United
New Concepts
Fund, Inc.
ANNUAL
REPORT
----------------------------------------
For the fiscal year ended March 31, 1994
<PAGE>
FUND MANAGER'S LETTER
- -----------------------------------------------------------------
MARCH 31, 1994
Dear Shareholder:
This report relates to the operation of United New Concepts Fund, Inc. for
the fiscal year ended March 31, 1994. The following discussion, graphs and
tables provide you with information regarding the Fund's performance during that
period.
Market conditions during the Fund's past fiscal year were characterized by
sharp securities price changes at various times within particular industries,
such as the health care, gaming, telecommunications, technology and retail
trade. A steady, substantial flow of initial public offerings came to market
throughout the year.
To take advantage of the lively market conditions, we employed a three-
pronged strategy. First, we added cyclical stocks that we believe have
excellent growth potential, primarily semiconductor and automotive shares.
Second, we continued to invest in companies in the managed care field that we
feel will benefit from health care reform. Finally, expecting volatile swings
within many industry sectors, we maintained approximately 25% of the portfolio's
assets in cash.
The strategies and techniques we applied resulted in the direction of the
Fund's performance during its past fiscal year remaining fairly consistent with
that of the indexes charted on the following page. Those indexes reflect the
performance of securities that generally represent the small companies sector of
the stock market (the NASDAQ Industrials Index) and the universe of funds with
similar investment objectives (the Lipper Small Company Growth Fund Universe
Average). The Fund achieved several large gains from its stock holdings of
health care industry companies that were involved in mergers or acquisitions.
Strong gains were also realized from investments in the electronics and
communications technology sector.
We anticipate that economic growth will slow due to currently rising
interest rates. While this may temporarily depress stock valuations, it should
once again favor rapid growth companies over economically sensitive ones. We
expect to continue to pursue the same strategies we have employed in the recent
past in seeking to achieve the Fund's objectives.
We appreciate your continued confidence.
Respectfully,
Mark G. Seferovich
Manager, United New Concepts Fund
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
UNITED NEW CONCEPTS FUND, INC.,
The line graph which appears here is the paper version which was filed on Form
SE on May 24, 1994.
<PAGE>
SHAREHOLDER SUMMARY
- --------------------------------------------------------------
United New Concepts Fund, Inc.
PORTFOLIO STRATEGY:
Common Stock in new & OBJECTIVE: Long-term appreciation
emerging companies of capital.
Maximum 10% Foreign STRATEGY: Invests primarily in
Securities common stocks of relatively new or
Cash Reserves unseasoned companies.
The use of cash reserves (often invested
in money market securities) for
defensive purposes is a strategy that
may be utilized by the New Concepts Fund
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: 1983
DIVIDENDS: PAID ANNUALLY (December)
<PAGE>
PERFORMANCE SUMMARY
PER SHARE DATA
For the Fiscal Year Ended March 31, 1994
- ----------------------------------------
CAPITAL GAINS DISTRIBUTION $0.23
=====
NET ASSET VALUE ON
3/31/94 $10.94 adjusted to:$11.17 (A)
3/31/93 9.70
-----
CHANGE PER SHARE $1.47
=====
(A) This number includes the capital gains distribution of $0.23 paid in
December 1993 added to the actual net asset value on March 31, 1994.
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 3-31-94 8.59% 15.21%
5-year period ended 3-31-94 17.08% 18.47%
10-year period ended 3-31-94 12.44% 13.10%
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 March 31, 1994, United New Concepts Fund, Inc. had net assets totaling
$221,052,586 invested in a diversified portfolio of:
74.35% Common Stocks
25.65% Cash and Cash Equivalents
As a shareholder in United New Concepts Fund, Inc., for every $100 you had
invested on March 31, 1994, your Fund owned:
$43.25 Technological Stocks
25.65 Cash and Cash Equivalents
20.77 Consumer Stocks
8.29 Basic Industries Stocks
2.04 Financial Stock
<PAGE>
- -----------------------------------------------------------------
These STOCK CATEGORIES are provided as a reference only. Not all categories or
subcategories will be represented in a portfolio at all times. Refer to the
following pages for a more detailed portfolio listing.
