United
New Concepts
Fund, Inc.
ANNUAL
REPORT
----------------------------------------
For the fiscal year ended March 31, 1997
<PAGE>
FUND MANAGER'S LETTER
- -----------------------------------------------------------------
MARCH 31, 1997
Dear Shareholder:
This report relates to the operation of United New Concepts Fund for the fiscal
year ended March 31, 1997. The following discussion, graphs and tables provide
you with information regarding the Fund's performance during that period.
Market conditions during the past fiscal year were unfavorable for investing in
small cap stocks. In fact, omitting the performance of Intel and Microsoft
(which are truly large cap issues) from the Nasdaq Industrials Index, all
benchmark indexes tracking small cap growth underperformed money market returns
for the first time since 1994. Following the nearly eighteen percent decline in
small cap stocks during the summer of 1996, investors' preferences shifted to
large cap and blue chip stocks.
The Fund largely continued to pursue a strategy of investing in companies in
healthcare and technology, sectors that continue to exhibit high growth
potential. However, the absence of normal seasonal "January effect" improvement
in the small cap market caused us to take some long-term gains in our core
positions. Additionally, we have emphasized more "measured growth" companies
over potential "rapid growth" opportunities.
The strategies and techniques we applied resulted in the performance of the Fund
remaining below 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 underperformance of the Fund relative to the
indexes resulted from our minimal use of initial public offerings before the
summer highs.
As the next fiscal year begins, it appears that expectations for profit growth
will continue an ongoing downward reassessment, particularly with the recent
interest rate increases by the Federal Reserve. Performance during these
periods is normally poor. Nevertheless, it should be kept in mind that declines
in this sector are well-advanced and valuations have markedly improved over the
past year.
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
------------------ ----------
03/31/87 Purchase9,425 10,000 10,000
03/31/88 8,004 8,448 8,837
03/31/89 7,816 8,777 9,937
03/31/90 8,331 9,920 11,139
03/31/91 11,131 12,001 12,739
03/31/92 15,343 14,886 15,689
03/31/93 15,833 15,712 17,557
03/31/94 18,241 17,153 19,477
03/31/95 21,981 17,652 20,978
03/31/96 28,616 22,565 27,674
03/31/97 26,218 22,414 28,995
===== United New Concepts Income Fund, Class A Shares* -- $26,218
+++++ NASDAQ Industrials Index -- $22,414
- ---- Lipper Small Company Growth Fund Universe Average -- $28,995
*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
3/31/97 -13.65% -8.12%
5 Years Ended
3/31/97 10.00% N/A
10 Years Ended
3/31/97 10.12% N/A
Life of
Class Y +++ N/A -2.00%
+ 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 3/31/97.
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, 1997
- ----------------------------------------
DIVIDEND PAID $0.06
=====
CAPITAL GAINS DISTRIBUTION $0.58
=====
NET ASSET VALUE ON
3/31/97 $13.59 adjusted to: $14.17(A)
3/31/96 15.46
------
CHANGE PER SHARE $(1.29)
======
(A)This number includes the capital gains distribution of $0.58 paid in December
1996 added to the actual net asset value on March 31, 1997.
