<PAGE> 1
[LOGO]
November 16, 1999
Dear Shareholders,
We are pleased to present the Annual Report of Concorde Funds, Inc. for the
fiscal year ended September 30, 1999.
CONCORDE VALUE FUND
The total return for the Concorde Value Fund (the "Value Fund") for the
fiscal year ended September 30, 1999 was 18.38%. The Value Fund added slightly
to the mid-year gains during the second half of the fiscal year as the U.S.
markets rose steadily through July and then declined through the September 30
year-end. This performance compares with various unmanaged indices and fund
groups listed below.
<TABLE>
<S> <C>
CONCORDE VALUE FUND 18.38%
Morningstar Mid Cap Value Funds 14.09%
S&P 500 27.79%
Russell 2000 19.07%
Value Line (Geometric) Index 8.98%
</TABLE>
All sectors represented in the Value Fund contributed to the positive
returns except for consumer staples; however, volatility in sectors and
individual stocks was high. Our selective use of covered calls to hedge what we
perceived as temporarily overvalued situations hurt performance during the first
nine months and assisted during the market decline in July-September.
Sectors contributing most significantly to the positive total returns were
conglomerates, energy and natural resources, services, and technology. The
Seagram Company contributed significant gains as it continued to evolve into a
world-class entertainment company. Weatherford International and Atlantic
Richfield stocks rose sharply from depressed levels as the energy sector
displayed signs of recovering from the significant industry slowdown of 1998.
The Atlantic Richfield position was reduced as it reached what we considered
high valuation levels. Burlington Resources and Maxxam contributed moderate
losses as earnings and cash flow results reflected lower natural gas and
aluminum pricing respectively.
In the service area, Chris Craft Industries, Intuit and NCR Corporation all
generated significant gains. Intuit and NCR were sold during the year as they
reached price targets. Chris Craft rose near the year-end as television station
ownership regulations were loosened, creating greater interest in their valuable
stations. Dallas Semiconductor, Motorola and FSI International contributed the
greatest in the technology group as stock prices began to reflect the recovery
from the 1997/1998 Asian induced slowdown. Arrow Electronics, a new holding,
generated a small loss
<PAGE> 2
as we continued to build a significant position. As the world's leading
electronics distributor, Arrow's business is beginning to recover recently from
a three-year industry slowdown.
Stocks contributing moderate gains in various sectors include Santa Fe
Snyder, Hasbro, Columbia/HCA, Johnson & Johnson, Superior Industries and VICORP
Restaurants. Lehman Brothers stock rose significantly as the financial industry
recovered from the mid-1998 credit crunch and the company reported increasingly
positive results during the year. Holdings contributing negatively for the year
included SuperValu, Walt Disney, Delphi Financial, First American Financial and
Lockheed Martin. All of these companies, except SuperValu, experienced
disappointing corporate results during the year but remain holdings at year end
as we believe current valuations are low with respect to the future prospects of
the businesses. SuperValu continued to report very good earning and cash flow
results, however, the stock price lagged as the food retailing and distribution
groups continued out of favor.
The Value Fund will strive to remain close to fully invested and will
continue to utilize a disciplined approach to investing in this very volatile
market environment.
CONCORDE INCOME FUND
The Concorde Income Fund (the "Income Fund") produced a total return for
the 1999 fiscal year ending September 30, 1999 of -2.80% as rising interest
rates impacted the income oriented securities in the fund. The Income Fund
continued to generate substantial interest and dividends, however rising rates
offset this income by reducing the market value of the bonds and preferred
stocks in the portfolio.
<TABLE>
<S> <C>
CONCORDE INCOME FUND -2.80%
Three Month U.S. Treasury Bill 4.65%
Lehman Brothers Intermediate Gov/Corp. -1.62%
Lehman Brothers Government Bond -1.71%
</TABLE>
The Bonds and Notes sector of the Fund, consisting exclusively of U.S.
Treasury and Agency securities, generated a slightly negative total return as
income from interest payments nearly matched unrealized price decreases
resulting from the rising rate environment. As noted in our Semi-Annual Report,
the impact of rising rates earlier in the year was reduced by shortening the
average bond maturity of holdings and maintaining above-average cash positions.
As interest rates reached more attractive valuations during this summer, we
began to lengthen average maturities and decrease cash levels. These adjustments
should result in enhanced results if rates stay steady or drop during the next
year.
The second largest sector for the Income Fund -- dividend paying common
stocks -- produced a modest total return gain for the year as equities recovered
from the mid-year 1998 market correction. Real estate stocks produced the
weakest returns among the equities as public investors continued to avoid this
area despite excellent operating performance of properties held by these
companies. Corporate Office Properties and First Industrial Realty stocks
performed well among the real estate holdings and Hospitality Properties
incurred a negative total return.
2
<PAGE> 3
Among other dividend paying stocks, Atlantic Richfield, PIMCO Commercial
Mortgage Trust and Chemed generated substantial gains. Strategic Global Income
and LG&E Energy incurred total return losses as the interest rate increases
affected the Strategic Global holdings and the LG&E utility sector.
Going forward, we will continue to focus on income generation, with the
majority of assets invested in high-quality, medium-term bonds. Fund holdings in
preferred stocks and income producing equities will continue to add income with
the potential for capital appreciation. The current price levels of the Fund's
bonds and preferred stocks, depressed as a result of higher interest rates,
appear attractive at year-end and hold out the potential of excellent total
returns if rates moderate over the next two years.
SUMMARY
Thank you for your past and future support as we strive to maintain the
highest standards in managing Concorde Funds, Inc.
Sincerely,
Gary B. Wood, Ph.D.
