United
Municipal
Bond Fund,
Inc.
ANNUAL
REPORT
--------------------------------------------
For the fiscal year ended September 30, 1999
<PAGE>
MANAGER'S LETTER
- -----------------------------------------------------------------
SEPTEMBER 30, 1999
Dear Shareholder:
This report relates to the operation of United Municipal Bond Fund, Inc. for the
fiscal year ended September 30, 1999. The discussion, graphs and tables
contained in this report will provide you with information regarding the Fund's
performance during that period.
The accommodative monetary conditions that we saw last year, with central banks
around the world easing, have largely come to an end. The Federal Reserve and
the Central Bank in the United Kingdom have already tightened and others appear
ready to follow suit. As the global economic recovery has gathered pace,
commodity prices have risen. In the U.S., tight labor markets and robust
consumer spending have brought about a moderate, but worrisome, trend in
inflation. The goal of the Fed is to maintain price stability, which in the
current economic environment places the emphasis on preemptively suppressing
inflation pressures by raising interest rates. Such Fed action tends to be
positive in the long-term for the economy and interest rates, but can lead to
short-term volatility and a heightened level of nervousness in the market.
We, along with most economists, did not expect the U.S. economy to expand as
rapidly as it did. The global inflation picture was very unclear, with upticks
in some commodity and financial asset markets offset by very low and, in some
instances, disinflationary readings in other measures of inflation. As monetary
stimulation ceased and interest rates rose off last years lows, we expected the
economy to slow. We felt that the high level of Y2K uncertainty, and belief in
U.S. preparedness relative to other nations, presented a logical backdrop for an
increase in foreign capital flows to the relative safety of the U.S. Treasury
market. We expected that this anticipated flight to quality would benefit
municipal bonds to some degree, but possibly not until the fourth quarter of
1999. We therefore saw no reason to adjust the portfolio for a major rise in
yields. However, very strong consumer confidence and low unemployment continued
to drive our economy and now the world economy is also accelerating. Y2K has
caused some distortions in the timing of bond issuance, with more bonds sold
recently and a slowdown expected as we approach year end. Also, some investors
have shown a preference for Treasury bonds versus other bonds. We feel this has
created a buying opportunity and that prices should revert to normal
relationships after year end.
The strategies and techniques we applied resulted in the Fund's performance
during the fiscal year falling slightly below that of the Lipper General
Municipal Bond Fund Universe (reflecting the performance of the universe of
funds with similar investment objectives) and below that of the Lehman Brothers
Municipal Bond Index (reflecting the performance of securities that generally
represent the municipal bond market). Both indexes are charted on the following
page. The unexpected increases in interest rates negatively impacted the Fund's
performance. Because the Fund remained generally fully invested due to the
anticipated interest rate environment, the Fund was unable to fully take
advantage of investment opportunities resulting from the higher interest rates.
Interest rates could go slightly higher as the Fed protects against threatened
inflation. We expect that the Federal Reserve will contain inflationary
pressures. When it is clear to the markets that this is the case, Treasury
interest rates, now above 6.30%, will prove to be attractive and more money
should flow into all bonds. Municipal bonds are at historically attractive
levels relative to other fixed income alternatives, and should outperform if
yield ratios revert to historical norms. As a result, we expect to remain fully
invested emphasizing current yield.
Thank you for your continued confidence.
Respectfully,
John M. Holliday
Manager, United Municipal Bond Fund, Inc.
<PAGE>
Comparison of Change in Value of $10,000 Investment in
United Municipal Bond Fund, Inc., Class A Shares,
The Lehman Brothers Municipal Bond Index
and The Lipper General Municipal Bond Fund Universe Average
Lipper
General
United Lehman Municipal
MunicipalBrothers Bond
Bond Municipal Fund
Fund, Bond Universe
Inc. Index Average
------------------ ----------
09/30/89 Purchase$ 9,575$10,000 $10,000
09/30/90 10,002 10,680 10,521
09/30/91 11,500 12,088 11,872
09/30/92 12,812 13,352 13,089
09/30/93 14,753 15,053 14,794
09/30/94 14,176 14,686 14,222
09/30/95 15,808 16,330 15,606
09/30/96 16,942 17,316 16,472
09/30/97 18,598 18,880 17,892
09/30/98 20,211 20,525 19,362
09/30/99 19,513 20,381 18,766
==== United Municipal Bond Fund, Inc., Class A Shares* -- $19,513
++++ Lehman Brothers Municipal Bond Index -- $20,381
---- Lipper General Municipal Bond Fund Universe Average - $18,766
*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.
Annual Average Total Return +
Class A++ Class Y
-----------------------------
Year Ended
9/30/99 -7.56% N/A
5 Years Ended
9/30/99 5.68% N/A
10 Years Ended
9/30/99 6.91% N/A
Aggregate Total
Return for Life
of Class Y +++ N/A -3.21%
+ Total return for the Class Y shares may be greater than that of the Class A
shares because the Fund's Class Y shares are not subject to a sales load or
12b-1 fees.
++ 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.
+++ 12/30/98 (the date on which Fund Class Y shares were first acquired by
shareholders) through 9/30/99.
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: To seek income not subject to
grade Municipal Bonds* Federal income taxation.
(Income may be subject to
state and local taxes and a
Maximum 10% Non-Municipal portion may be subject to
Bond Debt Securities Federal taxes, including
alternative minimum tax.)
May own 25% or more
Industrial Revenue Bonds STRATEGY: Invests primarily in tax-exempt
municipal bonds, mainly of investment
grade (rated BBB or higher by Standard &
Poor's or Baa or higher by Moody's
Investor Service, Inc.)
