UNITED
RETIREMENT
SHARES,
INC.
SEMIANNUAL
REPORT
------------------------------------------
For the six months ended December 31, 1999
<PAGE>
To all traditional IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from a traditional 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.
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, 1999
Dear Shareholder:
We are delighted to share with you this report on your Fund's operations for the
six months ended December 31, 1999.
The second half of 1999 was another extraordinary period for equity markets in
the U.S. and, indeed, around much of the globe, as all major stock market
indices weathered some volatility and finished 1999 solidly above mid-year
levels. Leading the way was the Nasdaq Composite, which is laden with
technology-oriented companies. This index rose a stunning 51.5 percent in the
last six months of 1999 and 85.6 percent for all of 1999, as investors poured
money into stocks of these "new era" companies. The Standard & Poor's 500, the
index most often used to track the performance of the largest U.S. stocks, rose
7.84 percent for the six months ended December 31 and 21.09 percent for the
year. The Dow Jones Industrial Average, which includes 30 of the nation's
largest companies, rose 5.44 percent in the last six months of the year and
26.93 percent for all of 1999. And, finally, the Russell 2000, which tracks the
performance of small-company stocks, rose 10.99 percent for the last six months
of 1999 and 21.17 percent for the year after having significantly trailed other
indices in recent years. Clearly, smaller and mid-sized companies -- especially
those in the technology industry -- were at the center of the market's favor for
the final six months of 1999.
The domestic equity markets' performance was achieved despite conflicting
economic signals. Inflation, as defined by the Consumer Price Index, rose 2.2
percent for all of 1999, up from the prior year's 1.8 percent but still modest
by historical standards. At the same time, though, interest rates increased
considerably over the course of the year and overall economic activity remained
strong. While such factors might ordinarily have undermined a vibrant stock
market, they had no noticeably negative overall effect in 1999. This was due in
part to investors' enormous enthusiasm for technology-related stocks which,
throughout 1999 -- and especially in the last six months of the year -- seemed
impervious to the influence of economic factors. U.S. equity markets were not
alone in turning in strong performances for the second half and all of 1999.
Many foreign equity markets turned in exceptional years as well, buoyed by some
of the same factors that propelled U.S. markets, along with a faster-than-
expected recovery in certain of the Asian markets that had been in economic
crisis in the recent past.
The news from bond markets was much less favorable. Inflationary pressures,
including high levels of consumer spending and very low unemployment, caused
bond yields (which move inversely to bond prices) to rise considerably over the
course of the year. As a result, U.S. bond markets experienced a very difficult
six months and their toughest full year since 1994. The Federal Reserve, which
is committed to keeping inflation in check, raised interest rates three times
during 1999 and, as the year came to a close, the likelihood of additional rate
hikes early in 2000 appeared to be high.
We were pleased with the overall performance of the United Fund family in the
second half of 1999 and for the full year. This report provides in-depth
discussion of the performance of the fund you own. I urge you to read it with
care so you can continue to be a well-informed investor.
While these reports necessarily focus on the second half of 1999, we of course
urge all our investors to keep a long-term perspective. Just as we urge you not
to become unduly concerned if the market moves downward in the near term, we
would urge that you not become too exuberant when it moves higher in similarly
short periods. No one can predict with certainty where markets will go next,
but one thing that remains certain is that a well-thought-out investment plan is
essential. Remember, a plan that is appropriate for you is appropriate
regardless of inevitable market changes. Your Waddell & Reed financial advisor
is indispensable in helping you create an investment program comprising our
time-tested investments. And with that plan in place, you can face any market
condition with confidence.
Respectfully,
Robert L. Hechler
President
<PAGE>
SHAREHOLDER SUMMARY
- --------------------------------------------------------------------------------
UNITED RETIREMENT SHARES, INC.
PORTFOLIO STRATEGY:
Common stocks believed to GOAL: To seek the highest
have the potential for: long-term total
Long-term appreciation investment return as is,
Stability in the opinion of
Income management,consistent with the
reasonable safety of capital.
Maximum 10% foreign STRATEGY: Invests primarily in
securities common stocks and debt
securities of U.S.
