United
New Concepts
Fund, Inc.
ANNUAL
REPORT
----------------------------------------
For the fiscal year ended March 31, 1999
<PAGE>
MANAGER'S LETTER
- -----------------------------------------------------------------
MARCH 31, 1999
Dear Shareholder:
This report relates to the operation of United New Concepts Fund for the fiscal
year ended March 31, 1999. The following discussion, graphs and tables provide
you with information regarding the Fund's performance during that period.
The United States economy remained strong over the past year. The political and
social climate around the world, particularly in the United States, provided for
a favorable market environment. Signs of recovery began to surface in the Asia
Pacific region, with the notable exception of Japan. Any potential for a
decisive economic turnaround in Japan has been muted by the underlying need for
a restructuring of virtually the country's entire economy. The European
economies remained somewhat lackluster during the past year, while Latin America
began to slow.
We continued our emphasis on companies that provide strong growth opportunities,
both in existing markets as well as new and developing ones. Significant
exposure to technology, particularly the Internet and telecommunications, as
well as consumer services, contributed to strong performance by the Fund. Since
taking over as Fund Manager in February of 1999, I increased the Fund's focus on
the mid capitalization segment of the market. With the exception of a change in
capitalization focus, the objective of the Fund remains unchanged.
The strategies and techniques we applied resulted in the performance of the Fund
significantly exceeding 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).
Although the timing is difficult to predict, we believe that global economic
growth is likely to moderate during the latter part of this year. Deflation, or
at best a lack of pricing power, will continue to pose a challenge for many
industries. Consequently, companies that offer significant real growth
opportunities should continue to command a premium. However, some of the
extremely high relative valuations that have been afforded a handful of large
capitalization stocks may come under pressure. These are the very stocks that
have largely been responsible for the unusually strong performance of the
popular indexes. Consequently, we expect financial market performance to
moderate going forward.
Zachary H. Shafran is primarily responsible for the management of the portfolio
of the Fund. Mr. Shafran has held his responsibilities since February 1999. He
is Vice President of WRIMCO and Vice President of the Fund. Mr. Shafran has
served as the portfolio manager for another investment company managed by
WRIMCO, since January 1996, Mr. Shafran has served as an investment analyst with
WRIMCO, and has been an employee of WRIMCO, since June 1990.
Thank you very much for your continued support and confidence in our
organization.
Respectfully,
Zachary H. Shafran
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
Class Industrials Universe
A Shares Index Average
--------- --------- ----------
03/31/89 Purchase 9,425 10,000 10,000
03/31/90 10,046 11,301 11,209
03/31/91 13,423 13,672 12,820
03/31/92 18,502 16,959 15,789
03/31/93 19,093 17,900 17,668
03/31/94 21,998 19,542 19,601
03/31/95 26,508 20,111 21,111
03/31/96 34,509 25,708 27,849
03/31/97 31,617 25,536 29,179
03/31/98 47,880 34,159 41,940
03/31/99 56,417 34,783 35,421
===== United New Concepts Income Fund, Class A Shares* -- $56,417
+++++ Nasdaq Industrials Index -- $34,783
- ---- Lipper Small Company Growth Fund Universe Average -- $35,421
*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
3/31/99 11.06% 18.29%
5 Years Ended
3/31/99 19.81% N/A
10 Years Ended
3/31/99 18.89% N/A
Life of
Class Y +++ N/A 16.80%
+ 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 3/31/99.
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.
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. For more information
about the Fund's cash reserves
flexibility, please consult the
Prospectus.
FOUNDED: 1983
SCHEDULED DIVIDEND FREQUENCY: ANNUALLY (December)
<PAGE>
PERFORMANCE SUMMARY - Class A Shares
PER SHARE DATA
For the Fiscal Year Ended March 31, 1999
(Restated to reflect the 100% stock
dividend effected June 26, 1998.)
- -------------------------------------------
DIVIDEND PAID $0.004
======
CAPITAL GAINS DISTRIBUTION $1.250
======
NET ASSET VALUE ON
3/31/99 $9.52 adjusted to: $10.77 (A)
3/31/98 9.24
------
CHANGE PER SHARE $1.53
======
(A)This number includes the capital gains distribution of $1.25 paid in December
1998 added to the actual net asset value on March 31, 1999.
