United
Municipal
Bond Fund,
Inc.
ANNUAL
REPORT
--------------------------------------------
For the fiscal year ended September 30, 1998
<PAGE>
MANAGER'S LETTER-------------------------------------------------------------
SEPTEMBER 30, 1998
Dear Shareholder:
This report relates to the operation of United Municipal Bond Fund, Inc. for the
fiscal year ended September 30, 1998. The discussion, graphs and tables
contained in this report will provide you with information regarding the Fund's
performance during that period.
Interest rates, as measured by the long U.S. Treasury bond, fell from
approximately 6.25% to 5.0% over the past fiscal year. Yields on municipal
bonds followed this trend, but underperformed somewhat because of an
extraordinary shift in preference for safety. This flight to quality left
municipals at historically attractive levels versus Treasuries. In late
September, the Federal Reserve reduced short term interest rates, which pushed
all interest rates lower.
During the year, we kept the Fund fully invested in longer-maturity bonds that
would appreciate in value as yields declined. We continually reworked the
Fund's portfolio to eliminate lower yielding bonds. We also added inverse
floaters, priced to relatively short call dates, as yields on these bonds move
in the opposite direction of general interest rates. Buying inverse floaters
provides a relatively short duration bond with a yield that actually goes up as
short-term interest rates decline.
The strategies and techniques we applied resulted in the Fund's performance
remaining consistent with 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). We credit
the Fund's above-average performance to active management of the Fund designed
to add value.
Fundamentals for the bond market appear to be favorable heading into the next
fiscal year. The economy is showing evidence of slowing, inflation is low and
the supply of bonds should shrink. Municipalities and corporations are
generally in good financial shape. These are all conditions that should keep
bond prices high. We expect to remain fully invested in bonds with slightly
longer maturities that should perform well in a declining interest rate
environment.
Thank you for your continued confidence.
Respectfully
John M. Holliday
Manager, United Municipal Bond Fund, Inc.
<PAGE>
Comparison of Change in Value of $10,000 Investment in
United Municipal Bond Fund, Inc. Class A Shares,
The Lehman Brothers Municipal Bond Index
and The Lipper General Municipal Bond Fund Universe Average
Lipper
General
United Lehman Municipal
MunicipalBrothers Bond
Bond Municipal Fund
Fund, Bond Universe
Inc. Index Average
------------------ ----------
09/30/88 Purchase$ 9,575$10,000 $10,000
09/30/89 10,603 10,868 10,859
09/30/90 11,076 11,607 11,425
09/30/91 12,735 13,137 12,892
09/30/92 14,187 14,511 14,213
09/30/93 16,337 16,360 16,065
09/30/94 15,698 15,961 15,443
09/30/95 17,506 17,747 16,947
09/30/96 18,761 18,820 17,887
09/30/97 20,595 20,519 19,429
09/30/98 22,381 22,307 21,017
==== United Municipal Bond Fund, Inc.* -- $22,381
++++ Lehman Brothers Municipal Bond Index -- $22,307
---- Lipper General Municipal Bond Fund Universe Average - $21,017
*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
9/30/98 4.05%
5 Years Ended
9/30/98 5.57%
10 Years Ended
9/30/98 8.39%
+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).
FOUNDED: 1976
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
<PAGE>
PERFORMANCE SUMMARY
PER SHARE DATA
For the Fiscal Year Ended September 30, 1998
- --------------------------------------------
DIVIDENDS PAID $0.37
=====
CAPITAL GAINS DISTRIBUTION $0.09
=====
NET ASSET VALUE ON
9/30/98 $7.63 adjusted to: $7.72(A)
9/30/97 7.47
-----
CHANGE PER SHARE 0.25
=====
(A) This number includes the capital gains distribution of $0.09 paid in
December 1997 added to the actual net asset value on September 30, 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 9-30-98 4.05% 8.67%
5-year period ended 9-30-98 5.57% 6.49%
10-year period ended 9-30-98 8.39% 8.86%
*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, 1998, United Municipal Bond Fund, Inc. had net assets totaling
$996,888,872 invested in a diversified portfolio.