Debt securities issuers (of any maturity
and mostly of investment
Cash reserves grade). The Fund
generally owns common stock of medium to
large, well-established companies while
typically emphasizing a blend of value
and growth potential.
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, 1999
- ------------------------------------------
DIVIDENDS PAID $0.04
=====
CAPITAL GAINS DISTRIBUTION $1.71
=====
NET ASSET VALUE ON
12/31/99 $10.94 adjusted to:$12.65(A)
06/30/99 9.84
------
CHANGE PER SHARE $ 2.81
======
(A)This number includes the capital gains distribution of $1.71 paid in December
1999 added to the actual net asset value on December 31, 1999.
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 12-31-99 35.39% 43.65%
5-year period ended 12-31-99 19.09% 20.51%
10-year period ended 12-31-99 14.17% 14.85%
*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, 1999, United Retirement Shares, Inc. had net assets totaling
$1,199,899,771 invested in a diversified portfolio of:
88.97% Common Stocks
5.17% Corporate Bonds
2.68% Cash and Cash Equivalents
1.97% U.S. Government Securities
0.96% Preferred Stock
0.25% Other Government Security
As a shareholder of United Retirement Shares, Inc. for every $100 you had
invested on December 31, 1999, your Fund owned:
$47.38 Manufacturing Stocks
13.51 Services Stocks
10.99 Transportation, Communication, Electric
and Sanitary Services Stocks
7.73 Finance, Insurance and Real Estate Stocks
5.70 Wholesale and Retail Trade Stocks
5.17 Corporate Bonds
2.99 Mining Stocks
2.68 Cash and Cash Equivalents
1.97 U.S. Government Securities
0.96 Preferred Stock
0.67 Contract Construction Stocks
0.25 Other Government Security
<PAGE>
THE INVESTMENTS OFUNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1999
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 1.04%
Nordstrom, Inc. ........................ 300,000 $ 7,856,250
Saks Incorporated* ..................... 300,000 4,668,750
Total ................................. 12,525,000
Apparel and Other Textile Products - 0.66%
Cintas Corporation ..................... 150,000 7,964,062
Building Materials and Garden Supplies - 0.47%
Fastenal Company ....................... 125,000 5,621,094
Business Services - 12.67%
America Online, Inc.* .................. 125,000 9,429,687
BMC Software, Inc.* .................... 150,000 11,985,938
Citrix Systems, Inc.* .................. 75,000 9,222,656
Computer Sciences Corporation* ......... 150,000 14,193,750
Compuware Corporation* ................. 200,000 7,443,750
Electronic DataSystems Corporation ..... 125,000 8,367,188
FleetBoston Financial Corporation ...... 250,000 8,703,125
Intuit Inc.* ........................... 200,000 11,981,250
Lycos, Inc.* ........................... 100,000 7,959,375
Microsoft Corporation* ................. 200,000 23,343,750
Oracle Corporation* .................... 200,000 22,406,250
Sterling Software, Inc.* ............... 275,000 8,662,500
SunGard Data Systems, Inc.* ............ 350,000 8,312,500
Total ................................. 152,011,719
Chemicals and Allied Products - 14.57%
Abbott Laboratories .................... 200,000 7,262,500
Alpharma Inc., Class A ................. 250,000 7,687,500
American Home Products Corporation ..... 275,000 10,845,313
Biogen, Inc.* .......................... 150,000 12,670,312
Bristol-Myers Squibb Company ........... 200,000 12,837,500
du Pont (E.I.) de Nemours and Company .. 150,000 9,881,250
Forest Laboratories, Inc.* ............. 250,000 15,359,375
Lilly (Eli) and Company ................ 150,000 9,975,000
Merck & Co., Inc. ...................... 175,000 11,735,938
Monsanto Company ....................... 275,000 9,796,875
Pfizer Inc. ............................ 200,000 6,487,500
Pharmacia & Upjohn, Inc. ............... 250,000 11,250,000
Pharmacyclics, Inc.* ................... 200,000 8,275,000
Schering-Plough Corporation ............ 275,000 11,601,562
Smith International, Inc.* ............. 175,000 8,695,312
