder servicing - Class Y ................. 5,806
Other ........................................... 203,542
------------
Total expenses ................................ 8,891,485
------------
Net investment income ........................ 88,400,918
------------
Realized and Unrealized Gain on
Investments (Notes 1 and 3)
Realized net gain on investments ................. 22,509,321
Unrealized appreciation in value of
investments during the period ................... 62,829,531
------------
Net gain on investments ....................... 85,338,852
------------
Net increase in net assets resulting
from operations ............................ $173,739,770
============
See notes to financial statements.
<PAGE>
UNITED HIGH INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year ended
March 31,
-----------------------------
1998 1997
-------------- --------------
Increase in Net Assets
Operations:
Net investment income .......... $ 88,400,918 $ 85,269,812
Realized net gain (loss) on
investments ................... 22,509,321 (7,693,608)
Unrealized appreciation ........ 62,829,531 24,040,694
-------------- ------------
Net increase in net assets
resulting from operations ... 173,739,770 101,616,898
-------------- ------------
Dividends to shareholders from
net investment income (Note 1D):*
Class A ........................ (88,014,345) (84,491,972)
Class Y ........................ (261,200) (215,341)
-------------- ------------
(88,275,545) (84,707,313)
-------------- ------------
Capital share transactions:
Proceeds from sale of shares:
Class A (11,406,679 and 7,938,016
shares, respectively) ....... 110,946,406 73,281,406
Class Y (43,283 and 110,412
shares, respectively) ....... 422,656 1,032,687
Proceeds from reinvestment
of dividends:
Class A (7,636,167 and
7,657,636 shares, respectively) 74,065,059 70,375,216
Class Y (26,963 and 23,378
shares, respectively) ....... 261,200 215,342
Payments for shares redeemed:
Class A (15,583,034 and 16,195,182
shares, respectively) ....... (151,632,299) (149,178,639)
Class Y (85,087 and 33,578
shares, respectively) ....... (823,804) (313,944)
-------------- ------------
Net increase (decrease) in net assets
resulting from capital share
transactions .............. 33,239,218 (4,587,932)
-------------- ------------
Total increase .............. 118,703,443 12,321,653
Net Assets
Beginning of period ............. 986,386,881 974,065,228
-------------- ------------
End of period, including
undistributed net investment
income of $1,438,004 and
$1,312,631, respectively ....... $1,105,090,324 $986,386,881
============== ============
*See "Financial Highlights" on pages - .
See notes to financial statements.
<PAGE>
UNITED HIGH INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the fiscal year ended March 31,
------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
Net asset value,
beginning of period $ 9.25 $9.09 $8.70 $9.20 $9.21
------ ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... 0.82 0.80 0.79 0.80 0.80
Net realized and
unrealized gain
(loss) on
investments ..... 0.79 0.16 0.40 (0.51) (0.01)
------ ----- ----- ----- -----
Total from investment
operations ....... 1.61 0.96 1.19 0.29 0.79
------ ----- ----- ----- -----
Less dividends
from net
investment income . (0.82) (0.80) (0.80) (0.79) (0.80)
------ ----- ----- ----- -----
Net asset value,
end of period .... $10.04 $9.25 $9.09 $8.70 $9.20
====== ===== ===== ===== =====
Total return* ...... 18.03% 10.94% 14.16% 3.41% 8.69%
Net assets, end
of period (000
omitted) ......... $1,101,860$983,273$971,916$933,576$1,006,619
Ratio of expenses to
average net assets 0.84% 0.89% 0.85% 0.84% 0.78%
Ratio of net investment
income to average
net assets ....... 8.38% 8.68% 8.74% 9.07% 8.51%
Portfolio turnover
rate ............. 63.40% 53.17% 41.67% 18.94% 54.80%
*Total return calculated without taking into account the sales load deducted
on an initial purchase.
See notes to financial statements.
