Waddell & Reed Advisors
New Concepts
Fund, Inc.
SEMIANNUAL
REPORT
-------------------------------------------
For the six months ended September 30, 2000
<PAGE>
CONTENTS
3 President's Letter
5 Performance Summary
7 Portfolio Highlights
8 Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Financial Highlights
18 Notes to Financial statements
25 Independent Auditors' Report
26 Directors & Officers
This report is submitted for the general information of the shareholders of
Waddell & Reed Advisors New Concepts Fund, Inc. It is not authorized for
distribution to prospective investors in the Fund unless accompanied with or
preceded by the Waddell & Reed Advisors New Concepts Fund, Inc. current
prospectus and current Fund performance information.
<PAGE>
PRESIDENT'S LETTER OF NEW CONCEPTS FUND
SEPTEMBER 30, 2000
Dear Shareholder:
We are delighted to share with you this report on your Fund's operations for the
six months ended September 30, 2000.
The last six months marked an unusual and frenetic time for the markets
and the economy. Concerns during the second quarter of 2000 centered on
a soaring economy, the potential for increased inflation and a drop in
the valuation of technology stocks. During the third quarter, rising
energy prices, a faltering euro, worries about violence in the Middle
East and doubts about third quarter corporate earnings reports replaced
those previous concerns.
Together, these issues served to depress stock prices as we entered the
fourth quarter of 2000. Additionally, a pending presidential election
has made the Federal Reserve hesitant to take any action, although it
appears that a soft landing has been engineered for the once-flying
economy.
For the last six months, the technology-heavy Nasdaq Composite Index was down
19.68 percent, while the Nasdaq Industrial Index was down 15.43 percent. The
performance of the two major indices was also down over the period, as the
Standard & Poor's 500 declined 3.81 percent and the Dow Jones Industrial Average
was down a more modest 1.82 percent. During the third quarter of 2000, the Dow
rebounded a bit, increasing 2.36 percent.
By contrast, bonds have done fairly well during the last six months. It appears
that a combination of decreasing concerns about inflation and the Fed being less
aggressive in raising interest rates has helped bond performance during the
period.
Going forward, we believe it is essential for investors to maintain a long-term
perspective and to stick with specific financial plans. Short-term downturns
often create excellent buying opportunities, as well as opportunities to further
diversify a portfolio.
Overall, investors have been rewarded well in recent years. Those who
continue a structured and consistent investment program remain well
positioned to take advantage of opportunities, including those presented
by the market's occasional downdrafts. Just as we urge you not to become
unduly concerned if the market moves downward in the near term, we would
urge that you not become too exuberant when it moves higher in similarly
short time periods.
It is impossible to predict with certainty where markets will go next, but one
thing that remains certain is that a well-thought-out investment plan is
important. Remember, a plan that is appropriate for you is appropriate
regardless of inevitable market changes. You have a partnership with your
Waddell & Reed financial advisor, and that partnership is built upon a
customized program based on your specific needs. Focusing on that plan, despite
market fluctuations, could be your key to a sound financial future. Thank you
for your ongoing commitment and support.
Respectfully,
Robert L. Hechler
President
<PAGE>
SHAREHOLDER SUMMARY
--------------------------------------------------------------
Waddell & Reed Advisors New Concepts Fund, Inc.
PORTFOLIO STRATEGY:
Common Stock in GOAL: To seek the growth of
mid-capitalization companies capital.
STRATEGY: Invests primarily in
common stocks of U.S. and
foreign companies whose market
capitalizations are within the range of
capitalizations of companies comprising
the Russell Mid-Cap Growth Index and
that the Manager believes offer above-
average growth potential.
FOUNDED: 1983
SCHEDULED DIVIDEND FREQUENCY: ANNUALLY (December)
PERFORMANCE SUMMARY - Class A Shares
PER SHARE DATA
For the Six Months Ended September 30, 2000
-------------------------------------------
NET ASSET VALUE ON
9-30-00 $13.59
3-31-00 15.07
------
CHANGE PER SHARE $(1.48)
======
Past performance is not necessarily indicative of future results.