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 3-31-99 11.06% 17.83%
5-year period ended 3-31-99 19.31% 20.73%
10-year period ended 3-31-99 18.89% 19.59%
*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, 1999, United New Concepts Fund, Inc. had net assets totaling
$983,984,388 invested in a diversified portfolio of:
86.06% Common Stocks
13.29% Cash and Cash Equivalents
0.65% Options
As a shareholder of United New Concepts Fund, Inc., for every $100 you had
invested on March 31, 1999, your Fund owned:
$40.39 Services Stocks
20.25 Manufacturing Stocks
17.01 Transportation, Communication, Electric
and Sanitary Services Stocks
13.29 Cash and Cash Equivalents
7.16 Wholesale and Retail Trade Stocks
1.25 Finance, Insurance and Real Estate Stocks
0.65 Options
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1999
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 0.39%
Children's Place Retail Stores, Inc. (The)* 142,300 $ 3,837,653
Automotive Dealers and Service Stations - 2.44%
O'Reilly Automotive, Inc.* ............. 537,750 24,047,508
Building Materials and Garden Supplies - 0.75%
Fastenal Company ....................... 210,000 7,356,562
Business Services - 24.90%
America Online, Inc.* .................. 500,000 73,000,000
Carreker-Antinori, Inc.* ............... 330,000 2,248,125
Cerner Corporation* .................... 1,000,000 16,000,000
Citrix Systems, Inc.* .................. 600,000 22,837,500
Concord EFS, Inc.* ..................... 569,530 15,662,075
Dendrite International, Inc.* .......... 600,000 13,556,250
Getty Images, Inc.* .................... 459,600 9,637,237
Inktomi Corporation* ................... 60,000 5,137,500
Intuit Inc.* ........................... 400,000 40,687,500
Learning Company, Inc. (The)* .......... 400,000 11,600,000
MemberWorks Incorporated* .............. 275,000 9,951,563
National Data Corporation .............. 250,000 10,500,000
Transaction Systems Architects, Inc.,
Class A* .............................. 300,000 10,809,375
Verity, Inc.* .......................... 100,000 3,343,750
Total ................................. 244,970,875
Chemicals and Allied Products - 3.06%
Forest Laboratories, Inc.* ............. 180,000 10,147,500
Genzyme Corporation - General Division* 150,000 7,560,937
PAREXEL International Corporation* ..... 300,000 6,187,500
SangStat Medical Corporation* .......... 500,000 6,171,875
Total ................................. 30,067,812
Communication - 14.21%
COLT Telecom Group plc, ADR* ........... 460,000 33,048,125
Concentric Network Corporation* ........ 280,000 20,956,250
Intermedia Communications of Florida, Inc.* 150,000 4,012,500
Paging Network, Inc.* .................. 1,500,000 6,984,375
PrimaCom AG, ADR* ...................... 130,000 2,275,000
Qwest Communications International Inc.* 349,830 25,220,557
Research In Motion Limited (A)* ........ 800,000 8,354,078
SkyTel Communications, Inc.* ........... 600,000 9,993,750
Western Wireless Corporation, Class A* . 800,000 28,975,000
Total ................................. 139,819,635
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1999
Shares Value
COMMON STOCKS (Continued)
Computer Integrated Systems Design - 7.72%
FORE Systems, Inc.* .................... 700,000 $ 13,234,375
Parametric Technology Corporation* ..... 600,000 11,868,750
Shared Medical Systems Corporation ..... 300,000 16,706,250
Sunquest Information Systems, Inc.* .... 291,100 3,247,584
USWeb Corporation* ..................... 750,000 30,890,625
Total ................................. 75,947,584
Electric, Gas and Sanitary Services - 2.80%
Allied Waste Industries, Inc., New* .... 1,300,000 18,768,750
Montana Power Company (The) ............ 120,000 8,827,500
Total ................................. 27,596,250
Electronic and Other Electric Equipment - 5.14%
Broadcom Corporation, Class A* ......... 200,000 12,312,500
Celestica, Inc.* ....................... 250,000 8,109,375
Gemstar International Group Limited* ... 150,000 11,268,750
hi/fn, inc.* ........................... 53,300 1,982,094
Scientific-Atlanta, Inc. ............... 250,000 6,812,500
Xilinx, Inc.* .......................... 250,000 10,132,812
Total ................................. 50,618,031
Engineering and Management Services - 7.23%
AHL Services, Inc.* .................... 600,000 12,225,000
