<PAGE>
UNITED
RETIREMENT
SHARES,
INC.
ANNUAL
REPORT
---------------------------------------
For the fiscal year ended June 30, 1996
<PAGE>
FUND MANAGER'S LETTER
JUNE 30, 1996
Dear Shareholder:
This report relates to the operation of United Retirement Shares, Inc. for the
fiscal year ended June 30, 1996. The following discussion, graphs and tables
provide you with information regarding the Fund's performance during that
period.
Interest rates and inflation declined and corporate profits rose during the
first half of the past fiscal year, contributing to strong performances by both
the stock and bond markets. Thereafter, however, signs of a strengthening
economy prompted concerns that the Federal Reserve Bank would raise interest
rates in response to inflationary pressures. These concerns negatively impacted
the bond markets during the latter stages of the fiscal year.
The Fund continued to pursue a strategy of attempting to increase the total
return of its portfolio while striving to preserve capital. In furtherance of
this strategy, the Fund reduced risk to its portfolio by diversifying its
investments across a broad number of industries. The Fund maintained a cash
position during the past fiscal year to enhance its ability to react to interest
rate changes and take advantage of attractive investment opportunities.
The strategies and techniques we applied resulted in the direction of the Fund's
performance during its past fiscal year remaining modestly below that of two of
the indexes charted on the following page and significantly ahead of the
remaining index. The charted indexes reflect the performance of securities that
generally represent the stock market (the Standard & Poor's 500 Index), the bond
market (the Lehman Brothers Government/Corporate Bond Index or LBGCBI) and the
universe of funds with similar investment objectives (the Lipper Growth & Income
Fund Universe Average). The S&P 500 and the LBGCBI are presented because the
Fund invests in both stocks and bonds. The Fund's relative performance was
negatively impacted during the second half of the fiscal year by investment in
bonds and cash, both of which underperformed stocks.
We anticipate moderate economic growth during the upcoming fiscal year,
accompanied by subdued inflation and downward pressure on interest rates. The
bond and stock markets are likely to remain volatile as economic growth slows
and corporate profits diminish. We expect to continue investing in securities
that present the opportunity for positive long-term returns consistent with the
Fund's objectives.
Thank you very much for your continued support and confidence in our
organization.
Respectfully,
Cynthia P. Prince-Fox
Manager, United Retirement Shares, Inc.
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
UNITED RETIREMENT SHARES, INC.,
THE S&P 500 INDEX,
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX,
AND THE LIPPER GROWTH & INCOME FUND UNIVERSE AVERAGE
Lehman Lipper
Brothers Growth &
United Government/ Income
Retirement S&P Corporate Fund
Shares, 500 Bond Universe
Inc. Index Index Average
------------------ ---------- ----------
06/30/86 Purchase 9,425 10,000 10,000 10,000
06/30/87 10,034 12,516 10,468 11,677
06/30/88 9,858 11,653 11,251 11,251
06/30/89 11,620 14,048 12,639 13,027
06/30/90 13,138 16,364 13,539 14,385
06/30/91 13,803 17,574 14,923 15,306
06/30/92 16,279 19,932 17,037 17,259
06/30/93 18,469 22,648 19,278 19,737
06/30/94 19,399 22,966 18,997 20,114
06/30/95 22,323 28,954 21,422 24,082
06/30/96 25,656 36,482 22,419 29,454
==== United Retirement Shares, Inc.* -- $25,656
++++ S&P 500 Index -- $36,482
- - - - - - - Lehman Brothers Government/Corporate Bond Index - $22,419
- ---------- Lipper Growth & Income Fund Universe Average -- $29,454
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund.
Annual Average Total Return +
Class A++ Class Y
-----------------------------
Year Ended
6/30/96 8.32% N/A
5 Years Ended
6/30/96 11.86% N/A
10 Years Ended
6/30/96 9.88% N/A
Aggregate Total
Return for Life
of Class Y +++ N/A 1.91%
+ Total return for the Class Y shares may be greater than that of the Class A
shares because the Fund's Class Y shares are not subject to a sales load or
12b-1 fees.
