United
New Concepts
Fund, Inc.
SEMIANNUAL
REPORT
-------------------------------------------
For the six months ended September 30, 1999
<PAGE>
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>
PRESIDENT'S LETTER
SEPTEMBER 30, 1999
Dear Shareholder:
As president of your Fund, I would like to thank you for your continued
confidence as an investor. I especially want to express our appreciation for
your confidence during our conversion to a new shareholder accounting system.
During this period some of you may have experienced delays in reaching our home
office shareholder services staff and we apologize for any inconvenience and
frustration you experienced.
Our conversion is now complete. Our new system complies with all of the date
requirements for the new millennium. It has the capacity to handle our growing
business and its modern structure will allow us to expand our services available
to you. We have also added to our telephone line capacity and have doubled the
size of our shareholder services staff. We are committed to the goal of
providing the best service possible to our shareholders.
With respect to your investment program, while it is impossible to predict the
future of the markets, there are some basic principles that we stand by that can
help investors achieve their financial goals.
. Work with your financial advisor to develop a comprehensive financial plan.
A comprehensive plan can help you pinpoint your financial objectives and
identify specific strategies for turning your financial dreams into reality.
A financial plan can also help ensure that your investment portfolio is
appropriately diversified. It can be one of the best ways to plan for your
financial future.
. Review your financial plan regularly. Financial planning is an ongoing
process that requires periodic reviews to adapt to life's changes.
. Make regular investments and adopt a long-term investment view. Over the
long term, regular contributions to your investments can smooth out the bumps
of volatility and enable investors to take advantage of the power of
compounding.
Waddell & Reed is positioned to assist you as you work toward your financial
goals. We will continue to offer quality investment products and personal
service to make the financial planning and investment process convenient and
accessible to you. Your financial advisor is ready to assist you in completing
your comprehensive financial plan to reach the financial goals that are most
important to you.
We look forward to assisting you in the future. If you have any questions about
your account, wish to review your financial plan or have other financial issues,
please contact your financial advisor or your local Waddell & Reed office.
Again, thank you for your continued confidence.
Respectfully,
Robert L. Hechler
President
<PAGE>
SHAREHOLDER SUMMARY
- --------------------------------------------------------------
United New Concepts Fund, Inc.
PORTFOLIO STRATEGY:
Common Stock in OBJECTIVE: To seek growth of
mid-capitalization companies capital.
STRATEGY: Invests primarily in
Maximum 10% Foreign common stocks of U.S.
Securities companies whose market
capitalizations are
within the range of capitalizations of
companies comprising the Standard &
Poors MidCap 400 Index and that the
Fund's investment manager believes offer
above-average growth potential.
FOUNDED: 1983
SCHEDULED DIVIDEND FREQUENCY: ANNUALLY (December)
<PAGE>
PERFORMANCE SUMMARY - Class A Shares
PER SHARE DATA
For the Six Months Ended September 30, 1999
- -------------------------------------------
NET ASSET VALUE ON
9/30/99 $10.61
3/31/99 9.52
------
CHANGE PER SHARE $ 1.09
======
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 9-30-99 38.79% 47.26%
5-year period ended 9-30-99 20.77% 22.21%
10-year period ended 9-30-99 19.06% 19.76%
*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 September 30, 1999, United New Concepts Fund, Inc. had net assets totaling
$1,164,548,782 invested in a diversified portfolio of:
86.96% Common Stocks
13.04% Cash and Cash Equivalents
As a shareholder of United New Concepts Fund, Inc., for every $100 you had
