<PAGE>
UNITED
RETIREMENT
SHARES,
INC.
ANNUAL
REPORT
---------------------------------------
For the fiscal year ended June 30, 1994
<PAGE>
FUND MANAGER'S LETTER
JUNE 30, 1994
Dear Shareholder:
This report relates to the operation of United Retirement Shares, Inc. for
the fiscal year ended June 30, 1994. The following discussion, graphs and
tables provide you with information regarding the Fund's performance during that
period.
One of the more important investment events for the Fund during its past
fiscal year was the reversal in the trend of declining interest rates. Rates
rose, and the U.S. economy continued to expand moderately while inflation
remained subdued. Adding a degree of uncertainty to the investment markets were
concerns with regard to health care reform and the weakness of the U.S. dollar
relative to currencies of our major trading partners.
We adjusted the asset mix of the Fund substantially to take advantage of these
changes in the market. As interest rates rose, we reduced the Fund's bond
holdings and shortened the average maturity of the bonds remaining in the Fund's
portfolio. We also slowly reduced the Fund's cash position to purchase high-
quality stocks whose prices had significantly declined as a result of rising
U.S. interest rates. We gradually increased the Fund's holdings of stocks of
energy-related companies in response to a rising demand for oil and we
maintained the Fund's positions in basic industry stocks.
The strategies and techniques we applied resulted in the direction of the
Fund's performance during its past fiscal year remaining fairly consistent with
that of the indexes charted on the following page. Those indexes reflect the
performance of securities that generally represent the stock market (the
Standard & Poor's 500 Index), the bond market (the Lehman Brothers
Government/Corporate Bond Index or LBGCBI) and the universe of funds with
similar investment objectives (the Lipper Growth & Income Fund Universe
Average). The S&P 500 and the LBGCBI are presented because the Fund invests in
both stocks and bonds.
We anticipate that the economic recovery experienced in the U.S. will
spread to other major economies. In seeking to achieve the Fund's objectives in
the upcoming fiscal year, we expect to pursue the same strategies we have
employed in the recent past by continuing to emphasize the stocks of major U.S.
companies with outstanding international operations. The Fund is well
positioned for worldwide economic recovery.
We appreciate your continued confidence.
Respectfully,
James D. Wineland
Manager, United Retirement Shares, Inc.
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
UNITED RETIREMENT SHARES, INC.,
THE STANDARD & POOR'S 500 INDEX,
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX
AND THE LIPPER GROWTH & INCOME FUND UNIVERSE AVERAGE
The line graph which appears here is the paper version which was filed on Form
SE on August 25, 1994.
<PAGE>
SHAREHOLDER SUMMARY
- -------------------------------------------------------------------------------
UNITED RETIREMENT SHARES, INC.
PORTFOLIO STRATEGY:
Common stocks believed to OBJECTIVE: Highest long-term total
have the potential for: return as is, in the
Long-term appreciation judgment of management,
Stability consistent with the
Income reasonable safety of capital.
Maximum 10% foreign STRATEGY: Invests in securities (stocks
securities and bonds) selected to provide a mix of
income, growth and
Debt securities asset preservation.
Cash reserves The use of cash reserves (often invested
in money market securities) for
defensive purposes is a strategy that
may be utilized by Retirement Shares
from time to time.
Moving into cash reserve positions at
times thought to be near a major stock
market peak allows the Fund the
opportunity to capture profits and
attempts to cushion the impact of market
declines. The added flexibility
provided by our CASH RESERVES STRATEGY
has from time to time been an important
element in our past success and, when
deemed appropriate, may be used in the
management of the portfolio in the
future.
FOUNDED: 1972
DIVIDENDS: PAID QUARTERLY (March, June, September,
December)
PERFORMANCE SUMMARY
PER SHARE DATA
For the Fiscal Year Ended June 30, 1994
- ---------------------------------------
DIVIDENDS PAID $0.18
=====
CAPITAL GAINS DISTRIBUTION $0.28
=====
NET ASSET VALUE ON
06/30/94 $7.64 adjusted to:$7.92(A)
06/30/93 7.70
-----
CHANGE PER SHARE $0.22
=====
(A)This number includes the capital gains distribution of $0.28 paid in December
1993 added to the actual net asset value on June 30, 1994.