Corporate Executive Board Company (The)* 200,000 5,250,000
Incyte Pharmaceuticals, Inc.* .......... 640,000 12,820,000
MAXIMUS, Inc.* ......................... 500,000 14,562,500
Quintiles Transnational Corp.* ......... 699,600 26,278,725
Total ................................. 71,136,225
Food and Kindred Products - 2.59%
American Italian Pasta Company, Class A* 525,000 13,125,000
Packaged Ice, Inc.* .................... 370,000 2,300,938
Tootsie Roll Industries, Inc. .......... 218,545 10,066,747
Total ................................. 25,492,685
Furniture and Home Furnishings Stores - 0.86%
Williams-Sonoma, Inc.* ................. 300,000 8,475,000
Health Services - 0.54%
Quorum Health Group, Inc.* ............. 527,500 5,324,453
Industrial Machinery and Equipment - 1.34%
Cisco Systems, Inc.* ................... 120,000 13,151,250
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1999
Shares Value
COMMON STOCKS (Continued)
Instruments and Related Products - 1.51%
Bionx Implants, Inc.* .................. 450,000 $ 2,503,125
Cerus Corporation* ..................... 75,000 1,652,344
STERIS Corporation* .................... 400,000 10,650,000
Total ................................. 14,805,469
Insurance Carriers - 0.20%
ESG Re Limited ......................... 125,000 1,980,469
Miscellaneous Manufacturing Industries - 1.20%
Blyth Industries, Inc.* ................ 500,000 11,812,500
Miscellaneous Retail - 1.78%
MSC Industrial Direct Co., Inc., Class A* 600,000 10,200,000
Spiegel, Inc., Class A* ................ 135,000 824,766
uBid, Inc.* ............................ 100,000 6,512,500
Total ................................. 17,537,266
Paper and Allied Products - 0.62%
IVEX Packaging Corporation* ............ 400,000 6,075,000
Real Estate - 1.05%
Stewart Enterprises, Inc., Class A ..... 644,500 10,332,141
Stone, Clay and Glass Products - 1.75%
Gentex Corporation* .................... 800,000 17,250,000
Transportation Equipment - 3.04%
Harley-Davidson, Inc. .................. 520,000 29,900,000
Wholesale Trade -- Nondurable Goods - 0.94%
U.S. Foodservice* ...................... 199,800 9,290,700
TOTAL COMMON STOCKS - 86.06% $846,825,068
(Cost: $532,356,030)
Number of
Contracts
OPTIONS
September 1600 Call Option on Morgan
Stanley High Tech Index,
Expires 9-22-99 ........................ 1,101 1,550,908
September 908.50 Put Spread Option on Morgan Stanley
High Tech Index, With Floor Price of 772.2
Expires 9-22-99 ........................ 1,101 4,824,436
TOTAL OPTIONS - 0.65% $ 6,375,344
(Cost: $7,907,540)
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Auto Repair, Services and Parking - 0.88%
PHH Corp.,
5.02%, 4-6-99 ......................... $ 8,700 8,693,934
Chemicals and Allied Products - 0.58%
du Pont (E.I.) de Nemours and Company,
4.8%, 4-12-99 ......................... 5,685 5,676,662
Communication - 1.21%
Dominion Resources, Inc.,
5.0%, 5-5-99 .......................... 12,000 11,943,333
Electric, Gas and Sanitary Services - 4.80%
Bay State Gas Co.,
4.86%, 4-13-99 ........................ 4,625 4,617,508
Commonwealth Edison Co.,
5.03%, 4-6-99 ......................... 6,700 6,695,319
PS Colorado Credit Corp.,
5.02%, 4-5-99 ......................... 11,500 11,493,586
Public Service Electric & Gas Co.,
5.0%, 4-7-99 .......................... 12,070 12,059,942
Questar Corp.,
4.87%, 4-8-99 ......................... 5,384 5,378,902
Western Resources, Inc.,
5.03%, 4-21-99 ........................ 7,000 6,980,439
Total ................................. 47,225,696
Engineering and Management Services - 0.43%
Halliburton Co.,
4.84%, 4-21-99 ........................ 4,200 4,188,707
Fabricated Metal Products - 0.46%
Danaher Corporation,
4.9388%, Master Note .................. 4,551 4,551,000
Food and Kindred Products - 2.27%
ConAgra, Inc.:
5.05%, 4-6-99 ......................... 3,500 3,497,545
5.02%, 4-9-99 ......................... 5,750 5,743,586
General Mills, Inc.,
4.7938%, Master Note .................. 13,148 13,148,000
Total ................................. 22,389,131
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands
SHORT-TERM SECURITIES (Continued)
Instruments and Related Products - 1.94%
Baxter International Inc.:
4.9%, 4-16-99 ......................... $14,100 $ 14,071,212
4.9%, 4-21-99 ......................... 5,000 4,986,389