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 3-31-97 -13.65% -8.38%
5-year period ended 3-31-97 10.00% 11.31%
10-year period ended 3-31-97 10.12% 10.77%
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, 1997, United New Concepts Fund, Inc. had net assets totaling
$508,960,603 invested in a diversified portfolio of:
66.66% Common Stocks
33.34% Cash and Cash Equivalents
As a shareholder of United New Concepts Fund, Inc., for every $100 you had
invested on March 31, 1997, your Fund owned:
$35.84 Services Stocks
33.34 Cash and Cash Equivalents
13.97 Manufacturing Stocks
8.02 Wholesale and Retail Trade Stocks
4.98 Finance, Insurance and Real Estate Stocks
3.85 Transportation, Communication, Electric
and Sanitary Services Stocks
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1997
Shares Value
COMMON STOCKS
Automotive Dealers and Service Stations - 1.09%
O'Reilly Automotive, Inc.* ............. 150,000 $ 5,550,000
Building Materials and Garden Supplies - 1.38%
Fastenal Company ....................... 200,000 7,012,400
Business Services - 20.51%
America Online, Inc.* .................. 500,000 21,187,500
CKS Group, Inc.* ....................... 250,000 5,171,750
CUC International Inc.* ................ 600,000 13,500,000
Concord EFS, Inc.* ..................... 379,687 7,166,592
FactSet Research Systems, Inc.* ........ 400,000 7,750,000
HCIA Inc.* ............................. 65,800 1,098,005
Health Management Systems, Inc.* ....... 163,600 1,073,543
IMNET Systems, Inc.* ................... 105,000 1,555,260
Leap Group, Inc. (The)* ................ 200,000 800,000
Metromail Corporation* ................. 400,000 6,850,000
PHAMIS, Inc.* .......................... 200,000 3,600,000
Parametric Technology Corporation* ..... 400,000 18,024,800
QuickResponse Services, Inc.* .......... 141,000 3,754,125
Shared Medical Systems Corporation ..... 200,000 9,325,000
Synopsys, Inc.* ........................ 140,000 3,508,680
Total ................................. 104,365,255
Chemicals and Allied Products - 0.84%
Watson Pharmaceuticals Inc.* ........... 120,400 4,289,250
Communication - 3.85%
CommNet Cellular Inc.* ................. 300,000 7,631,100
Intermedia Communications of
Florida, Inc.* ........................ 300,000 4,950,000
Mobile Telecommunication Technologies
Corp.* ................................ 250,000 1,546,750
WorldCom Inc.* ......................... 250,000 5,484,250
Total ................................. 19,612,100
Eating and Drinking Places - 0.38%
Rare Hospitality International Inc.* ... 150,000 1,931,250
Electronic and Other Electric Equipment - 1.23%
Advanced Fibre Communications, Inc.* ... 100,000 3,206,200
Ascend Communications, Inc.* ........... 75,000 3,060,900
Total ................................. 6,267,100
Engineering and Management Services - 0.58%
Transition Systems, Inc.* .............. 250,000 2,968,750
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1997
Shares Value
COMMON STOCKS (Continued)
Food and Kindred Products - 0.91%
Tootsie Roll Industries, Inc. .......... 103,000 $ 4,622,125
Furniture and Home Furnishings Stores - 0.56%
Williams-Sonoma, Inc.* ................. 100,000 2,875,000
Health Services - 4.67%
American Healthcorp, Inc.* ............. 400,000 4,474,800
HEALTHSOUTH Corporation* ............... 169,272 3,237,327
Physicians Resource Group, Inc.* ....... 355,000 4,703,750
Vencor, Incorporated* .................. 300,000 11,362,500
Total ................................. 23,778,377
Industrial Machinery and Equipment - 2.45%
cisco Systems, Inc.* ................... 150,000 7,228,050
MicroTouch Systems, Inc.* .............. 270,000 5,231,250
Total ................................. 12,459,300
Instruments and Related Products - 5.66%
Innovasive Devices, Inc.* .............. 142,500 1,620,938
LUNAR CORPORATION* ..................... 212,000 7,208,000
St. Jude Medical, Inc.* ................ 200,000 6,675,000
STERIS Corporation* .................... 300,000 7,331,100
Target Therapeutics, Inc.* ............. 90,000 5,951,250
Total ................................. 28,786,288
Insurance Agents, Brokers and Service - 0.94%
CRA Managed Care, Inc.* ................ 128,700 4,794,075
Insurance Carriers - 1.99%
United HealthCare Corporation .......... 213,000 10,144,125
Miscellaneous Retail - 0.73%
Books-A-Million, Inc.* ................. 67,900 326,735
MSC Industrial Direct Co., Inc.* ....... 116,500 3,393,062
Total ................................. 3,719,797
Nondepository Institutions - 0.13%
Mercury Finance Company ................ 249,999 656,247
Personal Services - 2.19%
Equity Corporation International* ...... 525,000 11,156,250
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1997
Shares Value