++ Performance data quoted represents past performance and is based on
deduction of a 5.75% sales load on the initial purchase in each of the
three periods. Investment return and principal value will fluctuate and an
investor's shares, when redeemed, may be worth more or less than their
original cost.
+++ 2/27/96 (the date on which Fund Class Y shares were first acquired by
shareholders) through 6/30/96.
Past performance is not predictive of future performance. Indexes are
unmanaged.
<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 -- Class A Shares
PER SHARE DATA
For the Fiscal Year Ended June 30, 1996
- ---------------------------------------
DIVIDENDS PAID $0.27
=====
CAPITAL GAINS DISTRIBUTION $0.47
=====
NET ASSET VALUE ON
06/30/96 $8.72 adjusted to: $9.19(A)
06/30/95 8.26
-----
CHANGE PER SHARE $0.93
=====
(A)This number includes the capital gains distribution of $0.47 paid in December
1995 added to the actual net asset value on June 30, 1996.
Past performance is not necessarily an indication of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 6-30-96 8.32% 14.93%
5-year period ended 6-30-96 11.86% 13.20%
10-year period ended 6-30-96 9.88% 10.53%
*Performance data quoted represents past performance and is based on deduction
of 5.75% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On June 30, 1996, United Retirement Shares, Inc. had net assets totaling
$609,034,447 invested in a diversified portfolio of:
55.77% Common Stocks
24.51% U.S. Government Securities
12.16% Cash and Cash Equivalents
4.99% Corporate Bonds
2.08% Convertible Preferred Stocks
0.49% Other Government Security
As a shareholder of United Retirement Shares, Inc. for every $100 you had
invested on June 30, 1996, your Fund owned:
$25.51 Manufacturing Stocks
24.51 United States Government Securities
12.16 Cash and Cash Equivalents
8.54 Transportation, Communication, Electric
and Sanitary Services Stocks
7.28 Finance, Insurance and Real Estate Stocks
4.99 Corporate Debt Securities
5.08 Wholesale and Retail Trade Stocks
4.18 Services Stocks
2.92 Miscellaneous Investing Institutions Stocks
4.83 Other
Not all holdings will be represented in the portfolio at all times.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1996
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 0.92%
Gap, Inc. (The) ........................ 175,000 $ 5,621,875
Business Services - 2.12%
Cerner Corporation* .................... 200,000 4,300,000
Electronic Data Systems Corporation .... 160,000 8,600,000
Total ................................. 12,900,000
Chemicals and Allied Products - 9.11%
Abbott Laboratories .................... 160,000 6,960,000
American Home Products Corporation ..... 140,000 8,417,500
Astra AB, Class A (A) .................. 175,000 7,745,000
Dow Chemical Company (The) .............. 80,000 6,080,000
du Pont (E.I.) de Nemours and Company .. 150,000 11,868,750
Pfizer Inc. ............................ 100,000 7,137,500
Procter & Gamble Company (The) .......... 80,000 7,250,000
Total ................................. 55,458,750
Communication - 6.45%
AT&T Corporation ....................... 150,000 9,300,000
GTE Corporation ........................ 179,700 8,041,575
MCI Communications Corporation ......... 255,000 6,518,310
Nokia Corporation, Series A, ADS ....... 111,600 4,129,200
SBC Communications Inc. ................. 135,000 6,648,750
Viacom Inc., Class B* ................... 120,000 4,665,000
Total ................................. 39,302,835
Depository Institutions - 1.91%
BankAmerica Corporation ................ 100,000 7,575,000
Wells Fargo & Company ................... 17,000 4,060,875
Total ................................. 11,635,875
Electric, Gas and Sanitary Services - 1.61%
Baltimore Gas and Electric Company ...... 120,000 3,405,000
Houston Industries Incorporated ........ 260,000 6,402,500
Total ................................. 9,807,500
Electronic and Other Electric Equipment - 3.29%
Duracell International Inc. ............. 150,000 6,468,750
