United
Municipal
Bond Fund,
Inc.
SEMIANNUAL
REPORT
---------------------------------------
For the six months ended March 31, 1996
<PAGE>
This report is submitted for the general information of the shareholders of
United Municipal Bond Fund, Inc. It is not authorized for distribution to
prospective investors in the Fund unless accompanied with or preceded by the
United Municipal Bond Fund, Inc. current prospectus.
<PAGE>
PRESIDENT'S LETTER
- -----------------------------------------------------------------
MARCH 31, 1996
Dear Shareholder:
As President of your Fund, I would like to thank you for your continued
confidence in our products and services. We strive to provide the best service
possible to our shareholders: from the Fund's manager, to Waddell & Reed's
customer service representatives, to your personal account representative and
the Waddell & Reed office nearest you.
While personalized service has become increasingly rare in the investment
industry, we remain committed to locally based account representatives who
provide the personal service you need. They are ready to assist you through
regular reviews of your financial plan and to answer any financial questions you
may have. Your account representative is anxious to help you plan for your
retirement, fund a child's education or make plans for other long-term financial
goals.
We want to help you open the door to a better financial future. We will
continue to help you meet your specific financial needs through quality
investment products and personalized service that makes the investment process
more convenient and accessible for you.
Should you have any questions about your account or other financial issues,
contact your personal account representative or your local Waddell & Reed
office. They're ready to help you make the most of your financial future.
Respectfully,
Keith A. Tucker
President
<PAGE>
SHAREHOLDER SUMMARY
- --------------------------------------------------------------
United Municipal Bond Fund, Inc.
PORTFOLIO STRATEGY:
Minimum 80% investment OBJECTIVE: Income not subject to Federal
quality Municipal Bonds income taxation. (Income may be
subject to state and local taxes
Maximum 10% Non-Municipal and a portion may be subject to
Bond Debt Securities Federal taxes, including
alternative minimum tax.)
May own 25% or more
Industrial Revenue Bonds STRATEGY: Invests in municipal bonds
(debt securities the interest on which
is generally exempt from Federal income
tax.) (May invest in certain futures.)
FOUNDED: 1976
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
<PAGE>
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Six Months Ended March 31, 1996
- --------------------------------------------
DIVIDENDS PAID $0.19
=====
CAPITAL GAINS DISTRIBUTION $0.05
=====
NET ASSET VALUE ON
3/31/96 $7.29 adjusted to: $ 7.34 (A)
9/30/95 7.25
-----
CHANGE PER SHARE $0.09
=====
(A) This number includes the capital gains distribution of $0.05 paid in
December 1995 added to the actual net asset value on March 31, 1996.
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- -----------
1-year period ended 3-31-96 3.79% 8.40%
5-year period ended 3-31-96 7.91% 8.85%
10-year period ended 3-31-96 8.06% 8.53%
Performance data quoted represents past performance and is based on deduction of
4.25% sales load on the initial purchase in each of the three periods.
Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On March 31, 1996, United Municipal Bond Fund, Inc. had net assets totaling
$970,399,689 invested in a diversified portfolio.
As a shareholder of United Municipal Bond Fund, Inc., for every $100 you had
invested on March 31, 1996, your Fund owned:
$16.58 Public Power Revenue Bonds
11.77 Cash and Cash Equivalents and Adjustable Rate Bonds
10.03 Airport Revenue Bonds
9.68 Resource Recovery Bonds
9.41 Hospital Revenue Bonds
9.06 Other Municipal Bonds
7.24 Housing Revenue Bonds
6.67 Water and Sewer Revenue Bonds
5.75 Student Loan Bonds
4.50 Transportation Revenue Bonds
3.69 Electric Utility Revenue Bonds
3.05 Industrial Revenue/Pollution Control Revenue Bonds
2.57 Lease/Certificates of Participation Bonds
1996 TAX YEAR TAXABLE EQUIVALENT YIELDS*
- -------------------------------------------------------------------------------
If your Taxable Income is:
Your
Marginal Equivalent Tax Free Yields
Joint Single Tax -----------------------------------
Return ReturnBracket Is 5% 6% 7% 8%
- -----------------------------------------------------------------
$ 0- 40,100$ 0- 24,000 15% 5.88 7.06 8.24 9.41
$ 40,101- 96,900$ 24,001- 58,150 28% 6.94 8.33 9.72 11.11
$ 96,901-147,700$ 58,151-121,300 31% 7.25 8.70 10.14 11.59
$147,701-263,750$121,301-263,750 36% 7.81 9.38 10.94 12.50
$263,751 and above$263,751 and above 39.6% 8.28 9.93 11.59 13.25
Above table is for illustration only and does not represent the actual
performance of
United Municipal Bond Fund, Inc.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS
ALABAMA - 0.63%
The Industrial Development Board of the
Town of Camden (Alabama), Pollution
Control Facilities Revenue Refunding
Bonds, Series 1990-A (MacMillan
Bloedel Project),
7.75%, 5-1-2009 ....................... 5,655 6,093,262
ALASKA - 0.44%
City of Valdez, Alaska, Marine Terminal
Revenue Refunding Bonds (Sohio Pipe Line
Company Project), Series 1985,
7.125%, 12-1-2025 ..................... $ 2,500 $ 2,696,875
Alaska Housing Finance Corporation,
General Housing Purpose Bonds, 1994
Series A (Refunding/Non-AMT),
5.0%, 12-1-2008 ....................... 1,640 1,547,750
Total ................................. 4,244,625
ARIZONA - 0.64%
The Industrial Development Authority
of the City of Tucson, Arizona,
Multifamily Housing Revenue Bonds,
Series 1985 (HSL La Cholla Project),
Adjustable Rate Bond,
3.64%, 12-1-2014....................... 3,115 3,115,000
Arizona Educational Loan Marketing
Corporation, Educational Loan Revenue
Bonds, Junior Subordinate Series 1993,
6.3%, 12-1-2008 ....................... 3,155 3,091,900
Total ................................. 6,206,900
ARKANSAS - 0.19%