<PAGE>
UNITED HIGH INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the fiscal year period
ended March 31, from 1/4/96*
----------------------- through
1998 1997 3/31/96
-------- -------- --------
Net asset value,
beginning of period $ 9.25 $9.10 $9.19
------ ----- -----
Income from investment
operations:
Net investment
income .......... 0.82 0.81 0.20
Net realized and
unrealized gain (loss)
on investments... 0.79 0.15 (0.10)
------ ----- -----
Total from investment
operations ........ 1.61 0.96 0.10
------ ----- -----
Less dividends
from net
investment income . (0.82) (0.81) (0.19)
------ ----- -----
Net asset value,
end of period ..... $10.04 $9.25 $9.10
====== ===== =====
Total return ....... 18.13% 11.07% 1.00%
Net assets, end of
period (000
omitted) ......... $3,230 $3,114 $2,149
Ratio of expenses
to average net
assets ............ 0.77% 0.77% 0.80%**
Ratio of net
investment income
to average net
assets ............ 8.46% 8.78% 8.55%**
Portfolio
turnover rate ..... 63.40% 53.17% 41.67%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED HIGH INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
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. Its investment objective is to provide a high level of current income,
by investing primarily in a diversified portfolio of high-yield, high-risk fixed
income securities, with a secondary objective of capital growth when consistent
with the primary objective. 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 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. 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 and post-1984 market discount on the purchase of
bonds 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 Subchapter M of 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
dividends 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.
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 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 $19.8 billion of
combined net assets at March 31, 1998) 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
For Class A shares, the Fund also pays WARSCO a monthly 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
Fund 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 Fund also reimburses W&R
and WARSCO for certain out-of-pocket costs.
As principal underwriter for the Fund's shares, W&R received gross sales
commissions for Class A shares (which are not an expense of the Fund) of
$2,719,457, out of which W&R paid sales commissions of $1,571,709 and all
expenses in connection with the sale of Fund shares, except for registration
fees and related expenses.
Under a Distribution and Service Plan for Class A shares adopted by the
Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund
may pay monthly a distribution and/or service fee to W&R in an amount not to
exceed .25% of the Fund's Class A average annual net assets. The fee is to be
paid to reimburse W&R for amounts it expends in connection with the distribution
of the Class A shares and/or provision of personal services to Fund shareholders
and/or maintenance of shareholder accounts.
The Fund paid Directors' fees of $39,523, which are included in other
expenses.
W&R is an indirect subsidiary of Torchmark Corporation, a holding company,
and Waddell & Reed Financial, Inc., 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 $658,634,325 while proceeds from
maturities and sales aggregated $615,099,277. Purchases of short-term
securities aggregated $1,018,086,946 while proceeds from maturities and sales of
short-term securities aggregated $1,034,129,424. There were no purchases or
sales of U.S. Government securities during the period.
For Federal income tax purposes, cost of investments owned at March 31,
1998 was $1,025,952,606, resulting in net unrealized appreciation of
$77,543,995, of which $80,729,832 related to appreciated securities and
$3,185,837 related to depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized net capital gain net
income of $22,253,510 during its fiscal year ended March 31, 1998, which was
entirely offset by utilization of capital loss carryovers. Capital loss
carryovers aggregated $331,251,576 at March 31, 1998 and expire as follows:
$171,001,917 through March 31, 1999; $114,024,403 at March 31, 2000; $17,962,753
at March 31, 2003; $20,841,730 at March 31, 2004; and $7,420,773 at March 31,
2005.
NOTE 5 -- Multiclass Operations
On July 31, 1995, the Fund was authorized to offer investors two classes of
shares, Class A and Class Y, each of which has equal rights as to assets and
voting privileges. Class Y shares are not subject to a sales charge on
purchases; they are not subject to a Rule 12b-1 Service Plan and have a separate
transfer agency and dividend disbursement services fee structure. A
comprehensive discussion of the terms under which shares of either class are
offered is contained in the prospectus and the Statement of Additional
Information for the 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
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
United High Income Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of United High Income Fund, Inc. (the "Fund") as of
March 31, 1998, and the related statements of operations for the year then ended
and changes in net assets for each of the years in the two-year period then
ended, and the financial highlights for each of the years in the five-year
period then ended. The financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on the financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at March
31, 1998 by correspondence with the custodian and brokers or other alternative
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of United High Income
Fund, Inc. as of March 31, 1998, the results of its operations, the changes in
its net assets, and the financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
May 8, 1998
<PAGE>
INCOME TAX INFORMATION
The amounts of the dividends 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
Federal income tax return for the years in which the dividends were received or
reinvested.