<PAGE>
AVERAGE ANNUAL TOTAL RETURN (1)
Class A Class B
----------------------- -----------------------
With Without With Without
Period Sales Load(2) Sales Load(3) CDSC(4) CDSC(5)
------ ---------- ---------- ----------- --------
1-year period
ended 9-30-00 33.16% 41.28% --- ---
5-year period
ended 9-30-00 20.64% 22.08% --- ---
10-year period
ended 9-30-00 24.79% 25.53% --- ---
Cumulative return
since inception
of Class (6) --- --- 33.61% 38.61%
(1)Performance data represents share price appreciation, including reinvestment
of all income and capital gains distributions. Performance data represents
past performance and is no guarantee of future results. Share price,
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
(2)Performance data is based on deduction of 5.75% sales load on the initial
purchase in the periods.
(3)Performance data does not take into account the sales load deducted on an
initial purchase.
(4)Performance data reflects the effect of paying the applicable contingent
deferred sales charge (CDSC) at a maximum of 5.00% upon redemption at the end
of the period.
(5)Performance data does not reflect the effect of paying the applicable CDSC
upon redemption at the end of the period.
(6)10-4-99 for Class B shares (the date on which shares were first acquired by
shareholders).
AVERAGE ANNUAL TOTAL RETURN(1)
Class C Class Y(2)
----------------------- ----------
With Without
Period CDSC(3) CDSC(4)
------ ---------- ----------
1-year period
ended 9-30-00 --- --- 41.53%
5-year period
ended 9-30-00 --- --- 22.44%
10-year period
ended 9-30-00 --- --- ---
Cumulative return
since inception
of Class(5) 37.71% 38.71% ---
Since inception
of Class(5) --- --- 22.10%
(1)Performance data represents share price appreciation, including reinvestment
of all income and capital gains distributions. Performance data represents
past performance and is no guarantee of future results. Share price,
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
(2)Performance data does not include the effect of sales charges, as Class Y
shares are not subject to these charges.
(3)Performance data reflects the effect of paying the applicable contingent
deferred sales charge (CDSC) at a maximum of 1.00% which declines to zero at
the end of the first year after investment.
(4)Performance data does not reflect the effect of paying the applicable CDSC
upon redemption at the end of the period.
(5)10-4-99 for Class C shares and 9-6-95 for Class Y shares (the date on which
shares were first acquired by shareholders).
The recent growth rate and volatility in the stock market has helped produce
short-term returns that may not be typical and may not continue in the future.
A substantial portion of the Fund's returns during recent periods is
attributable to investment in initial public offerings.
<PAGE>
PORTFOLIO HIGHLIGHTS
On September 30, 2000, Waddell & Reed Advisors New Concepts Fund, Inc. had net
assets totaling $1,888,836,399 invested in a diversified portfolio of:
93.31% Common Stocks
6.69% Cash and Cash Equivalents
As a shareholder of Waddell & Reed Advisors New Concepts Fund, Inc., for every
$100 you had invested on September 30, 2000, your Fund owned:
$39.70 Manufacturing Stocks
28.45 Services Stocks
13.20 Transportation, Communication, Electric
and Sanitary Services Stocks
6.69 Cash and Cash Equivalents
5.53 Finance, Insurance and Real Estate Stocks
5.19 Mining Stocks
1.24 Wholesale and Retail Trade Stocks
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS NEW CONCEPTS FUND, INC.