Arkansas Development Finance Authority,
Single Family Mortgage Revenue Bonds
(Access Program), 1995 Series F,
7.45%, 1-1-2027 ....................... 1,710 1,836,112
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA - 9.34%
Southern California Public Power Authority:
Palo Verde Project, Power Project
Revenue Bonds, 1993 Subordinate Refunding
Series, Auction-Based/Inverse Floater,
5.35%, 7-1-2012 ....................... $10,000 $ 9,600,000
Transmission Project Revenue Bonds, 1992
Subordinate Refunding Series (Southern
Transmission Project), Auction-Based/
Inverse Floater (RIBS),
7.81%, 7-1-2012 (A).................... 5,000 5,200,000
Multiple Project Revenue Bonds, 1989 Series,
6.75%, 7-1-2012 ....................... 3,455 3,761,631
Mead-Adelanto Project Revenue Bonds,
1994 Series A, Linked Inverse Floating
Rate Security,
5.15%, 7-1-2015 ....................... 2,800 2,572,500
Mead-Phoenix Project Revenue Bonds,
1994 Series A, Linked Inverse Floating
Rate Security,
5.15%, 7-1-2015 ....................... 1,600 1,462,000
Transmission Agency of Northern California,
California-Oregon Transmission Project
Revenue Bonds, 1990 Series A,
7.0%, 5-1-2013 ........................ 12,000 13,860,000
Imperial Irrigation District,
1993 Refunding Certificates of
Participation (1990 Electric
System Project),
5.2%, 11-1-2009 ....................... 10,000 9,837,500
Community Facilities District No. 90-2
(Green Valley) of the City of Perris,
1991 Special Tax Bonds,
8.75%, 10-1-2021 ...................... 6,165 8,569,350
Stanislaus Waste-To-Energy Financing
Agency, Solid Waste Facility Refunding
Revenue Certificates (Ogden Martin Systems
of Stanislaus, Inc. Project), Series 1990,
7.625%, 1-1-2010 ...................... 5,775 6,164,812
California Statewide Communities Development
Authority, Hospital Revenue Certificates
of Participation, Cedars-Sinai Medical Center,
Series 1992,
6.5%, 8-1-2012 ........................ 5,200 5,453,500
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA (Continued)
Foothill/Eastern Transportation Corridor
Agency, Toll Road Revenue Bonds, Series
1995A (Fixed Rate) Current Interest Bonds,
6.0%, 1-1-2016 ........................ $ 5,600 $ 5,425,000
California Health Facilities Financing
Authority, Hospital Revenue Bonds (Downey
Community Hospital), Series 1993,
5.75%, 5-15-2015 ...................... 4,250 3,925,938
Community Redevelopment Agency of the City
of Palmdale, Restructured Single Family
Mortgage Revenue Bonds, Series 1986A,
8.0%, 3-1-2016 ........................ 3,000 3,795,000
Orange County Water District, Revenue
Certificates of Participation,
Series 1993A,
5.5%, 8-15-2014 ....................... 3,430 3,267,075
Sacramento Municipal Utility District,
Electric Revenue Refunding Bonds,
1993 Series G,
6.5%, 9-1-2013 ........................ 2,500 2,753,125
Intermodal Container Transfer Facility,
Joint Powers Authority, Intermodal
Container Transfer Facility Refunding
Revenue Bonds, 1989 Series A,
7.7%, 11-1-2014 ....................... 2,000 2,105,000
California Rural Home Mortgage Finance
Authority, Single Family Mortgage
Revenue Bonds (Mortgage-Backed Securities
Program), 1995 Series B,
7.75%, 9-1-2027 ....................... 1,770 1,991,250
Sacramento County Sanitation Districts
Financing Authority, 1993 Revenue Bonds,
5.125%, 12-1-2013 ..................... 1,000 923,750
Total ................................. 90,667,431
COLORADO - 5.96%
City and County of Denver, Colorado,
Airport System Revenue Bonds:
Series 1991D,
7.75%, 11-15-2013 ..................... 11,705 13,797,269
Series 1992C,
6.75%, 11-15-2013 ..................... 8,765 9,093,688
Series 1991A,
0.0%, 11-15-2003 ...................... 7,955 5,170,750
Series 1990A,
0.0%, 11-15-2003 ...................... 3,370 2,190,500
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
COLORADO (Continued)
Colorado Housing and Finance Authority,
Single Family Program Senior Bonds:
1995 Series A,
8.0%, 6-1-2025 ........................ $ 4,550 $ 5,044,812
1995 Series D,
7.375%, 6-1-2026 ...................... 4,045 4,353,431
1995 Series C,
7.65%, 12-1-2025 ...................... 2,670 2,926,988
1995 Series B,
7.9%, 12-1-2025 ....................... 1,245 1,369,500
Colorado Student Obligation Bond Authority,
Student Loan Asset-Backed Obligations,
Senior Subordinate, 1995 Series II-B,
6.2%, 12-1-2008 ....................... 8,000 8,050,000
Colorado Health Facilities Authority,
Revenue Bonds, Series 1994 (Sisters of
Charity Health Care Systems, Inc.),
5.25%, 5-15-2014 ...................... 4,500 4,185,000
City of Colorado Springs, Colorado,
Utilities System Refunding Revenue Bonds,
Series 1991A,
6.5%, 11-15-2015 ...................... 1,500 1,620,000
Total ................................. 57,801,938
CONNECTICUT - 2.59%
Connecticut Resources Recovery Authority,
Mid-Connecticut System Bonds,
1996 Series A:
5.25%, 11-15-2008 ..................... 5,000 4,831,250
5.5%, 11-15-2012 ...................... 3,000 2,853,750
5.5%, 11-15-2011 ...................... 2,000 1,935,000
Bristol Resource Recovery Facility,
Operating Committee, Solid Waste Revenue
Refunding Bonds (Ogden Martin Systems of
Bristol, Inc. Project--1995 Series),
6.5%, 7-1-2014 ........................ 7,000 7,227,500
Eastern Connecticut Resource Recovery
Authority, Solid Waste Revenue Bonds
(Wheelabrator Lisbon Project),
Series 1993A,
5.5%, 1-1-2014 ........................ 6,750 6,041,250
State of Connecticut Health and Educational
Facilities Authority Revenue Bonds,
Greenwich Hospital Issue, Series A,
5.75%, 7-1-2016 ....................... 2,250 2,213,437
Total ................................. 25,102,187
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
FLORIDA - 3.50%
City of Atlantic Beach, Florida, Variable
Rate Demand, Improvement and Refunding
Revenue Bonds, Series 1994B (Fleet
Landing Project),
3.49%, 10-1-2024 ...................... $12,300 $ 12,300,000
Escambia County, Florida, Pollution Control
Revenue Bonds (Champion International
Corporation Project), Series 1994,
6.9%, 8-1-2022 ........................ 9,000 9,393,750
