United
Municipal
Bond Fund,
Inc.
ANNUAL
REPORT
--------------------------------------------
For the fiscal year ended September 30, 1997
<PAGE>
FUND MANAGER'S LETTER
- -----------------------------------------------------------------
SEPTEMBER 30, 1997
Dear Shareholder:
This report relates to the operation of United Municipal Bond Fund, Inc.
for the fiscal year ended September 30, 1997. The discussion, graphs and tables
contained in this report will provide you with information regarding the Fund's
performance during that period.
Long-term interest rates generally declined during the past fiscal year
with the prices of long-term bonds experiencing significant volatility, but
trading within a relatively narrow range. Balanced budget legislation was
approved by Congress during the year and the federal budget deficit declined
sharply to less than one percent of Gross Domestic Product. The domestic
economy experienced its seventh consecutive year of expansion, with inflation
actually declining despite tight labor markets. Economic activity throughout
the rest of the developed world remained mostly sluggish, making U.S. financial
assets attractive to foreign investors and causing a huge flow of cash into U.S.
stocks and bonds.
We maintained a generally market neutral maturity posture during most of
the past fiscal year. We increased the Fund's revenue bond holdings relative to
general obligation bonds, industrial development bonds and transportation bonds.
We also continued our emphasis on higher-yielding medium grade bonds due to the
moderating credit risk experienced during the period.
The strategies and techniques we applied resulted in the Fund's performance
exceeding that of the indexes charted on the following page during the fiscal
year. Those indexes reflect the performance of securities that generally
represent the municipal bond market (the Lehman Brothers Municipal Bond Index)
and the universe of funds with similar investment objectives (the Lipper General
Municipal Bond Fund Universe Average). The Fund's relative outperformance was
due in large part to its overweight position in revenue bonds.
If the current trend of economic growth continues into the next fiscal
year, the Federal Reserve may respond with moderate interest rate hikes which
may temporarily dampen market sentiment. Technological advances have increased
productivity and global competition has prompted companies to increase
investment in capital equipment to further increase efficiencies, while
attempting to hold down costs through restructuring, downsizing and outsourcing.
These conditions should create a favorable environment for continued controlled
inflation and solid financial asset prices. We will continue to monitor
economic data and respond accordingly with investments consistent with the
Fund's objectives.
Thank you for your continued confidence.
Respectfully,
John M. Holliday
Manager, United Municipal Bond Fund
<PAGE>
Comparison of Change in Value of $10,000 Investment in
United Municipal Bond Fund, Inc. Class A Shares,
The Lehman Brothers Municipal Bond Index,
and The Lipper General Municipal Bond Fund Universe Average
Lipper
General
United Lehman Municipal
MunicipalBrothers Bond
Bond Municipal Fund
Fund, Bond Universe
Inc. Index Average
------------------ ----------
09/30/87 Purchase$ 9,575$10,000 $10,000
09/30/88 11,305 11,319 11,390
09/30/89 12,519 12,302 12,368
09/30/90 13,078 13,138 13,012
09/30/91 15,036 14,870 14,684
09/30/92 16,751 16,425 16,188
09/30/93 19,289 18,518 18,298
09/30/94 18,534 18,066 17,590
09/30/95 20,669 20,088 19,302
09/30/96 22,150 21,302 20,373
09/30/97 24,315 23,225 22,129
==== United Municipal Bond Fund, Inc.* -- $24,315
++++ Lehman Brothers Municipal Bond Index -- $23,225
---- Lipper General Municipal Bond Fund Universe Average - $22,129
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund.
Average Annual Total Return
Class A+
---------------------
Year Ended
9/30/97 5.10%
5 Years Ended
9/30/97 6.80%
10 Years Ended
9/30/97 9.29%
+Performance data quoted represents past performance and is based on deduction
of a 4.25% sales load on the initial purchase in each of the three periods.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
Past performance is not predictive of future performance. Indexes are
unmanaged.
<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 and a portion may be
Maximum 10% Non-Municipal subject to Federal taxes,
Bond Debt Securities 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 purchase securities subject
to repurchase agreements. May invest in
certain options and futures.)
FOUNDED: 1976
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
PERFORMANCE SUMMARY -- Class A Shares
PER SHARE DATA
For the Fiscal Year Ended September 30, 1997
- --------------------------------------------
DIVIDENDS PAID $0.37
=====
CAPITAL GAINS DISTRIBUTION $0.16
=====
NET ASSET VALUE ON
9/30/97 $7.47 adjusted to: $7.63 (A)
9/30/96 7.32
-----
CHANGE PER SHARE $0.31
=====
(A) This number includes the capital gains distribution of $0.16 paid in
December 1996 added to the actual net asset value on September 30, 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 9-30-97 5.10% 9.77%
5-year period ended 9-30-97 6.80% 7.73%
10-year period ended 9-30-97 9.29% 9.76%
*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 September 30, 1997, United Municipal Bond Fund, Inc. had net assets totaling
$993,876,616 invested in a diversified portfolio.