SEPTEMBER 30, 2000
Shares Value
COMMON STOCKS
Advertising - 0.48%
Valassis Communications, Inc.* ......... 409,000 $ 9,100,250
Automotive Dealers and Service Stations - 0.55%
O'Reilly Automotive, Inc.* ............. 712,500 10,442,578
Building Materials and Garden Supplies - 0.64%
Fastenal Company ....................... 210,000 12,035,625
Business Services - 24.79%
Acxiom Corporation* ....................1,141,700 36,106,263
Aether Systems, Inc.* ................... 204,100 21,538,928
America Online, Inc.* .................. 825,000 44,343,750
Cerner Corporation* ....................1,219,800 56,682,581
Certicom Corp.* ......................... 144,850 5,771,367
CheckFree Holdings Corporation* ........1,646,000 68,977,688
Critical Path, Inc.* ................... 500,000 30,171,875
Dendrite International, Inc.* .......... 900,000 24,103,125
Descartes Systems* ..................... 929,000 45,869,375
Digital Insight Corporation* ............ 571,900 20,284,578
Genomica Corporation* ................... 25,000 486,725
Getty Images, Inc.* .................... 459,600 13,974,712
Intuit Inc.* ...........................1,200,000 68,437,500
S1 Corporation* ........................1,539,100 18,421,103
Ticketmaster Online-CitySearch, Inc.,
Class B* .............................. 450,000 7,607,812
USINTERNETWORKING, Inc.* ............... 825,750 5,509,322
Total ................................. 468,286,704
Chemicals and Allied Products - 8.76%
Biogen, Inc.* ........................... 600,000 36,618,750
Dial Corporation (The) .................1,000,000 11,625,000
Genzyme Corporation - General Division* 800,000 54,575,000
IVAX Corporation* ...................... 235,000 10,810,000
King Pharmaceuticals, Inc.* ............ 600,000 20,062,500
QLT Inc.* .............................. 449,000 31,836,906
Total ................................. 165,528,156
Communication - 8.69%
LCC International, Inc.* ............... 412,500 5,994,141
Motient Corporation* ................... 625,000 8,808,594
Research In Motion Limited* ............ 913,000 90,016,094
Research In Motion Limited* (A) ........ 600,000 59,323,158
Total ................................. 164,141,987
Depository Institutions - 4.73%
Concord EFS, Inc.* ..................... 2,514,850 89,355,764
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS NEW CONCEPTS FUND, INC.
SEPTEMBER 30, 2000
Shares Value
COMMON STOCKS (Continued)
Educational Services - 0.57%
Edison Schools Inc.* ................... 339,000 $ 10,784,438
Electric, Gas and Sanitary Services - 3.73%
El Paso Energy Corporation .............1,144,000 70,499,000
Electronic and Other Electric Equipment - 13.02%
C-MAC Industries Inc.* ................. 538,000 30,935,000
Chartered Semiconductor Manufacturing
Ltd, ADR* ............................. 276,800 16,806,950
Cypress Semiconductor Corporation* ..... 829,000 34,455,312
Elastic Networks Inc.* ................. 101,000 1,410,869
Lattice Semiconductor Corporation* ..... 822,000 44,156,813
Maytag Corporation ..................... 500,000 15,531,250
Micron Technology, Inc.* ............... 852,900 39,233,400
Microsemi Corporation* ................. 600,000 22,950,000
TelCom Semiconductor, Inc.* ............ 661,300 9,857,503
Viasystems Group, Inc.* ................1,800,000 30,600,000
Total ................................. 245,937,097
Engineering and Management Services - 2.61%
Incyte Pharmaceuticals, Inc.* ..........1,200,000 49,312,500
Industrial Machinery and Equipment - 13.10%
Baker Hughes Incorporated ..............2,075,300 77,045,513
Cisco Systems, Inc.* ................... 480,000 26,520,000
Compaq Computer Corporation ............ 500,000 13,790,000
Concurrent Computer Corp.* .............2,500,000 47,578,125
Cooper Cameron Corporation* ............ 550,000 40,528,125
CoSine Communications, Inc.* ........... 145,000 7,993,125
RSA Security Inc.* ..................... 790,000 34,044,062
Total ................................. 247,498,950
Instruments and Related Products - 1.28%
PE Corporation - Celera Genomics Group* 100,000 9,962,500
PE Corporation - PE Biosystems Group ... 121,500 14,154,750
Total ................................. 24,117,250
Miscellaneous Manufacturing Industries - 0.36%
CoorsTek, Inc.* ........................ 177,500 6,767,188
Oil and Gas Extraction - 5.19%
Burlington Resources Incorporated ......1,492,000 54,924,250
Noble Affiliates, Inc. .................1,162,000 43,139,250
Total ................................. 98,063,500
Printing and Publishing - 0.54%
Martha Stewart Living Omnimedia, Inc.* . 388,500 10,198,125
See Notes to Schedule of Investments on page 10.