COMMON STOCKS (Continued)
Prepackaged Software - 7.89%
BMC Software, Inc.* .................... 100,000 $ 4,606,200
Broderbund Software, Inc.* ............. 200,000 4,350,000
Cerner Corporation* .................... 300,000 3,900,000
Citrix Systems, Inc.* .................. 33,000 431,046
Dendrite International, Inc.* .......... 300,000 2,850,000
Expert Software, Inc.* ................. 300,000 637,500
GT Interactive Software Corp.* ......... 100,000 718,700
HPR Inc.* .............................. 199,800 2,222,775
Health Systems Design Corporation* ..... 180,200 1,114,897
Intuit Inc.* ........................... 300,000 6,937,500
Medic Computer Systems, Inc.* .......... 300,000 4,818,600
Premenos Technology Corp.* ............. 175,000 1,093,750
Wall Data Incorporated* ................ 400,000 6,450,000
Total.................................. 40,130,968
Real Estate - 1.92%
Stewart Enterprises, Inc., Class A ..... 268,650 9,772,144
Stone, Clay and Glass Products - 1.15%
Department 56, Inc.* ................... 200,000 3,475,000
Gentex Corporation* .................... 120,000 2,377,440
Total ................................. 5,852,440
Transportation Equipment - 1.73%
Harley-Davidson, Inc. .................. 260,000 8,807,500
Wholesale Trade - Durable Goods - 2.25%
OmniCare, Inc. ......................... 486,400 11,430,400
Wholesale Trade - Nondurable Goods - 1.63%
Cardinal Health, Inc. .................. 152,458 8,289,904
TOTAL COMMON STOCKS - 66.66% $339,271,045
(Cost: $263,042,890)
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES
Commercial Paper
Auto Repair, Services and Parking - 2.25%
Hertz Corp.,
5.28%, 4-7-97 ......................... $11,465 $ 11,454,911
Depository Institutions - 3.18%
Creditanstalt Finance Inc.:
5.3%, 4-3-97 .......................... 1,445 1,444,575
5.38%, 4-18-97 ........................ 7,740 7,720,336
U.S. Bancorp,
Master Note............................ 7,031 7,031,000
Total ................................. 16,195,911
Electric, Gas and Sanitary Services - 6.23%
Carolina Power & Light Co.:
5.32%, 4-10-97 ........................ 1,805 1,802,599
5.5%, 4-21-97 ......................... 8,135 8,110,143
Commonwealth Edison Co.,
5.52%, 4-17-97 ........................ 4,720 4,708,420
Georgia Power Co.,
5.3%, 4-21-97 ......................... 2,000 1,994,111
Idaho Power Co.,
5.57%, 4-17-97 ........................ 2,825 2,818,007
Nicor Inc.,
5.32%, 4-3-97 ......................... 10,700 10,696,838
Pacific Gas and Electric Co.,
5.31%, 4-21-97 ........................ 1,570 1,565,368
Total.................................. 31,695,486
Food and Kindred Products - 7.69%
ConAgra, Inc.,
5.51%, 4-28-97 ........................ 11,390 11,342,931
General Mills, Inc.,
Master Note ........................... 2,180 2,180,000
Hercules Inc.,
5.4%, 4-17-97 ......................... 5,835 5,820,996
Quaker Oats Co.,
5.4%, 4-22-97 ......................... 4,485 4,470,872
Ralston Purina Co.,
5.5%, 4-8-97 .......................... 15,335 15,318,600
Total.................................. 39,133,399
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Food Stores - 0.59%
Albertson's Inc.,
5.53%, 5-5-97 ......................... $3,045 $ 3,029,097
Instruments and Related Products - 0.44%
Hughes Electronics Corp.,
5.51%, 4-21-97 ........................ 2,266 2,259,063
Insurance Carriers - 0.47%
USAA Capital Corp.,
5.24%, 4-22-97 ........................ 2,390 2,382,695
Metal Mining - 0.84%
BHP Finance (USA) Inc.,
5.32%, 4-4-97 ......................... 4,260 4,258,111
Nondepository Institutions - 0.34%
Caterpillar Financial Services Corp.,
5.31%, 5-7-97 ......................... 1,750 1,740,708
Personal Services - 1.99%
Block Financial Corp.:
5.35%, 4-18-97 ........................ 5,324 5,310,549
5.35%, 4-21-97 ........................ 4,815 4,800,689
Total ................................. 10,111,238
Security and Commodity Brokers - 2.26%
Merrill Lynch & Co., Inc.,
5.33%, 4-14-97 ........................ 11,540 11,517,789
Textile Mill Products - 0.21%
Sara Lee Corporation,
Master Note ........................... 1,066 1,066,000
Tobacco Products - 1.74%
B.A.T. Capital Corp.:
5.32%, 4-4-97 ......................... 3,115 3,113,619
5.31%, 4-7-97 ......................... 5,725 5,719,933
Total ................................. 8,833,552
Transportation Equipment - 0.98%
Dana Credit Corp.:
5.43%, 4-4-97 ......................... 2,095 2,094,052
5.5%, 4-4-97 .......................... 2,910 2,908,666
Total ................................. 5,002,718
Total Commercial Paper - 29.21% 148,680,678
See Notes to Schedule of Investments on page 11.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Municipal Obligation - 2.95%
California