As a shareholder of United Municipal Bond Fund, Inc., for every $100 you had
invested on September 30, 1997, your Fund owned:
$20.73 Airport Revenue Bonds
15.59 Public Power Revenue Bonds
6.08 Student Loan Bonds
10.59 Hospital Revenue Bonds
3.58 Industrial Revenue/Pollution Control Revenue Bonds
8.08 Housing Revenue Bonds
6.87 Other Municipal Bonds
6.42 Derivative Bonds
4.53 Water and Sewer Revenue Bonds
0.20 Cash and Cash Equivalents
5.63 Adjustable Rate Bonds
3.98 Resource Recovery Bonds
2.30 Electric Utility Revenue Bonds
5.42 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
*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.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS
ALASKA _ 0.17%
Alaska Housing Finance Corporation,
General Housing Purpose Bonds, 1994
Series A (Refunding/Non-AMT),
5.0%, 12-1-2008 ....................... $ 1,640 $ 1,637,950
ARIZONA _ 0.33%
Arizona Educational Loan Marketing
Corporation, Educational Loan Revenue
Bonds, Junior Subordinate Series 1993,
6.3%, 12-1-2008 ....................... 3,155 3,324,581
ARKANSAS _ 0.19%
Arkansas Development Finance Authority,
Single Family Mortgage Revenue Bonds
(Access Program), 1995 Series F (AMT),
7.45%, 1-1-2027 ....................... 1,690 1,886,462
CALIFORNIA _ 8.60%
Southern California Public Power Authority:
Palo Verde Project, Power Project
Revenue Bonds, 1993 Subordinate Refunding
Series, Linked Inverse Floating Rate Security,
5.35%, 7-1-2012 ....................... 10,000 10,112,500
Multiple Project Revenue Bonds, 1989 Series,
6.75%, 7-1-2012 ....................... 3,455 3,968,931
Mead-Adelanto Project Revenue Bonds,
1994 Series A, Linked Inverse Floating
Rate Security,
5.15%, 7-1-2015 ....................... 2,800 2,772,000
Mead-Phoenix Project Revenue Bonds,
1994 Series A, Linked Inverse Floating
Rate Security,
5.15%, 7-1-2015 ....................... 2,600 2,561,000
Transmission Agency of Northern California,
California-Oregon Transmission Project
Revenue Bonds, 1990 Series A,
7.0%, 5-1-2013 ........................ 12,000 14,490,000
California Statewide Communities Development
Authority:
Hospital Refunding Revenue Certificates of
Participation, Series 1993,
Cedars-Sinai Medical Center
Linked Inverse Floating Rate Security,
5.4%, 11-1-2015 ....................... 6,500 6,394,375
Hospital Revenue Certificates
of Participation,
Series 1992,
Cedars-Sinai Medical Center,
6.5%, 8-1-2012 ........................ 5,200 5,876,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA (Continued)
County of San Bernardino, California,
Certificates of Participation (1992 Justice
Center/Airport Improvements Refunding
Project), Inland Empire Public Facilities
Corporation, Short/RITES Certificates,
6.78%, 7-1-2016 (A) ................... $ 9,500 $ 9,583,125
Imperial Irrigation District,
1993 Refunding Certificates of
Participation (1990 Electric
System Project),
5.2%, 11-1-2009 ....................... 8,500 8,829,375
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 6,007,631
Inland Empire Solid Waste Financing Authority,
Revenue Bonds, 1996 Series B (Landfill
Improvement Financing Project),
6.25%, 8-1-2011 ....................... 5,000 5,468,750
California Rural Home Mortgage Finance
Authority, Single Family Mortgage
Revenue Bonds (Mortgage-Backed Securities
Program):
1997 Series C,
5.5%, 3-1-2029 ........................ 2,230 2,478,087
1995 Series B,
7.75%, 9-1-2026 ....................... 1,670 1,964,338
Sacramento Municipal Utility District,
Electric Revenue Refunding Bonds,
1993 Series G,
6.5%, 9-1-2013 ........................ 2,500 2,890,625
Intermodal Container Transfer Facility,
Joint Powers Authority, Intermodal
Container Transfer Facility Refunding
Revenue Bonds, 1989 Series A,
7.7%, 11-1-2014 ....................... 2,000 2,075,000
Total ................................. 85,471,737
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
COLORADO _ 11.94%
City and County of Denver, Colorado,
Airport System Revenue Bonds:
Series 1991D:
7.75%, 11-15-2013 ..................... $11,905 $ 14,791,963
7.0%, 11-15-2025 ...................... 4,750 5,029,062
7.0%, 11-15-2025 (Prerefunded) ........ 1,250 1,370,313
Series 1992C:
6.75%, 11-15-2013 ..................... 10,080 10,848,600
6.75%, 11-15-2013 (Prerefunded) ....... 1,330 1,484,613
Series 1992B:
7.25%, 11-15-2023 ..................... 11,990 13,338,875
7.25%, 11-15-2023 (Prerefunded)........ 510 580,763
Series 1994A:
7.5%, 11-15-2023 ...................... 1,655 1,892,906
7.5%, 11-15-2023 (Prerefunded) ........ 345 408,394
Series 1997D:
6%, 11-15-2013 ........................ 4,000 4,415,000
City and County of Denver, Colorado, Special
Facilities Airport Revenue Bonds (United
Air Lines Project), Series 1992A,
6.875%, 10-1-2032 ..................... 28,700 30,744,875
Colorado Housing and Finance Authority:
Single Family Program Senior Bonds:
1995 Series A,
8.0%, 6-1-2025 ........................ 3,930 4,445,813
1995 Series D-1,
7.375%, 6-1-2026 ...................... 4,035 4,514,156
1996 Series A-1,
7.4%, 11-1-2027 ....................... 3,735 4,197,206
1995 Series C-1,
7.65%, 12-1-2025 ...................... 2,445 2,738,400
1995 Series B-1,
7.9%, 12-1-2025 ....................... 1,115 1,254,375
Single Family Program Senior and Subordinate
Bonds:
1996 Series B-1,
7.65%, 11-1-2026 ...................... 2,750 3,124,688
1997 Series A-2,
7.25%, 5-1-2027 ....................... 2,000 2,255,000
1996 Series C-1,
7.55%, 11-1-2027 ...................... 1,580 1,793,300
Colorado Student Obligation Bond Authority,
Student Loan Asset-Backed Obligations,
Senior Subordinate, 1995 Series II-B,
6.2%, 12-1-2008 ....................... 8,000 8,290,000
Douglas County, Colorado, Certificates of
Participation, Series 1996,
5.6%, 11-1-2011 ....................... 1,105 1,190,638
Total ................................. 118,708,940