* During normal market conditions.
FOUNDED: 1976
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
PERFORMANCE SUMMARY - Class A Shares
PER SHARE DATA
For the Fiscal Year Ended September 30, 1999
- --------------------------------------------
DIVIDENDS PAID $0.37
=====
CAPITAL GAINS DISTRIBUTION $0.11
=====
NET ASSET VALUE ON
9/30/99 $6.90 adjusted to: $ 7.01(A)
9/30/98 7.63
------
CHANGE PER SHARE $(0.62)
======
(A) This number includes the capital gains distribution of $0.11 paid in
December 1998 added to the actual net asset value on September 30, 1999.
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 9-30-99 -7.56% -3.46%
5-year period ended 9-30-99 5.68% 6.60%
10-year period ended 9-30-99 6.91% 7.38%
*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, 1999, United Municipal Bond Fund, Inc. had net assets totaling
$874,082,470 invested in a diversified portfolio.
As a shareholder of United Municipal Bond Fund, Inc., for every $100 you had
invested on September 30, 1999, your Fund owned:
$15.81 Industrial Revenue/Pollution Control Revenue Bonds
13.25 Derivative Bonds
11.42 Hospital Revenue Bonds
11.11 Housing Revenue Bonds
11.09 Other Municipal Bonds
10.31 Airport Revenue Bonds
10.31 Public Power Revenue Bonds
5.09 Cash and Cash Equivalents
4.31 Student Loan Bonds
4.11 Lease/Certificates of Participation Bonds
3.19 Resource Recovery Bonds
1999 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- 43,050 $ 0- 25,750 15% 5.88 7.06 8.24 9.41
$ 43,051-104,050 $ 25,751- 62,450 28% 6.94 8.33 9.72 11.11
$104,051-158,550 $ 62,451-130,250 31% 7.25 8.70 10.14 11.59
$158,551-283,150 $130,251-283,150 36% 7.81 9.38 10.94 12.50
$283,151 and above$283,151 and above 39.6% 8.28 9.93 11.59 13.25
*Table is for illustration only and does not represent the actual performance of
United Municipal Bond Fund, Inc.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS
ALABAMA - 0.20%
BMC Special Care Facilities Financing
Authority of the City of Montgomery,
Revenue Bonds, Series 1998-B (Baptist
Health),
4.875%, 11-15-2018 .................... $ 2,000 $ 1,760,000
ALASKA - 3.98%
City of Valdez, Alaska, Marine
Terminal Revenue Refunding Bonds
(BP Pipelines (Alaska) Inc. Project),
Series 1993A,
5.85%, 8-1-2025 ....................... 28,650 28,148,625
State of Alaska, International Airports
System Revenue Bonds, Series 1999A,
5.0%, 10-1-2019 ....................... 3,000 2,655,000
Alaska Energy Authority, Power Revenue
Refunding Bonds, Fifth Series (Bradley
Lake Hydroelectric Project),
5.0%, 7-1-2021 ........................ 2,350 2,070,937
Alaska Housing Finance Corporation,
Housing Development Bonds, 1997
Series B (AMT),
5.8%, 12-1-2029 ....................... 2,000 1,952,500
Total ................................. 34,827,062
CALIFORNIA - 10.83%
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 19,332,500
Hospital Revenue Certificates of Participation,
Series 1992, Cedars-Sinai Medical Center,
6.5%, 8-1-2012 ........................ 5,200 5,577,000
Hospital Refunding Revenue Certificates of
Participation, Series 1993, Cedars-Sinai Medical
Center, Inverse Floating Rate Securities (INFLOS),
7.17%, 11-1-2015 (A) .................. 3,300 2,978,250
East Bay Municipal Utility District (Alameda
and Contra Costa Counties, California),
Wastewater System Subordinated Revenue
Refunding Bonds, Series 1993B-2,
Inverse Floating Securities:
7.27%, 6-1-2013 (A) ................... 8,450 8,555,625
7.37%, 6-1-2020 (A) ................... 7,250 7,032,500
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA (Continued)
Transmission Agency of Northern California,
California-Oregon Transmission Project
Revenue Bonds, 1990 Series A,
7.0%, 5-1-2013 ........................ $12,000 $ 13,950,000
County of San Bernardino, California,
Certificates of Participation (1992 Justice
Center/Airport Improvements Refunding
Project), Inland Empire Public Facilities
Corporation, Short/RITES Certificates,
5.5%, 7-1-2016 (B) .................... 9,500 9,571,250
Southern California Public Power Authority:
Multiple Project Revenue Bonds, 1989 Series,
6.75%, 7-1-2012 ....................... 3,455 3,904,150
Mead-Adelanto Project Revenue Bonds,
1994 Series A:
Mead-Adelanto Auction Rate Securities (ACES),
4.01%, 7-1-2015 ....................... 1,400 1,400,000
Mead-Adelanto Inverse Floaters,
6.01%, 7-1-2015 (A) ................... 1,400 1,331,750
Mead-Phoenix Project Revenue Bonds,
1994 Series A:
Auction Rate Securities (ACES),
4.01%, 7-1-2015 ....................... 1,300 1,300,000
Inverse Floaters,
6.01%, 7-1-2015 (A) ................... 1,300 1,218,750
California Rural Home Mortgage Finance
Authority, Single Family Mortgage
Revenue Bonds (Mortgage-Backed Securities
Program):
1998 Series A,
6.35%, 12-1-2029 ...................... 3,345 3,495,525
1997 Series C,
6.75%, 3-1-2029 ....................... 2,050 2,173,000
1998 Series B,
6.35%, 12-1-2029 ...................... 1,940 2,092,775
Foothill/Eastern Transportation Corridor Agency,
Toll Road Refunding Revenue Bonds, Series 1999:
Capital Appreciation Bonds,
0.0%, 1-15-2017 ....................... 8,000 2,920,000