Lake County, Florida, Resource Recovery
Industrial Development Refunding Revenue
Bonds (NRG/Recovery Group Project),
Series 1993A,
5.85%, 10-1-2009 ...................... 5,825 5,533,750
Jacksonville Port Authority (Jacksonville,
Florida), 1996 Port Facilities
Revenue Refunding Bonds,
5.625%, 11-1-2018 ..................... 4,000 3,785,000
Dade County, Florida, Aviation Revenue
Bonds, Series 1996A (AMT),
5.75%, 10-1-2015 ...................... 3,000 2,940,000
Total ................................. 33,952,500
GEORGIA - 3.53%
Municipal Electric Authority of Georgia:
Project One Special Obligation Bonds,
Fifth Crossover Series,
6.4%, 1-1-2013 ........................ 15,500 16,740,000
General Power Revenue Bonds,
1992B Series,
8.25%, 1-1-2011 ....................... 8,700 11,070,750
Development Authority of Burke County
(Georgia), Pollution Control Revenue Bonds
(Georgia Power Company Plant Vogtle
Project), Sixth Series 1994,
6.375%, 8-1-2024 ...................... 4,300 4,466,625
Hospital Authority of Albany-Dougherty
County, Georgia, Revenue Bonds (Phoebe
Putney Memorial Hospital), Series 1993,
5.7%, 9-1-2013 ........................ 2,000 1,980,000
Total ................................. 34,257,375
GUAM - 0.11%
Guam Power Authority Revenue Bonds,
1994 Series A,
6.625%, 10-1-2014 ..................... 1,000 1,026,250
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
HAWAII - 2.31%
State of Hawaii, Airports System Revenue
Bonds, Second Series of 1991,
6.9%, 7-1-2012 ........................ $20,195 $ 22,391,206
IDAHO - 0.68%
Idaho Health Facilities Authority, Hospital
Revenue Refunding Bonds, Series 1992
(IHC Hospitals, Inc.), Indexed Inverse
Floating/Fixed Term Bonds,
8.57%, 2-15-2021 (B) .................. 6,000 6,562,500
ILLINOIS - 2.68%
City of Chicago, Chicago-O'Hare
International Airport:
Special Facility Revenue
Bonds, American Airlines,
Inc. Project:
7.875%, 11-1-2025 ..................... 7,250 7,730,312
8.2%, 12-1-2024 ....................... 3,000 3,457,500
Special Facility Revenue Bonds (United
Air Lines, Inc. Project), Series 1984C,
8.2%, 5-1-2018 ........................ 5,215 5,638,719
General Airport Revenue Refunding
Bonds, 1993 Series A,
5.0%, 1-1-2012 ........................ 3,000 2,801,250
Illinois Health Facilities Authority
(Lutheran General HealthSystem),
Indexed Inverse Floating Rate
Revenue Bonds, Series 1993B,
7.24%, 4-1-2014 (C) ................... 4,100 4,217,875
City of Peoria, City of Moline and City
of Freeport, Illinois, Collateralized
Single Family Mortgage Revenue Bonds,
Series 1995-A,
7.6%, 4-1-2027 ........................ 2,000 2,155,000
Total ................................. 26,000,656
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
INDIANA - 2.62%
Indiana State Office Building Commission,
Capitol Complex Revenue Bonds:
Series 1990B (State Office Building
I Facility),
7.4%, 7-1-2015 ........................ $ 8,000 $ 9,440,000
Series 1990A (Senate Avenue Parking Facility),
7.4%, 7-1-2015 ........................ 4,775 5,634,500
Indiana Transportation Finance Authority,
Highway Revenue Bonds, Series 1990A,
7.25%, 6-1-2015 ....................... 9,000 10,361,250
Total ................................. 25,435,750
IOWA - 0.55%
Iowa Student Loan Liquidity Corporation,
Student Loan Revenue Bonds, 1993
Subordinate Series C,
6.125%, 12-1-2011 ..................... 5,300 5,300,000
KANSAS - 0.52%
Sisters of Charity of Leavenworth Health
Services Corporation, Shawnee County,
Kansas, Revenue Bonds, Series 1994,
5.0%, 12-1-2014 ....................... 3,000 2,726,250
Shawnee County, Kansas, Health Facilities
Revenue Refunding Bonds (The Menninger
Foundation), Series 1995,
5.0%, 8-15-2016 ....................... 2,500 2,275,000
Total ................................. 5,001,250
KENTUCKY - 0.43%
Kentucky Economic Development Finance
Authority, Hospital Revenue Bonds,
Baptist Healthcare System Issue,
Series 1994,
5.0%, 8-15-2015 ....................... 4,650 4,219,875
LOUISIANA - 3.85%
Memorial Hospital Service District of the
Parish of Calcasieu, State of Louisiana,
Hospital Revenue Bonds (Lake Charles
Memorial Hospital Project), Series 1993,
Adjustable Rate Bond,
4.9%, 12-1-2018 ....................... 12,500 12,500,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
LOUISIANA (Continued)
Parish of Jefferson Home Mortgage Authority,
Tax-Exempt Agency Mortgage-Backed
Securities:
Series 1994A,
7.55%, 12-1-2026 ...................... $ 5,495 $ 6,243,694
Series 1995A,
6.65%, 12-1-2026 ...................... 4,300 4,455,875
Louisiana Public Facilities Authority,
Hospital Revenue and Refunding Bonds
(St. Francis Medical Center Project),
Inverse Floating Rate Notes, Series 1994B,
5.39%, 7-1-2014 ....................... 10,600 9,897,750
Louisiana Housing Finance Agency, Single
Family Mortgage Revenue Bonds,
Series 1995C-2,
6.45%, 6-1-2027 ....................... 4,250 4,281,875
Total ................................. 37,379,194
MARYLAND - 1.45%
Northeast Maryland Waste Disposal Authority,
Solid Waste Revenue Bonds (Montgomery
County Resource Recovery Project),
Series 1993A,
6.3%, 7-1-2016 ........................ 14,000 14,087,500
MASSACHUSETTS - 7.79%
Massachusetts Municipal Wholesale Electric
Company, A Public Corporation of the
Commonwealth of Massachusetts, Power
Supply System Revenue Bonds, Linked
PARS and INFLOS,
5.45%, 7-1-2018 ....................... 30,000 28,237,500
Massachusetts Water Resources Authority:
General Revenue Refunding Bonds,
1992 Series B,
5.5%, 11-1-2015 ....................... 15,435 14,605,369
General Revenue Bonds,
1992 Series A,
6.5%, 7-15-2019 ....................... 6,960 7,560,300
Massachusetts Bay Transportation Authority,
General Transportation System Bonds,
1992 Series B Refunding,
6.2%, 3-1-2016 ........................ 20,500 21,525,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MASSACHUSETTS (Continued)
Massachusetts State College Building
Authority, Project and Refunding
Revenue Bonds, Senior Series 1994-A,
7.5%, 5-1-2014 ........................ $ 1,750 $ 2,108,750
