United
Municipal
Bond Fund,
Inc.
SEMIANNUAL
REPORT
---------------------------------------
For the six months ended March 31, 1998
<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, 1998
Dear Shareholder:
As Waddell & Reed celebrates its 60th anniversary in the financial services
industry, I would like to thank you for your continued confidence in our
products and services. Since we opened our doors in 1937, our goal has been and
continues to be to provide the best service possible to our shareholders. This
commitment is reflected in every area of our organization: starting with your
financial advisor and continuing with our investment management and customer
service people of our affiliated companies.
Your confidence in the success of the products and services offered by Waddell &
Reed and its affiliates is reflected in the growth the Funds have experienced
over our 60 years. Total mutual fund assets under management reached the $1
billion mark in 1961, and over the $5 billion mark in 1985. As of March 31,
1998, mutual fund assets under management totaled more than $22.9 billion.
We look forward to helping you meet the financial goals that are important to
you, now and for many years to come. Should you have any questions about your
account or other financial issues that are important to you, contact your
financial advisor 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 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).
FOUNDED: 1976
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
PERFORMANCE SUMMARY
PER SHARE DATA
For the Six Months Ended March 31, 1998
- ---------------------------------------
DIVIDENDS PAID $0.19
=====
CAPITAL GAINS DISTRIBUTION $0.09
=====
NET ASSET VALUE ON
3/31/98 $7.47 adjusted to: $7.56 (A)
9/30/97 7.47
-----
CHANGE PER SHARE $0.09
=====
(A) This number includes the capital gains distribution of $0.09 paid in
December 1997 added to the actual net asset value on March 31, 1998.
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 3-31-98 5.93% 10.63%
5-year period ended 3-31-98 6.06% 6.99%
10-year period ended 3-31-98 8.58% 9.05%
*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, 1998, United Municipal Bond Fund, Inc. had net assets totaling
$967,347,212 invested in a diversified portfolio.
As a shareholder of United Municipal Bond Fund, Inc., for every $100 you had
invested on March 31, 1998, your Fund owned:
$16.40 Airport Revenue Bonds
16.40 Public Power Revenue Bonds
13.26 Hospital Revenue Bonds
11.31 Other Municipal Bonds
11.10 Housing Revenue Bonds
8.20 Derivative Bonds
5.63 Student Loan Bonds
5.50 Industrial Revenue/Pollution Control Revenue Bonds
4.78 Resource Recovery Bonds
3.89 Lease/Certificates of Participation Bonds
2.98 Water and Sewer Revenue Bonds
0.55 Cash and Cash Equivalents
1998 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- 42,350 $ 0- 25,350 15% 5.88 7.06 8.24 9.41
$ 42,351-102,300 $ 25,351- 61,400 28% 6.94 8.33 9.72 11.11
$102,301-155,950 $ 61,401-128,100 31% 7.25 8.70 10.14 11.59
$155,951-278,450 $128,101-278,450 36% 7.81 9.38 10.94 12.50
$278,451 and above$278,451 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.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS
ALASKA - 3.05%
City of Valdez, Alaska, Marine
Terminal Revenue Refunding Bonds
(BP Pipelines (Alaska) Inc. Project),
Series 1993A,
5.85%, 8-1-2025 ....................... $28,650 $ 29,509,500
ARKANSAS - 0.68%
Arkansas Development Finance Authority:
Home Mortgage Revenue Bonds,
1998 Series A (Non-AMT),
5.15%, 7-1-2017 ....................... 3,500 3,469,375
Single Family Mortgage Revenue Bonds
(Access Program), 1995 Series F (AMT),
7.45%, 1-1-2027 ....................... 1,690 1,886,463
City of Gurdon, Arkansas, Pollution Control
Revenue Refunding Bonds,
1998 Series A (Non-AMT),
5.375%, 3-1-2020 ...................... 1,250 1,256,250
Total ................................. 6,612,088
CALIFORNIA - 10.02%
California Statewide Communities Development
Authority:
Special Facilities Lease Revenue Bonds,
1997 Series A (United Air Lines, Inc.-San
Francisco International Airport Projects),
5.7%, 10-1-2033 ....................... 20,900 21,135,125
Hospital Revenue Certificates
of Participation,
Series 1992,
Cedars-Sinai Medical Center,
6.5%, 8-1-2012 ........................ 5,200 6,019,000
Hospital Refunding Revenue Certificates of
Participation, Series 1993,
Cedars-Sinai Medical Center:
Inverse Floating Rate Securities (INFLOS),
7.119%, 11-1-2015 (A) ................. 3,000 2,962,500
Linked Inverse Floating Rate Security,
5.4%, 11-1-2015 ....................... 500 501,875
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA (Continued)
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 $10,337,500
Multiple Project Revenue Bonds, 1989 Series,
6.75%, 7-1-2012 ....................... 3,455 4,063,944
Mead-Adelanto Project Revenue Bonds,
1994 Series A, Linked Inverse Floating
Rate Security,
5.15%, 7-1-2015 ....................... 2,800 2,828,000
Mead-Phoenix Project Revenue Bonds,
1994 Series A, Linked Inverse Floating
Rate Security,
5.15%, 7-1-2015 ....................... 2,600 2,613,000
