United
Municipal
Bond Fund,
Inc.
SEMIANNUAL
REPORT
---------------------------------------
For the six months ended March 31, 1997
<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, 1997
Dear Shareholder:
As President of your Fund, I would like to thank you for your continued
confidence in our products and services. Our goal to provide the best service
possible to our shareholders has not changed since we opened our doors nearly 60
years ago. Waddell & Reed's team of professionals, including the Fund's
manager, our customer service representatives and your personal account
representative continue to strive to meet your financial needs.
Waddell & Reed plays a special role in the investment industry. We take
pride in being one of the few financial services firms committed to locally
based account representatives who provide the personal service you need. When
you're ready to evaluate your financial plan to keep up with life's changes, or
to find an answer to a financial question that you may have, your representative
is ready to assist you--when you need it. He or she is available to help you
plan for your retirement, fund a child's education or make plans for other long-
term financial goals.
All of us are committed to helping you meet the financial goals that are
important to you. This is accomplished by our offering investment products to
meet a variety of personal financial objectives, along with the personal service
to make the investment process more convenient and accessible.
We want to continue to meet your financial needs for many years to come.
Should you have any questions about your account or other financial issues that
are important to you, 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, 1997
- ---------------------------------------
DIVIDENDS PAID $0.19
=====
CAPITAL GAINS DISTRIBUTION $0.16
=====
NET ASSET VALUE ON
3/31/97 $7.19 adjusted to: $7.35 (A)
9/30/96 7.32
-----
CHANGE PER SHARE 0.03
=====
(A) This number includes the capital gains distribution of $0.16 paid in
December 1996 added to the actual net asset value on March 31, 1997.
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 3-31-97 1.83% 6.35%
5-year period ended 3-31-97 6.98% 7.91%
10-year period ended 3-31-97 7.44% 7.90%
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, 1997, United Municipal Bond Fund, Inc. had net assets totaling
$943,089,937 invested in a diversified portfolio.
As a shareholder of United Municipal Bond Fund, Inc., for every $100 you had
invested on March 31, 1997, your Fund owned:
$19.34 Airport Revenue Bonds
14.84 Public Power Revenue Bonds
8.33 Student Loan Bonds
7.62 Hospital Revenue Bonds
7.09 Industrial Revenue/Pollution Control Revenue Bonds
6.89 Housing Revenue Bonds
6.80 Other Municipal Bonds
5.76 Derivative Bonds
5.57 Water and Sewer Revenue Bonds
4.24 Cash and Cash Equivalents
4.05 Adjustable Rate Bonds
3.43 Resource Recovery Bonds
3.12 Electric Utility Revenue Bonds
2.92 Lease/Certificates of Participation Bonds
1997 TAX YEAR TAXABLE EQUIVALENT YIELDS*
- ---------------------------------------------------------------------------
If your Taxable Income is:
Your Equivalent
Marginal Tax Free Yields
Joint Single Tax -----------------------
return Return Bracket Is 5% 6% 7% 8%
$ 0- 41,200 $ 0- 24,650 15% 5.88 7.06 8.24 9.41
$ 41,201- 99,600 $ 24,651- 59,750 28% 6.94 8.33 9.72 11.11
$ 99,601-151,750 $ 59,751-124,650 31% 7.25 8.70 10.14 11.59
$151,751-271,050 $124,651-271,050 36% 7.81 9.38 10.94 12.50
$271,051 and above$271,051 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, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS
ALABAMA - 0.64%
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 $ 6,050,850
ALASKA - 0.71%
City of Valdez, Alaska, Marine Terminal
Revenue Refunding Bonds (Sohio Pipe Line
Company Project), Series 1985,
7.125%, 12-1-2025 ..................... 2,500 2,690,625
Alaska Industrial Development and Export
Authority, Revolving Fund Bonds,
Series 1997A,
5.9%, 4-1-2017 ........................ 2,500 2,437,500
Alaska Housing Finance Corporation,
General Housing Purpose Bonds, 1994
Series A (Refunding/Non-AMT),
5.0%, 12-1-2008 ....................... 1,640 1,566,200
Total ................................. 6,694,325
ARIZONA - 0.65%
Arizona Educational Loan Marketing
Corporation, Educational Loan Revenue
Bonds, Junior Subordinate Series 1993,
6.3%, 12-1-2008 ....................... 3,155 3,214,156
The Industrial Development Authority
of the City of Tucson, Arizona,
Multifamily Housing Revenue Bonds,
Series 1985 (HSL La Cholla Project),
Adjustable Rate Bond,
3.65%, 12-1-2014....................... 2,950 2,950,000
Total ................................. 6,164,156
ARKANSAS - 0.79%
City of Blytheville, Arkansas, Solid Waste
Recycling and Sewage Treatment Revenue
Bonds (Nucor Corporation Project):
Series 1993,
6.375%, 1-1-2023 ...................... 3,425 3,514,906
Series 1992,
6.9%, 12-1-2021 ....................... 2,000 2,110,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
ARKANSAS (Continued)
Arkansas Development Finance Authority,
Single Family Mortgage Revenue Bonds
(Access Program), 1995 Series F,
7.45%, 1-1-2027 ....................... $ 1,710 $ 1,842,525