Total ................................. 19,057,601
Metal Mining - 1.67%
BHP Finance (USA) Inc.,
5.07%, 4-9-99 ......................... 16,446 16,427,471
Nondepository Institutions - 0.51%
Ford Motor Credit Company,
4.86%, 4-8-99 ......................... 5,000 4,995,275
Personal Services - 0.81%
Block Financial Corp.,
4.84%, 4-20-99 ........................ 8,000 7,979,564
TOTAL SHORT-TERM SECURITIES - 15.56% $153,128,374
(Cost: $153,128,374)
TOTAL INVESTMENT SECURITIES - 102.27% $1,006,328,786
(Cost: $693,391,944)
LIABILITIES, NET OF CASH AND OTHER ASSETS _ (2.27%) (22,344,398)
NET ASSETS - 100.00% $983,984,388
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
MARCH 31, 1999
Notes To Schedule of Investments
*No income dividends were paid during the preceding 12 months.
(A) Listed on an exchange outside the United States.
See Note 1 to financial statements for security valuation and other significant
accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and
depreciation of investments owned for Federal income tax purposes.
As of March 31, 1999, the following written call option was outstanding (See
Note 6 to financial statements):
Contracts
Underlying Subject Expiration Month/ Premium Market
Index to Call Exercise Price Received Price
---------------------------------------------------------------
Morgan Stanley
High Tech Index 1,101 September 1,044.80$6,499,725$13,285,636
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
(In Thousands, Except for Per Share Amounts)
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $1,006,329
Cash ............................................ 76
Receivables:
Investment securities sold....................... 14,025
Fund shares sold ................................ 2,644
Dividends and interest .......................... 108
Prepaid insurance premium ........................ 10
----------
Total assets .................................. 1,023,192
----------
Liabilities
Payable for investment securities purchased ....... 23,602
Outstanding call options at market (Note 6) ...... 13,286
Payable to Fund shareholders ..................... 1,845
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 243
Accrued service fee (Note 2) ..................... 58
Accrued management fee (Note 2) .................. 20
Accrued distribution fee (Note 2) ................ 19
Accrued accounting services fee (Note 2) ......... 7
Other ............................................ 128
----------
Total liabilities ............................. 39,208
----------
Total net assets ............................. $ 983,984
==========
Net Assets
$1.00 par value capital stock
Capital stock ................................... $ 103,314
Additional paid-in capital ...................... 510,305
Accumulated undistributed income:
Accumulated undistributed net realized gain
on investment transactions .................... 64,214
Net unrealized appreciation in value of
investments ................................... 312,937
Net unrealized depreciation in value of written
call options .................................. (6,786)
----------
Net assets applicable to outstanding units
of capital ................................... $ 983,984
==========
Net asset value per share (net assets divided
by shares outstanding)
Class A .......................................... $9.52
Class Y .......................................... $9.53
Capital shares outstanding
Class A .......................................... 102,046
Class Y .......................................... 1,268
Capital shares authorized .......................... 300,000
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended MARCH 31, 1999
(In Thousands)
Investment Income (Loss)
Income (Note 1B):
Interest and amortization ....................... $ 10,002
Dividends ....................................... 502
--------
Total income .................................. 10,504
--------
Expenses (Note 2):
Investment management fee ....................... 6,235
Transfer agency and dividend disbursing - Class A 2,016
Service fee - Class A ........................... 1,936
Distribution fee - Class A ...................... 141
Accounting services fee ......................... 82
Custodian fees .................................. 45
Shareholder servicing - Class Y ................. 17
