<PAGE>
UNITED
RETIREMENT
SHARES,
INC.
SEMIANNUAL
REPORT
------------------------------------------
For the six months ended December 31, 1995
<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, 1995
Dear Shareholder:
As President of your Fund, I would like to thank you for your continued
confidence in our products and services. We strive to provide the best service
possible to our shareholders: from the Fund's manager, to Waddell & Reed's
customer service representatives, to your personal account representative and
the Waddell & Reed office nearest you.
While personalized service has become increasingly rare in the investment
industry, we remain committed to locally based account representatives who
provide the personal service you need. They are ready to assist you through
regular reviews of your financial plan and to answer any financial questions you
may have. Your account representative is anxious to help you plan for your
retirement, fund a child's education or make plans for other long-term financial
goals.
We want to help you open the door to a better financial future. We will
continue to help you meet your specific financial needs through quality
investment products and personalized service that makes the investment process
more convenient and accessible for you.
Should you have any questions about your account or other financial issues,
contact your personal account representative or your local Waddell & Reed
office. They're ready to help you make the most of your financial future.
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 opinion of management,
Stability consistent with the
Income reasonable safety of capital.
Maximum 10% foreign STRATEGY: Invests in equity and debt
securities securities in such
proportions that management
Debt securities believes are most likely to
achieve the Fund's objective.
Cash reserves (May purchase securities
subject to repurchase agreements. May
invest in certain options and futures.)
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)
PERFORMANCE SUMMARY
PER SHARE DATA
For the Six Months Ended December 31, 1995
- ------------------------------------------
DIVIDENDS PAID $0.15
=====
CAPITAL GAINS DISTRIBUTION $0.47
=====
NET ASSET VALUE ON
12/31/95 $8.47 adjusted to: $8.94(A)
06/30/95 8.26
-----
CHANGE PER SHARE $0.68
=====
(A)This number includes the capital gains distribution of $0.47 paid in December
1995 added to the actual net asset value on December 31, 1995.
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 12-31-95 17.13% 24.28%
5-year period ended 12-31-95 12.58% 13.92%
10-year period ended 12-31-95 11.27% 11.93%
*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, 1995, United Retirement Shares, Inc. had net assets totaling
$576,445,902 invested in a diversified portfolio of:
54.85% Common Stocks
23.88% U.S. Government Securities
13.89% Cash and Cash Equivalents
4.78% Corporate Bonds
2.02% Convertible Preferred Stocks
0.58% Other Government Security
As a shareholder of United Retirement Shares, Inc. for every $100 you had
invested on December 31, 1995, your Fund owned:
U.S. Government Securities $23.88
Basic Industries Stocks 15.85
Technological Stocks 15.29
Cash and Cash Equivalents 13.89
Consumer Stocks 11.31
Financial Stocks 6.80
Corporate Bonds 4.78
Energy and Energy-Related Stocks 4.51
Convertible Preferred Stocks 2.02
Public Utilities Stocks 1.09
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, 1995
Shares Value
COMMON STOCKS
Airlines - 0.81%
Southwest Airlines Co. ................. 200,000 $ 4,650,000
Automotive - 0.32%
Eaton Corporation ...................... 35,000 1,876,875
Banks and Savings and Loans - 3.61%
Ahmanson (H. F.) & Company ............. 195,000 5,167,500
BankAmerica Corporation ................ 125,000 8,093,750
Great Western Financial Corporation .... 175,000 4,462,500
HSBC Holdings Plc (A) .................. 202,060 3,057,358
Total ................................. 20,781,108
Beverages - 0.97%
PepsiCo, Inc. .......................... 100,000 5,587,500
Biotechnology and Medical Services - 1.79%
St. Jude Medical, Inc.* ................ 240,000 10,290,000
Building - 2.32%
National Health Investors, Inc. ........ 190,500 6,310,312
York International Corporation ......... 150,000 7,050,000
Total ................................. 13,360,312
Chemicals Major - 2.61%
du Pont (E.I.) de Nemours and Company .. 150,000 10,481,250
PPG Industries, Inc. ................... 100,000 4,575,000