BASIC INDUSTRIES
Airlines
Automotive
Building
Chemicals Major
Electrical Equipment
Engineering and Construction
Machinery
Manufacturers
Metals and Mining
Multi-Industry
Paper
Precious Metals
Railroad Equipment
Railroads
Shipping
Steel
Tire and Rubber
Trucking
CONSUMER
Beverages
Consumer Electronics and Appliances
Food and Related
Hospital Management
Household Products
Leisure Time
Packaging and Containers
Publishing and Advertising
Retailing
Services, Consumer and Business
Textiles and Apparel
Tobacco
ENERGY AND ENERGY-RELATED
Canadian Oil
Coal
Domestic Oil
International Oil
Oil Services
Propane
FINANCIAL
Banks and Savings and Loans
Financial
Insurance
PUBLIC UTILITIES
Electric
Gas
Pipelines
TECHNOLOGICAL
Aerospace
Biotechnology and Medical Services
Chemicals Specialty and Miscellaneous Technology
Computers and Office Equipment
Drugs and Hospital Supply
Electronics
Telecommunications
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1994
Shares Value
COMMON STOCKS
Automotive - 6.34%
Automotive Industries Holding, Inc.* ... 112,500 $ 3,375,000
Gentex Corporation* .................... 60,000 1,357,500
Harley-Davidson, Inc. .................. 130,000 5,931,250
O'Reilly Automotive, Inc.* ............. 45,000 1,254,375
Superior Industries International,
Inc. .................................. 60,000 2,092,500
Total ................................. 14,010,625
Biotechnology and Medical Services - 5.00%
American Healthcorp, Inc.* ............. 125,500 1,757,000
Pyxis Corporation* .................... 85,000 2,231,250
Target Therapeutics, Inc.* ............. 60,000 1,470,000
Tecnol Medical Products, Inc.* ......... 110,550 1,450,969
Ventritex, Inc.* ....................... 100,000 2,100,000
Zoll Medical Corporation* .............. 70,000 2,056,250
Total ................................. 11,065,469
Building - 0.74%
NCI Building Systems, Inc.* ............ 100,000 1,637,500
Computers and Office Equipment - 18.36%
America Online, Inc.* .................. 70,000 5,013,750
BMC Software* .......................... 65,000 4,005,625
Broderbund Software, Inc.* ............. 70,000 2,861,250
Cerner Corporation* .................... 29,000 1,203,500
Concord EFS, Inc.* ...................... 75,000 1,659,375
DSP Group, Inc.* ...................... 50,000 806,250
Digi International Inc.* ............... 120,000 2,100,000
Health Management Systems, Inc.* ....... 71,000 1,615,250
Information Resources, Inc.* ........... 80,000 1,370,000
Integrated Silicon Systems, Inc.* ..... 40,000 940,000
MEDSTAT Group (The)* ................... 150,000 2,306,250
Microchip Technology Incorporated* ..... 6,600 253,275
Microsoft Corporation* ................. 35,000 2,975,000
Parametric Technology Corporation* ..... 100,000 2,737,500
Pinnacle Micro, Inc.* .................. 85,000 1,338,750
QuickResponse Services, Inc.* .......... 100,000 2,137,500
Spectrum HoloByte* .................... 100,000 912,500
Synopsys, Inc.* ........................ 50,000 2,206,250
Wall Data Incorporated* ................ 50,000 2,225,000
Wonderware Corporation* ............... 110,000 1,925,000
Total ................................. 40,592,025
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1994
Shares Value
COMMON STOCKS (Continued)
Drugs and Hospital Supply - 3.62%
Circa Pharmaceuticals* ................. 100,000 $ 1,175,000
Copley Pharmaceutical, Inc.* ........... 70,000 1,671,250
Forest Laboratories Inc.* .............. 80,000 3,430,000
Pharmaceutical Marketing Services, Inc.* 66,000 965,250
Watson Pharmaceuticals, Inc.* .......... 50,000 750,000
Total ................................. 7,991,500
Electronics - 12.86%
Advanced Technology Materials, Inc.* ... 82,500 484,688
Applied Materials, Inc.* ............... 80,000 3,570,000
Atmel Corporation* ..................... 70,000 2,970,590
cisco Systems, Inc.* ................... 250,000 8,531,250
Lam Research* .......................... 50,000 1,562,500
Megatest Corporation* .................. 30,000 543,750
Micron Technology, Inc. ............... 80,000 6,680,000
Summa Four, Inc.* ...................... 25,100 847,125
TriQuint Semiconductor, Inc.* ......... 30,000 487,500
Xilinx, Inc.* ......................... 55,000 2,743,125
Total ................................. 28,420,528
Financial - 2.04%
Mercury Finance Company ................ 266,666 4,499,989
Hospital Management - 10.19%
Intergroup Healthcare Corporation* ..... 75,000 3,393,750
Physician Corporation of America* ..... 50,000 1,325,000
ReLife, Inc.* .......................... 60,000 1,147,500