<PAGE>
THE INVESTMENTS OF
WADDELL & REED ADVISORS NEW CONCEPTS FUND, INC.
SEPTEMBER 30, 2000
Shares Value
COMMON STOCKS (Continued)
Real Estate - 0.80%
HomeServices.Com Inc.* ................. 297,500 $ 3,384,062
homestore.com, Inc.* ................... 250,200 11,673,394
Total ................................. 15,057,456
Transportation Equipment - 2.64%
Harley-Davidson, Inc. ..................1,040,000 49,790,000
Trucking and Warehousing - 0.78%
Iron Mountain Incorporated* ............ 400,000 14,800,000
Wholesale Trade - Nondurable Goods - 0.05%
Repeater Technologies, Inc.* ........... 73,400 841,806
TOTAL COMMON STOCKS - 93.31% $1,762,558,374
(Cost: $1,289,296,674)
TOTAL SHORT-TERM SECURITIES - 9.74% $183,885,926
(Cost: $183,885,926)
TOTAL INVESTMENT SECURITIES - 103.05% $1,946,444,300
(Cost: $1,473,182,600)
LIABILITIES, NET OF CASH AND
OTHER ASSETS - (3.05%) (57,607,901)
NET ASSETS - 100.00% $1,888,836,399
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>
WADDELL & REED ADVISORS NEW CONCEPTS FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
(In Thousands, Except for Per Share Amounts)
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $1,946,444
Cash ............................................ 3
Receivables:
Investment securities sold....................... 23,578
Fund shares sold ................................ 1,809
Dividends and interest .......................... 503
Prepaid insurance premium ........................ 22
----------
Total assets .................................. 1,972,359
----------
Liabilities
Payable for investment sercurities purchased ...... 62,468
Payable to Fund shareholders ..................... 20,184
Accrued service fee (Note 2) ..................... 343
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 340
Accrued management fee (Note 2) .................. 86
Accrued distribution fee (Note 2) ................ 46
Accrued accounting services fee (Note 2) ......... 10
Other ............................................ 46
----------
Total liabilities ............................. 83,523
----------
Total net assets ............................. $1,888,836
==========
Net Assets
$1.00 par value capital stock
Capital stock ................................... $ 139,046
Additional paid-in capital ...................... 921,366
Accumulated undistributed income (loss):
Accumulated undistributed net investment loss.... (6,823)
Accumulated undistributed net realized gain
on investment transactions .................... 361,985
Net unrealized appreciation in value of
investments ................................... 473,262
----------
Net assets applicable to outstanding units
of capital ................................... $1,888,836
==========
Net asset value per share (net assets divided
by shares outstanding)
Class A .......................................... $13.59
Class B .......................................... $13.43
Class C .......................................... $13.44
Class Y .......................................... $13.67
Capital shares outstanding
Class A .......................................... 133,819
Class B .......................................... 3,290
Class C .......................................... 599
Class Y .......................................... 1,338
Capital shares authorized .......................... 300,000
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS NEW CONCEPTS FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended SEPTEMBER 30, 2000
(In Thousands)
Investment Loss
Income (Note 1B):
Interest and amortization ....................... $ 4,409
Dividends ....................................... 1,218
--------
Total income .................................. 5,627
--------
Expenses (Note 2):
Investment management fee ....................... 7,635
Service fee:
Class A ........................................ 2,138
Class B ........................................ 45
Class C ........................................ 8
Transfer agency and dividend disbursing:
Class A ........................................ 1,827
Class B ........................................ 112
Class C ........................................ 18
Distribution fee:
Class A ........................................ 121
