UNITED
RETIREMENT
SHARES,
INC.
SEMIANNUAL
REPORT
------------------------------------------
For the six months ended December 31, 1993
<PAGE>
This report is submitted for the general information of the shareholders of
United Retirement Shares, Inc. It is not authorized for distribution to
prospective investors in the Fund unless accompanied with or preceded by the
United Retirement Shares, Inc. current prospectus.
<PAGE>
PRESIDENT'S LETTER
- -----------------------------------------------------------------
DECEMBER 31, 1993
Dear Shareholder:
This report covers the investment performance of your Fund for the six
months ended December 31, 1993.
During the past six months, bond and equity markets have benefited from low
interest rates and minimal inflation. These markets will continue to react to
events that affect the economy such as the proposed deficit reduction program
and new taxes.
We are hoping to see improved economies throughout the world over the next
year. We believe this would contribute to a favorable outlook for U. S. and
foreign securities.
Regardless of the rise and decline of markets, we will continue to use the
strengths and abilities we have developed over the past 55 years. These
include:
Professional portfolio management-- As investment professionals, we pay
careful attention to economic trends; we understand the business of each company
in which we invest; and we have the ability to judge the management of such
companies as they adapt to changes in the industries and markets they serve.
A widely diversified approach-- Our extensive experience managing a variety
of securities allows us to see the whole "investment pie." We use this broad
view to consider every investment opportunity available that meets your Fund's
objectives, and to take advantage of these opportunities in an effort to achieve
maximum return.
These are just two of the many attributes that we bring to the table when
making investment decisions. We believe your Fund is designed appropriately to
meet its investment objectives, and can reward the long-term investor. We never
forget that we are managing your money.
The following is a comprehensive look at your Fund's recent performance.
We believe you will find that the information continues to reflect our aim of
meeting the stated objectives of your Fund.
Respectfully,
Keith A. Tucker
President
<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: Invest 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)
<PAGE>
PERFORMANCE SUMMARY
PER SHARE DATA
For the Six Months Ended December 31, 1993
- ------------------------------------------
DIVIDENDS PAID $0.10
=====
CAPITAL GAINS DISTRIBUTION $0.28
=====
NET ASSET VALUE ON
12/31/93 $7.90 adjusted to:$8.18(A)
06/30/93 7.70
-----
CHANGE PER SHARE $0.48
=====
(A)This number includes the capital gains distribution of $0.28 paid in December
1993 added to the actual net asset value on December 31, 1993.
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 12-31-93 6.26% 12.74%
5-year period ended 12-31-93 12.88% 14.22%
10-year period ended 12-31-93 11.79% 12.45%
*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 December 31, 1993, United Retirement Shares, Inc. had net assets totaling
$432,631,498 invested in a diversified portfolio of:
62.30% Common Stocks
20.37% Cash and Cash Equivalents
9.91% U.S. Government Securities
3.94% Corporate Bonds
2.74% Convertible Preferred Stocks
0.74% Other Government Securities
As a shareholder of United Retirement Shares, Inc. for every $100 you had
invested on December 31, 1993, your Fund owned:
Basic Industries Stocks $24.60
Cash and Cash Equivalents 20.37
Technological Stocks 16.38
Consumer Stocks 15.47
U.S. Government Securities 9.91
Corporate Bonds 3.94
Energy and Energy-Related Stocks 2.77
Convertible Preferred Stocks 2.74
Financial Stocks 1.99
Public Utilities Stock 1.09
Other Government Securities .74
Not all holdings will be represented in the portfolio at all times.