As a shareholder of United Municipal Bond Fund, Inc., for every $100 you had
invested on September 30, 1998, your Fund owned:
$14.87 Airport Revenue Bonds
14.61 Derivative Bonds
11.92 Public Power Revenue Bonds
11.57 Hospital Revenue Bonds
11.50 Housing Revenue Bonds
9.49 Other Municipal Bonds
7.49 Industrial Revenue/Pollution Control Revenue Bonds
6.44 Cash and Cash Equivalents
5.26 Student Loan Bonds
3.51 Lease/Certificates of Participation Bonds
3.34 Resource Recovery Bonds
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 OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS
ALASKA - 3.22%
City of Valdez, Alaska, Marine
Terminal Revenue Refunding Bonds
(BP Pipelines (Alaska) Inc. Project),
Series 1993A,
5.85%, 8-1-2025 ....................... $28,650 $ 30,046,687
Alaska Housing Finance Corporation,
Housing Development Bonds, 1997
Series B (AMT),
5.8%, 12-1-2029 ....................... 2,000 2,075,000
Total ................................. 32,121,687
ARKANSAS - 0.32%
Arkansas Development Finance Authority,
Single Family Mortgage Revenue Bonds
(Access Program), 1995 Series F (AMT),
7.45%, 1-1-2027 ....................... 1,690 1,897,025
City of Gurdon, Arkansas, Pollution Control
Revenue Refunding Bonds,
1998 Series A (Non-AMT),
5.375%, 3-1-2020 ...................... 1,250 1,290,625
Total ................................. 3,187,650
CALIFORNIA - 9.83%
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 21,762,125
Hospital Revenue Certificates
of Participation, Series 1992,
Cedars-Sinai Medical Center,
6.5%, 8-1-2012 ........................ 5,200 6,084,000
Hospital Refunding Revenue Certificates of
Participation, Series 1993,
Cedars-Sinai Medical Center,
Inverse Floating Rate Securities (INFLOS),
7.068%, 11-1-2015 (A) ................. 3,300 3,460,875
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA (Continued)
East Bay Municipal Utility District,
Wastewater System Subordinated Revenue
Refunding Bonds, Series 1993B-2 (YCNs):
6.72%, 6-1-2013 (A) ................... 8,450 $ 9,622,438
6.82%, 6-1-2020 (A) ................... 7,250 8,056,562
Transmission Agency of Northern California,
California-Oregon Transmission Project
Revenue Bonds, 1990 Series A,
7.0%, 5-1-2013 ........................ 12,000 15,240,000
Southern California Public Power Authority:
Multiple Project Revenue Bonds, 1989 Series,
6.75%, 7-1-2012 ....................... 3,455 4,271,244
Mead-Adelanto Project Revenue Bonds,
1994 Series A, Linked Inverse Floating
Rate Security,
5.15%, 7-1-2015 ....................... 2,800 2,971,500
Mead-Phoenix Project Revenue Bonds,
1994 Series A, Linked Inverse Floating
Rate Security,
5.15%, 7-1-2015 ....................... 2,600 2,759,250
County of San Bernardino, California,
Certificates of Participation (1992 Justice
Center/Airport Improvements Refunding
Project), Inland Empire Public Facilities
Corporation, Short/RITES Certificates,
6.85%, 7-1-2016 (B) ................... 9,500 9,986,875
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 3,928,750
1997 Series C,
6.75%, 3-1-2029 ....................... 2,050 2,372,875
1998 Series B,
5.75%, 12-1-2029 ...................... 2,000 2,235,000
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA (Continued)
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 $ 3,199,412
Intermodal Container Transfer Facility,
Joint Powers Authority, Intermodal
Container Transfer Facility Refunding
Revenue Bonds, 1989 Series A,
7.7%, 11-1-2014 ....................... 2,000 2,072,500
Total ................................. 98,023,406
COLORADO - 5.36%
City and County of Denver, Colorado,
Airport System Revenue Bonds:
Series 1991D,
7.75%, 11-15-2013 ..................... 11,905 15,268,163
Series 1992B,
7.25%, 11-15-2023 ..................... 11,990 13,353,862
Colorado Housing and Finance Authority:
Single Family Program Senior and Subordinate
Bonds:
1996 Series B-1,
7.65%, 11-1-2026 ...................... 2,750 3,114,375
1997 Series C-2,
6.875%, 11-1-2028 ..................... 2,500 2,809,375
1997 Series A-2,
7.25%, 5-1-2027 ....................... 2,000 2,297,500
1996 Series C-1,
7.55%, 11-1-2027 ...................... 1,580 1,797,250
1998 Series A-3,
6.5%, 5-1-2016 ........................ 1,000 1,115,000
Single Family Program Senior Bonds:
1996 Series A-1,
7.4%, 11-1-2027 ....................... 3,735 4,192,538
1995 Series D-1,
7.375%, 6-1-2026 ...................... 75 83,812
Colorado Student Obligation Bond Authority,
Student Loan Asset-Backed Obligations,
Senior Subordinate, 1995 Series II-B,
6.2%, 12-1-2008 ....................... 8,000 8,410,000
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 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 $ 1,023,750
Total ................................. 53,465,625
CONNECTICUT - 2.41%
Eastern Connecticut Resource Recovery
Authority, Solid Waste Revenue Bonds
(Wheelabrator Lisbon Project),
Series 1993A,
5.5%, 1-1-2014 ........................ 13,750 13,990,625
Bristol Resource Recovery Facility,
Operating Committee, Solid Waste Revenue
Refunding Bonds (Ogden Martin Systems of
Bristol, Inc. Project--1995 Series),
6.5%, 7-1-2014 ........................ 7,000 7,805,000
Connecticut Development Authority, Water
Facilities Revenue Bonds (Bridgeport
Hydraulic Company Project-1995 Series),