invested on September 30, 1999, your Fund owned:
$33.04 Services Stocks
24.08 Transportation, Communication, Electric
and Sanitary Services Stocks
21.15 Manufacturing Stocks
13.04 Cash and Cash Equivalents
5.26 Wholesale and Retail Trade Stocks
2.43 Finance, Insurance and Real Estate Stocks
1.00 Mining Stocks
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS
Automotive Dealers and Service Stations - 2.20%
O'Reilly Automotive, Inc.* ............. 537,750 $ 25,627,148
Building Materials and Garden Supplies - 0.85%
Fastenal Company ....................... 210,000 9,889,687
Business Services - 21.43%
AHL Services, Inc.* .................... 600,000 15,675,000
Acxiom Corporation* .................... 1,100,000 21,621,875
America Online, Inc.* .................. 425,000 44,200,000
Cerner Corporation* .................... 1,205,000 18,338,594
CheckFree Holdings Corporation* ........ 700,000 28,765,625
Getty Images, Inc.* .................... 459,600 11,059,125
MemberWorks Incorporated* .............. 275,000 9,135,156
National Data Corporation .............. 350,000 9,100,000
NOVA Corporation ....................... 600,000 15,000,000
Securities First Technologies Corporation* 300,000 11,643,750
Shared Medical Systems Corporation ..... 300,000 14,025,000
Telemate.Net Software, Inc.* ........... 50,000 701,563
Ticketmaster Online-CitySearch, Inc.,
Class B* .............................. 450,000 10,898,437
USWeb Corporation* ..................... 750,000 25,757,813
Webstakes.com, Inc.* ................... 251,000 2,231,547
Wind River Systems, Inc.* .............. 600,000 11,381,250
Total ................................. 249,534,735
Chemicals and Allied Products - 4.10%
Genzyme Corporation - General Division* 450,000 20,278,125
SangStat Medical Corporation* .......... 500,000 10,687,500
Watson Pharmaceuticals, Inc.* .......... 550,000 16,809,375
Total ................................. 47,775,000
Communication - 21.10%
American Mobile Satellite Corporation* . 700,000 12,228,125
COLT Telecom Group plc, ADR* ........... 460,000 44,073,750
Concentric Network Corporation* ........ 1,200,000 24,412,500
Insight Communications Company, L.P.* .. 300,750 8,627,766
Nextel Communications, Inc.* ........... 400,000 27,137,500
Research In Motion Limited* (A) ........ 600,000 18,610,979
Research In Motion Limited* ............ 567,500 17,539,297
Salem Communications Corporation, Class A* 300,000 7,743,750
VoiceStream Wireless Corporation* ...... 800,000 49,375,000
Western Wireless Corporation, Class A* . 800,000 35,875,000
Total ................................. 245,623,667
Depository Institutions - 1.53%
Concord EFS, Inc.* ..................... 862,500 17,789,062
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS (Continued)
Electric, Gas and Sanitary Services - 1.30%
Allied Waste Industries, Inc., New* .... 1,300,000 $ 15,193,750
Electronic and Other Electric Equipment - 5.64%
Cypress Semiconductor Corporation* ..... 700,000 15,050,000
EMCORE Corporation* .................... 107,400 1,486,819
Gemstar International Group Limited* ... 255,000 19,913,906
Micron Technology, Inc.* ............... 440,000 29,287,500
Total ................................. 65,738,225
Engineering and Management Services - 2.56%
Incyte Pharmaceuticals, Inc.* .......... 640,000 14,800,000
MAXIMUS, Inc.* ......................... 500,000 14,968,750
Total ................................. 29,768,750
Furniture and Home Furnishings Stores - 1.25%
Williams-Sonoma, Inc.* ................. 300,000 14,568,750
Industrial Machinery and Equipment - 4.79%
Cisco Systems, Inc.* ................... 240,000 16,447,500
Cooper Cameron Corporation* ............ 550,000 20,762,500
RSA Security Inc.* ..................... 700,000 18,571,875
Total ................................. 55,781,875
Instruments and Related Products - 2.79%
Beckman Coulter, Inc. .................. 193,500 8,731,687
Boston Scientific Corporation* ......... 500,000 12,343,750
General Motors Corporation, Class H* ... 200,000 11,450,000
Total ................................. 32,525,437
Miscellaneous Retail - 0.31%
uBid, Inc.* ............................ 135,000 3,564,844