Oakland-Alameda County Coliseum Lease Revenue
Bonds (Oakland Coliseum Project), 1995 Series
B-1 (Canadian Imperial Bank of Commerce),
5.38%, 4-17-97 ........................ $15,000 $ 15,000,000
TOTAL SHORT-TERM SECURITIES - 32.16% $163,680,678
(Cost: $163,680,678)
TOTAL INVESTMENT SECURITIES - 98.82% $502,951,723
(Cost: $426,723,568)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.18% 6,008,880
NET ASSETS - 100.00% $508,960,603
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, 1997
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $502,951,723
Cash ............................................ 8,554
Receivables:
Investment securities sold....................... 8,160,482
Fund shares sold ................................ 1,342,611
Dividends and interest .......................... 171,961
Prepaid insurance premium ........................ 8,436
------------
Total assets .................................. 512,643,767
------------
Liabilities
Payable for investment securities purchased ....... 1,753,000
Payable for Fund shares redeemed ................. 1,615,750
Accrued service fee (Note 2) ..................... 158,249
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 122,151
Accrued management fee (Note 2) .................. 10,491
Accrued accounting services fee (Note 2) ......... 5,833
Other ............................................ 17,690
------------
Total liabilities ............................. 3,683,164
------------
Total net assets ............................. $508,960,603
============
Net Assets
$1.00 par value capital stock
Capital stock ................................... $ 37,453,687
Additional paid-in capital ...................... 348,306,673
Accumulated undistributed income:
Accumulated undistributed net investment
income ........................................ 751,675
Accumulated undistributed net realized gain
on investment transactions .................... 46,220,413
Net unrealized appreciation in value of
investments ................................... 76,228,155
------------
Net assets applicable to outstanding units
of capital ................................... $508,960,603
============
Net asset value per share (net assets divided
by shares outstanding)
Class A .......................................... $13.59
Class Y .......................................... $13.60
Capital shares outstanding
Class A .......................................... 36,876,205
Class Y .......................................... 577,482
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, 1997
Investment Income
Income (Note 1B):
Interest and amortization ....................... $ 8,758,073
Dividends ....................................... 315,976
-----------
Total income .................................. 9,074,049
-----------
Expenses (Note 2):
Investment management fee ....................... 4,125,726
Transfer agency and dividend disbursing - Class A 1,485,650
Service fee - Class A ........................... 954,323
Accounting services fee ......................... 66,667
Custodian fees .................................. 29,951
Audit fees ...................................... 17,257
Shareholder servicing - Class Y.................. 12,649
Legal fees ...................................... 8,313
Other ........................................... 213,774
-----------
Total expenses ................................ 6,914,310
-----------
Net investment income ........................ 2,159,739
-----------
Realized and Unrealized Gain (Loss) on
Investments (Notes 1 and 3)
Realized net gain on investments ................. 50,242,282
Unrealized depreciation in value of investments
during the period ............................... (96,222,788)
-----------
Net loss on investments ......................... (45,980,506)
-----------
Net decrease in net assets resulting from
operations ................................... $(43,820,767)
===========
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year
ended March 31,
-------------------------
1997 1996
Increase in Net Assets ------------ ------------
Operations:
Net investment income ...............$ 2,159,739 $ 1,167,792
Realized net gain on
investments ....................... 50,242,282 23,180,531
Unrealized appreciation
(depreciation) .................... (96,222,788) 81,497,533
------------ ------------
Net increase (decrease) in net assets
resulting from operations ........ (43,820,767) 105,845,856
------------ ------------
Dividends to shareholders from (Note 1D):*
Net investment income:
Class A ........................... (2,029,503) (912,026)
Class Y ........................... (53,641) (2,797)
Realized gains on securities transactions:
Class A ........................... (20,120,352) (12,198,918)