Total ................................. 7,467,431
CALIFORNIA - 8.36%
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 9,475,000
Multiple Project Revenue Bonds, 1989 Series,
6.75%, 7-1-2012 ....................... 3,455 3,800,500
Mead-Adelanto Project Revenue Bonds,
1994 Series A, Linked Inverse Floating
Rate Security,
5.15%, 7-1-2015 ....................... 2,800 2,569,000
Mead-Phoenix Project Revenue Bonds,
1994 Series A, Linked Inverse Floating
Rate Security,
5.15%, 7-1-2015 ....................... 1,600 1,460,000
Transmission Agency of Northern California,
California-Oregon Transmission Project
Revenue Bonds, 1990 Series A,
7.0%, 5-1-2013 ........................ 12,000 13,905,000
County of San Bernardino, California,
Certificates of Participation (1992 Justice
Center/Airport Improvements Refunding
Project), Inland Empire Public Facilities
Corporation, Short/RITES Certificates,
7.09%, 7-1-2016 (A) ................... 9,500 9,048,750
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 ...................... 5,595 5,951,681
7.5%, 1-1-2005 ........................ 2,470 2,615,112
Imperial Irrigation District,
1993 Refunding Certificates of
Participation (1990 Electric
System Project),
5.2%, 11-1-2009 ....................... 8,500 8,372,500
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA (Continued)
California Health Facilities Financing
Authority, Hospital Revenue Bonds (Downey
Community Hospital), Series 1993,
5.625%, 5-15-2008 ..................... $ 6,000 $5,902,500
California Statewide Communities Development
Authority, Hospital Revenue Certificates
of Participation, Cedars-Sinai Medical Center,
Series 1992,
6.5%, 8-1-2012 ........................ 5,200 5,531,500
Student Education Loan Marketing Corporation,
Student Loan Program Revenue Bonds, Junior
Subordinate Series 111-D-1 Bonds,
6.7%, 7-1-2008 ........................ 3,500 3,438,750
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 2,077,680
California Rural Home Mortgage Finance
Authority, Single Family Mortgage
Revenue Bonds (Mortgage-Backed Securities
Program), 1995 Series B,
7.75%, 9-1-2026 ....................... 1,685 1,918,794
Total ................................. 78,819,892
COLORADO - 10.77%
City and County of Denver, Colorado,
Airport System Revenue Bonds:
Series 1991D:
7.75%, 11-15-2013 ..................... 11,905 14,256,238
7.0%, 11-15-2025 ...................... 6,000 6,217,500
Series 1992C,
6.75%, 11-15-2013 ..................... 11,410 11,909,188
Series 1992B,
7.25%, 11-15-2023 ..................... 2,500 2,693,750
Series 1994A,
7.5%, 11-15-2023 ...................... 2,000 2,190,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
COLORADO (Continued)
City and County of Denver, Colorado, Special
Facilities Airport Revenue Bonds (United
Air Lines Project), Series 1992A,
6.875%, 10-1-2032 ..................... $28,700 $ 29,345,750
Colorado Housing and Finance Authority:
Single Family Program Senior Bonds:
1995 Series A,
8.0%, 6-1-2025 ........................ 4,105 4,587,337
1995 Series D-1,
7.375%, 6-1-2026 ...................... 4,035 4,438,500
1996 Series A-1,
7.4%, 11-1-2027 ....................... 3,750 4,139,063
1995 Series C-1,
7.65%, 12-1-2025 ...................... 2,560 2,825,600
1995 Series B-1,
7.9%, 12-1-2025 ....................... 1,170 1,300,162
Single Family Program Senior and Subordinate
Bonds:
1996 Series B-1,
7.65%, 11-1-2026 ...................... 2,750 3,066,250
1997 Series A-2,
7.25%, 5-1-2027 ....................... 2,000 2,167,500
1996 Series C-1,
7.55%, 11-1-2027 ...................... 1,580 1,724,175
Colorado Student Obligation Bond Authority,
Student Loan Asset-Backed Obligations,
Senior Subordinate, 1995 Series II-B,
6.2%, 12-1-2008 ....................... 8,000 7,960,000
City of Colorado Springs, Colorado,
Utilities System Refunding Revenue Bonds,
Series 1991A,
6.5%, 11-15-2015 ...................... 1,500 1,608,750
Douglas County, Colorado, Certificates of
Participation, Series 1996,
5.6%, 11-1-2011 ....................... 1,105 1,117,431
Total ................................. 101,547,194
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CONNECTICUT - 2.02%
Bristol Resources 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 $ 7,271,250
Eastern Connecticut Resource Recovery
Authority, Solid Waste Revenue Bonds
(Wheelabrator Lisbon Project),
Series 1993A,
5.5%, 1-1-2014 ........................ 6,750 6,269,063
Connecticut Development Authority,
Adjustable Rate Pollution Control Revenue
Bonds (New England Power Company Project--
1985 Series),
7.25%, 10-15-2015 ..................... 5,200 5,531,500
Total ................................. 19,071,813
FLORIDA - 1.54%
Escambia County, Florida, Pollution Control
Revenue Bonds (Champion International
Corporation Project), Series 1994,
6.9%, 8-1-2022 ........................ 9,000 9,405,000
Manatee County, Florida, Public Utilities
Revenue Refunding Bonds, Series 1993 A,
5.0%, 10-1-2013 ....................... 5,000 4,650,000
City of Atlantic Beach, Florida, Variable
Rate Demand, Improvement and Refunding
Revenue Bonds, Series 1994B (Fleet
Landing Project),
3.9%, 10-1-2024 ....................... 500 500,000