Boston Water and Sewer Commission,
General Revenue Bonds, 1992 Series A
(Senior Series),
5.75%, 11-1-2013 ...................... 1,575 1,563,187
Total ................................. 75,600,106
MICHIGAN - 1.76%
Michigan Strategic Fund, Limited Obligation
Refunding Revenue Bonds (The Detroit Edison
Company Pollution Control Bonds Project),
Collateralized Series 1991 AA,
6.95%, 5-1-2011 ....................... 8,000 9,080,000
The Economic Development Corporation of
Dickinson County (Michigan), Solid Waste
Disposal Refunding Revenue Bonds
(Champion International Corporation Project),
Series 1989,
6.55%, 3-1-2007 ....................... 3,000 3,135,000
Michigan State Hospital Finance Authority:
Hospital Revenue Bonds (Holland Community
Hospital), Series 1993,
5.25%, 1-1-2010 ....................... 1,200 1,096,500
Hospital Revenue Refunding Bonds
(McLaren Obligated Group),
Series 1993A,
5.375%, 10-15-2013 .................... 750 692,813
School District of the City of Detroit,
Wayne County, Michigan, School Building
and Site Improvement and Refunding Bonds
(Unlimited Tax General Obligation),
Series 1993,
5.0%, 5-1-2011 ........................ 1,885 1,724,775
Charter County of Wayne, Michigan, Detroit
Metropolitan Wayne County Airport, Airport
Revenue Bonds, Subordinate Lien,
Series 1993B,
5.25%, 12-1-2013 ...................... 1,500 1,393,125
Total ................................. 17,122,213
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MINNESOTA - 0.50%
City of Rochester, Minnesota, Health
Care Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center),
Series 1992D, Indexed Inverse
Floating/Fixed Term Bonds,
8.0%, 11-15-2009 (D) .................. $ 4,500 $ 4,826,250
MISSISSIPPI - 1.28%
Lowndes County, Mississippi, Solid Waste
Disposal and Pollution Control
Refunding Revenue Bonds (Weyerhaeuser
Company Project), Series 1992B, Indexed
Inverse Floating/Fixed Term Bonds,
8.57%, 4-1-2022 (E) ................... 11,000 12,443,750
MISSOURI - 2.49%
Health Facilities Revenue Bonds
(Barnes-Jewish, Inc./Christian Health
Services), Series 1993A:
6.0%, 5-15-2011 ....................... 3,000 3,116,250
5.25%, 5-15-2014 ...................... 2,900 2,700,625
The Industrial Development Authority of the
City of Independence, Missouri, Industrial
Development Revenue Bonds, Series 1995
(Resthaven Project),
3.35%, 2-1-2025 ....................... 4,800 4,800,000
Health and Educational Facilities Authority
of the State of Missouri, Health Facilities
Revenue Bonds (BJC Health System),
Series 1994A,
6.75%, 5-15-2012 ...................... 4,000 4,405,000
Health and Educational Facilities Authority
of the State of Missouri, Variable Rate
Demand Educational Facilities Revenue Bonds
(The Washington University), Series 1996C,
3.65%, 9-1-2030 ....................... 4,300 4,300,000
Missouri Housing Development Commission,
Single Family Mortgage Revenue Bonds
(Homeownership Loan Program),
1995 Series C,
7.25%, 9-1-2026 ....................... 3,255 3,486,919
Missouri Higher Education Loan Authority
(A Public Instrumentality and Body
Corporate and Politic of the State of
Missouri), Student Loan Revenue Bonds,
Subordinate Series 1994A,
5.45%, 2-15-2009 ...................... 1,500 1,381,875
Total ................................. 24,190,669
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEBRASKA - 1.53%
Nebraska Higher Education Loan Program,
Inc., 1993-2 Series A-6 Junior
Subordinate Bonds,
6.4%, 6-1-2013 ........................ $14,500 $ 14,880,625
NEVADA - 0.54%
Washoe County, Nevada, Variable Rate Demand
Water Facilities, Revenue Bonds (Sierra
Pacific Power Company Project),
Series 1987,
6.65%, 6-1-2017 ....................... 5,000 5,237,500
NEW HAMPSHIRE - 0.45%
The Industrial Development Authority of
The State of New Hampshire, Pollution
Control Revenue Bonds (The Connecticut
Light and Power Company Project),
Series 1989,
7.375%, 12-1-2019 ..................... 4,000 4,370,000
NEW JERSEY - 3.94%
The Union County Utilities Authority
(New Jersey), Solid Waste System Revenue
Bonds, 1991 Series A:
6.95%, 6-15-2003 ...................... 9,000 9,382,500
7.2%, 6-15-2014 ....................... 5,400 5,582,250
7.15%, 6-15-2009 ...................... 4,000 4,165,000
Pollution Control Financing Authority
of Camden County (Camden County, New
Jersey), Solid Waste Disposal and
Resource Recovery System Revenue Bonds:
Series B,
7.5%, 12-1-2009 ....................... 10,015 10,202,781
Series A,
7.5%, 12-1-2010 ....................... 5,500 5,603,125
Middlesex County Utilities Authority,
Sewer Revenue Refunding Bonds, Series
1992A, Indexed Inverse Floating/Fixed
Term Bonds,
7.6%, 8-15-2010 (F) ................... 3,000 3,273,750
Total ................................. 38,209,406
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW MEXICO - 2.06%
New Mexico Educational Assistance
Foundation, Student Loan Purchase Bonds:
Senior 1995 Series IV-A1,
7.05%, 3-1-2010 ....................... $ 6,485 $ 6,865,994
First Subordinate 1994 Series II-B,
5.75%, 12-1-2008 ...................... 1,750 1,688,750
New Mexico Educational Assistance
Foundation, Student Loan Program Bonds:
First Subordinate 1995 Series A-2:
5.95%, 11-1-2007 ...................... 3,005 2,967,438
5.85%, 11-1-2006 ...................... 1,745 1,703,556
5.5%, 11-1-2003 ....................... 1,255 1,306,769
Second Subordinate 1995 Series A-3,
6.6%, 11-1-2010 ....................... 1,500 1,471,875
City of Albuquerque, New Mexico, Governmental
Purpose Airport Refunding Revenue Bonds,
Series 1989,
6.5%, 7-1-2019 ........................ 3,950 4,019,125
Total ................................. 20,023,507
NEW YORK - 7.50%
The City of New York, General Obligation
Bonds:
Fiscal 1996 Series G:
5.75%, 2-1-2008 ....................... 3,595 3,469,175
5.75%, 2-1-2014 ....................... 2,500 2,337,500
Fiscal 1996 Series I,
5.75%, 3-15-2009 ...................... 5,500 5,273,125
Fiscal 1996 Series E,
6.5%, 2-15-2006 ....................... 5,000 5,212,500
New York State Environmental Facilities