Oil and Gas Extraction - 1.00%
Noble Affiliates, Inc. ................. 400,000 11,600,000
Prepackaged Software - 9.05%
Dendrite International, Inc.* ......... 600,000 28,331,250
i2 Technologies, Inc.* ................. 300,000 11,634,375
ISS Group, Inc.* ....................... 300,000 8,137,500
Intuit Inc.* ........................... 400,000 35,062,500
Parametric Technology Corporation* ..... 600,000 8,081,250
Transaction Systems Architects, Inc.,
Class A* .............................. 526,200 14,190,956
Total ................................. 105,437,831
Real Estate - 0.90%
homestore.com, Inc.* ................... 250,200 10,477,125
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
SEPTEMBER 30, 1999
Shares Value
COMMON STOCKS (Continued)
Transportation by Air - 0.52%
Southwest Airlines Co. ................. 400,000$ 6,075,000
Transportation Equipment - 3.83%
Gentex Corporation* .................... 900,000 18,590,625
Harley-Davidson, Inc. .................. 520,000 26,032,500
Total ................................. 44,623,125
Trucking and Warehousing - 1.16%
Iron Mountain Incorporated* ............ 400,000 13,550,000
Wholesale Trade -- Durable Goods - 0.65%
WESCO International, Inc.* ............. 534,900 7,555,463
TOTAL COMMON STOCKS - 86.96% $1,012,699,474
(Cost: $668,364,217)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Auto Repair, Services and Parking - 0.38%
PHH Corp.,
5.8%, 10-1-99 ......................... $ 4,385 4,385,000
Business Services - 0.26%
Electronic Data Systems Corporation,
5.33%, 10-5-99 ........................ 3,000 2,998,223
Communication - 0.43%
Dominion Resources Inc.,
5.49%, 10-18-99 ....................... 5,000 4,987,014
Electric, Gas and Sanitary Services - 2.93%
Allegheny Energy Inc.,
5.32%, 10-20-99 ....................... $ 2,540 2,532,868
Bay State Gas Co.,
5.4%, 10-26-99 ........................ 12,500 12,453,125
Commonwealth Edison Co.,
5.6%, 11-23-99 ........................ 11,400 11,306,014
Western Resources, Inc.,
5.65%, 10-7-99 ........................ 7,900 7,892,561
Total ................................. 34,184,568
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Fabricated Metal Products - 1.02%
Danaher Corporation,
5.38%, Master Note .................... $ 1,902$ 1,902,000
Snap-On Inc.,
5.35%, 10-19-99 ....................... 10,000 9,973,250
Total ................................. 11,875,250
Food and Kindred Products - 1.79%
ConAgra Inc.,
5.58%, 10-7-99 ........................ 3,000 2,997,210
General Mills, Inc.,
5.235%, Master Note ................... 13,400 13,400,000
Ralston Purina Co.,
5.53%, 10-8-99 ........................ 4,455 4,450,210
Total ................................. 20,847,420
Industrial Machinery and Equipment - 1.29%
Hewlett-Packard Co.:
5.27%, 10-5-99 ........................ 3,030 3,028,226
5.33%, 10-5-99 ........................ 12,000 11,992,893
Total ................................. 15,021,119
Insurance Carriers - 0.43%
SAFECO Corp.,
5.38%, 10-7-99 ........................ 4,995 4,990,521
Miscellaneous Retail - 0.86%
Toys _R_ Us Inc.,
5.5%, 10-19-99 ........................ 10,000 9,972,500
Nondepository Institutions - 1.28%
Associates First Capital B.V.,
5.31%, 10-25-99 ....................... 5,000 4,982,300
Penney (J.C.) Funding Corp.,
5.58%, 10-14-99 ....................... 10,000 9,979,850
Total ................................. 14,962,150
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
UNITED NEW CONCEPTS FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Personal Services - 1.03%
Block Financial Corp.,
5.37%, 10-5-99 ........................ $12,000 $ 11,992,840
Petroleum and Coal Products - 0.35%
Kerr-McGee Credit LLC,
5.95%, 10-1-99 ........................ 4,145 4,145,000
Wholesale Trade -- Nondurable Goods - 0.97%
Enron Corp.,
5.85%, 10-1-99 ........................ 11,309 11,309,000
TOTAL SHORT-TERM SECURITIES - 13.02% $ 151,670,605
(Cost: $151,670,605)
TOTAL INVESTMENT SECURITIES - 99.98% $1,164,370,079
(Cost: $820,034,822)
CASH AND OTHER ASSETS, NET OF LIABILITIES _ 0.02% 178,703
NET ASSETS - 100.00% $1,164,548,782
See Notes to Schedule of Investments.