Total ................................. 14,555,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
GEORGIA - 3.43%
Municipal Electric Authority of Georgia:
Project One Special Obligation Bonds,
Fifth Crossover Series,
6.4%, 1-1-2013 ........................ $15,500 $ 16,895,000
General Power Revenue Bonds,
1992B Series,
8.25%, 1-1-2011 ....................... 8,700 11,027,250
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 4,455,875
Total ................................. 32,378,125
HAWAII - 2.39%
State of Hawaii, Airports System Revenue
Bonds, Second Series of 1991,
6.9%, 7-1-2012 ........................ 20,195 22,492,181
IDAHO - 0.68%
Idaho Health Facilities Authority, Hospital
Revenue Refunding Bonds, Series 1992
(IHC Hospitals, Inc.), Indexed Inverse
Floating/Fixed Term Bonds,
8.49%, 2-15-2021 (B) .................. 6,000 6,397,500
ILLINOIS - 3.76%
City of Chicago, Chicago-O'Hare
International Airport:
General Airport Second Lien Revenue
Refunding Bonds, 1993 Series C:
5.0%, 1-1-2011 ........................ 5,590 5,247,612
5.0%, 1-1-2010 ........................ 3,000 2,850,000
Special Facility Revenue
Bonds, American Airlines,
Inc. Project,
7.875%, 11-1-2025 ..................... 7,250 7,739,375
Special Facility Revenue Bonds (United
Air Lines, Inc. Project):
Series 1984C,
8.2%, 5-1-2018 ........................ 5,115 5,492,231
Series 1988A,
8.4%, 5-1-2018 ........................ 5,000 5,387,500
General Airport Revenue Refunding
Bonds, 1993 Series A,
5.0%, 1-1-2012 ........................ 3,000 2,786,250
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
ILLINOIS (Continued)
Illinois Health Facilities Authority
(Lutheran General HealthSystem),
Indexed Inverse Floating Rate
Revenue Bonds, Series 1993B,
7.16%, 4-1-2014 (C) ................... $ 4,100 $ 4,320,375
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 ........................ 1,490 1,612,925
Total ................................. 35,436,268
INDIANA - 2.72%
Indiana State Office Building Commission,
Capitol Complex Revenue Bonds:
Series 1990B (State Office Building
I Facility),
7.4%, 7-1-2015 ........................ 8,000 9,480,000
Series 1990A (Senate Avenue Parking Facility),
7.4%, 7-1-2015 ........................ 4,775 5,658,375
Indiana Transportation Finance Authority,
Highway Revenue Bonds, Series 1990A,
7.25%, 6-1-2015 ....................... 9,000 10,496,250
Total ................................. 25,634,625
KENTUCKY - 0.67%
Kentucky Economic Development Finance
Authority, Hospital Revenue Bonds,
Baptist Healthcare System Issue,
Series 1994,
5.0%, 8-15-2015 ....................... 4,650 4,208,250
Kenton County Airport Board (Commonwealth
of Kentucky), Special Facilities Revenue
Bonds, 1992 Series A (Delta Air Lines,
Inc. Project),
7.5%, 2-1-2012 ........................ 2,000 2,137,500
Total ................................. 6,345,750
LOUISIANA - 1.98%
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,
4.85%, 12-1-2018 ...................... 12,335 12,335,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
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 $ 6,312,381
Total ................................. 18,647,381
MAINE - 0.30%
Maine Educational Loan Marketing Corporation,
Student Loan Revenue Refunding Bonds,
Series 1991A,
6.9%, 11-1-2003 ....................... 2,710 2,838,725
MASSACHUSETTS - 1.97%
The New England Education Loan Marketing
Corporation, Student Loan Refunding Bonds,
1993 Series A (Nellie Mae),
5.7%, 7-1-2005 ........................ 7,550 7,587,750
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 ....................... 5,000 4,637,500
Massachusetts Health and Educational
Facilities Authority, Revenue Bonds,
New England Deaconess Hospital Issue,
Series C,
7.2%, 4-1-2022 ........................ 2,500 2,687,500
Massachusetts State College Building
Authority, Project and Refunding
Revenue Bonds, Senior Series 1994-A,
7.5%, 5-1-2014 ........................ 1,750 2,115,312
Boston Water and Sewer Commission,
General Revenue Bonds, 1992 Series A
(Senior Series),
5.75%, 11-1-2013 ...................... 1,575 1,584,844
Total ................................. 18,612,906
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MICHIGAN - 2.20%
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 $ 9,140,000
Michigan State Hospital Finance Authority:
Hospital Revenue Refunding Bonds
(McLaren Obligated Group),
Series 1993A,
5.375%, 10-15-2013 .................... 2,250 2,106,562
Hospital Revenue and Refunding Bonds
(Bay Medical Center), Series 1997A,
5.375%, 7-1-2011 ...................... 2,190 2,099,663
Hospital Revenue Bonds (Holland Community
Hospital), Series 1993,
5.25%, 1-1-2010 ....................... 1,200 1,125,000
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 3,127,500
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 1,753,050
Charter County of Wayne, Michigan, Detroit
Metropolitan Wayne County Airport, Airport
Revenue Bonds, Subordinate Lien,
Series 1993B,
5.25%, 12-1-2013 ...................... 1,500 1,395,000
Total ................................. 20,746,775
MINNESOTA - 1.14%
City of Minneapolis, Minnesota and
Housing and Redevelopment Authority of the
City of Saint Paul, Minnesota, Health Care