Warner-Lambert Company ................. 250,000 20,484,375
Total ................................. 174,845,312
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OFUNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1999
Shares Value
COMMON STOCKS (Continued)
Communication - 10.02%
AT&T Corp. - Liberty Media Group,
Class A* .............................. 200,000 $ 11,350,000
Cablevision Systems Corporation,
Class A* .............................. 100,000 7,550,000
Charter Communications, Inc.* .......... 500,000 10,937,500
MCI WORLDCOM, Inc.* .................... 262,500 13,920,703
MGC Communications, Inc.* .............. 200,000 10,112,500
MediaOne Group, Inc.* .................. 150,000 11,521,875
Sinclair Broadcast Group, Inc.* ........ 700,000 8,553,125
TV Guide, Inc., Class A* ............... 375,000 16,066,406
USA Networks, Inc.* .................... 300,000 16,565,625
Viacom Inc., Class B* .................. 225,000 13,598,438
Total ................................. 120,176,172
Depository Institutions - 2.84%
Bank of America Corporation ............ 225,000 11,292,187
Chase Manhattan Corporation (The) ...... 150,000 11,653,125
Citigroup Inc. ......................... 200,000 11,112,500
Total ................................. 34,057,812
Eating and Drinking Places - 0.43%
Wendy's International, Inc. ............ 250,000 5,156,250
Electronic and Other Electric Equipment - 16.62%
Amphenol Corporation, Class A* ......... 150,000 9,984,375
Analog Devices, Inc.* .................. 225,000 20,925,000
Celestica, Inc.* ....................... 200,000 11,100,000
DII Group, Inc. (The)* ................. 200,000 14,193,750
Gemstar International Group Limited* ... 100,000 7,118,750
General Electric Company ............... 100,000 15,475,000
Harman International Industries,
Incorporated .......................... 275,000 15,434,375
Intel Corporation ...................... 225,000 18,513,281
JDS Uniphase Corporation* .............. 120,000 19,357,500
Jabil Circuit, Inc.* ................... 150,000 10,950,000
Maxim Integrated Products, Inc.* ....... 250,000 11,789,063
Micron Technology, Inc.* ............... 150,000 11,662,500
Motorola, Inc. ......................... 80,000 11,780,000
Rambus Inc.* ........................... 170,000 11,459,062
Texas Instruments Incorporated ......... 100,000 9,687,500
Total ................................. 199,430,156
Fabricated Metal Products - 0.85%
Parker Hannifin Corporation ............ 200,000 10,262,500
Food and Kindred Products - 0.84%
Seagram Company Ltd. (The) ............. 225,000 10,110,937
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OFUNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1999
Shares Value
COMMON STOCKS (Continued)
Food Stores - 0.79%
Kroger Co. (The)* ...................... 500,000$ 9,437,500
General Merchandise Stores - 0.86%
Wal-Mart Stores, Inc. .................. 150,000 10,368,750
Heavy Construction, Except Building - 0.67%
Halliburton Company .................... 200,000 8,050,000
Industrial Machinery and Equipment - 8.21%
Apple Computer, Inc.* .................. 155,000 15,931,094
Applied Materials, Inc.* ............... 140,000 17,731,875
Dell Computer Corporation* ............. 250,000 12,742,187
EMC Corporation* ....................... 125,000 13,656,250
Extreme Networks, Inc.* ................ 175,000 14,634,375
Illinois Tool Works, Inc. .............. 125,000 8,445,313
Novellus Systems, Inc.* ................ 125,000 15,316,406
Total ................................. 98,457,500
Instruments and Related Products - 1.69%
Guidant Corporation* ................... 150,000 7,050,000
Teradyne, Inc.* ........................ 200,000 13,200,000
Total ................................. 20,250,000
Insurance Agents, Brokers & Service - 0.99%
Hartford Financial Services Group Inc. (The) 250,000 11,843,750
Insurance Carriers - 1.07%
Lincoln National Corporation ........... 150,000 6,000,000
ReliaStar Financial Corp. .............. 175,000 6,857,813
