UNITED
RETIREMENT
SHARES,
INC.
ANNUAL
REPORT
---------------------------------------
For the fiscal year ended June 30, 1997
<PAGE>
FUND MANAGER'S LETTER
JUNE 30, 1997
Dear Shareholder:
This report relates to the operation of United Retirement Shares, Inc. for
the fiscal year ended June 30, 1997. The following discussion, graphs and
tables provide you with information regarding the Fund's performance during
that period.
During the last fiscal year, the economy experienced growth with continuing
low inflation rates. However, perceptions regarding the direction and
strength of the economy varied widely during the past fiscal year,
contributing to volatility and uncertainty in both the equity and fixed
income markets. Inflation concerns arose during the second half of the
fiscal year, prompted by low unemployment levels. However, these concerns
appear to have been largely unfounded as the rate of inflation remained
modest and the markets responded with strong performance during the fourth
fiscal quarter.
We continued to pursue a strategy of attempting to increase total return
while striving to preserve capital during the past fiscal year. In an
attempt to reduce investment risk, we continued to diversify the Fund's
investments across a broad section of industries. We maintained some cash
during the past fiscal year to enable us to react to interest rate changes
and take advantage of investment opportunities we perceived as being
attractive.
The strategies and techniques we applied resulted in the direction of the
Fund's performance remaining below that of the equity indexes and above
that of the fixed income indexes charted on the following page. Those
indexes reflect the performance of securities that generally represent the
stock market (the S&P 500 Index), the bond market (the Salomon Brothers
Treasury/Government Sponsored/Corporate Index) and the universe of funds
with similar investment objectives (the Lipper Growth & Income Fund
Universe Average). Multiple indexes are presented because the Fund invests
in both stocks and bonds. We have chosen to use the Salomon Brothers Index
beginning with this year's Annual Report, instead of the Lehman Brothers
Government/Corporate Index that had been presented in prior years. We
believe that the Salomon Brothers Index provides a more accurate basis for
comparing the Fund's performance to the performance of the types of fixed
income securities in which the Fund invests. Both indexes are presented on
the following page in this year's Annual Report for comparison purposes.
The Fund's performance relative to the equity indexes was negatively
impacted by exposure to bonds, a cash position and a more diverse equity
portfolio, particularly in cyclical issues that underperformed the more
stable growth issues during the second half of the fiscal year.
As the next fiscal year begins, the economy appears to be moving along at a
steady pace and inflation seems to be under control. Disinflationary
forces appear to be strong, as evidenced by general declines in the prices
of gold and commodities and price competition continuing across a broad
section of consumer goods. In light of anticipated economic conditions, we
expect to maintain a diversified position and will continue to invest 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. CLASS A SHARES,
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX,
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX,
THE SALOMON BROTHERS TREASURY/ GOVERNMENT SPONSORED/CORPORATE INDEX,
AND THE LIPPER GROWTH & INCOME FUND UNIVERSE AVERAGE
Standard Salomon
& Poor's Lehman Brothers Lipper
500 BrothersTreasury/ Growth &
UnitedCompositeGovernment/GovernmentIncome
RetirementStockCorporateSponsored/ Fund
Shares, Price BondCorporate Universe
Inc. Index Index Index Average
----------------------------------------------
06/30/87 Purchase 9,42510,000 10,000 10,000 10,000
06/30/88 9,260 9,310 10,748 10,764 9,635
06/30/89 10,915 11,223 12,075 12,095 11,156
06/30/90 12,341 13,074 12,934 12,938 12,320
06/30/91 12,966 14,041 14,256 14,280 13,108
06/30/92 15,291 15,925 16,276 16,314 14,781
06/30/93 17,349 18,095 18,417 18,462 16,903
06/30/94 18,222 18,349 18,148 18,219 17,226
06/30/95 20,969 23,133 20,465 20,536 20,624
06/30/96 24,100 29,148 21,418 21,486 25,225
06/30/97 28,126 39,250 23,078 23,165 32,230
==== United Retirement Shares, Inc.* -- $28,126
++++ Standard & Poor's 500 Composite Stock Price Index -- $39,250
- - - - Lehman Brothers Government/Corporate Bond Index - $23,078
**** Salomon Brothers Treasury/Government Sponsored/ Corporate Index -
- $23,165
------ Lipper Growth & Income Fund Universe Average -- $32,230
*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
6/30/97 9.99% 16.87%
5 Years Ended
6/30/97 11.63% N/A
10 Years Ended
6/30/97 10.89% N/A
Life of
Class Y +++ N/A 13.94%
+ 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 6/30/97.