Revenue Bonds (Children's Health Care),
3.85%, 8-15-2025 ...................... $ 6,020 $ 6,020,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MINNESOTA (Continued)
City of Rochester, Minnesota, Health
Care Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center),
Series 1992D, Indexed Inverse
Floating/Fixed Term Bonds,
7.91%, 11-5-2009 (D) .................. 4,500 4,753,125
Total ................................. 10,773,125
MISSISSIPPI - 2.18%
Lowndes County, Mississippi, Solid Waste
Disposal and Pollution Control
Refunding Revenue Bonds (Weyerhaeuser
Company Project), Series 1992B, Indexed
Inverse Floating/Fixed Term Bonds,
8.49%, 4-1-2022 (E) ................... 11,000 11,948,750
Mississippi Higher Education Assistance
Corporation, Student Loan Revenue Bonds,
Subordinate Series 1996-C:
6.75%, 9-1-2014 ....................... 5,500 5,534,375
6.7%, 9-1-2012 ........................ 1,470 1,479,188
Mississippi Home Corporation, Single Family
Mortgage Revenue Bonds, Series 1996F (AMT),
6.0%, 12-1-2027 ....................... 1,500 1,608,750
Total ................................. 20,571,063
MISSOURI - 3.08%
Health Facilities Revenue Bonds
(Barnes-Jewish, Inc./Christian Health
Services), Series 1993A:
6.0%, 5-15-2011 ....................... 3,000 3,101,250
5.25%, 5-15-2014 ...................... 2,900 2,762,250
Missouri Housing Development Commission,
Single Family Mortgage Revenue Bonds
(Homeownership Loan Program):
1995 Series C,
7.25%, 9-1-2026 ....................... 2,985 3,276,038
1996 Series C,
7.45%, 9-1-2027 ....................... 1,680 1,856,400
Variable Rate Demand Certificates of
Participation in Boatmen's St. Louis,
Grantor Trust # 1, Series 1996A, ,
3.6%, 6-30-2001 ....................... 5,000 5,000,000
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 4,470,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MISSOURI (Continued)
Health and Educational Facilities Authority
of the State of Missouri, Variable Rate
Demand Health Facilities Revenue Bonds
(Bethesda Barclay House), Series 1996A,
3.95%, 8-15-2026 ...................... $ 4,400 $ 4,400,000
The Industrial Development Authority of the
County of Jackson, State of Missouri,
Variable Rate Demand, Recreational Facilities
Revenue Bonds (YMCA of Greater Kansas City
Project), Series 1996A,
3.95%, 11-1-2016 ...................... 2,750 2,750,000
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 1,428,750
Total ................................. 29,044,688
NEBRASKA - 1.67%
Nebraska Higher Education Loan Program,
Inc., 1993-2 Series A-6 Junior
Subordinate Bonds,
6.4%, 6-1-2013 ........................ 14,500 15,714,375
NEVADA - 0.66%
Washoe County, Nevada, Variable Rate Demand
Water Facilities, Revenue Bonds (Sierra
Pacific Power Company Project),
Series 1987,
6.65%, 6-1-2017 ....................... 5,000 5,243,750
Nevada Housing Division, Single Family
Mortgage Bonds, 1996 Series C
Subordinate Bonds,
6.35%, 4-1-2009 ....................... 1,000 1,013,750
Total ................................. 6,257,500
NEW HAMPSHIRE - 0.46%
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 4,305,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW JERSEY - 2.03%
The Union County Utilities Authority
(New Jersey), Solid Waste System Revenue
Bonds, 1991 Series A:
6.95%, 6-15-2003 ...................... $ 9,000 $ 9,202,500
7.15%, 6-15-2009 ...................... 1,000 1,025,000
The Hudson County Improvement Authority,
Essential Purpose Pooled Governmental
Loan Program Bonds, Series 1986,
7.6%, 8-1-2025 ........................ 5,170 5,641,763
Middlesex County Utilities Authority,
Sewer Revenue Refunding Bonds, Series
1992A, Indexed Inverse Floating/Fixed
Term Bonds,
7.5%, 8-15-2010 (F) ................... 3,000 3,228,750
Total ................................. 19,098,013
NEW MEXICO - 3.78%
City of Albuquerque, New Mexico, Governmental
Purpose Airport Refunding Revenue Bonds,
Series 1989,
6.5%, 7-1-2019 ........................ 15,350 15,419,535
New Mexico Educational Assistance
Foundation, Student Loan Program Bonds:
First Subordinate 1995 Series A-2:
5.95%, 11-1-2007 ...................... 3,005 2,959,925
5.85%, 11-1-2006 ...................... 1,745 1,701,375
5.5%, 11-1-2003 ....................... 1,255 1,298,925
First Subordinate 1996 Series A-2,
6.2%, 11-1-2008 ....................... 2,210 2,190,663
Second Subordinate 1996 Series A-3,
6.75%, 11-1-2008 ...................... 2,175 2,155,969
Second Subordinate 1995 Series A-3,
6.6%, 11-1-2010 ....................... 1,500 1,468,125
New Mexico Educational Assistance
Foundation, Student Loan Purchase Bonds:
Senior 1995 Series IV-A1,
7.05%, 3-1-2010 ....................... 6,485 6,817,356
First Subordinate 1994 Series II-B (AMT),
5.75%, 12-1-2008 ...................... 1,700 1,655,375
Total ................................. 35,667,248
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW YORK - 8.48%
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 $ 10,187,500
5.75%, 6-15-2011 ...................... 5,000 5,131,250
The City of New York, General Obligation
Bonds, Fiscal 1994 Series C Inverse
Floater,
8.0%, 9-30-2003 ....................... 13,000 14,608,750
New York City Municipal Water Finance