President
3
<PAGE> 4
[CONCORDE VALUE FUND CHART]
<TABLE>
<CAPTION>
12/04/87 10000 10000 10000
- -------- ----- ----- -----
<S> <C> <C> <C> <C>
9151.00 9608.00 9407.00
9064.00 9688.71 9467.20
Dec-89 9114.00 9772.03 9505.07
8529.00 9333.27 8675.28
8658.00 9455.53 8944.21
8924.00 9628.57 9294.83
8597.00 9346.45 8990.89
8993.00 9939.95 9627.44
9062.00 9927.03 9652.47
8830.00 9814.85 9229.69
7823.00 8979.61 7994.76
7186.00 8492.91 7284.03
6721.00 8313.71 6838.97
7177.00 8777.62 7360.79
Dec-90 7591.00 9058.50 7650.07
8304.00 9520.49 8339.34
8930.00 10148.80 9274.18
9062.00 10386.30 9924.30
8991.00 10448.60 9898.49
9238.00 10852.00 10369.70
9220.00 10473.20 9770.29
9396.00 10869.10 10112.20
9423.00 11099.50 10485.40
9256.00 11106.20 10567.20
9414.00 11297.20 10846.20
9123.00 10892.80 10344.00
Dec-91 9673.00 11738.10 11171.50
9925.00 11909.40 12077.50
10349.00 12176.20 12430.20
10367.00 11988.70 12010.00
10475.00 12142.20 11588.50
10538.00 12239.30 11742.60
10151.00 12025.10 11190.70
10394.00 12427.90 11580.10
10187.00 12195.50 11252.40
10034.00 12352.90 11511.20
10178.00 12417.10 11875.00
10565.00 12857.90 12784.60
Dec-92 11088.00 13183.20 13229.50
11297.00 13444.20 13676.70
11288.00 13623.00 13360.70
11580.00 14068.50 13793.60
11470.00 13875.80 13414.30
11653.00 14179.70 14007.20
11653.00 14278.90 14094.10
11662.00 14397.40 14288.60
11926.00 14950.30 14905.80
11954.00 14962.20 15326.20
12109.00 15194.20 15720.00
11990.00 14990.60 15207.60
Dec-93 12212.00 15356.30 15727.70
12467.00 15849.30 16220.00
12426.00 15587.80 16161.60
12141.00 14984.50 15309.80
12029.00 15111.90 15400.20
12151.00 15195.00 15226.20
12059.00 14909.30 14713.00
12274.00 15319.30 14954.30
12732.00 15898.40 15787.30
12518.00 15599.50 15733.60
12488.00 15683.80 15670.70
12029.00 15054.80 15037.60
Dec-94 11722.00 15163.20 15440.60
11700.00 15375.50 15246.00
11849.00 15936.70 15880.30
12158.00 16320.80 16151.80
12487.00 16725.60 16510.40
12806.00 17207.20 16794.40
13275.00 17585.80 17666.00
13891.00 18201.30 18683.60
13902.00 18408.80 19070.30
14179.00 18791.70 19411.70
13934.00 18444.10 18544.00
14466.00 19178.10 19322.80
Dec-95 14545.00 19485.00 19832.90
14879.00 19884.40 19811.10
15019.00 20240.40 20429.20
15321.00 20550.00 20852.10
15612.00 21047.30 21967.70
15968.00 21394.60 22833.20
15785.00 21227.80 21894.80
15105.00 20257.70 19983.40
15612.00 20956.50 21144.40
16119.00 21687.90 21971.10
16475.00 22015.40 21632.80
17251.00 23331.90 22524.10
Dec-96 17152.00 23471.90 23114.20
18165.00 24171.40 23576.50
18062.00 24372.00 23005.90
17417.00 23704.20 21917.70
18476.00 24100.10 21979.10
19420.00 25746.10 24425.40
20260.00 26624.10 25473.20
21734.00 28383.90 26657.70
21250.00 28165.30 27268.20
22632.00 29649.70 29264.20
21860.00 28525.90 27979.50
21929.00 28908.20 27797.70
Dec-97 22121.00 29425.60 28284.10
22171.00 29175.50 27837.20
23853.00 31177.00 29894.40
24932.00 32526.90 31126.10
25534.00 32673.30 31297.20
24756.00 31755.20 29610.30
24330.00 31453.50 29672.50
22862.00 29865.10 27272.00
19072.00 25227.10 21975.80
19273.00 26291.60 23696.50
20779.00 28145.20 24663.30
21594.00 29268.20 25955.70
Dec-98 22443.00 29917.90 27562.30
22618.00 29681.60 27928.90
21918.00 28672.40 25666.60
22370.00 29334.80 26067.00
23816.00 32068.70 28402.70
23670.00 32331.70 28817.30
24677.00 33292.00 30119.90
24064.00 32469.70 29294.60
23655.00 31333.20 28210.70
Sep-99 22633.00 30004.70 28216.30
</TABLE>
NOTE: The Russell 2000 Index is an index comprised of 2000 publicly traded small
capitalization common stocks that are ranked in terms of capitalization
below the large and mid-range capitalization sectors of the United States
equity market. This index attempts to accurately capture the performance
of the universe of small capitalization common stocks. The Value Fund
believes this index more closely reflects the Value Fund's investment
strategy, and therefore, is a more appropriate performance comparator than
the S&P 500 Index. A hypothetical $10,000 investment in the S&P 500 Index
on 9/30/89 would have a value of $47,292 at 9/30/99. A hypothetical
investment of $10,000 at 9/30/98 in the Value Fund, the Russell 2000
Index, Morningstar Mid-Cap Value, and the S&P 500 Index would have values
of $11,743, $11,907, $11,412 and $12,779, respectively at 9/30/99.
[CONCORDE INCOME FUND CHART]
<TABLE>
<CAPTION>
1/22/96 10000 10000
- ------- ----- -----
<S> <C> <C>
9900.00 9883.00
Mar 96 9900.00 9832.60
9840.00 9798.18
9770.00 9790.34
Jun 96 9880.00 9894.12
9790.00 9923.80
9890.00 9931.74
Sep 96 10070.00 10069.80
10191.60 10248.00
10475.20 10383.30
Dec 96 10400.40 10316.90
10441.70 10357.10
10462.30 10376.80
Mar 97 10266.30 10305.20
10349.80 10426.80
10485.60 10513.30
Jun 97 10621.40 10609.00
10938.40 10824.30
10832.70 10770.20
Sep 97 11118.10 10895.20
11107.40 11016.10
11118.10 11040.30
Dec 97 11112.70 11128.70
11220.80 11274.40
11242.50 11265.40
Mar 98 11285.70 11301.50
11263.80 11358.00
11252.90 11440.90
Jun 98 11231.00 11514.10
11054.00 11554.40
10932.30 11735.80
Sep 98 11219.90 12030.40
11096.70 12018.40
11107.90 12017.20
Dec 98 11119.10 12065.20
11141.80 12131.60
10937.30 11953.20
Mar 99 10960.10 12042.90
11132.40 12080.20
11086.40 11987.20
Jun 99 11069.20 11995.60
10987.80 11984.80
10964.50 11994.40
Sep 99 10906.40 12105.90
</TABLE>
4
<PAGE> 5
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
Concorde Funds, Inc.