Current Interest Bonds,
5.125%, 1-15-2019 ..................... 3,000 2,816,250
Delta Counties Home Mortgage Finance Authority
(California), Single Family Mortgage Revenue
Bonds (Mortgage-Backed Securities Program),
1998 Series A,
5.2%, 12-1-2014 ....................... 3,110 2,942,837
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA (Continued)
Intermodal Container Transfer Facility,
Joint Powers Authority, Intermodal
Container Transfer Facility Refunding
Revenue Bonds, 1989 Series A,
7.7%, 11-1-2014 ....................... $ 2,000 $ 2,049,140
Total ................................. 94,641,302
COLORADO - 3.45%
City and County of Denver, Colorado,
Airport System Revenue Bonds:
Series 1991D,
7.75%, 11-15-2013 ..................... 11,905 14,003,256
Series 1996D,
5.5%, 11-15-2025 ...................... 2,000 1,920,000
Colorado Housing and Finance Authority,
Single Family Program Senior and Subordinate
Bonds:
1996 Series B-1,
7.65%, 11-1-2026 ...................... 2,750 2,987,187
1997 Series C-2,
6.875%, 11-1-2028 ..................... 2,500 2,668,750
1999 Series A-2,
6.45%, 4-1-2030 ....................... 2,185 2,286,056
1997 Series A-2,
7.25%, 5-1-2027 ....................... 2,000 2,190,000
1998 Series A-3,
6.5%, 5-1-2016 ........................ 1,000 1,061,250
Highlands Ranch Metropolitan District No. 3,
Douglas County, Colorado,
General Obligation Bonds:
Series 1999,
5.3%, 12-1-2019 ....................... 1,250 1,164,063
Series 1998A,
5.125%, 12-1-2012 ..................... 1,000 960,000
University of Colorado Hospital Authority,
Revenue Bonds, Series 1999A,
5.0%, 11-15-2019 ...................... 1,000 896,250
Total ................................. 30,136,812
CONNECTICUT - 5.08%
Connecticut Development Authority, Water
Facilities Revenue Bonds (Bridgeport
Hydraulic Company Project):
1996 Series,
6.0%, 9-1-2036 ........................ 15,000 14,981,250
1995 Series,
6.15%, 4-1-2035 ....................... 9,200 9,303,500
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CONNECTICUT (Continued)
Eastern Connecticut Resource Recovery
Authority, Solid Waste Revenue Bonds
(Wheelabrator Lisbon Project),
Series 1993A,
5.5%, 1-1-2014 ........................ $13,700 $ 12,775,250
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 7,358,750
Total ................................. 44,418,750
FLORIDA - 3.35%
Escambia County, Florida, Pollution Control Revenue
Bonds (Champion International Corporation Project):
Series 1994,
6.9%, 8-1-2022 ........................ 8,855 9,430,575
Series 1996,
6.4%, 9-1-2030 ........................ 6,200 6,285,250
City of Leesburg, Florida, Hospital Revenue
Refunding Bonds (Leesburg Regional Medical
Center Project), Series 1993A,
6.125%, 7-1-2012 ...................... 5,000 5,137,500
Housing Finance Authority of Lee County, Florida,
Single Family Mortgage Revenue Bonds:
Series 1998A, Subseries 6,
6.45%, 3-1-2031 ....................... 2,175 2,278,312
Series 1999A, Subseries 2,
5.0%, 9-1-2030 ........................ 1,620 1,555,200
Jacksonville Health Facilities Authority,
Hospital Revenue Bonds (Charity Obligated
Group), Series 1999C,
5.25%, 8-15-2019 ...................... 2,745 2,570,006
City of Miami, Florida, Health Facilities
Authority, Health Facilities Revenue Refunding
Bonds (Mercy Hospital Project), Series 1994A,
Inverse Floating Rate Security (INFLOS),
6.87%, 8-15-2015 (A) .................. 2,200 2,043,250
Total ................................. 29,300,093
GEORGIA - 3.40%
Municipal Electric Authority of Georgia:
Project One Special Obligation Bonds,
Fifth Crossover Series,
6.4%, 1-1-2013 ........................ 15,500 16,953,125
General Power Revenue Bonds,
1992B Series,
8.25%, 1-1-2011 ....................... 8,700 10,907,625
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
GEORGIA (Continued)
Private Colleges and Universities Authority,
Revenue and Refunding Bonds (Mercer University
Project), Tax-Exempt Series 1999A,
5.25%, 10-1-2020 ...................... $ 2,000 $ 1,837,500
Total ................................. 29,698,250
HAWAII - 3.00%
State of Hawaii, Airports System Revenue
Bonds, Second Series of 1991,
6.9%, 7-1-2012 ........................ 20,195 22,593,156
Department of Budget and Finance of the State
of Hawaii, Special Purpose Revenue Bonds
(Citizens Utilities Company Project):
Residual Interest Bonds (RIBS), Series 1991B,
8.575%, 11-1-2021 (A) ................. 1,750 1,890,000
Select Auction Variable Rate Securities (SAVRS),
Series 1991A,
4.4%, 11-1-2021 ....................... 1,750 1,750,000
Total.................................. 26,233,156
IDAHO - 0.76%
Idaho Health Facilities Authority, Hospital
Revenue Refunding Bonds, Series 1992
(IHC Hospitals, Inc.),
6.65%, 2-15-2021 ...................... 6,000 6,660,000
ILLINOIS - 2.13%
City of Chicago, Collateralized Single Family
Mortgage Revenue Bonds:
Series 1998C-1,
6.3%, 9-1-2029 ........................ 4,000 4,185,000
Series 1998A-1,
6.45%, 9-1-2029 ....................... 2,500 2,650,000
Series 1999A,
6.35%, 10-1-2030 ...................... 2,500 2,646,875