Audit fees ...................................... 16
Legal fees ...................................... 9
Other ........................................... 318
--------
Total expenses ................................ 10,815
--------
Net investment loss .......................... (311)
--------
Realized and Unrealized Gain (Loss) on
Investments (Notes 1 and 3)
Realized net gain on investments ................. 110,614
Realized net loss on foreign currency transactions (61)
--------
Realized net gain on investments ................ 110,553
--------
Unrealized appreciation in value of investments
during the period ............................... 45,716
Unrealized depreciation in value of written call
options during the period ....................... (6,786)
Unrealized depreciation in value of options
purchased during the period ..................... (1,532)
--------
Unrealized appreciation ......................... 37,398
--------
Net gain on investments ....................... 147,951
--------
Net increase in net assets resulting from
operations ................................. $147,640
========
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
(Dollars In Thousands)
For the fiscal year
ended March 31,
----------------------------
1999 1998
Increase in Net Assets -------------- ------------
Operations:
Net investment income (loss) ..... $ (311) $ 414
Realized net gain on investments . 110,553 81,941
Unrealized appreciation .......... 37,398 192,525
-------- ---------
Net increase in net assets
resulting from operations ..... 147,640 274,880
-------- ---------
Distributions to shareholders from (Note 1D):*
Net investment income:
Class A ........................ (348) (750)
Class Y ........................ (40) (39)
Realized gains on
securities transactions:
Class A ........................ (108,654) (63,226)
Class Y ........................ (1,329) (969)
-------- ---------
(110,371) (64,984)
-------- ---------
Capital share transactions:
Proceeds from sale of shares:
Class A (45,229,713 and 69,999,164
shares, respectively) ......... 420,544 1,127,590
Class Y (1,008,266 and 166,671
shares, respectively) ......... 9,457 2,765
Proceeds from reinvestment of dividend
and/or capital gains distribution:
Class A (12,288,232 and 4,237,797
shares, respectively) ......... 107,269 63,567
Class Y (156,588 and 67,193
shares, respectively) ......... 1,367 1,008
Payments for shares redeemed:
Class A (39,822,410 and 68,937,977
shares, respectively).......... (371,985) (1,120,136)
Class Y (1,033,095 and 243,230
shares, respectively) ......... (9,638) (3,950)
-------- ---------
Net increase in net assets resulting
from capital share transactions 157,014 70,844
-------- ---------
Total increase .............. 194,283 280,740
Net Assets
Beginning of period ............ ... 789,701 508,961
-------- ---------
End of period ..................... $983,984 $ 789,701
======== =========
Undistributed net investment income $--- $377
==== ====
*See "Financial Highlights" on pages 14 - 15.
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,
-----------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $9.24 $6.80 $7.73 $6.13 $5.47
----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income (loss) ... (0.00) 0.01 0.03 0.02 0.02
Net realized and
unrealized gain
(loss) on
investments ..... 1.54 3.29 (0.64) 1.81 1.06
----- ----- ----- ----- -----
Total from investment
operations ....... 1.54 3.30 (0.61) 1.83 1.08
----- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.01) (0.01) (0.03) (0.02) (0.01)
From capital gains (1.25) (0.85) (0.29) (0.21) (0.41)
----- ----- ----- ----- -----
Total distributions. (1.26) (0.86) (0.32) (0.23) (0.42)
----- ----- ----- ----- -----
Net asset value,
end of period .... $9.52 $9.24 $6.80 $7.73 $6.13
===== ===== ===== ===== =====
Total return**...... 17.83% 51.44% -8.38% 30.18% 20.50%
Net assets, end
of period (in
millions) ......... $972 $779 $501 $492 $304
Ratio of expenses
to average net
assets ........... 1.29% 1.25% 1.27% 1.19% 1.24%
Ratio of net investment
income (loss)to average
net assets ....... -0.04% 0.06% 0.39% 0.29% 0.30%
Portfolio turnover
rate ............. 48.95% 38.51% 38.82% 27.75% 44.01%
*Per-share and share amounts have been adjusted retroactively to reflect the
100% stock dividend effected June 26, 1998.
