<PAGE>
UNITED
RETIREMENT
SHARES,
INC.
SEMIANNUAL
REPORT
------------------------------------------
For the six months ended December 31, 1994
<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, 1994
Dear Shareholder:
As President of your Fund, I would like to take this opportunity to share
my thoughts on a subject that I believe is very important to all of us; the need
for tax incentives that will help Americans take personal responsibility for
their futures.
Voters all across America sent two clear messages in the elections held in
November 1994. They want their taxes reduced and they want their concern for
financial security addressed without adding new bureaucracies or government
programs. One of the methods to do this is to expand the availability of tax
incentives for individuals to invest in Individual Retirement Accounts. This
could be done in several ways such as:
restoring the universal availability of fully tax-deductible Individual
Retirement Accounts,
allowing non-working spouses to make a full contribution of $2,000 to an
Individual Retirement Account instead of only $250 as currently allowed,
eliminating the taxation on the distribution of earnings from Individual
Retirement Accounts.
All of us recognize that future generations will need to supplement social
security benefits by private savings in order to provide an adequate level of
retirement income. Expanding the benefits of IRA's provides tax incentives to
encourage savings which allows all individuals the opportunity to provide
financial security for themselves and their families. Encouraging savings
through tax incentives has additional indirect benefits. Americans' personal
savings rate has fallen from 8% in the 1960's to just 2% of disposable income
today. Expanding the benefits of IRA's will help reverse this trend, will
increase the amount of U.S. capital available for investment and should make the
U.S. less dependent on capital from foreign sources.
Changes to our current IRA laws, such as the ones I mentioned above, are
being discussed in Congress. I urge you to write to your Members of Congress
and to the President to tell them that you support expanded IRA legislation that
provides incentives and opportunities for all Americans to improve their
financial well being.
Finally, I appreciate your continued confidence in our products and
services.
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: 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
SCHEDULED DIVIDEND FREQUENCY: QUARTERLY (March, June, September,
December)
<PAGE>
PERFORMANCE SUMMARY
PER SHARE DATA
For the Six Months Ended December 31, 1994
- ------------------------------------------
DIVIDENDS PAID $0.12
=====
CAPITAL GAINS DISTRIBUTION $0.26
=====
NET ASSET VALUE ON
12/31/94 $7.41 adjusted to:$7.67(A)
06/30/94 7.64
-----
CHANGE PER SHARE $0.03
=====
(A)This number includes the capital gains distribution of $0.26 paid in December
1994 added to the actual net asset value on December 31, 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 12-31-94 -6.14% -0.42%
5-year period ended 12-31-94 8.16% 9.45%
10-year period ended 12-31-94 11.28% 11.94%
*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, 1994, United Retirement Shares, Inc. had net assets totaling
$473,501,608 invested in a diversified portfolio of:
59.36% Common Stocks
24.19% U.S. Government Securities
9.73% Cash and Cash Equivalents
3.56% Corporate Bonds
2.58% Convertible Preferred Stocks
0.58% Other Government Security
As a shareholder in United Retirement Shares, Inc. for every $100 you had
invested on December 31, 1994, your Fund owned:
U.S. Government Securities $24.19
Basic Industries Stocks 18.28
Technological Stocks 12.52
Consumer Stocks 12.50
Cash and Cash Equivalents 9.73
Energy and Energy-Related Stocks 8.32
Financial Stocks 6.45
Corporate Bonds 3.56
Convertible Preferred Stocks 2.58
Public Utilities Stock 1.29
Other Government Security 0.58
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
Chemicals Specialty and Miscellaneous Technology
Computers and Office Equipment
Drugs and Hospital Supply
Electronics
Telecommunications
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1994
Shares Value
COMMON STOCKS
Airlines - 0.71%
Southwest Airlines Co. ................. 200,000 $ 3,350,000
Banks and Savings and Loans - 1.63%
Bankers Trust New York Corporation .... 100,000 5,537,500
