United
New Concepts
Fund, Inc.
ANNUAL
REPORT
----------------------------------------
For the fiscal year ended March 31, 1996
<PAGE>
FUND MANAGER'S LETTER
- -----------------------------------------------------------------
MARCH 31, 1996
Dear Shareholder:
This report relates to the operation of United New Concepts Fund for the fiscal
year ended March 31, 1996. The following discussion, graphs and tables provide
you with information regarding the Fund's performance during that period.
During the first half of the fiscal year, strong corporate earnings and
declining interest rates contributed to increases in stock prices, particularly
those of growth companies. Decelerating profit growth and indications of a
slowing economy during the second half of the fiscal year resulted in a
corresponding general slowing of performance for growth and small cap stocks as
investors turned to larger and more stable companies.
The Fund continued to pursue a strategy of identifying companies in market
niches where expectations of twenty-five percent (25%) three to five year
sustainable growth in revenues and profits appear attainable. Upon identifying
such companies, the Fund has employed a buy and hold strategy to take advantage
of appreciation in the value of their stock.
The strategies and techniques we applied resulted in the direction of the Fund's
performance 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).
As 1996 began, market analysts were predicting slow economic growth and lower
corporate earnings, accompanied by low inflation and interest rates. However,
recent government statistics have reflected stronger-than-expected employment
growth. These employment figures have fueled uncertainty regarding the
direction of the economy and of inflation and interest rates. Until the
economic picture becomes more clear, we expect to pursue a fairly cautious
strategy.
Thank you very much for your continued support and confidence in our
organization.
Respectfully,
Mark G. Seferovich
Manager, United New Concepts Fund, Inc.
<PAGE>
Comparison of Change in Value of $10,000 Investment in
United New Concepts Fund, Inc. Class A Shares,
The Nasdaq Industrials Index,
and The Lipper Small Company Growth Fund Universe Average
United Lipper
New Small
Concepts Company
Fund, Nasdaq Growth Fund
ClassIndustrials Universe
A Shares Index Average
------------------ ----------
03/31/86 Purchase9,425 10,000 10,000
03/31/87 11,250 12,084 11,321
03/31/88 9,554 10,209 10,004
03/31/89 9,329 10,607 11,249
03/31/90 9,944 11,987 12,610
03/31/91 13,287 14,502 14,422
03/31/92 18,313 17,988 17,761
03/31/93 18,898 18,987 19,875
03/31/94 21,773 20,729 22,050
03/31/95 26,237 21,332 23,749
03/31/96 34,157 27,268 31,329
- ---------- Lipper Small Company Growth Fund Universe Average -- $31,329
+++++ NASDAQ Industrials Index -- $27,268
===== United New Concepts Income Fund, Class A Shares* -- $34,157
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund.
Annual Average Total Return+
Class A++ Class Y
-----------------------------
Year Ended
3/31/96 22.70% N/A
5 Years Ended
3/31/96 19.36% N/A
10 Years Ended
3/31/96 13.07% N/A
Aggregate Total
Return for Life
of Class Y +++ N/A 5.44%
+ Total return for the Class Y shares may be greater than that of the Class A
shares because the Fund's Class Y shares are not subject to a sales load or
12b-1 fees.
++ Performance data quoted represents past performance and is based on
deduction of a 5.75% sales load on the initial purchase in each of the
three periods. Investment return and principal value will fluctuate and an
investor's shares, when redeemed, may be worth more or less than their
original cost.
+++ 9/6/95 (the date on which Fund Class Y shares were first acquired by
shareholders) through 3/31/96.
Past performance is not predictive of future performance. Indexes are
unmanaged.
<PAGE>
SHAREHOLDER SUMMARY
- --------------------------------------------------------------
United New Concepts Fund, Inc.
PORTFOLIO STRATEGY:
Common Stock in new & OBJECTIVE: Growth of capital.
emerging companies
STRATEGY: Invests primarily in
Maximum 10% Foreign common stocks of
Securities relatively new or
unseasoned companies,
Cash Reserves companies in their early stages of
development or smaller companies in new
or emerging industries. (May purchase
securities subject to repurchase
agreements. May invest in certain
options and futures.)