**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 ended March 31, from 9/6/95**
--------------------- through
1999 1998 1997 3/31/96
------ ------ ------ --------
Net asset value,
beginning of period $9.25 $6.80 $7.74 $7.57
----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... 0.03 0.03 0.05 0.02
Net realized and
unrealized gain (loss)
on investments... 1.54 3.30 (0.65) 0.38
----- ----- ----- -----
Total from investment
operations ........ 1.57 3.33 (0.60) 0.40
----- ----- ----- -----
Less distributions:
From net investment
income........... (0.04) (0.03) (0.05) (0.02)
From capital gains (1.25) (0.85) (0.29) (0.21)
----- ----- ----- -----
Total distributions. (1.29) (0.88) (0.34) (0.23)
----- ----- ----- -----
Net asset value,
end of period ..... $9.53 $9.25 $6.80 $7.74
===== ===== ===== =====
Total return ....... 18.29% 51.83% -8.12% 5.44%
Net assets, end of
period (in
millions) ........ $12 $11 $8 $7
Ratio of expenses
to average net
assets ............ 0.95% 0.96% 0.97% 0.96%***
Ratio of net
investment income
to average net
assets ............ 0.29% 0.35% 0.69% 0.54%***
Portfolio
turnover rate ..... 48.95% 38.51% 38.82% 27.75%***
*Per-share and share amounts have been adjusted retroactively to reflect the
100% stock dividend effected June 26, 1998.
**Commencement of operations.
***Annualized.
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
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 the Nasdaq Stock
Market, which provides information on bid and asked prices quoted by major
dealers in such stocks. Short-term debt securities are valued at amortized
cost, which approximates market.
B. Security transactions and related investment income -- Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Securities gains and losses are calculated on the
identified cost basis. Dividend income is recorded on the ex-dividend
date. Interest income is recorded on the accrual basis. See Note 3 --
Investment Security Transactions.
C. Foreign currency translations -- All assets and liabilities denominated in
foreign currencies are translated into U.S. dollars daily. Purchases and
sales of investment securities and accruals of income and expenses are
translated at the rate of exchange prevailing on the date of the
transaction. For assets and liabilities other than investments in
securities, net realized and unrealized gains and losses from foreign
currency translations arise from changes in currency exchange rates. The
Corporation combines fluctuations from currency exchange rates and
fluctuations in market value when computing net realized and unrealized
gain or loss from investments.
D. Federal income taxes -- It is the Fund's policy to distribute all of its
taxable income and capital gains to its shareholders and otherwise qualify
as a regulated investment company under Subchapter M of the Internal
Revenue Code. In addition, the Fund intends to pay distributions as
required to avoid imposition of excise tax. Accordingly, provision has not
been made for Federal income taxes. See Note 4 -- Federal Income Tax
Matters.
E. Dividends and distributions -- Dividends and distributions to shareholders
are recorded by the Fund on the business day following record date. Net
investment income dividends and capital gains distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are due to differing
treatments for items such as deferral of wash sales and post-October
losses, foreign currency transactions, net operating losses and expiring
capital loss carryovers. At March 31, 1999, the Fund reclassified $310,712
between accumulated undistributed net investment income and accumulated
undistributed net realized gain on investment transactions. Net investment
income, net realized gains and net assets were not affected by this change.
F. Options -- See Note 6 -- Options.
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 $21.5 billion of
combined net assets at March 31, 1999) at annual rates of .51% of the first $750
million of combined net assets, .49% on that amount between $750 million and
$1.5 billion, .47% between $1.5 billion and $2.25 billion, .45% between $2.25
billion and $3 billion, .43% between $3 billion and $3.75 billion, .40% between
$3.75 billion and $7.5 billion, .38% between $7.5 billion and $12 billion, and
.36% of that amount over $12 billion. The Fund accrues and pays this fee daily.