Series 1999C,
7.05%, 10-1-2030 ...................... 2,000 2,182,500
Series 1997-B,
6.95%, 9-1-2028 ....................... 1,890 2,005,762
Illinois Health Facilities Authority, Revenue Bonds:
Series 1997A (Victory Health Services),
5.375%, 8-15-2016 ..................... 3,000 2,763,750
Series 1999 (Alexian Brothers Health System),
5.0%, 1-1-2019 ........................ 1,500 1,338,750
School District Number 116, Champaign County,
Illinois (Urbana), General Obligation School
Building Bonds, Series 1999C,
0.0%, 1-1-2012 ........................ 1,695 847,500
Total ................................. 18,620,137
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
INDIANA - 5.91%
Indiana State Office Building Commission,
Capitol Complex Revenue Bonds:
Series 1990B (State Office Building I Facility),
7.4%, 7-1-2015 ........................ $ 8,000 $ 9,560,000
Series 1990A (Senate Avenue Parking Facility),
7.4%, 7-1-2015 ........................ 4,775 5,706,125
Indianapolis Airport Authority,
Special Facility Revenue Bonds, Series 1995 A
(United Air Lines, Inc., Indianapolis
Maintenance Center Project),
6.5%, 11-15-2031 ...................... 10,850 10,985,625
Indiana Transportation Finance Authority,
Highway Revenue Bonds, Series 1990A,
7.25%, 6-1-2015 ....................... 9,000 10,631,250
East Chicago Elementary School Building
Corporation (Lake County, Indiana), First
Mortgage Refunding Bonds, Series 1996,
6.25%, 1-5-2016 ....................... 7,655 8,162,144
Indiana Health Facility Financing Authority,
Hospital Revenue Bonds:
Series 1999D (Charity Obligated
Group),
5.5%, 11-15-2024 ...................... 5,000 4,706,250
Series 1999A (Deaconess Hospital
Obligated Group),
5.75%, 3-1-2019 ....................... 2,000 1,907,500
Total ................................. 51,658,894
KANSAS - 1.85%
Sedgwick County, Kansas and Shawnee County,
Kansas, Single Family Mortgage Revenue Bonds
(Mortgage-Backed Securities Program):
1998 Series A-1 (AMT),
6.5%, 12-1-2022 ....................... 8,000 8,420,000
1997 Series A-1 (AMT),
6.95%, 6-1-2029 ....................... 5,225 5,649,531
1999 Series A-1 (AMT),
5.5%, 12-1-2026 ....................... 2,000 2,135,000
Total ................................. 16,204,531
KENTUCKY - 0.06%
County of Jefferson, Kentucky, Insured
Hospital Revenue Bonds, Series 1992 (Alliant
Health System, Inc. Project), Inverse Floaters,
8.836%, 10-23-2014 (A) ................ 500 536,250
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
LOUISIANA - 1.14%
Louisiana Public Facilities Authority,
Hospital Revenue and Refunding Bonds:
St. Francis Medical Center Project,
Residual Interest Bonds (RIBS), Series 1994C,
6.858%, 7-22-2024 (A) ................. $ 3,650 $ 4,042,375
Pendleton Memorial Methodist Hospital
Project, Series 1998,
5.25%, 6-1-2017 ....................... 2,000 1,717,500
Parish of East Baton Rouge, State of
Louisiana, Refunding Revenue Bonds
(Georgia-Pacific Corporation Project),
Series 1998,
5.35%, 9-1-2011 ....................... 3,000 2,887,500
Parish of Webster, Louisiana, Pollution
Control Revenue Refunding Bonds,
1998 Series B (Non-AMT),
5.2%, 3-1-2013 ........................ 1,435 1,361,456
Total ................................. 10,008,831
MASSACHUSETTS - 1.66%
City of Quincy, Massachusetts, Revenue Refunding
Bonds, Quincy Hospital Issue, Series 1993,
Inverse Floating Rate Security (INFLOS),
6.32%, 1-15-2011 (A) .................. 5,700 5,671,500
Massachusetts Housing Finance Agency,
Single Family Housing Revenue Bonds,
Series 57 (AMT),
5.6%, 6-1-2030 ........................ 4,735 4,504,169
Massachusetts Municipal Wholesale Electric
Company, Power Supply System Revenue Bonds,
1993 Series A, Inverse Floating Rate Security (INFLOS),
7.17%, 7-1-2018 (A) ................... 2,500 2,284,375
Massachusetts State College Building
Authority, Project and Refunding
Revenue Bonds, Senior Series 1994-A,
7.5%, 5-1-2014 ........................ 1,750 2,089,063
Total ................................. 14,549,107
MICHIGAN - 1.99%
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 9,210,000
Limited Obligation Revenue Bonds, WMX
Technologies, Inc. Project, Series 1993,
6.0%, 12-1-2013 ....................... 4,000 4,040,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MICHIGAN (Continued)
City of Detroit, Michigan, Sewage Disposal
System Revenue and Revenue Refunding Bonds,
Series 1993-A, Inverse Floating Rate Security
(INFLOS),
7.567%, 7-1-2023 (A) .................. $ 2,600 $ 2,486,250
Michigan State Hospital Finance Authority,
Hospital Revenue Bonds (The Detroit Medical
Center Obligated Group), Series 1998A,
5.125%, 8-15-2018 ..................... 2,000 1,695,000
Total ................................. 17,431,250
MINNESOTA - 0.66%
City of Rochester, Minnesota, Health
Care Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center),
Series 1992D, Floating Inverse
Rate Securities (FIRS),
7.6%, 11-15-2009 (A) .................. 4,500 4,848,750
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,
6.043%, 7-1-2013 (A) .................. 1,000 938,750