Class B ........................................ 135
Class C ........................................ 24
Custodian fees .................................. 57
Accounting services fee ......................... 52
Shareholder servicing - Class Y ................. 14
Audit fees ...................................... 11
Legal fees ...................................... 8
Other ........................................... 245
--------
Total expenses ................................ 12,450
--------
Net investment loss .......................... (6,823)
--------
Realized and Unrealized Gain (Loss) on
Investments (Notes 1 and 3)
Realized net gain on securities .................. 175,982
Realized net gain on call options written ........ 298
--------
Realized net gain on investments ................ 176,280
Unrealized depreciation in value of investments
during the period ............................... (363,401)
--------
Net loss on investments ....................... (187,121)
--------
Net decrease in net assets resulting from
operations ................................. $(193,944)
=========
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS NEW CONCEPTS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
For the For the
six months fiscal year
ended ended
September 30, March 31,
2000 2000
Increase (Decrease) in Net Assets ------------ ------------
Operations:
Net investment loss .............. $ (6,823) $ (9,423)
Realized net gain on investments . 176,280 282,434
Unrealized appreciation(depreciation) (363,401) 530,512
---------- ----------
Net increase (decrease) in net assets
resulting from operations ..... (193,944) 803,523
---------- ----------
Distributions to shareholders from (Note 1D):*
Net investment income:
Class A ........................ --- ---
Class B ......................... --- ---
Class C ......................... --- ---
Class Y ........................ --- ---
Realized gains on securities transactions:
Class A ........................ --- (149,021)
Class B ......................... --- (616)
Class C ......................... --- (89)
Class Y ........................ --- (1,793)
---------- ----------
--- (151,519)
---------- ----------
Capital share transactions
(Note 5) ......................... 43,466 403,326
---------- ----------
Total increase(decrease) .... (150,478) 1,055,330
Net Assets
Beginning of period ............ ... 2,039,314 983,984
---------- ----------
End of period ..................... $1,888,836 $2,039,314
========== ==========
Undistributed net investment
loss ........................... $(6,823) $---
======== ====
*See "Financial Highlights" on pages 14 - 17.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS 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 -----------------------------------
9-30-00 2000 1999 1998 1997 1996
------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $15.07 $ 9.52 $9.24 $6.80 $7.73 $6.13
------ ------ ----- ----- ----- -----
Income (loss) from investment
operations:
Net investment
income (loss) ... (0.05) (0.09) (0.00) 0.01 0.03 0.02
Net realized and
unrealized gain
(loss) on
investments ..... (1.43) 6.96 1.54 3.29 (0.64) 1.81
------ ------ ----- ----- ----- -----
Total from investment
operations ....... (1.48) 6.87 1.54 3.30 (0.61) 1.83
------ ------ ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.00) (0.00) (0.01) (0.01) (0.03) (0.02)
From capital gains (0.00) (1.32) (1.25) (0.85) (0.29) (0.21)
------ ------ ----- ----- ----- -----
Total distributions. (0.00) (1.32) (1.26) (0.86) (0.32) (0.23)
------ ------ ----- ----- ----- -----
Net asset value,
end of period .... $13.59 $15.07 $9.52 $9.24 $6.80 $7.73
====== ====== ===== ===== ===== =====
Total return**...... -9.82% 74.61% 17.83% 51.44% -8.38% 30.18%
Net assets, end
of period (in
millions) ......... $1,819 $1,984 $972 $779 $501 $492
Ratio of expenses
to average net
assets ........... 1.35%***1.32% 1.29% 1.25% 1.27% 1.19%
Ratio of net investment
income (loss) to average
net assets ....... -0.73%***-0.66%-0.04% 0.06% 0.39% 0.29%
Portfolio turnover
rate ............. 42.62% 127.31% 48.95% 38.51% 38.82% 27.75%
*Per-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>
WADDELL & REED ADVISORS NEW CONCEPTS FUND, INC.