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
securities debt securities in such
proportions that
management believes are
Debt securities most likely to
achieve the Fund's
objective. (May
Cash reserves 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, 1997
---------------------------------------
DIVIDENDS PAID $0.27
=====
CAPITAL GAINS DISTRIBUTION $0.66
=====
NET ASSET VALUE ON
6/30/97 $9.14 adjusted to: $9.80(A)
6/30/96 8.72
-----
CHANGE PER SHARE $1.08
=====
(A)This number includes the capital gains distribution of $0.66 paid in
December 1996 added to the actual net asset value on June 30, 1997.
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 6-30-97 9.99% 16.70%
5-year period ended 6-30-97 11.63% 12.96%
10-year period ended 6-30-97 10.89% 11.55%
*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, 1997, United Retirement Shares, Inc. had net assets totaling
$718,506,379 invested in a diversified portfolio of:
57.53% Common Stocks
24.95% U.S. Government Securities
14.77% Cash and Cash Equivalents
2.32% Corporate Bonds
0.43% Other Government Security
As a shareholder of United Retirement Shares, Inc. for every $100 you had
invested on June 30, 1997, your Fund owned:
$29.87 Manufacturing Stocks
24.95 United States Government Securities
14.77 Cash and Cash Equivalents
9.29 Finance, Insurance and Real Estate Stocks
7.02 Transportation, Communication, Electric
and Sanitary Services Stocks
3.22 Miscellaneous Investing Institutions Stocks
2.78 Mining Stocks
2.32 Corporate Debt Securities
2.06 Wholesale and Retail Trade Stocks
3.29 Miscellaneous Stocks
0.43 Other Government Security
Not all holdings will be represented in the portfolio at all times.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1997
Shares Value
COMMON STOCKS
Chemicals and Allied Products - 10.97%
Abbott Laboratories .................... 160,000 10,680,000
American Home Products Corporation ..... 140,000 10,710,000
Avon Products, Inc. .................... 85,000 5,997,770
Dow Chemical Company (The) ............. 80,000 6,970,000
du Pont (E.I.) de Nemours and Company .. 180,000 11,148,660
Hoechst AG (A) ......................... 164,000 6,956,835
IMC Global, Inc. ....................... 175,000 6,125,000
International Flavors & Fragrances, Inc. 13,100 659,913
Merck & Co., Inc. ...................... 105,000 10,867,500
Pfizer Inc. ............................ 73,000 8,723,500
Total ................................. 78,839,178
Communication - 4.20%
Carso Global Telecom & Media (A) ....... 500,000 2,014,352
GTE Corporation ........................ 179,700 7,884,337
Nokia Corporation, Series A, ADS ....... 111,600 8,230,500
SBC Communications Inc. ................ 195,000 12,065,625
Total ................................. 30,194,814
Depository Institutions - 3.55%
BankAmerica Corporation ................ 200,000 12,912,400
HSBC Holdings plc (A) .................. 202,060 6,077,345
Wells Fargo & Company .................. 24,210 6,524,595
Total ................................. 25,514,340
Eating and Drinking Places - 0.10%
Einstein/Noah Bagel Corp.* ............. 62,500 744,125
Electric, Gas and Sanitary Services - 2.46%
Baltimore Gas and Electric Company ..... 120,000 3,202,440
Houston Industries Incorporated ........ 260,000 5,573,620
PECO Energy Company .................... 200,000 4,200,000
Unicom Corporation ..................... 210,000 4,659,270
Total ................................. 17,635,330
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment - 2.00%
Emerson Electric Co. ................... 200,000 11,012,400
LSI Logic Corporation* ................. 105,000 3,360,000
Total ................................. 14,372,400
Fabricated Metal Products - 0.85%
Mark IV Industries, Inc. ............... 254,677 6,112,248
Food and Kindred Products - 1.00%
CPC International Inc. ................. 78,000 7,200,336
Forestry - 1.79%
Georgia-Pacific Corporation ............ 90,000 7,683,750
Weyerhaeuser Company ................... 100,000 5,200,000
Total ................................. 12,883,750
Furniture and Fixtures - 0.58%