Emerson Electric Co. ................... 150,000 13,556,250
Total ................................. 20,025,000
See Notes to Schedules of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1996
Shares Value
COMMON STOCKS (Continued)
Fabricated Metal Products - 1.54%
Gillette Company (The) ................. 150,000 $ 9,356,250
Food and Kindred Products - 1.16%
PepsiCo, Inc. .......................... 200,000 7,075,000
General Merchandise Stores - 2.66%
Cifra, S.A. de C.V., Series C (A)* ..... 550,000 786,545
Dillard Department Stores, Inc., Class A 115,000 4,197,500
May Department Stores Company (The) .... 140,000 6,125,000
Wal-Mart Stores, Inc. ................... 200,000 5,075,000
Total ................................. 16,184,045
Health Services - 0.70%
Tenet Healthcare Corporation* ........... 200,000 4,275,000
Heavy Construction, Excluding Building - 0.88%
Foster Wheeler Corporation ............. 120,000 5,385,000
Holding and Other Investment Offices - 2.92%
Grupo Carso, S.A. de C.V.,
Series 1A (A)* ........................ 500,000 3,555,379
HSBC Holdings Plc (A) .................. 202,060 3,055,185
LTC Properties, Inc. ................... 300,000 4,950,000
National Health Investors, Inc. ........ 190,500 6,238,875
Total ................................. 17,799,439
Hotels and Other Lodging Places - 1.36%
ITT Corporation* ....................... 125,000 8,281,250
Industrial Machinery and Equipment - 3.56%
Applied Materials, Inc.* ............... 68,400 2,081,891
Deere & Company ........................ 150,000 6,000,000
Seagate Technology, Inc.* .............. 130,000 5,850,000
York International Corporation ......... 150,000 7,762,500
Total ................................. 21,694,391
Instruments and Related Products - 2.48%
Mark IV Industries, Inc. ............... 242,550 5,487,694
St. Jude Medical, Inc.* ................ 120,000 4,005,000
Teradyne, Inc.* ........................ 325,000 5,606,250
Total ................................. 15,098,944
See Notes to Schedules of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1996
Shares Value
COMMON STOCKS (Continued)
Insurance Agents, Brokers and Service - 1.09%
ITT Hartford Group, Inc. ............... 125,000 $ 6,656,250
Insurance Carriers - 4.04%
Chubb Corporation (The) ................ 200,000 9,975,000
Financial Security Assurance Holdings Ltd. 350,000 9,581,250
United HealthCare Corporation .......... 100,000 5,050,000
Total ................................. 24,606,250
Nondepository Institutions - 0.24%
Associates First Capital Corporation* ... 38,000 1,429,750
Oil and Gas Extraction - 1.38%
Schlumberger Limited ................... 100,000 8,425,000
Petroleum and Coal Products - 1.43%
Exxon Corporation ...................... 100,000 8,687,500
Printing and Publishing - 2.94%
Belo (A. H.) Corporation, Class A ...... 113,200 4,216,700
Berkshire Hathaway Inc., Class B* ...... 3,000 3,099,000
McGraw-Hill, Inc. ...................... 120,000 5,490,000
Time Warner Incorporated ............... 130,000 5,102,500
Total ................................. 17,908,200
Transportation by Air - 0.48%
Southwest Airlines Co. ................. 100,000 2,912,500
Wholesale Trade -- Nondurable Goods - 1.50%
Sara Lee Corporation .................... 150,000 4,856,250
SYSCO Corporation ...................... 125,000 4,281,250
Total ................................. 9,137,500
TOTAL COMMON STOCKS - 55.77% $339,664,104
(Cost: $257,698,339)
See Notes to Schedules of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1996
Shares Value
PREFERRED STOCKS
Transportation By Air - 1.04%
Delta Air Lines, Incorporated,
Convertible ........................... 100,000 $ 6,300,000
Transportation Equipment - 1.04%
Ford Motor Company, Convertible ........ 60,000 6,360,000
TOTAL PREFERRED STOCKS - 2.08% $12,660,000
(Cost: $8,349,138)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Communication - 0.56%
Bell Telephone Company of Pennsylvania (The),
8.35%, 12-15-2030 ..................... $3,000 3,421,260
Electronic and Other Electric Equipment - 0.70%