Transmission Agency of Northern California,
California-Oregon Transmission Project
Revenue Bonds, 1990 Series A,
7.0%, 5-1-2013 ........................ 12,000 14,670,000
County of San Bernardino, California,
Certificates of Participation (1992 Justice
Center/Airport Improvements Refunding
Project), Inland Empire Public Facilities
Corporation, Short/RITES Certificates,
6.95%, 7-1-2016 (B) ................... 9,500 9,796,875
California Rural Home Mortgage Finance
Authority, Single Family Mortgage
Revenue Bonds (Mortgage-Backed Securities
Program):
1998 Series A,
5.75%, 12-1-2029 ...................... 3,500 3,819,375
1997 Series C,
5.5%, 3-1-2029 ........................ 2,230 2,505,963
1995 Series B,
7.75%, 9-1-2026 ....................... 1,670 1,978,950
Inland Empire Solid Waste Financing Authority,
Revenue Bonds, 1996 Series B (Landfill
Improvement Financing Project),
6.25%, 8-1-2011 ....................... 5,000 5,575,000
Delta Counties Home Mortgage Finance Authority,
Single Family Mortgage Revenue Bonds
(Mortgage-Backed Securities Program),
1998 Series A,
5.2%, 12-1-2014 ....................... 3,110 3,102,225
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA (Continued)
Sacramento Municipal Utility District,
Electric Revenue Refunding Bonds,
1993 Series G,
6.5%, 9-1-2013 ........................ $ 2,500 $ 2,943,750
Intermodal Container Transfer Facility,
Joint Powers Authority, Intermodal
Container Transfer Facility Refunding
Revenue Bonds, 1989 Series A,
7.7%, 11-1-2014 ....................... 2,000 2,095,000
Total ................................. 96,948,082
COLORADO - 7.74%
City and County of Denver, Colorado,
Airport System Revenue Bonds:
Series 1991D,
7.75%, 11-15-2013 ..................... 11,905 15,015,181
Series 1992B,
7.25%, 11-15-2023 ..................... 11,990 13,353,863
Series 1992C,
6.75%, 11-15-2013 ..................... 10,080 10,974,600
Series 1997E,
6.0%, 11-15-2013 ...................... 4,000 4,530,000
Series 1994A,
7.5%, 11-15-2023 ...................... 1,655 1,903,250
Colorado Housing and Finance Authority:
Single Family Program Senior and Subordinate
Bonds:
1996 Series B-1,
7.65%, 11-1-2026 ...................... 2,750 3,104,063
1997 Series C-2,
6.875%, 11-1-2028 ..................... 2,500 2,781,250
1997 Series A-2,
7.25%, 5-1-2027 ....................... 2,000 2,277,500
1996 Series C-1,
7.55%, 11-1-2027 ...................... 1,580 1,795,275
1998 Series A-3,
6.5%, 5-1-2016 ........................ 1,000 1,093,750
Single Family Program Senior Bonds:
1995 Series D-1,
7.375%, 6-1-2026 ...................... 4,035 4,493,981
1996 Series A-1,
7.4%, 11-1-2027 ....................... 3,735 4,178,531
Colorado Student Obligation Bond Authority,
Student Loan Asset-Backed Obligations,
Senior Subordinate, 1995 Series II-B,
6.2%, 12-1-2008 ....................... 8,000 8,390,000
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
COLORADO (Continued)
Highlands Ranch Metropolitan District No. 3,
Douglas County, Colorado,
General Obligation Bonds, Series 1998A,
5.125%, 12-1-2012 ..................... $ 1,000 $ 987,500
Total ................................. 74,878,744
CONNECTICUT - 2.43%
Eastern Connecticut Resource Recovery
Authority, Solid Waste Revenue Bonds
(Wheelabrator Lisbon Project),
Series 1993A,
5.5%, 1-1-2014 ........................ 13,750 13,698,438
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 7,691,250
Connecticut Development Authority, Water
Facilities Revenue Bonds (Bridgeport
Hydraulic Company Project-1995 Series),
6.15%, 4-1-2035 ....................... 2,000 2,132,500
Total ................................. 23,522,188
FLORIDA - 0.57%
Pasco County, Florida, Solid Waste Disposal
and Resource Recovery System, Revenue
Bonds, Series 1998,
6.0%, 4-1-2011 ........................ 4,930 5,478,462
GEORGIA - 3.05%
Municipal Electric Authority of Georgia:
Project One Special Obligation Bonds,
Fifth Crossover Series,
6.4%, 1-1-2013 ........................ 15,500 17,999,375
General Power Revenue Bonds,
1992B Series,
8.25%, 1-1-2011 ....................... 8,700 11,494,875
Total ................................. 29,494,250
HAWAII - 2.46%
State of Hawaii, Airports System Revenue
Bonds, Second Series of 1991,
6.9%, 7-1-2012 ........................ 20,195 23,830,100
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
IDAHO - 0.75%
Idaho Health Facilities Authority, Hospital
Revenue Refunding Bonds, Series 1992
(IHC Hospitals, Inc.), Indexed Inverse
Floating/Fixed Term Bonds,
8.35%, 2-15-2021 (A) .................. $ 6,000 $ 7,207,500
ILLINOIS - 2.36%
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 5,617,950
General Airport Revenue Refunding
Bonds, 1993 Series A,
5.0%, 1-1-2012 ........................ 3,000 2,977,500
Illinois Health Facilities Authority:
(Lutheran General HealthSystem),
Indexed Inverse Floating Rate
Revenue Bonds, Series 1993B,
7.02%, 4-1-2014 (A) ................... 4,100 4,622,750
Revenue Bonds, Series 1997 (Victory
Health Services),
5.375%, 8-15-2016 ..................... 3,000 2,973,750
City of Chicago, Collateralized Single
Family Mortgage Revenue Bonds,