HSBC Holdings plc (A) .................. 202,060 2,180,409
Total ................................. 7,717,909
Beverages - 3.32%
Coca-Cola Company (The) ................ 200,000 10,300,000
PepsiCo, Inc. .......................... 150,000 5,437,500
Total ................................. 15,737,500
Building - 2.04%
Sherwin-Williams Company (The) ......... 125,000 4,140,625
York International Corporation ......... 150,000 5,531,250
Total ................................. 9,671,875
Chemicals Major - 1.78%
du Pont (E.I.) de Nemours and Company .. 150,000 8,437,500
Chemicals Specialty and Miscellaneous Technology - 1.13%
Minnesota Mining and Manufacturing
Company ............................... 100,000 5,337,500
Computers and Office Equipment - 1.30%
General Motors Corporation, Class E .... 160,000 6,160,000
Domestic Oil - 2.15%
Atlantic Richfield Company .............. 100,000 10,175,000
Drugs and Hospital Supply - 1.10%
Abbott Laboratories .................... 160,000 5,220,000
Electrical Equipment - 1.98%
Emerson Electric Co. ................... 150,000 9,375,000
Engineering and Construction - 0.75%
Foster Wheeler Corporation ............. 120,000 3,570,000
Food and Related - 0.97%
CPC International Inc. ................. 86,000 4,579,500
Hospital Management - 0.56%
LTC Properties, Inc. ................... 200,000 2,650,000
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1994
Shares Value
COMMON STOCKS (Continued)
Household Products - 4.75%
Colgate-Palmolive Company .............. 100,000 $ 6,337,500
Gillette Company (The) ................. 150,000 11,212,500
Procter & Gamble Company (The) ......... 80,000 4,960,000
Total ................................. 22,510,000
Insurance - 4.82%
Chubb Corporation (The) ................ 200,000 15,475,000
Financial Security Assurance Holdings Ltd. 350,000 7,350,000
Total ................................. 22,825,000
International Oil - 2.57%
Exxon Corporation ...................... 200,000 12,150,000
Leisure Time - 2.68%
Walt Disney Company (The) .............. 275,000 12,684,375
Machinery - 5.78%
Caterpillar Inc. ....................... 350,000 19,293,750
Parker Hannifin Corporation ............ 100,000 4,550,000
Timken Company (The) ................... 100,000 3,525,000
Total ................................. 27,368,750
Metals and Mining - 0.78%
Reynolds Metals Company ................ 75,000 3,675,000
Multi-Industry - 3.88%
Grupo Carso, S.A. de C.V.,
Series 1A (A)* ........................ 400,000 2,940,000
ITT Corporation ........................ 125,000 11,078,125
Mark IV Industries, Inc. ............... 220,000 4,345,000
Total ................................. 18,363,125
Oil Services - 3.60%
Baker Hughes Incorporated .............. 400,000 7,300,000
Dresser Industries, Inc. ............... 250,000 4,718,750
Schlumberger Limited ................... 100,000 5,037,500
Total ................................. 17,056,250
Public Utilities - Pipelines - 1.29%
Enron Corp. ............................ 200,000 6,100,000
Railroads - 0.58%
Union Pacific Corporation .............. 60,000 2,737,500
Retailing - 0.22%
Cifra, S.A. de C.V., Class C (A) ....... 550,000 1,040,600
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1994
Shares Value
COMMON STOCKS (Continued)
Telecommunications - 8.99%
AT&T Corporation ....................... 250,000 $ 12,562,500
BellSouth Corporation .................. 200,000 10,825,000
GTE Corporation ........................ 179,700 5,458,388
MCI Communications Corporation ......... 300,000 5,531,100
Telefonos de Mexico S.A. de C.V., ADR .. 200,000 8,200,000
Total ................................. 42,576,988
TOTAL COMMON STOCKS - 59.36% $281,069,372
(Cost: $242,674,394)
PREFERRED STOCKS
Airlines - 0.92%
Delta Air Lines, Incorporated,
Convertible ........................... 100,000 4,375,000
Automotive - 1.17%
Ford Motor Company, Convertible ........ 60,000 5,520,000
Building - 0.49%
National Health Investors, Convertible .. 100,000 2,337,500
TOTAL PREFERRED STOCKS - 2.58% $ 12,232,500
(Cost: $10,853,522)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Electrical Equipment - 0.65%
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... $ 3,000 3,057,030
Financial - 2.25%
American Express Company,
6.25%, 10-15-96 ....................... 9,188 10,656,214
Telecommunications - 0.66%
Bell Telephone Company of Pennsylvania,
8.35%, 12-15-2030 ..................... 3,000 3,142,110