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 6-30-94 -1.01% 5.03%
5-year period ended 6-30-94 9.49% 10.79%
10-year period ended 6-30-94 11.94% 12.60%
*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 June 30, 1994, United Retirement Shares, Inc. had net assets totaling
$452,836,033 invested in a diversified portfolio of:
70.92% Common Stocks
11.03% Cash and Cash Equivalents
11.01% U.S. Government Securities
3.58% Corporate Bonds
2.84% Convertible Preferred Stocks
0.62% Other Government Security
As a shareholder in United Retirement Shares, Inc. for every $100 you had
invested on June 30, 1994, your Fund owned:
Basic Industries Stocks $29.48
Consumer Stocks 16.93
Technological Stocks 12.78
Cash and Cash Equivalents 11.03
U.S. Government Securities 11.01
Energy and Energy-Related Stocks 6.17
Financial Stocks 4.73
Corporate Bonds 3.58
Convertible Preferred Stocks 2.84
Public Utilities Stock 0.83
Other Government Security 0.62
Not all holdings will be represented in the portfolio at all times.
- -----------------------------------------------------------------
These STOCK CATEGORIES are provided as a reference only. Not all categories or
subcategories will be represented in a portfolio at all times. Refer to the
following pages for a more detailed portfolio listing.
BASIC INDUSTRIES
Airlines
Automotive
Building
Chemicals Major
Electrical Equipment
Engineering and Construction
Machinery
Manufacturers
Metals and Mining
Multi-Industry
Paper
Precious Metals
Railroad Equipment
Railroads
Shipping
Steel
Tire and Rubber
Trucking
CONSUMER
Beverages
Consumer Electronics and Appliances
Food and Related
Hospital Management
Household Products
Leisure Time
Packaging and Containers
Publishing and Advertising
Retailing
Services, Consumer and Business
Textiles and Apparel
Tobacco
ENERGY AND ENERGY-RELATED
Canadian Oil
Coal
Domestic Oil
International Oil
Oil Services
Propane
FINANCIAL
Banks and Savings and Loans
Financial
Insurance
PUBLIC UTILITIES
Electric
Gas
Pipelines
TECHNOLOGICAL
Aerospace
Biotechnology and Medical Services
Chemicals Specialty and Miscellaneous Technology
Computers and Office Equipment
Drugs and Hospital Supply
Electronics
Telecommunications
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1994
Shares Value
COMMON STOCKS
Airlines - 1.15%
Southwest Airlines Co. ................. 200,000 $ 5,225,000
Automotive - 2.81%
Eaton Corporation ...................... 100,000 5,200,000
General Motors Corporation ............. 150,000 7,537,500
Total ................................. 12,737,500
Banks and Savings and Loans - 0.49%
HSBC Holdings plc (A) .................. 202,060 2,208,718
Beverages - 2.81%
Coca-Cola Company (The) ................ 200,000 8,125,000
PepsiCo, Inc. .......................... 150,000 4,593,750
Total ................................. 12,718,750
Building - 6.47%
Georgia-Pacific Corporation ............ 80,000 4,790,000
Sherwin-Williams Company (The) ......... 150,000 4,725,000
Temple-Inland Inc. ..................... 300,000 14,287,500
York International Corporation ......... 150,000 5,512,500
Total ................................. 29,315,000
Chemicals Major - 5.30%
du Pont (E. I.) de Nemours and Company . 200,000 11,675,000
PPG Industries, Inc. ................... 120,000 4,500,000
Praxair, Inc. .......................... 400,000 7,800,000
Total ................................. 23,975,000
Chemicals Specialty and Miscellaneous Technology - 5.29%
Ferro Corporation ...................... 225,000 5,203,125
Geon Company (The) ..................... 225,000 5,850,000
Minnesota Mining and Manufacturing
Company ............................... 100,000 4,950,000
WMX Technologies, Inc. ................. 300,000 7,950,000
Total ................................. 23,953,125
Computers and Office Equipment - 1.23%
General Motors Corporation, Class E .... 160,000 5,580,000
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1994
Shares Value
COMMON STOCKS (Continued)
Consumer Electronics and Appliances - 1.16%
Whirlpool Corporation .................. 100,000 $ 5,250,000
Domestic Oil - 2.26%
Atlantic Richfield Company .............. 100,000 10,212,500
Drugs and Hospital Supply - 1.03%
Abbott Laboratories .................... 160,000 4,640,000
Electrical Equipment - 3.32%
Emerson Electric Co. ................... 100,000 5,687,500
General Electric Company ............... 200,000 9,325,000
Total ................................. 15,012,500
Engineering and Construction - 0.96%
Foster Wheeler Corporation ............. 120,000 4,365,000
Food and Related - 0.92%
CPC International Inc. ................. 86,000 4,149,500
Hospital Management - 0.59%
LTC Properties, Inc. ................... 200,000 2,675,000
Household Products - 3.97%
Gillette Company (The) ................. 150,000 9,768,750
Procter & Gamble Company (The) ......... 80,000 4,270,000
Rubbermaid Incorporated ................ 150,000 3,937,500
Total ................................. 17,976,250
Insurance - 4.24%
Chubb Corporation (The) ................ 150,000 11,493,750
Financial Security Assurance Holdings Ltd.* 350,000 7,700,000
Total ................................. 19,193,750
International Oil - 1.25%
Exxon Corporation ...................... 100,000 5,662,500
Leisure Time - 2.53%
Walt Disney Company (The) .............. 275,000 11,446,875
Machinery - 6.22%
Caterpillar Inc. ....................... 175,000 17,500,000
Parker Hannifin Corporation ............ 150,000 6,393,750
Timken Company (The) ................... 131,000 4,290,250
Total ................................. 28,184,000
Metals and Mining - 1.06%
Reynolds Metals Company ................ 100,000 4,800,000
See Notes to Schedule of Investments on page 10.