Series 1998A-1,
6.45%, 9-1-2029 ....................... 2,500 2,718,750
Series 1997-B,
6.95%, 9-1-2028 ....................... 2,000 2,245,000
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 ................................. 22,824,500
INDIANA - 4.95%
Indiana State Office Building Commission,
Capitol Complex Revenue Bonds:
Series 1990B (State Office Building
I Facility),
7.4%, 7-1-2015 ........................ 8,000 10,170,000
Series 1990A (Senate Avenue Parking Facility),
7.4%, 7-1-2015 ........................ 4,775 6,070,219
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
INDIANA (Continued)
Indiana Transportation Finance Authority,
Highway Revenue Bonds, Series 1990A,
7.25%, 6-1-2015 ....................... $ 9,000 $ 11,193,750
Indianapolis Airport Authority,
Special Facility Revenue Bonds, Series 1995 A
(United Air Lines, Inc., Indianapolis
Maintenance Center Project),
6.5%, 11-15-2031 ...................... 8,550 9,276,750
East Chicago Elementary School Building
Corporation (Lake County, Indiana), First
Mortgage Refunding Bonds, Series 1996,
6.25%, 1-5-2016 ....................... 7,655 8,793,681
Indiana Health Facility Financing Authority,
Hospital Revenue Refunding Bonds, Series 1992
(The Methodist Hospitals, Inc.),
6.75%, 9-15-2009 ...................... 2,200 2,398,000
Total ................................. 47,902,400
KANSAS - 0.56%
Sedgwick County, Kansas and Shawnee County,
Kansas, Single Family Mortgage Revenue Bonds
(Mortgage-Backed Securities Program),
1997 Series A-1 (AMT),
5.5%, 6-1-2029 ........................ 4,775 5,359,937
KENTUCKY - 0.48%
Kentucky Economic Development Finance
Authority, Hospital Revenue Bonds,
Baptist Healthcare System Issue,
Series 1994,
5.0%, 8-15-2015 ....................... 4,650 4,603,500
LOUISIANA - 1.48%
Parish of Jefferson Home Mortgage Authority,
Tax-Exempt Agency Mortgage-Backed
Securities, Series 1994A,
7.55%, 12-1-2026 ...................... 5,495 6,793,194
City of Shreveport, State of Louisiana,
Airport System PFC Revenue Bonds, Series
1997B (AMT-Subject),
5.0%, 1-1-2015 ........................ 3,165 3,062,137
Parish of East Baton Rouge, State of
Louisiana, Refunding Revenue Bonds
(Georgia-Pacific Corporation Project),
Series 1998,
5.35%, 9-1-2011 ....................... 3,000 3,003,750
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
LOUISIANA (Continued)
Parish of Webster, Louisiana, Pollution
Control Revenue Refunding Bonds,
1998 Series B (non-AMT),
5.2%, 3-1-2013 ........................ $ 1,435 $ 1,442,175
Total ................................. 14,301,256
MASSACHUSETTS - 1.81%
Massachusetts Housing Finance Agency,
Single Family Housing Revenue Bonds,
Series 57 (AMT),
5.6%, 6-1-2030 ........................ 5,000 5,068,750
Massachusetts Municipal Wholesale Electric
Company, A Public Corporation of the
Commonwealth of Massachusetts, Power
Supply System Revenue Bonds,
1993 Series A:
Inverse Floating Rate Security (INFLOS),
6.87%, 7-1-2018 (A) ................... 2,500 2,553,125
Periodic Auction Reset Security (PARS),
4.03%, 7-1-2018 ....................... 2,500 2,500,000
Massachusetts Port Authority, Revenue
Refunding Bonds, Series 1998-B (AMT),
5.0%, 7-1-2016 ........................ 3,560 3,448,750
Massachusetts State College Building
Authority, Project and Refunding
Revenue Bonds, Senior Series 1994-A,
7.5%, 5-1-2014 ........................ 1,750 2,242,188
Boston Water and Sewer Commission,
General Revenue Bonds, 1992 Series A
(Senior Series),
5.75%, 11-1-2013 ...................... 1,575 1,728,563
Total ................................. 17,541,376
MICHIGAN - 2.42%
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 9,710,000
City of Detroit, Michigan, Sewage Disposal
System Revenue and Revenue Refunding Bonds,
Series 1993-A, Inverse Floating Rate Security
(INFLOS),
7.618%, 7-1-2023 (A) .................. 5,000 5,368,750
County of Kent, Michigan, Airport Revenue
Bonds, Series 1998 (Kent County
International Airport):
5.0%, 1-1-2016 ........................ 1,640 1,605,150
5.0%, 1-1-2017 ........................ 1,000 972,500
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MICHIGAN (Continued)
Michigan State Hospital Finance Authority,
Hospital Revenue and Refunding Bonds
(Bay Medical Center), Series 1997A,
5.375%, 7-1-2011 ...................... $ 2,190 $ 2,277,600
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 1,946,263
Charter County of Wayne, Michigan, Detroit
Metropolitan Wayne County Airport, Airport
Revenue Bonds, Subordinate Lien,
Series 1993B,
5.25%, 12-1-2013 ...................... 1,500 1,511,250
Total ................................. 23,391,513
MINNESOTA - 0.73%
City of Rochester, Minnesota, Health
Care Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center),
Series 1992D, Indexed Inverse
Floating/Fixed Term Bonds,
7.7%, 11-15-2009 (A) .................. 4,500 5,056,875
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 2,005,000
Total ................................. 7,061,875
MISSISSIPPI - 2.31%
Lowndes County, Mississippi, Solid Waste
Disposal and Pollution Control
Refunding Revenue Bonds (Weyerhaeuser