Corporation, State Water Pollution
Control, Revolving Fund Revenue Bonds,
Series 1994 A (New York City Municipal
Water Finance Authority Project)
(Second Resolution Bonds):
5.75%, 6-15-2012 ...................... 10,000 10,125,000
5.75%, 6-15-2011 ...................... 5,000 5,143,750
New York City Municipal Water Finance
Authority, Water and Sewer System
Revenue Bonds, Fiscal 1993 Series A,
6.0%, 6-15-2010 ....................... 12,000 12,495,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW YORK (Continued)
New York State Medical Care Facilities,
Finance Agency Mental Health Services
Facilities, Improvement Revenue Bonds,
1993 Series F Refunding,
5.375%, 2-15-2014 ..................... $12,000 $ 11,385,000
Housing New York Corporation, Senior
Revenue Refunding Bonds, Series 1993,
5.0%, 11-1-2013 ....................... 6,600 5,964,750
New York State Housing Finance Agency,
Health Facilities Revenue Bonds (New
York City), 1990 Series A Refunding,
8.0%, 11-1-2008 ....................... 4,270 4,926,512
Dormitory Authority of the State of New York:
State University Educational
Facilities, Revenue Bonds,
Series 1990B,
7.5%, 5-15-2011 ....................... 2,000 2,305,000
Department of Health of the State of
New York Revenue Bonds, Series 1996,
5.5%, 7-1-2010 ........................ 2,000 1,900,000
New York Local Government Assistance
Corporation (A Public Benefit Corporation
of the State of New York),
Series 1993D Bonds,
5.375%, 4-1-2014 ...................... 2,370 2,221,875
Total ................................. 72,759,187
NORTH CAROLINA - 2.56%
North Carolina Eastern Municipal Power
Agency, Power System Revenue Bonds,
Refunding Series 1993 B,
7.0%, 1-1-2008 ........................ 19,000 20,710,000
North Carolina Housing Finance Agency:
Single Family Revenue Bonds, Series EE,
5.9%, 9-1-2013 ........................ 2,100 2,102,625
Single Family Revenue Bonds, Series FF,
6.125%, 3-1-2018 ...................... 2,000 2,010,000
Total.................................. 24,822,625
OHIO - 1.29%
County of Cuyahoga, Ohio, Hospital Revenue
Bonds, Series 1990 (Meridia Health System),
7.25%, 8-15-2019 ...................... 4,980 5,285,025
City of Columbus, Ohio, Various Purpose
Adjustable Rate Unlimited Tax Bonds,
Series 1995-1,
3.1%, 6-1-2016 ........................ 2,900 2,900,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
OHIO (Continued)
1993 Beneficial Interest Certificates
(Belleville Hydroelectric Project),
Ohio Municipal Electric Generation
Agency Joint Venture 5,
5.375%, 2-15-2013 ..................... $ 2,750 $ 2,657,187
City of Moraine, Ohio, Solid Waste
Disposal Revenue Bonds (General Motors
Corporation Project), Series 1994,
6.75%, 7-1-2014 ....................... 1,550 1,689,500
Total ................................. 12,531,712
OKLAHOMA - 1.03%
Oklahoma Housing Finance Agency Single
Family Mortgage Revenue Bonds
(Homeownership Loan Program):
1995 Series B, Subseries B-2,
7.625%, 9-1-2026 ...................... 5,815 6,287,469
1996 Series A,
7.05%, 9-1-2026 ....................... 1,000 1,073,750
Trustees of the Tulsa Municipal Airport
Trust, 1988 Adjustable Rate Revenue
Obligations, American Airlines,
7.375%, 12-1-2020 ..................... 2,500 2,650,000
Total ................................. 10,011,219
OREGON - 0.15%
State of Oregon, Housing and Community
Services Department, Mortgage Revenue
Bonds, Single-Family Mortgage Program,
1992 Series C,
5.5%, 7-1-2013 ........................ 1,500 1,458,750
PENNSYLVANIA - 1.43%
Pennsylvania Turnpike Commission,
Pennsylvania Turnpike Revenue Bonds,
Series N of 1991,
6.5%, 12-1-2013 ....................... 5,000 5,250,000
Washington County Hospital Authority
(Commonwealth of Pennsylvania), Hospital
Revenue Bonds, Series of 1993 (The
Washington Hospital Project),
5.5%, 7-1-2012 ........................ 5,000 4,818,750
The School District of Philadelphia,
Pennsylvania, General Obligation Bonds,
Series B of 1995,
5.5%, 9-1-2015 ........................ 2,000 1,930,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
PENNSYLVANIA (Continued)
City of Philadelphia, Pennsylvania, Water
and Wastewater Revenue Bonds, Series 1995,
5.5%, 8-1-2014 ........................ $ 2,000 $ 1,917,500
Total ................................. 13,916,250
PUERTO RICO - 0.55%
Puerto Rico Highway and Transportation
Authority, Highway Revenue Bonds
Series W,
3.6%, 7-1-2010 ........................ 4,250 4,250,000
Series Y,
6.25%, 7-1-2014 ....................... 1,000 1,053,750
Total ................................. 5,303,750
RHODE ISLAND - 0.10%
Rhode Island Student Loan Authority,
Student Loan Program Revenue Bonds,
1995 Subordinate Series III Bonds,
6.45%, 12-1-2015 ...................... 1,000 993,750
SOUTH CAROLINA - 1.88%
Calhoun County, South Carolina, Solid
Waste Disposal Facilities Revenue Bonds
(Eastman Kodak Company Project),
Series 1992,
6.75%, 5-1-2017 ....................... 10,895 12,216,019
South Carolina State Education Assistance
Authority, Guaranteed Student Loan
Revenue and Refunding Bonds:
1993 Series,
5.55%, 9-1-2008 ....................... 4,000 4,040,000
1995 Series, Series C Subordinate Lien
Refunding Bonds,
6.0%, 9-1-2008 ........................ 2,000 2,022,500
Total ................................. 18,278,519
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TENNESSEE - 1.34%
Tennessee Housing Development Agency:
Homeownership Program Bonds, Issue T,
7.375%, 7-1-2023 ...................... $ 4,665 $ 4,851,600
Mortgage Finance Program Bonds,
1994 Series B,
6.45%, 7-1-2014 ....................... 3,015 3,060,225
The Health and Educational Facilities
Board of the Metropolitan Government
of Nashville and Davidson County,
Tennessee, Multi-Modal Interchangeable
Rate, Health Facility Revenue Bonds
(Richland Place, Inc. Project),
Series 1993,
3.35%, 5-1-2023 ....................... 5,100 5,100,000
Total ................................. 13,011,825
TEXAS - 4.31%
Alliance Airport Authority, Inc.,
Special Facilities Revenue Bonds,
Series 1991 (American Airlines, Inc.