Sierra Health Services, Inc.* ......... 60,000 1,522,500
United HealthCare Corporation .......... 260,000 11,115,000
Vencor Incorporated* ................... 120,100 4,023,350
Total ................................. 22,527,100
Household Products - 0.52%
Valence Technology, Inc.* ............. 80,000 1,140,000
Leisure Time - 0.43%
Iwerks Entertainment, Inc.* ............ 45,100 947,100
Machinery - 0.93%
Cognex Corporation* .................... 100,000 2,062,500
Retailing - 4.29%
Books-A-Million, Inc.* ................. 90,000 1,845,000
Fastenal Company ....................... 100,000 3,262,500
Leslie's Poolmart* .................... 48,000 540,000
Starbucks Corporation* ................. 60,000 1,462,500
Williams-Sonoma, Inc.* ................ 75,000 2,381,250
Total ................................. 9,491,250
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1994
Shares Value
COMMON STOCKS (Continued)
Services, Consumer and Business - 5.34%
CUC International Inc.* ................ 222,750 $ 7,016,625
Stewart Enterprises, Inc., Class A ..... 110,000 2,626,250
Thomas Group, Inc.* ................... 40,000 640,000
Varsity Spirit Corporation* ............ 95,000 1,531,875
Total ................................. 11,814,750
Steel - 0.28%
Webco Industries, Inc.* ............... 37,000 624,375
Telecommunications - 3.41%
A+ Communications Inc.* ................ 50,000 506,250
Applied Digital Access, Inc.* ......... 60,000 960,000
Glenayre Technologies, Inc.* ........... 80,000 2,910,000
MFS Communications Company, Inc.* ...... 60,000 1,732,500
Mobile Telecommunications Technologies
Corp.* ................................ 80,000 1,424,960
Total ................................. 7,533,710
TOTAL COMMON STOCKS - 74.35% $164,358,421
(Cost: $109,555,535)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Banks and Savings and Loans - 2.38%
U.S. Bancorp,
Master Note ........................... $5,256 5,256,000
Beverages - 1.05%
PepsiCo, Inc.,
3.6%, 4-12-94.......................... 2,330 2,327,437
Chemicals Major - 1.27%
Air Products & Chemicals Inc.,
3.53%, 4-18-94......................... 2,820 2,815,299
Financial - 6.18%
Associates Corporation of North America,
Master Note ........................... 3,293 3,293,000
B.A.T. Capital Corp.,
3.52%, 4-4-94.......................... 1,500 1,499,560
BHP Finance (U.S.A.) Inc.,
3.57%, 4-18-94 ........................ 1,500 1,497,471
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1994
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Financial (Continued)
Merrill Lynch & Co. Inc.:
3.42%, 4-8-94.......................... $4,400 $ 4,397,074
3.55%, 4-18-94......................... 550 549,078
PHH Corp.,
3.52%, 4-13-94......................... 2,425 2,422,155
Total ................................. 13,658,338
Food and Related - 2.33%
Golden Peanut Co.,
3.55%, 4-4-94 ......................... 300 299,911
Sara Lee Corporation,
Master Note ........................... 4,846 4,846,000
Total ................................. 5,145,911
Household Products - 1.11%
Procter & Gamble Company (The),
3.52%, 4-18-94......................... 2,450 2,445,928
Paper - 1.01%
Champion International Corporation,
3.7%, 4-7-94........................... 2,230 2,228,626
Publishing and Advertising - 2.42%
Times Mirror Company (The),
3.45%, 4-5-94.......................... 5,350 5,347,949
Retailing - 3.92%
K Mart Corporation,
3.87%, 5-2-94 ......................... 8,700 8,671,007
Telecommunications - 0.36%
Siemens Corp.,
3.5%, 4-15-94 ......................... 800 798,911
Tobacco - 4.43%
Philip Morris Cos. Inc.,
3.4%, 4-13-94.......................... 9,800 9,788,893
TOTAL SHORT-TERM SECURITIES - 26.46% $ 58,484,299
(Cost: $58,484,299)
TOTAL INVESTMENT SECURITIES - 100.81% $222,842,720
(Cost: $168,039,834)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.81%) (1,790,134)
NET ASSETS - 100.00% $221,052,586
See Notes to Schedule of Investments on page 9.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1994
Notes To Schedule of Investments
*No income 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 NEW CONCEPTS FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1994
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $222,842,720
Cash ............................................ 38,388
Receivables:
Fund shares sold ................................ 1,041,128
Dividends and interest .......................... 34,823
Prepaid insurance premium ........................ 8,280
------------