Company Project), Series 1992B, Indexed
Inverse Floating/Fixed Term Bonds,
8.35%, 4-1-2022 (A) ................... 11,000 13,337,500
Mississippi Higher Education Assistance
Corporation, Student Loan Revenue Bonds,
Subordinate Series 1996-C:
6.75%, 9-1-2014 ....................... 5,500 5,781,875
6.7%, 9-1-2012 ........................ 1,470 1,545,338
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MISSISSIPPI (Continued)
Mississippi Home Corporation, Single Family
Mortgage Revenue Bonds, Series 1996F (AMT),
7.55%, 12-1-2027 ...................... $ 1,500 $ 1,704,375
Total ................................. 22,369,088
MISSOURI - 2.98%
Missouri Housing Development Commission,
Single Family Mortgage Revenue Bonds
(Homeownership Loan Program):
1995 Series C,
7.25%, 9-1-2026 ....................... 2,985 3,350,662
1997 Series C-1 (Non-AMT),
6.55%, 9-1-2028 ....................... 2,000 2,215,000
1996 Series C,
7.45%, 9-1-2027 ....................... 1,570 1,799,613
1997 Series A-2,
7.3%, 3-1-2028 ........................ 970 1,107,013
Health Facilities Revenue Bonds
(Barnes-Jewish, Inc./Christian Health
Services), Series 1993A:
6.0%, 5-15-2011 ....................... 3,000 3,322,500
5.25%, 5-15-2014 ...................... 2,900 3,026,875
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 4,810,000
The Industrial Development Authority of the
City of Joplin, Missouri, Revenue Bonds
(Catholic Health Initiatives), Series 1997A,
5.125%, 12-1-2011 ..................... 3,305 3,325,656
Health and Educational Facilities Authority
of the State of Missouri, Health Facilities
Revenue Bonds (Freeman Health System Project),
Series 1998,
5.25%, 2-15-2018 ...................... 2,460 2,410,800
City of Fenton, Missouri, Public Facilties
Authority, Leasehold Revenue Bonds,
Series 1997 (City of Fenton, Missouri,
Lessee),
5.25%, 1-1-2018 ....................... 2,000 1,957,500
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
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 $ 1,516,875
Total ................................. 28,842,494
NEBRASKA - 2.17%
Nebraska Higher Education Loan Program,
Inc., 1993-2 Series A-6 Junior
Subordinate Bonds,
6.4%, 6-1-2013 ........................ 14,500 15,895,625
Nebraska Investment Finance Authority,
Revenue Bonds (Catholic Health Initiatives),
Series 1997A:
5.125%, 12-1-2011 ..................... 3,255 3,311,963
5.125%, 12-1-2017 ..................... 1,825 1,795,344
Total ................................. 21,002,932
NEVADA - 0.32%
Nevada Housing Division, Single Family
Mortgage Bonds:
1998 Series A-1 Mezzanine Bonds,
5.35%, 4-1-2016 ....................... 2,050 2,029,500
1996 Series C Subordinate Bonds,
6.35%, 4-1-2009 ....................... 995 1,062,162
Total ................................. 3,091,662
NEW JERSEY - 1.97%
The Union County Utilities Authority
(New Jersey), Solid Waste System Revenue
Bonds, 1991 Series A:
6.95%, 6-15-2003 ...................... 9,000 9,000,000
7.15%, 6-15-2009 ...................... 1,000 1,002,500
The Hudson County Improvement Authority,
Essential Purpose Pooled Governmental
Loan Program Bonds, Series 1986,
7.6%, 8-1-2025 ........................ 5,125 5,567,031
Middlesex County Utilities Authority,
Sewer Revenue Refunding Bonds, Series
1992A, Indexed Inverse Floating/Fixed
Term Bonds,
6.25%, 8-15-2010 ...................... 3,000 3,461,250
Total ................................. 19,030,781
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW MEXICO - 3.30%
City of Albuquerque, New Mexico, Governmental Purpose
Airport Refunding Revenue Bonds, Series 1989,
6.5%, 7-1-2019 ........................ $15,350 $ 15,444,556
New Mexico Educational Assistance
Foundation, Student Loan Program Bonds:
First Subordinate 1995 Series A-2:
5.95%, 11-1-2007 ...................... 2,740 2,866,725
5.85%, 11-1-2006 ...................... 1,575 1,641,937
Second Subordinate 1996 Series A-3,
6.75%, 11-1-2008 ...................... 2,175 2,370,750
First Subordinate 1996 Series A-2,
6.2%, 11-1-2008 ....................... 2,210 2,314,975
Second Subordinate 1995 Series A-3,
6.6%, 11-1-2010 ....................... 1,415 1,464,525
New Mexico Educational Assistance Foundation, Student
Loan Purchase Bonds, Senior 1995 Series IV-A1,
7.05%, 3-1-2010 ....................... 5,310 5,814,450
Total ................................. 31,917,918
NEW YORK - 13.11%
New York State Medical Care Facilities Finance Agency:
Hospital Insured Mortgage Revenue Bonds,
1994 Series A Refunding:
5.375%, 2-15-2025 ..................... 13,000 13,097,500
5.25%, 8-15-2014 ...................... 10,000 10,187,500
5.5%, 8-15-2024 ....................... 10,000 10,187,500
Mental Health Services Facilities Improvement
Revenue Bonds,1993 Series F Refunding,
5.375%, 2-15-2014 ..................... 12,000 12,150,000
Dormitory Authority of the State of New York:
City University System Consolidated Revenue
Bonds, Series 1993F,
5.0%, 7-1-2014 ........................ 9,700 9,518,125
City University System Consolidated Third General
Resolution Revenue Bonds, 1998 Series 1,
5.0%, 7-1-2016 ........................ 3,000 2,932,500