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CONNECTICUT _ 2.00%
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 $ 7,603,750
Eastern Connecticut Resource Recovery
Authority, Solid Waste Revenue Bonds
(Wheelabrator Lisbon Project),
Series 1993A,
5.5%, 1-1-2014 ........................ 6,750 6,648,750
Connecticut Development Authority,
Adjustable Rate Pollution Control Revenue
Bonds (New England Power Company Project--
1985 Series),
7.25%, 10-15-2015 ..................... 5,200 5,583,500
Total ................................. 19,836,000
FLORIDA _ 2.14%
Escambia County, Florida, Pollution Control
Revenue Bonds (Champion International
Corporation Project), Series 1994,
6.9%, 8-1-2022 ........................ 10,000 11,075,000
Pasco County, Florida, Solid Waste Disposal
and Resource Recovery System, Revenue
Bonds, Series 1998,
6.0%, 4-1-2011 ........................ 4,930 5,256,612
Manatee County, Florida, Public Utilities
Revenue Refunding Bonds, Series 1993 A,
5.0%, 10-1-2013 ....................... 5,000 4,900,000
Total ................................. 21,231,612
GEORGIA _ 2.93%
Municipal Electric Authority of Georgia:
Project One Special Obligation Bonds,
Fifth Crossover Series,
6.4%, 1-1-2013 ........................ 15,500 17,670,000
General Power Revenue Bonds,
1992B Series,
8.25%, 1-1-2011 ....................... 8,700 11,494,875
Total ................................. 29,164,875
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
HAWAII _ 2.39%
State of Hawaii, Airports System Revenue
Bonds, Second Series of 1991,
6.9%, 7-1-2012 ........................ $20,195 $ 23,754,369
IDAHO _ 0.69%
Idaho Health Facilities Authority, Hospital
Revenue Refunding Bonds, Series 1992
(IHC Hospitals, Inc.), Indexed Inverse
Floating/Fixed Term Bonds,
8.18%, 2-15-2021 (B) .................. 6,000 6,840,000
ILLINOIS _ 3.88%
City of Chicago, Chicago-O'Hare
International Airport:
Special Facility Revenue Bonds (United
Air Lines, Inc. Project):
Series 1984C,
8.2%, 5-1-2018 ........................ 5,015 5,397,394
Series 1988A,
8.4%, 5-1-2018 ........................ 4,905 5,291,269
General Airport Second Lien Revenue
Refunding Bonds, 1993 Series C:
5.0%, 1-1-2011 ........................ 5,590 5,576,025
5.0%, 1-1-2010 ........................ 3,000 3,018,750
Special Facility Revenue
Bonds (American Airlines,
Inc. Project),
7.875%, 11-1-2025 ..................... 7,250 7,920,625
General Airport Revenue Refunding
Bonds, 1993 Series A,
5.0%, 1-1-2012 ........................ 3,000 2,917,500
Illinois Health Facilities Authority
(Lutheran General HealthSystem),
Indexed Inverse Floating Rate
Revenue Bonds, Series 1993B,
6.85%, 4-1-2014 (C) ................... 4,100 4,597,125
City of Chicago, Collateralized Single
Family Mortgage Revenue Bonds,
Series 1997-B,
6.95%, 9-1-2028 ....................... 2,000 2,215,000
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 1,668,800
Total ................................. 38,602,488
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
INDIANA _ 3.81%
Indiana State Office Building Commission,
Capitol Complex Revenue Bonds:
Series 1990B (State Office Building
I Facility),
7.4%, 7-1-2015 ........................ $ 8,000 $ 10,010,000
Series 1990A (Senate Avenue Parking Facility),
7.4%, 7-1-2015 ........................ 4,775 5,974,719
Indiana Transportation Finance Authority,
Highway Revenue Bonds, Series 1990A,
7.25%, 6-1-2015 ....................... 9,000 10,980,000
East Chicago Elementary School Building
Corporation (Lake County, Indiana), First
Mortgage Refunding Bonds, Series 1996,
6.25%, 1-5-2016 ....................... 7,655 8,506,619
Indiana Health Facility Financing Authority,
Hospital Revenue Refunding Bonds, Series 1992
(The Methodist Hospitals, Inc.),
6.75%, 9-15-2009 ...................... 2,200 2,384,250
Total ................................. 37,855,588
KENTUCKY _ 0.67%
Kentucky Economic Development Finance
Authority, Hospital Revenue Bonds,
Baptist Healthcare System Issue,
Series 1994,
5.0%, 8-15-2015 ....................... 4,650 4,458,187
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 2,205,000
Total ................................. 6,663,187
LOUISIANA _ 1.92%
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,
4.8%, 12-1-2018 ....................... 12,335 12,335,000
Parish of Jefferson Home Mortgage Authority,
Tax-Exempt Agency Mortgage-Backed
Securities, Series 1994A,
7.55%, 12-1-2026 ...................... 5,495 6,751,981
Total ................................. 19,086,981
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MAINE _ 0.29%
Maine Educational Loan Marketing Corporation,
Student Loan Revenue Refunding Bonds,
Series 1991A,
6.9%, 11-1-2003 ....................... $ 2,710 $ 2,916,638
MASSACHUSETTS _ 1.17%
Massachusetts Municipal Wholesale Electric
Company, A Public Corporation of the
Commonwealth of Massachusetts, Power
Supply System Revenue Bonds, 1993 Series
A, Linked Inverse Floating Rate Security,
5.45%, 7-1-2018 ....................... 5,000 4,931,250
Massachusetts Health and Educational
Facilities Authority, Revenue Bonds,
New England Deaconess Hospital Issue,
Series C,
7.2%, 4-1-2022 ........................ 2,500 2,734,375
Massachusetts State College Building
Authority, Project and Refunding
Revenue Bonds, Senior Series 1994-A,
7.5%, 5-1-2014 ........................ 1,750 2,205,000
Boston Water and Sewer Commission,
General Revenue Bonds, 1992 Series A
(Senior Series),
5.75%, 11-1-2013 ...................... 1,575 1,689,188
Total ................................. 11,559,813
MICHIGAN - 1.74%
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 9,620,000
Michigan State Hospital Finance Authority:
Hospital Revenue and Refunding Bonds
(Bay Medical Center), Series 1997A,
5.375%, 7-1-2011 ...................... 2,190 2,242,012
Hospital Revenue Bonds (Holland Community
Hospital), Series 1993,
5.25%, 1-1-2010 ....................... 1,200 1,183,500