Total ................................. 5,787,500
MISSISSIPPI - 2.43%
Lowndes County, Mississippi, Solid Waste
Disposal and Pollution Control
Refunding Revenue Bonds (Weyerhaeuser
Company Project), Series 1992B,
6.7%, 4-1-2022 ........................ 11,000 12,072,500
Mississippi Higher Education Assistance
Corporation, Student Loan Revenue Bonds,
Subordinate Series 1996-C:
6.75%, 9-1-2014 ....................... 5,500 5,548,125
6.7%, 9-1-2012 ........................ 1,470 1,482,863
Mississippi Home Corporation, Single Family
Mortgage Revenue Bonds, Series 1999A,
5.25%, 6-1-2031 ....................... 2,000 2,107,500
Total ................................. 21,210,988
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MISSOURI - 1.94%
Health and Educational Facilities Authority
of the State of Missouri, Health Facilities
Revenue Bonds:
Barnes-Jewish, Inc./Christian Health
Services, Series 1993A:
6.0%, 5-15-2011 ....................... $ 3,000 $ 3,157,500
5.25%, 5-15-2014 ...................... 2,900 2,834,750
Freeman Health System Project, Series 1998,
5.25%, 2-15-2018 ...................... 2,460 2,229,375
Lake of the Ozarks General Hospital, Inc.,
Series 1998,
5.1%, 2-15-2018 ....................... 2,220 2,009,100
Missouri Housing Development Commission,
Single Family Mortgage Revenue Bonds
(Homeownership Loan Program):
1997 Series C-1 (Non-AMT),
6.55%, 9-1-2028 ....................... 1,960 2,072,700
1998 Series D-2 (AMT),
6.3%, 3-1-2029 ........................ 1,145 1,190,800
1997 Series A-2 (AMT),
7.3%, 3-1-2028 ........................ 910 997,587
1998 Series B-2 (AMT),
6.4%, 3-1-2029 ........................ 950 995,125
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 1,445,625
Total ................................. 16,932,562
MONTANA - 0.16%
Montana Higher Education Student Assistance
Corporation, Student Loan Revenue Bonds,
Subordinate Series 1998-B,
5.5%, 12-1-2031 ....................... 1,500 1,395,000
NEBRASKA - 1.68%
Nebraska Higher Education Loan Program, Inc.,
1993-2 Series A-6 Junior Subordinate Bonds,
6.4%, 6-1-2013 ........................ 14,500 14,663,125
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEVADA - 0.97%
Clark County, Nevada:
Industrial Development Refunding Revenue
Bonds (Nevada Power Company Project),
Series 1995B,
5.9%, 10-1-2030 ....................... $ 4,000 $ 3,760,000
Industrial Development Revenue Bonds (Nevada
Power Company Project), Series 1997A,
5.9%, 11-1-2032 ....................... 2,000 1,877,500
Nevada Housing Division, Single Family
Mortgage Bonds:
1998 Series A-1 Mezzanine Bonds,
5.35%, 4-1-2016 ....................... 2,050 1,947,500
1996 Series C Subordinate Bonds,
6.35%, 4-1-2009 ....................... 880 906,400
Total ................................. 8,491,400
NEW HAMPSHIRE - 0.96%
State of New Hampshire, Turnpike System
Revenue Bonds, 1994 Series C, Indexed
Inverse Floater, Residual Interest
Bonds (RIBS),
6.351%, 2-1-2024 (A) .................. 10,000 8,350,000
NEW MEXICO - 1.20%
New Mexico Educational Assistance Foundation:
Student Loan Program Bonds:
Second Subordinate 1996 Series A-3,
6.75%, 11-1-2008 ...................... 2,175 2,245,687
First Subordinate 1996 Series A-2,
6.2%, 11-1-2008 ....................... 2,210 2,198,950
Second Subordinate 1995 Series A-3,
6.6%, 11-1-2010 ....................... 1,235 1,216,475
Student Loan Purchase Bonds,
Senior 1995 Series IV-A1 (AMT),
7.05%, 3-1-2010 ....................... 4,645 4,807,575
Total ................................. 10,468,687
NEW YORK - 3.62%
New York State Medical Care Facilities Finance Agency,
Mental Health Services Facilities Improvement
Revenue Bonds, 1993 Series F Refunding,
5.375%, 2-15-2014 ..................... 12,000 11,850,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW YORK (Continued)
The City of New York, General Obligation Bonds:
Fiscal 1994 Series C, Inverse Floaters,
20.36%, 9-30-2003 (C) ................. $ 3,250 $ 4,472,812
Fiscal 1997 Series H,
6.125%, 8-1-2025 ...................... 4,230 4,288,163
Dormitory Authority of the State of New York:
State University Educational Facilities,
Revenue Bonds, Series 1990B,
7.5%, 5-15-2011 ....................... 2,000 2,312,500
Department of Health of the State of
New York, Revenue Bonds, Series 1996,
5.5%, 7-1-2010 ........................ 2,000 2,030,000
Nyack Hospital, Revenue Bonds, Series 1996,
6.25%, 7-1-2013 ....................... 1,000 1,032,500
New York State Urban Development Corporation,
Correctional Capital Facilities Revenue Bonds,
1993A Refunding Series,
5.25%, 1-1-2014 ....................... 3,000 2,962,500
New York City Transitional Finance Authority,
Future Tax Secured Bonds, Fiscal 1999 Series C
Tax-Exempt Bonds,
5.0%, 5-1-2019 ........................ 3,000 2,707,500
Total ................................. 31,655,975
NORTH CAROLINA - 1.63%
The Columbus County Industrial Facilities
and Pollution Control Financing Authority
(North Carolina), Environmental Improvement
Revenue Bonds, 1996 Series A,
5.85%, 12-1-2020 ...................... 5,000 4,837,500