<PAGE>
- -----------------------------------------------------------------
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
Business Machines and Office Equipment
Chemicals Specialty and Miscellaneous Technology
Drugs and Hospital Supply
Electronics
Telecommunications
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1993
Shares Value
COMMON STOCKS
Airlines - 1.73%
Southwest Airlines Co. ................. 200,000 $ 7,500,000
Automotive - 2.82%
Eaton Corporation ...................... 100,000 5,050,000
General Motors Corporation ............. 130,000 7,133,750
Total ................................. 12,183,750
Banks and Savings and Loans - 1.99%
Ahmanson (H. F.) & Company ............. 130,000 2,551,250
HSBC Holdings plc (A) .................. 200,000 2,976,200
NationsBank Corporation ................ 63,000 3,087,000
Total ................................. 8,614,450
Beverages - 2.32%
Anheuser-Busch Companies, Inc. ......... 80,000 3,930,000
PepsiCo, Inc. .......................... 150,000 6,131,250
Total ................................. 10,061,250
Building - 5.85%
Georgia-Pacific Corporation ............ 80,000 5,500,000
Sherwin-Williams Company (The) ......... 125,000 4,468,750
Temple-Inland Inc. ..................... 200,000 10,075,000
York International Corporation ......... 150,000 5,287,500
Total ................................. 25,331,250
Business Machines and Office Equipment - 1.08%
General Motors Corporation, Class E .... 160,000 4,680,000
Chemicals Major - 4.44%
du Pont (E. I.) de Nemours and Company . 200,000 9,650,000
PPG Industries, Inc. ................... 60,000 4,567,500
Praxair, Inc. .......................... 300,000 4,987,500
Total ................................. 19,205,000
Chemicals Specialty and Miscellaneous Technology - 5.37%
Ferro Corporation ...................... 225,000 7,200,000
Geon Company (The) ..................... 225,000 5,315,625
Minnesota Mining and Manufacturing
Company ............................... 50,000 5,437,500
WMX Technologies, Inc. ................. 200,000 5,275,000
Total ................................. 23,228,125
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1993
Shares Value
COMMON STOCKS (Continued)
Consumer Electronics and Appliances - 1.54%
Whirlpool Corporation .................. 100,000 $ 6,650,000
Domestic Oil - 1.95%
Atlantic Richfield Company .............. 80,000 8,420,000
Drugs and Hospital Supply - 6.34%
Abbott Laboratories .................... 160,000 4,720,000
Baxter International Inc. .............. 200,000 4,875,000
Bristol-Myers Squibb Company ........... 100,000 5,812,500
Roche Holdings AG (A) .................. 1,141 4,815,511
Sandoz Ltd. (A) ........................ 2,600 7,225,132
Total ................................. 27,448,143
Engineering and Construction - 0.93%
Foster Wheeler Corporation ............. 120,000 4,020,000
Food and Related - 0.95%
CPC International Inc. ................. 86,000 4,095,750
Household Products - 4.33%
Gillette Company (The) ................. 150,000 8,943,750
Procter & Gamble Company (The) ......... 80,000 4,560,000
Rubbermaid Incorporated ................ 150,000 5,212,500
Total ................................. 18,716,250
Leisure Time - 1.97%
Walt Disney Company (The) .............. 200,000 8,525,000
Machinery - 4.38%
Caterpillar Inc. ....................... 100,000 8,900,000
Parker Hannifin Corporation ............ 150,000 5,662,500
Timken Company (The) ................... 131,000 4,404,875
Total ................................. 18,967,375
Metals and Mining - 1.89%
Engelhard Corporation .................. 150,000 3,656,250
Reynolds Metals Company ................ 100,000 4,537,500
Total ................................. 8,193,750
Multi-Industry - 1.69%
ITT Corporation ........................ 80,000 7,300,000
Oil Services - 0.82%
Schlumberger Limited ................... 60,000 3,547,500
Public Utilities - Pipelines - 1.09%
Consolidated Natural Gas Company ....... 100,000 4,700,000
Publishing and Advertising - 1.52%
New York Times Co. ..................... 250,000 6,562,500
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1993
Shares Value
COMMON STOCKS (Continued)
Railroads - 0.87%
Union Pacific Corporation .............. 60,000 $ 3,757,500
Retailing - 2.84%
Cifra, S.A. de C.V., C (A) ............. 550,000 1,650,000
Home Depot, Inc. (The) ................. 70,000 2,765,000
Penney (J. C.) Company, Inc. ........... 150,000 7,856,250
Total ................................. 12,271,250
Telecommunications - 3.59%
Allen Group Inc. (The) ................. 200,000 3,625,000