Lear Corporation* ...................... 93,900 4,166,813
General Merchandise Stores -0.14%
Cifra, S.A. de C.V., Series A, CPO (A) . 67,269 124,324
Cifra, S.A. de C.V., Series C (A) ...... 550,000 879,391
Total ................................. 1,003,715
Health Services - 0.82%
Tenet Healthcare Corporation* .......... 200,000 5,912,400
Heavy Construction, Excluding Building - 0.68%
Foster Wheeler Corporation ............. 120,000 4,860,000
Holding and Other Investment Offices - 3.22%
Grupo Carso, S.A. de C.V.,
Series 1A (A) ......................... 500,000 3,481,053
LTC Properties, Inc. ................... 300,000 5,437,500
National Health Investors, Inc. ........ 190,500 7,477,125
Zurich Insurance Company (A) ........... 17,000 6,762,289
Total ................................. 23,157,967
Industrial Machinery and Equipment - 3.74%
Applied Materials, Inc.* ............... 100,000 7,078,100
Deere & Company ........................ 150,000 8,221,800
Parker Hannifin Corporation ............ 115,000 6,979,005
York International Corporation ......... 100,000 4,600,000
Total ................................. 26,878,905
Instruments and Related Products - 0.65%
St. Jude Medical, Inc.* ................ 120,000 4,680,000
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
Insurance Carriers - 4.59%
Berkshire Hathaway Inc., Class B* ...... 3,000 $4,740,000
Chubb Corporation (The) ................ 200,000 13,375,000
Financial Security Assurance Holdings Ltd. 50,000 1,946,850
Hartford Financial Services Group
Inc. (The) ............................ 125,000 10,343,750
United HealthCare Corporation .......... 50,000 2,600,000
Total ................................. 33,005,600
Metal Mining - 0.67%
Homestake Mining Company ............... 370,000 4,832,940
Nondepository Institutions - 1.15%
Federal Home Loan Mortgage Corporation . 240,000 8,250,000
Oil and Gas Extraction - 2.11%
Noble Affiliates, Inc. ................. 100,000 3,868,700
Schlumberger Limited ................... 90,000 11,250,000
Total ................................. 15,118,700
Petroleum and Coal Products - 3.72%
Exxon Corporation ...................... 200,000 12,300,000
Royal Dutch Petroleum Company .......... 180,000 9,787,500
Tosco Corporation ...................... 154,500 4,625,267
Total ................................. 26,712,767
Primary Metal Industries - 1.58%
British Steel plc, ADR ................. 225,000 5,681,250
Nucor Corporation ...................... 100,000 5,650,000
Total ............................... 11,331,250
Printing and Publishing - 3.16%
Gannett Co., Inc. ...................... 75,000 7,406,250
McGraw-Hill, Inc. ...................... 100,000 5,881,200
Meredith Corporation ................... 200,000 5,800,000
Viacom Inc., Class B* .................. 120,000 3,600,000
Total ................................. 22,687,450
Textile Mill Products - 0.87%
Sara Lee Corporation ................... 150,000 6,243,750
Transportation by Air - 0.36%
Southwest Airlines Co. ................. 100,000 2,587,500
Transportation Equipment - 0.75%
Sundstrand Corporation ................. 100,000 5,400,000
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
Wholesale Trade -- Nondurable Goods - 1.82%
Gillette Company (The) ................. 137,800 $ 13,056,550
TOTAL COMMON STOCKS - 57.53% ............. $413,382,828
(Cost: $294,810,458)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Building Materials and Garden Supplies - 0.25%
Home Depot, Inc. (The), Convertible,
3.25%, 10-1-2001 ...................... $ 1,600 1,832,000
Communication - 0.48%
Bell Telephone Company of Pennsylvania (The),
8.35%, 12-15-2030 ..................... 3,000 3,428,070
Electronic and Other Electric Equipment - 0.81%
Cooper Industries, Inc.,
6.0%, 1-1-99 (Exchangeable) ........... 3,416 5,819,000
Nondepository Institutions - 0.46%
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... 3,000 3,292,080
Oil and Gas Extraction - 0.32%
Enron Corp.,
6.25%, 12-13-98 (Exchangeable)......... 2,588 2,275,875
TOTAL CORPORATE DEBT SECURITIES - 2.32% $16,647,025
(Cost: $7,589,143)
OTHER GOVERNMENT SECURITY - 0.43%