Cooper Industries, Inc.,
6.0%, 1-1-99 (Exchangeable) ........... 3,416 4,237,750
Nondepository Institutions - 3.23%
American Express Company,
6.25%, 10-15-96 (Exchangeable)......... 9,188 16,406,250
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... 3,000 3,272,400
Total ................................. 19,678,650
Oil and Gas Extraction - 0.50%
Enron Corp.,
6.25%, 12-13-98 (Exchangeable)......... 2,588 3,079,125
TOTAL CORPORATE DEBT SECURITIES - 4.99% $30,416,785
(Cost: $21,172,768)
OTHER GOVERNMENT SECURITY - 0.49%
Supranational
International Bank for Reconstruction and
Development,
9.25%, 7-15-2017 ...................... 2,500 $2,992,425
(Cost: $2,498,204)
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1996
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
United States Treasury:
7.5%, 12-31-96 ........................ $10,000 $ 10,096,900
6.5%, 8-15-97 ......................... 5,000 5,032,800
7.375%, 11-15-97 ...................... 5,000 5,089,050
9.25%, 8-15-98 ........................ 5,000 5,300,800
4.75%, 10-31-98 ....................... 10,000 9,689,100
7.125%, 9-30-99 ....................... 20,000 20,437,400
7.75%, 12-31-99 ....................... 10,000 10,418,700
7.25%, 5-15-2004 ...................... 5,000 5,180,450
7.875%, 11-15-2004 .................... 10,000 10,748,400
7.5%, 2-15-2005 ....................... 37,000 38,925,110
9.375%, 2-15-2006 ..................... 8,500 10,083,125
10.375%, 11-15-2012 ................... 4,000 5,078,120
9.25%, 2-15-2016 ...................... 5,000 6,183,600
Miscellaneous United States Government
Backed Securities:
National Archives Facility Trust,
8.5%, 9-1-2019 ...................... 4,365 4,788,493
Postal Square Limited Partnership,
8.95%, 6-15-2022 .................... 1,935 2,222,043
TOTAL UNITED STATES GOVERNMENT SECURITIES - 24.51% $149,274,091
(Cost: $146,556,602)
SHORT-TERM SECURITIES
Chemicals and Allied Products - 1.07%
PPG Industries Inc.,
5.33%, 7-11-96......................... 6,520 6,510,347
Communication - 1.56%
Nynex Corp.,
5.32%, 7-16-96......................... 9,530 9,508,875
Depository Institutions - 0.60%
U.S. Bancorp,
Master Note ........................... 3,654 3,654,000
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1996
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Electric, Gas and Sanitary Services - 3.62%
Baltimore Gas & Electric Co.,
5.37%, 7-24-96......................... $6,755 $ 6,731,825
Commonwealth Edison Co.:
5.55%, 7-17-96......................... 6,825 6,808,165
5.53%, 7-29-96......................... 2,605 2,593,796
Public Service Co. of Colorado,
5.55%, 7-11-96......................... 5,930 5,920,858
Total.................................. 22,054,644
Electronic and Other Electric Equipment - 0.52%
TDK USA Corp.,
5.35%, 7-22-96......................... 3,155 3,145,154
Food and Kindred Products - 0.09%
General Mills, Inc.,
Master Note ........................... 515 515,000
Industrial Machinery and Equipment - 0.53%
Hewlett-Packard Co.,
5.36%, 7-30-96......................... 3,215 3,201,118
Metal Mining - 0.21%
BHP Finance (USA) Inc.,
5.33%, 7-19-96......................... 1,300 1,296,535
Nondepository Institutions - 2.05%
Ford Motor Credit Co.,
5.31%, 7-12-96......................... 4,220 4,213,153
IBM Credit Corp.,
5.3%, 7-17-96.......................... 8,300 8,280,449
Total.................................. 12,493,602
Printing and Publishing - 0.98%
Gannett Co.,
5.35%, 7-16-96......................... 6,000 5,986,625
Wholesale Trade -- Nondurable Goods - 0.26%
Sara Lee Corporation,
Master Note ........................... 1,579 1,579,000
TOTAL SHORT-TERM SECURITIES - 11.49% $69,944,900
(Cost: $69,944,900)
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1996
TOTAL INVESTMENT SECURITIES - 99.33% $604,952,305
(Cost: $506,219,951)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.67% 4,082,142
NET ASSETS - 100.00% $609,034,447
Notes to Schedule of Investments
*No income dividends were paid during the preceding 12 months.