TOTAL CORPORATE DEBT SECURITIES - 3.56% $ 16,855,354
(Cost: $15,138,536)
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
OTHER GOVERNMENT SECURITY - 0.58%
Supranational
International Bank for Reconstruction and
Development,
9.25%, 7-15-2017 ...................... $ 2,500 $ 2,724,425
(Cost: $2,498,169)
UNITED STATES GOVERNMENT SECURITIES
United States Treasury:
7.625%, 5-31-96 ....................... 10,000 10,017,200
7.5%, 12-31-96 ........................ 10,000 9,964,100
6.5%, 8-15-97 ......................... 5,000 4,848,450
7.375%, 11-15-97 ...................... 5,000 4,946,850
9.25%, 8-15-98 ........................ 5,000 5,217,200
4.75%, 10-31-98 ....................... 10,000 8,987,500
7.125%, 9-30-99 ....................... 20,000 19,425,000
7.75%, 12-31-99 ....................... 10,000 9,965,600
7.25%, 5-15-2004 ...................... 5,000 4,801,550
7.875%, 11-15-2004 .................... 10,000 10,028,100
9.375%, 2-15-2006 ..................... 8,500 9,427,010
10.375%, 11-15-2012 ................... 4,000 4,760,000
9.25%, 2-15-2016 ...................... 5,000 5,625,800
Miscellaneous United States Government
Backed Securities:
National Archives Facility Trust,
8.5%, 9-1-2019 ...................... 4,450 4,476,834
Postal Square Limited Partnership,
8.95%, 6-15-2022 .................... 1,962 2,061,458
TOTAL UNITED STATES GOVERNMENT SECURITIES - 24.19% $114,552,652
(Cost: $115,409,439)
SHORT-TERM SECURITIES
Banks and Savings and Loans - 0.44%
U. S. Bancorp,
Master Note ........................... 2,074 2,074,000
Financial - 5.53%
Associates Corporation of North America,
5.97%, 1-9-95.......................... 6,045 6,036,980
B.A.T. Capital Corp.,
5.9%, 1-25-95 ......................... 805 801,834
International Business Machines
Credit Corporation,
7.25%, 1-3-95 ......................... 6,900 6,897,221
Philip Morris Capital Corp.,
5.9%,1-25-95 .......................... 8,310 8,277,314
USAA Capital Corp.,
5.95%, 1-19-95 ........................ 4,200 4,187,505
Total ................................. 26,200,854
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Food and Related - 0.66%
General Mills, Inc.,
Master Note ........................... $ 1,499 $ 1,499,000
Sara Lee Corporation,
Master Note............................ 1,624 1,624,000
Total ................................. 3,123,000
Metals and Mining - 1.31%
Minnesota Mining and Manufacturing Company,
5.8%, 1-6-95 .......................... 6,225 6,219,985
Paper - 1.07%
Champion International, Inc.,
5.95%, 2-3-95.......................... 5,065 5,037,375
Public Utilities - Electric - 1.27%
PS of Colorado Credit Corp:
6.2%, 1-6-95 .......................... 1,310 1,308,872
6.18%, 1-13-95 ........................ 4,715 4,705,287
Total ................................. 6,014,159
Publishing and Advertising - 0.49%
Times Mirror Company (The),
6.05%, 1-11-95 ........................ 2,320 2,316,101
TOTAL SHORT-TERM SECURITIES - 10.77% $ 50,985,474
(Cost: $50,985,474)
TOTAL INVESTMENT SECURITIES - 101.04% $478,419,777
(Cost: $437,559,534)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (1.04%) (4,918,169)
NET ASSETS - 100.00% $473,501,608
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 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
DECEMBER 31, 1994
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $478,419,777
Cash ............................................. 57,307
Receivables:
Investment securities sold ...................... 19,266,669
Dividends and interest .......................... 2,746,556
Fund shares sold ................................ 694,233
Prepaid insurance premium ......................... 12,529
------------
Total assets .................................. 501,197,071
------------
Liabilities
Payable for investment securities purchased ...... 25,423,500
Payable for Fund shares redeemed ................. 2,043,732
Accrued service fee ............................... 112,760
Accrued transfer agency and dividend disbursing .. 75,656
Accrued accounting services fee .................. 5,000
Other ............................................ 34,815
------------
Total liabilities ............................. 27,695,463
------------
Total net assets ............................. $473,501,608
============
Net Assets
$1.00 par value capital stock, authorized --
300,000,000; shares outstanding -- 63,925,127