The use of cash reserves (often invested
in money market securities) for
defensive purposes is a strategy that
may be utilized by 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
SCHEDULED DIVIDEND FREQUENCY: ANNUALLY (December)
<PAGE>
PERFORMANCE SUMMARY - Class A Shares
PER SHARE DATA
For the Fiscal Year Ended March 31, 1996
- ----------------------------------------
DIVIDENDS PAID $0.032
======
CAPITAL GAINS DISTRIBUTION $0.428
======
NET ASSET VALUE ON
3/31/96 $15.46 adjusted to: $15.89 (A)
3/31/95 12.25
------
CHANGE PER SHARE $ 3.64
======
(A)This number includes the capital gains distribution of $0.428 paid in
December 1995 added to the actual net asset value on March 31, 1996.
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 3-31-96 22.70% 30.18%
5-year period ended 3-31-96 19.36% 20.78%
10-year period ended 3-31-96 13.07% 13.74%
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, 1996, United New Concepts Fund, Inc. had net assets totaling
$498,859,246 invested in a diversified portfolio of:
71.10% Common Stocks
28.90% Cash and Cash Equivalents
As a shareholder of United New Concepts Fund, Inc., for every $100 you had
invested on March 31, 1996, your Fund owned:
$37.08 Services Stocks
28.90 Cash and Cash Equivalents
16.14 Manufacturing Stocks
8.77 Finance, Insurance and Real Estate Stocks
6.81 Wholesale and Retail Trade Stocks
2.30 Transportation, Communication, Electric
and Sanitary Services Stocks
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1996
Shares Value
COMMON STOCKS
Apparel and Other Textile Products - 0.44%
Varsity Spirit Corporation ............. 142,500 $ 2,173,125
Automotive Dealers and Service Stations - 0.56%
O'Reilly Automotive, Inc.* ............. 80,000 2,810,000
Building Materials and Garden Supplies - 2.08%
Central Tractor Farm & Country, Inc.* ... 165,000 2,640,000
Fastenal Company ....................... 200,000 7,725,000
Total ................................. 10,365,000
Business Services - 16.19%
America Online, Inc.* .................. 500,000 28,093,500
CMG Information Services, Inc.* ........ 170,000 6,651,250
CUC International Inc.* ................ 400,000 11,700,000
Cerner Corporation* .................... 154,700 3,558,100
HCIA Inc.* ............................. 65,800 3,043,250
Health Management Systems, Inc.* ....... 180,000 5,085,000
IMNET Systems, Inc.* ................... 85,000 2,550,000
National Instruments Corporation* ...... 50,000 1,068,750
Objective Systems Integrators, Inc.* .. 28,600 1,315,600
PHAMIS, Inc.* .......................... 182,000 3,059,784
Pyxis Corporation* .................... 250,000 6,437,500
QuickResponse Services, Inc.* .......... 141,000 3,630,750
Shiva Corporation* ..................... 50,000 4,550,000
Total ................................. 80,743,484
Chemicals and Allied Products - 0.97%
Watson Pharmaceuticals Inc.* ........... 120,400 4,831,050
Communication - 2.30%
Intermedia Communications of Florida,
Inc.* ................................ 100,000 1,818,700
MFS Communications Company, Inc.* ...... 125,000 7,789,000
Mobile Telecommunication Technologies
Corp.* ................................ 121,000 1,875,500
Total ................................. 11,483,200
Depository Institutions - 1.33%
Concord EFS, Inc.* .................... 253,125 6,644,531
Eating and Drinking Places - 0.44%
Longhorn Steaks, Inc.* ................. 95,000 2,173,125
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1996
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment - 4.58%
Ascend Communications, Inc.* ........... 260,000 $ 14,023,620
Atmel Corporation* ..................... 64,800 1,652,400
Fusion Systems Corporation* ............ 105,000 2,611,875
LSI Logic Corporation* ................. 170,000 4,547,500
Total ................................. 22,835,395
Furniture and Home Furnishings Stores - 1.07%
Movie Gallery, Inc.* ................... 121,000 3,100,625
Williams-Sonoma, Inc.* ................ 100,000 2,256,200
Total ................................. 5,356,825
