United Corporations : a strong portfolio: investment diversification, low fees and regular dividends are key to United's conservative appeal - Ltd

Money Digest, August, 1997

United Corporations is a conservative security suitable for longer term investment strategies.

Highlights

We are introducing coverage of United with a buy rating as a conservative growth security for longer term investors for the following reasons:

* Excellent diversification in this portfolio. Made up mainly of Canadian companies, this closed end fund also has holdings in major international corporations. The fund is also well diversified across industries.

* Very low management fees. In 1996, total expenses for the fund were $1,233,000. This figure is about 0.26% of total assets.

* Discount to Net Asset Value provides a measure of downside protection, as well as additional upside potential.

                         United Corporations Ltd.



Recommendations           Buy
TSE Symbol                UNC
Recent Price           $48.25
Safety           Conservative
Objective              Growth
Target Price           $60.00

The company

United Corporation Ltd. is a closed-end investment company that has been in operation since 1933. The company invests the majority of its assets in stable Canadian companies; its most significant holdings are utilities and financial stocks.

The portfolio's heavy weighting in the financial industry should provide superior returns in these times of low, stable interest rates. Banks and Utilities outperform when interest rates are low because their consistent dividend streams compete with interest from bonds. As interest rates decline, the high dividend yields become more attractive to income seeking investors.

The largest single holdings are:

                            value


National Trustco      $47,718,000
Royal Bank of Cda.    $20,127,000
Bank of Nova Scotia    19,903,000
Algoma Central Corp.   18,491,000
Seagram Company        13,250,000
TD Bank                12,861,000
Canadian Pacific       12,625,000
BCE Inc.               11,925,000

The most significant foreign holdings are IBM Corporation, Citicorp, Philips Electronics N.V., United Technologies and Colgate Palmolive.

The company takes advantage of the expertise of others to gain exposure to emerging and far eastern markets through investments in: The China Fund, Inc.; Emerging Markets Investors Fund; Southeast Asia Frontier Fund; Templeton Vietnam Opportunities Fund.

To maintain its status as an "investment corporation" (as defined by the Income Tax Act), United Corpora-tions distributes a minimum of 85% of the aggregate of taxable dividends received and two-thirds of taxable income excluding taxable capital gains. What this means to investors is a small steady quarterly dividend stream with often significant special dividends.