North Carolina Medical Care Commission,
Hospital Revenue Bonds:
Gaston Health Care, Series 1998,
5.0%, 2-15-2019 ....................... 2,500 2,218,750
Halifax Regional Medical Center, Series 1998,
5.0%, 8-15-2018 ....................... 2,170 1,877,050
Rex Healthcare, Series 1998,
5.0%, 6-1-2017 ........................ 750 684,375
The Martin County Industrial Facilities and
Pollution Control Financing Authority (North
Carolina), Solid Waste Disposal Revenue Bonds
(Weyerhaeuser Company Project), Series 1993,
5.65%, 12-1-2023 ...................... 2,500 2,356,250
County of Cumberland, North Carolina, Hospital
Facility Revenue Bonds (Cumberland County
Hospital System, Inc.), Series 1999,
5.25%, 10-1-2019 ...................... 2,500 2,287,500
Total ................................. 14,261,425
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NORTH DAKOTA - 0.98%
City of Fargo, North Dakota, Health System
Revenue Bonds (Meritcare Obligated Group),
Series 1996A,
5.55%, 6-1-2016 ....................... $ 5,350 $ 5,289,812
County of Burleigh, North Dakota, Healthcare
Revenue Refunding Bonds, Series 1999
(Medcenter One, Inc.),
5.25%, 5-1-2013 ....................... 2,000 1,950,000
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 ....................... 1,380 1,295,475
Total ................................. 8,535,287
OHIO - 1.18%
State of Ohio Air Quality Development Revenue
Bonds (Columbus Southern Power Company
Project), Series 1985 B,
6.25%, 12-1-2020 ...................... 4,500 4,561,875
County of Erie, Ohio, Franciscan Services
Corporation, Revenue Refunding Bonds,
Series 1993 A (Providence Hospital, Inc.),
6.0%, 1-1-2013 ........................ 4,000 4,050,000
City of Moraine, Ohio, Solid Waste
Disposal Revenue Bonds (General Motors
Corporation Project), Series 1994,
6.75%, 7-1-2014 ....................... 1,550 1,722,438
Total ................................. 10,334,313
OKLAHOMA - 0.69%
Oklahoma Housing Finance Agency, Single
Family Mortgage Revenue Bonds
(Homeownership Loan Program):
1995 Series B, Subseries B-2 (AMT),
7.625%, 9-1-2026 ...................... 4,605 4,984,913
1996 Series A,
7.05%, 9-1-2026 ....................... 995 1,065,894
Total ................................. 6,050,807
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
OREGON - 0.67%
State of Oregon, Housing and Community
Services Department, Mortgage Revenue
Bonds, Single-Family Mortgage Program:
1996 Series D,
6.375%, 7-1-2027 ...................... $ 3,150 $ 3,256,313
1992 Series B,
6.875%, 7-1-2028 ...................... 2,500 2,618,750
Total ................................. 5,875,063
PENNSYLVANIA - 3.79%
City of Philadelphia, Pennsylvania, Water
and Wastewater Revenue Bonds, Series 1993,
Inverse Rate Securities:
7.54%, 6-15-2012 (A) .................. 7,100 7,250,875
7.54%, 6-15-2012 (A) .................. 4,650 5,202,188
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 5,018,750
Allegheny County Hospital Development Authority
(Pennsylvania), UPMC Health System Revenue
Refunding Bonds, Series 1999B,
5.0%, 12-15-2017 ...................... 5,000 4,550,000
The Philadelphia Parking Authority, Airport
Parking Revenue Bonds, Series of 1999,
5.25%, 9-1-2020 ....................... 3,000 2,790,000
City of Philadelphia, Pennsylvania, General
Obligation Bonds, Series 1998:
4.75%, 3-15-2017 ...................... 1,615 1,423,219
4.75%, 3-15-2018 ...................... 1,000 876,250
Pennsylvania Intergovernmental Cooperation
Authority, Special Tax Revenue Refunding
Bonds (City of Philadelphia Funding Program),
Series of 1999,
5.0%, 6-15-2021 ....................... 2,500 2,237,500
Falls Township Hospital Authority, Refunding
Revenue Bonds, The Delaware Valley Medical Center
Project (FHA Insured Mortgage), Series 1992,
7.0%, 8-1-2022 ........................ 2,000 2,152,500
Pennsylvania Higher Educational Facilities Authority,
Revenue Bonds (Thomas Jefferson University),
1999 Series A,
5.0%, 7-1-2019 ........................ 1,750 1,583,750
Total ................................. 33,085,032
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
SOUTH CAROLINA - 1.77%
South Carolina Jobs - Economic Development
Authority, Hospital Revenue Refunding and
Improvement Bonds (South Carolina Baptist
Hospital), Series 1993D, Intermediate Longs,
Inverse Floating Securities,
7.22%, 8-1-2021 (A) ................... $14,550 $ 13,495,125
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 1,937,500
Total ................................. 15,432,625
TENNESSEE - 0.80%
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 2,511,675
Multi-Modal Interchangeable Rate, Health Facility
Revenue Bonds (Richland Place, Inc. Project),
Series 1993,
5.5%, 5-1-2023 ........................ 1,950 1,845,187
Volunteer State Student Funding Corporation,
Educational Loan Revenue Bonds,
Junior Subordinate Series 1993C Bonds,
5.85%, 12-1-2008 ...................... 2,700 2,639,250
Total ................................. 6,996,112
TEXAS - 6.26%
AllianceAirport Authority, Inc.,
Special Facilities Revenue Bonds,
Series 1991 (American Airlines, Inc.