Health Services - 5.36%
ARV Assisted Living, Inc.* ............. 80,000 1,340,000
American Healthcorp, Inc.* ............. 200,000 1,775,000
Assisted Living Concepts, Inc.* ........ 100,000 1,837,500
HEALTHSOUTH Corporation* ............... 84,636 2,877,624
Inphynet Medical Management Inc.* ...... 200,000 3,575,000
Physicians Resource Group, Inc.* ....... 150,000 4,312,500
Sierra Health Services, Inc.* ......... 136,000 4,437,000
Vencor, Incorporated* .................. 190,150 6,560,175
Total ................................. 26,714,799
Industrial Machinery and Equipment - 6.78%
cisco Systems, Inc.* ................... 500,000 23,218,500
Digi International Inc.* ............... 150,000 4,106,250
MicroTouch Systems, Inc.* .............. 270,000 4,050,000
Silicon Valley Group, Inc.* ............ 100,000 2,425,000
Total ................................. 33,799,750
Instruments and Related Products - 2.85%
Boston Scientific Corporation* ......... 71,280 3,278,880
LUNAR CORPORATION ...................... 90,000 3,881,250
St. Jude Medical, Inc.* ................ 120,000 4,477,440
Tecnol Medical Products, Inc.* ......... 145,550 2,583,513
Total ................................. 14,221,083
Insurance Carriers - 3.88%
PacifiCare Health Systems, Inc.* ....... 73,700 6,273,712
United HealthCare Corporation .......... 213,000 13,099,500
Total ................................. 19,373,212
Miscellaneous Retail - 3.28%
Books-A-Million, Inc.* ................. 180,000 2,002,500
Leslie's Poolmart* .................... 95,917 1,282,890
OmniCare, Inc. ......................... 243,200 13,102,400
Total ................................. 16,387,790
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1996
Shares Value
COMMON STOCKS (Continued)
Nondepository Institutions - 1.13%
Mercury Finance Company ................ 399,999 $ 5,649,986
Prepackaged Software - 12.99%
Adobe Systems Incorporated ............. 130,000 4,184,310
Broderbund Software, Inc.* ............. 112,200 4,207,500
Dendrite International, Inc.* .......... 152,000 3,325,000
Elcom International, Inc.* ............. 200,000 1,462,400
Electronic Arts Inc.* .................. 60,000 1,593,720
Expert Software, Inc.* ................. 275,000 3,884,375
GT Interactive Software Corp.* ......... 150,000 1,593,750
HPR Inc.* .............................. 99,900 3,946,050
Macromedia, Inc.* ...................... 80,000 3,430,000
Medic Computer Systems, Inc.* .......... 30,000 2,278,110
Microsoft Corporation* ................. 40,000 4,122,480
Parametric Technology Corporation* ..... 380,000 14,843,560
Premenos Technology Corp.* ............. 125,000 2,296,875
Quarterdeck Corporation* ............... 170,000 2,496,790
Synopsys, Inc.* ........................ 140,000 4,480,000
Wall Data Incorporated* ................ 200,000 3,125,000
Wonderware Corporation* ............... 150,000 3,543,750
Total.................................. 64,813,670
Real Estate - 1.54%
Stewart Enterprises, Inc., Class A ..... 179,100 7,690,017
Stone, Clay and Glass Products - 0.55%
Department 56, Inc.* ................... 125,000 2,734,375
Transportation Equipment - 2.78%
Gentex Corporation* .................... 60,000 1,770,000
Harley-Davidson, Inc. .................. 260,000 10,107,500
Superior Industries International,
Inc. .................................. 80,000 2,000,000
Total ................................. 13,877,500
TOTAL COMMON STOCKS - 71.10% $354,677,917
(Cost: $182,226,974)
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES
Auto Repair, Services and Parking - 1.26%
PHH Corp.,
5.31%, 4-22-96......................... $ 6,320 $ 6,300,424
Chemicals and Allied Products - 7.22%
Ciba-Geigy Corp.:
5.26%, 4-15-96......................... 4,000 3,991,818
5.26%, 4-22-96......................... 8,800 8,772,999
Hercules, Inc.,
5.35%, 4-26-96......................... 8,650 8,617,863
PPG Industries, Inc.:
5.2%, 4-8-96........................... 7,200 7,192,720
5.25%, 4-8-96.......................... 7,465 7,457,379