Total ................................. 15,056,250
Computers and Office Equipment - 1.91%
Cerner Corporation* .................... 130,000 2,665,000
General Motors Corporation, Class E .... 160,000 8,320,000
Total ................................. 10,985,000
Domestic Oil - 1.92%
Atlantic Richfield Company .............. 100,000 11,075,000
Drugs and Hospital Supply - 3.55%
Abbott Laboratories .................... 160,000 6,680,000
American Home Products Corporation ..... 70,000 6,790,000
Astra AB, Class A (A) .................. 175,000 6,982,609
Total ................................. 20,452,609
Electrical Equipment - 2.13%
Emerson Electric Co. ................... 150,000 12,262,500
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1995
Shares Value
COMMON STOCKS (Continued)
Electronics - 0.47%
Applied Materials, Inc.* ............... 68,400 $ 2,688,941
Engineering and Construction - 0.88%
Foster Wheeler Corporation ............. 120,000 5,100,000
Hospital Management - 1.92%
LTC Properties, Inc. ................... 300,000 4,500,000
United HealthCare Corporation .......... 100,000 6,550,000
Total ................................. 11,050,000
Household Products - 2.51%
Gillette Company (The) ................. 150,000 7,818,750
Procter & Gamble Company (The) ......... 80,000 6,640,000
Total ................................. 14,458,750
Insurance - 3.19%
Chubb Corporation (The) ................ 100,000 9,675,000
Financial Security Assurance Holdings Ltd. 350,000 8,706,250
Total ................................. 18,381,250
International Oil - 1.39%
Exxon Corporation ...................... 100,000 8,012,500
Leisure Time - 0.85%
Time Warner Incorporated ............... 130,000 4,923,750
Machinery - 0.92%
Deere & Company ........................ 150,000 5,287,500
Metals and Mining - 1.19%
Aluminum Company of America ............ 130,000 6,873,750
Multi-Industry - 3.98%
Grupo Carso, S.A. de C.V.,
Series 1A (A)* ........................ 500,000 2,702,528
ITT Corporation* ....................... 125,000 6,625,000
ITT Hartford Group, Inc.* .............. 125,000 6,046,875
ITT Industries, Inc. ................... 125,000 3,000,000
Mark IV Industries, Inc. ............... 231,000 4,562,250
Total ................................. 22,936,653
Oil Services - 1.20%
Schlumberger Limited ................... 100,000 6,925,000
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1995
Shares Value
COMMON STOCKS (Continued)
Public Utilities - Electric - 1.09%
Houston Industries Incorporated ........ 260,000 $ 6,305,000
Publishing and Advertising - 0.91%
McGraw-Hill, Inc. ...................... 60,000 5,227,500
Retailing - 3.45%
Cifra, S.A. de C.V., Series C (A)* ..... 550,000 556,060
May Department Stores Company (The) .... 140,000 5,915,000
Mercantile Stores Company, Inc. ........ 100,000 4,625,000
Penney (J.C.) Company, Inc. ............ 100,000 4,762,500
SYSCO Corporation ...................... 125,000 4,062,500
Total ................................. 19,921,060
Services, Consumer and Business - 0.70%
Block (H & R), Inc. .................... 100,000 4,050,000
Steel - 0.69%
Nucor Corporation ...................... 70,000 3,998,750
Telecommunications - 7.57%
AT&T Corporation ....................... 150,000 9,712,500
BellSouth Corporation .................. 200,000 8,700,000
GTE Corporation ........................ 179,700 7,906,800
MCI Communications Corporation ......... 300,000 7,856,100
Motorola, Inc. ......................... 90,000 5,130,000
Nokia Corporation, Series A, ADS ....... 111,600 4,338,450
Total ................................. 43,643,850
TOTAL COMMON STOCKS - 54.85% $316,161,408
(Cost: $240,633,794)
PREFERRED STOCKS
Airlines - 1.03%
Delta Air Lines, Incorporated,
Convertible ........................... 100,000 5,937,500
Automotive - 0.99%
Ford Motor Company, Convertible ........ 60,000 5,685,000
TOTAL PREFERRED STOCKS - 2.02% $ 11,622,500
(Cost: $8,349,137)
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Domestic Oil - 0.50%
Enron Corp.,
6.25%, 12-13-98 (Exchangeable)......... $ 2,588 $ 2,856,000
Electrical Equipment - 0.62%
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... 3,000 3,583,650
Financial - 2.41%
American Express Company,
6.25%, 10-15-96 (Exchangeable)......... 9,188 13,875,000
Metals and Mining - 0.60%
Cooper Industries, Inc.,
6.0%, 1-1-99 (Exchangeable) ........... 3,416 3,478,750
Telecommunications - 0.65%
Bell Telephone Company of Pennsylvania (The),
