UNITED
RETIREMENT
SHARES,
INC.
SEMIANNUAL
REPORT
------------------------------------------
For the six months ended December 31, 1997
<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, 1997
Dear Shareholder:
As Waddell & Reed celebrates its 60th anniversary in the financial services
industry, I would like to thank you for your continued confidence in our
products and services. Since we opened our doors in 1937, our goal has been and
continues to be to provide the best service possible to our shareholders. This
commitment is reflected in every area of our organization: starting with your
financial advisor and continuing with our investment management and customer
service people of our affiliated companies.
Your confidence in the success of the products and services offered by Waddell &
Reed and its affiliates is reflected in the growth the Funds have experienced
over our 60 years. Total mutual fund assets under management reached the $1
billion mark in 1961, and over the $5 billion mark in 1985. As of December 31,
1997, mutual fund assets under management totaled more than $20.8 billion.
We look forward to helping you meet the financial goals that are important to
you, now and for many years to come. Should you have any questions about your
account or other financial issues that are important to you, contact your
financial advisor 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
securities debt securities in such
proportions that
management believes are
Debt securities most likely to
achieve the Fund's
objective.
Cash reserves
The use of cash reserves
(often invested in money market
securities) for defensive purposes is a
strategy that may be utilized by
Retirement Shares from time to time.
For more information about the Fund's
cash reserves flexibility, please
consult the Prospectus.
FOUNDED: 1972
SCHEDULED DIVIDEND FREQUENCY: QUARTERLY (March, June, September,
December)
<PAGE>
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Six Months Ended December 31, 1997
- ------------------------------------------
DIVIDENDS PAID $0.14
=====
CAPITAL GAINS DISTRIBUTION $0.84
=====
NET ASSET VALUE ON
12/31/97 $8.74 adjusted to: $9.58 (A)
6/30/97 9.14
-----
CHANGE PER SHARE $0.44
=====
(A)This number includes the capital gains distribution of $0.84 paid in December
1997 added to the actual net asset value on December 31, 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 12-31-97 11.36% 18.15%
5-year period ended 12-31-97 11.28% 12.60%
10-year period ended 12-31-97 13.24% 13.91%
*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, 1997, United Retirement Shares, Inc. had net assets totaling
$769,002,931 invested in a diversified portfolio of:
59.81% Common Stocks
22.94% U.S. Government Securities
14.25% Cash and Cash Equivalents
2.57% Corporate Bonds
0.43% Other Government Security
As a shareholder of United Retirement Shares, Inc. for every $100 you had
invested on December 31, 1997, your Fund owned:
$28.78 Manufacturing Stocks
22.94 United States Government Securities
14.25 Cash and Cash Equivalents
10.69 Transportation, Communication, Electric
and Sanitary Services Stocks
8.05 Finance, Insurance and Real Estate Stocks
5.50 Wholesale and Retail Trade Stocks
2.88 Miscellaneous Investing Institutions Stocks
2.57 Corporate Bonds
2.03 Mining Stocks
1.88 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.