Total.................................. 36,032,779
Communication - 1.31%
GTE Corporation,
5.49%, 4-26-96......................... 6,550 6,525,028
Depository Institutions - 5.47%
Barclays Bank PLC,
5.27%, 5-9-96.......................... 15,485 15,398,860
U.S. Bancorp,
Master Note............................ 11,911 11,911,000
Total.................................. 27,309,860
Electric, Gas and Sanitary Services - 7.31%
Baltimore Gas and Electric Company,
0.0%, 4-23-96.......................... 435 433,602
Commonwealth Edison Co.,
5.38%, 4-1-96.......................... 5,000 5,000,000
Pacific Gas & Electric Co.,
5.42%, 4-2-96.......................... 5,790 5,789,128
Potomac Electric Power Co.,
5.5%, 4-8-96........................... 13,125 13,110,963
Public Service Company of Colorado:
5.55%, 4-11-96......................... 5,775 5,766,097
5.57%, 5-8-96.......................... 3,430 3,410,364
Public Service Electric & Gas Co.,
5.53%, 5-17-96......................... 2,960 2,939,084
Total.................................. 36,449,238
Electronic and Other Electric Equipment - 1.02%
Cooper Industries, Inc.,
5.3%, 4-4-96........................... 5,070 5,067,761
Food and Kindred Products - 0.25%
General Mills, Inc.,
Master Note............................ 1,271 1,271,000
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Instruments and Related Products - 0.82%
Baxter International Inc.,
5.45%, 5-1-96.......................... $ 4,090 $ 4,071,425
Nondepository Institutions - 1.18%
Textron Financial Corp.,
5.45%, 4-2-96.......................... 1,150 1,149,826
Transamerica Finance Corporation,
5.18%, 4-5-96.......................... 4,745 4,742,269
Total.................................. 5,892,095
Petroleum and Coal Products - 0.34%
Kerr-McGee Credit Corp.,
5.63%, 5-1-96.......................... 1,700 1,692,024
Printing and Publishing - 0.56%
American Greetings Corporation,
5.4%, 4-9-96........................... 2,820 2,816,616
Tobacco Products - 0.20%
B.A.T. Capital Corp.,
5.27%, 4-4-96.......................... 975 974,572
Transportation Equipment - 1.70%
Echlin, Inc.,
5.27%, 4-12-96......................... 8,490 8,476,329
Wholesale Trade - Nondurable Goods - 0.36%
Sara Lee Corporation,
Master Note............................ 1,789 1,789,000
TOTAL SHORT-TERM SECURITIES - 29.00% $144,668,151
(Cost: $144,668,151)
TOTAL INVESTMENT SECURITIES - 100.10% $499,346,068
(Cost: $326,895,125)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.10%) (486,822)
NET ASSETS - 100.00% $498,859,246
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, 1996
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $499,346,068
Cash ............................................ 3,043
Receivables:
Fund shares sold ................................ 1,384,256
Dividends and interest .......................... 30,347
Prepaid insurance premium ........................ 7,612
------------
Total assets .................................. 500,771,326
------------
Liabilities
Payable for Fund shares redeemed ................. 975,573
Payable for investment securities purchased ...... 644,550
Accrued service fee .............................. 154,320
Accrued transfer agency and dividend disbursing .. 83,181
Accrued accounting services fee .................. 5,000
Other ............................................ 49,456
------------
Total liabilities ............................. 1,912,080
------------
Total net assets ............................. $498,859,246
============
Net Assets
$1.00 par value capital stock
Capital stock ................................... $ 32,258,561
Additional paid-in capital ...................... 277,073,794
Accumulated undistributed income:
Accumulated undistributed net investment
income ........................................ 675,080
Accumulated undistributed net realized gain
on investment transactions .................... 16,400,868
Net unrealized appreciation in value of
investments at end of period .................. 172,450,943