Project),
7.0%, 12-1-2011 ....................... 13,100 14,098,875
Brazos River Authority (Texas),
Collateralized Pollution Control Revenue
Bonds (Texas Utilities Electric Company
Project), Series 1991A,
7.875%, 3-1-2021 ...................... 11,855 13,055,319
Lubbock Health Facilities Development
Corporation, Hospital Revenue Bonds
(Methodist Hospital, Lubbock, Texas
Project),
6.75%, 12-1-2010 ...................... 5,000 5,581,250
Harris County Health Facilities Development
Corporation, Hospital Revenue Bonds
(Memorial Hospital System Project),
Series 1989,
6.5%, 6-1-2019 ........................ 4,500 4,702,500
Sabine River Authority of Texas,
Collateralized Pollution Control Revenue
Bonds (Texas Utilities Electric Company
Project), Series 1990,
8.25%, 10-1-2020 ...................... 4,000 4,430,000
Total ................................. 41,867,944
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
UTAH - 0.50%
Intermountain Power Agency, Power Supply
Revenue Refunding Bonds, 1996 Series C,
5.7%, 7-1-2017 ........................ $ 4,000 $ 3,895,000
Utah Housing Finance Agency, Single Family
Mortgage Subordinate Bonds, 1993 Issue B,
5.7%, 7-1-2013 ........................ 970 933,625
Total ................................. 4,828,625
VIRGINIA - 0.58%
Virginia Housing Development Authority,
Commonwealth Mortgage Bonds, 1992 Series
C, Subseries C-2,
5.6%, 1-1-2015 ........................ 2,955 2,840,494
City of Chesapeake, Virginia, Water
and Sewer System Revenue Refunding
Bonds, Series of 1994,
5.1%, 5-1-2014 ........................ 2,000 1,835,000
Southeastern Public Service Authority of
Virginia, Senior Revenue Refunding Bonds,
Series 1993A (Regional Solid Waste System),
5.125%, 7-1-2013....................... 1,000 931,250
Total ................................. 5,606,744
WASHINGTON - 5.06%
Washington Public Power Supply System:
Nuclear Project No. 3, Refunding Revenue Bonds:
Series 1989B,
7.125%, 7-1-2016 ...................... 20,750 23,525,313
Series 1993C,
5.375%, 7-1-2015 ...................... 9,000 8,178,750
Nuclear Project No. 1, Refunding Revenue Bonds:
Series 1989B,
7.125%, 7-1-2016 ...................... 8,200 9,296,750
Series 1993B,
5.7%, 7-1-2010 ........................ 2,500 2,443,750
State of Washington, Various Purpose General
Obligation Bonds, Series 1990A,
6.75%, 2-1-2015 ....................... 4,995 5,631,862
Total ................................. 49,076,425
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WEST VIRGINIA - 0.22%
Mason County, West Virginia, Pollution
Control Revenue Bonds (Appalachian Power
Company Project), Series G,
7.4%, 1-1-2014 ........................ $ 2,000 $ 2,170,000
TOTAL MUNICIPAL BONDS - 92.86% $901,107,862
(Cost: $865,659,295)
Number
of Contracts
OPTIONS - 0.25%
June 108 Put Options on Treasury Bond
Futures, Expires 5-18-96 .............. 3,000 1,689,000
September 108 Put Options on Treasury Bond
Futures, Expires 8-24-96 .............. 500 781,500
Total.................................. $ 2,470,500
(Cost: $2,064,080)
TOTAL SHORT-TERM SECURITIES - 6.01% $ 58,305,557
(Cost: $58,305,557)
TOTAL INVESTMENT SECURITIES - 99.12% $961,883,919
(Cost: $926,028,932)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.88% 8,515,770
NET ASSETS - 100.00% $970,399,689
See Notes to Schedule of Investments on page 23.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1996
Notes to Schedule of Investments
(A) Coupon resets semi-annually to 12% - ((SAVRS rate + 28 basis
points)*365/360). Minimum coupon rate is 0%.
(B) Coupon resets weekly to 11.95% - Kenny S&P Index. Minimum coupon rate is
0%. On February 15, 1999, rate becomes fixed at 6.65%.
(C) Coupon resets weekly to 10.62% - Kenny S&P Index. Minimum coupon rate is
0%. On April 1, 1998, rate becomes fixed at 6.25%.
(D) Coupon resets weekly to 11.37% - PSA Municipal Swap Index. Minimum coupon
rate is 0%. On November 15, 2000, rate becomes fixed at 6.15%.
(E) Coupon resets weekly to 11.95% - Kenny S&P Index. Minimum coupon rate is
0%. On April 1, 1999, rate becomes fixed at 6.70%.
(F) Coupon resets weekly to 10.90% - Bankers Trust Company TENR Index. Minimum
coupon rate is 0%. On August 15, 1997, rate becomes fixed at 6.25%.