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1994
Shares Value
COMMON STOCKS (Continued)
Multi-Industry - 1.44%
ITT Corporation ........................ 80,000 $ 6,530,000
Oil Services - 2.66%
Baker Hughes Incorporated .............. 300,000 6,150,000
Schlumberger Limited ................... 100,000 5,912,500
Total ................................. 12,062,500
Public Utilities - Pipelines - 0.83%
Consolidated Natural Gas Company ....... 100,000 3,775,000
Publishing and Advertising - 1.32%
New York Times Co., Class A ............ 250,000 5,968,750
Railroads - 0.75%
Union Pacific Corporation .............. 60,000 3,397,500
Retailing - 3.63%
Cifra, S.A. de C.V., C (A) ............. 550,000 1,280,400
Home Depot, Inc. (The) ................. 70,000 2,948,750
Penney (J. C.) Company, Inc. ........... 225,000 12,206,250
Total ................................. 16,435,400
Telecommunications - 5.23%
AT&T Corporation ....................... 250,000 13,593,750
GTE Corporation ........................ 179,700 5,660,550
MCI Communications Corporation ......... 200,000 4,437,400
Total ................................. 23,691,700
TOTAL COMMON STOCKS - 70.92% $321,141,818
(Cost: $276,024,070)
PREFERRED STOCKS
Airlines - 1.00%
Delta Air Lines, Incorporated,
Convertible ........................... 100,000 4,525,000
Automotive - 1.29%
Ford Motor Company, Convertible ........ 60,000 5,820,000
Building - 0.55%
National Health Investors, Convertible .. 100,000 2,512,500
TOTAL PREFERRED STOCKS - 2.84% $ 12,857,500
(Cost: $10,853,522)
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Electrical Equipment - 0.69%
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... $ 3,000 $ 3,137,280
Financial - 2.18%
American Express Company,
6.25%, 10-15-96 ....................... 9,188 9,875,001
Telecommunications - 0.71%
Bell Telephone Company of Pennsylvania,
8.35%, 12-15-2030 ..................... 3,000 3,226,200
TOTAL CORPORATE DEBT SECURITIES - 3.58% $ 16,238,481
(Cost: $15,137,718)
OTHER GOVERNMENT SECURITY - 0.62%
Supranational
International Bank for Reconstruction and
Development,
9.25%, 7-15-2017 ...................... 2,500 $ 2,792,875
(Cost: $2,498,158)
UNITED STATES GOVERNMENT SECURITIES
United States Treasury:
9.5%, 10-15-94 ........................ 2,000 2,027,500
7.625%, 5-31-96 ....................... 10,000 10,267,200
9.25%, 8-15-98 ........................ 5,000 5,429,700
7.25%, 5-15-2004 ...................... 5,000 4,971,850
9.375%, 2-15-2006 ..................... 8,500 9,757,745
10.375%, 11-15-2012 ................... 4,000 4,895,640
9.25%, 2-15-2016 ...................... 5,000 5,773,450
Miscellaneous United States Government
Backed Securities:
National Archives Facility Trust,
8.5%, 9-1-2019 ...................... 4,475 4,631,599
Postal Square Limited Partnership,
8.95%, 6-15-2022 .................... 1,970 2,123,042
TOTAL UNITED STATES GOVERNMENT SECURITIES - 11.01% $ 49,877,726
(Cost: $49,218,194)
SHORT-TERM SECURITIES
Banks and Savings and Loans - 0.10%
U. S. Bancorp,
Master Note ........................... 470 470,000
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1994
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Consumer Electronics and Appliances - 1.29%
TDK (USA) Corp.,
4.28%, 7-20-94 ........................ $5,870 $ 5,856,740
Financial - 3.43%
Associates Corporation of North America,
Master Note ........................... 874 874,000