DECEMBER 31, 1997
Shares Value
COMMON STOCKS
Agricultural Production -- Crops - 0.48%
Dole Food Company, Inc. ................ 80,000 $ 3,660,000
Apparel and Accessory Stores - 0.74%
Kohl's Corporation* .................... 83,000 5,654,375
Chemicals and Allied Products - 8.23%
A. Schulman, Inc. ...................... 200,000 5,050,000
Abbott Laboratories .................... 100,000 6,556,200
American Home Products Corporation ..... 70,000 5,355,000
Avon Products, Inc. .................... 65,000 3,989,375
Dow Chemical Company (The) ............. 40,000 4,060,000
du Pont (E.I.) de Nemours and Company .. 180,000 10,811,160
Hoechst AG (A) .......................... 190,000 6,654,806
International Flavors & Fragrances Inc. 70,000 3,605,000
Monsanto Company ....................... 150,000 6,300,000
Pfizer Inc. ............................ 146,000 10,886,052
Total ................................. 63,267,593
Communication - 5.25%
AT&T Corporation ....................... 275,000 16,843,750
Carso Global Telecom & Media (A) ....... 500,000 2,032,722
SBC Communications Inc. ................ 195,000 14,283,750
Telebras S.A., ADR ..................... 62,000 7,219,094
Total ................................. 40,379,316
Depository Institutions - 3.25%
BankAmerica Corporation* ............... 200,000 14,600,000
Wells Fargo & Company .................. 30,710 10,424,110
Total ................................. 25,024,110
Electric, Gas and Sanitary Services - 2.90%
Baltimore Gas and Electric Company ..... 120,000 4,080,000
Houston Industries Incorporated ........ 260,000 6,938,620
PECO Energy Company .................... 200,000 4,850,000
Unicom Corporation ..................... 210,000 6,457,500
Total ................................. 22,326,120
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1997
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment - 2.92%
Emerson Electric Co. ................... 200,000 $ 11,287,400
Intel Corporation ...................... 50,000 3,510,900
U. S. Industries, Inc. ................. 255,000 7,681,875
Total ................................. 22,480,175
Fabricated Metal Products - 0.72%
Mark IV Industries, Inc. ............... 254,677 5,571,059
Food and Kindred Products - 3.66%
CPC International Inc. ................. 48,300 5,216,400
General Mills, Inc. .................... 110,000 7,878,750
Heinz (H. J.) Company .................. 150,000 7,621,800
Ralston Purina Co. ..................... 80,000 7,434,960
Total ................................. 28,151,910
Forestry - 0.54%
Weyerhaeuser Company ................... 84,000 4,121,208
Furniture and Fixtures - 0.58%
Lear Corporation* ...................... 93,900 4,460,250
General Merchandise Stores - 2.38%
Cifra, S.A. de C.V., Series C (A) ...... 550,000 1,233,887
Cifra, S.A. de C.V., Series V (A) ...... 43,357 106,512
Penney (J.C.) Company, Inc. ............ 150,000 9,046,800
Wal-Mart Stores, Inc. .................. 200,000 7,887,400
Total ................................. 18,274,599
Health Services - 0.86%
Tenet Healthcare Corporation* .......... 200,000 6,625,000
Holding and Other Investment Offices - 2.88%
Berkshire Hathaway Inc., Class B* ...... 3,000 4,617,000
Grupo Carso, S.A. de C.V.,
Series 1A (A) ......................... 500,000 3,340,357
LTC Properties, Inc. ................... 300,000 6,225,000
National Health Investors, Inc. ........ 190,500 7,977,187
Total ................................. 22,159,544
Industrial Machinery and Equipment - 1.49%
Applied Materials, Inc.* ............... 50,000 1,504,650
Deere & Company ........................ 75,000 4,373,400
Parker Hannifin Corporation ............ 122,500 5,619,688
Total ................................. 11,497,738
Instruments and Related Products - 0.48%
St. Jude Medical, Inc.* ................ 120,000 3,660,000
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1997
Shares Value
COMMON STOCKS (Continued)
Insurance Carriers - 3.49%
Chubb Corporation (The) ................ 200,000 $ 15,125,000
Hartford Financial Services Group
Inc. (The) ............................ 125,000 11,695,250
Total ................................. 26,820,250
Metal Mining - 0.43%
Homestake Mining Company ............... 370,000 3,283,750