Supranational
International Bank for Reconstruction and
Development,
9.25%, 7-15-2017 ...................... 2,500 $3,090,300
(Cost: $2,498,231)
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1997
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
United States Treasury:
6.5%, 8-15-97 ......................... $ 5,000 $5,006,250
5.625%, 8-31-97 ....................... 10,000 10,000,000
7.375%, 11-15-97 ...................... 5,000 5,031,250
5.125%, 2-28-98 ....................... 15,000 14,943,750
9.25%, 8-15-98 ........................ 5,000 5,178,900
4.75%, 10-31-98 ....................... 10,000 9,846,900
5.5%, 2-28-99 ......................... 15,000 14,875,800
7.125%, 9-30-99 ....................... 20,000 20,409,400
7.75%, 12-31-99 ....................... 10,000 10,357,800
7.25%, 5-15-2004 ...................... 5,000 5,211,700
7.875%, 11-15-2004 .................... 10,000 10,792,200
7.5%, 2-15-2005 ....................... 37,000 39,150,440
9.375%, 2-15-2006 ..................... 8,500 10,069,865
10.375%, 11-15-2012 ................... 4,000 5,077,480
9.25%, 2-15-2016 ...................... 5,000 6,255,450
Miscellaneous United States Government
Backed Securities:
National Archives Facility Trust,
8.5%, 9-1-2019 ...................... 4,303 4,858,026
Postal Square Limited Partnership,
8.95%, 6-15-2022 .................... 1,914 2,195,962
TOTAL UNITED STATES GOVERNMENT SECURITIES - 24.95% $179,261,173
(Cost: $176,035,642)
SHORT-TERM SECURITIES
Auto Repair, Services, and Parking - 1.17%
Hertz Corp (The),
5.53%, 7-11-97 ........................ 6,685 6,674,731
PHH Corp.,
5.53%, 7-10-97 ........................ 1,775 1,772,546
Total ................................. 8,447,277
Chemicals and Allied Products - 2.41%
Dow Chemical Co.,
5.52%, 7-11-97 ........................ 5,660 5,651,321
PPG Industries Inc.,
5.53%, 7-29-97 ........................ 11,685 11,634,742
Total ................................. 17,286,063
Communication - 0.21%
Bell Atlantic Network Funding Corp.,
5.51%, 7-9-97 ......................... 1,500 1,498,163
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1997
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Depository Institutions - 0.01%
U.S. Bancorp,
5.47%, Master Note .................... $ 8 $ 8,000
Electric, Gas and Sanitary Services - 4.96%
Detroit Edison Co.,
5.75%, 7-7-97 ......................... 3,525 3,521,622
Georgia Power Co.,
5.55%, 7-25-97 ........................ 5,115 5,096,075
Pacificorp,
5.6%, 7-24-97 ......................... 3,350 3,338,014
Potomac Electric Power Co.,
5.55%, 7-16-97 ........................ 12,430 12,401,256
Public Service Co. of Colorado:
5.75%, 7-14-97 ........................ 5,875 5,862,801
5.82%, 7-18-97 ........................ 1,460 1,455,987
Public Service Electric & Gas Co.,
5.83%, 7-25-97 ........................ 4,000 3,984,453
Total ................................. 35,660,208
Food and Kindred Products - 0.88%
ConAgra Inc.,
5.77%, 7-2-97 ......................... 3,650 3,649,415
General Mills, Inc.,
5.495%, Master Note ................... 107 107,000
Heinz (H.J.) Co.,
5.54%, 7-17-97 ........................ 1,015 1,012,501
Hercules Inc.,
5.7%, 7-25-97 ......................... 1,590 1,583,958
Total ................................. 6,352,874
Nondepository Institutions - 2.60%
Associates Corp. of North America,
5.5%, 7-16-97 ......................... 8,410 8,390,727
Island Finance Puerto Rico Inc.,
5.57%, 7-14-97 ........................ 8,200 8,183,507
Textron Financial Corp.,
5.75%, 7-15-97 ........................ 2,110 2,105,282
Total ................................. 18,679,516
Printing and Publishing - 0.76%
American Greetings Corp.,
5.52%, 8-11-97 ........................ 5,535 5,500,203
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
JUNE 30, 1997
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Textile Mill Products - 0.33%
Sara Lee Corporation,
5.5%, Master Note ..................... $ 2,380 $ 2,380,000
Tobacco Products - 1.84%
B.A.T Capital Corp.,
5.56%, 7-22-97 ........................ 13,250 13,207,026