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MICHIGAN (Continued)
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 $ 1,863,794
The Economic Development Corporation of the
County of Jackson, Variable Rate Demand Bonds
(Vista Grande Villa Project), Series 1987,
3.85%, 6-1-2027 ....................... 900 900,000
Charter County of Wayne, Michigan, Detroit
Metropolitan Wayne County Airport, Airport
Revenue Bonds, Subordinate Lien,
Series 1993B,
5.25%, 12-1-2013 ...................... 1,500 1,481,250
Total ................................. 17,290,556
MINNESOTA - 0.83%
City of Rochester, Minnesota, Health
Care Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center),
Series 1992D, Indexed Inverse
Floating/Fixed Term Bonds,
7.58%, 11-5-2009 (D) .................. 4,500 5,040,000
HealthSystem Minnesota, The Healthcare
Network, City of St. Louis Park,
Minnesota, Health Care Facilities Revenue
Bonds (Healthsystem Minnesota Obligated
Group), Series 1993B and 1993C,
Relinked Inverse Floater,
5.1%, 7-1-2013 ........................ 2,000 1,950,000
City of Minneapolis, Minnesota and
Housing and Redevelopment Authority of the
City of Saint Paul, Minnesota, Health Care
Revenue Bonds (Children's Health Care),
Variable Rate Demand,
3.9%, 8-15-2025 ....................... 1,300 1,300,000
Total ................................. 8,290,000
MISSISSIPPI _ 2.21%
Lowndes County, Mississippi, Solid Waste
Disposal and Pollution Control
Refunding Revenue Bonds (Weyerhaeuser
Company Project), Series 1992B, Indexed
Inverse Floating/Fixed Term Bonds,
8.18%, 4-1-2022 (E) ................... 11,000 13,021,250
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MISSISSIPPI (Continued)
Mississippi Higher Education Assistance
Corporation, Student Loan Revenue Bonds,
Subordinate Series 1996-C:
6.75%, 9-1-2014 ....................... $ 5,500 $ 5,720,000
6.7%, 9-1-2012 ........................ 1,470 1,528,800
Mississippi Home Corporation, Single Family
Mortgage Revenue Bonds, Series 1996F (AMT),
7.55%, 12-1-2027 ...................... 1,500 1,702,500
Total ................................. 21,972,550
MISSOURI _ 5.64%
Health and Educational Facilities Authority
of the State of Missouri:
Insured Variable Rate Demand Health Facilities,
Revenue Refunding Bonds
(Cox Health Systems),
Series 1997,
3.85%, 6-1-2015 ....................... 10,000 10,000,000
Variable Rate Demand, Health Facilities
Revenue Bonds (Bethesda Barclay House),
Series 1996A,
4.0%, 8-15-2026 ....................... 4,200 4,200,000
Missouri Housing Development Commission,
Single Family Mortgage Revenue Bonds
(Homeownership Loan Program):
1995 Series C,
7.25%, 9-1-2026 ....................... 2,985 3,365,588
1996 Series C,
7.45%, 9-1-2027 ....................... 1,670 1,914,237
1997 Series A-2,
7.3%, 3-1-2028 ........................ 1,000 1,140,000
Health Facilities Revenue Bonds
(Barnes-Jewish, Inc./Christian Health
Services), Series 1993A:
6.0%, 5-15-2011 ....................... 3,000 3,258,750
5.25%, 5-15-2014 ...................... 2,900 2,936,250
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,
4.0%, 11-1-2016 ....................... 6,000 6,000,000
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 4,700,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MISSOURI (Continued)
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 $ 1,496,250
The Industrial Development Authority of the
City of Kansas City, Missouri (Ewing
Marion Kauffman Foundation Project),
Variable Rate Demand Revenue Bonds,
Series 1997A,
3.9%, 4-1-2027 ........................ 17,000 17,000,000
Total ................................. 56,011,075
NEBRASKA _ 1.56%
Nebraska Higher Education Loan Program,
Inc., 1993-2 Series A-6 Junior
Subordinate Bonds,
6.4%, 6-1-2013 ........................ 14,500 15,533,125
NEVADA _ 0.11%
Nevada Housing Division, Single Family
Mortgage Bonds, 1996 Series C
Subordinate Bonds,
6.35%, 4-1-2009 ....................... 1,000 1,053,750
NEW JERSEY _ 1.94%
The Union County Utilities Authority
(New Jersey), Solid Waste System Revenue
Bonds, 1991 Series A:
6.95%, 6-15-2003 ...................... 9,000 9,258,750
7.15%, 6-15-2009 ...................... 1,000 1,032,500
The Hudson County Improvement Authority,
Essential Purpose Pooled Governmental
Loan Program Bonds, Series 1986,
7.6%, 8-1-2025 ........................ 5,125 5,605,469
Middlesex County Utilities Authority,
Sewer Revenue Refunding Bonds, Series
1992A, Indexed Inverse Floating/Fixed
Term Bonds,
6.85%, 8-15-2010 ...................... 3,000 3,408,750
Total ................................. 19,305,469
NEW MEXICO _ 3.24%
City of Albuquerque, New Mexico, Governmental
Purpose Airport Refunding Revenue Bonds,
Series 1989,
6.5%, 7-1-2019 ........................ 15,350 15,436,574
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW MEXICO (Continued)
New Mexico Educational Assistance
Foundation, Student Loan Program Bonds:
First Subordinate 1995 Series A-2:
5.95%, 11-1-2007 ...................... $ 2,835 $ 2,920,050
5.85%, 11-1-2006 ...................... 1,645 1,690,237
First Subordinate 1996 Series A-2,
6.2%, 11-1-2008 ....................... 2,210 2,281,825
Second Subordinate 1996 Series A-3,
6.75%, 11-1-2008 ...................... 2,175 2,340,844
Second Subordinate 1995 Series A-3,
6.6%, 11-1-2010 ....................... 1,415 1,445,069
New Mexico Educational Assistance
Foundation, Student Loan Purchase Bonds,
Senior 1995 Series IV-A1,
7.05%, 3-1-2010 ....................... 5,635 6,121,019
Total ................................. 32,235,618
NEW YORK _ 12.13%
New York State Medical Care Facilities
Finance Agency:
Hospital Insured Mortgage Revenue Bonds,
1994 Series A Refunding:
5.25%, 8-15-2014 ...................... 10,000 10,025,000
5.5%, 8-15-2024 ....................... 10,000 10,037,500
5.375%, 2-15-2025 ..................... 15,000 14,868,750