Pursuant to assignment of the Investment Management Agreement between the
Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly owned subsidiary of W&R, serves as the Fund's
investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed Services
Company ("WARSCO"), a wholly owned subsidiary of W&R. Under the agreement,
WARSCO acts as the agent in providing accounting services and assistance to the
Fund and pricing daily the value of shares of the Fund. For these services, the
Fund pays WARSCO a monthly fee of one-twelfth of the annual fee shown in the
following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
For Class A shares, the Fund also pays WARSCO a monthly per account charge
for transfer agency and dividend disbursement services of $1.3125 for each
shareholder account which was in existence at any time during the prior month,
plus $0.30 for each account on which a dividend or distribution of cash or
shares had a record date in that month. With respect to Class Y shares, the
Fund pays WARSCO a monthly fee at an annual rate of .15% of the average daily
net assets of the class for the preceding month. The Fund also reimburses W&R
and WARSCO for certain out-of-pocket costs.
As principal underwriter for the Fund's shares, W&R received gross sales
commissions for Class A shares (which are not an expense of the Fund) of
$4,777,199, out of which W&R paid sales commissions of $2,779,296 and all
expenses in connection with the sale of Fund shares, except for registration
fees and related expenses.
Under a Distribution and Service Plan for Class A shares adopted by the
Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund
may pay monthly a distribution and/or service fee to W&R in an amount not to
exceed .25% of the Fund's Class A average annual net assets. The fee is to be
paid to reimburse W&R for amounts it expends in connection with the distribution
of the Class A shares and/or provision of personal services to Fund shareholders
and/or maintenance of shareholder accounts.
The Fund paid Directors' fees of $29,364, which are included in other
expenses.
W&R is a subsidiary of Waddell & Reed Financial, Inc., a holding company,
and a direct subsidiary of Waddell & Reed Financial Services, Inc., a holding
company.
NOTE 3 -- Investment Security Transactions
Purchases of investment securities, other than U.S. Government and short-
term securities, aggregated $380,112,854 while proceeds from maturities and
sales aggregated $326,857,921. Purchases of options aggregated $7,907,540 while
proceeds from options aggregated $6,499,725. Purchases of short-term securities
aggregated $3,062,388,575 while proceeds from maturities and sales aggregated
$3,068,678,554. No U.S. Government securities were bought or sold during the
period ended March 31, 1999.
For Federal income tax purposes, cost of investments owned at March 31,
1999 was $110,303,268, resulting in net unrealized appreciation of $312,936,842,
of which $356,464,820 related to appreciated securities and $43,527,978 related
to depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $81,941,223 during the year ended March 31, 1998, of which a portion was paid
to shareholders during the period ended March 31, 1998. 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 two classes of shares,
Class A and Class Y, each of which has equal rights as to assets and voting
privileges. Class Y shares are not subject to a sales charge on purchases; they
are not subject to a Rule 12b-1 Distribution and Service Plan and have a
separate transfer agency and dividend disbursement services fee structure. A
comprehensive discussion of the terms under which shares of either class are
offered is contained in the Prospectus and the Statement of Additional
Information for the Fund.
Income, non-class specific expenses, and realized and unrealized gains and
losses are allocated daily to each class of shares based on the value of
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity.
NOTE 6 -- Options
When the Fund writes (sells) an option, an amount equal to the premium
received by the Fund is recorded as a liability. The amount of the liability is
subsequently adjusted to reflect the current market value of the option written.
The current market value of an option is the last sales price on the principal
exchange on which the option is traded, or in the absence of transactions, the
mean between the bid and asked prices or at a value supplied by a broker-dealer.
When an option expires on its stipulated expiration date or the Fund enters into
a closing purchase transaction, the Fund realizes a gain (or loss if the cost of
a closing purchase transaction exceeds the premium received when the call option
was sold) and the liability related to such option is extinguished. When a call
option is exercised, the premium is added to the proceeds from the sale of the
underlying security in determining whether the Fund has realized a gain or loss.