FINANCIAL HIGHLIGHTS
Class B Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the period
six from
months 10-4-99*
ended through
9-30-00 3-31-00
------- -------
Net asset value,
beginning of period $14.98 $10.69
----- -----
Income (loss) from investment
operations:
Net investment
income (loss) ... (0.11) 0.01
Net realized and
unrealized gain (loss)
on investments .. (1.44) 5.60
----- -----
Total from investment
operations ....... (1.55) 5.61
----- -----
Less distributions:
From net investment
income .......... (0.00) (0.00)
From capital gains (0.00) (1.32)
----- -----
Total distributions (0.00) (1.32)
----- -----
Net asset value,
end of period .... $13.43 $14.98
===== =====
Total return ....... -10.35% 54.60%
Net assets, end of
period (in
millions) ........ $44 $28
Ratio of expenses to
average net assets 2.51%** 2.40%**
Ratio of net investment
loss to average
net assets ....... -1.89%** -1.73%**
Portfolio turnover
rate ............. 42.62% 127.31%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS NEW CONCEPTS FUND, INC.
FINANCIAL HIGHLIGHTS
Class C Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the period
six from
months 10-4-99*
ended through
9-30-00 3-31-00
------- -------
Net asset value,
beginning of period $14.99 $10.69
----- -----
Income (loss) from investment
operations:
Net investment
income (loss).... (0.11) 0.02
Net realized and
unrealized gain (loss)
on investments .. (1.44) 5.60
----- -----
Total from investment
operations ....... (1.55) 5.62
----- -----
Less distributions:
From net investment
income .......... (0.00) (0.00)
From capital gains (0.00) (1.32)
----- -----
Total distributions (0.00) (1.32)
----- -----
Net asset value,
end of period .... $13.44 $14.99
===== =====
Total return ....... -10.34% 54.71%
Net assets, end of
period (in
millions) ........ $8 $5
Ratio of expenses to
average net assets 2.44%** 2.30%**
Ratio of net investment
loss to average
net assets ....... -1.82%** -1.62%**
Portfolio turnover
rate ............. 42.62% 127.31%**
*Commencement of operations.
**Annualized.
See notes to financial statements.
<PAGE>
WADDELL & REED ADVISORS NEW CONCEPTS FUND, INC.
FINANCIAL HIGHLIGHTS
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:*
For the
For the period
six For the fiscal from
months year ended March 31, 9-6-95**
ended ----------------------------- through
9-30-00 2000 1999 1998 1997 3-31-96
------- ------ ------ ------ ------ -------
Net asset value,
beginning of period $15.14 $ 9.53 $9.25 $6.80 $7.74 $7.57
------ ------ ----- ----- ----- -----
Income (loss) from investment
operations:
Net investment
income (loss) ... (0.03) (0.05) 0.03 0.03 0.05 0.02
Net realized and
unrealized gain (loss)
on investments... (1.44) 6.98 1.54 3.30 (0.65) 0.38
------ ------ ----- ----- ----- -----
Total from investment
operations ........ (1.47) 6.93 1.57 3.33 (0.60) 0.40
------ ------ ----- ----- ----- -----
Less distributions:
From net investment
income........... (0.00) (0.00) (0.04) (0.03) (0.05) (0.02)
From capital gains (0.00) (1.32) (1.25) (0.85) (0.29) (0.21)
------ ------ ----- ----- ----- -----
Total distributions. (0.00) (1.32) (1.29) (0.88) (0.34) (0.23)
------ ------ ----- ----- ----- -----
Net asset value,
end of period ..... $13.67 $15.14 $9.53 $9.25 $6.80 $7.74
====== ====== ===== ===== ===== =====
Total return ....... -9.71% 75.17% 18.29% 51.83% -8.12% 5.44%
Net assets, end of
period (in
millions) ........ $18 $22 $12 $11 $8 $7
Ratio of expenses
to average net
assets ............ 1.03%***1.02% 0.95% 0.96% 0.97% 0.96%***
Ratio of net
investment income
(loss) to average
net assets ....... -0.42%***-0.36% 0.29% 0.35% 0.69% 0.54%***
Portfolio
turnover rate ..... 42.62% 127.31% 48.95% 38.51% 38.82% 27.75%***
*Per-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>
WADDELL & REED ADVISORS NEW CONCEPTS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 -- Significant Accounting Policies
Waddell & Reed Advisors New Concepts Fund, Inc. (the "Fund"), formerly
United New Concepts Fund, Inc., 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
accounting principles generally accepted in the United States of America.