Dana Credit Corp.,
4.5%, 7-5-94 .......................... 6,000 5,997,000
National Australia Funding (DE) Inc.,
4.29%, 7-5-94 ......................... 8,680 8,675,863
Total ................................. 15,546,863
Insurance - 1.90%
Aon Corp.,
4.25%, 7-8-94 ......................... 8,600 8,592,893
Paper - 1.44%
Champion International, Inc.,
4.5%, 7-6-94........................... 6,510 6,505,931
Public Utilities - Electric - 1.64%
Potomac Electric Power Co.,
4.25%, 7-21-94 ........................ 7,455 7,437,398
Retailing - 1.12%
Albertson's Inc.,
4.32%, 7-11-94 ........................ 5,060 5,053,928
Services, Consumer and Business - 0.22%
Hertz Corp.,
4.45%, 7-26-94 ........................ 1,000 996,910
Telecommunications - 1.42%
BellSouth Telecommunications Inc.,
4.27%, 8-3-94 ......................... 6,430 6,404,832
TOTAL SHORT-TERM SECURITIES - 12.56% $ 56,865,495
(Cost: $56,865,495)
TOTAL INVESTMENT SECURITIES - 101.53% $459,773,895
(Cost: $410,597,157)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (1.53%) (6,937,862)
NET ASSETS - 100.00% $452,836,033
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1994
Notes to Schedule of Investments
*No income dividends were paid during the preceding 12 months.
(A) Listed on an exchange outside the United States.
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 RETIREMENT SHARES, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1994
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $459,773,895
Cash ............................................. 10,144
Receivables:
Dividends and interest .......................... 1,939,316
Fund shares sold ................................ 1,502,828
Prepaid insurance premium ......................... 18,727
------------
Total assets .................................. 463,244,910
------------
Liabilities
Payable for investment securities purchased ...... 9,450,600
Payable for Fund shares redeemed ................. 769,250
Accrued service fee ............................... 91,640
Accrued transfer agency and dividend disbursing .. 72,626
Accrued accounting services fee .................. 5,000
Other ............................................ 19,761
------------
Total liabilities ............................. 10,408,877
------------
Total net assets ............................. $452,836,033
============
Net Assets
$1.00 par value capital stock, authorized --
300,000,000; shares outstanding -- 59,281,716
Capital stock ................................... $ 59,281,716
Additional paid-in capital....................... 333,187,777
Accumulated undistributed income:
Accumulated undistributed net investment income . 806,482
Accumulated undistributed net realized gain
on investment transactions .................... 10,383,320
Net unrealized appreciation in value of investments
at end of period .............................. 49,176,738
------------
Net assets applicable to outstanding
units of capital ............................. $452,836,033
============
Net asset value per share (net assets divided by
shares outstanding) .............................. $7.64
Sales load (offering price x 5.75%) ................ .47
-----
Offering price per share (net asset value
divided by 94.25%) ............................... $8.11
=====
On sales of $100,000 or more the sales load
is reduced as set forth in the Prospectus.