Total assets .................................. 223,965,339
------------
Liabilities
Payable for investment securities purchased ...... 2,244,991
Payable for Fund shares redeemed ................. 557,017
Accrued transfer agency and dividend disbursing .. 46,488
Accrued service fee .............................. 43,378
Accrued accounting services fee .................. 4,167
Other ............................................ 16,712
------------
Total liabilities ............................. 2,912,753
------------
Total net assets ............................. $221,052,586
============
Net Assets
$1.00 par value capital stock, authorized --
100,000,000; shares outstanding -- 20,201,157
Capital stock ................................... $ 20,201,157
Additional paid-in capital ...................... 136,420,866
Accumulated undistributed income:
Accumulated undistributed net realized gain
on investment transactions .................... 9,627,677
Net unrealized appreciation in value of
investments at end of period .................. 54,802,886
------------
Net assets applicable to outstanding units
of capital ................................... $221,052,586
============
Net asset value per share (net assets divided by
shares outstanding) .............................. $10.94
Sales load (offering price x 5.75%) ................ .67
------
Offering price per share (net asset value
divided by 94.25%) ............................... $11.61
======
On sales of $100,000 or more the sales load
is reduced as set forth in the Prospectus.
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended MARCH 31, 1994
Investment Income
Income:
Interest (Note 5) ............................... $ 2,087,582
Dividends ....................................... 147,850
-----------
Total income .................................. 2,235,432
-----------
Expenses (Note 2):
Investment management fee ....................... 1,577,044
Transfer agency and dividend disbursing.......... 572,140
Service fee ..................................... 120,619
Accounting services fee ......................... 46,667
Custodian fees .................................. 19,909
Audit fees ...................................... 19,487
Legal fees ...................................... 3,590
Other ........................................... 95,167
-----------
Total expenses ................................ 2,454,623
-----------
Net investment loss .......................... (219,191)
-----------
Realized and Unrealized Gain on Investments
Realized net gain on investments ................. 12,880,184
Unrealized appreciation in value of investments
during the period ............................... 14,982,107
-----------
Net gain on investments ......................... 27,862,291
-----------
Net increase in net assets resulting from
operations ................................... $27,643,100
===========
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year
ended March 31,
------------------------
1994 1993
------------ ------------
Increase in Net Assets
Operations:
Net investment income (loss) ........$ (219,191) $ 244,449
Realized net gain on investments .... 12,880,184 4,475,529
Unrealized appreciation ............. 14,982,107 479,580
------------ ------------
Net increase in net assets
resulting from operations ........ 27,643,100 5,199,558
------------ ------------
Dividends to shareholders from:*
Net investment income ............... --- (195,168)
Realized gains on securities
transactions ...................... (4,451,708) ---
------------ ------------
(4,451,708) (195,168)
------------ ------------
Capital share transactions:
Proceeds from sale of shares
(3,653,867 and 4,309,400
shares, respectively) ............. 39,432,809 40,649,228
Proceeds from reinvestment of
dividends and/or capital gains
distribution (410,178 and 19,176
shares, respectively) ............. 4,417,621 193,098
Payments for shares redeemed
(2,419,485 and 1,964,530
shares, respectively) ............. (25,948,382) (18,313,945)
------------ ------------
Net increase in net assets
resulting from capital share
transactions ..................... 17,902,048 22,528,381
------------ ------------
Total increase ................... 41,093,440 27,532,771
Net Assets
Beginning of period ............ ...... 179,959,146 152,426,375
------------ ------------
End of period ........................$221,052,586 $179,959,146
============ ============
Undistributed net
investment income .................. $--- $135,600
==== ========
*See "Financial Highlights" on page .