We have audited the accompanying statement of assets and liabilities of the
Concorde Value Fund portfolio of Concorde Funds, Inc., including the schedules
of investments in securities and covered call options written, as of
September 30, 1999, and the related statements of operations and changes in net
assets and the financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The statement of changes
in net assets for the year ended September 30, 1998 and financial highlights for
the two years then ended, and the financial highlights for each of the two years
in the period ended September 30, 1996 of Concorde Value Fund were audited by
other auditors whose reports dated October 22, 1998 and November 4, 1996,
respectively, expressed unqualified opinions on the statement of changes in net
assets and financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and 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 and financial highlights. 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 audit provides 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 the
Concorde Value Fund portfolio of Concorde Funds, Inc. as of September 30, 1999,
the results of its operations, the changes in its net assets and the financial
highlights for the year then ended in conformity with generally accepted
accounting principles.
/s/ WALLACE SANDERS & COMPANY
WALLACE SANDERS & COMPANY
Irving, Texas
October 14, 1999
5
<PAGE> 6
CONCORDE VALUE FUND
INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL PERCENT OF
AMOUNT VALUE NET ASSETS
--------- ----------- ----------
<S> <C> <C> <C>
COMMON STOCKS
CONGLOMERATES
Seagram Company Ltd....................................... 15,500 $ 705,250 4.55%
Tyco International Ltd.(b)................................ 3,500 361,375 2.33
----------- ------
1,066,625 6.88
----------- ------
CONSUMER DURABLES
Fedders Corporation Class A............................... 58,500 288,844 1.87
----------- ------
CONSUMER STAPLES
Playtex Products, Incorporated(a)......................... 32,200 474,950 3.07
Suiza Funds Corporation(a)................................ 13,300 498,750 3.22
SuperValu Inc............................................. 30,500 665,281 4.29
----------- ------
1,638,981 10.58
----------- ------
ENERGY AND NATURAL RESOURCES
Atlantic Richfield Company(c)............................. 6,200 549,475 3.54
Burlington Resources, Incorporated........................ 8,300 305,025 1.97
Maxxam Incorporated(a).................................... 8,550 439,256 2.84
Santa Fe Snyder Corporation(a)............................ 45,000 405,000 2.62
Weatherford International, Incorporated(a)................ 18,500 592,000 3.82
----------- ------
2,290,756 14.79
----------- ------
ENTERTAINMENT
Hasbro, Incorporated...................................... 27,750 594,891 3.84
Walt Disney Company....................................... 8,000 207,000 1.34
----------- ------
801,891 5.18
----------- ------
FINANCE AND INSURANCE
Delphi Financial Group, Inc.(a)........................... 14,264 430,585 2.78
First American Financial Corporation...................... 25,400 339,725 2.19
Lehman Brothers Holdings Incorporated(e).................. 9,000 524,812 3.39
----------- ------
1,295,122 8.36
----------- ------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
CONCORDE VALUE FUND
INVESTMENTS IN SECURITIES (CONTINUED)
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL PERCENT OF
AMOUNT VALUE NET ASSETS
--------- ----------- ----------
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
HEALTH
Columbia/HCA Healthcare Corporation....................... 16,500 $ 349,594 2.26%
Johnson & Johnson(f)...................................... 8,000 735,000 4.75
Merck & Co., Incorporated(e).............................. 10,000 648,125 4.18
US Oncology, Incorporated(a).............................. 39,480 357,788 2.31
----------- ------
2,090,507 13.50
----------- ------
INDUSTRIAL CYCLICALS
Lockheed Martin Corporation............................... 7,000 228,812 1.48
Republic Group Incorporated............................... 21,475 299,308 1.93
Superior Industries International, Incorporated........... 16,500 462,000 2.98
----------- ------
990,120 6.39
----------- ------
REAL ESTATE
First Industrial Realty Trust, Incorporated............... 15,000 371,250 2.40
----------- ------
RETAIL TRADE
VICORP Restaurants, Incorporated(a)....................... 28,000 462,000 2.98
----------- ------
SERVICES
AT&T Corporation(g)....................................... 6,981 303,673 1.96
Chemed Corporation........................................ 9,300 281,325 1.82
Chris-Craft Industries, Incorporated(a)................... 10,716 601,436 3.88
----------- ------
1,186,434 7.66
----------- ------
TECHNOLOGY
Arrow Electronics, Incorporated(a)........................ 14,000 246,750 1.59
Dallas Semiconductor Corporation(h)....................... 15,900 849,656 5.49
Motorola, Incorporated(i)................................. 10,200 897,600 5.80
----------- ------
1,994,006 12.88
----------- ------
TOTAL COMMON STOCKS (cost $10,751,866)...................... 14,476,536 93.47
----------- ------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 8
CONCORDE VALUE FUND
INVESTMENTS IN SECURITIES (CONTINUED)
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL PERCENT OF
AMOUNT VALUE NET ASSETS
--------- ----------- ----------
<S> <C> <C> <C>
FEDERAL AGENCY OBLIGATIONS
Federal Home Loan Bank, 6.7%, Due 09/05/2002.............. 200,000 $ 200,422 1.29%
Federal Home Loan Bank, 5.76%, Due 10/15/2002............. 200,000 196,664 1.27
----------- ------
TOTAL FEDERAL AGENCY OBLIGATIONS (cost $396,188)............ 397,086 2.56
----------- ------
SHORT TERM DEMAND NOTES
American Family Financial Services, 5.0234%............... 222,224 222,224 1.44
Wisconsin Corporate Central Credit Union, 5.05%........... 750,000 750,000 4.84
----------- ------
TOTAL SHORT TERM DEMAND NOTES (cost $972,224)............... 972,224 6.28
----------- ------
CERTIFICATE OF DEPOSIT
Firstar Bank Milwaukee, 4.11%, due 1/13/2000
(cost $4,292).......................................... 4,292 4,292 0.03
----------- ------
TOTAL INVESTMENTS IN SECURITIES (cost $12,124,570).......... $15,850,138 102.34%
=========== ======
</TABLE>
- ---------------------
(a) Presently non-income producing
(b) 3,500 shares subject to option
(c) 4,500 shares subject to option
(d) 10,000 shares subject to option
(e) 2,500 shares subject to option
(f) 2,000 shares subject to option
(g) 6,000 shares subject to option
(h) 8,000 shares subject to option
(i) 5,000 shares subject to option
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 9
CONCORDE VALUE FUND
COVERED CALL OPTIONS WRITTEN
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES SUBJECT
TO CALL VALUE