Authority, Water and Sewer System
Revenue Bonds, Fiscal 1993 Series A,
6.0%, 6-15-2010 ....................... 12,000 12,555,000
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 11,400,000
Housing New York Corporation, Senior
Revenue Refunding Bonds, Series 1993,
5.0%, 11-1-2013 ....................... 6,600 5,997,750
Dormitory Authority of the State of New York:
State University Educational
Facilities, Revenue Bonds,
Series 1990B,
7.5%, 5-15-2011 ....................... 2,000 2,315,000
Department of Health of the State of
New York, Revenue Bonds, Series 1996,
5.5%, 7-1-2010 ........................ 2,000 1,922,500
Nyack Hospital, Revenue Bonds, Series 1996,
6.25%, 7-1-2013 ....................... 1,000 1,005,000
New York State Thruway Authority, Highway
and Bridge Trust Fund Bonds, Series 1997A,
5.25%, 4-1-2014 ....................... 5,000 4,756,250
Municipal Assistance Corporation for the
City of New York (A Public Benefit
Corporation of the State of New York),
Series E Bonds,
5.2%, 7-1-2008 ........................ 4,000 3,970,000
New York State Urban Development Corporation,
Correctional Capital Facilities Revenue Bonds,
1993A, Refunding Series,
5.25%, 1-1-2014 ....................... 3,000 2,865,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW YORK (Continued)
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 $ 2,263,350
New York City Industrial Development Agency,
Amended and Restated Industrial Development
Revenue Bonds (1991 Japan Airlines Company,
Ltd. Project),
6.0%, 11-1-2015 ....................... 1,000 1,021,250
Total ................................. 79,998,600
NORTH CAROLINA - 2.64%
North Carolina Eastern Municipal Power
Agency, Power System Revenue Bonds,
Refunding Series 1993 B,
7.0%, 1-1-2008 ........................ 19,000 20,638,750
The Martin County Industrial Facilities
and Pollution Control Financing Authority
(North Carolina), Solid Waste Disposal
Revenue Bonds (Weyerhaeuser Company
Project), Series 1994,
6.8%, 5-1-2024 ........................ 4,000 4,275,000
Total ................................. 24,913,750
NORTH DAKOTA - 0.54%
City of Fargo, North Dakota, Health System
Revenue Bonds (Meritcare Obligated Group),
Series 1996A,
5.55%, 6-1-2016 ....................... 5,350 5,136,000
OHIO - 1.66%
County of Cuyahoga, Ohio, Hospital Revenue
Bonds, Series 1990 (Meridia Health System),
7.25%, 8-15-2019 ...................... 4,980 5,260,125
State of Ohio, Pollution Control Revenue
Refunding Bonds, Ohio Water Development
Authority, 1989 Series A (Ohio Edison
Company Project),
7.625%, 7-1-2023 ...................... 2,500 2,593,750
The Student Loan Funding Corporation,
Cincinnati, Ohio, Student Loan
Subordinated Revenue Refunding Bonds,
Series 1992B,
6.75%, 1-1-2007 ....................... 2,450 2,492,875
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
OHIO (Continued)
State of Ohio (OPFC), Mental Health Capital
Facilities Bonds, Series II-1996A,
4.5%, 12-1-2010 ....................... $ 2,350 $ 2,115,000
City of Moraine, Ohio, Solid Waste
Disposal Revenue Bonds (General Motors
Corporation Project), Series 1994,
6.75%, 7-1-2014 ....................... 1,550 1,706,938
City of Dayton, Ohio, Special Facilities
Revenue Refunding Bonds, 1993 Series E
(Emery Air Freight Corporation and
Emery Worldwide Airlines, Inc. -
Guarantors), (Non-AMT),
6.05%, 10-1-2009 ...................... 1,500 1,513,125
Total ................................. 15,681,813
OKLAHOMA - 1.07%
Oklahoma Housing Finance Agency, Single
Family Mortgage Revenue Bonds
(Homeownership Loan Program):
1995 Series B, Subseries B-2 (AMT),
7.625%, 9-1-2026 ...................... 5,815 6,316,544
1996 Series A,
7.05%, 9-1-2026 ....................... 1,000 1,081,250
Trustees of the Tulsa Municipal Airport
Trust, 1988 Adjustable Rate Revenue
Obligations, American Airlines,
7.375%, 12-1-2020 ..................... 2,500 2,646,875
Total ................................. 10,044,669
OREGON - 0.16%
State of Oregon, Housing and Community
Services Department, Mortgage Revenue
Bonds, Single-Family Mortgage Program,
1992 Series C,
5.5%, 7-1-2013 ........................ 1,485 1,472,006
PENNSYLVANIA - 0.85%
Pennsylvania Turnpike Commission,
Pennsylvania Turnpike Revenue Bonds,
Series N of 1991,
6.5%, 12-1-2013 ....................... 5,000 5,212,500
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
PENNSYLVANIA (Continued)
Delaware County Authority, Hospital Revenue
Bonds, Series of 1992 (Riddle Memorial
Hospital),
6.5%, 1-1-2022 ........................ $ 2,800 $ 2,838,500
Total ................................. 8,051,000
PUERTO RICO - 1.62%
Puerto Rico Public Buildings Authority,
Public Education and Health Facilities,
Refunding Bonds, Series M,
4.8%, 7-1-2016 ........................ 12,000 11,025,000
Puerto Rico Highway and Transportation
Authority, Highway Revenue Bonds,
Series W,
3.875%, 7-1-2010 ...................... 4,250 4,250,000
Total ................................. 15,275,000
SOUTH CAROLINA - 0.81%
South Carolina State Education Assistance
Authority, Guaranteed Student Loan
Revenue and Refunding Bonds:
1995 Series, Series C Subordinate Lien
Refunding Bonds,
6.0%, 9-1-2008 ........................ 2,000 2,030,000