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.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999
(In Thousands, Except for Per Share Amounts)
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $1,164,370
Cash ............................................ 6
Receivables:
Investment securities sold....................... 7,267
Fund shares sold ................................ 2,663
Dividends and interest .......................... 90
Prepaid insurance premium ........................ 16
----------
Total assets .................................. 1,174,412
----------
Liabilities
Payable to Fund shareholders ..................... 5,306
Payable for investment securities purchased ....... 3,947
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 297
Accrued service fee (Note 2) ..................... 173
Accrued distribution fee (Note 2) ................ 63
Accrued management fee (Note 2) .................. 27
Accrued accounting services fee (Note 2) ......... 8
Other ............................................ 42
----------
Total liabilities ............................. 9,863
----------
Total net assets ............................. $1,164,549
==========
Net Assets
$1.00 par value capital stock
Capital stock ................................... $ 109,706
Additional paid-in capital ...................... 570,050
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss ... (3,823)
Accumulated undistributed net realized gain
on investment transactions .................... 144,281
Net unrealized appreciation in value of
investments ................................... 344,335
----------
Net assets applicable to outstanding units
of capital ................................... $1,164,549
==========
Net asset value per share (net assets divided
by shares outstanding)
Class A .......................................... $10.61
Class Y .......................................... $10.65
Capital shares outstanding
Class A .......................................... 108,343
Class Y .......................................... 1,363
Capital shares authorized .......................... 300,000
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended SEPTEMBER 30, 1999
(In Thousands)
Investment Loss
Income (Note 1B):
Interest and amortization ....................... $ 3,183
Dividends ....................................... 593
--------
Total income .................................. 3,776
--------
Expenses (Note 2):
Investment management fee ....................... 4,401
Transfer agency and dividend disbursing - Class A 1,463
Service fee - Class A ........................... 1,173
Distribution fee - Class A ...................... 186
Accounting services fee ......................... 50
Custodian fees .................................. 34
Legal fees ...................................... 13
Shareholder servicing - Class Y ................. 11
Audit fees ...................................... 10
Other ........................................... 197
--------
Total expenses ................................ 7,538
--------
Net investment loss .......................... (3,762)
--------
Realized and Unrealized Gain (Loss) on
Investments (Notes 1 and 3)
Realized net gain on investments ................. 97,864
Realized net loss on written call options ......... (17,858)
--------
Net realized gain on investments ................ 80,006
Unrealized appreciation in value of investments
during the period ............................... 38,184
--------
Net gain on investments ....................... 118,190
--------
Net increase in net assets resulting from
operations ................................. $114,428
========
See notes to financial statements.
<PAGE>
UNITED NEW CONCEPTS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
(Dollars In Thousands)
For the For the
six months fiscal year
ended ended
September 30, March 31,
1999 1999
Increase in Net Assets ------------ ------------
Operations:
Net investment loss .............. $ (3,762) $ (311)
Realized net gain on investments . 80,006 110,553
Unrealized appreciation .......... 38,184 37,398
---------- ---------
Net increase in net assets
resulting from operations ..... 114,428 147,640
---------- ---------
Distributions to shareholders from (Note 1D):*
Net investment income:
Class A ........................ --- (348)
Class Y ........................ --- (40)
Realized gains on securities transactions:
Class A ........................ --- (108,654)
Class Y ........................ --- (1,329)
---------- ---------
--- (110,371)
---------- ---------
Capital share transactions:
Proceeds from sale of shares:
Class A (16,467,240 and 45,229,713
shares, respectively) ......... 169,743 420,544
Class Y (199,216 and 1,008,266
shares, respectively) ......... 2,072 9,457
Proceeds from reinvestment of dividend
and/or capital gains distribution:
Class A (0 and 12,288,232
shares, respectively) ......... --- 107,269
Class Y (0 and 156,588
shares, respectively) ......... --- 1,367
Payments for shares redeemed:
Class A (10,170,465 and 39,822,410
shares, respectively).......... (104,625) (371,985)
Class Y (103,687 and 1,033,095
shares, respectively) ......... (1,053) (9,638)
---------- ---------
Net increase in net assets resulting
from capital share transactions 66,137 157,014
---------- ---------
Total increase .............. 180,565 194,283
Net Assets
Beginning of period ............ ... 983,984 789,701
---------- ---------
End of period ..................... $1,164,549 $983,984
========== =========
Undistributed net investment loss $(3,823) $---
======== ====
*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
six months For the fiscal year ended March 31,
ended -----------------------------------
9/30/99 1999 1998 1997 1996 1995
------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $ 9.52 $9.24 $6.80 $7.73 $6.13 $5.47
------ ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income (loss) ... (0.03) (0.00) 0.01 0.03 0.02 0.02
Net realized and
unrealized gain
(loss) on
investments ..... 1.12 1.54 3.29 (0.64) 1.81 1.06
------ ----- ----- ----- ----- -----
Total from investment
operations ....... 1.09 1.54 3.30 (0.61) 1.83 1.08
------ ----- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.00) (0.01) (0.01) (0.03) (0.02) (0.01)
From capital gains (0.00) (1.25) (0.85) (0.29) (0.21) (0.41)
------ ----- ----- ----- ----- -----
Total distributions. (0.00) (1.26) (0.86) (0.32) (0.23) (0.42)
------ ----- ----- ----- ----- -----
Net asset value,
end of period .... $10.61 $9.52 $9.24 $6.80 $7.73 $6.13
====== ===== ===== ===== ===== =====
Total return**...... 11.45% 17.83% 51.44% -8.38% 30.18% 20.50%
Net assets, end
of period (in
millions) ......... $1,150 $972 $779 $501 $492 $304
Ratio of expenses
to average net
assets ........... 1.37%***1.29% 1.25% 1.27% 1.19% 1.24%
Ratio of net investment
income (loss)to average
net assets ....... -0.68%***-0.04% 0.06% 0.39% 0.29% 0.30%
Portfolio turnover
rate ............. 61.45% 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.