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended JUNE 30, 1994
Investment Income
Income:
Interest ........................................ $ 7,135,345
Dividends ....................................... 6,529,978
-----------
Total income .................................. 13,665,323
-----------
Expenses (Note 2):
Investment management fee ....................... 2,423,283
Transfer agency and dividend disbursing ......... 693,686
Service fee ..................................... 342,919
Accounting services fee ......................... 60,000
Custodian fees .................................. 48,151
Audit fees ...................................... 20,350
Legal fees ...................................... 6,770
Other ........................................... 129,805
-----------
Total expenses ................................ 3,724,964
-----------
Net investment income ........................ 9,940,359
-----------
Realized and Unrealized Gain (Loss) on Investments
Realized net gain on investments ................. 16,961,825
Unrealized depreciation in value of investments
during the period ............................... (8,435,883)
-----------
Net gain on investments ......................... 8,525,942
-----------
Net increase in net assets resulting
from operations .............................. $18,466,301
===========
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year ended
June 30,
-------------------------
1994 1993
------------ ------------
Increase in Net Assets
Operations:
Net investment income ...............$ 9,940,359 $ 9,421,852
Realized net gain on investments .... 16,961,825 14,211,153
Unrealized appreciation
(depreciation) .................... (8,435,883) 15,734,082
------------ ------------
Net increase in net assets
resulting from operations ........ 18,466,301 39,367,087
------------ ------------
Dividends to shareholders from:*
Net investment income ............... (9,489,801) (9,558,210)
Realized gains on securities
transactions ...................... (14,680,000) (8,932,827)
------------ ------------
(24,169,801) (18,491,037)
------------ ------------
Capital share transactions:
Proceeds from sale of shares
(12,022,339 and 13,934,605
shares, respectively) ............. 95,070,558 104,779,648
Proceeds from reinvestment of
dividends and/or capital gains
distribution (3,062,704 and
2,470,349 shares, respectively) ... 24,100,246 18,444,394
Payments for shares redeemed
(5,121,599 and 3,063,290
shares, respectively) ............. (40,564,094) (23,029,170)
------------ ------------
Net increase in net assets
resulting from capital
share transactions ............... 78,606,710 100,194,872
------------ ------------
Total increase ................... 72,903,210 121,070,922
Net Assets
Beginning of period .................. 379,932,823 258,861,901
------------ ------------
End of period, including
undistributed net investment
income of $806,482 and $355,924,
respectively ........................$452,836,033 $379,932,823
============ ============
*See "Financial Highlights" on page 14.
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
FINANCIAL HIGHLIGHTS
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the fiscal year ended June 30,
------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $7.70 $7.20 $6.41 $6.41 $6.03
----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... .18 .22 .21 .26 .26
Net realized and
unrealized gain
on investments .. .22 .73 .91 .05 .51
----- ----- ----- ----- -----
Total from investment
operations ....... .40 .95 1.12 .31 .77
----- ----- ----- ----- -----
Less distributions:
Dividends from
net investment
income .......... (0.18) (0.23) (0.22) (0.26) (0.26)
Distribution from
capital gains ... (0.28) (0.22) (0.11) (0.05) (0.13)
----- ----- ----- ----- -----
Total distributions. (0.46) (0.45) (0.33) (0.31) (0.39)
----- ----- ----- ----- -----
Net asset value,
end of period .... $7.64 $7.70 $7.20 $6.41 $6.41
===== ===== ===== ===== =====
Total return* ...... 5.03% 13.45% 17.93% 5.07% 13.06%
Net assets, end
of period (000
omitted) .........$452,836$379,933$258,862$195,330$161,263
Ratio of expenses
to average net
assets ........... 0.87% 0.80% 0.82% 0.88% 0.87%
Ratio of net
investment income
to average net
assets ........... 2.32% 2.98% 3.12% 4.20% 4.21%
Portfolio turnover
rate ............. 27.10% 30.62% 38.26% 29.05% 53.20%
*Total return calculated without taking into account the
sales load deducted on an initial purchase.
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1994
NOTE 1 -- Significant Accounting Policies
United Retirement Shares, 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. 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 Securities 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. During the fiscal year ended
June 30, 1994, the Fund adopted Statement of Position 93-2 Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. Accordingly,
permanent book and tax basis differences relating to future shareholder
distributions have been reclassified to additional paid-in capital. As of
July 1, 1993, the cumulative effect of such differences totaling $2,204 was
reclassified from accumulated undistributed net realized gain on investment
transactions to additional paid-in capital. Net investment income, net
realized gains and net assets were not affected by this change.
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 $10.5 billion of
combined net assets at June 30, 1994) at annual rates of .51% of the first $750
million of combined net assets, .49% on that amount between $750 million and
$1.5 billion, .47% between $1.5 billion and $2.25 billion, .45% between $2.25
billion and $3 billion, .43% between $3 billion and $3.75 billion, .40% between
$3.75 billion and $7.5 billion, .38% between $7.5 billion and $12 billion, and
.36% of that amount over $12 billion. The Fund accrues and pays this fee daily.