8.35%, 12-15-2030 ..................... 3,000 3,768,420
TOTAL CORPORATE DEBT SECURITIES - 4.78% $ 27,561,820
(Cost: $21,169,190)
OTHER GOVERNMENT SECURITY - 0.58%
Supranational
International Bank for Reconstruction and
Development,
9.25%, 7-15-2017 ...................... 2,500 $ 3,320,000
(Cost: $2,498,192)
UNITED STATES GOVERNMENT SECURITIES
United States Treasury:
7.625%, 5-31-96 ....................... 10,000 10,093,700
7.5%, 12-31-96 ........................ 10,000 10,218,700
6.5%, 8-15-97 ......................... 5,000 5,100,000
7.375%, 11-15-97 ...................... 5,000 5,189,050
9.25%, 8-15-98 ........................ 5,000 5,484,350
4.75%, 10-31-98 ....................... 10,000 9,870,300
7.125%, 9-30-99 ....................... 20,000 21,206,200
7.75%, 12-31-99 ....................... 10,000 10,851,600
7.25%, 5-15-2004 ...................... 5,000 5,550,000
7.875%, 11-15-2004 .................... 10,000 11,575,000
7.5%, 2-15-2005 ....................... 10,000 11,334,400
9.375%, 2-15-2006 ..................... 8,500 10,923,860
10.375%, 11-15-2012 ................... 4,000 5,530,000
9.25%, 2-15-2016 ...................... 5,000 6,872,650
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1995
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES (Continued)
Miscellaneous United States Government
Backed Securities:
National Archives Facility Trust,
8.5%, 9-1-2019 ...................... $4,394 $ 5,434,080
Postal Square Limited Partnership,
8.95%, 6-15-2022 .................... 1,944 2,434,551
TOTAL UNITED STATES GOVERNMENT SECURITIES - 23.88% $137,668,441
(Cost: $126,028,151)
SHORT-TERM SECURITIES
Automotive - 1.40%
Echlin, Inc.,
5.75%, 1-29-96 ........................ 8,085 8,048,842
Banks and Savings and Loans - 2.06%
Morgan (J.P.) & Co. Incorporated,
5.77%, 1-8-96 ......................... 9,590 9,579,241
U.S. Bancorp,
Master Note ........................... 2,285 2,285,000
Total ................................. 11,864,241
Consumer Electronics and Appliances - 1.12%
Whirlpool Corporation,
5.85%, 1-19-96 ........................ 6,500 6,480,987
Drugs and Hospital Supply - 1.50%
Abbott Laboratories,
5.63%, 1-16-96 ........................ 8,690 8,669,615
Financial - 0.53%
Philip Morris Capital Corp.,
5.72%, 1-19-96 ........................ 3,070 3,061,220
Food and Related - 0.89%
ConAgra, Inc.,
5.98%, 1-19-96 ........................ 3,000 2,991,030
General Mills, Inc.,
Master Note ........................... 207 207,000
Sara Lee Corporation,
Master Note ........................... 1,905 1,905,000
Total ................................. 5,103,030
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1995
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Insurance - 0.88%
Aon Corporation,
5.77%, 1-26-96 ........................ $5,120 $ 5,099,484
Metals and Mining - 1.42%
Minnesota Mining and Manufacturing
Company,
5.75%, 1-18-96 ........................ 8,205 8,182,721
Multi-Industry - 0.29%
Textron Inc.,
5.97%, 2-20-96 ........................ 1,660 1,646,236
Public Utilities - Electric - 0.91%
Public Service Electric & Gas Co.,
5.95%, 1-29-96 ........................ 5,280 5,255,565
Telecommunications - 2.40%
GTE Corporation:
5.85%, 1-19-96 ........................ 5,000 4,985,375
5.95%, 2-2-96 ......................... 8,915 8,867,850
Total ................................. 13,853,225
TOTAL SHORT-TERM SECURITIES - 13.40% $ 77,265,166
(Cost: $77,265,166)
TOTAL INVESTMENT SECURITIES - 99.51% $573,599,335
(Cost: $475,943,630)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.49% 2,846,567
NET ASSETS - 100.00% $576,445,902
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, 1995
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $573,599,335
Cash ............................................. 16,877
Receivables:
Dividends and interest .......................... 3,777,165
Investment securities sold ...................... 1,246,958
Fund shares sold ................................ 781,659
Prepaid insurance premium ......................... 9,350
------------
Total assets .................................. 579,431,344
------------
Liabilities
Payable for Fund shares redeemed ................. 2,655,413
Accrued service fee ............................... 200,991
Accrued transfer agency and dividend disbursing .. 71,118
Accrued accounting services fee .................. 5,833
Other ............................................ 52,087