Total ................................. 12,857,813
Motion Pictures - 0.84%
Time Warner Incorporated ............... 140,000 10,141,250
Nondepository Institutions - 0.78%
Freddie Mac ............................ 200,000 9,412,500
Oil and Gas Extraction - 2.99%
Apache Corporation ..................... 275,000 10,157,812
Burlington Resources Incorporated ...... 350,000 11,571,875
Schlumberger Limited ................... 225,000 12,656,250
Transocean Sedco Forex Inc. ............ 43,560 1,467,428
Total ................................. 35,853,365
Paper and Allied Products - 0.82%
International Paper Company ............ 175,000 9,876,563
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OFUNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1999
Shares Value
COMMON STOCKS (Continued)
Petroleum and Coal Products - 1.64%
Exxon Mobil Corporation ................ 150,000$ 12,084,375
Royal Dutch Petroleum Company,
NY Shares ............................. 125,000 7,554,687
Total ................................. 19,639,062
Security and Commodity Brokers - 2.05%
Goldman Sachs Group, Inc. (The) ........ 150,000 14,128,125
Merrill Lynch & Co., Inc. .............. 125,000 10,437,500
Total ................................. 24,565,625
Transportation by Air - 0.97%
UAL Corporation* ....................... 150,000 11,634,375
Transportation Equipment - 1.48%
Ford Motor Company ..................... 150,000 8,015,625
Gentex Corporation* .................... 350,000 9,756,250
Total ................................. 17,771,875
Wholesale Trade -- Durable Goods - 1.01%
Avnet, Inc. ............................ 200,000 12,100,000
Wholesale Trade -- Nondurable Goods - 1.10%
Cardinal Health, Inc. .................. 275,000 13,165,625
TOTAL COMMON STOCKS - 88.97% $1,067,586,567
(Cost: $810,872,790)
PREFERRED STOCK - 0.96%
Communication
Cox Communications, Inc.,
7.0% (Convertible) .................... 170,000$ 11,560,000
(Cost: $8,500,000)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Chemicals and Allied Products- 0.82%
du Pont (E.I.) de Nemours and Company,
6.75%, 10-15-04 ....................... $10,000 9,868,900
Communication - 0.39%
Bell Telephone Company of Pennsylvania (The),
8.35%, 12-15-30 ....................... 3,000 3,248,940
Southwestern Bell Telephone Company,
5.77%, 10-14-03 ....................... 1,500 1,439,100
Total ................................. 4,688,040
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OFUNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Depository Institutions - 0.19%
Wachovia Corporation,
6.25%, 8-4-08 ......................... $ 2,500$ 2,301,850
Electric, Gas and Sanitary Services - 0.08%
California Infrastructure and Economic Development
Bank, Special Purpose Trust PG&E-1,
6.42%, 9-25-08 ........................ 1,000 967,920
Food and Kindred Products - 0.41%
Coca-Cola Enterprises Inc.,
6.7%, 10-15-36 ........................ 5,000 4,939,500
Health Services - 0.53%
Columbia/HCA Healthcare Corporation,
6.91%, 6-15-05 ........................ 7,000 6,405,000
Industrial Machinery and Equipment - 0.20%
Tyco International Group S.A.,
6.375%, 6-15-05 ....................... 2,500 2,341,950
Nondepository Institutions - 2.06%
Ford Motor Credit Company,
6.7%, 7-16-04 ......................... 22,000 21,532,500
General Electric Capital Corporation,
8.3%, 9-20-09 ......................... 3,000 3,197,460
Total ................................. 24,729,960
Transportation by Air - 0.31%
Southwest Airlines Co.,
7.875%, 9-1-07 ........................ 3,650 3,645,876
United States Postal Service - 0.18%
Postal Square Limited Partnership,
8.95%, 6-15-22 ........................ 1,855 2,098,095
TOTAL CORPORATE DEBT SECURITIES - 5.17% $ 61,987,091
(Cost: $62,835,957)
OTHER GOVERNMENT SECURITY - 0.25%
Supranational
International Bank for Reconstruction and
Development,
9.25%, 7-15-17 ........................ 2,500 $ 2,982,500
(Cost: $2,498,309)
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OFUNITED RETIREMENT SHARES, INC.