Mental Health Services
Facilities Improvement Revenue Bonds,
1993 Series F Refunding,
5.375%, 2-15-2014 ..................... 12,000 11,955,000
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 10,687,500
5.75%, 6-15-2011 ...................... 5,000 5,412,500
The City of New York, General Obligation
Bonds, Fiscal 1994 Series C,
Linked Inverse Floating Rate Security,
8.0%, 9-30-2003 ....................... 13,000 14,950,000
Dormitory Authority of the State of New York:
State University Educational
Facilities, Revenue Bonds,
Series 1990B,
7.5%, 5-15-2011 ....................... 2,000 2,420,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW YORK (Continued)
Department of Health of the State of
New York, Revenue Bonds, Series 1996,
5.5%, 7-1-2010 ........................ $ 2,000 $ 2,022,500
Nyack Hospital, Revenue Bonds, Series 1996,
6.25%, 7-1-2013 ....................... 1,000 1,060,000
City University System Consolidated Revenue
Bonds, Series 1993F,
5.0%, 7-1-2014 ........................ 9,700 9,202,875
New York City Municipal Water Finance
Authority, Water and Sewer System
Revenue Bonds, Fiscal 1993 Series A,
6.0%, 6-15-2010 ....................... 12,000 13,230,000
Housing New York Corporation, Senior
Revenue Refunding Bonds, Series 1993,
5.0%, 11-1-2013 ....................... 6,600 6,410,250
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 4,160,000
New York State Urban Development Corporation,
Correctional Capital Facilities Revenue Bonds,
1993A Refunding Series,
5.25%, 1-1-2014 ....................... 3,000 3,071,250
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 1,061,250
Total ................................. 120,574,375
NORTH CAROLINA _ 2.18%
North Carolina Eastern Municipal Power
Agency, Power System Revenue Bonds,
Refunding Series 1993 B,
7.0%, 1-1-2008 ........................ 19,000 21,636,250
NORTH DAKOTA _ 0.55%
City of Fargo, North Dakota, Health System
Revenue Bonds (Meritcare Obligated Group),
Series 1996A,
5.55%, 6-1-2016 ....................... 5,350 5,416,875
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
OHIO _ 2.24%
State of Ohio (Ohio Building Authority),
Workers' Compensation Facilities Bonds
(William Green Building), 1993 Series A,
4.75%, 4-1-2014 ....................... 11,590 10,807,675
County of Cuyahoga, Ohio, Hospital Revenue
Bonds, Series 1990 (Meridia Health System),
7.25%, 8-15-2019 ...................... 4,980 5,390,850
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 2,637,500
City of Moraine, Ohio, Solid Waste
Disposal Revenue Bonds (General Motors
Corporation Project), Series 1994,
6.75%, 7-1-2014 ....................... 1,550 1,803,812
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 1,603,125
Total ................................. 22,242,962
OKLAHOMA _ 1.04%
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 6,534,606
1996 Series A,
7.05%, 9-1-2026 ....................... 1,000 1,105,000
Trustees of the Tulsa Municipal Airport
Trust, 1988 Adjustable Rate Revenue
Obligations, American Airlines,
7.375%, 12-1-2020 ..................... 2,500 2,715,625
Total ................................. 10,355,231
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
OREGON _ 0.42%
State of Oregon, Housing and Community
Services Department, Mortgage Revenue
Bonds, Single-Family Mortgage Program:
1992 Series B,
6.875%, 7-1-2028 ...................... $ 2,500 $ 2,668,750
1992 Series C,
5.5%, 7-1-2013 ........................ 1,485 1,525,837
Total ................................. 4,194,587
PENNSYLVANIA _ 1.92%
Delaware Valley Regional Finance Authority,
(Bucks, Chester, Delaware and Montgomery Counties,
Pennsylvania), Local Government Revenue Bonds,
1997 Series B,
5.6%, 7-1-2017 ........................ 5,000 5,237,500
Bethlehem Authority, Northampton and Lehigh
Counties, Pennsylvania, Water Revenue
Refunding Bonds, Series 1994,
4.875%, 11-15-2014 .................... 5,000 4,743,750
County of Allegheny, Pennsylvania, Airport
Revenue Refunding Bonds,
Series 1997A-1 (AMT),
5.75%, 1-1-2012 ....................... 4,000 4,275,000
Delaware County Authority, Hospital Revenue
Bonds, Series of 1992 (Riddle Memorial
Hospital),
6.5%, 1-1-2022 ........................ 2,800 2,933,000
Monroe County Hospital Authority, Hospital
Revenue Bonds (Pocono Medical Center),
Series A of 1997,
5.125%, 7-1-2015 ...................... 2,000 1,935,000
Total ................................. 19,124,250
PUERTO RICO _ 1.64%
Puerto Rico Public Buildings Authority,
Public Education and Health Facilities,
Refunding Bonds, Series M,
4.8%, 7-1-2016 ........................ 12,000 12,030,000
Puerto Rico Highway and Transportation
Authority, Highway Revenue Bonds,
Series W,
3.95%, 7-1-2010 ....................... 4,250 4,250,000
Total ................................. 16,280,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
SOUTH CAROLINA _ 0.45%
City of Charleston, South Carolina,
Waterworks and Sewer System Refunding
Revenue Bonds, Series 1986,
5.0%, 1-1-2016 ........................ $ 2,525 $ 2,408,219
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 2,105,000
Total ................................. 4,513,219
TENNESSEE _ 2.02%
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 10,937,500
Tennessee Housing Development Agency,
Homeownership Program Bonds, Issue T,
7.375%, 7-1-2023 ...................... 4,665 4,939,069
Volunteer State Student Funding Corporation,
Educational Loan Revenue Bonds,
Junior Subordinate Series 1993C Bonds,
5.85%, 12-1-2008 ...................... 2,700 2,720,250
Memphis-Shelby County Airport Authority,
Special Facilities Revenue Bonds,
Refunding Series 1997 (Federal Express
Corporation),
5.35%, 9-1-2012 ....................... 1,500 1,503,750
Total ................................. 20,100,569
TEXAS _ 6.85%
AllianceAirport Authority, Inc.,
Special Facilities Revenue Bonds:
Series 1990 (American Airlines, Inc.