For the Fund, when a put written is exercised, the cost basis of the securities
purchased by the Fund is reduced by the amount of the premium.
Options purchased by United New Concepts Fund are accounted for in the same
manner as marketable portfolio securities. The cost of portfolio securities
acquired through the exercise of call options is increased by the premium paid
to purchase the call. The proceeds from securities sold through the exercise of
put options are decreased by the premium paid to purchase the put.
Transactions in call options written were as follows:
Number of
Contracts Premiums
--------- --------
Outstanding at March 31, 1998 ....... --- $ ---
Options written ..................... 1,101 6,499,725
Options terminated in closing
purchase transactions .......... --- ---
Options exercised ................... --- ---
Options expired ..................... --- ---
----- ----------
Outstanding at March 31, 1999 ....... 1,101 $6,499,725
===== ==========
NOTE 7 -- Stock Dividend
The Fund's Board of Directors approved on February 11, 1998 a stock
dividend of 100% effected on June 26, 1998. Authorized shares of the Fund were
accordingly increased by 100,000,000 shares.
<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, 1999, and the related statement of operations for the fiscal year
then ended, the statements of changes in net assets for each of the two fiscal
years in the period then ended, and the financial highlights for each of the
five fiscal years in the period 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
March 31, 1999, by correspondence with the custodian and brokers or other
alternative procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of United
New Concepts Fund, Inc. as of March 31, 1999, the results of its operations for
the fiscal year then ended, the changes in its net assets for each of the two
fiscal years in the period then ended, and the financial highlights for each of
the five fiscal years in the period then ended, in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
May 7, 1999
<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
12-16-98 $1.254 $0.0560 $1.1980 $0.0041 $0.0519 $1.1980
------ ------- ------- ------- ------- -------
Total $1.254 $0.0560 $1.1980 $0.0041 $0.0519 $1.1980
====== ======= ======= ======= ======= =======
Class Y
12-16-98 $1.288 $0.0900 $1.1980 $0.0394 $0.0506 $1.1980
------ ------- ------- ------- ------- -------
Total $1.288 $0.0900 $1.1980 $0.0394 $0.0506 $1.1980
====== ======= ======= ======= ======= =======
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
Keith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, Menlo Park, California
Linda K. Graves, Topeka, Kansas
Joseph Harroz, Jr., Norman, Oklahoma
John F. Hayes, Hutchinson, Kansas
Robert L. Hechler, Overland Park, Kansas
Henry J. Herrmann, Overland Park, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Ronald C. Reimer, Mission Hills, Kansas
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Frederick Vogel III, Milwaukee, Wisconsin
OFFICERS
Robert L. Hechler, President
Henry J. Herrmann, Vice President
Theodore W. Howard, Vice President and Treasurer
Helge K. Lee, Vice President and Secretary
Zachary H. Shafran, Vice President
Lower sales charges are available by combining the net asset value ("NAV") of
existing Class A shares of the Fund with additional purchases of Class A shares
of any fund in the United Group, except that only the Class A shares of United
Cash Management, Inc. that were acquired by exchange of another United Group
fund's Class A shares on which a sales charge was paid, plus the shares paid as
dividends on those acquired shares, may be combined.
For shareholders who have chosen the Income-Earned option or the Cash option for
their distribution method: if the dividend distribution (for Income-Earned) or
the total distribution (for Cash) is less than ten dollars, the distribution
will be automatically paid in additional shares of the same class of the Fund.
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.
<PAGE>
To all traditional IRA Planholders:
As required by law, income tax will automatically be withheld from any
distribution or withdrawal from a traditional IRA unless you make a written
election not to have taxes withheld. The election may be made by submitting
forms provided by Waddell & Reed, Inc. which can be obtained from your Waddell &
Reed representative or by submitting Internal Revenue Service form W-4P. Once
made, an election can be revoked by providing written notice to Waddell & Reed,
Inc. If you elect not to have tax withheld you may be required to make payments
of estimated tax. Penalties may be imposed by the IRS if withholding and
estimated tax payments are not adequate.
<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(3-99)
printed on recycled paper