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
FINANCIAL HIGHLIGHTS
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the fiscal year
ended March 31,
------------------------------------
1994 1993 1992 1991 1990
----- ----- ----- ----- -----
Net asset value,
beginning of
period ........... $ 9.70 $9.41 $6.84 $5.21 $5.06
------ ----- ----- ----- -----
Income from investment
operations:
Net investment
income (loss) ... (0.01) .01 .02 .07 .14
Net realized and
unrealized gain
on investments .. 1.48 .29 2.57 1.65 .19
------ ----- ----- ----- -----
Total from investment
operations ....... 1.47 .30 2.59 1.72 .33
------ ----- ----- ----- -----
Less distributions:
Dividends from
net investment
income .......... (0.00) (0.01) (0.02) (0.09) (0.18)
Distribution from
capital gains ... (0.23) (0.00) (0.00) (0.00) (0.00)
------ ----- ----- ----- -----
Total distributions (0.23) (0.01) (0.02) (0.09) (0.18)
------ ----- ----- ----- -----
Net asset value,
end of period .... $10.94 $9.70 $9.41 $6.84 $5.21
====== ===== ===== ===== =====
Total return* ...... 15.21% 3.19% 37.83% 33.62% 6.59%
Net assets, end
of period (000
omitted) ..........$221,053$179,959$152,426$78,274$68,111
Ratio of expenses
to average net
assets ........... 1.19% 1.18% 1.16% 1.36% 1.27%
Ratio of net investment
income to average
net assets ....... -0.11% 0.15% 0.22% 1.12% 2.39%
Portfolio turnover
rate ............. 55.23% 57.10% 71.56% 89.64%130.41%
Total return calculated without taking into account the sales load deducted on
an initial purchase.
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1994
NOTE 1 -- Significant Accounting Policies
United New Concepts Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
A. Security valuation -- Each stock and convertible bond is valued at the
latest sale price thereof on the last business day of the fiscal period as
reported by the principal securities exchange on which the issue is traded
or, if no sale is reported for a stock, the average of the latest bid and
asked prices. Bonds, other than convertible bonds, are valued using a
pricing system provided by a major dealer in bonds. Convertible bonds are
valued using this pricing system only on days when there is no sale
reported. Stocks which are traded over-the-counter are priced using NASDAQ
(National Association of Securities Dealers Automated Quotations) which
provides information on bid and asked or closing prices quoted by major
dealers in such stocks. Short-term debt securities are valued at amortized
cost, which approximates market.
B. Security transactions and related investment income -- Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Securities gains and losses are calculated on the
identified cost basis. Dividend income is recorded on the ex-dividend
date. Interest income is recorded on the accrual basis. See Note 3 --
Investment Security Transactions.
C. Federal income taxes -- It is the Fund's policy to distribute all of its
taxable income and capital gains to its shareholders and otherwise qualify
as a regulated investment company under the Internal Revenue Code. In
addition, the Fund intends to pay distributions as required to avoid
imposition of excise tax. Accordingly, provision has not been made for
Federal income taxes. See Note 4 -- Federal Income Tax Matters.
D. Dividends and distributions -- Dividends and distributions to shareholders
are recorded by the Fund on the record date. During the period ended March
31, 1994, the Fund adopted Statement of Position 93-2 Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. Accordingly,
permanent book and tax basis differences relating to future shareholder
distributions have been reclassified to additional paid-in capital. As of
April 1, 1993, the cumulative effect of such differences totaling $300 was
reclassified from accumulated undistributed net realized gain on investment
transactions to additional paid-in capital. In addition, at March 31, 1994
$83,591 was reclassified from accumulated undistributed net investment
income to accumulated undistributed net realized gain on investment
transactions to more appropriately conform book and tax treatment of
dividend distributions paid to shareholders. Net investment income, net
realized gains and net assets were not affected by this change.
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 .35% 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 $10.9 billion of
combined net assets at March 31, 1994) 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
Presently, the Fund operates under state expense requirements which limit
the amount of aggregate annual expenses, adjusted for certain excess custodian
fees, that the Fund may incur during its fiscal year. The Manager will
reimburse the Fund for any expenses in excess of the limitation. No such
reimbursement is required for the period ended March 31, 1994.