The New York and Presbyterian Hospital, FHA-Insured
Mortgage Hospital Revenue Bonds, Series 1998,
4.75%, 2-1-2012 ....................... 2,715 2,643,731
State University Educational Facilities,
Revenue Bonds,Series 1990B,
7.5%, 5-15-2011 ....................... 2,000 2,505,000
Department of Health of the State of
New York, Revenue Bonds, Series 1996,
5.5%, 7-1-2010 ........................ 2,000 2,075,000
Nyack Hospital, Revenue Bonds, Series 1996,
6.25%, 7-1-2013 ....................... 1,000 1,078,750
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW YORK (Continued)
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 10,862,500
5.75%, 6-15-2011 ...................... 5,000 5,443,750
The City of New York, General Obligation Bonds:
Fiscal 1994 Series C:
Auction Rate Securities (ACES),
3.55%, 9-30-2003 ...................... $ 9,750 $ 9,750,000
Fiscal 1995 Series F-1:
6.625%, 2-15-2025 (prerefunded) ....... 6,940 7,920,275
6.625%, 2-15-2025 ..................... 60 66,450
Fiscal 1997 Series H,
6.125%, 8-1-2025 ...................... 5,730 6,195,562
Inverse Floaters,
20.509%, 9-30-2003 (A) ................ 3,250 5,098,437
Housing New York Corporation, Senior
Revenue Refunding Bonds, Series 1993,
5.0%, 11-1-2013 ....................... 6,600 6,435,000
New York State Urban Development Corporation:
Correctional Capital Facilities Revenue Bonds,
1993A Refunding Series,
5.25%, 1-1-2014 ....................... 3,000 3,127,500
Correctional Facilities Service Contract
Revenue Bonds, Series A,
5.0%, 1-1-2013 ........................ 2,000 1,955,000
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW YORK (Continued)
New York City Industrial Development Agency,
Amended and Restated Industrial Development
Revenue Bonds (1991 Japan Airlines Company,
Ltd. Project),
6.0%, 11-1-2015 ....................... $ 3,300 $ 3,547,500
Total ................................. 126,777,580
NORTH CAROLINA - 0.51%
North Carolina Medical Care Commission,
Hospital Revenue Bonds (Rex Healthcare),
Series 1998,
5.0%, 6-1-2017 ........................ 5,000 4,887,500
NORTH DAKOTA - 0.72%
City of Fargo, North Dakota, Health System
Revenue Bonds (Meritcare Obligated Group),
Series 1996A,
5.55%, 6-1-2016 ....................... 5,350 5,537,250
State of North Dakota, North Dakota Housing
Finance Agency, Housing Finance Program Bonds,
Home Mortgage Finance Program, 1998 Series A,
5.25%, 7-1-2018 ....................... 1,390 1,377,837
Total ................................. 6,915,087
OHIO - 1.23%
County of Erie, Ohio, Franciscan Services
Corporation, Revenue Refunding Bonds,
Series 1993 A (Providence Hospital, Inc.),
6.0%, 1-1-2013 ........................ 4,000 4,190,000
Montgomery County, Ohio, Revenue Bonds
(Catholic Health Initiatives), Series 1997A,
5.125%, 12-1-2012 ..................... 2,765 2,768,456
City of Moraine, Ohio, Solid Waste
Disposal Revenue Bonds (General Motors
Corporation Project), Series 1994,
6.75%, 7-1-2014 ....................... 1,550 1,846,438
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 1,623,750
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
OHIO (Continued)
City of East Liverpool, Ohio, Hospital
Facilities Revenue Bonds, Series 1998A
(East Liverpool City Hospital Project),
4.9%, 10-1-2018 ....................... $ 1,550 $ 1,488,000
Total ................................. 11,916,644
OKLAHOMA - 0.79%
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 6,541,875
1996 Series A,
7.05%, 9-1-2026 ....................... 1,000 1,117,500
Total ................................. 7,659,375
OREGON - 0.43%
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 2,675,000
1992 Series C,
5.5%, 7-1-2013 ........................ 1,455 1,507,744
Total ................................. 4,182,744
PENNSYLVANIA - 3.12%
City of Philadelphia, Pennsylvania, Water
and Wastewater Revenue Bonds, Series 1993,
Inverse Rate Securities,
6.87%, 6-15-2012 (A) .................. 11,750 12,778,125
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 5,375,000
County of Allegheny, Pennsylvania, Airport
Revenue Refunding Bonds,
Series 1997A-1 (AMT),
5.75%, 1-1-2012 ....................... 4,000 4,300,000
Delaware County Authority, Hospital Revenue
Bonds, Series of 1992 (Riddle Memorial
Hospital),
6.5%, 1-1-2022 ........................ 2,800 2,954,000
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
PENNSYLVANIA (Continued)
Lancaster County Solid Waste Management
Authority, Resource Recovery System Revenue
Bonds, 1998 Series A (AMT),
5.0%, 12-15-2014 ...................... $ 3,000 $ 2,910,000
Allegheny County Hospital Development Authority,
Health Center Revenue Bonds, Series 1998A
(UPMC Health System),
4.5%, 8-1-2015 ........................ 2,000 1,845,000
Total ................................. 30,162,125
PUERTO RICO - 1.27%
Puerto Rico Public Buildings Authority,
Public Education and Health Facilities,
Refunding Bonds, Series M,
4.8%, 7-1-2016 ........................ 12,000 12,300,000
SOUTH CAROLINA - 0.96%
Charleston County, South Carolina, Resource
Recovery Refunding Revenue Bonds (Foster
Wheeler Charleston Resource Recovery, Inc.