6.15%, 4-1-2035 ....................... 2,000 2,200,000
Total ................................. 23,995,625
FLORIDA - 1.56%
Escambia County, Florida, Pollution Control
Revenue Bonds (Champion International
Corporation Project), Series 1996,
6.4%, 9-1-2030 ........................ 6,200 6,796,750
Pasco County, Florida, Solid Waste Disposal
and Resource Recovery System, Revenue
Bonds, Series 1998 (AMT),
6.0%, 4-1-2011 ........................ 4,930 5,583,225
Housing Finance Authority of Lee County, Florida,
Single Family Mortgage Revenue Bonds,
Series 1998A, Subseries 6,
6.45%, 3-1-2031 ....................... 2,800 3,136,000
Total ................................. 15,515,975
GEORGIA - 3.05%
Municipal Electric Authority of Georgia:
Project One Special Obligation Bonds,
Fifth Crossover Series,
6.4%, 1-1-2013 ........................ 15,500 18,464,375
General Power Revenue Bonds,
1992B Series,
8.25%, 1-1-2011 ....................... 8,700 11,908,125
Total ................................. 30,372,500
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
HAWAII - 2.45%
State of Hawaii, Airports System Revenue
Bonds, Second Series of 1991,
6.9%, 7-1-2012 ........................ $20,195 $ 24,435,950
IDAHO - 0.75%
Idaho Health Facilities Authority, Hospital
Revenue Refunding Bonds, Series 1992
(IHC Hospitals, Inc.), Indexed Inverse
Floating Rate Securities,
8.25%, 2-15-2021 (A) .................. 6,000 7,470,000
ILLINOIS - 1.72%
City of Chicago:
Collateralized Single Family Mortgage Revenue Bonds:
Series 1998C-1,
6.3%, 9-1-2029 ........................ 4,000 4,380,000
Series 1998A-1,
6.45%, 9-1-2029 ....................... 2,500 2,768,750
Series 1997-B,
6.95%, 9-1-2028 ....................... 1,890 2,142,788
Chicago-O'Hare International Airport, General Airport
Revenue Refunding Bonds, 1993 Series A,
5.0%, 1-1-2012 ........................ 3,000 3,116,250
Illinois Health Facilities Authority,
Revenue Bonds, Series 1997 (Victory
Health Services),
5.375%, 8-15-2016 ..................... 3,000 3,048,750
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 1,679,975
Total ................................. 17,136,513
INDIANA - 6.04%
Indianapolis Airport Authority,
Special Facility Revenue Bonds, Series 1995 A
(United Air Lines, Inc., Indianapolis
Maintenance Center Project),
6.5%, 11-15-2031 ...................... 18,850 20,546,500
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
INDIANA (Continued)
Indiana State Office Building Commission,
Capitol Complex Revenue Bonds:
Series 1990B (State Office Building
I Facility),
7.4%, 7-1-2015 ........................ $ 8,000 $ 10,470,000
Series 1990A (Senate Avenue Parking Facility),
7.4%, 7-1-2015 ........................ 4,775 6,249,281
Indiana Transportation Finance Authority,
Highway Revenue Bonds, Series 1990A,
7.25%, 6-1-2015 ....................... 9,000 11,643,750
East Chicago Elementary School Building
Corporation (Lake County, Indiana), First
Mortgage Refunding Bonds, Series 1996,
6.25%, 1-5-2016 ....................... 7,655 8,908,506
Indiana Health Facility Financing Authority,
Hospital Revenue Refunding Bonds, Series 1992
(The Methodist Hospitals, Inc.),
6.75%, 9-15-2009 ...................... 2,200 2,403,500
Total ................................. 60,221,537
KANSAS - 1.43%
Sedgwick County, Kansas and Shawnee County,
Kansas, Single Family Mortgage Revenue Bonds
(Mortgage-Backed Securities Program):
1998 Series A-1 (AMT),
5.5%, 12-1-2022 ....................... 8,000 8,830,000
1997 Series A-1 (AMT),
5.5%, 6-1-2029 ........................ 4,775 5,449,469
Total ................................. 14,279,469
KENTUCKY - 0.47%
Kentucky Economic Development Finance
Authority, Hospital Revenue Bonds,
Baptist Healthcare System Issue,
Series 1994,
5.0%, 8-15-2015 ....................... 4,650 4,702,313
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
LOUISIANA - 2.73%
Louisiana Public Facilities Authority:
Hospital Revenue and Refunding Bonds:
St. Francis Medical Center Project,
Residual Interest Bonds (RIBS), Series 1994C,
6.797%, 7-22-2024 (A) ................. $ 7,150 $ 8,374,437
Pendleton Memorial Methodist Hospital
Project, Series 1998,
5.25%, 6-1-2017 ....................... 2,000 1,950,000
Hospital Revenue Bonds,
Franciscan Missionaries of Our Lady Health
System Project, Series 1998C,
5.0%, 7-1-2019 ........................ 2,250 2,252,813
Parish of Jefferson Home Mortgage Authority,
Tax-Exempt Agency Mortgage-Backed
Securities, Series 1994A,
7.55%, 12-1-2026 ...................... 5,495 6,923,700
City of Shreveport, State of Louisiana,
Airport System PFC Revenue Bonds, Series
1997B (AMT-Subject),
5.0%, 1-1-2015 ........................ 3,165 3,192,694
Parish of East Baton Rouge, State of
Louisiana, Refunding Revenue Bonds
(Georgia-Pacific Corporation Project),
Series 1998,
5.35%, 9-1-2011 ....................... 3,000 3,037,500
Parish of Webster, Louisiana, Pollution
Control Revenue Refunding Bonds,
1998 Series B (non-AMT),
5.2%, 3-1-2013 ........................ 1,435 1,490,606
Total ................................. 27,221,750
MASSACHUSETTS - 1.56%
Massachusetts Housing Finance Agency,
Single Family Housing Revenue Bonds,
Series 57 (AMT),
5.6%, 6-1-2030 ........................ 5,000 5,168,750