1993 Series Subordinate Lien Bonds,
5.55%, 9-1-2008 ....................... 2,000 1,967,500
Richland County, South Carolina, Solid
Waste Disposal Facilities, Revenue Bonds
(Union Camp Corporation Project),
Series 1992A,
6.75%, 5-1-2022 ....................... 3,500 3,631,250
Total ................................. 7,628,750
TENNESSEE - 2.42%
The Industrial Development Board of the
County of McMinn, Pollution Control
Facilities Revenue Bonds, Series 1991
(Calhoun Newsprint Company Project -
Bowater Incorporated Obligor), (the
"Construction Bonds"),
7.625%, 3-1-2016 ...................... 10,000 10,650,000
Tennessee Housing Development Agency,
Homeownership Program Bonds, Issue T,
7.375%, 7-1-2023 (G) .................. 4,665 4,851,600
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TENNESSEE (Continued)
Memphis-Shelby County Airport Authority,
Special Facilities Revenue Bonds,
Refunding Series 1992 (Federal Express
Corporation),
6.75%, 9-1-2012 ....................... $ 4,475 $ 4,704,344
Volunteer State Student Funding Corporation,
Educational Loan Revenue Bonds,
Junior Subordinate Series 1993C Bonds,
5.85%, 12-1-2008 ...................... 2,700 2,612,250
Total ................................. 22,818,194
TEXAS - 7.66%
Alliance Airport Authority, Inc.,
Special Facilities Revenue Bonds:
Series 1990 (American Airlines, Inc.
Project),
7.5%, 12-1-2029 ....................... 15,000 15,956,250
Series 1991 (American Airlines, Inc.
Project),
7.0%, 12-1-2011 ....................... 13,100 14,279,000
Dallas-Fort Worth International Airport,
Facility Improvement Corporation, American
Airlines, Inc. Revenue Bonds, Series 1990,
7.5%, 11-1-2025 ....................... 7,700 8,181,250
City of Austin, Texas, Combined Utility
Systems Revenue Refunding Bonds,
Series 1996 A,
5.125%, 5-15-2011 ..................... 7,330 7,045,962
Gulf Coast Waste Disposal Authority,
Multi-Modal Interchangeable Rate Revenue
Bonds (Champion International Corporation
Project), Series 1992A,
6.875%, 12-1-2028 ..................... 6,000 6,180,000
Sabine River Authority of Texas,
Collateralized Pollution Control Revenue
Bonds (Texas Utilities Electric Company
Project), Series 1990,
8.25%, 10-1-2020 ...................... 5,140 5,647,575
Lubbock Health Facilities Development
Corporation, Hospital Revenue Bonds
(Methodist Hospital, Lubbock, Texas
Project), Series 1993B,
6.75%, 12-1-2010 ...................... 5,000 5,556,250
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TEXAS (Continued)
Harris County Health Facilities Development
Corporation, Hospital Revenue Bonds
(Memorial Hospital System Project),
Series 1989,
6.5%, 6-1-2019 ........................ $ 4,500 $ 4,764,375
City of Houston, Texas, Airport System
Special Facilities Revenue Bonds
(Continental Airlines, Inc. Terminal
Improvement Projects), Series 1997B,
6.125%, 7-15-2017 ..................... 2,850 2,746,688
Harris County Industrial Development
Corporation (Texas), Marine Terminal
Revenue Refunding Bonds, Series 1992
(GATX Terminals Corporation Project),
6.95%, 2-1-2022 ....................... 1,750 1,841,875
Total ................................. 72,199,225
UTAH - 0.46%
Utah Water Finance Agency, Revenue Bonds
(Pooled Loan Financing Program),
Series 1997A,
5.6%, 10-1-2017 ....................... 4,500 4,325,625
VIRGINIA - 0.19%
City of Chesapeake, Virginia, Water
and Sewer System Revenue Refunding
Bonds, Series of 1994,
5.1%, 5-1-2014 ........................ 2,000 1,822,500
WASHINGTON - 6.01%
Washington Public Power Supply System:
Nuclear Project No. 1, Refunding Revenue Bonds:
Linked PARS and INFLOS, Series 1993A,
5.75%, 7-1-2011 ....................... 15,000 14,943,750
Series 1989B,
7.125%, 7-1-2016 ...................... 8,200 9,245,500
Nuclear Project No. 3, Refunding Revenue Bonds,
Series 1989B,
7.125%, 7-1-2016 ...................... 20,750 23,395,625
State of Washington, Various Purpose General
Obligation Bonds, Series 1990A,
6.75%, 2-1-2015 ....................... 4,995 5,613,131
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WASHINGTON (Continued)
Public Utility District No. 1 of Douglas
County, Washington, Wells Hydroelectric
Revenue Bonds, Series of 1965,
3.7%, 9-1-2018 ........................ $ 4,200 $ 3,496,500
Total ................................. 56,694,506
WEST VIRGINIA - 0.61%
Braxton County, West Virginia, Solid Waste
Disposal Revenue Bonds (Weyerhaeuser Company
Project), Series 1995A,
6.5%, 4-1-2025 ........................ 3,500 3,618,125
Mason County, West Virginia, Pollution
Control Revenue Bonds (Appalachian Power
Company Project), Series G,
7.4%, 1-1-2014 ........................ 2,000 2,142,500
Total ................................. 5,760,625
TOTAL MUNICIPAL BONDS - 95.76% $903,154,172
(Cost: $874,547,211)
TOTAL SHORT-TERM SECURITIES - 2.99% $ 28,170,591
(Cost: $28,170,591)
TOTAL INVESTMENT SECURITIES - 98.75% $931,324,763
(Cost: $902,717,802)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.25% 11,765,174
NET ASSETS - 100.00% $943,089,937
See Notes to Schedule of Investments on page 23.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1997
Notes to Schedule of Investments
(A) Coupon resets weekly based on the formula 10.55% less the Kenny S&P Index.