See Note 1 to financial statements for security valuation and other significant
accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and
depreciation of investments owned for Federal income tax purposes.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996
Assets
Investment securities--at value
(Notes 1 and 3) ............................... $961,883,919
Cash ........................................... 8,584
Receivables:
Investment securities sold .................... 22,222,765
Interest ...................................... 15,584,185
Fund shares sold .............................. 455,633
Prepaid insurance premium ...................... 23,422
--------------
Total assets ................................ 1,000,178,508
--------------
Liabilities
Payable for investment securities purchased .... 26,499,795
Payable for Fund shares redeemed ............... 2,714,638
Accrued service fee ............................ 261,170
Accrued transfer agency and dividend disbursing 49,309
Accrued accounting services fee ................ 7,083
Other .......................................... 246,824
--------------
Total liabilities ........................... 29,778,819
--------------
Total net assets ........................... $970,399,689
==============
Net Assets
$1.00 par value capital stock, authorized --
600,000,000; shares outstanding -- 133,192,136
Capital stock ................................. $133,192,136
Additional paid-in capital .................... 790,943,894
Accumulated undistributed income:
Accumulated undistributed net investment
income ...................................... 1,007,906
Accumulated undistributed net realized gain on
investment transactions ..................... 9,400,766
Net unrealized appreciation in value of
investments at end of period ................ 35,854,987
--------------
Net assets applicable to outstanding units
of capital ................................. $970,399,689
==============
Net asset value per share (net assets divided by
shares outstanding) ............................ $7.29
=====
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended MARCH 31, 1996
Investment Income
Interest ......................................... $29,372,386
------------
Expenses (Note 2):
Investment management fee ....................... 2,196,175
Service fee ..................................... 639,379
Transfer agency and dividend disbursing ......... 318,886
Accounting services fee ......................... 47,500
Custodian fees .................................. 24,618
Audit fees ...................................... 23,448
Legal fees ...................................... 18,622
Other ........................................... 181,984
------------
Total expenses ................................ 3,450,612
------------
Net investment income ........................ 25,921,774
------------
Realized and Unrealized Gain (Loss) on Investments
Realized net gain on securities .................. 20,752,654
Realized net gain on futures contracts closed .... 492,688
Realized net gain on put options purchased 203,123
------------
Net realized gain on investments ................ 21,448,465
Net unrealized depreciation in value of
investments during the period ................... (8,685,308)
------------
Net gain on investments ....................... 12,763,157
------------
Net increase in net assets resulting
from operations ............................ $38,684,931
============
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the For the
six months fiscal year
ended ended
March 31, September 30,
1996 1995
------------ --------------
Increase (Decrease) in Net Assets
Operations:
Net investment income.............. $ 25,921,774 $ 52,049,896
Realized net gain (loss) on
investments ..................... 21,448,465 (4,681,498)
Unrealized appreciation
(depreciation) .................. (8,685,308) 55,263,393
------------ --------------
Net increase in net assets
resulting from operations ...... 38,684,931 102,631,791
------------ --------------
Dividends to shareholders:*
From net investment income ........ (25,896,511) (52,122,952)
From realized gains on securities
transactions .................... (6,890,412) ---
In excess of realized gains on securities
transactions .................... --- (5,125,035)
------------ --------------
(32,786,923) (57,247,987)
------------ --------------
Capital share transactions:
Proceeds from sale of shares
(31,362,857 and 16,748,709
shares, respectively) ........... 232,649,702 118,813,088
Proceeds from reinvestment of
dividends and/or capital gains
distribution (3,685,797 and
6,061,556 shares, respectively) . 27,235,979 42,256,392
Payments for shares redeemed
(36,425,763 and 25,912,586
shares, respectively) ........... (270,492,798) (182,296,814)
------------ --------------
Net decrease in net assets
resulting from capital
share transactions ............. (10,607,117) (21,227,334)
------------ --------------
Total increase (decrease) ...... (4,709,109) 24,156,470
Net Assets
Beginning of period ................ 975,108,798 950,952,328
------------ --------------
End of period, including
undistributed net investment
income of $1,007,906 and
$982,643, respectively ............ $970,399,689 $975,108,798
============ ==============
*See "Financial Highlights" on page 27.
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
six For the fiscal year ended
months September 30,
ended ------------------------------------
3/31/96 1995 1994 1993 1992 1991
------- ------ ------ ------ ------ ------
Net asset value,
beginning of period $7.25 $6.91 $7.83 $7.40 $7.18 $6.66
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income........... .19 .39 .38 .41 .43 .45
Net realized and
unrealized gain
(loss) on
investments...... .09 .38 (0.67) .65 .35 .52
----- ----- ----- ----- ----- -----
Total from investment
operations ........ .28 .77 (0.29) 1.06 .78 .97
----- ----- ----- ----- ----- -----
Less distributions:
Dividends from net
investment
income........... (0.19) (0.39) (0.38) (0.40) (0.43) (0.45)
Distribution from
capital gains.... (0.05) (0.00) (0.25) (0.23) (0.13) (0.00)
Distribution in excess
of capital gains. (0.00) (0.04) (0.00) (0.00) (0.00) (0.00)
----- ----- ----- ----- ----- -----
Total distributions. (0.24) (0.43) (0.63) (0.63) (0.56) (0.45)
----- ----- ----- ----- ----- -----
Net asset value,
end of period ..... $7.29 $7.25 $6.91 $7.83 $7.40 $7.18
===== ===== ===== ===== ===== =====
Total return*....... 3.80% 11.51% -3.91% 15.15% 11.41% 14.97%
Net assets, end of
period (000
omitted) .........$970,400$975,109$950,952$1,055,434$890,004$769,122
Ratio of expenses to
average net assets 0.69%** 0.65% 0.64% 0.56% 0.57% 0.57%
Ratio of net investment
income to average
net assets ........ 5.17%** 5.51% 5.17% 5.38% 5.92% 6.47%
Portfolio
turnover rate ..... 36.17% 70.67% 62.61% 94.51%125.44% 144.36%
*Total return calculated without taking into account the sales load
deducted on an initial purchase.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 1 -- Significant Accounting Policies
United Municipal Bond Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. Its investment objective is to provide income not subject to Federal
income taxation. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
A. Security valuation -- Municipal bonds and the taxable obligations in the
Fund's investment portfolio are not listed or traded on any securities
exchange. Therefore, municipal bonds are valued using prices quoted by
Muller and Company, an independent pricing service. Short-term debt
securities, whether taxable or nontaxable, 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. Original issue discount (as defined by the Internal
Revenue Code) and premiums on the purchase of bonds are amortized for both
financial and tax reporting purposes over the remaining lives of the bonds.
Interest income is recorded on the accrual basis. See Note 3 -- Investment
Security Transactions.
C. Federal income taxes -- The Fund intends to distribute all of its net
investment income and capital gains to its shareholders and otherwise
qualify as a regulated investment company under the Internal Revenue Code.
The Fund intends to pay distributions as required to avoid imposition of
excise tax. Accordingly, provision has not been made for Federal income
taxes. In addition, the Fund intends to meet requirements of the Internal
Revenue Code which will permit it to pay dividends from net investment
income, substantially all of which will be exempt from Federal income tax.