Massachusetts Port Authority, Revenue
Refunding Bonds, Series 1998-B (AMT),
5.0%, 7-1-2016 ........................ 3,560 3,577,800
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),
6.966%, 7-1-2018 (A) .................. 2,500 2,734,375
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MASSACHUSETTS (Continued)
Massachusetts State College Building
Authority, Project and Refunding
Revenue Bonds, Senior Series 1994-A,
7.5%, 5-1-2014 ........................ $ 1,750 $ 2,316,562
Boston Water and Sewer Commission,
General Revenue Bonds, 1992 Series A
(Senior Series),
5.75%, 11-1-2013 ...................... 1,575 1,767,937
Total ................................. 15,565,424
MICHIGAN - 3.06%
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) .................. 11,200 12,656,000
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 10,030,000
Michigan State Hospital Finance Authority:
Hospital Revenue and Refunding Bonds
(Bay Medical Center), Series 1997A,
5.375%, 7-1-2011 ...................... 2,190 2,332,350
Hospital Revenue Bonds (The Detroit Medical
Center Obligated Group), Series 1998A,
5.125%, 8-15-2018 ..................... 2,000 1,967,500
Charter County of Wayne, Michigan, Detroit
Metropolitan Wayne County Airport, Airport
Revenue Bonds:
Series 1998A,
5.0%, 12-1-2019 ....................... 2,000 2,002,500
Subordinate Lien, Series 1993B,
5.25%, 12-1-2013 ...................... 1,500 1,550,625
Total ................................. 30,538,975
MINNESOTA - 0.75%
City of Rochester, Minnesota, Health
Care Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center),
Series 1992D, Floating Inverse
Rate Securities (FIRS),
7.4%, 11-15-2009 (A) .................. 4,500 5,377,500
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MINNESOTA (Continued)
HealthSystem Minnesota, The Healthcare
Network, City of St. Louis Park,
Minnesota, Health Care Facilities Revenue
Bonds (HealthSystem Minnesota Obligated
Group), Series 1993,
Relinked Inverse Floater,
5.1%, 7-1-2013 (A)..................... $ 2,000 $ 2,052,500
Total ................................. 7,430,000
MISSISSIPPI - 2.27%
Lowndes County, Mississippi, Solid Waste
Disposal and Pollution Control
Refunding Revenue Bonds (Weyerhaeuser
Company Project), Series 1992B, Indexed
Inverse Floating/Fixed Term Bonds,
8.25%, 4-1-2022 (A) ................... 11,000 13,598,750
Mississippi Higher Education Assistance
Corporation, Student Loan Revenue Bonds,
Subordinate Series 1996-C:
6.75%, 9-1-2014 ....................... 5,500 5,802,500
6.7%, 9-1-2012 ........................ 1,470 1,550,850
Mississippi Home Corporation, Single Family
Mortgage Revenue Bonds, Series 1996F (AMT),
7.55%, 12-1-2027 ...................... 1,490 1,700,462
Total ................................. 22,652,562
MISSOURI - 3.26%
Missouri Housing Development Commission,
Single Family Mortgage Revenue Bonds
(Homeownership Loan Program):
1995 Series C,
7.25%, 9-1-2026 ....................... 2,985 3,373,050
1997 Series C-1 (Non-AMT),
6.55%, 9-1-2028 ....................... 1,980 2,217,600
1996 Series C,
7.45%, 9-1-2027 ....................... 1,570 1,813,350
1998 Series D-2 (AMT),
6.3%, 3-1-2029 ........................ 1,150 1,275,063
1998 Series B-2 (AMT),
6.4%, 3-1-2029 ........................ 1,000 1,101,250
1997 Series A-2,
7.3%, 3-1-2028 ........................ 925 1,063,750
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MISSOURI (Continued)
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 $ 4,845,000
Freeman Health System Project, Series 1998,
5.25%, 2-15-2018 ...................... 2,460 2,484,600
Lake of the Ozarks General Hospital, Inc.,
Series 1998,
5.1%, 2-15-2018 ....................... 2,220 2,242,200
Health Facilities Revenue Bonds
(Barnes-Jewish, Inc./Christian Health
Services), Series 1993A:
6.0%, 5-15-2011 ....................... 3,000 3,393,750
5.25%, 5-15-2014 ...................... 2,900 3,070,375
Poplar Bluff, Missouri, Public Building Corporation,
Leasehold Refunding and Improvement Revenue Bonds
(Poplar Bluff, Missouri), Series 1998,
5.1%, 9-1-2018 ........................ 2,000 2,027,500
City of Fenton, Missouri, Public Facilties
Authority, Leasehold Revenue Bonds,
Series 1997 (City of Fenton, Missouri,
Lessee),
5.25%, 1-1-2018 ....................... 2,000 2,022,500
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 1,522,500
Total ................................. 32,452,488
NEBRASKA - 1.61%
Nebraska Higher Education Loan Program, Inc.,
1993-2 Series A-6 Junior Subordinate Bonds,
6.4%, 6-1-2013 ........................ 14,500 16,004,375
NEVADA - 0.32%
Nevada Housing Division, Single Family
Mortgage Bonds:
1998 Series A-1 Mezzanine Bonds,
5.35%, 4-1-2016 ....................... 2,050 2,083,313
1996 Series C Subordinate Bonds,
6.35%, 4-1-2009 ....................... 985 1,063,800
Total ................................. 3,147,113
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW JERSEY - 0.75%
The Hudson County Improvement Authority,
Essential Purpose Pooled Governmental
Loan Program Bonds, Series 1986,
7.6%, 8-1-2025 ........................ $ 5,080 $ 5,492,750
The Union County Utilities Authority
(Union County, New Jersey), Solid Waste
Facility Senior Lease Revenue Bonds
(Ogden Martin Systems of Union, Inc.