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 accounting
principles generally accepted in the United States of America. 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 accounting
principles generally accepted in the United States of America 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
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. 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 $ 11,000
From $ 25 to $ 50 $ 22,000
From $ 50 to $ 100 $ 33,000
From $ 100 to $ 200 $ 44,000
From $ 200 to $ 350 $ 55,000
From $ 350 to $ 550 $ 66,000
From $ 550 to $ 750 $ 77,000
From $ 750 to $1,000 $ 93,500
$1,000 and Over $110,000
In addition, for each class of shares in excess of one, the Fund pays
WARSCO a monthly per-class fee equal to 2.5% of the monthly base fee.
Prior to September 1, 2000, the Accounting Services Agreement was as 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, Class B and Class C shares, the Fund pays WARSCO a monthly per
account charge for transfer agency and dividend disbursement services of $1.3375
or each shareholder account which was in existence at any time during the prior
month. With respect to Class Y shares, the Fund pays WARSCO a monthly fee at an
annual rate of 0.15% 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.
Prior to September 1, 2000, for Class A, Class B and Class C shares, the
Fund paid 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.
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
$3,865,775. During the period ended September 30, 2000, W&R received $17,760
and $3,103 in deferred sales charges for Class B shares and Class C shares,
respectively. With respect to Class A, Class B and Class C shares, W&R paid
sales commissions of $2,664,743 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 0.25% 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.
Under the Distribution and Service Plan adopted by the Fund for Class B and
Class C shares, respectively, the Fund may pay W&R, on an annual basis, a
service fee of up to 0.25% of the average daily net assets of the class to
compensate W&R for providing services to shareholders of that class and/or
maintaining shareholder accounts for that class and a distribution fee of up to
0.75% of the average daily net assets of the class to compensate W&R for
distributing the shares of that class. The Class B Plan and the Class C Plan
each permit W&R to receive compensation, through the distribution and service
fee, respectively, for its distribution activities for that class, which are
similar to the distribution activities described with respect to the Class A
Plan, and for its activities in providing personal services to shareholders of
that class and/or maintaining shareholder accounts of that class, which are
similar to the corresponding activities for which it is entitled to
reimbursement under the Class A Plan.
The Fund paid Directors' fees of $28,072, 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 $751,515,741 while proceeds from maturities and
sales aggregated $732,668,885. Purchases of options aggregated $1,065,292 while
proceeds from options aggregated $1,363,564. Purchases of options aggregated
$5,622,500 while proceeds from options aggregated $7,114,400. Purchases of
short-term securities aggregated $2,100,097,743 while proceeds from maturities
and sales aggregated $1,998,582,196. No U.S. Government securities were bought
or sold during the period ended September 30, 2000.
For Federal income tax purposes, cost of investments owned at September 30,
2000 was $1,476,700,148, resulting in net unrealized appreciation of
$469,744,152, of which $626,492,421 related to appreciated securities and
$156,748,269 related to depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $277,946,487 during the year ended March 31, 2000, of which a portion was
paid to shareholders during the period ended March 31, 2000. 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. 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 each 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.
Transactions in capital stock are summarized below. Amounts are in
thousands.