Project), Series 1997,
5.15%, 1-1-2009 ....................... 2,600 2,655,250
City of Charleston, South Carolina,
Waterworks and Sewer System Refunding
Revenue Bonds, Series 1986,
5.0%, 1-1-2016 ........................ 2,525 2,474,500
South Carolina State Education Assistance
Authority, Guaranteed Student Loan
Revenue and Refunding Bonds,
1995 Series Subordinate Lien
Refunding Bonds,
6.0%, 9-1-2008 ........................ 2,000 2,127,500
Orangeburg County, South Carolina, Solid
Waste Disposal Facilities Revenue Bonds
(South Carolina Electric & Gas Company
Project), Series 1994,
5.7%, 11-1-2024 ....................... 2,000 2,055,000
Total ................................. 9,312,250
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TENNESSEE - 1.16%
Tennessee Housing Development Agency,
Homeownership Program Bonds, Issue T,
7.375%, 7-1-2023 ...................... $ 4,665 $ 4,927,406
Volunteer State Student Funding Corporation,
Educational Loan Revenue Bonds,
Junior Subordinate Series 1993C Bonds,
5.85%, 12-1-2008 ...................... 2,700 2,750,625
The Health and Educational Facilities Board
of the Metropolitan Government of Nashville
and Davidson County, Tennessee, Multi-Modal
Interchangeable Rate, Health Facility
Revenue Bonds (Richland Place, Inc. Project),
Series 1993,
5.5%, 5-1-2023 ........................ 2,000 2,030,000
Memphis-Shelby County Airport Authority,
Special Facilities Revenue Bonds,
Refunding Series 1997 (Federal Express
Corporation),
5.35%, 9-1-2012 ....................... 1,500 1,535,625
Total ................................. 11,243,656
TEXAS - 5.91%
AllianceAirport Authority, Inc.,
Special Facilities Revenue Bonds,
Series 1991 (American Airlines, Inc.
Project),
7.0%, 12-1-2011 ....................... 14,100 16,602,750
Brazos River Authority (Texas), Revenue
Refunding Bonds (Houston Industries
Incorporated Project):
Series 1998B,
5.125%, 11-1-2020 ..................... 7,200 7,110,000
Series 1998A,
5.125%, 5-1-2019 ...................... 2,800 2,765,000
Texas Department of Housing and Community
Affairs, Single Family Mortgage Revenue
Bonds:
1997 Series A (AMT) TEAMS Structure,
5.8%, 9-1-2029 ........................ 5,000 5,125,000
1997 Series D (AMT) TEAMS Structure:
5.65%, 3-1-2029 ....................... 2,500 2,537,500
5.7%, 9-1-2029 ........................ 1,500 1,522,500
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TEXAS (Continued)
Gulf Coast Waste Disposal Authority,
Multi-Modal Interchangeable Rate Revenue
Bonds (Champion International Corporation
Project), Series 1992A,
6.875%, 12-1-2028 ..................... $ 6,000 $ 6,645,000
Lubbock Health Facilities Development
Corporation, Hospital Revenue Bonds
(Methodist Hospital, Lubbock, Texas
Project), Series 1993B,
6.75%, 12-1-2010 ...................... 5,000 5,950,000
Harris County, Texas, Toll Road Unlimited
Tax and Subordinate Lien Revenue Refunding
Bonds, Series 1997,
5.125%, 8-15-2017 ..................... 4,000 3,940,000
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 2,978,250
Midland County Hospital District, Hospital
Revenue Refunding Bonds, Series 1997,
5.375%, 6-1-2016 ...................... 2,000 2,027,500
Total ................................. 57,203,500
UTAH - 0.77%
Intermountain Power Agency, Power Supply
Revenue Refunding Bonds, 1993 Series A:
Inverse Floating Rate Securities (INFLOS),
7.316%, 7-1-2021 (A) .................. 3,200 3,304,000
Periodic Auction Reset Securities (PARS),
3.78%, 7-1-2021 ....................... 3,200 3,200,000
Granger-Hunter Improvement District, Salt
Lake County, Utah, Water and Sewer Revenue
and Refunding Bonds, Series 1998,
5.0%, 3-1-2018 ........................ 1,000 976,250
Total ................................. 7,480,250
VIRGINIA - 0.21%
City of Chesapeake, Virginia, Water
and Sewer System Revenue Refunding
Bonds, Series of 1994,
5.1%, 5-1-2014 ........................ 2,000 1,992,500
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WASHINGTON - 10.28%
Washington Public Power Supply System:
Nuclear Project No. 3, Refunding Revenue Bonds:
Series 1989B,
7.125%, 7-1-2016 ...................... $20,750 $ 25,289,062
Series 1997A,
5.25%, 7-1-2014 ....................... 6,220 6,282,200
Nuclear Project No. 2 Refunding Revenue
Bonds, Series 1994A:
Linked Auction Rate Securities (ACES),
5.4%, 7-1-2012 ........................ 14,000 14,262,500
Inverse Floating Rate Securities,
7.22%, 7-1-2011 (A) ................... 7,500 8,662,500
Linked Inverse Floating Rate Securities,
5.4%, 7-1-2012 ........................ 5,000 5,181,250
Nuclear Project No. 1, Refunding Revenue Bonds:
Series 1997B:
5.125%, 7-1-2013 ...................... 10,000 9,937,500
5.125%, 7-1-2015 ...................... 5,000 4,962,500
Series 1989B,
7.125%, 7-1-2016 ...................... 8,200 9,993,750
Series 1998A,
5.0%, 7-1-2013 ........................ 2,000 1,962,500
State of Washington, Various Purpose General
Obligation Bonds, Series 1990A,
6.75%, 2-1-2015 ....................... 4,995 6,006,487
Public Utility District No. 1 of Douglas
County, Washington, Wells Hydroelectric
Revenue Bonds, Series of 1965,
3.7%, 9-1-2018 ........................ 4,200 3,858,750
Public Utility District No. 1 of Chelan
County, Washington, Chelan Hydro