DECEMBER 31, 1999
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
Federal National Mortgage Association,
6.51%, 5-6-08 ......................... $ 7,500$ 7,066,425
Government National Mortgage Association,
6.5%, 8-15-28 ......................... 12,855 12,063,290
National Archives Facility Trust,
8.5%, 9-1-19 .......................... 4,122 4,514,195
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 1.97% $ 23,643,910
(Cost: $24,421,078)
TOTAL SHORT-TERM SECURITIES - 2.10% $ 25,171,192
(Cost: $25,171,192)
TOTAL INVESTMENT SECURITIES - 99.42% $1,192,931,260
(Cost: $934,299,326)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.58% 6,968,511
NET ASSETS - 100.00% $1,199,899,771
Notes to Schedule of Investments
*No dividends were paid during the preceding 12 months.
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, 1999
(In Thousands, Except for Per Share Amounts)
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $1,192,931
Cash ............................................ 2
Receivables:
Investment securities sold ...................... 7,633
Dividends and interest .......................... 1,898
Fund shares sold ................................ 1,552
Prepaid insurance premium ......................... 13
----------
Total assets .................................. 1,204,029
----------
Liabilities
Payable to Fund shareholders ..................... 3,690
Accrued service fee (Note 2) ..................... 201
Accrued transfer agency and
dividend disbursing (Note 2) .................... 139
Accrued management fee (Note 2) .................. 22
Accrued distribution fee (Note 2) ................ 15
Accrued accounting services fee (Note 2) ......... 8
Accrued shareholder servicing - Class Y (Note 2) . 1
Other ............................................ 53
----------
Total liabilities ............................. 4,129
----------
Total net assets ............................. $1,199,900
==========
Net Assets
$1.00 par value capital stock:
Capital stock ................................... $ 109,644
Additional paid-in capital....................... 742,737
Accumulated undistributed income:
Accumulated undistributed net investment income . 695
Accumulated undistributed net realized
gain on investment transactions ............... 88,192
Net unrealized appreciation in value of
investments ................................... 258,632
----------
Net assets applicable to outstanding
units of capital ............................. $1,199,900
==========
Capital shares outstanding:
Class A .......................................... 108,060
Class B ........................................... 550
Class C .......................................... 106
Class Y .......................................... 928
Capital shares authorized .......................... 300,000
Net asset value per share (net assets divided
by shares outstanding):
Class A .......................................... $10.94
Class B ........................................... $10.93
Class C .......................................... $10.93
Class Y .......................................... $10.94
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.STATEMENT OF OPERATIONS
For the Six Months Ended DECEMBER 31, 1999
(In Thousands)
Investment Income
Income (Note 1B):
Interest and amortization ....................... $ 5,512
Dividends ....................................... 2,661
--------
Total income .................................. 8,173
--------
Expenses (Note 2):
Investment management fee ....................... 3,428
Service fee:
Class A ....................................... 1,036
Class B ....................................... 2
Class C ....................................... ---
Transfer agency and dividend disbursing:
Class A ....................................... 679
Class B ....................................... 2
Class C ....................................... 1
Accounting services fee ......................... 45
Distribution fee:
Class A ....................................... 36
Class B ....................................... 5
Class C ....................................... 1
Custodian fees .................................. 27
Audit fees ...................................... 9
Legal fees ...................................... 9
Shareholder servicing - Class Y ................. 5
Other ........................................... 124
--------
Total expenses ................................ 5,409
--------
Net investment income ........................ 2,764
--------
Realized and Unrealized Gain on
Investments (Notes 1 and 3)
Realized net gain on investments ................. 158,436
Unrealized appreciation in value of investments
during the period ............................... 113,450
--------
Net gain on investments ....................... 271,886
--------
Net increase in net assets resulting
from operations ............................ $274,650
========
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.STATEMENT OF CHANGES IN NET ASSETS
(Dollars In Thousands)
For the For the
six months fiscal year
ended ended
December 31, June 30,
1999 1999
Increase in Net Assets ------------ -----------
Operations:
Net investment income ............... $ 2,764 $ 16,688
Realized net gain on investments .... 158,436 89,889
Unrealized appreciation
(depreciation) .................... 113,450 (5,039)
---------- --------
Net increase in net assets
resulting from operations ........ 274,650 101,538
---------- --------
Distributions to shareholders from (Note 1E):*
Net investment income:
Class A ........................... (3,662) (15,950)
Class B ........................... --- ---
Class C ........................... --- ---
Class Y ........................... (40) (74)
Realized gains on securities transactions:
Class A ........................... (157,318) (32,461)
Class B ........................... (576) ---
Class C ........................... (113) ---
Class Y ........................... (1,368) (138)
---------- --------
(163,077) (48,623)
---------- --------
Capital share transactions (Note 5) .. 194,991 12,084
---------- --------
Total increase ................... 306,564 64,999
Net Assets
Beginning of period .................. 893,336 828,337
---------- --------
End of period, including undistributed
net investment income of $695
and $1,633, respectively ............ $1,199,900 $893,336
========== ========
*See "Financial Highlights" on pages 15 - 18.