Project),
7.0%, 12-1-2011 ....................... 14,400 15,876,000
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 4,862,500
1997 Series D (AMT) TEAMS Structure:
5.65%, 3-1-2029 ....................... 2,500 2,390,625
5.7%, 9-1-2029 ........................ 1,500 1,443,750
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TEXAS (Continued)
Trinity River Authority of Texas (Tarrant
County Water Project), Improvement and Refunding
Revenue Bonds, Series 1999,
5.25%, 2-1-2020 ....................... $7,415 $ 6,933,025
Amarillo Health Facilities Corporation,
Hospital Revenue Bonds (Baptist St. Anthony's
Hospital Corporation Project), Series 1998,
5.5%, 1-1-2015 ........................ 6,320 6,280,500
City of Austin, Texas, Subordinate Lien
Revenue Refunding Bonds, Series 1998,
5.25%, 5-15-2019 ...................... 5,000 4,762,500
Gulf Coast Waste Disposal Authority,
Multi-Modal Interchangeable Rate Revenue
Bonds (Champion International Corporation
Project), Series 1992A,
6.875%, 12-1-2028 ..................... 3,220 3,413,200
Lufkin Health Facilities Development
Corporation, Health System Revenue and
Refunding Bonds (Memorial Health System
of East Texas), Series 1995,
6.875%, 2-15-2026 ..................... 2,995 3,148,494
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 2,760,938
Midland County Hospital District, Hospital
Revenue Refunding Bonds, Series 1997,
5.375%, 6-1-2016 ...................... 2,000 1,935,000
Collin County Housing Finance Corporation,
Student Housing Revenue Bonds (Collin
County Community College District Foundation,
Inc. Project), Series 1998A,
5.25%, 6-1-2031 ....................... 1,000 870,000
Total ................................. 54,676,532
UTAH - 5.80%
Tooele County, Utah, Hazardous Waste Treatment
Revenue Bonds (Union Pacific Corporation/
USPCI, Inc. Project), Series A,
5.7%, 11-1-2026 ....................... 37,200 33,945,000
Intermountain Power Agency, Power Supply
Revenue Refunding Bonds, 1993 Series A,
Inverse Floating Rate Securities (INFLOS),
7.266%, 7-1-2021 (A) .................. 18,200 16,766,750
Total ................................. 50,711,750
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WASHINGTON - 7.32%
Washington Public Power Supply System:
Nuclear Project No. 3, Refunding Revenue Bonds:
Series 1989B,
7.125%, 7-1-2016 ...................... $20,750 $ 23,836,563
Series 1993C, Inverse Floating Rate Security,
6.87%, 7-1-2012 (A) ................... 7,000 6,658,750
Nuclear Project No. 1, Refunding Revenue Bonds:
Series 1989B,
7.125%, 7-1-2016 ...................... 8,200 9,419,750
Series 1993A, Inverse Floating Rate Security,
7.47%, 7-1-2011 (A) ................... 7,500 8,109,375
Nuclear Project No. 2, Refunding Revenue
Bonds, Series 1994A, Inverse Floating Rate
Securities,
6.52%, 7-1-2012 (A) ................... 2,500 2,418,750
State of Washington, Various Purpose General
Obligation Bonds, Series 1990A,
6.75%, 2-1-2015 ....................... 4,995 5,600,644
Pilchuck Development Public Corporation (State
of Washington), Special Facilities Airport
Revenue Bonds, Series 1993 (TRAMCO, INC. Project),
6.0%, 8-1-2023 ........................ 3,500 3,473,750
Public Utility District No. 1 of Douglas County,
Washington, Wells Hydroelectric Revenue Bonds,
Series of 1965,
3.7%, 9-1-2018 ........................ 4,130 3,458,875
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 ...................... 875 980,000
Total ................................. 63,956,457
WEST VIRGINIA - 0.66%
Braxton County, West Virginia, Solid Waste
Disposal Revenue Bonds (Weyerhaeuser Company
Project), Series 1995A,
6.5%, 4-1-2025 ........................ 3,500 3,670,625
The County Commission of Monongalia County, West
Virginia, Pollution Control Revenue Bonds (The
Potomac Edison Company Fort Martin Station Project),
1993 Series B,
5.95%, 4-1-2013 ....................... 2,000 2,065,000
Total ................................. 5,735,625
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WISCONSIN - 0.95%
Wisconsin Public Power Incorporated SYSTEM
(The), Power Supply System Revenue Bonds,
Series 1993B-2, Yield Curve Notes (YCNs),
6.8%, 7-1-2014 (A) .................... $ 5,500 $ 5,390,000
Wisconsin Housing and Economic Development
Authority, Home Ownership Revenue Bonds,
1997 Series H,
5.75%, 9-1-2028 ....................... 3,000 2,917,500
Total ................................. 8,307,500
TOTAL MUNICIPAL BONDS - 94.91% $829,598,190
(Cost: $834,285,556)
TOTAL SHORT-TERM SECURITIES - 3.89% $ 33,952,154
(Cost: $33,952,154)
TOTAL INVESTMENT SECURITIES - 98.80% $863,550,344
(Cost: $868,237,710)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.20% 10,532,126
NET ASSETS - 100.00% $874,082,470
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
SEPTEMBER 30, 1999
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, 1999.