PER-SHARE AMOUNTS REPORTABLE AS:
--------------------------------------------------------------------
For Individuals For Corporations
--------------------------------------------------------------
- -
Record OrdinaryLong-Term Capital Gain Non- Long-Term
Date Total Income 28% Rate 20% RateQualifyingQualifyingCapital Gain
- ----------- ------------- -------- ---------------------------------------
Class A
04-11-97 $0.066 $0.0660 $-- $-- $0.0013 $0.0647 $--
05-16-97 0.066 0.0660 -- -- 0.0016 0.0644 --
06-13-97 0.066 0.0660 -- -- 0.0016 0.0644 --
07-11-97 0.066 0.0660 -- -- 0.0016 0.0644 --
08-15-97 0.066 0.0660 -- -- 0.0016 0.0644 --
09-12-97 0.066 0.0660 -- -- 0.0016 0.0644 --
10-17-97 0.066 0.0660 -- -- 0.0016 0.0644 --
11-14-97 0.066 0.0660 -- -- 0.0016 0.0644 --
12-12-97 0.090 0.0660 -- -- 0.0021 0.0879 --
01-16-98 0.066 0.0660 -- -- 0.0019 0.0641 --
02-13-98 0.066 0.0660 -- -- 0.0019 0.0641 --
03-13-98 0.066 0.0660 -- -- 0.0019 0.0641 --
------ ------- ------- ------- ------- ------- -------
Total $0.816 $0.8160 -- $-- $0.0203 $0.7957 $--
====== ======= ======= ======= ======= ======= =======
Class Y
04-11-97 $0.067 $0.0670 $-- $-- $0.0013 $0.0657 $--
05-16-97 0.066 0.0660 -- -- 0.0016 0.0644 --
06-13-97 0.067 0.0670 -- -- 0.0016 0.0654 --
07-11-97 0.066 0.0660 -- -- 0.0016 0.0644 --
08-15-97 0.067 0.0670 -- -- 0.0016 0.0654 --
09-12-97 0.067 0.0670 -- -- 0.0016 0.0654 --
10-17-97 0.067 0.0670 -- -- 0.0016 0.0654 --
11-14-97 0.066 0.0660 -- -- 0.0016 0.0644 --
12-12-97 0.091 0.0910 -- -- 0.0022 0.0888 --
01-16-98 0.067 0.0670 -- -- 0.0019 0.0651 --
02-13-98 0.066 0.0660 -- -- 0.0019 0.0641 --
03-13-98 0.067 0.0670 -- -- 0.0019 0.0651 --
------ ------- ------- ------- ------- ------- -------
Total $0.824 $0.8240 $-- $-- $0.0204 $0.8036 $--
====== ======= ======= ======= ======= ======= =======
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.
The tax status of dividends paid will be reported to you on Form 1099-DIV after
the close of the applicable calendar year.
Shareholders are advised to consult with their tax adviser concerning the tax
treatment of dividends and distributions from the Fund.
<PAGE>
Shareholder Meeting Results
A special meeting of shareholders of United High Income Fund, Inc. was held on
July 24, 1997. The matters voted upon by the shareholders and the resulting
votes for each matter are presented below.