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 ----------------------------------
12/31/99 1999 1998 1997 1996 1995
-------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $9.84 $9.28 $9.14 $8.72 $8.26 $7.64
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... .03 .19 .24 .27 .26 .24
Net realized and
unrealized gain
on investments .. 2.82 .92 .99 1.08 .94 .86
----- ----- ----- ----- ----- -----
Total from investment
operations ....... 2.85 1.11 1.23 1.35 1.20 1.10
----- ----- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.04) (0.18) (0.25) (0.27) (0.27) (0.22)
From capital gains (1.71) (0.37) (0.84) (0.66) (0.47) (0.26)
----- ----- ----- ----- ----- -----
Total distributions. (1.75) (0.55) (1.09) (0.93) (0.74) (0.48)
----- ----- ----- ----- ----- -----
Net asset value,
end of period .... $10.94 $9.84 $9.28 $9.14 $8.72 $8.26
===== ===== ===== ===== ===== =====
Total return* ...... 30.10% 12.75% 14.45% 16.70% 14.93% 15.07%
Net assets, end of
period (in millions)$1,183 $890 $825 $716 $607 $528
Ratio of expenses to
average net assets 1.10%** 0.99% 0.93% 0.92% 0.89% 0.89%
Ratio of net
investment income
to average net
assets ........... 0.56%** 2.04% 2.57% 3.12% 3.01% 3.04%
Portfolio turnover
rate ............. 152.04% 122.58% 53.52% 39.55% 42.05% 48.62%
*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 B Shares
For a Share of Capital Stock Outstanding Throughout The Period:
For the
period
from
10/4/99*
through
12/31/99
-------
Net asset value,
beginning of period $10.12
-----
Income from investment
operations:
Net investment loss (0.01)
Net realized and
unrealized gain
on investments .. 2.53
-----
Total from investment
operations ....... 2.52
-----
Less distributions:
From net investment
income .......... (0.00)
From capital gains (1.71)
-----
Total distributions (1.71)
-----
Net asset value,
end of period .... $10.93
=====
Total return ....... 25.95%
Net assets, end of
period (in
millions) ........ $6
Ratio of expenses to
average net assets 2.24%**
Ratio of net investment
loss to average
net assets ....... -0.86%**
Portfolio turnover
rate ............. 152.04%***
*Commencement of operations.
**Annualized.
***For the six months ended December 31, 1999.
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.FINANCIAL HIGHLIGHTS
Class C Shares
For a Share of Capital Stock Outstanding Throughout The Period:
For the
period
from
10/4/99*
through
12/31/99
-------
Net asset value,
beginning of period $10.12
-----
Income from investment
operations:
Net investment loss (0.01)
Net realized and
unrealized gain
on investments .. 2.53
-----
Total from investment
operations ....... 2.52
-----
Less distributions:
From net investment
income .......... (0.00)
From capital gains (1.71)
-----
Total distributions (1.71)
-----
Net asset value,
end of period .... $10.93
=====
Total return ....... 25.95%
Net assets, end of
period (in
millions) ........ $1
Ratio of expenses to
average net assets 2.29%**
Ratio of net investment
loss to average
net assets ....... -0.92%**
Portfolio turnover
rate ............. 152.04%***
*Commencement of operations.