Lessee - Series 1998 A),
5.0%, 6-1-2015 ........................ 2,000 2,030,000
Total ................................. 7,522,750
NEW MEXICO - 3.19%
New Mexico Educational Assistance Foundation:
Student Loan Program Bonds:
First Subordinate 1995 Series A-2:
5.95%, 11-1-2007 ...................... 2,740 $ 2,873,575
5.85%, 11-1-2006 ...................... 1,575 1,645,875
Second Subordinate 1996 Series A-3,
6.75%, 11-1-2008 ...................... 2,175 2,373,469
First Subordinate 1996 Series A-2,
6.2%, 11-1-2008 ....................... 2,210 2,323,262
Second Subordinate 1995 Series A-3,
6.6%, 11-1-2010 ....................... 1,415 1,469,831
Student Loan Purchase Bonds,
Senior 1995 Series IV-A1 (AMT),
7.05%, 3-1-2010 ....................... 5,310 5,761,350
City of Albuquerque, New Mexico, Governmental Purpose
Airport Refunding Revenue Bonds, Series 1989,
6.5%, 7-1-2019 ........................ 15,350 15,350,000
Total ................................. 31,797,362
NEW YORK - 6.48%
Mental Health Services Facilities Improvement
Revenue Bonds, 1993 Series F Refunding,
5.375%, 2-15-2014 ..................... 12,000 12,465,000
New York State Medical Care Facilities Finance Agency:
Hospital Insured Mortgage Revenue Bonds,
1994 Series A Refunding,
5.25%, 8-15-2014 ...................... 10,000 10,362,500
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW YORK (Continued)
Dormitory Authority of the State of New York:
City University System Consolidated Revenue
Bonds, Series 1993F,
5.0%, 7-1-2014 ........................ $ 9,700 $ 9,748,500
City University System Consolidated Third General
Resolution Revenue Bonds, 1998 Series 1,
5.0%, 7-1-2016 ........................ 3,000 3,048,750
State University Educational Facilities,
Revenue Bonds, Series 1990B,
7.5%, 5-15-2011 ....................... 2,000 2,490,000
Department of Health of the State of
New York, Revenue Bonds, Series 1996,
5.5%, 7-1-2010 ........................ 2,000 2,152,500
Nyack Hospital, Revenue Bonds, Series 1996,
6.25%, 7-1-2013 ....................... 1,000 1,096,250
The City of New York, General Obligation Bonds:
Fiscal 1997 Series H,
6.125%, 8-1-2025 ...................... 5,730 6,303,000
Fiscal 1994 Series C, Inverse Floaters,
20.36%, 9-30-2003 (C) ................. 3,250 5,074,063
Housing New York Corporation, Senior
Revenue Refunding Bonds, Series 1993,
5.0%, 11-1-2013 ....................... 6,600 6,616,500
New York State Urban Development Corporation:
Correctional Capital Facilities Revenue Bonds,
1993A Refunding Series,
5.25%, 1-1-2014 ....................... 3,000 3,240,000
Correctional Facilities Service Contract
Revenue Bonds, Series A,
5.0%, 1-1-2013 ........................ 2,000 2,035,000
Total ................................. 64,632,063
NORTH CAROLINA - 1.78%
North Carolina Medical Care Commission,
Hospital Revenue Bonds:
Rex Healthcare, Series 1998,
5.0%, 6-1-2017 ........................ 7,850 7,928,500
Gaston Health Care, Series 1998,
5.0%, 2-15-2019 ....................... 2,500 2,478,125
Halifax Regional Medical Center, Series 1998,
5.0%, 8-15-2018 ....................... 2,170 2,102,187
Columbus County Industrial (The),
Facilities and Pollution Control Financing
Authority (North Carolina), Environmental
Improvement Revenue Bonds, 1996 Series A,
5.85%, 12-1-2020 ...................... 5,000 5,250,000
Total ................................. 17,758,812
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NORTH DAKOTA - 0.71%
City of Fargo, North Dakota, Health System
Revenue Bonds (Meritcare Obligated Group),
Series 1996A,
5.55%, 6-1-2016 ....................... 5,350 $ 5,711,125
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 1,412,588
Total ................................. 7,123,713
OHIO - 0.62%
County of Erie, Ohio, Franciscan Services
Corporation, Revenue Refunding Bonds,
Series 1993 A (Providence Hospital, Inc.),
6.0%, 1-1-2013 ........................ 4,000 4,255,000
City of Moraine, Ohio, Solid Waste
Disposal Revenue Bonds (General Motors
Corporation Project), Series 1994,
6.75%, 7-1-2014 ....................... 1,550 1,904,562
Total ................................. 6,159,562
OKLAHOMA - 0.73%
Oklahoma Housing Finance Agency, Single
Family Mortgage Revenue Bonds
(Homeownership Loan Program):
1995 Series B, Subseries B-2 (AMT),
7.625%, 9-1-2026 ...................... $ 5,450 6,172,125
1996 Series A,
7.05%, 9-1-2026 ....................... 1,000 1,126,250
Total ................................. 7,298,375
OREGON - 0.27%
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 2,678,125
1992 Series C,
5.5%, 7-1-2013 ........................ 35 35,000
Total ................................. 2,713,125
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
PENNSYLVANIA - 2.94%
City of Philadelphia, Pennsylvania, Water
and Wastewater Revenue Bonds, Series 1993,
Inverse Rate Securities,
7.23%, 6-15-2012 (A) .................. $11,750 $ 13,262,812
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 5,537,500
County of Allegheny, Pennsylvania, Airport
Revenue Refunding Bonds,
Series 1997A-1 (AMT),
5.75%, 1-1-2012 ....................... 4,000 4,455,000
Delaware County Authority, Hospital Revenue
Bonds, Series of 1992 (Riddle Memorial
Hospital),
6.5%, 1-1-2022 ........................ 2,800 3,073,000
Philadelphia Authority for Industrial Development,
Philadelphia, Pennsylvania, Airport Revenue
Bonds, Series 1998A (Philadelphia Airport