Miscellaneous Retail - 1.16%
Costco Companies, Inc.* ................ 200,000 8,918,600
Nondepository Institutions - 1.31%
Freddie Mac ............................ 240,000 10,064,880
Oil and Gas Extraction - 1.60%
Anadarko Petroleum Corporation ......... 25,700 1,559,656
Noble Affiliates, Inc. ................. 100,000 3,525,000
Schlumberger Limited ................... 90,000 7,245,000
Total ................................. 12,329,656
Petroleum and Coal Products - 3.62%
Exxon Corporation ...................... 200,000 12,237,400
Royal Dutch Petroleum Company .......... 180,000 9,753,660
Tosco Corporation ...................... 154,500 5,841,954
Total ................................. 27,833,014
Primary Metal Industries - 0.63%
British Steel plc, ADR ................. 225,000 4,823,325
Printing and Publishing - 4.47%
Gannett Co., Inc. ...................... 150,000 9,271,800
McGraw-Hill Companies, Inc. (The) ...... 100,000 7,400,000
Meredith Corporation ................... 200,000 7,137,400
New York Times Company (The), Class A .. 85,000 5,620,625
Viacom Inc., Class B* .................. 120,000 4,972,440
Total ................................. 34,402,265
Railroad Transportation - 1.48%
Burlington Northern Santa Fe Corporation 65,000 6,040,905
Union Pacific Corporation .............. 85,000 5,307,145
Total ................................. 11,348,050
Transportation Equipment - 1.98%
Chrysler Corporation ................... 165,000 5,805,855
Sundstrand Corporation ................. 50,000 2,518,750
TRW Inc. ............................... 130,000 6,938,750
Total ................................. 15,263,355
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1997
Shares Value
COMMON STOCKS (Continued)
Transportation Services - 1.06%
Dial Corporation (The) ................. 390,000 $ 8,128,770
Wholesale Trade -- Durable Goods - 1.22%
Motorola, Inc. ......................... 165,000 9,415,230
TOTAL COMMON STOCKS - 59.81% $459,944,142
(Cost: $354,336,960)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Building Materials and Garden Supplies - 0.27%
Home Depot, Inc. (The), Convertible,
3.25%, 10-1-2001 ...................... $ 1,600 2,102,000
Communication - 0.49%
Bell Telephone Company of Pennsylvania (The),
8.35%, 12-15-2030 ..................... 3,000 3,737,130
Electric, Gas and Sanitary Services - 0.13%
California Infrastructure and Economic Development
Bank Special Trust PG&E-1,
6.42%, 9-25-2008 ...................... 1,000 1,010,160
Electronic and Other Electric Equipment - 0.60%
Cooper Industries, Inc.,
6.0%, 1-1-99 (Exchangeable) ........... 3,416 4,617,250
Nondepository Institutions - 0.45%
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... 3,000 3,468,540
Oil and Gas Extraction - 0.32%
Enron Corp.,
6.25%, 12-13-98 (Exchangeable) ........ 2,588 2,454,375
United States Postal Service - 0.31%
Postal Square Limited Partnership,
8.95%, 6-15-2022 ...................... 1,904 2,347,051
TOTAL CORPORATE DEBT SECURITIES - 2.57% $ 19,736,506
(Cost: $16,498,206)
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
OTHER GOVERNMENT SECURITY - 0.43%
Supranational
International Bank for Reconstruction and
Development,
9.25%, 7-15-2017 ...................... $ 2,500 $ 3,319,775
(Cost: $2,498,245)
UNITED STATES GOVERNMENT SECURITIES
National Archives Facility Trust,
8.5%, 9-1-2019 ........................ 4,269 5,153,848
United States Treasury:
5.125%, 2-28-98 ....................... 15,000 14,988,300
9.25%, 8-15-98 ........................ 5,000 5,108,600
4.75%, 10-31-98 ....................... 10,000 9,928,100
5.5%, 2-28-99 ......................... 15,000 14,976,600
7.125%, 9-30-99 ....................... 20,000 20,475,000
7.75%, 12-31-99 ....................... 10,000 10,389,100
5.75%, 10-31-2000 ..................... 10,000 10,012,500
7.25%, 5-15-2004 ...................... 5,000 5,396,100
7.875%, 11-15-2004 .................... 10,000 11,179,700
7.5%, 2-15-2005 ....................... 37,000 40,665,220
9.375%, 2-15-2006 ..................... 8,500 10,451,005
10.375%, 11-15-2012 ................... 4,000 5,315,000
9.25%, 2-15-2016 ...................... 5,000 6,784,350
0.0%, 2-15-2019 ....................... 20,000 5,610,600
TOTAL UNITED STATES GOVERNMENT SECURITIES - 22.94% $176,434,023