Project),
7.5%, 12-1-2029 ....................... 15,000 16,331,250
Series 1991 (American Airlines, Inc.
Project),
7.0%, 12-1-2011 ....................... 14,100 16,250,250
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TEXAS (Continued)
Dallas-Fort Worth International Airport,
Facility Improvement Corporation, American
Airlines, Inc. Revenue Bonds, Series 1990,
7.5%, 11-1-2025 ....................... $ 7,700 $ 8,373,750
Gulf Coast Waste Disposal Authority,
Multi-Modal Interchangeable Rate Revenue
Bonds (Champion International Corporation
Project), Series 1992A,
6.875%, 12-1-2028 ..................... 6,000 6,517,500
Lubbock Health Facilities Development
Corporation, Hospital Revenue Bonds
(Methodist Hospital, Lubbock, Texas
Project), Series 1993B,
6.75%, 12-1-2010 ...................... 5,000 5,893,750
Texas Department of Housing and Community
Affairs, Single Family Mortgage Revenue
Bonds, 1997 Series A,
5.8%, 9-1-2029 ........................ 5,000 5,043,750
Harris County Health Facilities Development
Corporation, Hospital Revenue Bonds
(Memorial Hospital System Project),
Series 1989,
6.5%, 6-1-2019 ........................ 4,500 4,758,750
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 2,939,062
Midland County Hospital District, Hospital
Revenue Refunding Bonds, Series 1997,
5.375%, 6-1-2016 ...................... 2,000 1,980,000
Total ................................. 68,088,062
VIRGINIA _ 0.20%
City of Chesapeake, Virginia, Water
and Sewer System Revenue Refunding
Bonds, Series of 1994,
5.1%, 5-1-2014 ........................ 2,000 1,935,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WASHINGTON _ 7.17%
Washington Public Power Supply System:
Nuclear Project No. 3, Refunding Revenue Bonds:
Series 1989B,
7.125%, 7-1-2016 ...................... $20,750 $ 24,925,937
Series 1997 A,
5.25%, 7-1-2014 ....................... 6,220 6,150,025
Nuclear Project No. 1, Refunding Revenue Bonds:
Linked Inverse floating Rate Security,
Series 1993A,
5.75%, 7-1-2011 ....................... 15,000 15,750,000
Series 1989B,
7.125%, 7-1-2016 ...................... 8,200 9,850,250
Series 1997B,
5.125%, 7-1-2015 ...................... 5,000 4,843,750
State of Washington, Various Purpose General
Obligation Bonds, Series 1990A,
6.75%, 2-1-2015 ....................... 4,995 5,987,756
Public Utility District No. 1 of Douglas
County, Washington, Wells Hydroelectric
Revenue Bonds, Series of 1965,
3.7%, 9-1-2018 ........................ 4,200 3,743,250
Total ................................. 71,250,968
WEST VIRGINIA _ 0.60%
Braxton County, West Virginia, Solid Waste
Disposal Revenue Bonds (Weyerhaeuser Company
Project), Series 1995A,
6.5%, 4-1-2025 ........................ 3,500 3,762,500
Mason County, West Virginia, Pollution
Control Revenue Bonds (Appalachian Power
Company Project), Series G,
7.4%, 1-1-2014 ........................ 2,000 2,152,500
Total ................................. 5,915,000
TOTAL MUNICIPAL BONDS _ 99.80% $991,860,712
(Cost: $924,819,386)
Number of
Contracts
OPTIONS - 0.02%
December 110 Put Options on Treasury Bond
Futures, Expires 11-15-97 ............. 2,000 $ 250,000
(Cost: $1,728,130)
TOTAL SHORT-TERM SECURITIES _ 0.17% $ 1,664,000
(Cost: $1,664,000)
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1997
Value
TOTAL INVESTMENT SECURITIES _ 99.99% $993,774,712
(Cost: $928,211,516)
CASH AND OTHER ASSETS, NET OF LIABILITIES _ 0.01% 101,904
NET ASSETS - 100.00% $993,876,616
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 the 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 the 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 the 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 the Kenny S&P Index.
Minimum coupon rate is 0%. On April 1, 1999, rate becomes fixed at 6.70%.