See Note 4 -- Federal Income Tax Matters.
D. Dividends and distributions -- Dividends and distributions to shareholders
are recorded by the Fund on the record date. Net investment income
distributions and capital gains distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences are due to differing treatments
for items such as deferral of wash sales and post-October losses, net
operating losses and expiring capital loss carryforwards.
E. Futures -- See Note 5 -- Futures.
F. Options -- See Note 6 -- Options.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
NOTE 2 -- Investment Management and Payments to Affiliated Persons
The Fund pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business. The fee
consists of two elements: (i) a "Specific" fee computed on net asset value as of
the close of business each day at the annual rate of .03% of net assets and (ii)
a "Group" fee computed each day on the combined net asset values of all of the
funds in the United Group of mutual funds (approximately $14.0 billion of
combined net assets at March 31, 1996) at annual rates of .51% of the first $750
million of combined net assets, .49% on that amount between $750 million and
$1.5 billion, .47% between $1.5 billion and $2.25 billion, .45% between $2.25
billion and $3 billion, .43% between $3 billion and $3.75 billion, .40% between
$3.75 billion and $7.5 billion, .38% between $7.5 billion and $12 billion, and
.36% of that amount over $12 billion. The Fund accrues and pays this fee daily.
Pursuant to assignment of the Investment Management Agreement between the
Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly-owned subsidiary of W&R, serves as the Fund's
investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed Services
Company ("WARSCO"), a wholly-owned subsidiary of W&R. Under the agreement,
WARSCO acts as the agent in providing accounting services and assistance to the
Fund and pricing daily the value of shares of the Fund. For these services, the
Fund pays WARSCO a monthly fee of one-twelfth of the annual fee shown in the
following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
The Fund also pays WARSCO a monthly per account charge for transfer agency
and dividend disbursement services of $1.0208 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. The Fund also reimburses W&R and WARSCO for certain out-of-pocket costs.
As principal underwriter for the Fund's shares, W&R received direct and
indirect gross sales commissions (which are not an expense of the Fund) of
$605,396, out of which W&R paid sales commissions of $344,444 and all expenses
in connection with the sale of Fund shares, except for registration fees and
related expenses.
Under a Service Plan adopted by the Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940, the Fund may pay monthly a fee to W&R in an
amount not to exceed .25% of the Fund's average annual net assets. The fee is
to be paid to reimburse W&R for amounts it expends in connection with the
provision of personal services to Fund shareholders and/or maintenance of
shareholder accounts.
The Fund paid Directors' fees of $20,742.
W&R is an indirect subsidiary of Torchmark Corporation, a holding company,
and United Investors Management Company, a holding company, and a direct
subsidiary of Waddell & Reed Financial Services, Inc., a holding company.
NOTE 3 -- Investment Security Transactions
Purchases of investment securities, other than U.S. Government and short-
term securities, aggregated $353,007,214 while proceeds from maturities and
sales aggregated $433,482,113. Purchases of options aggregated $4,680,813 while
proceeds from maturities and sales aggregated $2,819,855. Purchases of short-
term securities aggregated $569,292,379 while proceeds from maturities and sales
aggregated $519,370,542. No U.S. Government securities were bought or sold
during the period ended March 31, 1996.
For Federal income tax purposes, cost of investments owned at March 31,
1996 was $931,688,982, resulting in net unrealized appreciation of $30,194,937,
of which $34,558,306 related to appreciated securities and $4,363,369 related to
depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $6,883,387 during the year ended September 30, 1995, of which a portion was
paid to shareholders during the period ended September 30, 1995. Remaining net
capital gains have been distributed to the Fund's shareholders.
Internal Revenue Code regulations permit the Fund to defer into its next
fiscal year net capital losses or net long-term capital losses incurred from
each November 1 to the end of its fiscal year ("post-October losses"). From
November 1, 1994 through September 30, 1995, the Fund incurred net long-term
capital losses of $6,444,562, which have been deferred to the fiscal year ending
September 30, 1996.
NOTE 5 -- Futures
The Fund may engage in buying and selling interest rate futures contracts,
but only Debt Futures and Municipal Bond Index Futures. Upon entering into a
futures contract, the Fund is required to deposit, in a segregated account, an
amount of cash or U.S. Treasury Bills equal to a varying specified percentage of
the contract amount. This amount is known as the initial margin. Subsequent
payments ("variation margins") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying debt security
or index. These changes in the variation margins are recorded by the Fund as
unrealized gains or losses. Upon the closing of the contracts, the cumulative
net change in the variation margin is recorded as realized gain or loss. The
Fund uses futures to attempt to reduce the overall risk of its investments.
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. The Fund
uses options to attempt to reduce the overall risk of its investments.
NOTE 7 -- Multiclass Operations
On January 21, 1996, the Fund was authorized to offer investors a choice of
two classes of shares, Class A and Class Y, each of which has equal rights as to
assets and voting privileges. Class A shares represent existing shareholders;
Class Y shares are offered through a separate Prospectus to certain
institutional investors. Class Y shares are not subject to a sales charge on
purchases; they are not subject to a Rule 12b-1 Service Plan and have a separate
transfer agency and dividend disbursement services fee structure. As of March
31, 1996, the Fund had not commenced multiclass operations.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
United Municipal Bond Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of United Municipal Bond Fund, Inc.
(the "Fund") at March 31, 1996, the results of its operations for the six months
then ended and the changes in its net assets and the financial highlights for
each of the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at March 31, 1996 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
Price Waterhouse LLP
Kansas City, Missouri
May 10, 1996
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
Jay B. Dillingham, Kansas City, Missouri
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Los Angeles, California
Doyle Patterson, Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel, III Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
OFFICERS
Keith A. Tucker, President
Robert L. Hechler, Vice President
Henry J. Herrmann, Vice President
John M. Holliday, Vice President
Theodore W. Howard, Vice President and Treasurer
Sharon K. Pappas, Vice President and Secretary
Carl E. Sturgeon, Vice President
<PAGE>
The United Group of Mutual Funds
United Cash Management, Inc.
United Government Securities Fund, Inc.
United Bond Fund
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Continental Income Fund, Inc.
United Retirement Shares, Inc.
United Asset Strategy Fund, Inc.
United Income Fund
United Accumulative Fund
United Vanguard Fund, Inc.
United New Concepts Fund, Inc.
United Science and Technology Fund
United International Growth Fund, Inc.
United Gold & Government Fund, Inc.
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
(913) 236-1303
Our INTERNET address is:
http://www.waddell.com
NUR1008SA(3-96)
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