**Annualized.
***For the six months ended December 31, 1999.
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
six For the fiscal period
months year ended June 30, from 2/27/96*
ended --------------------- through
12/31/99 1999 1998 1997 6/30/96
-------- ------ ------ ------ --------
Net asset value,
beginning of period $ 9.85 $9.28 $9.14 $8.72 $8.68
------ ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... 0.06 .20 .25 .29 .10
Net realized and
unrealized gain
on investments .. 2.80 .94 .99 1.07 .06
------ ----- ----- ----- -----
Total from investment
operations ........ 2.86 1.14 1.24 1.36 .16
------ ----- ----- ----- -----
Less distributions:
From net investment
income........... (0.06) (0.20) (0.26) (0.28) (0.12)
From capital gains (1.71) (0.37) (0.84) (0.66) (0.00)
------ ----- ----- ----- -----
Total distributions. (1.77) (0.57) (1.10) (0.94) (0.12)
------ ----- ----- ----- -----
Net asset value,
end of period .... $10.94 $9.85 $9.28 $9.14 $8.72
====== ===== ===== ===== =====
Total return ....... 30.16% 13.11% 14.62% 16.87% 1.91%
Net assets, end of
period (in
millions) ........ $10 $3 $3 $3 $2
Ratio of expenses
to average net
assets ............ 0.90%** 0.75% 0.79% 0.78% 0.71%**
Ratio of net
investment income
to average net
assets ............ 0.74%** 2.32% 2.71% 3.28% 3.36%**
Portfolio
turnover rate ..... 152.04% 122.58% 53.52% 39.55% 42.05%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED RETIREMENT SHARES, INC.NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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 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.
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, 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 business day following 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 carryovers.
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
is payable by the Fund at the annual rates of: 0.70% of net assets up to $1
billion, 0.65% of net assets over $1 billion and up to $2 billion, 0.60% of net
assets over $2 billion and up to $3 billion, and 0.55% of net assets over $3
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, Class B and Class C shares, the Fund 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
$1,764,613. With respect to Class A, Class B and Class C shares, W&R paid sales
commissions of $1,140,124 and all expenses in connection with the sale of Fund
shares, except for registration fees and related expenses.
A contingent deferred sales charge (``CDSC'') may be assessed against a
shareholder's redemption amount of Class B and Class C shares and is paid to
W&R. The purpose of the deferred sales charge is to compensate W&R for the
costs incurred by W&R in connection with the sale of Fund shares.
With respect to Class B shares, the amount of the CDSC will be the
following percent of the total amount invested during a calendar year to acquire
the shares or the value of the shares redeemed, whichever is less. Redemption
at any time during the first calendar year of investment, 5%; the second
calendar year, 4%; the third calendar year, 3%; the fourth calendar year, 3%;
the fifth calendar year, 2%; the sixth calendar year, 1% and thereafter, 0%.
If Class C shares are sold within 12 months of buying these shares, a 1%
CDSC will be imposed.
The deferred sales charge will not be imposed on shares representing
payment of dividends or distributions or on amounts which represent an increase
in the value of the shareholder's account resulting from capital appreciation
above the amount paid for shares purchased during the deferred sales charge
period. During the period ended December 31, 1999, W&R received $461 in
deferred sales charges from Class B shares. No CDSC fees were received from
Class C shares.
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.
Under the Distribution and Service Plan adopted by the Fund for Class B and
Class C shares, respectively, the Fund may pay W&R, on an annual basis, a
service fee of up to 0.25% of the average daily net assets of the class to
compensate W&R for providing services to shareholders of that class and/or
maintaining shareholder accounts for that class and a distribution fee of up to
0.75% of the average daily net assets of the class to compensate W&R for
distributing the shares of that class. The Class B Plan and the Class C Plan
each permit W&R to receive compensation, through the distribution and service
fee, respectively, for its distribution activities for that class, which are
similar to the distribution activities described with respect to the Class A
Plan, and for its activities in providing personal services to shareholders of
that class and/or maintaining shareholder accounts of that class, which are
similar to the corresponding activities for which is it entitled to
reimbursement under the Class A Plan.
The Fund paid Directors' fees of $16,008, which are included in other
expenses.
W&R is a subsidiary of Waddell & Reed Financial, Inc., 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 $1,364,812,768 while proceeds from
maturities and sales aggregated $1,270,866,121. Purchases of short-term and
U.S. Government securities aggregated $1,260,914,280 and $89,450,356,
respectively. Proceeds from maturities and sales of short-term and U.S.
Government securities aggregated $1,250,459,721 and $160,501,602, respectively.