------------
Net assets applicable to outstanding units
of capital ................................... $498,859,246
============
Net asset value per share (net assets divided
by shares outstanding)
Class A .......................................... $15.46
Class Y .......................................... $15.47
Capital shares outstanding
Class A .......................................... 31,793,840
Class Y .......................................... 464,721
Capital shares authorized .......................... 200,000,000
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended MARCH 31, 1996
Investment Income
Income:
Interest ........................................ $ 5,756,447
Dividends ....................................... 266,625
-----------
Total income .................................. 6,023,072
-----------
Expenses (Note 2):
Investment management fee ....................... 3,091,040
Transfer agency and dividend disbursing - Class A 878,301
Service fee - Class A ........................... 603,601
Accounting services fee ......................... 57,500
Audit fees ...................................... 23,480
Custodian fees .................................. 22,315
Legal fees ...................................... 12,208
Shareholder servicing - Class Y.................. 1,655
Other ........................................... 165,180
-----------
Total expenses ................................ 4,855,280
-----------
Net investment income ........................ 1,167,792
-----------
Realized and Unrealized Gain on Investments
Realized net gain on investments ................. 23,180,531
Unrealized appreciation in value of investments
during the period ............................... 81,497,533
-----------
Net gain on investments ......................... 104,678,064
-----------
Net increase in net assets resulting from
operations ................................... $105,845,856
===========
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year
ended March 31,
-------------------------
1996 1995
Increase in Net Assets ------------ ------------
Operations:
Net investment income ...............$ 1,167,792 $ 751,952
Realized net gain on investments .... 23,180,531 13,964,808
Unrealized appreciation ............. 81,497,533 36,150,524
------------ ------------
Net increase in net assets
resulting from operations ........ 105,845,856 50,867,284
------------ ------------
Dividends to shareholders from:*
Net investment income:
Class A ........................... (912,026) (329,841)
Class Y ........................... (2,797) ---
Realized gains on securities transactions:
Class A ........................... (12,198,918) (18,140,872)
Class Y ........................... (32,358) ---
------------ ------------
(13,146,099) (18,470,713)
------------ ------------
Capital share transactions:
Proceeds from sale of shares:
Class A (63,533,003 and 20,385,599
shares, respectively) ............ 921,129,691 235,348,087
Class Y (471,439 and 0
shares, respectively) ............ 7,171,949 ---
Proceeds from reinvestment of dividend
and/or capital gains distribution:
Class A (895,245 and 1,662,837
shares, respectively) ............ 13,052,675 18,341,093
Class Y (2,411 and 0
shares, respectively) ............ 35,155 ---
Payments for shares redeemed:
Class A (57,415,916 and 17,468,085
shares, respectively) ............(838,714,963) (203,514,427)
Class Y (9,129 and 0
shares, respectively) ............ (138,928) ---
------------ ------------
Net increase in net assets
resulting from capital share
transactions ..................... 102,535,579 50,174,753
------------ ------------
Total increase ................... 195,235,336 82,571,324
Net Assets
Beginning of period ............ ...... 303,623,910 221,052,586
------------ ------------
End of period ........................$498,859,246 $303,623,910
============ ============
Undistributed net
investment income .................. $675,080 $422,111
========== ========
*See "Financial Highlights" on pages 15 - 16.