(A) Listed on an exchange outside the United States.
See Note 1 to financial statements for security valuation and other significant
accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and
depreciation of investments owned for Federal income tax purposes.
<PAGE>
UNITED RETIREMENT SHARES, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $604,952,305
Receivables:
Dividends and interest .......................... 4,586,719
Fund shares sold ................................ 720,427
Prepaid insurance premium ......................... 7,362
------------
Total assets .................................. 610,266,813
------------
Liabilities
Payable for Fund shares redeemed ................. 914,582
Accrued service fee ............................... 177,021
Accrued transfer agency and dividend disbursing .. 82,631
Accrued accounting services fee .................. 5,833
Due to custodian .................................. 4,520
Other ............................................ 47,779
------------
Total liabilities ............................. 1,232,366
------------
Total net assets ............................. $609,034,447
============
Net Assets
$1.00 par value capital stock
Capital stock ................................... $ 69,819,175
Additional paid-in capital....................... 408,281,009
Accumulated undistributed income:
Accumulated undistributed net investment income . 1,513,126
Accumulated undistributed net
realized gain on investment
transactions .................................. 30,688,783
Net unrealized appreciation in value of
investments at end of period .................. 98,732,354
------------
Net assets applicable to outstanding
units of capital ............................. $609,034,447
============
Net asset value per share (net assets divided
by shares outstanding)
Class A .......................................... $8.72
Class Y .......................................... $8.72
Capital shares outstanding
Class A .......................................... 69,607,591
Class Y .......................................... 211,584
Capital shares authorized 300,000,000
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended JUNE 30, 1996
Investment Income
Income:
Interest ........................................ $14,154,264
Dividends ....................................... 8,187,260
-----------
Total income .................................. 22,341,524
-----------
Expenses (Note 2):
Investment management fee ....................... 3,198,744
Service fee - Class A............................ 829,523
Transfer agency and dividend disbursing - Class A 790,263
Accounting services fee ......................... 66,667
Custodian fees .................................. 38,176
Audit fees ...................................... 25,854
Legal fees ...................................... 9,813
Shareholder servicing - Class Y.................. 772
Other ........................................... 137,271
-----------
Total expenses ................................ 5,097,083
-----------
Net investment income ........................ 17,244,441
-----------
Realized and Unrealized Gain (Loss) on Investments
Realized net gain on securities .................. 37,040,208
Realized net loss on foreign
currency transactions ........................... (510)
-----------
Realized net gain on investments ................ 37,039,698
Unrealized appreciation in value of investments
during the period ............................... 24,086,193
-----------
Net gain on investments ....................... 61,125,891
-----------
Net increase in net assets resulting
from operations ............................ $78,370,332
===========
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year ended
June 30,
-------------------------
1996 1995
------------ ------------
Increase in Net Assets
Operations:
Net investment income ............... $17,244,441 $ 14,751,110
Realized net gain on investments .... 37,039,698 29,069,365
Unrealized appreciation ............. 24,086,193 25,469,423
------------ ------------
Net increase in net assets
resulting from operations ........ 78,370,332 69,289,898
------------ ------------
Dividends to shareholders from:*
Net investment income
Class A ........................... (17,894,502) (13,359,196)
Class Y ........................... (23,837) ---
Realized gains on securities
transactions
Class A ........................... (29,768,931) (16,046,041)
Class Y ........................... --- ---
------------ ------------
(47,687,270) (29,405,237)
------------ ------------
Capital share transactions:
Proceeds from sale of shares:
Class A (7,948,671 and 8,362,713
shares, respectively) ............ 68,712,131 65,060,570
Class Y (231,276 and 0
shares, respectively) ............ 2,009,381 ---
Proceeds from reinvestment of
dividends and/or capital gains
distribution:
Class A (5,612,672 and
3,899,165 shares, respectively) .. 47,558,555 29,326,493
Class Y (2,757 and 0
shares, respectively) ............ 23,837 ---
Payments for shares redeemed
Class A (7,874,360 and 7,622,986
shares, respectively) ............ (67,818,591) (59,045,801)
Class Y (22,449 and 0
shares, respectively) ............ (195,884) ---
------------ ------------
Net increase in net assets
resulting from capital
share transactions ............... 50,289,429 35,341,262
------------ ------------
Total increase ................... 80,972,491 75,225,923
Net Assets
Beginning of period .................. 528,061,956 452,836,033
------------ ------------
End of period, including
undistributed net investment
income of $1,513,126 and $2,187,534,
respectively ........................$609,034,447 $528,061,956
============ ============
*See "Financial Highlights" on pages 15-16.