Capital stock ................................... $ 63,925,127
Additional paid-in capital....................... 363,631,801
Accumulated undistributed income:
Accumulated undistributed net investment income . 358,563
Accumulated undistributed net realized gain
on investment transactions .................... 4,725,874
Net unrealized appreciation in value of
securities at end of period ................... 40,860,243
------------
Net assets applicable to outstanding
units of capital ............................. $473,501,608
============
Net asset value per share (net assets divided by
shares outstanding) .............................. $7.41
=====
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended DECEMBER 31, 1994
Investment Income
Income:
Interest ........................................ $4,412,053
Dividends ....................................... 4,289,016
-----------
Total income .................................. 8,701,069
-----------
Expenses (Note 2):
Investment management fee ....................... 1,347,034
Transfer agency and dividend disbursing ......... 360,736
Service fee ..................................... 273,284
Accounting services fee ......................... 30,000
Custodian fees .................................. 16,247
Audit fees ...................................... 13,875
Legal fees ...................................... 8,284
Other ........................................... 85,607
-----------
Total expenses ................................ 2,135,067
-----------
Net investment income ........................ 6,566,002
-----------
Realized and Unrealized Gain (Loss) on Investments
Realized net gain on investments ................. 10,388,757
-----------
Unrealized depreciation in value of securities
during the period ............................... (8,316,495)
-----------
Unrealized depreciation in value of investments
during the period ............................... (8,316,495)
-----------
Net gain on investments ......................... 2,072,262
-----------
Net increase in net assets resulting
from operations .............................. $8,638,264
===========
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,
1994 1994
------------ -----------
Increase in Net Assets
Operations:
Net investment income ............... $6,566,002 $ 9,940,359
Realized net gain on investments .... 10,388,957 16,961,825
Unrealized appreciation
(depreciation) .................... (8,316,495) (8,435,883)
------------ ------------
Net increase in net assets
resulting from operations ........ 8,638,264 18,466,301
------------ ------------
Dividends to shareholders from:*
Net investment income ............... (7,013,921) (9,489,801)
Realized gains on securities
transactions ...................... (16,046,203) (14,680,000)
------------ ------------
(23,060,124) (24,169,801)
------------ ------------
Capital share transactions:
Proceeds from sale of shares
(4,732,804 and 12,022,339
shares, respectively) ............. 36,745,953 95,070,558
Proceeds from reinvestment of
dividends and/or capital gains
distribution (3,102,513 and
3,062,704 shares, respectively) ... 22,999,310 24,100,246
Payments for shares redeemed
(3,191,906 and 5,121,599
shares, respectively) ............. (24,657,828) (40,564,094)
------------ ------------
Net increase in net assets
resulting from capital
share transactions ............... 35,087,435 78,606,710
------------ ------------
Total increase ................... 20,665,575 72,903,210
Net Assets
Beginning of period .................. 452,836,033 379,932,823
------------ ------------
End of period, including
undistributed net investment
income of $358,563 and $806,482,
respectively ........................$473,501,608 $452,836,033
============ ============
*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
six
months For the fiscal year ended June 30,
ended ----------------------------------
12/31/94 1994 1993 1992 1991 1990
-------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $7.64 $7.70 $7.20 $6.41 $6.41 $6.03
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... .11 .18 .22 .21 .26 .26
Net realized and
unrealized gain
on investments .. .04 .22 .73 .91 .05 .51
----- ----- ----- ----- ----- -----
Total from investment
operations ....... .15 .40 .95 1.12 .31 .77
----- ----- ----- ----- ----- -----
Less distributions:
Dividends from
net investment