Minimum coupon rate is 0%. On January 1, 1999, the rate becomes fixed at
5.50%.
(B) Coupon resets weekly based on the formula 11.95% less than Kenny S&P Index.
Minimum coupon rate is 0%. On February 15, 1999, rate becomes fixed at
6.65%.
(C) Coupon resets weekly based on the formula 10.62% less than Kenny S&P Index.
Minimum coupon rate is 0%. On April 1, 1998, rate becomes fixed at 6.25%.
(D) Coupon resets weekly based on the formula 11.37% less than PSA Municipal
Swap Index. Minimum coupon rate is 0%. On November 15, 2000, rate becomes
fixed at 6.15%.
(E) Coupon resets weekly based on the formula 11.95% less than Kenny S&P Index.
Minimum coupon rate is 0%. On April 1, 1999, rate becomes fixed at 6.70%.
(F) Coupon resets weekly based on the formula 10.90% less than Bankers Trust
Company TENR Index. Minimum coupon rate is 0%. On August 15, 1997, rate
becomes fixed at 6.25%.
(G) This security serves as collateral for the following open futures contracts
at March 31, 1997:
Number
Of Expiration Market
Type Contracts Date Value
- ---- --------- ---------- ------
Municipal
Bonds 500 5-17-97 $53,609,375
Municipal
Bonds 300 5-17-97 32,165,625
-----------
$85,775,000
===========
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, 1997
Assets
Investment securities--at value
(Notes 1 and 3) ............................... $931,324,763
Receivables:
Interest ...................................... 16,352,657
Investment securities sold .................... 10,984,110
Fund shares sold .............................. 352,876
Prepaid insurance premium ...................... 24,256
Variation margin receivable .................... 125,000
------------
Total assets ................................ 959,163,662
------------
Liabilities
Payable for investment securities purchased .... 12,359,200
Payable for Fund shares redeemed ............... 3,208,399
Accrued service fee (Note 2) ................... 257,795
Due to Custodian ............................... 154,231
Accrued transfer agency and dividend
disbursing (Note 2) ........................... 55,831
Accrued management fee (Note 2) ................ 11,208
Accrued accounting services fee (Note 2) ....... 7,083
Other .......................................... 19,978
------------
Total liabilities ........................... 16,073,725
------------
Total net assets ........................... $943,089,937
============
Net Assets
$1.00 par value capital stock, authorized --
600,000,000; shares outstanding - 131,247,293
Capital stock ................................. $131,247,293
Additional paid-in capital .................... 777,986,281
Accumulated undistributed income:
Accumulated undistributed net investment
income ...................................... 960,128
Accumulated undistributed net realized gain on
investment transactions ..................... 2,720,524
Net unrealized appreciation in value of
Investments ................................. 28,606,961
Net unrealized appreciation in value of
futures contracts ........................... 1,568,750
------------
Net assets applicable to outstanding units
of capital ................................. $943,089,937
============
Net asset value per share (net assets divided by
shares outstanding) ............................ $7.19
=====
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended MARCH 31, 1997
Investment Income
Interest and amortization (Note 1B) .............. $28,544,324
-----------
Expenses (Note 2):
Investment management fee ....................... 2,105,931
Service fee ..................................... 686,604
Transfer agency and dividend disbursing ......... 355,890
Accounting services fee ......................... 43,750
Custodian fees .................................. 20,382
Audit fees ...................................... 17,474
Legal fees ...................................... 7,429
Other ........................................... 114,153
-----------
Total expenses ................................ 3,351,613
-----------
Net investment income ........................ 25,192,711
-----------
Realized and Unrealized Gain (Loss) on
Investments (Notes 1 and 3)
Realized net gain on securities .................. 5,316,454
Realized net gain on put options purchased ....... 1,738,706
Realized net gain on futures contracts closed .... 271,875
-----------
Net realized gain on investments ................ 7,327,035
-----------
Net unrealized depreciation in value of
securities during the period .................... (5,637,054)
Unrealized appreciation on futures contracts open . 1,568,750
-----------
Net unrealized depreciation in value of
investments during the period................... (4,068,304)
-----------
Net gain on investments ....................... 3,258,731
-----------
Net increase in net assets resulting
from operations ............................ $28,451,442
===========
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,
1997 1996
------------ --------------
Increase (Decrease) in Net Assets
Operations:
Net investment income.............. $ 25,192,711 $51,863,441
Realized net gain on
investments ..................... 7,327,035 28,285,767
Unrealized depreciation ........... (4,068,304) (10,296,280)
------------ -------------
Net increase in net assets
resulting from operations ...... 28,451,442 69,852,928
------------ -------------
Dividends to shareholders (Note 1D):*
From net investment income ........ (25,037,566) (52,041,101)
From realized gains on securities
transactions .................... (20,844,579) (6,890,412)
------------ -------------
(45,882,145) (58,931,513)
------------ -------------
Capital share transactions:
Proceeds from sale of shares
(32,540,484 and 69,215,523
shares, respectively) ........... 238,043,872 507,068,546
Proceeds from reinvestment of
dividends and/or capital gains
distribution (5,398,684 and
6,577,962 shares, respectively) . 39,098,512 48,186,696
Payments for shares redeemed
(42,808,272 and 74,246,333
shares, respectively) ........... (313,560,406) (544,346,793)
------------ -------------
Net increase (decrease) in net
assets resulting from capital
share transactions ............. (36,418,022) 10,908,449