(Cost: $169,554,972)
SHORT-TERM SECURITIES
Chemicals and Allied Products - 0.93%
Abbott Laboratories,
5.77%, 1-14-98 ........................ 7,195 7,180,009
Communication - 1.49%
BellSouth Telecommunications Inc.,
5.92%, 1-13-98 ........................ 1,585 1,581,872
Dominion Resources Inc.,
5.9%, 1-12-98 ......................... 9,865 9,847,216
Total ................................. 11,429,088
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Electric, Gas and Sanitary Services - 0.74%
Western Resources Inc.,
6.07%, 1-9-98 ......................... $ 5,730 $ 5,722,271
Electronic and Other Electric Equipment - 0.24%
Cooper Industries, Inc.,
6.0%, 1-23-98 ......................... 1,865 1,858,162
Fabricated Metal Products - 0.19%
Danaher Corporation,
5.7227%, Master Note .................. 1,454 1,454,000
Food and Kindred Products - 1.72%
General Mills, Inc.,
5.5777%, Master Note .................. 910 910,000
Hercules Inc.,
6.09%, 1-16-98 ........................ 12,345 12,313,675
Total ................................. 13,223,675
Industrial Machinery and Equipment - 1.54%
Hewlett-Packard Company,
5.68%, 1-5-98 ......................... 11,815 11,807,543
Instruments and Related Products - 1.48%
Baxter International Inc.,
6.07%, 1-14-98 ........................ 11,425 11,399,957
Insurance Agents, Brokers and Service - 0.96%
Aon Corp.,
5.9%, 1-30-98 ......................... 7,435 7,399,663
Nondepository Institutions - 3.43%
Caterpillar Financial Services Corp.,
5.85%, 1-23-98 ........................ 4,135 4,120,217
General Motors Acceptance Corporation,
5.85%, 1-12-98 ........................ 22,330 22,290,085
Total ................................. 26,410,302
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF
UNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1997
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Security and Commodity Brokers - 0.36%
Merrill Lynch & Co. Inc.,
5.81%, 1-16-98 ........................ $ 2,815 $ 2,808,185
Textile Mill Products - 0.10%
Sara Lee Corporation,
5.5727%, Master Note .................. 764 764,000
Tobacco Products - 0.43%
B.A.T. Capital Corp.,
6.08%, 1-20-98 ........................ 3,280 3,269,475
Transportation Equipment - 0.35%
Dana Credit Corp.,
6.08%, 2-5-98 ......................... 2,650 2,634,336
TOTAL SHORT-TERM SECURITIES - 13.96% $107,360,666
(Cost: $107,360,666)
TOTAL INVESTMENT SECURITIES - 99.71% $766,795,112
(Cost: $650,249,049)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.29% 2,207,819
NET ASSETS - 100.00% $769,002,931
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
DECEMBER 31, 1997
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $766,795,112
Cash ............................................ 2,367
Receivables:
Dividends and interest .......................... 4,490,256
Investment securities sold ...................... 2,257,471
Fund shares sold ................................ 928,062
Prepaid insurance premium ......................... 13,226
------------
Total assets .................................. 774,486,494
------------
Liabilities
Payable to Fund shareholders ..................... 3,480,084
Payable for investment securities purchased ...... 1,521,055
Accrued service fee (Note 2) ..................... 345,265
Accrued transfer agency and
dividend disbursing (Note 2) .................... 89,939
Accrued management fee (Note 2) .................. 11,505
Accrued accounting services fee (Note 2) ......... 7,083
Other ............................................ 28,632
------------
Total liabilities ............................. 5,483,563
------------
Total net assets ............................. $769,002,931
============
Net Assets
$1.00 par value capital stock
Capital stock ................................... $ 88,033,913
Additional paid-in capital....................... 545,934,319
Accumulated undistributed income:
Accumulated undistributed net investment income . 843,158
Accumulated undistributed net realized
gain on investment transactions ............... 17,645,771
Net unrealized appreciation in value of
investments ................................... 116,545,770
------------
Net assets applicable to outstanding