Item 1. To elect the Board of Directors;
Broker
For WithheldNon-Votes*
Henry L. Bellmon 58,364,186 1,025,132 0
Dodds I. Buchanan 58,430,514 958,804 0
James M. Concannon 58,439,918 949,400 0
John A. Dillingham 58,428,653 960,665 0
Linda Graves 58,364,168 1,025,150 0
John F. Hayes 58,362,142 1,027,176 0
Glendon E. Johnson 58,377,525 1,011,793 0
William T. Morgan 58,397,438 991,880 0
Ronald K. Richey 58,385,090 1,004,228 0
William L. Rogers 58,425,968 963,350 0
Frank J. Ross, Jr. 58,428,795 960,523 0
Eleanor B. Schwartz 58,420,717 968,601 0
Keith A. Tucker 58,376,208 1,013,110 0
Frederick Vogel III 58,439,148 950,170 0
Paul S. Wise 58,374,120 1,015,198 0
Item 2.To ratify the selection of Deloitte & Touche LLP as the Fund's
independent accountants for its current fiscal year;
Broker
For Against AbstainNon-Votes*
56,483,565 226,738 2,679,015 0
Item 3.To approve or disapprove changes to the following fundamental investment
policies and restrictions:
3.1 Elimination of Fundamental Restrictions Regarding Restricted
Securities
Broker
For Against AbstainNon-Votes*
54,236,725 1,070,441 4,042,698 39,454
3.2 Modification of Fundamental Restriction Regarding Diversification
of Assets
Broker
For Against AbstainNon-Votes*
54,251,129 1,055,340 4,043,395 39,454
3.3 Elimination of Fundamental Restrictions Regarding Unseasoned
Issuers
Broker
For Against AbstainNon-Votes*
54,235,412 1,070,558 4,043,894 39,454
3.4 Modification and/or Elimination of Fundamental Restrictions
Regarding Options, Commodities, Forward Contracts and/or Futures
Contracts
Broker
For Against AbstainNon-Votes*
54,204,197 1,101,816 4,043,851 39,454
3.5 Elimination of Fundamental Restrictions Regarding Mortgaging or
Pledging Securities
Broker
For Against AbstainNon-Votes*
54,241,008 1,066,158 4,042,698 39,454
3.6 Modification of Fundamental Restriction Regarding Margin Purchases
of Securities
Broker
For Against AbstainNon-Votes*
54,234,758 1,072,408 4,042,698 39,454
3.7 Modification of Fundamental Restriction Regarding Short Sales of
Securities
Broker
For Against AbstainNon-Votes*
54,255,930 1,049,821 4,044,113 39,454
3.8 Elimination of Fundamental Restriction Regarding Investment in
Warrants and Rights
Broker
For Against AbstainNon-Votes*
54,243,004 1,062,747 4,044,113 39,454
3.9 Elimination of Fundamental Restrictions Regarding Arbitrage
Transactions
Broker
For Against AbstainNon-Votes*
54,252,201 1,053,454 4,044,209 39,454
3.10 Elimination of Fundamental Restriction Regarding Investments in
Issuers Whose Securities are Owned by Certain Persons
Broker
For Against AbstainNon-Votes*
54,203,269 1,102,797 4,043,798 39,454
3.11 Modification of Fundamental Policy Regarding Loans
Broker
For Against AbstainNon-Votes*
54,226,665 1,071,972 4,051,227 39,454
Item 4.To amend the terms of the service plan adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940.
Broker
For Against AbstainNon-Votes*
52,398,645 1,461,937 5,216,913 6,163
*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>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
William L. Rogers, Los Angeles, California
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
OFFICERS
Keith A. Tucker, President
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
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.
To all traditional IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from a traditional IRA unless you make a written
election not to have taxes withheld. The election may be made by submitting
forms provided by Waddell & Reed, Inc. which can be obtained from your Waddell &
Reed representative or by submitting Internal Revenue Service Form W-4P. Once
made, an election can be revoked by providing written notice to Waddell & Reed,
Inc. If you elect not to have tax withheld you may be required to make payments
of estimated tax. Penalties may be imposed by the IRS if withholding and
estimated tax payments are not adequate.
<PAGE>
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
(800) 366-5465
Our INTERNET address is:
http://www.waddell.com
NUR1009A(3-98)
printed on recycled paper