The Fund also pays WARSCO a monthly per account charge for transfer agency
and dividend disbursement services of $1.0208 for each shareholder account which
was in existence at any time during the prior month, plus $0.30 for each account
on which a dividend or distribution of cash or shares had a record date in that
month. The Fund also reimburses W&R and WARSCO for certain out-of-pocket costs.
As principal underwriter for the Fund's shares, W&R received direct and
indirect gross sales commissions (which are not an expense of the Fund) of
$1,435,848, out of which W&R paid sales commissions of $810,854 and all expenses
in connection with the sale of Fund shares, except for registration fees and
related expenses.
On September 28, 1993, shareholders of the Fund approved the adoption of a
12b-1 Service Plan with a maximum fee of .25%. The Plan went into effect
October 1, 1993.
The Fund paid Directors' fees of $7,534.
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 Security Transactions
Purchases of investment securities, other than U.S. Government and short-
term securities, aggregated $100,040,077 while proceeds from maturities and
sales aggregated $77,752,519. Purchases of short-term securities aggregated
$524,273,131 while proceeds from maturities and sales aggregated $536,661,319.
There was no gain or loss on the sale of short-term securities. No U.S.
Government securities were bought or sold during the period ended March 31,
1994.
For Federal income tax purposes, cost of investments owned at March 31,
1994 was $168,260,686, resulting in net unrealized appreciation of $54,582,034,
of which $60,725,426 related to appreciated securities and $6,143,392 related to
depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $13,051,036 during the year ended March 31, 1994, of which a portion was paid
to shareholders during the period ended March 31, 1994. Remaining capital gain
net income will be distributed to the Fund's shareholders.
NOTE 5 -- Securities Loaned
It is the Fund's policy to make loans of portfolio securities under
agreements which must be continuously secured by collateral at 100% of the
market value of the securities loaned. The Fund derives income from its
securities lending activities. These agreements may be terminated by the
borrower or the Fund upon proper notice. In the event the borrower fails to
deliver the securities within five business days, the Fund has the right to use
the collateral to purchase similar or other securities. During the period ended
March 31, 1994, the Fund derived approximately $7,500 of income, net of related
expenses, from its securities lending activities.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
United New Concepts Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of United New Concepts Fund, Inc. (the
"Fund") at March 31, 1994, the results of its operations for the year then ended
and the changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at March
31, 1994 by correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Kansas City, Missouri
April 29, 1994
- -----------------------------------------------------------------
<PAGE>
INCOME TAX INFORMATION
The amounts of the dividend and capital gain below, multiplied by the number of
shares owned by you on the record date, will give you the total amount to be
reported in your Federal income tax return for the year 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
- ---------------- ------------------------------------------------
12-17-93$0.2320 $0.0668 $0.1652 $0.0000 $0.0668 $0.1652
------- ------- ------- ------ ------- -------
Total $0.2320 $0.0668 $0.1652 $0.0000 $0.0668 $0.1652
======= ======= ======= ======= ======= =======
CORPORATION DEDUCTIONS -- Under Federal tax law, the amounts reportable as
Qualifying Dividends are eligible for the dividends received deduction in the
year received as provided by Section 243 of the Internal Revenue Code.
The tax status of dividends paid will be reported to you on Form 1099-DIV after
the close of the applicable calendar year.
Shareholders are advised to consult with their tax advisor concerning the tax
treatment of dividends and distributions from the Fund.
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
Jay B. Dillingham, Kansas City, Missouri
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Los Angeles, California
Doyle Patterson, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel, III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
Leslie S. Wright, Birmingham, Alabama
OFFICERS
Keith A. Tucker, President
Robert L. Hechler, Vice President
Henry J. Herrmann, Vice President
Theodore W. Howard, Vice President and Treasurer
Rodney O. McWhinney, Vice President
Sharon K. Pappas, Vice President and Secretary
Mark G. Seferovich, Vice President
Carl E. Sturgeon, Vice President
This report is submitted for the general information of the shareholders of
United New Concepts Fund, Inc. It is not authorized for distribution to
prospective investors in the Fund unless accompanied with or preceded by the
United New Concepts Fund, 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 Continental Income Fund, Inc.
United Income Fund
United Municipal High Income Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
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.
United Retirement Shares, Inc.
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
(913) 236-1303
NUR1012A(3-94)
printed on recycled paper