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
SEPTEMBER 30, 1997
Assets
Investment securities--at value
(Notes 1 and 3) ............................... $ 993,774,712
Receivables:
Interest ...................................... 16,003,200
Fund shares sold .............................. 1,064,449
Prepaid insurance premium ...................... 32,061
--------------
Total assets ................................ 1,010,874,422
--------------
Liabilities
Payable for investment securities purchased .... 14,167,451
Payable to Fund shareholders ................... 2,423,045
Accrued service fee (Note 2) ................... 264,038
Accrued transfer agency and dividend
disbursing (Note 2) ........................... 71,756
Accrued management fee (Note 2) ................ 11,600
Due to custodian ............................... 9,648
Accrued accounting services fee (Note 2) ....... 7,083
Other .......................................... 43,185
--------------
Total liabilities ........................... 16,997,806
--------------
Total net assets ........................... $ 993,876,616
==============
Net Assets
$1.00 par value capital stock, authorized --
600,000,000; shares outstanding _ 133,060,437
Capital stock ................................. $133,060,437
Additional paid-in capital .................... 788,926,333
Accumulated undistributed income:
Accumulated undistributed net investment
income ...................................... 1,270,995
Accumulated undistributed net realized gain on
investment transactions ..................... 5,055,655
Net unrealized appreciation in value of
investments ................................. 65,563,196
------------
Net assets applicable to outstanding units
of capital ................................. $993,876,616
============
Net asset value per share (net assets divided by
shares outstanding) ............................ $7.47
=====
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended SEPTEMBER 30, 1997
Investment Income
Interest and amortization (Note 1B) .............. $56,789,291
-----------
Expenses (Note 2):
Investment management fee ....................... 4,208,872
Service fee ..................................... 1,257,977
Transfer agency and dividend disbursing ......... 724,587
Accounting services fee ......................... 86,250
Custodian fees .................................. 42,227
Audit fees ...................................... 27,343
Legal fees ...................................... 20,115
Other ........................................... 194,517
-----------
Total expenses ................................ 6,561,888
-----------
Net investment income ........................ 50,227,403
-----------
Realized and Unrealized Gain on
Investments (Notes 1 and 3)
Realized net gain on securities .................. 7,890,338
Realized net gain on put options purchased ....... 1,713,707
Realized net gain on futures contracts closed .... 58,125
-----------
Net realized gain on investments ................ 9,662,170
Net unrealized appreciation in value of
investments during the period ................... 31,319,181
-----------
Net gain on investments ......................... 40,981,351
-----------
Net increase in net assets resulting
from operations ............................. $91,208,754
===========
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year
ended September 30,
-----------------------------
1997 1996
-------------- ------------
Increase (Decrease) in Net Assets
Operations:
Net investment income.............. $ 50,227,403 $51,863,441
Realized net gain on
investments ..................... 9,662,170 28,285,767
Unrealized appreciation
(depreciation) ................... 31,319,181 (10,296,280)
------------ -------------
Net increase in net assets
resulting from operations ...... 91,208,754 69,852,928
------------ -------------
Distributions to shareholders (Note 1D):*
From net investment income ........ (49,761,391) (52,041,101)
From realized gains on securities
transactions .................... (20,844,583) (6,890,412)
------------ -------------
(70,605,974) (58,931,513)
------------ -------------
Capital share transactions:
Proceeds from sale of shares
(69,698,111 and 69,215,523
shares, respectively) ........... 511,770,397 507,068,546
Proceeds from reinvestment of
dividends and/or capital gains
distribution (8,113,114 and
6,577,962 shares, respectively) . 58,977,509 48,186,696
Payments for shares redeemed
(80,867,185 and 74,246,333
shares, respectively) ........... (594,412,732) (544,346,793)
------------ -------------
Net increase (decrease) in net
assets resulting from capital
share transactions ............. (23,664,826) 10,908,449
------------ -------------
Total increase (decrease) ...... (3,062,046) 21,829,864
Net Assets
Beginning of period ................ 996,938,662 975,108,798
------------ -------------
End of period, including
undistributed net investment
income of $1,270,995 and
$804,983, respectively ............ $993,876,616 $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 fiscal year ended
September 30,
------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
Net asset value,
beginning of period $7.32 $7.25 $6.91 $7.83 $7.40
----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income........... .38 .39 .39 .38 .41
Net realized and
unrealized gain
(loss) on
investments...... .30 .12 .38 (0.67) .65
----- ----- ----- ----- -----
Total from investment
operations ........ .68 .51 .77 (0.29) 1.06
----- ----- ----- ----- -----
Less distributions:
From net investment
income........... (0.37) (0.39) (0.39) (0.38) (0.40)
From capital gains (0.16) (0.05) (0.00) (0.25) (0.23)
In excess of capital
gains............ (0.00) (0.00) (0.04) (0.00) (0.00)
----- ----- ----- ----- -----
Total distributions. (0.53) (0.44) (0.43) (0.63) (0.63)
----- ----- ----- ----- -----
Net asset value,
end of period ..... $7.47 $7.32 $7.25 $6.91 $7.83
===== ===== ===== ===== =====
Total return*....... 9.77% 7.16% 11.51% -3.91% 15.15%
Net assets, end of
period (000
omitted) ......... $993,877$996,939$975,109$950,952$1,055,434
Ratio of expenses to
average net assets 0.67% 0.68% 0.65% 0.64% 0.56%
Ratio of net investment
income to average
net assets ........ 5.14% 5.23% 5.51% 5.17% 5.38%
Portfolio
turnover rate ..... 47.24% 74.97% 70.67% 62.61% 94.51%
*Total return calculated without taking into account the sales load deducted on
an initial purchase.
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 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 in 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 $18.0 billion of
combined net assets at September 30, 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 $900,465, out of which W&R
paid sales commissions of $510,986 and all expenses in connection with the sale
of Fund shares, except for registration fees and related expenses.
Under a Distribution and Service Plan for Class A shares adopted by the
Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund
may pay monthly a distribution and/or service fee to W&R in an amount not to
exceed .25% of the Fund's average annual net assets. The fee is to be paid to
reimburse W&R for amounts it expends in connection with the distribution of the
Class A shares and/or provision of personal services to Fund shareholders and/or
maintenance of shareholder accounts.
The Fund paid Directors' fees of $38,670, 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 $449,376,246 while proceeds from maturities and
sales aggregated $445,254,709. Purchases of options aggregated $14,576,549
while proceeds from options aggregated $14,562,121. Purchases of short-term
securities aggregated $896,599,663 while proceeds from maturities and sales
aggregated $942,937,166. No U.S. Government securities were bought or sold
during the period ended September 30, 1997.
For Federal income tax purposes, cost of investments owned at September 30,
1997 was $933,612,685, resulting in net unrealized appreciation of $60,162,027,
of which $62,004,258 related to appreciated securities and $1,842,231 related to
depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $10,659,950 during its fiscal year ended September 30, 1997. A portion of
the realized capital gain was paid to shareholders during the period ended
September 30, 1997. Remaining net capital gains will be distributed to the
Fund's shareholders.
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 Distribution and Service Plan
and have a separate transfer agency and dividend disbursement services fee
structure. As of September 30, 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 September 30, 1997, the related statements of operations and changes in net
assets for the year then ended, and the financial highlights for the year 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 in the four-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
September 30, 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 United Municipal
Bond Fund, Inc. as of September 30, 1997, the results of its operations, the
changes in its net assets, and the financial highlights for the year then ended
in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
October 31, 1997
<PAGE>
INCOME TAX INFORMATION
The amounts of the dividends and long-term capital gains shown in the table
below, multiplied by the number of shares owned by you on the record dates, will
give you the total amounts to be reported in your Federal income tax return for
the years in which they were received or reinvested.