GTE Corporation ........................ 179,700 6,289,500
MCI Communications Corporation ......... 200,000 5,637,400
Total ................................. 15,551,900
TOTAL COMMON STOCKS - 62.30% $269,530,743
(Cost: $208,633,380)
PREFERRED STOCKS
Airlines - 1.24%
Delta Air Lines, Incorporated,
Convertible ........................... 100,000 5,350,000
Automotive - 1.50%
Ford Motor Company, Convertible ........ 60,000 6,510,000
TOTAL PREFERRED STOCKS - 2.74% $11,860,000
(Cost: $8,349,137)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Electrical Equipment - 0.81%
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... $ 3,000 3,510,960
Financial - 2.30%
American Express Company,
6.25%, 10-15-96 ....................... 9,188 9,937,476
Telecommunications - 0.83%
Bell Telephone Company of Pennsylvania,
8.35%, 12-15-2030 ..................... 3,000 3,588,930
TOTAL CORPORATE DEBT SECURITIES - 3.94% $ 17,037,366
(Cost: $15,137,427)
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1993
Principal
Amount in
Thousands Value
OTHER GOVERNMENT SECURITIES - 0.74%
Supranational
International Bank for Reconstruction and
Development,
9.25%, 7-15-2017 ...................... $ 2,500 $ 3,196,125
(Cost: $2,497,714)
UNITED STATES GOVERNMENT SECURITIES
United States Treasury:
9.5%, 10-15-94 ........................ 2,000 2,089,680
7.625%, 5-31-96 ....................... 10,000 10,739,100
9.25%, 8-15-98 ........................ 5,000 5,839,050
9.375%, 2-15-2006 ..................... 8,500 10,958,370
10.375%, 11-15-2012 ................... 4,000 5,523,120
Miscellaneous United States Government
Backed Securities:
National Archives Facility Trust,
8.5%, 9-1-2019 ...................... 4,500 5,321,340
Postal Square Limited Partnership,
8.95%, 6-15-2022 .................... 1,978 2,406,203
TOTAL UNITED STATES GOVERNMENT SECURITIES - 9.91% $ 42,876,863
(Cost: $38,417,053)
SHORT-TERM SECURITIES
Banks and Savings and Loans - 0.99%
U. S. Bancorp,
Master Note ........................... 4,281 4,281,000
Beverages - 1.63%
PepsiCo, Inc.:
3.3%, 1-4-94........................... 4,600 4,598,735
3.27%, 1-6-94.......................... 2,450 2,448,887
Total.................................. 7,047,622
Consumer Electronics and Appliances - 0.44%
TDK (USA) Corp.,
3.33%, 1-18-94 ........................ 1,900 1,897,012
Drugs and Hospital Supply - 1.25%
Baxter International Inc.,
3.53%, 1-7-94.......................... 5,400 5,396,823
Financial - 4.10%
Associates Corporation of North America,
Master Note ........................... 490 490,000
Block Financial Corp.,
3.28%, 1-27-94......................... 8,000 7,981,049
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1993
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Financial (Continued)
Transamerica Financial Group,
3.35%, 1-28-94 ........................ $ 6,000 $ 5,984,925
USAA Capital Corp.,
3.32%, 1-12-94......................... 3,300 3,296,652
Total ................................. 17,752,626
Food and Related - 0.54%
Sara Lee Corporation,
Master Note ........................... 2,329 2,329,000
Leisure Time - 1.24%
Grand Metropolitan Investment
Corp.,
3.35%, 1-6-94.......................... 5,350 5,347,511
Machinery - 2.90%
Caterpillar Financial Services Corp.,
3.43%, 1-21-94......................... 7,500 7,485,708
Cooper Industries, Inc.,
3.25%, 2-4-94.......................... 5,100 5,084,346
Total.................................. 12,570,054
Paper - 1.95%
Champion International, Inc.,
3.3%, 2-2-94........................... 8,450 8,425,213
Public Utilities - Gas - 0.71%
National Fuel Gas Co.,
3.5%, 1-14-94.......................... 3,100 3,096,082
Retailing - 0.81%
K Mart Corporation:
3.33%, 1-20-94......................... 2,250 2,246,046
3.3%, 2-9-94........................... 1,250 1,245,531
Total ................................. 3,491,577
Telecommunications - 3.48%
GTE North Inc.,
3.25%, 1-26-94......................... 5,100 5,088,490
NYNEX Corp.,
3.24%, 1-24-94......................... 10,000 9,979,300
Total.................................. 15,067,790
TOTAL SHORT-TERM SECURITIES - 20.04% $ 86,702,310
(Cost: $86,702,310)
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1993
Value
TOTAL INVESTMENT SECURITIES - 99.67% $431,203,407
(Cost: $359,737,021)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.33% 1,428,091
NET ASSETS - 100.00% $432,631,498
Notes to Schedule of Investments
(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
DECEMBER 31, 1993
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $431,203,407
Cash ............................................. 11,752