units of capital ............................. $769,002,931
============
Net asset value per share (net assets divided
by shares outstanding)
Class A .......................................... $8.74
Class Y .......................................... $8.74
Capital shares outstanding
Class A .......................................... 87,675,450
Class Y .......................................... 358,463
Capital shares authorized .......................... 300,000,000
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended DECEMBER 31, 1997
Investment Income
Income (Note 1B):
Interest and amortization ....................... $ 9,068,260
Dividends ....................................... 4,455,390
------------
Total income .................................. 13,523,650
------------
Expenses (Note 2):
Investment management fee ....................... 2,058,200
Service fee - Class A............................ 700,118
Transfer agency and dividend disbursing - Class A 515,460
Accounting services fee ......................... 37,500
Custodian fees .................................. 28,034
Legal fees ...................................... 9,130
Audit fees ...................................... 8,270
Shareholder servicing - Class Y ................. 3,405
Other ........................................... 137,480
------------
Total expenses ................................ 3,497,597
------------
Net investment income ........................ 10,026,053
------------
Realized and Unrealized Gain (Loss) on
Investments (Notes 1 and 3)
Realized net gain on securities .................. 51,551,802
Realized net loss on foreign
currency transactions ........................... (2,353)
------------
Realized net gain on investments ................ 51,549,449
Unrealized depreciation in value of investments
during the period ............................... (14,901,916)
------------
Net gain on investments ....................... 36,647,533
------------
Net increase in net assets resulting
from operations ............................ $46,673,586
============
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
STATEMENT OF CHANGES IN NET ASSETS For the For the
six months fiscal year
ended ended
December 31, June 30,
1997 1997
Increase in Net Assets ------------ -----------
Operations:
Net investment income ...............$ 10,026,053 $ 20,202,223
Realized net gain on investments .... 51,549,449 49,201,023
Unrealized appreciation
(depreciation) .................... (14,901,916) 32,715,332
------------ ------------
Net increase in net assets
resulting from operations ........ 46,673,586 102,118,578
------------ ------------
Distributions to shareholders from (Note 1D):*
Net investment income
Class A ........................... (11,058,033) (19,808,042)
Class Y ........................... (48,974) (80,743)
Realized gains on securities
transactions
Class A ........................... (66,642,687) (46,608,511)
Class Y ........................... (270,928) (173,810)
------------ ------------
(78,020,622) (66,671,106)
Capital share transactions: ------------ ------------
Proceeds from sale of shares:
Class A (4,405,969 and 8,619,974
shares, respectively) ............ 41,064,538 75,017,265
Class Y (43,608 and 171,527
shares, respectively) ............ 412,032 1,493,308
Proceeds from reinvestment of dividends
and/or capital gains distribution:
Class A (8,936,359 and
7,914,002 shares, respectively) .. 77,458,769 66,243,096
Class Y (36,887 and 30,364
shares, respectively) ............ 319,907 254,553
Payments for shares redeemed:
Class A (3,968,546 and 7,839,899
shares, respectively) ............ (36,893,076) (68,274,890)
Class Y (55,147 and 80,360
shares, respectively) ............ (518,582) (708,872)
------------ ------------
Net increase in net assets
resulting from capital
share transactions ............... 81,843,588 74,024,460
------------ ------------
Total increase ................... 50,496,552 109,471,932
Net Assets
Beginning of period .................. 718,506,379 609,034,447
------------ ------------
End of period, including undistributed
net investment income of $843,158
and $1,926,465, respectively ........$769,002,931 $718,506,379
============ ============
*See "Financial Highlights" on pages 16 - 17.