TOTAL SHORT-TERM SECURITIES - 15.17% $109,019,330
(Cost: $109,019,330)
TOTAL INVESTMENT SECURITIES - 100.40% $721,400,656
(Cost: $589,952,804)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.40%) (2,894,277)
NET ASSETS - 100.00% $718,506,379
Notes to Schedule of Investments
*No 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, 1997
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $721,400,656
Cash ............................................ 108,621
Receivables:
Dividends and interest .......................... 4,679,978
Fund shares sold ................................ 1,150,337
Prepaid insurance premium ......................... 7,362
------------
Total assets .................................. 727,346,954
------------
Liabilities
Payable for investment securities purchased ...... 6,976,714
Payable to Fund shareholders ..................... 1,526,023
Accrued service fee (Note 2) ..................... 184,952
Accrued transfer agency and
dividend disbursing (Note 2) .................... 109,782
Accrued accounting services fee (Note 2) ......... 5,833
Accrued management fee (Note 2) .................. 10,788
Other ............................................ 26,483
------------
Total liabilities ............................. 8,840,575
------------
Total net assets ............................. $718,506,379
============
Net Assets
$1.00 par value capital stock
Capital stock ................................... $ 78,634,783
Additional paid-in capital....................... 473,489,861
Accumulated undistributed income:
Accumulated undistributed net investment income . 1,926,465
Accumulated undistributed net realized
gain on investment transactions ............... 33,007,584
Net unrealized appreciation in value of
investments ................................... 131,447,686
------------
Net assets applicable to outstanding
units of capital ............................. $718,506,379
============
Net asset value per share (net assets divided
by shares outstanding)
Class A .......................................... $9.14
Class Y .......................................... $9.14
Capital shares outstanding
Class A .......................................... 78,301,668
Class Y .......................................... 333,115
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, 1997
Investment Income
Income (Note 1B):
Interest and amortization ....................... $ 17,734,897
Dividends ....................................... 8,419,258
------------
Total income .................................. 26,154,155
------------
Expenses (Note 2):
Investment management fee ....................... 3,578,876
Service fee - Class A............................ 1,031,683
Transfer agency and dividend disbursing - Class A 989,150
Accounting services fee ......................... 70,000
Custodian fees .................................. 57,857
Audit fees ...................................... 17,295
Legal fees ...................................... 12,512
Shareholder servicing - Class Y.................. 4,219
Other ........................................... 190,340
------------
Total expenses ................................ 5,951,932
------------
Net investment income ........................ 20,202,223
------------
Realized and Unrealized Gain on
Investments (Notes 1 and 3)
Realized net gain on securities .................. 49,101,122
Realized net gain on foreign
currency transactions ........................... 99,901
------------
Realized net gain on investments ................ 49,201,023
Unrealized appreciation in value of investments
during the period ............................... 32,715,332
------------
Net gain on investments ....................... 81,916,355
------------
Net increase in net assets resulting
from operations ............................ $102,118,578
============
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year ended
June 30,
-------------------------
1997 1996
Increase in Net Assets ------------ -----------
Operations:
Net investment income ...............$ 20,202,223 $ 17,244,441
Realized net gain on investments .... 49,201,023 37,039,698