Receivables:
Dividends and interest .......................... 1,515,984
Fund shares sold ................................ 1,449,448
Prepaid insurance premium ......................... 12,342
------------
Total assets .................................. 434,192,933
------------
Liabilities
Payable for Fund shares redeemed ................. 1,400,654
Accrued service fee ............................... 83,621
Accrued transfer agency and dividend disbursing .. 58,648
Accrued accounting services fee .................. 5,000
Other ............................................ 13,512
------------
Total liabilities ............................. 1,561,435
------------
Total net assets ............................. $432,631,498
============
Net Assets
$1.00 par value capital stock, authorized --
300,000,000; shares outstanding -- 54,778,161
Capital stock ................................... $ 54,778,161
Additional paid-in capital....................... 302,140,141
Accumulated undistributed income:
Accumulated undistributed net investment income . 141,669
Accumulated undistributed net realized gain
on investment transactions .................... 4,105,141
Net unrealized appreciation in value of investments
at end of period .............................. 71,466,386
------------
Net assets applicable to outstanding
units of capital ............................. $432,631,498
============
Net asset value per share (net assets divided by
shares outstanding) .............................. $7.90
=====
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended DECEMBER 31, 1993
Investment Income
Income:
Interest ........................................ $ 3,838,685
Dividends ....................................... 2,615,294
-----------
Total income .................................. 6,453,979
-----------
Expenses (Note 2):
Investment management fee ....................... 1,162,710
Transfer agency and dividend disbursing ......... 352,902
Service fee ..................................... 101,842
Accounting services fee ......................... 30,000
Custodian fees .................................. 22,227
Audit fees ...................................... 12,991
Legal fees ...................................... 4,022
Other ........................................... 84,982
-----------
Total expenses ................................ 1,771,676
-----------
Net investment income ........................ 4,682,303
-----------
Realized and Unrealized Gain on Investments
Realized net gain on investments ................. 10,681,237
Unrealized appreciation in value of investments
during the period ............................... 13,853,765
-----------
Net gain on investments ......................... 24,535,002
-----------
Net increase in net assets resulting
from operations .............................. $29,217,305
===========
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the For the
six months fiscal year
ended ended
December 31, June 30,
1993 1993
------------ -----------
Increase in Net Assets
Operations:
Net investment income ...............$ 4,682,303 $ 9,421,852
Realized net gain on investments .... 10,681,237 14,211,153
Unrealized appreciation ............. 13,853,765 15,734,082
------------ ------------
Net increase in net assets
resulting from operations ........ 29,217,305 39,367,087
------------ ------------
Dividends to shareholders from:*
Net investment income ............... (4,896,558) (9,558,210)
Realized gains on securities
transactions ...................... (14,677,591) (8,932,827)
------------ ------------
(19,574,149) (18,491,037)
------------ ------------
Capital share transactions:
Proceeds from sale of shares
(5,274,648 and 13,934,605
shares, respectively) ............. 41,786,041 104,779,648
Proceeds from reinvestment of
dividends and/or capital gains
distribution (2,484,455 and
2,470,349 shares, respectively) .. 19,522,154 18,444,394
Payments for shares redeemed
(2,299,214 and 3,063,290
shares, respectively) ............. (18,252,676) (23,029,170)
------------ ------------
Net increase in net assets
resulting from capital
share transactions ............... 43,055,519 100,194,872
------------ ------------
Total increase ................... 52,698,675 121,070,922
Net Assets
Beginning of period .................. 379,932,823 258,861,901
------------ ------------
End of period, including
undistributed net investment
income of $141,669 and $355,924,
respectively ........................$432,631,498 $379,932,823
============ ============
*See "Financial Highlights" on page 15.