Class Y ........................... (302,385) (32,358)
------------ ------------
(22,505,881) (13,146,099)
------------ ------------
Capital share transactions:
Proceeds from sale of shares:
Class A (70,633,686 and 63,533,003
shares, respectively) ............1,082,428,196 921,129,691
Class Y (195,033 and 471,439
shares, respectively) ............ 3,026,117 7,171,949
Proceeds from reinvestment of dividend
and/or capital gains distribution:
Class A (1,470,532 and 895,245
shares, respectively) ............ 22,028,449 13,052,675
Class Y (23,766 and 2,411
shares, respectively) ............ 356,026 35,155
Payments for shares redeemed:
Class A (67,021,853 and 57,415,916
shares, respectively) ............(1,029,804,952)(838,714,963)
Class Y (106,038 and 9,129
shares, respectively) ............ (1,605,831) (138,928)
------------ ------------
Net increase in net assets resulting
from capital share transactions .. 76,428,005 102,535,579
------------ ------------
Total increase ................... 10,101,357 195,235,336
Net Assets
Beginning of period ............ ...... 498,859,246 303,623,910
------------ ------------
End of period ........................$508,960,603 $498,859,246
============ ============
Undistributed net investment income.. $751,675 $675,080
========== ========
*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,
-----------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $15.46 $12.25 $10.94 $ 9.70 $9.41
------ ------ ------ ------ -----
Income from investment
operations:
Net investment
income (loss) ... 0.06 0.04 0.03 (0.01) 0.01
Net realized and
unrealized gain
(loss) on
investments ..... (1.29) 3.63 2.12 1.48 0.29
------ ------ ------ ------ -----
Total from investment
operations ....... (1.23) 3.67 2.15 1.47 0.30
------ ------ ------ ------ -----
Less distributions:
Dividends from
net investment
income .......... (0.06) (0.03) (0.01) (0.00) (0.01)
Distribution from
capital gains ... (0.58) (0.43) (0.83) (0.23) (0.00)
------ ------ ------ ------ -----
Total distributions. (0.64) (0.46) (0.84) (0.23) (0.01)
------ ------ ------ ------ -----
Net asset value,
end of period .... $13.59 $15.46 $12.25 $10.94 $9.70
====== ====== ====== ====== =====
Total return* ...... -8.38% 30.18% 20.50% 15.21% 3.19%
Net assets, end
of period (000
omitted) .......... $501,107$491,668$303,624$221,053$179,959
Ratio of expenses
to average net
assets ........... 1.27% 1.19% 1.24% 1.19% 1.18%
Ratio of net investment
income to average
net assets ....... 0.39% 0.29% 0.30% -0.11% 0.15%
Portfolio turnover
rate ............. 38.82% 27.75% 44.01% 55.23% 57.10%
Average commission
rate paid ......... $0.0479
*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 Each Period:
For the For the
fiscal period
year from 9/6/95*
ended through
3/31/97 3/31/96
-------- --------
Net asset value,
beginning of period $15.47 $15.14
------ ------
Income from investment
operations:
Net investment
income .......... 0.10 0.05
Net realized and
unrealized gain (loss)
on investments... (1.29) 0.75
------ ------
Total from investment
operations ........ (1.19) 0.80
------ ------
Less distributions:
Dividends from net
investment
income........... (0.10) (0.04)
Distribution from
capital gains.... (0.58) (0.43)
------ ------
Total distributions. (0.68) (0.47)
------ ------
Net asset value,
end of period ..... $13.60 $15.47
====== ======
Total return ....... -8.12% 5.44%
Net assets, end of
period (000
omitted) ......... $7,854 $7,191
Ratio of expenses
to average net
assets ............ 0.97% 0.96%**
Ratio of net
investment income
to average net
assets ............ 0.69% 0.54%**
Portfolio
turnover rate ..... 38.82% 27.75%**
Average commission
rate paid ......... $0.0479
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
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 pricing service. Convertible bonds are valued
using this pricing system only on days when there is no sale reported.
Stocks which are traded over-the-counter are priced using Nasdaq (National
Association of Securities Dealers Automated Quotations system) which
provides information on bid and asked or closing prices quoted by major
dealers in such stocks. Short-term debt securities are valued at amortized
cost, which approximates market.
B. Security transactions and related investment income -- Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Securities gains and losses are calculated on the
identified cost basis. 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 Subchapter M of the Internal
Revenue Code. In addition, the Fund intends to pay distributions as
required to avoid imposition of excise tax. Accordingly, provision has not
been made for Federal income taxes. See Note 4 -- Federal Income Tax
Matters.