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
FINANCIAL HIGHLIGHTS
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the fiscal year ended March 31,
-----------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $12.25 $10.94 $ 9.70 $9.41 $6.84
------ ------ ----- ----- -----
Income from investment
operations:
Net investment
income (loss) ... .04 .03 (0.01) .01 .02
Net realized and
unrealized gain
on investments .. 3.63 2.12 1.48 .29 2.57
------ ------ ----- ----- -----
Total from investment
operations ....... 3.67 2.15 1.47 .30 2.59
------ ------ ----- ----- -----
Less distributions:
Dividends from
net investment
income .......... (0.03) (0.01) (0.00) (0.01) (0.02)
Distribution from
capital gains ... (0.43) (0.83) (0.23) (0.00) (0.00)
------ ------ ----- ----- -----
Total distributions. (0.46) (0.84) (0.23) (0.01) (0.02)
------ ------ ----- ----- -----
Net asset value,
end of period .... $15.46 $12.25 $10.94 $9.70 $9.41
====== ====== ===== ===== =====
Total return* ...... 30.18% 20.50% 15.21% 3.19% 37.83%
Net assets, end
of period (000
omitted) .......... $491,668$303,624$221,053$179,959$152,426
Ratio of expenses
to average net
assets ........... 1.19% 1.24% 1.19% 1.18% 1.16%
Ratio of net investment
income to average
net assets ....... 0.29% 0.30% -0.11% 0.15% 0.22%
Portfolio turnover
rate ............. 27.75% 44.01% 55.23% 57.10% 71.56%
*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.
FINANCIAL HIGHLIGHTS
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout the Period:
For the
period
from 9/6/95
through
3/31/96*
--------
Net asset value,
beginning of period $15.14
-----
Income from investment
operations:
Net investment
income .......... .05
Net realized and
unrealized gain on
investments...... .75
-----
Total from investment
operations ........ .80
-----
Less distributions:
Dividends from net
investment
income........... (0.04)
Distribution from
capital gains.... (0.43)
-----
Total distributions. (0.47)
-----
Net asset value,
end of period ..... $15.47
=====
Total return ....... 5.44%
Net assets, end of
period (000
omitted) ......... $7,191
Ratio of expenses
to average net
assets ............ 0.96%**
Ratio of net
investment income
to average net
assets ............ 0.54%**
Portfolio
turnover rate ..... 27.75%
*On July 18, 1995, the Fund began offering Class Y shares to the public.
Fund shares outstanding prior to that date were designated Class A
shares.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
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. Its investment objective is to seek growth through a diversified
holding of securities issued primarily by new or unseasoned companies, companies
which are in their early stages of development or smaller companies positioned
in new and emerging industries where the opportunity for rapid growth is above
average. 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. Net investment income
distributions and capital gains distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences are due to differing treatments
for items such as deferral of wash sales and post-October losses, foreign
currency transactions, net operating losses and expiring capital loss
carryforwards.
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 .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 $14.0 billion of
combined net assets at March 31, 1996) at annual rates of .51% of the first $750
million of combined net assets, .49% on that amount between $750 million and
$1.5 billion, .47% between $1.5 billion and $2.25 billion, .45% between $2.25
billion and $3 billion, .43% between $3 billion and $3.75 billion, .40% between
$3.75 billion and $7.5 billion, .38% between $7.5 billion and $12 billion, and
.36% of that amount over $12 billion. The Fund accrues and pays this fee daily.
Pursuant to assignment of the Investment Management Agreement between the
Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly-owned subsidiary of W&R, serves as the Fund's
investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed Services
Company ("WARSCO"), a wholly-owned subsidiary of W&R. Under the agreement,
WARSCO acts as the agent in providing accounting services and assistance to the
Fund and pricing daily the value of shares of the Fund. For these services, the
Fund pays WARSCO a monthly fee of one-twelfth of the annual fee shown in the
following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
For Class A shares, the Fund also pays WARSCO a monthly per account charge
for transfer agency and dividend disbursement services of $1.0208 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. With respect to Class Y shares, the
Fund pays WARSCO a monthly fee at an annual rate of .15% of the average daily
net assets of the class for the preceding month. The Fund also reimburses W&R
and WARSCO for certain out-of-pocket costs.
As principal underwriter for the Fund's shares, W&R received direct and
indirect gross sales commissions for Class A shares (which are not an expense of
the Fund) of $4,051,161, out of which W&R paid sales commissions of $2,331,578
and all expenses in connection with the sale of Fund shares, except for
registration fees and related expenses.