-------------- --------
<S> <C> <C>
COMMON STOCKS/EXPIRATION DATE/EXERCISE PRICE
AT&T Corporation/January/35............................... 6,000 $ 57,000
Atlantic Richfield Company/October/80..................... 2,500 21,875
Atlantic Richfield Company/January/70..................... 2,000 39,000
Dallas Semiconductor Corporation/October/45............... 8,000 68,000
Johnson & Johnson/January/70.............................. 2,000 46,250
Lehman Brothers Holdings Incorporated/January/35.......... 2,500 59,063
Merck & Co./January/50.................................... 2,500 40,000
Motorola, Inc./October/70................................. 5,000 90,000
Tyco International, Ltd./October/75....................... 3,500 98,000
Weatherford International, Incorporated/November/25....... 5,000 37,500
Weatherford International, Incorporated/November/35....... 5,000 9,687
--------
TOTAL (premiums received $669,845).......................... $566,375
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 10
CONCORDE VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $12,124,570).... $15,850,138
Receivables
Securities sold........................................ 201,143
Dividends.............................................. 17,395
Interest............................................... 10,845
Other assets.............................................. 3,653
-----------
TOTAL ASSETS................................................ 16,083,174
-----------
LIABILITIES
Covered call options written, at value (premiums received
$669,845).............................................. 566,375
Payable for securities purchased.......................... 3,667
Investment advisory fee payable........................... 11,762
Accrued expenses.......................................... 14,273
-----------
TOTAL LIABILITIES........................................... 596,077
-----------
NET ASSETS
Equivalent to $15.50 per share on 998,975 shares of
capital stock outstanding.............................. $15,487,097
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 11
CONCORDE VALUE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Investment income
Dividends.............................................. $ 169,447
Interest............................................... 93,680
----------
Total investment income................................... 263,127
----------
Expenses
Investment advisory fee................................ 144,374
Custodian fees......................................... 10,931
Printing, postage and delivery......................... 16,375
Accounting fees........................................ 24,200
Transfer agent fees.................................... 15,536
Legal fees............................................. 14,014
Registration fees...................................... 2,269
Audit fees............................................. 12,412
Other expenses......................................... 4,141
----------
Total expenses............................................ 244,252
----------
NET INVESTMENT INCOME..................................... 18,875
----------
REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS AND
REALIZED LOSS AND UNREALIZED APPRECIATION ON COVERED CALL
OPTIONS WRITTEN
Net realized gain on investments in securities............ 984,232
Net realized loss on covered call options written......... (499,081)
Net change in unrealized appreciation of investments in
securities............................................. 2,050,753
Net change in unrealized appreciation of covered call
options written........................................ 66,218
----------
NET GAIN ON INVESTMENTS................................... 2,602,122
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...... $2,620,997
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 12
CONCORDE VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CHANGE IN NET ASSETS FROM OPERATIONS
Net investment income..................................... $ 18,875 $ 20,648
Net realized gain on investments.......................... 485,151 2,351,625
Net change in unrealized appreciation of investments...... 2,116,971 (4,844,594)
----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................. 2,620,997 (2,472,321)
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income..................................... (3,628) (49,504)
Net realized gains on investments......................... (2,310,012) (1,385,134)
CAPITAL SHARE TRANSACTIONS.................................. 812,794 742,239
----------- -----------
Total increase (decrease) in net assets................... 1,120,151 (3,164,720)
NET ASSETS
Beginning of year......................................... 14,366,946 17,531,666
----------- -----------
End of year (including undistributed net investment income
of $17,373 and $2,126, respectively)................... $15,487,097 $14,366,946
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 13
CONCORDE VALUE FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------------------------
1999 1998 1997 1996 1995
------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA(1):
Net asset value, beginning of year........... $ 15.36 $ 19.66 $ 14.95 $ 13.33 $ 12.28
------- -------- ------- ------- -------
Income from investment operations:
Net investment income...................... 0.02 0.02 0.06 0.07 0.06
Net realized and unrealized gain (loss) on
investments in securities............... 2.64 (2.73) 5.66 1.73 1.47
------- -------- ------- ------- -------
Total income (loss) from investment
operations.............................. 2.66 (2.71) 5.72 1.80 1.53
------- -------- ------- ------- -------
Less distributions:
Distributions from net investment income... -- (0.06) (0.09) (0.06) (0.06)
Distributions from net realized gains...... (2.52) (1.53) (0.92) (0.12) (0.42)
------- -------- ------- ------- -------
Total from distributions................... (2.52) (1.59) (1.01) (0.18) (0.48)
------- -------- ------- ------- -------
Net asset value, end of year................. $ 15.50 $ 15.36 $ 19.66 $ 14.95 $ 13.33
======= ======== ======= ======= =======
TOTAL RETURN................................. 18.38% (14.76%) 40.53% 13.64% 13.32%
======= ======== ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands)..... $15,487 $ 14,367 $17,532 $12,580 $12,235
Ratio of expenses to average net assets.... 1.47% 1.39% 1.60% 1.62% 1.74%
Ratio of net investment income to average
net assets.............................. 0.11% 0.12% 0.38% 0.53% 0.52%
Portfolio turnover rate.................... 25.87% 44.62% 30.62% 26.10% 22.42%
</TABLE>
- ---------------------
(1) Per share information has been calculated using the average number of shares
outstanding.
The accompanying notes are an integral part of these financial highlights.