D. Dividends and distributions -- Dividends and distributions to shareholders
are recorded by the Fund on the record date. Net investment income
dividends and capital gains distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are due to differing treatments for items
such as deferral of wash sales and post-October losses, foreign currency
transactions, net operating losses and expiring capital loss carryforwards.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
NOTE 2 -- Investment Management And Payments to Affiliated Persons
The Fund pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business. The fee
consists of two elements: (i) a "Specific" fee computed on net asset value as of
the close of business each day at the annual rate of .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 $15.0 billion of
combined net assets at March 31, 1997) at annual rates of .51% of the first $750
million of combined net assets, .49% on that amount between $750 million and
$1.5 billion, .47% between $1.5 billion and $2.25 billion, .45% between $2.25
billion and $3 billion, .43% between $3 billion and $3.75 billion, .40% between
$3.75 billion and $7.5 billion, .38% between $7.5 billion and $12 billion, and
.36% of that amount over $12 billion. The Fund accrues and pays this fee daily.
Pursuant to assignment of the Investment Management Agreement between the
Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly-owned subsidiary of W&R, serves as the Fund's
investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed Services
Company ("WARSCO"), a wholly-owned subsidiary of W&R. Under the agreement,
WARSCO acts as the agent in providing accounting services and assistance to the
Fund and pricing daily the value of shares of the Fund. For these services, the
Fund pays WARSCO a monthly fee of one-twelfth of the annual fee shown in the
following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
For Class A shares, the Fund also pays WARSCO a monthly per account charge
for transfer agency and dividend disbursement services of $1.3125 for each
shareholder account which was in existence at any time during the prior month
($1.0208 per account prior to April 1, 1996), 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
$4,510,597, out of which W&R paid sales commissions of $2,582,236 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 $20,918, which are included in other
expenses.
W&R is an indirect subsidiary of Torchmark Corporation, a holding company,
and United Investors Management Company, a holding company, and a direct
subsidiary of Waddell & Reed Financial Services, Inc., a holding company.
NOTE 3 -- Investment Security Transactions
Purchases of investment securities, other than U.S. Government and short-
term securities, aggregated $179,897,019 while proceeds from maturities and
sales aggregated $149,132,512. Purchases of short-term securities aggregated
$2,315,831,531 while proceeds from maturities and sales aggregated
$2,304,315,728. No U.S. Government securities were bought or sold during the
period ended March 31, 1997.
For Federal income tax purposes, cost of investments owned at March 31,
1997 was $426,723,568, resulting in net unrealized appreciation of $76,228,155,
of which $120,102,215 related to appreciated securities and $43,874,060 related
to depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $50,242,282 during the year ended March 31, 1997, of which a portion was paid
to shareholders during the period ended March 31, 1997. Remaining capital gain
net income will be distributed to the Fund's shareholders.
NOTE 5 -- 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.
Income, non-class specific expenses, and realized and unrealized gains and
losses are allocated daily to each class of shares based on the value of
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
United New Concepts Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of United New Concepts Fund, Inc.
(the ``Fund'') as of March 31, 1997, the related statements of operations
and changes in net assets for the year then ended, and the financial
highlights for the year then ended. These financial statements and the
financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial statements
and the financial highlights based on our audit. The financial
statements and the financial highlights of the Fund for each of the
periods presented in the four-year period ended March 31, 1996 were
audited by other auditors whose report, dated May 10, 1996, expressed an
unqualified opinion on those statements and financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
the financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at March 31, 1997 by correspondence with
the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of the
United New Concepts Fund, Inc. as of March 31, 1997, the results of its
operations, the changes in its net assets, and the financial highlights
for the year then ended in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Kansas City, Missouri
May 7, 1997
<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 amounts 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
12-13-96 $0.633 $0.1357 $0.4973 $0.0097 $0.1260 $0.4973
------- ------- ------- ------- ------- -------
Total $0.633 $0.1357 $0.4973 $0.0097 $0.1260 $0.4973
======= ======= ======= ======= ======= =======
Class Y
12-13-96 $0.677 $0.1797 $0.4973 $0.0171 $0.1626 $0.4973
------- ------- ------- ------ ------- -------
Total $0.677 $0.1797 $0.4973 $0.0171 $0.1626 $0.4973
======= ======= ======= ======= ======= =======
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
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
William L. Rogers, Los Angeles, California
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
OFFICERS
Keith A. Tucker, President
Robert L. Hechler, Vice President
Henry J. Herrmann, Vice President
Theodore W. Howard, Vice President and Treasurer
Sharon K. Pappas, Vice President and Secretary
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
(800) 366-5465
Our INTERNET address is:
http://www.waddell.com
NUR1012A(3-97)
printed on recycled paper