Unrealized appreciation ............. 32,715,332 24,086,193
------------ ------------
Net increase in net assets
resulting from operations ........ 102,118,578 78,370,332
------------ ------------
Distributions to shareholders from (Note 1D):*
Net investment income
Class A ........................... (19,808,042) (17,894,502)
Class Y ........................... (80,743) (23,837)
Realized gains on securities
transactions
Class A ........................... (46,608,511) (29,768,931)
Class Y ........................... (173,810) ---
------------ ------------
(66,671,106) (47,687,270)
------------ ------------
Capital share transactions:
Proceeds from sale of shares:
Class A (8,619,974 and 7,948,671
shares, respectively) ............ 75,017,265 68,712,131
Class Y (171,527 and 231,276
shares, respectively) ............ 1,493,308 2,009,381
Proceeds from reinvestment of dividends
and/or capital gains distribution:
Class A (7,914,002 and
5,612,672 shares, respectively) .. 66,243,096 47,558,555
Class Y (30,364 and 2,757
shares, respectively) ............ 254,553 23,837
Payments for shares redeemed:
Class A (7,839,899 and 7,874,360
shares, respectively) ............ (68,274,890) (67,818,591)
Class Y (80,360 and 22,449
shares, respectively) ............ (708,872) (195,884)
------------ ------------
Net increase in net assets
resulting from capital
share transactions ............... 74,024,460 50,289,429
------------ ------------
Total increase ................... 109,471,932 80,972,491
Net Assets
Beginning of period .................. 609,034,447 528,061,956
------------ ------------
End of period, including undistributed
net investment income of $1,926,465
and $1,513,126, respectively ........$718,506,379 $609,034,447
============ ============
*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,
----------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $8.72 $8.26 $7.64 $7.70 $7.20
----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... .27 .26 .24 .18 .22
Net realized and
unrealized gain
on investments .. 1.08 .94 .86 .22 .73
----- ----- ----- ----- -----
Total from investment
operations ....... 1.35 1.20 1.10 .40 .95
----- ----- ----- ----- -----
Less distributions:
From net
investment
income .......... (0.27) (0.27) (0.22) (0.18) (0.23)
From capital
gains ........... (0.66) (0.47) (0.26) (0.28) (0.22)
----- ----- ----- ----- -----
Total distributions. (0.93) (0.74) (0.48) (0.46) (0.45)
----- ----- ----- ----- -----
Net asset value,
end of period .... $9.14 $8.72 $8.26 $7.64 $7.70
===== ===== ===== ===== =====
Total return* ...... 16.70% 14.93% 15.07% 5.03% 13.45%
Net assets, end
of period (000
omitted) ......... $715,462$607,188$528,062$452,836$379,933
Ratio of expenses
to average net
assets ........... 0.92% 0.89% 0.89% 0.87% 0.80%
Ratio of net
investment income
to average net
assets ........... 3.12% 3.01% 3.04% 2.32% 2.98%
Portfolio turnover
rate ............. 39.55% 42.05% 48.62% 27.10% 30.62%
Average commission
rate paid ........ $.0580
*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 Each Period:
For the For the
fiscal period
year from 2/27/96*
ended through
6/30/97 6/30/96
-------- --------
Net asset value,
beginning of period $8.72 $8.68
----- -----
Income from investment
operations:
Net investment
income .......... .29 .10
Net realized and
unrealized gain
on investments .. 1.07 .06
----- -----
Total from investment
operations ........ 1.36 .16
----- -----
Less distributions:
From net
investment
income........... (.28) (.12)
From capital
gains............ (.66) (.00)
----- -----
Total distributions. (.94) (.12)
----- -----
Net asset value,
end of period ..... $9.14 $8.72
===== =====
Total return ....... 16.87% 1.91%
Net assets, end of
period (000
omitted) ......... $3,044 $1,846
Ratio of expenses
to average net
assets ............ .78% 0.71%**
Ratio of net
investment income
to average net
assets ............ 3.28% 3.36%**
Portfolio
turnover rate ..... 39.55% 42.05%**
Average commission
rate paid ........ $.0580
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