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
FINANCIAL HIGHLIGHTS
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the fiscal year ended June 30,
----------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $8.26 $7.64 $7.70 $7.20 $6.41
---- ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... .26 .24 .18 .22 .21
Net realized and
unrealized gain
on investments .. .94 .86 .22 .73 .91
---- ----- ----- ----- -----
Total from investment
operations ....... 1.20 1.10 .40 .95 1.12
---- ----- ----- ----- -----
Less distributions:
Dividends from
net investment
income .......... (0.27) (0.22) (0.18) (0.23) (0.22)
Distribution from
capital gains ... (0.47) (0.26) (0.28) (0.22) (0.11)
----- ----- ----- ----- -----
Total distributions. (0.74) (0.48) (0.46) (0.45) (0.33)
----- ----- ----- ----- -----
Net asset value,
end of period .... $8.72 $8.26 $7.64 $7.70 $7.20
===== ===== ===== ===== =====
Total return* ...... 14.93% 15.07% 5.03% 13.45% 17.93%
Net assets, end
of period (000
omitted) ......... $607,188$528,062$452,836$379,933$258,862
Ratio of expenses
to average net
assets ........... 0.89% 0.89% 0.87% 0.80% 0.82%
Ratio of net
investment income
to average net
assets ........... 3.01% 3.04% 2.32% 2.98% 3.12%
Portfolio turnover
rate ............. 42.05% 48.62% 27.10% 30.62% 38.26%
*Total return calculated without taking into account the sales load deducted
on an initial purchase.
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
FINANCIAL HIGHLIGHTS
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout the Period:
For the
period
from 2/27/96
through
6/30/96*
--------
Net asset value,
beginning of period $8.68
-----
Income from investment
operations:
Net investment
income .......... .10
Net realized and
unrealized gain
on investments... .06
-----
Total from investment
operations ........ .16
-----
Less distributions:
Dividends from net
investment
income...........(.12)
Distribution from
capital gains....(.00)
-----
Total distributions.(.12)
-----
Net asset value,
end of period ..... $8.72
=====
Total return ....... 1.91%
Net assets, end of
period (000
omitted) ......... $1,846
Ratio of expenses
to average net
assets ............ 0.71%**
Ratio of net
investment income
to average net
assets ............ 3.36%**
Portfolio
turnover rate ..... 42.05%**
*On October 7, 1995, the Fund began offering Class Y shares to the
public. Fund shares outstanding prior to that date were designated
Class A shares.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
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 pricing service or 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 System) 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, 1996, $510 was reclassified between accumulated
undistributed net investment income and accumulated undistributed net
realized gain on investment transactions.
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 $14.3 billion of
combined net assets at June 30, 1996) 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
For Class A shares, the Fund also pays WARSCO a monthly per account charge
for transfer agency and dividend disbursement services of $1.3125 for each
shareholder account which was in existence at any time during the prior month
($1.0208 per account prior to April 1, 1996), plus $0.30 for each account on
which a dividend or distribution of cash or shares had a record date in that
month. With respect to Class Y shares, the Fund pays WARSCO a monthly fee at an
annual rate of .15% of the average daily net assets of the class for the
preceding 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 for Class A shares (which are not an expense of
the Fund) of $2,789,340, out of which W&R paid sales commissions of $1,594,267
and all expenses in connection with the sale of Fund shares, except for
registration fees and related expenses.