13
<PAGE> 14
CONCORDE VALUE FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF OPERATIONS
Concorde Value Fund (Fund) is a separate series of shares of common stock
of Concorde Funds, Inc. (Company). The Company was incorporated in the state of
Texas in September of 1987, and is registered under the Investment Company Act
of 1940 as a diversified, open-end management investment company. The Fund is
subject to various investment restrictions as set forth in the Statement of
Additional Information. The effective date of the Fund's Registration Statement
under the Securities Act of 1933 was December 4, 1987. The primary investment
objective of the Fund is to produce long-term growth of capital, without
exposing capital to undue risks. The Company may designate one or more series of
common stock. Presently, the Company has designated only one additional series,
Concorde Income Fund. Each capital share in the Fund represents an equal
proportionate interest in the net assets of the Fund with each other capital
share in such series and no interest in any other series.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of the assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
VALUATION OF SECURITIES
Securities are valued at the close of each business day. Bonds and notes
are valued at the last quoted bid price obtained from independent pricing
services. Securities traded on national securities exchanges or on the national
market systems are valued at the last reported sales price on the day of
valuation, except for call options written for which the last quoted bid price
is used. Short-term demand notes and certificates of deposit are stated at
amortized cost, which is equivalent to value. Securities for which
representative market quotations are not readily available are valued at fair
value as determined in good faith by the Board of Directors.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the date the securities are
purchased or sold, plus one day. Realized gains and losses from securities
transactions are reported on an identified cost basis. Dividend income is
recognized on the ex-dividend date, and interest income is recognized on the
accrual basis. Discounts and premiums on securities purchased are amortized over
the life of the respective securities.
INCOME TAXES
The Fund's policy is to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gains on
investments, to its shareholders. Therefore, no federal income or excise tax
provision is required.
Net investment income (loss), net realized gains (losses) and the cost of
investments
14
<PAGE> 15
in securities may differ for financial statement and income tax purposes. The
character of distributions from net investment income or net realized gains may
differ from their ultimate characterization for income tax purposes. At
September 30, 1999, there were no material differences. Also, due to the timing
of dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains were recorded by
the Fund.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends declared and paid from net investment income or net realized
gains are recorded on the ex-dividend date.
NOTE 2 -- COVERED CALL OPTIONS WRITTEN
As of September 30, 1999, investment securities valued at $2,700,250 were
held by the custodian in connection with covered call options written by the
Fund.
Transactions in covered call options written for the year ended September
30, 1999 were as follows:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS AMOUNTS
--------- -----------
<S> <C> <C>
Beginning............. 205 $ 230,002
Written............... 1,925 2,387,790
Expired............... -- --
Exercised............. (50) (100,272)
Closed................ (1,640) (1,847,675)
------ -----------
Ending................ 440 $ 669,845
====== ===========
</TABLE>
NOTE 3 -- DISTRIBUTION TO SHAREHOLDERS
A distribution to shareholders of $2.52 per share aggregating $2,313,640
was declared on December 3, 1998 from net investment income and net realized
gains from investment transactions. The distribution was paid on December 24,
1998 to shareholders of record on December 22, 1998.
At September 30, 1999, the Fund had undistributed net realized gains
of $495,161.
NOTE 4 -- CAPITAL SHARE TRANSACTIONS
As of September 30, 1999, there were 30,000,000 shares of $1 par value
capital stock authorized of which 9,841,293 shares are classified as the Fund's
series (Series A), 10,000,000 shares are classified as Concorde Income Fund
series (Series B), and the remaining balance is unallocated for future use. As
of September 30, 1999, capital paid-in aggregated $11,145,525.
Transactions in shares of capital stock for the years ended September 30,
1999 and 1998 were as follows:
<TABLE>
<CAPTION>
1999
--------------------
SHARES AMOUNT
------- ----------
<S> <C> <C>
Shares sold............. 36,080 $ 571,248
Shares issued in
reinvestment of
dividends............. 157,991 2,297,191
------- ----------
194,071 2,868,439
Shares redeemed......... 130,473 2,055,645
------- ----------
Net increase............ 63,598 $ 812,794
======= ==========
</TABLE>
<TABLE>
<CAPTION>
1998
--------------------
SHARES AMOUNT
------- ----------
<S> <C> <C>
Shares sold............. 98,762 $1,761,328
Shares issued in
reinvestment of
dividends............. 81,667 1,424,268
------- ----------
180,429 3,185,596
Shares redeemed......... 136,685 2,443,357
------- ----------
Net increase............ 43,744 $ 742,239
======= ==========
</TABLE>
15
<PAGE> 16
NOTE 5 -- INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities
(excluding short-term securities) aggregated $3,410,360 and $5,590,311,
respectively, for common stock, and $396,188 and $0, respectively, for U.S.
government obligations for the year ended September 30, 1999. Net gain on
investments for the year ended September 30, 1999 was $2,602,122. That amount
represents the net increase in value of investment securities held during the
year. As of September 30, 1999, the aggregate unrealized appreciation and
depreciation of investment securities and covered call options written was as
follows:
<TABLE>
<S> <C>
Unrealized appreciation......... $4,358,468
Unrealized depreciation......... (529,430)
----------
Net unrealized appreciation..... $3,829,038
==========
</TABLE>
NOTE 6 -- INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory Agreement (Advisory Agreement) with
Concorde Financial Corporation dba Concorde Investment Management (Advisor) to
act as the Fund's investment advisor. The Advisor provides the Fund with
investment advice and recommendations consistent with the Fund's investment
objectives, policies and restrictions, and supervises the purchase and sale of
investment transactions on behalf of the Fund. For such services, the Advisor
receives an annual fee of 0.9% of the Fund's average daily net assets, computed
daily and paid on a monthly basis. The investment advisory fee was $144,374 for
the year ended September 30, 1999, of which $11,762 was payable at year end.
Certain directors and officers of the Company are also directors, officers
and/or employees of the Advisor.
16
<PAGE> 17
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
Concorde Funds, Inc.
We have audited the accompanying statement of assets and liabilities of the
Concorde Income Fund portfolio of Concorde Funds, Inc., including the schedule
of investments in securities, as of September 30, 1999, and the related
statements of operations and changes in net assets and the financial highlights
for the year then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit. The statement of changes in net assets for the year ended September 30,
1998 and financial highlights for the two years then ended, and the financial
highlights for period ended September 30, 1996 of Concorde Income Fund were
audited by other auditors whose reports dated October 22, 1998 and November 4,
1996, respectively, expressed unqualified opinions on the statement of changes
in net assets and financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and 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 and financial highlights. 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 audit provides 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 the
Concorde Income Fund portfolio of Concorde Funds, Inc. as of September 30, 1999,
the results of its operations, the changes in its net assets and the financial
highlights for the year then ended in conformity with generally accepted
accounting principles.