------------
Total liabilities ............................. 2,985,442
------------
Total net assets ............................. $576,445,902
============
Net Assets
$1.00 par value capital stock, authorized --
300,000,000; shares outstanding -- 68,049,087
Capital stock ................................... $ 68,049,087
Additional paid-in capital....................... 394,750,201
Accumulated undistributed income:
Accumulated undistributed net investment income . 534,298
Accumulated undistributed net
realized gain on investment
transactions .................................. 15,456,611
Net unrealized appreciation in value of
investments at end of period .................. 97,655,705
------------
Net assets applicable to outstanding
units of capital ............................. $576,445,902
============
Net asset value per share (net assets divided by
shares outstanding) .............................. $8.47
=====
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended DECEMBER 31, 1995
Investment Income
Income:
Interest ........................................ $ 6,352,721
Dividends ....................................... 4,109,500
-----------
Total income .................................. 10,462,221
-----------
Expenses (Note 2):
Investment management fee ....................... 1,546,653
Service fee ..................................... 401,575
Transfer agency and dividend disbursing ......... 353,740
Accounting services fee ......................... 31,667
Custodian fees .................................. 19,830
Audit fees ...................................... 15,998
Legal fees ...................................... 6,699
Other ........................................... 76,813
-----------
Total expenses ................................ 2,452,975
-----------
Net investment income ........................ 8,009,246
-----------
Realized and Unrealized Gain on Investments
Realized net gain on securities .................. 21,805,998
Realized net gain on foreign
currency transactions ........................... 406
-----------
Realized net gain on investments ................ 21,806,404
Unrealized appreciation in value of investments
during the period ............................... 23,009,544
-----------
Net gain on investments ....................... 44,815,948
-----------
Net increase in net assets resulting
from operations ............................ $52,825,194
===========
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the For the
six months fiscal year
ended ended
December 31, June 30,
1995 1995
------------ -----------
Increase in Net Assets
Operations:
Net investment income ...............$ 8,009,246 $ 14,751,110
Realized net gain on investments .... 21,806,404 29,069,365
Unrealized appreciation ............. 23,009,544 25,469,423
------------ ------------
Net increase in net assets
resulting from operations ........ 52,825,194 69,289,898
------------ ------------
Dividends to shareholders from:*
Net investment income ............... (9,662,888) (13,359,196)
Realized gains on securities
transactions ...................... (29,766,893) (16,046,041)
------------ ------------
(39,429,781) (29,405,237)
------------ ------------
Capital share transactions:
Proceeds from sale of shares
(3,448,876 and 8,362,713
shares, respectively) ............. 29,721,339 65,060,570
Proceeds from reinvestment of
dividends and/or capital gains
distribution (4,662,725 and
3,899,165 shares, respectively) ... 39,351,088 29,326,493
Payments for shares redeemed
(3,983,122 and 7,622,986
shares, respectively) ............. (34,083,894) (59,045,801)
------------ ------------
Net increase in net assets
resulting from capital
share transactions ............... 34,988,533 35,341,262
------------ ------------
Total increase ................... 48,383,946 75,225,923
Net Assets
Beginning of period .................. 528,061,956 452,836,033
------------ ------------
End of period, including
undistributed net investment
income of $534,298 and $2,187,534,
respectively ........................$576,445,902 $528,061,956
============ ============
*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 ----------------------------------
12/31/95 1995 1994 1993 1992 1991
-------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $8.26 $7.64 $7.70 $7.20 $6.41 $6.41
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... 0.13 .24 .18 .22 .21 .26
Net realized and
unrealized gain