------------ -------------
Total increase (decrease) ...... (53,848,725) 21,829,864
Net Assets
Beginning of period ................ 996,938,662 975,108,798
------------ -------------
End of period, including
undistributed net investment
income of $960,128 and
$804,983, respectively ............ $943,089,937 $996,938,662
============ =============
*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 ------------------------------------
3/31/97 1996 1995 1994 1993 1992
------- ------ ------ ------ ------ ------
Net asset value,
beginning of period $7.32 $7.25 $6.91 $7.83 $7.40 $7.18
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income........... .19 .39 .39 .38 .41 .43
Net realized and
unrealized gain
(loss) on
investments...... .03 .12 .38 (0.67) .65 .35
----- ----- ----- ----- ----- -----
Total from investment
operations ........ .22 .51 .77 (0.29) 1.06 .78
----- ----- ----- ----- ----- -----
Less distributions:
Dividends from net
investment
income........... (0.19) (0.39) (0.39) (0.38) (0.40) (0.43)
Distribution from
capital gains.... (0.16) (0.05) (0.00) (0.25) (0.23) (0.13)
Distribution in excess
of capital gains. (0.00) (0.00) (0.04) (0.00) (0.00) (0.00)
----- ----- ----- ----- ----- -----
Total distributions. (0.35) (0.44) (0.43) (0.63) (0.63) (0.56)
----- ----- ----- ----- ----- -----
Net asset value,
end of period ..... $7.19 $7.32 $7.25 $6.91 $7.83 $7.40
===== ===== ===== ===== ===== =====
Total return*....... 3.01% 7.16% 11.51% -3.91% 15.15% 11.41%
Net assets, end of
period (000
omitted) .........$943,090$996,939$975,109$950,952$1,055,434$890,004
Ratio of expenses to
average net assets 0.69%** 0.68% 0.65% 0.64% 0.56% 0.57%
Ratio of net investment
income to average
net assets ........ 5.18%** 5.23% 5.51% 5.17% 5.38% 5.92%
Portfolio
turnover rate ..... 19.23% 74.97% 70.67% 62.61% 94.51% 125.44%
*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, 1997
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 a pricing system
provided by a pricing service or dealer in bonds. 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 Subchapter M of 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
dividends and capital gains distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are due to differing treatments for items
such as deferral of wash sales and post-October losses, 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 $15.0 billion of
combined net assets at March 31, 1997) 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 $1.3125 for each shareholder account which
was in existence at any time during the prior month, plus $0.30 for each account
on which a dividend or distribution of cash or shares had a record date in that
month. The Fund also reimburses W&R and WARSCO for certain out-of-pocket costs.
As principal underwriter for the Fund's shares, W&R received gross sales
commissions (which are not an expense of the Fund) of $403,452, out of which W&R
paid sales commissions of $226,463 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 $21,375, which are included in other
expenses.
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 $179,688,344 while proceeds from maturities and
sales aggregated $224,207,528. Purchases of options aggregated $12,039,039
while proceeds from options aggregated $13,777,741. Purchases of short-term
securities aggregated $449,167,718 while proceeds from maturities and sales
aggregated $468,205,855. No U.S. Government securities were bought or sold
during the period ended March 31, 1997.
For Federal income tax purposes, cost of investments owned at March 31,
1997 was $907,121,191, resulting in net unrealized appreciation of $24,203,572,
of which $27,801,820 related to appreciated securities and $3,598,248 related to
depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $20,584,544 during its fiscal year ended September 30, 1996, which included
losses of $6,444,652 deferred from the year ended September 30, 1995 (see
discussion below). A portion of the realized capital gain was paid to
shareholders during the period ended September 30, 1996. 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 incurred between each November 1 and the end of
its next fiscal year ("post-October losses"). From November 1, 1994 through
September 30, 1995, the Fund incurred net long-term capital losses of
$6,444,652, which have been deferred to the fiscal year ended 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, 1997, the Fund had not commenced multiclass operations.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
United Municipal Bond Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of United Municipal Bond Fund,
Inc. (the ``Fund'') as of March 31, 1997, the related statements of
operations and changes in net assets for the six-month period then ended,
and the financial highlights for the six-month period then ended. These
financial statements and the financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on
these financial statements and the financial highlights based on our
audit. The financial statements and the financial highlights of the Fund
for each of the periods presented in the five-year period ended September
30, 1996 were audited by other auditors whose report, dated November 8,
1996, expressed an unqualified opinion on those statements 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
the financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at March 31, 1997 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, such financial statements and financial highlights
present fairly, in all material respects, the financial position of the
United Municipal Bond Fund, Inc. as of March 31, 1997, the results of
its operations, the changes in its net assets, and the financial
highlights for the six-month period then ended in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
May 7, 1997
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
William L. Rogers, Los Angeles, California
Frank J. Ross, Jr., 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
(800) 366-5465
Our INTERNET address is:
http://www.waddell.com
NUR1008SA(3-97)
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