For the For the
six months fiscal year
ended ended
September 30, March 31,
2000 2000
------------ ------------
Shares issued from sale
of shares:
Class A ............ 53,101 76,177
Class B ............. 1,531 1,843
Class C ............. 273 367
Class Y ............ 127 475
Shares issued from reinvestment
of capital gains distribution:
Class A ............ --- 11,409
Class B ............. --- 48
Class C ............. --- 7
Class Y ............ --- 139
Shares redeemed:
Class A ............ (50,916) (57,998)
Class B ............. (110) (22)
Class C ............. (38) (10)
Class Y ............ (260) (411)
------ ------
Increase in outstanding
capital shares ...... 3,708 32,024
====== ======
Value issued from sale
of shares:
Class A ............ $682,505 $1,022,613
Class B ............. 19,508 26,532
Class C ............. 3,524 5,432
Class Y ............ 1,736 5,962
Value issued from reinvestment
of capital gains distributions:
Class A ............ --- 146,603
Class B ............. --- 616
Class C ............. --- 89
Class Y ............ --- 1,793
Value redeemed:
Class A ............ (658,367) (800,566)
Class B ............. (1,415) (330)
Class C ............. (484) (165)
Class Y ............ (3,541) (5,253)
-------- --------
Increase in outstanding
capital ............ 43,466 $403,326
======== ========
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, 2000 --- ---
Options written 848 $1,065,292
Options terminated
in closing purchase
transactions (848) (1,065,292)
Options exercised --- ---
Options expired --- ---
--------- --------
Outstanding at
September 30, 2000 --- $ ---
========= ========
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Waddell & Reed Advisors New Concepts Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Waddell & Reed Advisors New Concepts Fund, Inc.
(formerly United New Concepts Fund, Inc.) (the "Fund") as of September 30, 2000,
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, 2000, and the financial highlights for the six-month
period ended September 30, 2000 and for each of the five fiscal years in the
period ended March 31, 2000. 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 auditing standards generally accepted
in the United States of America. 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, 2000, 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
Waddell & Reed Advisors New Concepts Fund, Inc. as of September 30, 2000, 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, 2000, and the financial highlights for the six-month period ended
September 30, 2000 and for each of the five fiscal years in the period ended
March 31, 2000, in conformity with accounting principles generally accepted in
the United States of America.
Deloitte & Touche LLP
Kansas City, Missouri
November 3, 2000
<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, San Mateo, 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
Kristen A. Richards, Vice President and Secretary
Daniel C. Schulte, Vice President
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 Waddell & Reed Advisors Group of Mutual Funds
Waddell & Reed Advisors Accumulative Fund
Waddell & Reed Advisors Asset Strategy Fund, Inc.
Waddell & Reed Advisors Bond Fund
Waddell & Reed Advisors Cash Management, Inc.
Waddell & Reed Advisors Continental Income Fund, Inc.
Waddell & Reed Advisors Core Investment Fund
Waddell & Reed Advisors Global Bond Fund, Inc.
Waddell & Reed Advisors Government Securities Fund, Inc.
Waddell & Reed Advisors High Income Fund, Inc.
Waddell & Reed Advisors International Growth Fund, Inc.
Waddell & Reed Advisors Municipal Bond Fund, Inc.
Waddell & Reed Advisors Municipal High Income Fund, Inc.
Waddell & Reed Advisors New Concepts Fund, Inc.
Waddell & Reed Advisors Retirement Shares, Inc.
Waddell & Reed Advisors Science and Technology Fund
Waddell & Reed Advisors Small Cap Fund, Inc.
Waddell & Reed Advisors Tax-Managed Equity Fund, Inc.
Waddell & Reed Advisors 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
(888)-WADDELL
(888)-923-3355
Our INTERNET address is:
http://www.waddell.com
NUR1012SA(9-00)
For more complete information regarding any of the mutual funds in Waddell &
Reed Advisors Funds, including charges and expenses, please obtain the Fund's
prospectus by calling or writing to the number or address listed above. Please
read the prospectus carefully before investing.