Consolidated System Revenue Bonds,
Refunding Series 1996A,
6.4%, 7-1-2017 ........................ 2,700 3,010,500
Total ................................. 99,409,499
WEST VIRGINIA - 0.39%
Braxton County, West Virginia, Solid Waste
Disposal Revenue Bonds (Weyerhaeuser Company
Project), Series 1995A,
6.5%, 4-1-2025 ........................ 3,500 3,810,625
TOTAL MUNICIPAL BONDS - 99.45% $961,975,481
(Cost: $893,988,870)
See Notes to Schedule of Investments on page 24.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1998
Value
TOTAL SHORT-TERM SECURITIES - 1.05% $ 10,161,075
(Cost: $10,161,075)
TOTAL INVESTMENT SECURITIES - 100.50% $972,136,556
(Cost: $904,149,945)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.50%) (4,789,344)
NET ASSETS - 100.00% $967,347,212
Notes to Schedule of Investments
(A) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in
effect at March 31, 1998.
(B) The interest rate is subject to change periodically and based upon
prevailing market rates. The interest rate shown is the rate in effect at
March 31, 1998.
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, 1998
Assets
Investment securities--at value
(Notes 1 and 3) ............................... $972,136,556
Cash ........................................... 15,920
Receivables:
Interest ...................................... 14,426,036
Investment securities sold .................... 5,660,000
Fund shares sold .............................. 684,673
Prepaid insurance premium ...................... 26,643
--------------
Total assets ................................ 992,949,828
--------------
Liabilities
Payable for investment securities purchased .... 21,307,667
Payable to Fund shareholders ................... 3,894,755
Accrued service fee (Note 2) ................... 180,966
Accrued transfer agency and dividend
disbursing (Note 2) ........................... 51,696
Accrued management fee (Note 2) ................ 11,209
Accrued accounting services fee (Note 2) ....... 7,083
Other .......................................... 149,240
--------------
Total liabilities ........................... 25,602,616
--------------
Total net assets ........................... $967,347,212
==============
Net Assets
$1.00 par value capital stock, authorized --
600,000,000; shares outstanding - 129,564,842
Capital stock ................................. $129,564,842
Additional paid-in capital .................... 765,675,070
Accumulated undistributed income:
Accumulated undistributed net investment
income ...................................... 953,291
Accumulated undistributed net realized gain on
investment transactions ..................... 3,167,398
Net unrealized appreciation in value of
investments ................................. 67,986,611
------------
Net assets applicable to outstanding units
of capital ................................. $967,347,212
============
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 Six Months Ended MARCH 31, 1998
Investment Income
Interest and amortization (Note 1B) .............. $27,879,516
-----------
Expenses (Note 2):
Investment management fee ....................... 2,107,281
Service fee ..................................... 743,236
Transfer agency and dividend disbursing ......... 338,111
Accounting services fee ......................... 43,750
Custodian fees .................................. 21,945
Audit fees ...................................... 12,200
Legal fees ...................................... 6,013
Other ........................................... 99,854
-----------
Total expenses ................................ 3,372,390
-----------
Net investment income ........................ 24,507,126
-----------
Realized and Unrealized Gain on
Investments (Notes 1 and 3)
Realized net gain on securities .................. 12,112,315
Realized net loss on put options purchased ....... (2,109,380)
Realized net gain on futures contracts closed .... 212,812
-----------
Net realized gain on investments ................ 10,215,747
Net unrealized appreciation in value of
investments during the period ................... 2,423,415
-----------
Net gain on investments ....................... 12,639,162
-----------
Net increase in net assets resulting
from operations ............................ $37,146,288
===========
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,
1998 1997
------------ --------------
Decrease in Net Assets
Operations:
Net investment income.............. $ 24,507,126 $ 50,227,403
Realized net gain on
investments ..................... 10,215,747 9,662,170
Unrealized appreciation ........... 2,423,415 31,319,181
------------ -------------
Net increase in net assets
resulting from operations ...... 37,146,288 91,208,754
------------ -------------
Distributions to shareholders (Note 1D):*
From net investment income ........ (24,824,830) (49,761,391)
From realized gains on securities
transactions .................... (12,104,004) (20,844,583)
------------ -------------
(36,928,834) (70,605,974)
------------ -------------
Capital share transactions:
Proceeds from sale of shares
(25,651,694 and 69,698,111
shares, respectively) ........... 192,572,242 511,770,397
Proceeds from reinvestment of