Under a Service Plan for Class A shares adopted by the Fund pursuant to
Rule 12b-1 under the Investment Company Act of 1940, the Fund may pay monthly a
fee to W&R in an amount not to exceed .25% of the Fund's average annual net
assets. The fee is to be paid to reimburse W&R for amounts it expends in
connection with the provision of personal services to Fund shareholders and/or
maintenance of shareholder accounts.
The Fund paid Directors' fees of $15,304.
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 $116,090,602 while proceeds from maturities and
sales aggregated $85,722,440. Purchases of short-term securities aggregated
$1,536,726,399 while proceeds from maturities and sales aggregated
$1,478,357,570. No U.S. Government securities were bought or sold during the
period ended March 31, 1996.
For Federal income tax purposes, cost of investments owned at March 31,
1996 was $326,895,125, resulting in net unrealized appreciation of $172,450,943
of which $187,323,394 related to appreciated securities and $14,872,451 related
to depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $23,180,531 during the year ended March 31, 1996, of which a portion was paid
to shareholders during the period ended March 31, 1996. Remaining capital gain
net income will be distributed to the Fund's shareholders.
NOTE 5 -- Commencement of Multiclass Operations
On July 18, 1995, the Fund was authorized to offer investors a choice of two
classes of shares, Class A and Class Y, each of which has equal rights as to
assets and voting privileges. Class Y shares are not subject to a sales charge
on purchases; they are not subject to a Rule 12b-1 Service Plan and have a
separate transfer agency and dividend disbursement services fee structure. A
comprehensive discussion of the terms under which shares of either class are
offered is contained in the prospectus and the Statement of Additional
Information for the Fund. The Fund commenced multiclass operations on September
6, 1995.
Income, non-class specific expenses and realized and unrealized gains and
losses are allocated daily to each class of shares based on the value of
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
United 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, 1996, the results of its operations for the year then ended
and the changes in its net assets and the financial highlights for each of the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at March
31, 1996 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 LLP
Kansas City, Missouri
May 10, 1996
<PAGE>
INCOME TAX INFORMATION
The amount 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
- ---------------- ------------------------------------------------
Class A
12-15-95 $0.460 $0.2161 $0.2439 $0.0081 $0.2080 $0.2439
------- ------- ------- ------ ------- -------
Total $0.460 $0.2161 $0.2439 $0.0081 $0.2080 $0.2439
======= ======= ======= ======= ======= =======
Class Y
12-15-95 $0.465 $0.2211 $0.2439 $0.0096 $0.2115 $0.2439
------- ------- ------- ------ ------- -------
Total $0.465 $0.2211 $0.2439 $0.0096 $0.2115 $0.2439
======= ======= ======= ======= ======= =======
CORPORATION DEDUCTIONS -- Under Federal tax law, the amounts reportable as
Qualifying Dividends are eligible for the dividends received deduction in the
year received as provided by Section 243 of the Internal Revenue Code.
The tax status of dividends paid will be reported to you on Form 1099-DIV after
the close of the applicable calendar year.
Shareholders are advised to consult with their tax advisor concerning the tax
treatment of dividends and distributions from the Fund.
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
Jay B. Dillingham, Kansas City, Missouri
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Los Angeles, California
Doyle Patterson, Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
OFFICERS
Keith A. Tucker, President
Robert L. Hechler, Vice President
Henry J. Herrmann, Vice President
Theodore W. Howard, Vice President and Treasurer
Sharon K. Pappas, Vice President and Secretary
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 Municipal High Income Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Continental Income Fund, Inc.
United Retirement Shares, Inc.
United Asset Strategy Fund, Inc.
United Income Fund
United Accumulative Fund
United Vanguard Fund, Inc.
United New Concepts Fund, Inc.
United Science and Technology Fund
United International Growth Fund, Inc.
United Gold & Government Fund, Inc.
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
(913) 236-1303
Our INTERNET address is:
http://www.waddell.com
NUR1012A(3-96)
printed on recycled paper