Exempt Interest Dividends - The per-share amounts shown as Exempt Interest
represent the distribution of state and municipal bond interest and are exempt
from Federal income tax.
PER-SHARE AMOUNTS REPORTABLE AS:
-------------------------------------------------------------
For Individuals For Corporations
------------------------------- -----------------------------
Record Ordinary ExemptLong-Term Non- ExemptLong-Term
Date Total Income InterestCapital GainQualifyingInterestCapital Gain
- -------------------------------------------------------------------------
10-11-96$0.032$0.0012 $0.0308 $0.0000 $0.0012$0.0308 $0.0000
11-15-96 0.032 .0012 .0308 .0000 .0012 .0308 .0000
12-13-96 0.191 .0723 .0299 .0888 .0723 .0299 .0888
01-17-97 0.031 .0010 .0300 .0000 .0010 .0300 .0000
02-14-97 0.031 .0010 .0300 .0000 .0010 .0300 .0000
03-14-97 0.031 .0010 .0300 .0000 .0010 .0300 .0000
04-11-97 0.031 .0010 .0300 .0000 .0010 .0300 .0000
05-16-97 0.031 .0010 .0300 .0000 .0010 .0300 .0000
06-13-97 0.031 .0010 .0300 .0000 .0010 .0300 .0000
07-11-97 0.031 .0010 .0300 .0000 .0010 .0300 .0000
08-15-97 0.031 .0010 .0300 .0000 .0010 .0300 .0000
09-12-97 0.031 .0010 .0300 .0000 .0010 .0300 .0000
------------- ------- ------- -------------- -------
Total $0.534$0.0837 $0.3615 $0.0888 $0.0837$0.3615 $0.0888
============= ======= ======= ============== =======
NON-QUALIFYING DIVIDENDS -- The non-qualifying portion of distributions
represents the taxable portion of dividends paid and does not qualify for the
dividends received deduction for corporations.
The tax status of dividends paid will be reported to you on Form 1099-DIV after
the close of the applicable calendar year.
Income from the Fund may be subject to the alternative minimum tax.
Shareholders are advised to consult with their tax adviser concerning the tax
treatment of dividends and distributions from the Fund.
<PAGE>
Shareholder Meeting Results
A special meeting of shareholders of United Municipal Bond Fund, Inc. was held
on July 24, 1997. The matters voted upon by the shareholders and the resulting
votes for each matter are presented below.
Item 1.To elect the Board of Directors;
Broker
For WithheldNon-Votes*
Henry L. Bellmon 73,694,533 1,312,000 0
Dodds I. Buchanan 73,820,866 1,185,667 0
James M. Concannon 73,831,062 1,175,471 0
John A. Dillingham 73,782,321 1,224,212 0
Linda Graves 73,750,830 1,255,703 0
John F. Hayes 73,731,859 1,274,674 0
Glendon E. Johnson 73,722,867 1,283,666 0
William T. Morgan 73,796,093 1,210,440 0
Ronald K. Richey 73,775,003 1,231,530 0
William L. Rogers 73,783,747 1,222,786 0
Frank J. Ross, Jr. 73,829,388 1,177,145 0
Eleanor B. Schwartz 73,794,312 1,212,221 0
Keith A. Tucker 73,823,658 1,182,875 0
Frederick Vogel III 73,811,333 1,195,200 0
Paul S. Wise 73,723,319 1,283,214 0
Item 2.To ratify the selection of Deloitte & Touche LLP as the Fund's
independent accountants for its current fiscal year;
Broker
For Against AbstainNon-Votes*
71,554,630 322,185 3,129,718 0
Item 3.To approve or disapprove changes to certain of its fundamental
investment policies and restrictions:
3.1 Elimination of Fundamental Restrictions Regarding Restricted
Securities
Broker
For Against AbstainNon-Votes*
65,508,377 1,839,244 7,311,117 347,795
3.2 Modification of Fundamental Restriction Regarding Diversification
of Assets
Broker
For Against AbstainNon-Votes*
65,527,850 1,818,471 7,312,417 347,795
3.3 Elimination of Fundamental Restriction Regarding Unseasoned Issuers
Broker
For Against AbstainNon-Votes*
65,522,111 1,825,510 7,311,117 347,795
3.4 Elimination of Fundamental Restriction Regarding Repurchase
Transactions
Broker
For Against AbstainNon-Votes*
65,532,222 1,815,398 7,311,117 347,795
3.5 Modification and/or Elimination of Fundamental Restrictions
Regarding Options, Commodities, Forward Contracts and/or Futures
Contracts
Broker
For Against AbstainNon-Votes*
65,422,568 1,925,053 7,311,117 347,795
3.6 Elimination of Fundamental Restriction Regarding Margin Purchases
Broker
For Against AbstainNon-Votes*
65,490,722 1,856,898 7,311,117 347,795
3.7 Elimination of Fundamental Restriction Regarding Short Sales
Broker
For Against AbstainNon-Votes*
65,435,531 1,912,089 7,311,117 347,795
3.8 Elimination of Fundamental Restriction Regarding Arbitrage
Transactions
Broker
For Against AbstainNon-Votes*
65,504,700 1,842,921 7,311,117 347,795
3.9 Elimination of Fundamental Restriction Regarding Investments in
Issuers Whose Securities are Owned by Certain Persons
Broker
For Against AbstainNon-Votes*
65,506,822 1,840,799 7,311,117 347,795
3.10 Modification of Fundamental Policy Regarding Loans
Broker
For Against AbstainNon-Votes*
65,510,616 1,837,005 7,311,117 347,795
Item 4.To amend the terms of the service plan adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940.
Broker
For Against AbstainNon-Votes*
63,751,340 2,248,334 8,901,363 105,496
*Broker non-votes are proxies received by the Fund from brokers or nominees when
the broker or nominee neither has received instructions from the beneficial
owner or other persons entitled to vote nor has discretionary power to vote on
a particular matter.
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
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
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>
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
NUR1008A(9-97)
printed on recycled paper