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
six
months For the fiscal year ended June 30,
ended ----------------------------------
12/31/97 1997 1996 1995 1994 1993
-------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $9.14 $8.72 $8.26 $7.64 $7.70 $7.20
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... 0.13 .27 .26 .24 .18 .22
Net realized and
unrealized gain
on investments .. 0.45 1.08 .94 .86 .22 .73
----- ----- ----- ----- ----- -----
Total from investment
operations ....... 0.58 1.35 1.20 1.10 .40 .95
----- ----- ----- ----- ----- -----
Less distributions:
From net
investment
income .......... (0.14) (0.27) (0.27) (0.22) (0.18) (0.23)
From capital
gains ........... (0.84) (0.66) (0.47) (0.26) (0.28) (0.22)
----- ----- ----- ----- ----- -----
Total distributions. (0.98) (0.93) (0.74) (0.48) (0.46) (0.45)
----- ----- ----- ----- ----- -----
Net asset value,
end of period .... $8.74 $9.14 $8.72 $8.26 $7.64 $7.70
===== ===== ===== ===== ===== =====
Total return* ...... 6.50% 16.70% 14.93% 15.07% 5.03% 13.45%
Net assets, end of
period (000 omitted)$765,872$715,462$607,188$528,062$452,836$379,933
Ratio of expenses to
average net assets 0.93%** 0.92% 0.89% 0.89% 0.87% 0.80%
Ratio of net
investment income
to average net
assets ........... 2.66%** 3.12% 3.01% 3.04% 2.32% 2.98%
Portfolio turnover
rate ............. 26.49% 39.55% 42.05% 48.62% 27.10% 30.62%
Average commission
rate paid ........ $0.0641 $0.0580
*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.
FINANCIAL HIGHLIGHTS
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the For the For the
six fiscal period
months year from 2/27/96*
ended ended through
12/31/97 6/30/97 6/30/96
-------- -------- --------
Net asset value,
beginning of period $9.14 $8.72 $8.68
----- ----- -----
Income from investment
operations:
Net investment
income .......... 0.14 .29 .10
Net realized and
unrealized gain
on investments .. 0.45 1.07 .06
----- ----- -----
Total from investment
operations ........ 0.59 1.36 .16
----- ----- -----
Less distributions:
From net investment
income........... (0.15) (.28) (.12)
From capital gains (0.84) (.66) (.00)
----- ----- -----
Total distributions. (0.99) (.94) (.12)
----- ----- -----
Net asset value,
end of period .... $8.74 $9.14 $8.72
===== ===== =====
Total return ....... 6.58% 16.87% 1.91%
Net assets, end of
period (000
omitted) ......... $3,131 $3,044 $1,846
Ratio of expenses
to average net
assets ............ 0.79%** 0.78% 0.71%**
Ratio of net
investment income
to average net
assets ............ 2.79%** 3.28% 3.36%**
Portfolio
turnover rate ..... 26.49% 39.55% 42.05%**
Average commission
rate paid ........ $0.0641 $0.0580
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 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 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 the Nasdaq Stock Market, 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. Foreign currency translations -- All assets and liabilities denominated in
foreign currencies are translated into U.S. dollars daily. Purchases and
sales of investment securities and accruals of income and expenses are
translated at the rate of exchange prevailing on the date of the
transaction. For assets and liabilities other than investments in
securities and bullion, net realized and unrealized gains and losses from
foreign currency translations arise from changes in currency exchange
rates. The Fund combines fluctuations from currency exchange rates and
fluctuations in market value when computing net realized and unrealized
gain or loss from investments.
D. 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.
E. Dividends and distributions -- Dividends and distributions to shareholders
are recorded by the Fund on the record date. Net investment income
dividends 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.
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 $17.8 billion of
combined net assets at December 31, 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
$1,606,021, out of which W&R paid sales commissions of $931,291 and all expenses
in connection with the sale of Fund shares, except for registration fees and
related expenses.
Under a Distribution and 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 distribution and/or service 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 distribution of the
Class A shares and/or provision of personal services to Fund shareholders and/or
maintenance of shareholder accounts.
The Fund paid Directors' fees of $13,238, 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 $167,441,396 while proceeds from
maturities and sales aggregated $152,424,743. Purchases of short-term and U.S.
Government securities aggregated $528,514,689 and $15,360,438, respectively.
Proceeds from maturities and sales of short-term and U.S. Government securities
aggregated $532,690,837 and $20,033,201, respectively.
For Federal income tax purposes, cost of investments owned at December 31,
1997 was $650,249,049, resulting in net unrealized appreciation of $116,546,063
of which $130,710,767 related to appreciated securities and $14,164,704 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, which has been
distributed to Fund shareholders.
NOTE 5 -- 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 Distribution and 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 December 31, 1997, and the related statement of operations for the six-month
period then ended and changes in net assets for the six-month period then ended
and the year ended June 30, 1997, and the financial highlights for the six-month
period then ended and for each of the years in the five-year period ended June
30, 1997. 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
audits.