/s/ WALLACE SANDERS & COMPANY
WALLACE SANDERS & COMPANY
Irving, Texas
October 14, 1999
17
<PAGE> 18
CONCORDE INCOME FUND
INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL PERCENT OF
AMOUNT VALUE NET ASSETS
--------- ---------- ----------
<S> <C> <C> <C>
BONDS AND NOTES
FEDERAL AGENCY OBLIGATIONS
Federal Farm Credit Bank, 5.92%, due 2/24/2003, callable
2/24/2000.............................................. 100,000 $ 98,051 1.95%
Federal Farm Credit Bank, 6.2%, due 11/26/2003............ 100,000 99,363 1.97
Federal Home Loan Bank, 5.76%, due 10/15/2002, callable
10/15/1999............................................. 100,000 98,332 1.95
Federal Home Loan Bank, 6.2%, due 6/2/2009................ 200,000 192,857 3.83
Federal Home Loan Mortgage Corporation, 6.783%, due
8/18/2005.............................................. 100,000 101,298 2.01
Federal Home Loan Mortgage Corporation, 5.9%, due
2/14/2006.............................................. 150,000 145,028 2.88
Federal Home Loan Mortgage Corporation, 6.99%, due
7/26/2006.............................................. 200,000 204,675 4.06
Federal Home Loan Mortgage Corporation, 6.943%, due
3/21/2007.............................................. 100,000 101,962 2.02
Federal National Mortgage Association, 5.9%, due
2/17/2004, callable 2/17/2000.......................... 100,000 97,156 1.93
Federal National Mortgage Association, 6.85%, due
8/22/2005.............................................. 200,000 201,426 4.00
Federal National Mortgage Association, 5.8%, due
2/22/2006.............................................. 100,000 94,922 1.89
Federal National Mortgage Association, 6.41%, due
3/08/2006.............................................. 200,000 196,075 3.89
Federal National Mortgage Association, 6.7%, due
6/19/2007.............................................. 200,000 199,949 3.97
---------- -----
1,831,094 36.35
---------- -----
U.S. TREASURY OBLIGATIONS
U.S. Treasury Note, 6.25%, due 2/15/2003.................. 200,000 202,625 4.02
U.S. Treasury Note, 5.75%, due 8/15/2003.................. 200,000 199,375 3.96
U.S. Treasury Note, 5.875%, due 2/15/2004................. 200,000 200,813 3.99
U.S. Treasury Note, 5.625%, due 5/15/2008................. 300,000 291,281 5.78
U.S. Treasury Bond, 7.25%, due 5/15/2016.................. 300,000 324,281 6.44
---------- -----
1,218,375 24.19
---------- -----
TOTAL BONDS AND NOTES (cost $3,082,499)..................... 3,049,469 60.54
---------- -----
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 19
CONCORDE INCOME FUND
INVESTMENTS IN SECURITIES (CONTINUED)
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL PERCENT OF
AMOUNT VALUE NET ASSETS
--------- ---------- ----------
<S> <C> <C> <C>
CLOSED-END FIXED INCOME FUNDS
PIMCO Commercial Mortgage Securities Trust Inc............ 10,700 $ 134,419 2.67%
Strategic Global Income Fund Inc.......................... 12,300 126,075 2.50
---------- -----
TOTAL CLOSED-END FIXED INCOME FUNDS (cost $288,468)......... 260,494 5.17
---------- -----
COMMON STOCKS
REAL ESTATE
Corporate Office Properties Trust, Inc.................... 15,000 113,438 2.26
First Industrial Realty Trust, Inc........................ 5,500 136,125 2.70
Hospitality Properties Trust.............................. 4,800 105,900 2.10
---------- -----
355,463 7.06
---------- -----
SERVICES
Chemed Corporation........................................ 2,000 60,500 1.20
---------- -----
UTILITIES
LG&E Energy Corporation................................... 5,500 116,875 2.32
---------- -----
TOTAL COMMON STOCKS (cost $616,146)......................... 532,838 10.58
---------- -----
PREFERRED STOCKS
Alabama Power, 7% Preferred............................... 4,200 92,400 1.83
Allstate Financial, Series A, Preferred................... 2,800 68,075 1.35
Lehman Brothers Cap Tr, Preferred......................... 2,500 59,375 1.18
Conseco Finance, 9.16% Preferred.......................... 3,700 87,181 1.73
First Industrial Realty Trust, 8.75% Series A Preferred... 4,000 85,500 1.70
Merrill Lynch Capital Trust, 8% Class C Preferred......... 2,200 54,450 1.08
Phillips 66 Capital, 8.24% Preferred...................... 2,800 69,475 1.38
Public Storage, Inc., 8.45% Series H Preferred............ 3,600 80,100 1.59
Time Warner Capital, 8.87% Preferred...................... 3,000 74,625 1.48
---------- -----
TOTAL PREFERRED STOCKS (cost $729,587)...................... 671,181 13.32
---------- -----
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE> 20
CONCORDE INCOME FUND
INVESTMENTS IN SECURITIES (CONTINUED)
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL PERCENT OF
AMOUNT VALUE NET ASSETS
--------- ---------- ----------
<S> <C> <C> <C>
CONVERTIBLE PREFERRED STOCKS
Bethlehem Steel Corp., $5 Cum Preferred................... 1,500 $ 76,781 1.52%
ICO, Inc. Preferred....................................... 2,200 28,600 0.57
Seagram Co. Ltd. Aces Preferred........................... 1,200 55,725 1.11
---------- -----
TOTAL CONVERTIBLE PREFERRED STOCKS (cost $187,920).......... 161,106 3.20
---------- -----
SHORT TERM DEMAND NOTES
American Family, 5.0234%.................................. 140,542 140,542 2.79
Wisconsin Corp. Cent Credit Union, 5.05%.................. 200,000 200,000 3.97
---------- -----
TOTAL SHORT TERM DEMAND NOTES (cost $340,542)............... 340,542 6.76
---------- -----
TOTAL INVESTMENTS IN SECURITIES (cost $5,245,162)........... $5,015,630 99.57%
========== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE> 21
CONCORDE INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $5,245,162)..... $5,015,630
Cash...................................................... 1,037
Receivables
Dividends.............................................. 8,899
Interest............................................... 42,054
Expense reimbursement due from Advisor................. 477
Organization costs, net................................... 6,654
----------
TOTAL ASSETS................................................ 5,074,751
----------
LIABILITIES
Payable for securities purchased.......................... 18,274
Investment advisory fee payable........................... 2,914
Accrued expenses.......................................... 16,058
----------
TOTAL LIABILITIES........................................... 37,246
----------
NET ASSETS
Equivalent to $9.26 per share on 543,916 shares of capital
stock outstanding...................................... $5,037,505
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE> 22
CONCORDE INCOME FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Investment income
Dividends.............................................. $ 143,190
Interest............................................... 185,661
---------
Total investment income................................... 328,851
---------
Expenses
Investment advisory fee................................ 33,381