***Annualized.
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
six For the fiscal period
months year ended March 31, from 9/6/95**
ended --------------------- through
9/30/99 1999 1998 1997 3/31/96
-------- ------ ------ ------ --------
Net asset value,
beginning of period $ 9.53 $9.25 $6.80 $7.74 $7.57
------ ----- ----- ----- -----
Income from investment
operations:
Net investment
income (loss) ... (0.02) 0.03 0.03 0.05 0.02
Net realized and
unrealized gain (loss)
on investments... 1.14 1.54 3.30 (0.65) 0.38
------ ----- ----- ----- -----
Total from investment
operations ........ 1.12 1.57 3.33 (0.60) 0.40
------ ----- ----- ----- -----
Less distributions:
From net investment
income........... (0.00) (0.04) (0.03) (0.05) (0.02)
From capital gains (0.00) (1.25) (0.85) (0.29) (0.21)
------ ----- ----- ----- -----
Total distributions. (0.00) (1.29) (0.88) (0.34) (0.23)
------ ----- ----- ----- -----
Net asset value,
end of period ..... $10.65 $9.53 $9.25 $6.80 $7.74
====== ===== ===== ===== =====
Total return ....... 11.75% 18.29% 51.83% -8.12% 5.44%
Net assets, end of
period (in
millions) ........ $15 $12 $11 $8 $7
Ratio of expenses
to average net
assets ............ 1.01%***0.95% 0.96% 0.97% 0.96%***
Ratio of net
investment income
to average net
assets (loss) .... -0.33%***0.29% 0.35% 0.69% 0.54%***
Portfolio
turnover rate ..... 61.45% 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
SEPTEMBER 30, 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. 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
Fund combines fluctuations from currency exchange rates and fluctuations in
market value when computing net realized and unrealized gain or loss from
investments.
D. Federal income taxes -- It is the Fund's policy to distribute all of its
taxable income and capital gains to its shareholders and otherwise qualify
as a regulated investment company under Subchapter M of the Internal
Revenue Code. In addition, the Fund intends to pay distributions as
required to avoid imposition of excise tax. Accordingly, provision has not
been made for Federal income taxes. See Note 4 -- Federal Income Tax
Matters.
E. Dividends and distributions -- Dividends and distributions to shareholders
are recorded by the Fund on the business day following record date. Net
investment income dividends and capital gains distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are due to differing
treatments for items such as deferral of wash sales and post-October
losses, foreign currency transactions, net operating losses and expiring
capital loss carryovers.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
NOTE 2 -- Investment Management And Payments to Affiliated Persons
The Fund pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business. As of
June 30, 1999, the fee is payable by the Fund at the annual rates of: 0.85% of
net assets up to $1 billion; 0.83% of net assets over $1 billion and up to $2
billion; 0.80% of net assets over $2 billion and up to $3 billion; and 0.76% of
net assets over $3 billion. Prior to June 30, 1999, the fee consisted 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 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 the 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
$3,403,145, out of which W&R paid sales commissions of $1,992,834 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 $18,768, 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 $630,219,686 while proceeds from maturities and
sales aggregated $599,032,015. Purchases of options aggregated $24,476,057
while proceeds from options aggregated $926,087. Purchases of short-term
securities aggregated $1,950,577,216 while proceeds from maturities and sales
aggregated $1,955,059,403. No U.S. Government securities were bought or sold
during the period ended September 30, 1999.
For Federal income tax purposes, cost of investments owned at September 30,
1999 was $820,034,822, resulting in net unrealized appreciation of $344,335,257,
of which $397,584,021 related to appreciated securities and $53,248,764 related
to depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $110,303,268 during the year ended March 31, 1999, of which a portion was
paid to shareholders during the period ended March 31, 1999. Remaining capital
gain net income will be distributed to the Fund's shareholders.