Pursuant to assignment of the Investment Management Agreement between the
Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly-owned subsidiary of W&R, serves as the Fund's
investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed Services
Company ("WARSCO"), a wholly-owned subsidiary of W&R. Under the agreement,
WARSCO acts as the agent in providing accounting services and assistance to the
Fund and pricing daily the value of shares of the Fund. For these services, the
Fund pays WARSCO a monthly fee of one-twelfth of the annual fee shown in the
following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
The Fund also pays WARSCO a monthly per account charge for transfer agency
and dividend disbursement services of $1.0208 for each shareholder account which
was in existence at any time during the prior month plus $0.30 for each account
on which a dividend or distribution of cash or shares had a record date in that
month. The Fund also reimburses W&R and WARSCO for certain out-of-pocket costs.
As principal underwriter for the Fund's shares, W&R received direct and
indirect gross sales commissions (which are not an expense of the Fund) of
$3,770,666, out of which W&R paid sales commissions of $2,136,431 and all
expenses in connection with the sale of Fund shares, except for registration
fees and related expenses.
On September 28, 1993, shareholders of the Fund approved the adoption of a
12b-1 Service Plan with a maximum fee of .25%. The Plan went into effect
October 1, 1993.
The Fund paid Directors' fees of $15,193.
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 Securities Transactions
Purchases of investment securities, other than U.S. Government obligations
and short-term securities, aggregated $204,939,791 while proceeds from
maturities and sales aggregated $70,574,269. Purchases of short-term and U.S.
Government securities aggregated $754,429,122 and $10,987,500, respectively.
Proceeds from maturities and sales of short-term and U.S. Government securities
aggregated $807,946,439 and $23,124,766, respectively. There was no gain or
loss on the sale of short-term securities. There was a gain of $4,062,176 on
the sale of U.S. Government securities.
For Federal income tax purposes, cost of investments owned at June 30, 1994
was $410,597,157, resulting in net unrealized appreciation of $49,176,738, of
which $55,623,381 related to appreciated securities and $6,446,643 related to
depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $16,961,824 during its fiscal year ended June 30, 1994, of which a portion
was paid to shareholders during the period ended June 30, 1994. Remaining
capital gain net income will be distributed to Fund shareholders.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
United Retirement Shares, 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 Retirement Shares, Inc. (the
"Fund") at June 30, 1994, the results of its operations for the year 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 June
30, 1994 by correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Kansas City, Missouri
July 29, 1994
<PAGE>
INCOME TAX INFORMATION
The amounts of the dividends and long-term capital gains below, multiplied by
the number of shares owned by you on the record dates, will give you the total
amounts to be reported in your Federal income tax return for the years in which
they were received or reinvested.
PER-SHARE AMOUNTS REPORTABLE AS:
--------------------------------------------------------
For Individuals For Corporations
---------------------- --------------------------------
Record Ordinary Long-Term Non- Long-Term
Date Total Income Capital Gain Qualifying Qualifying Capital Gain
- -------- ------- ------- ------- ----------- ------ --------
9-17-93 $0.0500 $0.0500 $0.0000 $0.0265 $0.0235 $0.0000
12-17-93 0.3250 0.0672 0.2578 0.0246 0.0426 0.2578
3-11-94 0.0400 0.0400 0.0000 0.0284 0.0116 0.0000
6-17-94 0.0400 0.0400 0.0000 0.0284 0.0116 0.0000
------- ------ ------ ------ ------- -------
Totals $0.4550 $0.1972 $0.2578 $0.1079 $0.0893 $0.2578
======= ====== ====== ====== ======= =======
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 advisor concerning the tax
treatment of dividends and distributions from the Fund.
<PAGE>
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>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
Jay B. Dillingham, Kansas City, Missouri
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Los Angeles, California
Doyle Patterson, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel, III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
Leslie S. Wright, Birmingham, Alabama
OFFICERS
Keith A. Tucker, President
Robert L. Hechler, Vice President
Henry J. Herrmann, Vice President
Theodore W. Howard, Vice President and Treasurer
Rodney O. McWhinney, Vice President
Sharon K. Pappas, Vice President and Secretary
Carl E. Sturgeon, Vice President
James D. Wineland, Vice President
<PAGE>
THE UNITED GROUP OF MUTUAL FUNDS
United Cash Management, Inc.
United Government Securities Fund, Inc.
United Bond Fund
United Municipal Bond Fund, Inc.
United Continental Income Fund, Inc.
United Income Fund
United Municipal High Income Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Accumulative Fund
United Vanguard Fund, Inc.
United New Concepts Fund, Inc.
United Science and Technology Fund
United International Growth Fund, Inc.
United Gold & Government Fund, Inc.
United Retirement Shares, Inc.
- ------------------------------------
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, KS 66201-9217
(913) 236-1303
NUR1007A(6-94)
printed on recycled paper