Custodian fees......................................... 1,734
Printing, postage and delivery......................... 12,233
Accounting fees........................................ 25,302
Transfer agent fees.................................... 8,736
Legal fees............................................. 12,590
Registration fees...................................... 1,208
Audit fees............................................. 8,079
Amortization........................................... 7,489
Other expenses......................................... 2,911
---------
Total expenses............................................ 113,663
Expense reimbursement by Advisor.......................... (23,935)
---------
Expenses, net of reimbursement by Advisor................. 89,728
---------
NET INVESTMENT INCOME..................................... 239,123
---------
REALIZED LOSS AND UNREALIZED DEPRECIATION ON INVESTMENTS AND
REALIZED GAIN AND UNREALIZED DEPRECIATION ON COVERED CALL
OPTIONS WRITTEN
Net realized loss on investments in securities............ (130,822)
Net realized gain on covered call options written......... 4,943
Net change in unrealized depreciation of investments in
securities............................................. (245,406)
Net change in unrealized depreciation of covered call
options written........................................ (6,030)
---------
NET LOSS ON INVESTMENTS................................... (377,315)
---------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS...... $(138,192)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE> 23
CONCORDE INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
CHANGE IN NET ASSETS FROM OPERATIONS
Net investment income..................................... $ 239,123 $ 213,392
Net realized loss on investments.......................... (125,879) (7,697)
Net change in unrealized depreciation of investments...... (251,436) (170,791)
---------- ----------
Net increase (decrease) in net assets resulting from
operations............................................. (138,192) 34,904
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income..................................... (235,797) (215,820)
CAPITAL SHARE TRANSACTIONS.................................. 593,914 1,078,529
---------- ----------
Total increase in net assets.............................. 219,925 897,613
NET ASSETS
Beginning of year......................................... 4,817,580 3,919,967
---------- ----------
End of the year (including undistributed net investment
income of $3,544 and $218, respectively)............... $5,037,505 $4,817,580
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE> 24
CONCORDE INCOME FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PERIOD ENDED SEPTEMBER 30,
--------------------------------------
1999 1998 1997 1996(2)
-------- ------- ------- -------
<S> <C> <C> <C> <C>
PER SHARE DATA(1):
Net asset value, beginning of period................. $ 10.01 $ 10.41 $ 9.94 $ 10.00
-------- ------- ------- -------
Income from investment operations:
Net investment income.............................. 0.49 0.49 0.49 0.25
Net realized and unrealized gain (loss) on
investments in securities....................... (0.76) (0.39) 0.52 (0.18)
-------- ------- ------- -------
Total income (loss) from investment operations..... (0.27) 0.10 1.01 0.07
-------- ------- ------- -------
Less distributions:
Distributions from net investment income........... (0.48) (0.50) (0.54) (0.13)
-------- ------- ------- -------
Net asset value, end of period....................... $ 9.26 $ 10.01 $ 10.41 $ 9.94
======== ======= ======= =======
TOTAL RETURN......................................... (2.80%) 0.92% 10.41% 0.71%
======== ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)........... $ 5,038 $ 4,818 $ 3,920 $ 2,217
Ratio of expenses (before reimbursement) to average
net assets...................................... 2.38% 2.46% 3.27% 3.17%
Ratio of expenses (net of reimbursement) to average
net assets...................................... 1.88% 1.89% 1.99% 2.01%
Ratio of net investment income to average net
assets.......................................... 5.01% 4.78% 4.86% 2.51%
Portfolio turnover rate............................ 29.63% 18.84% 20.07% 29.77%
</TABLE>
- ---------------------
(1) Per share information has been calculated using the average number of shares
outstanding.
(2) Period from January 22, 1996 (commencement of operations) through September
30, 1996. Total return and other ratios are not annualized.
The accompanying notes are an integral part of these financial highlights.
24
<PAGE> 25
CONCORDE INCOME FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF OPERATIONS
Concorde Income Fund (Fund) is a separate series of shares of common stock
of Concorde Funds, Inc. (Company). The Company was incorporated in the state of
Texas in September of 1987, and is registered under the Investment Company Act
of 1940 as a diversified, open-end management investment company. The Fund is
subject to various investment restrictions as set forth in the Statement of
Additional Information. The effective date of the Fund's Registration Statement
under the Securities Act of 1933 was December 4, 1995 and the Fund was initially
capitalized on January 22, 1996. The primary investment objective of the Fund is
to produce current income. The Company may designate one or more series of
common stock. Presently, the Company has designated only one additional series,
Concorde Value Fund. Each capital share in the Fund represents an equal,
proportionate interest in the net assets of the Fund with each other capital
share in such series and no interest in any other series.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of the assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
VALUATION OF SECURITIES
Securities are valued at the close of each business day. Bonds and notes
are valued at the last quoted bid price obtained from independent pricing
services. Securities traded on national securities exchanges or on the national
market systems are valued at the last reported sales price on the day of
valuation, except for call options written for which the last quoted bid price
is used. Short-term demand notes and certificates of deposit are stated at
amortized cost, which is equivalent to value. Securities for which
representative market quotations are not readily available are valued at fair
value as determined in good faith by the Board of Directors.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the date the securities are
purchased or sold, plus one day. Realized gains and losses from securities
transactions are reported on an identified cost basis. Dividend income is
recognized on the ex-dividend date, and interest income is recognized on the
accrual basis. Discounts and premiums on securities purchased are amortized over
the life of the respective securities.