For Federal income tax purposes, cost of investments owned at December 31,
1999 was $934,422,462, resulting in net unrealized appreciation of $258,508,798,
of which $277,808,603 related to appreciated securities and $19,299,805 related
to depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $89,301,916 during its fiscal year ended June 30, 1999, which has been
distributed to the Fund's shareholders.
NOTE 5 -- Multiclass Operations
The Fund is authorized to offer four classes of shares, Class A, Class B,
Class C and Class Y, each of which have equal rights as to assets and voting
privileges. Class Y shares are not subject to a sales charge on purchases, are
not subject to a Rule 12b-1 Distribution and Service Plan and are subject to a
separate transfer agency and dividend disbursement services fee structure. A
comprehensive discussion of the terms under which shares of each 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 their
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity.
Transactions in capital stock are summarized below. Dollar amounts are in
thousands.
For the For the
six months fiscal year
ended ended
December 31, June 30,
1999 1999
------------ ------------
Shares issued from sale of shares:
Class A ............ 7,964,481 10,309,331
Class B ............. 499,436 ---
Class C ............. 95,492 ---
Class Y ............ 555,448 230,169
Shares issued from
reinvestment of dividends
and/or capital gains
distribution:
Class A ............ 15,506,922 5,446,253
Class B ............. 56,007 ---
Class C ............. 11,035 ---
Class Y ............ 84,360 24,055
Shares redeemed:
Class A ............ (5,814,698) (14,310,457)
Class B ............. (4,948) ---
Class C ............. (204) ---
Class Y ............ (51,690) (242,942)
---------- ----------
Increase in
outstanding capital
shares .............. 18,901,641 1,456,409
========== ==========
Value issued from sale
of shares:
Class A ............ $ 83,310 $ 93,629
Class B ............. 5,391 ---
Class C ............. 1,028 ---
Class Y ............ 5,741 2,066
Value issued from
reinvestment of dividends
and/or capital gains
distribution:
Class A ............ 159,378 48,028
Class B ............. 575 ---
Class C ............. 113 ---
Class Y ............ 867 212
Value redeemed:
Class A ............ (60,806) (129,651)
Class B ............. (56) ---
Class C ............. (2) ---
Class Y ............ (548) (2,200)
-------- --------
Increase in outstanding
capital ............ $194,991 $ 12,084
======== ========
<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, 1999, and the related statement of operations for the six-month
period then ended, the statements of changes in net assets for the six-month
period then ended and the fiscal year ended June 30, 1999, and the financial
highlights for the six-month period ended December 31, 1999, and for each of the
five fiscal years in the period ended June 30, 1999. 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 as of
December 31, 1999, by correspondence with the custodian. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of United
Retirement Shares, Inc. as of December 31, 1999, the results of its operations
for the six-month period then ended, the changes in its net assets for the six-
month period then ended and the fiscal year ended June 30, 1999, and the
financial highlights for the six-month period ended December 31, 1999, and for
each of the five fiscal years in the period ended June 30, 1999, in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
February 4, 2000
<PAGE>
DIRECTORS
Keith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, San Mateo, California
Linda K. Graves, Topeka, Kansas
Joseph Harroz, Jr., Norman, Oklahoma
John F. Hayes, Hutchinson, Kansas
Robert L. Hechler, Overland Park, Kansas
Henry J. Herrmann, Overland Park, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Ronald C. Reimer, Mission Hills, Kansas
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Frederick Vogel III, Milwaukee, Wisconsin
OFFICERS
Robert L. Hechler, President
Henry J. Herrmann, Vice President
Charles W. Hooper, Vice President
Theodore W. Howard, Vice President and Treasurer
Kristen A. Richards, Vice President and Secretary
Daniel C. Schulte, Vice President
<PAGE>
THE UNITED GROUP OF MUTUAL FUNDS
United Accumulative Fund
United Asset Strategy Fund, Inc.
United Bond Fund
United Cash Management, Inc.
United Continental Income Fund, Inc.
United Government Securities Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Income Fund
United International Growth Fund, Inc.
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United New Concepts Fund, Inc.
United Retirement Shares, Inc.
United Science and Technology Fund
United Small Cap Fund, Inc.
United Vanguard 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(12-99)
printed on recycled paper