System Project),
5.0%, 7-1-2015 ........................ 3,000 3,030,000
Total ................................. 29,358,312
PUERTO RICO - 1.27%
Puerto Rico Public Buildings Authority,
Public Education and Health Facilities,
Refunding Bonds, Series M,
5.7%, 7-1-2016 ........................ 12,000 12,630,000
SOUTH CAROLINA - 1.80%
South Carolina Jobs - Economic Development
Authority, Hospital Revenue Refunding and
Improvement Bonds (South Carolina Baptist
Hospital), Series 1993D, Intermediate Longs,
7.07%, 8-1-2021 ....................... 14,550 15,859,500
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 2,082,500
Total ................................. 17,942,000
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TENNESSEE - 0.92%
The Health and Educational Facilities Board
of the Metropolitan Government of Nashville
and Davidson County, Tennessee:
Health Facility Revenue Refunding Bonds (Open
Arms Developmental Centers Project), Series 1998,
5.1%, 8-1-2016 ........................ $ 2,745 $ 2,758,725
Multi-Modal Interchangeable Rate, Health Facility
Revenue Bonds (Richland Place, Inc. Project),
Series 1993,
5.5%, 5-1-2023 ........................ 1,990 2,091,988
Volunteer State Student Funding Corporation,
Educational Loan Revenue Bonds,
Junior Subordinate Series 1993C Bonds,
5.85%, 12-1-2008 ...................... 2,700 2,757,375
Memphis-Shelby County Airport Authority,
Special Facilities Revenue Bonds,
Refunding Series 1997 (Federal Express
Corporation),
5.35%, 9-1-2012 ....................... 1,500 1,580,625
Total ................................. 9,188,713
TEXAS - 4.84%
AllianceAirport Authority, Inc.,
Special Facilities Revenue Bonds,
Series 1991 (American Airlines, Inc.
Project),
7.0%, 12-1-2011 ....................... 14,300 17,231,500
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 5,225,000
1997 Series D (AMT) TEAMS Structure:
5.65%, 3-1-2029 ....................... 2,500 2,590,625
5.7%, 9-1-2029 ........................ 1,500 1,554,375
Amarillo Health Facilities Corporation,
Hospital Revenue Bonds (Baptist St. Anthony's
Hospital Corporation Project), Series 1998,
5.5%, 1-1-2015 ........................ 6,320 6,880,900
Lubbock Health Facilities Development
Corporation, Hospital Revenue Bonds
(Methodist Hospital, Lubbock, Texas
Project), Series 1993B,
6.75%, 12-1-2010 ...................... 5,000 6,125,000
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 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 ..................... $ 3,220 $ 3,570,175
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 2,981,813
Midland County Hospital District, Hospital
Revenue Refunding Bonds, Series 1997,
5.375%, 6-1-2016 ...................... 2,000 2,072,500
Total ................................. 48,231,888
UTAH - 3.32%
Intermountain Power Agency, Power Supply
Revenue Refunding Bonds, 1993 Series A,
Inverse Floating Rate Securities (INFLOS),
7.266%, 7-1-2021 (A) .................. 18,200 19,724,250
Tooele County, Utah, Hazardous Waste Treatment
Revenue Bonds (Union Pacific Corporation/
USPCI, Inc. Project), Series A,
5.7%, 11-1-2026 ....................... 13,200 13,365,000
Total ................................. 33,089,250
WASHINGTON - 8.77%
Washington Public Power Supply System:
Nuclear Project No. 3, Refunding Revenue Bonds:
Series 1989B,
7.125%, 7-1-2016 ...................... 20,750 26,119,063
Series 1993C,
6.77%, 7-1-2012 ....................... 7,000 7,621,250
Nuclear Project No. 1, Refunding Revenue Bonds:
Series 1997B:
5.125%, 7-1-2013 ...................... 10,000 10,225,000
5.125%, 7-1-2015 ...................... 5,000 5,131,250
Series 1989B,
7.125%, 7-1-2016 ...................... 8,200 10,321,750
Series 1998A,
5.0%, 7-1-2013 ........................ 2,000 2,025,000
Nuclear Project No. 2 Refunding Revenue
Bonds, Series 1994A:
Inverse Floating Rate Securities,
7.47%, 7-1-2011 (A) ................... 7,500 9,300,000
Linked Inverse Floating Rate Securities,
5.4%, 7-1-2012 ........................ 5,000 5,400,000
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WASHINGTON (Continued)
State of Washington, Various Purpose General
Obligation Bonds, Series 1990A,
6.75%, 2-1-2015 ....................... $ 4,995 $ 6,200,044
Public Utility District No. 1 of Douglas
County, Washington, Wells Hydroelectric
Revenue Bonds, Series of 1965,
3.7%, 9-1-2018 ........................ 4,200 4,037,250
Housing Authority of the City of Seattle,
Low-Income Housing Assistance Revenue Bonds,
1995 (GNMA Collateralized Mortgage
Loan - Kin On Project),
7.4%, 11-20-2036 ...................... 875 1,029,219
Total ................................. 87,409,826
WISCONSIN - 0.61%
Wisconsin Public Power Incorporated SYSTEM (The),
Power Supply System Revenue Bonds,
Series 1993B-2, Yield Curve Notes (YCNs),
6.95%, 7-1-2014 (A) ................... 5,500 6,084,375
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 3,863,125
TOTAL MUNICIPAL BONDS - 93.56% $932,744,188
(Cost: $850,689,274)
TOTAL SHORT-TERM SECURITIES - 3.19% $ 31,791,313
(Cost: $31,791,313)
TOTAL INVESTMENT SECURITIES - 96.75% $964,535,501
(Cost: $882,480,587)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 3.25% 32,353,371
NET ASSETS - 100.00% $996,888,872
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1998
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 September 30, 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
September 30, 1998.