on investments .. 0.70 .86 .22 .73 .91 .05
----- ----- ----- ----- ----- -----
Total from investment
operations ....... 0.83 1.10 .40 .95 1.12 .31
----- ----- ----- ----- ----- -----
Less distributions:
Dividends from
net investment
income .......... (0.15) (0.22) (0.18) (0.23) (0.22) (0.26)
Distribution from
capital gains ... (0.47) (0.26) (0.28) (0.22) (0.11) (0.05)
----- ----- ----- ----- ----- -----
Total distributions. (0.62) (0.48) (0.46) (0.45) (0.33) (0.31)
----- ----- ----- ----- ----- -----
Net asset value,
end of period .... $8.47 $8.26 $7.64 $7.70 $7.20 $6.41
===== ===== ===== ===== ===== =====
Total return* ...... 10.10% 15.07% 5.03% 13.45% 17.93% 5.07%
Net assets, end
of period (000
omitted) .........$576,446$528,062$452,836$379,933$258,862$195,330
Ratio of expenses
to average net
assets ........... 0.89%** 0.89% 0.87% 0.80% 0.82% 0.88%
Ratio of net
investment income
to average net
assets ........... 2.90%** 3.04% 2.32% 2.98% 3.12% 4.20%
Portfolio turnover
rate ............. 16.66% 48.62% 27.10% 30.62% 38.26% 29.05%
*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, 1995
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. Its investment objective is to provide the highest long-term total
investment return as is, in the opinion of management, consistent with
reasonable safety of capital. 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. At June 30, 1995, $10,862 was reclassified between
accumulated undistributed net investment income and accumulated
undistributed net realized gain on investment transactions.
E. The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
NOTE 2 -- Investment Management and Payments to Affiliated Persons
The Fund pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business. The fee
consists of two elements: (i) a "Specific" fee computed on net asset value as of
the close of business each day at the annual rate of .15% of net assets and (ii)
a "Group" fee computed each day on the combined net asset values of all of the
funds in the United Group of mutual funds (approximately $13.6 billion of
combined net assets at December 31, 1995) 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
$1,215,359, out of which W&R paid sales commissions of $692,789 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 $11,129.
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 $75,115,973 while proceeds from maturities
and sales aggregated $137,519,745. Purchases of short-term and U.S. Government
securities aggregated $218,030,552 and $10,611,719, respectively. Proceeds from
maturities and sales of short-term and U.S. Government securities aggregated
$166,211,712 and $37,189, respectively.
For Federal income tax purposes, cost of investments owned at December 31,
1995 was $475,943,630, resulting in net unrealized appreciation of $97,655,705,
of which $100,942,258 related to appreciated securities and $3,286,553 related
to depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $29,080,227 during its fiscal year ended June 30, 1995, of which a portion
was paid to shareholders during the period ended June 30, 1995. 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, 1995, the results of its operations for the six months
then ended and the changes in its net assets and the financial highlights for
each of 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 December 31, 1995 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
February 8, 1996
<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
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
James B. Judd, Kansas City, Missouri
William T. Morgan, Los Angeles, California
Doyle Patterson, Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
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
Cynthia P. Prince-Fox, Vice President
Carl E. Sturgeon, 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 Municipal High Income Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Continental Income Fund, Inc.
United Retirement Shares, Inc.
United Asset Strategy Fund, Inc.
United Income Fund
United Accumulative Fund
United Vanguard Fund, Inc.
United New Concepts Fund, Inc.
United Science and Technology Fund
United International Growth Fund, Inc.
United Gold & Government Fund, Inc.
- ------------------------------------
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, KS 66201-9217
(913) 236-1303
Our INTERNET address is:
http://www.waddell.com
NUR1007SA(12-95)
printed on recycled paper