income .......... (0.12) (0.18) (0.23) (0.22) (0.26) (0.26)
Distribution from
capital gains ... (0.26) (0.28) (0.22) (0.11) (0.05) (0.13)
----- ----- ----- ----- ----- -----
Total distributions. (0.38) (0.46) (0.45) (0.33) (0.31) (0.39)
----- ----- ----- ----- ----- -----
Net asset value,
end of period .... $7.41 $7.64 $7.70 $7.20 $6.41 $6.41
===== ===== ===== ===== ===== =====
Total return* ...... 1.94% 5.03% 13.45% 17.93% 5.07% 13.06%
Net assets, end
of period (000
omitted) .........$473,502$452,836$379,933$258,862$195,330$161,263
Ratio of expenses
to average net
assets ........... 0.90%** 0.87% 0.80% 0.82% 0.88% 0.87%
Ratio of net
investment income
to average net
assets ........... 2.76%** 2.32% 2.98% 3.12% 4.20% 4.21%
Portfolio turnover
rate ............. 61.67%**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.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 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. Net investment income
distributions and capital gains distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences are due to differing treatments
for items such as deferral of wash sales and post-October losses, foreign
currency transactions, net operating losses and expiring capital loss
carryforwards.
NOTE 2 -- Investment Management and Payments to Affiliated Persons
The Fund pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business. The fee
consists of two elements: (i) a "Specific" fee computed on net asset value as of
the close of business each day at the annual rate of .15% of net assets and (ii)
a "Group" fee computed each day on the combined net asset values of all of the
funds in the United Group of mutual funds (approximately $11.0 billion of
combined net assets at December 31, 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
$1,328,355, out of which W&R paid sales commissions of $782,801 and all expenses
in connection with the sale of Fund shares, except for registration fees and
related expenses.
Under a Service Plan adopted by the Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940, the Fund may pay monthly a fee to W&R in an
amount not to exceed .25% of the Fund's average annual net assets. The fee is
to be paid to reimburse W&R for amounts it expends in connection with the
provision of personal services to Fund shareholders and/or maintenance of
shareholder accounts.
The Fund paid Directors' fees of $8,361.
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 $81,437,741 while proceeds from maturities
and sales aggregated $125,176,538. Purchases of short-term and U.S. Government
securities aggregated $396,883,024 and $68,332,813, respectively. Proceeds from
maturities and sales of short-term and U.S. Government securities aggregated
$414,119,440 and $2,034,174, respectively.
For Federal income tax purposes, cost of investments owned at December 31,
1994 was $437,559,534, resulting in net unrealized appreciation of $40,860,243,
of which $47,028,251 related to appreciated securities and $6,168,008 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 has been 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 December 31, 1994, 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, 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
January 31, 1995
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
Jay B. Dillingham, Kansas City, Missouri
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
Sharon K. Pappas, Vice President and Secretary
Carl E. Sturgeon, Vice President
Cynthia P. Prince-Fox, Vice President
To all IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from an IRA unless you make a written election not to
have taxes withheld. The election may be made by submitting forms provided by
Waddell & Reed, Inc. which can be obtained from your Waddell & Reed
representative or by submitting Internal Revenue Service form W-4P. Once made,
an election can be revoked by providing written notice to Waddell & Reed, Inc.
If you elect not to have tax withheld you may be required to make payments of
estimated tax. Penalties may be imposed by the IRS if withholding and estimated
tax payments are not adequate.
<PAGE>
THE UNITED GROUP OF MUTUAL FUNDS
United Cash Management, Inc.
United Government Securities Fund, Inc.
United Bond Fund
United Municipal Bond Fund, Inc.
United 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(12-94)
printed on recycled paper