dividends and/or capital gains
distribution (4,198,603 and
8,113,114 shares, respectively) . 30,880,637 58,977,509
Payments for shares redeemed
(33,345,892 and 80,867,185
shares, respectively) ........... (250,199,737) (594,412,732)
------------ -------------
Net decrease in net
assets resulting from capital
share transactions ............. (26,746,858) (23,664,826)
------------ -------------
Total decrease ................. (26,529,404) (3,062,046)
Net Assets
Beginning of period ................ 993,876,616 996,938,662
------------ -------------
End of period, including
undistributed net investment
income of $953,291 and
$1,270,995, respectively .......... $967,347,212 $993,876,616
============ =============
*See "Financial Highlights" on page 28.
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 ------------------------------------
3/31/98 1997 1996 1995 1994 1993
------- ------ ------ ------ ------ ------
Net asset value,
beginning of period $7.47 $7.32 $7.25 $6.91 $7.83 $7.40
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income........... 0.19 .38 .39 .39 .38 .41
Net realized and
unrealized gain
(loss) on
investments...... 0.09 .30 .12 .38 (0.67) .65
----- ----- ----- ----- ----- -----
Total from investment
operations ........ 0.28 .68 .51 .77 (0.29) 1.06
----- ----- ----- ----- ----- -----
Less distributions:
From net investment
income........... (0.19) (0.37) (0.39) (0.39) (0.38) (0.40)
From capital gains (0.09) (0.16) (0.05) (0.00) (0.25) (0.23)
In excess of capital
gains............ (0.00) (0.00) (0.00) (0.04) (0.00) (0.00)
----- ----- ----- ----- ----- -----
Total distributions. (0.28) (0.53) (0.44) (0.43) (0.63) (0.63)
----- ----- ----- ----- ----- -----
Net asset value,
end of period ..... $7.47 $7.47 $7.32 $7.25 $6.91 $7.83
===== ===== ===== ===== ===== =====
Total return*....... 3.82% 9.77% 7.16% 11.51% -3.91% 15.15%
Net assets, end of
period (000
omitted) .........$967,347$993,877$996,939$975,109$950,952$1,055,434
Ratio of expenses to
average net assets 0.68%** 0.67% 0.68% 0.65% 0.64% 0.56%
Ratio of net investment
income to average
net assets ........ 4.95%** 5.14% 5.23% 5.51% 5.17% 5.38%
Portfolio
turnover rate ..... 29.00% 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.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
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 $19.8 billion of
combined net assets at March 31, 1998) 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 $602,690, out of which W&R
paid sales commissions of $344,813 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 Class A average annual net assets. The fee is to be
paid to reimburse W&R for amounts it expends in connection with the distribution
of the Class A shares and/or provision of personal services to Fund shareholders
and/or maintenance of shareholder accounts.
The Fund paid Directors' fees of $21,252, which are included in other
expenses.
W&R is an indirect subsidiary of Torchmark Corporation, a holding company,
and Waddell & Reed Financial, Inc., a holding company, and a direct subsidiary
of Waddell & Reed Financial Services, Inc., a holding company.
NOTE 3 -- Investment Security Transactions
Purchases of investment securities, other than U.S. Government and short-
term securities, aggregated $283,988,213 while proceeds from maturities and
sales aggregated $326,390,490. Purchases of options aggregated $1,550,005 while
proceeds from options aggregated $1,168,755. Purchases of short-term securities
aggregated $514,362,422 while proceeds from maturities and sales aggregated
$506,341,372. No U.S. Government securities were bought or sold during the
period ended March 31, 1998.
For Federal income tax purposes, cost of investments owned at March 31,
1998 was $909,551,114, resulting in net unrealized appreciation of $62,585,442,
of which $64,334,224 related to appreciated securities and $1,748,782 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, which has been
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 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 March 31, 1998, 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, 1998, and the related statements of operations for the six-month
period then ended and changes in net assets for the six-month period then ended
and the year ended September 30, 1997, and the financial highlights for the six-
month period then ended and for each of the years in the five-year period ended
September 30, 1997. The financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on the financial statements and the financial highlights based on our
audits.
We conducted our audits 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, 1998 by correspondence with the custodian and brokers or other alternative
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of United Municipal
Bond Fund, Inc. as of March 31, 1998, the results of its operations, the changes
in its net assets and the financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
May 8, 1998
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
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
<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(3-98)
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