ORGANIZATION COSTS
Organization costs of $25,426 have been capitalized and are being amortized
on a straight-line basis over a period of sixty months from commencement of
operations. If any of the initial shares are redeemed before all the
organization costs have been amortized, the proceeds will be reduced by the
redeemed share's prorata share of the then-unamortized organization costs, in
the same proportion as the number of shares redeemed
25
<PAGE> 26
bears to the total number of initial shares outstanding.
INCOME TAXES
The Fund's policy is to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gains on
investments, to its shareholders. Therefore, no federal income or excise tax
provision is required.
Net investment income (loss), net realized gains (losses) and the cost of
investments in securities may differ for financial statement and income tax
purposes. The character of distributions from net investment income or net
realized gains may differ from their ultimate characterization for income tax
purposes. At September 30, 1999, there were no material differences. Also, due
to the timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gains were
recorded by the Fund.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends declared and paid from net investment income or net realized
gains are recorded on the ex-dividend date.
NOTE 2 -- COVERED CALL OPTIONS WRITTEN
Transactions in covered call options written for the year ended September
30, 1999 were as follows:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS AMOUNTS
--------- --------
<S> <C> <C>
Beginning............. 9 $ 8,337
Written............... 24 20,949
Expired............... -- --
Exercised............. -- --
Closed................ (33) (29,286)
---- --------
Ending................ -- $ --
==== ========
</TABLE>
NOTE 3 -- DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income were as follows:
<TABLE>
<CAPTION>
PER
RECORD PAID SHARE AMOUNT
------ ------------- ----- --------
<S> <C> <C> <C>
December 17,
December 15, 1998 1998 $0.13 $ 60,504
March 25,
March 23, 1999 1999 0.11 53,871
June 22, 1999 June 24, 1999 0.12 56,890
September 23,
September 21, 1999 1999 0.12 64,532
----- --------
$0.48 $235,797
===== ========
</TABLE>
At September 30, 1999, the Fund had available for federal income tax
purposes a capital loss carryforward of $180,305 of which $25,959 expires in
2004, $20,770 expires in 2005, $7,697 expires in 2006 and $125,879 expires
in 2007.
NOTE 4 -- CAPITAL SHARE TRANSACTIONS
As of September 30, 1999, there were 30,000,000 shares of $1 par value
capital stock authorized of which 10,000,000 shares are classified as the Fund's
series (Series B),
26
<PAGE> 27
9,841,293 shares are classified as Concorde Value Fund series (Series A), and
the remaining balance is unallocated for future use. As of September 30, 1999,
capital paid-in aggregated $5,443,798.
Transactions in shares of capital stock for the years ended September 30,
1999 and 1998 were as follows:
<TABLE>
<CAPTION>
1999
--------------------
SHARES AMOUNT
------- ----------
<S> <C> <C>
Shares sold............ 91,597 $ 881,113
Shares issued in
reinvestment of
dividends............ 24,712 235,322
------- ----------
116,309 1,116,435
Shares redeemed........ 53,734 522,521
------- ----------
Net increase........... 62,575 $ 593,914
======= ==========
</TABLE>
<TABLE>
<CAPTION>
1998
--------------------
SHARES AMOUNT
------- ----------
<S> <C> <C>
Shares sold............ 142,648 $1,464,701
Shares issued in
reinvestment of
dividends............ 21,177 215,276
------- ----------
163,825 1,679,977
Shares redeemed........ 58,952 601,448
------- ----------
Net increase........... 104,873 $1,078,529
======= ==========
</TABLE>
NOTE 5 -- INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities
(excluding short-term securities) aggregated $631,183 and $461,025,
respectively, for fixed income funds, common stocks, preferred stocks and
convertible preferred stocks, and $1,133,000 and $866,469, respectively, for
U.S. government obligations for the year ended September 30, 1999. Net loss on
investments for the year ended September 30, 1999 was $377,315. That amount
represents the net decrease in value of investment securities held during the
year. As of September 30, 1999, the aggregate unrealized appreciation and
depreciation of investment securities was as follows:
<TABLE>
<S> <C>
Unrealized appreciation.......... $ 17,274
Unrealized depreciation.......... (246,806)
---------
Net unrealized depreciation...... $(229,532)
=========
</TABLE>
NOTE 6 -- INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory Agreement (Advisory Agreement) with
Concorde Financial Corporation dba Concorde Investment Management (Advisor) to
act as the Fund's investment advisor. The Advisor provides the Fund with
investment advice and recommendations consistent with the Fund's investment
objectives, policies and restrictions, and supervises the purchase and sale of
investment transactions on behalf of the Fund. For such services, the Advisor
receives an annual fee of 0.7% of the Fund's average daily net assets, computed
daily and paid on a monthly basis. The investment advisory fee was $33,381 for
the year ended September 30, 1999, of which $2,914 was payable at year end. The
Advisor voluntarily reimbursed the Fund for expenses in excess of 1.88% of
average daily net assets. The expense reimbursement under this arrangement for
the year ended September 30, 1999 was $23,935, of which $477 was due from
Advisor at year end.
Certain directors and officers of the Company are also directors, officers
and/or employees of the Advisor.
27
<PAGE> 28
INVESTMENT ADVISOR
Concorde Investment Management
1500 Three Lincoln Centre
5430 LBJ Freeway
Dallas, Texas 75240
OFFICERS
Gary B. Wood, Ph.D.
President and Treasurer
John A. Stetter
Secretary
DIRECTORS
John R. Bradford, Ph.D.
John H. Wilson
Gary B. Wood, Ph.D.
CUSTODIAN
Firstar Bank, N.A.
777 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Firstar Mutual Fund Services, LLC
Mutual Fund Services, 3rd Floor
615 East Michigan Street
Milwaukee, Wisconsin 53202
INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
Wallace Sanders & Company
511 E. John Carpenter Freeway
Suite 200
Irving, Texas 75062
LEGAL COUNSEL
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
TELEPHONE
(972) 387-8258
(Fund information)
(800) 294-1699
(Shareholder account information)
[LOGO]
A FAMILY OF NO-LOAD
MUTUAL FUNDS
ANNUAL REPORT
DATED SEPTEMBER 30, 1999
[LOGO]