We conducted our audits 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
December 31, 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 audits provide 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 December 31, 1997, the results of its operations, the changes
in its net assets and the financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
February 6, 1998
<PAGE>
Shareholder Meeting Results
A special meeting of shareholders of United Retirement Shares, Inc. was held on
July 24, 1997. The matters voted upon by the shareholders and the resulting
votes for each matter are presented below.
Item 1. To elect the Board of Directors;
Broker
For Withheld Non-Votes*
Henry L. Bellmon 38,612,842 650,712 0
Dodds I. Buchanan 38,665,768 597,786 0
James M. Concannon 38,666,485 597,069 0
John A. Dillingham 38,647,800 615,754 0
Linda Graves 38,638,242 625,312 0
John F. Hayes 38,606,261 657,293 0
Glendon E. Johnson 38,602,142 661,412 0
William T. Morgan 38,667,049 596,505 0
Ronald K. Richey 38,636,611 626,943 0
William L. Rogers 38,635,311 628,243 0
Frank J. Ross, Jr. 38,667,302 596,252 0
Eleanor B. Schwartz 38,636,717 626,837 0
Keith A. Tucker 38,665,489 598,065 0
Frederick Vogel III 38,666,956 596,598 0
Paul S. Wise 38,615,541 648,013 0
Item 2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent accountants for its current fiscal year;
Broker
For Against Abstain Non-Votes*
37,624,736 212,198 1,426,620 0
Item 3. To approve or disapprove changes to certain of its fundamental
investment policies and restrictions:
3.1 Elimination of Fundamental Restriction Regarding Restricted
Securities
Broker
For Against Abstain Non-Votes*
35,907,672 1,018,654 2,304,831 32,397
3.2 Modification of Fundamental Restriction Regarding Diversification
of Assets
Broker
For Against Abstain Non-Votes*
35,847,305 1,075,995 2,307,857 32,397
3.3 Modification and/or Elimination of Fundamental Restrictions
Regarding Options, Commodities, Forward Contracts and/or Futures
Contracts
Broker
For Against Abstain Non-Votes*
35,888,827 1,034,842 2,307,488 32,397
3.4 Elimination of Fundamental Restriction Regarding Mortgaging or
Pledging Securities
Broker
For Against Abstain Non-Votes*
35,888,528 1,035,141 2,307,488 32,397
3.5 Modification of Fundamental Restriction Regarding Margin Purchases
of Securities
Broker
For Against Abstain Non-Votes*
35,902,135 1,021,534 2,307,488 32,397
3.6 Modification of Fundamental Restriction Regarding Short Sales of
Securities
Broker
For Against Abstain Non-Votes*
35,918,666 1,005,003 2,307,488 32,397
3.7 Elimination of Fundamental Restriction Regarding Investment in
Warrants and Rights
Broker
For Against Abstain Non-Votes*
35,913,445 1,008,557 2,309,155 32,397
3.8 Elimination of Fundamental Restriction Regarding Purchasing Call
Options
Broker
For Against Abstain Non-Votes*
35,917,604 1,006,065 2,307,488 32,397
3.9 Elimination of Fundamental Restriction Regarding Arbitrage
Transactions
Broker
For Against Abstain Non-Votes*
35,910,632 1,013,037 2,307,488 32,397
3.10 Elimination of Fundamental Restriction Regarding Investments in
Issuers Whose Securities are Owned by Certain Persons
Broker
For Against Abstain Non-Votes*
35,909,626 1,014,043 2,307,488 32,397
3.11 Modification of Fundamental Policy Regarding Loans
Broker
For Against Abstain Non-Votes*
35,922,215 1,001,454 2,307,488 32,397
Item 4. To amend the terms of the service plan adopted pursuant to Rule
12b-1 under the Investment Company Act of 1940.
Broker
For Against Abstain Non-Votes*
34,309,473 1,379,345 3,251,799 17,062
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the beneficial
owner or other persons entitled to vote nor has discretionary power to vote on a
particular matter.
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
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
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
NUR1007SA(12-97)
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