(C) The interest rate is subject to change periodically and based upon
prevailing market rates with a leverage factor of three. The interest rate
shown is the rate in effect at September 30, 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
SEPTEMBER 30, 1998
(In Thousands, Except for Per Share Amounts)
Assets
Investment securities--at value
(Notes 1 and 3) ............................... $ 964,536
Receivables:
Investment securities sold .................... 22,511
Interest ...................................... 14,244
Fund shares sold .............................. 544
Prepaid insurance premium ...................... 29
----------
Total assets ................................ 1,001,864
----------
Liabilities
Payable to Fund shareholders ................... 2,630
Payable for investment securities purchased .... 2,080
Accrued service fee (Note 2) ................... 177
Accrued transfer agency and dividend
disbursing (Note 2) ........................... 60
Accrued management fee (Note 2) ................ 12
Accrued accounting services fee (Note 2) ....... 7
Distribution fee (Note 2) ...................... 1
Due to custodian ............................... 1
Other .......................................... 7
----------
Total liabilities ............................. 4,975
----------
Total net assets ........................... $ 996,889
==========
Net Assets
$1.00 par value capital stock, authorized --
600,000; shares outstanding - 130,689
Capital stock ................................. $ 130,689
Additional paid-in capital .................... 772,825
Accumulated undistributed income:
Accumulated undistributed net investment
income ...................................... 1,427
Accumulated undistributed net realized gain on
investment transactions ..................... 9,893
Net unrealized appreciation in value of
investments ................................. 82,055
----------
Net assets applicable to outstanding units
of capital ................................. $ 996,889
==========
Net asset value per share (net assets divided by
shares outstanding) ............................ $7.63
=====
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.STATEMENT OF OPERATIONS
For the Fiscal Year Ended SEPTEMBER 30, 1998
(In Thousands)
Investment Income
Interest and amortization (Note 1B) .............. $55,883
-------
Expenses (Note 2):
Investment management fee ....................... 4,183
Service fee ..................................... 1,900
Transfer agency and dividend disbursing ......... 670
Accounting services fee ......................... 86
Custodian fees .................................. 44
Audit fees ...................................... 20
Distribution fees ............................... 10
Legal fees ...................................... 9
Other ........................................... 157
-------
Total expenses ................................ 7,079
-------
Net investment income ........................ 48,804
-------
Realized and Unrealized Gain on
Investments (Notes 1 and 3)
Realized net gain on securities .................. 20,753
Realized net loss on put options purchased ....... (4,234)
Realized net gain on futures contracts closed .... 422
-------
Net realized gain on investments ................ 16,941
Net unrealized appreciation in value of
investments during the period ................... 16,492
-------
Net gain on investments ....................... 33,433
-------
Net increase in net assets resulting
from operations ............................ $82,237
=======
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.STATEMENT OF CHANGES IN NET ASSETS
(Dollars In Thousands)
For the fiscal year
ended September 30,
-----------------------------
1998 1997
-------------- ------------
Increase (Decrease) in Net Assets
Operations:
Net investment income.............. $ 48,804 $ 50,228
Realized net gain on
investments ..................... 16,941 9,662
Unrealized appreciation ........... 16,492 31,319
-------- --------
Net increase in net assets
resulting from operations ...... 82,237 91,209
-------- --------
Distributions to shareholders from(Note 1D):*
Net investment income: ............ (48,648) (49,761)
Realized gains on securities
transactions: ................... (12,104) (20,845)
-------- --------
(60,752) (70,606)
-------- --------
Capital share transactions:
Proceeds from sale of shares:
(41,023,912 and 69,698,111
shares, respectively) ........... 307,508 511,770
Proceeds from reinvestment of
dividends and/or capital gains
distribution: (6,763,886 and
8,113,114 shares, respectively) . 50,042 58,978
Payments for shares redeemed:
(50,159,643 and 80,867,185
shares, respectively) ........... (376,023) (594,413)
--------- --------
Net decrease in net
assets resulting from capital
share transactions ............. (18,473) (23,665)
--------- --------
Total increase (decrease) ...... 3,012 (3,062)
Net Assets
Beginning of period ................ 993,877 996,939
--------- --------
End of period, including
undistributed net investment
income of $1,427 and
$1,271, respectively .............. $996,889 $993,877
======== ========
*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 fiscal year ended
September 30,