Under a Service Plan for Class A shares 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 Class A 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 $22,417.
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 $179,354,404 while proceeds from
maturities and sales aggregated $239,906,117. Purchases of short-term and U.S.
Government securities aggregated $612,884,522 and $41,278,594, respectively.
Proceeds from maturities and sales of short-term and U.S. Government securities
aggregated $569,951,818 and $10,075,973, respectively.
For Federal income tax purposes, cost of investments owned at June 30, 1996
was $506,219,951, resulting in net unrealized appreciation of $98,732,354, of
which $106,394,263 related to appreciated securities and $7,661,909 related to
depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $37,040,208 during its fiscal year ended June 30, 1996, of which a portion
was paid to shareholders during the period ended June 30, 1996. Remaining
capital gain net income will be distributed to Fund shareholders.
NOTE 5 -- Commencement of Multiclass Operations
On October 7, 1995, the Fund was authorized to offer investors a choice of two
classes of shares, Class A and Class Y, each of which has equal rights as to
assets and voting privileges. Class Y shares are not subject to a sales charge
on purchases; they are not subject to a Rule 12b-1 Service Plan and have a
separate transfer agency and dividend disbursement services fee structure. A
comprehensive discussion of the terms under which shares of either class are
offered is contained in the prospectus and the Statement of Additional
Information for the Fund. The Fund commenced multiclass operations on February
27, 1996.
Income, non-class specific expenses and realized and unrealized gains and
losses are allocated daily to each class of shares based on the value of
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
United Retirement Shares, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of United Retirement Shares, Inc. (the
"Fund") at June 30, 1996, the results of its operations for the year 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 June
30, 1996 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
Price Waterhouse LLP
Kansas City, Missouri
August 5, 1996
<PAGE>
INCOME TAX INFORMATION
The amounts of the dividends and long-term capital gains below, multiplied by
the number of shares owned by you on the record dates, will give you the total
amounts to be reported in your Federal income tax return for the years in which
they were received or reinvested.
PER-SHARE AMOUNTS REPORTABLE AS:
-----------------------------------------------
For Individuals For Corporations
----------------- -----------------------------
Record Ordinary Long-Term Non- Long-Term
Date Total IncomeCapital GainQualifyingQualifyingCapital Gain
- --------- ----- ---------------------------------------------------
Class A
9-15-95 $0.050 $0.0500 $0.0000 $0.0271 $0.0229 $0.0000
12-15-95 0.569 0.1020 0.4670 0.0520 0.0500 0.4670
3-15-96 0.060 0.0600 0.0000 0.0252 0.0348 0.0000
6-14-96 0.060 0.0600 0.0000 0.0252 0.0348 0.0000
------- ------ ------ ------ ------- -------
Totals $0.739 $0.2720 $0.4670 $0.1295 $0.1425 $0.4670
======= ====== ====== ====== ======= =======
Class Y
3-15-96 $0.060 $0.0600 $0.0000 $0.0252 $0.0348 $0.0000
6-14-96 0.064 0.0640 0.0000 0.0268 0.0372 0.0000
------- ------ ------ ------ ------- -------
Totals $0.124 $0.1240 $0.0000 $0.0520 $0.0720 $0.0000
======= ====== ====== ====== ======= =======
CORPORATION DEDUCTIONS -- Under Federal tax law, the amounts reportable as
Qualifying Dividends are eligible for the dividends received deduction in the
year received as provided by Section 243 of the Internal Revenue Code.
The tax status of dividends paid will be reported to you on Form 1099-DIV after
the close of the applicable calendar year.
Shareholders are advised to consult with their tax advisor concerning the tax
treatment of dividends and distributions from the Fund.
<PAGE>
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
William T. Morgan, Coronado, 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
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
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.
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
NUR1007A(6-96)
printed on recycled paper