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 Fu,nd 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 Subchapter M of 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 dividneds 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, 1997,
$99,901 was reclassified between accumulated undistributed net
investment income and accumulated undistributed net realized gain on
investment transactions. At June 30, 1997, $99,901 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 $16.9 billion of combined net assets at June 30, 1997) 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, 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 gross
sales commissions for Class A shares (which are not an expense of the Fund)
of $2,917,026, out of which W&R paid sales commissions of $1,689,593 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 $24,446, which are included in other
expenses.
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 $187,387,399 while
proceeds from maturities and sales aggregated $221,313,466. Purchases of
short-term and U.S. Government securities aggregated $850,367,704 and
$39,413,281, respectively. Proceeds from maturities and sales of short-
term and U.S. Government securities aggregated $814,973,679 and
$10,082,637, respectively.
For Federal income tax purposes, cost of investments owned at June 30,
1997 was $589,952,804, resulting in net unrealized appreciation of
$131,447,852 of which $140,380,830 related to appreciated securities and
$8,932,978 related to depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net
income of $49,101,122 during its fiscal year ended June 30, 1997, of which
a portion was paid to shareholders during the period ended June 30, 1997.
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.
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>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
United Retirement Shares, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of United Retirement Shares, Inc.
(the "Fund") as of June 30, 1997, the related statements of operations and
changes in net assets for the year then ended, and the financial highlights
for the year then ended. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
the financial highlights based on our audit. The financial statements and
the financial highlights of the Fund for each of the years in the four-year
period ended June 30, 1996 were audited by other auditors whose report,
dated August 5, 1996, expressed an unqualified opinion on those statements
and financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and the
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned at June 30, 1997 by correspondence with the custodian and
broker. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of United
Retirement Shares, Inc. as of June 30, 1997, the results of its operations,
the changes in its net assets, and the financial highlights for the year
then ended in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
August 1, 1997
<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
9-13-96 $0.060 $0.0600 $0.0000 $0.0218 $0.0382 $0.0000
12-13-96 0.752 0.3093 0.4427 0.0327 0.2766 0.4427
3-14-97 0.060 0.0600 0.0000 0.0217 0.0383 0.0000
6-13-97 0.060 0.0600 0.0000 0.0217 0.0383 0.0000
------ ------- ------- ------- ------- -------
Totals $0.932 $0.4893 $0.4427 $0.0979 $0.3914 $0.4427
====== ======= ======= ======= ======= =======
Class Y
9-13-96 $0.063 $0.0630 $0.0000 $0.0229 $0.0401 $0.0000
12-13-96 0.756 0.3133 0.4427 0.0341 0.2792 0.4427
3-14-97 0.062 0.0620 0.0000 0.0224 0.0396 0.0000
6-13-97 0.064 0.0640 0.0000 0.0232 0.0408 0.0000
------ ------- ------- ------- ------- -------
Totals $0.945 $0.5023 $0.4427 $0.1026 $0.3997 $0.4427
====== ======= ======= ======= ======= =======
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
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
William L. Rogers, Los Angeles, California
Frank J. Ross, Jr., 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
(800) 366-5465
Our INTERNET address is:
http://www.waddell.com
NUR1007A(6-97)
printed on recycled paper