------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
Net asset value,
beginning of period $7.47 $7.32 $7.25 $6.91 $7.83
----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... 0.37 0.38 0.39 0.39 0.38
Net realized and
unrealized gain
(loss) on
investments ..... 0.25 0.30 0.12 0.38 (0.67)
----- ----- ----- ----- -----
Total from investment
operations ....... 0.62 0.68 0.51 0.77 (0.29)
----- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.37) (0.37) (0.39) (0.39) (0.38)
From capital gains (0.09) (0.16) (0.05) (0.00) (0.25)
In excess of capital
gains ........... (0.00) (0.00) (0.00) (0.04) (0.00)
----- ----- ----- ----- -----
Total distributions (0.46) (0.53) (0.44) (0.43) (0.63)
----- ----- ----- ----- -----
Net asset value,
end of period .... $7.63 $7.47 $7.32 $7.25 $6.91
===== ===== ===== ===== =====
Total return* ...... 8.67% 9.77% 7.16% 11.51% -3.91%
Net assets, end of
period (in
millions) ........ $997 $994 $997 $975 $951
Ratio of expenses to
average net assets 0.72% 0.67% 0.68% 0.65% 0.64%
Ratio of net investment
income to average
net assets ....... 4.95% 5.14% 5.23% 5.51% 5.17%
Portfolio
turnover rate .... 50.65% 47.24% 74.97% 70.67% 62.61%
*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, 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 carryovers.
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 $18.9 billion of
combined net assets at September 30, 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 $1,153,458, out of which
W&R paid sales commissions of $663,988 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 $35,405, which are included in other
expenses.
W&R is a subsidiary of 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 $487,150,153 while proceeds from maturities and
sales aggregated $581,245,455. Purchases of options aggregated $5,409,385 while
proceeds from options aggregated $2,903,135. Purchases of short-term securities
aggregated $1,018,059,216 while proceeds from maturities and sales aggregated
$989,228,207. No U.S. Government securities were bought or sold during the
period ended September 30, 1998.
For Federal income tax purposes, cost of investments owned at September 30,
1998 was $886,920,070, resulting in net unrealized appreciation of $77,615,431,
of which $77,619,034 related to appreciated securities and $3,603 related to
depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $15,978,789 during its fiscal year ended September 30, 1998, of which a
portion was paid to shareholders during the period ended September 30, 1998.
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 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, 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 September 30, 1998, and the related statements of operations for the fiscal
year then ended and changes in net assets for each of the fiscal years in the
two-year period then ended, and the financial highlights for each of the fiscal
years in the five-year period then ended. These financial statements and the
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our 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
September 30, 1998 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 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 September 30, 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
November 6, 1998
<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 Long-Term Capital GainExempt Non- Long-Term Exempt
Date Total Income 28% Rate20% RateInterestQualifyingCapital Gain Interest
- ----------------------------------------------------------------------------
Class A
10-17-97$0.0310$0.0006 $ ---- $ ---- $0.0304 $0.0006$ ---- $0.0304
11-14-97 0.0310 0.0006 ---- ---- 0.0304 0.0006 ---- 0.0304
12-12-97 0.1290 0.0529 0.0246 0.0162 0.0353 0.0529 0.0408 0.0353
01-16-98 0.0310 0.0011 ---- ---- 0.0299 0.0011 ---- 0.0299
02-13-98 0.0300 0.0011 ---- ---- 0.0289 0.0011 ---- 0.0289
03-13-98 0.0300 0.0011 ---- ---- 0.0289 0.0011 ---- 0.0289
04-17-98 0.0300 0.0011 ---- ---- 0.0289 0.0011 ---- 0.0289
05-15-98 0.0300 0.0011 ---- ---- 0.0289 0.0011 ---- 0.0289
06-12-98 0.0300 0.0011 ---- ---- 0.0289 0.0011 ---- 0.0289
07-17-98 0.0310 0.0011 ---- ---- 0.0299 0.0011 ---- 0.0299
08-14-98 0.0310 0.0011 ---- ---- 0.0299 0.0011 ---- 0.0299
09-11-98 0.0310 0.0011 ---- ---- 0.0299 0.0011 ---- 0.0299
------- ------------- ------- ------- ------- ------- -------
Total $0.4650$0.0640 $0.0246 $0.0162 $0.3602 $0.0640 $0.0408 $0.3602
====== ======= ======= ======= ======= ======= ======= =======
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>
DIRECTORS
Keith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, Menlo Park, California
Linda Graves, Topeka, Kansas
Joseph Harroz, Jr., Norman, Oklahoma
John F. Hayes, Hutchinson, Kansas
Robert L. Hechler, Overland Park, Kansas
Henry J. Herrmann, Overland Park, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Ronald C. Reimer, Mission Hills, Kansas
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Frederick Vogel III, Milwaukee, Wisconsin
OFFICERS
Robert L. Hechler, President
Henry J. Herrmann, Vice President
John M. Holliday, Vice President
Theodore W. Howard, Vice President and Treasurer
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(9-98)
printed on recycled paper