NOTE 5 -- Multiclass Operations
The Fund is authorized to offer four classes of shares, Class A, Class B,
Class C and Class Y, each of which have equal rights as to assets and voting
privileges. Only Class A and Class Y shares were issued during the six months
ended September 30, 1999. Class Y shares are not subject to a sales charge on
purchases, are not subject to a Rule 12b-1 Distribution and Service Plan and are
subject to a separate transfer agency and dividend disbursement services fee
structure. A comprehensive discussion of the terms under which shares of 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 their
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity.
NOTE 6 -- Options
Options purchased by the 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.
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.
Transactions in call options written were as follows:
Number of Premiums
Contracts Received
--------- --------
Outstanding at March 31, 1999 ...... 1,101 $ 6,499,725
Options written .............. 400 118,796
Options terminated in closing
purchase transactions ......... (1,501) (6,618,521)
Options exercised .................. --- ---
Options expired .................... --- ---
----- -----------
Outstanding at September 30, 1999 .. --- $---
===== ===========
<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 September 30, 1999, and the related statement of operations for the six-month
period then ended, the statements of changes in net assets for the six-month
period then ended and the fiscal year ended March 31, 1999, and the financial
highlights for the six-month period ended September 30, 1999, and for each of
the five fiscal years in the period ended March 31, 1999. These financial
statements and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1999, 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 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 September 30, 1999, the results of its operations
for the six-month period then ended, the changes in its net assets for the six-
month period then ended and the fiscal year ended March 31, 1999, and the
financial highlights for the six-month period ended September 30, 1999, and for
each of the five fiscal years in the period ended March 31, 1999 in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
November 5, 1999
<PAGE>
Shareholder Meeting Results
A special meeting of United New Concepts Fund, Inc. was held on June 22, 1999.
The matters voted upon by the shareholders and the resulting votes for each
matter are presented below.
Item 1. To elect the Board of Directors:
Broker
For Withhold Non-Votes*
J. Concannon 48,758,069 2,775,411 0
J. Dillingham 48,760,750 2,772,730 0
D. Gardner 48,684,216 2,849,264 0
L. Graves 48,736,807 2,796,673 0
J. Harroz Jr. 48,651,152 2,882,328 0
J. Hayes 48,606,256 2,927,224 0
R. Hechler 48,707,006 2,826,474 0
H. Herrmann 48,729,223 2,804,257 0
G. Johnson 48,547,795 2,985,685 0
W. Morgan 48,673,913 2,859,567 0
R. Reimer 48,672,395 2,861,085 0
F. Ross 48,746,111 2,787,369 0
E. Schwartz 48,730,539 2,802,941 0
K. Tucker 48,742,811 2,790,669 0
F. Vogel 48,771,310 2,762,170 0
Item 2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent accountants for its current fiscal year:
Broker
For Against Abstain Non-Votes*
48,376,951 491,131 2,665,398 0
Item 3. To approve or disapprove the amendment to the Fund's investment
management agreement with Waddell & Reed Investment Management Company:
Broker
For Against Abstain Non-Votes*
44,437,601 3,841,645 3,211,891 42,343
Item 4. To approve or disapprove amendment of the Fund's policy regarding
securities lending:
Broker
For Against Abstain Non-Votes*
45,673,327 2,176,156 3,641,654 42,343
Item 5. To approve or disapprove the Fund's Articles of Incorporation to
change the par value of Fund shares to $0.001:
Broker
For Against Abstain Non-Votes*
45,613,924 1,789,263 4,130,293 0
*Broker Non-Votes are proxies received by the Fund from brokers or nominees when
the broker or nominee neither has received instructions from the beneficial
owner or other persons entitled to vote nor has discretionary power to vote on a
particular matter.
<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
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 Accumulative Fund
United Asset Strategy Fund, Inc.
United Bond Fund
United Cash Management, Inc.
United Continental Income Fund, Inc.
United Government Securities Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Income Fund
United International Growth Fund, Inc.
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United New Concepts Fund, Inc.
United Retirement Shares, Inc.
United Science and Technology Fund
United Small Cap Fund, Inc.
United Vanguard Fund, Inc.
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
(800) 366-5465
Our INTERNET address is:
http://www.waddell.com
NUR1012SA(9-99)
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