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
FINANCIAL HIGHLIGHTS
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
six
months For the fiscal year ended June 30,
ended ----------------------------------
12/31/93 1993 1992 1991 1990 1989
-------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $7.70 $7.20 $6.41 $6.41 $6.03 $5.39
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... .09 .22 .21 .26 .26 .26
Net realized and
unrealized gain
on investments .. .49 .73 .91 .05 .51 .67
----- ----- ----- ----- ----- -----
Total from investment
operations ....... .58 .95 1.12 .31 .77 .93
----- ----- ----- ----- ----- -----
Less distributions:
Dividends from
net investment
income .......... (0.10) (0.23) (0.22) (0.26) (0.26) (0.28)
Distribution from
capital gains ... (0.28) (0.22) (0.11) (0.05) (0.13) (0.01)
----- ----- ----- ----- ----- -----
Total distributions. (0.38) (0.45) (0.33) (0.31) (0.39) (0.29)
----- ----- ----- ----- ----- -----
Net asset value,
end of period .... $7.90 $7.70 $7.20 $6.41 $6.41 $6.03
===== ===== ===== ===== ===== =====
Total return* ...... 15.60%**13.45% 17.93% 5.07% 13.06% 17.88%
Net assets, end
of period (000
omitted) .........$432,631$379,933$258,862$195,330$161,263$125,987
Ratio of expenses
to average net
assets ........... 0.86%** 0.80% 0.82% 0.88% 0.87% 0.87%
Ratio of net
investment income
to average net
assets ........... 2.28%** 2.98% 3.12% 4.20% 4.21% 4.77%
Portfolio turnover
rate ............. 33.70%**30.62% 38.26% 29.05% 53.20% 52.19%
*Total return calculated without taking into account the
sales load deducted on an initial purchase.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993
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 six months ended
December 31, 1993, 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 $11.1 billion of
combined net assets at December 31, 1993) at annual rates of .51% of the first
$750 million of combined net assets, .49% on that amount between $750 million
and $1.5 billion, .47% between $1.5 billion and $2.25 billion, .45% between
$2.25 billion and $3 billion, .43% between $3 billion and $3.75 billion, .40%
between $3.75 billion and $7.5 billion, .38% between $7.5 billion and $12
billion, and .36% of that amount over $12 billion. The Fund accrues and pays
this fee daily.
Pursuant to assignment of the Investment Management Agreement between the
Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly-owned subsidiary of W&R, serves as the Fund's
investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed Services
Company ("WARSCO"), a wholly-owned subsidiary of W&R. Under the agreement,
WARSCO acts as the agent in providing accounting services and assistance to the
Fund and pricing daily the value of shares of the Fund. For these services, the
Fund pays WARSCO a monthly fee of one-twelfth of the annual fee shown in the
following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
The Fund also pays WARSCO a monthly per account charge for transfer agency
and dividend disbursement services of $1.0208 for each shareholder account which
was in existence at any time during the prior month plus $0.30 for each account
on which a dividend or distribution of cash or shares had a record date in that
month. The Fund also reimburses W&R and WARSCO for certain out-of-pocket costs.
As principal underwriter for the Fund's shares, W&R received direct and
indirect gross sales commissions (which are not an expense of the Fund) of
$1,778,634, out of which W&R paid sales commissions of $1,007,264 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 $7,357.
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 $100,191,175 while proceeds from
maturities and sales aggregated $29,464,441. Purchases of short-term securities
aggregated $427,385,798. Proceeds from maturities and sales of short-term and
U.S. Government securities aggregated $449,851,725 and $23,091,997,
respectively. There was no gain or loss on the sale of short-term securities.
There was a gain of $4,061,190 on the sale of U.S. Government securities.
For Federal income tax purposes, cost of investments owned at December 31,
1993 was $359,737,021, resulting in net unrealized appreciation of $71,466,386,
of which $74,764,854 related to appreciated securities and $3,298,468 related to
depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $14,211,154 during its fiscal year ended June 30, 1993, of which a portion
was paid to shareholders during the year ended June 30, 1993. Remaining capital
gain net income will be distributed to the Fund's 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 December 31, 1993, the results of its operations for the six months
then ended and the changes in its net assets and the financial highlights for
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and the 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 December 31, 1993 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE
Kansas City, Missouri
January 31, 1994
<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
NUR1007SA(12-93)
printed on recycled paper