(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, 1999.
(C) The interest rate is subject to change periodically and inversely based
upon prevailing market rates with a leverage factor of three. The interest
rate shown is the rate in effect at September 30, 1999.
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, 1999
(In Thousands, Except for Per Share and Share Amounts)
Assets
Investment securities--at value
(Notes 1 and 3) ............................... $863,550
Cash ........................................... 70
Receivables:
Interest ...................................... 12,690
Fund shares sold .............................. 165
Prepaid insurance premium ...................... 28
Other assets .................................... 10
--------
Total assets ................................ 876,513
--------
Liabilities
Payable to Fund shareholders ................... 2,159
Accrued service fee (Note 2) ................... 173
Accrued transfer agency and dividend
disbursing (Note 2) ........................... 75
Accrued management fee (Note 2) ................ 12
Accrued accounting services fee (Note 2) ....... 7
Accrued distribution fee (Note 2) .............. 5
--------
Total liabilities ........................... 2,431
--------
Total net assets ........................... $874,082
========
Net Assets
$0.001 par value capital stock
Capital stock ................................. $ 127
Additional paid-in capital .................... 873,386
Accumulated undistributed income:
Accumulated undistributed net investment
income ...................................... 701
Accumulated undistributed net realized gain on
investment transactions ..................... 4,555
Net unrealized depreciation in value of
investments ................................. (4,687)
--------
Net assets applicable to outstanding units
of capital ................................. $874,082
========
Net asset value per share (net assets divided
by shares outstanding)
Class A ........................................ $6.90
Class Y ........................................ $6.90
Capital shares outstanding
Class A ........................................ 126,596,042
Class Y ........................................ 281
Capital shares authorized ........................ 600,000,000
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended SEPTEMBER 30, 1999
(In Thousands)
Investment Income
Interest and amortization (Note 1B) .............. $ 54,506
--------
Expenses (Note 2):
Investment management fee ....................... 4,196
Service fee - Class A............................ 2,034
Transfer agency and dividend disbursing - Class A 758
Distribution fee - Class A....................... 129
Accounting services fee ......................... 85
Custodian fees .................................. 37
Audit fees ...................................... 20
Legal fees ...................................... 14
Other ........................................... 168
--------
Total expenses ................................ 7,441
--------
Net investment income ........................ 47,065
--------
Realized and Unrealized Gain (Loss) on
Investments (Notes 1 and 3)
Realized net gain on securities .................. 9,130
Realized net gain on put options purchased ....... 221
Realized net loss on futures contracts closed .... (350)
--------
Net realized gain on investments ................ 9,001
Net unrealized depreciation in value of
investments during the period ................... (86,742)
--------
Net loss on investments ....................... (77,741)
--------
Net decrease in net assets resulting
from operations ............................ $(30,676)
=========
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,
-----------------------------
1999 1998
-------------- ------------
Increase (Decrease) in Net Assets
Operations:
Net investment income.............. $47,065 $ 48,804
Realized net gain on
investments ..................... 9,001 16,941
Unrealized appreciation
(depreciation) ................... (86,742) 16,492
-------- --------
Net increase (decrease) in net assets
resulting from operations ...... (30,676) 82,237
-------- --------
Distributions to shareholders from (Note 1D):*
Net investment income:
Class A ......................... (47,791) (48,648)
Class Y** ....................... --- ---
Realized gains on securities transactions:
Class A ......................... (14,339) (12,104)
Class Y ......................... --- ---
-------- --------
(62,130) (60,752)
-------- --------
Capital share transactions:
Proceeds from sale of shares:
Class A (25,266,631 and 41,023,912
shares, respectively) .......... 185,060 307,508
Class Y (270 and 0 shares, respectively) 2 ---
Proceeds from reinvestment of dividends
and/or capital gains distribution:
Class A (7,012,942 and 6,763,886
shares, respectively) .......... 51,386 50,042
Class Y (11 and 0 shares, respectively)** --- ---
Payments for shares redeemed:
Class A (36,372,123 and 50,159,643
shares, respectively) .......... (266,449) (376,023)
Class Y (0 and 0 shares, respectively) --- ---
--------- --------
Net decrease in net assets resulting
from capital share transactions (30,001) (18,473)
--------- --------
Total increase (decrease) .... (122,807) 3,012
Net Assets
Beginning of period ................ 996,889 993,877
--------- --------
End of period, including undistributed
net investment income of $701 and
$1,427, respectively .............. $874,082 $996,889
======== ========
*See "Financial Highlights" on pages 27 - 28.
**Amounts for the fiscal period ended September 30, 1999 not shown due to
rounding.
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the fiscal year ended
September 30,
------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
Net asset value,
beginning of period $7.63 $7.47 $7.32 $7.25 $6.91
----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... 0.36 0.37 0.38 0.39 0.39
Net realized and
unrealized gain
(loss) on
investments ..... (0.61) 0.25 0.30 0.12 0.38
----- ----- ----- ----- -----
Total from investment
operations ....... (0.25) 0.62 0.68 0.51 0.77
----- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.37) (0.37) (0.37) (0.39) (0.39)
From capital gains (0.11) (0.09) (0.16) (0.05) (0.00)
In excess of capital
gains ........... (0.00) (0.00) (0.00) (0.00) (0.04)
----- ----- ----- ----- -----
Total distributions (0.48) (0.46) (0.53) (0.44) (0.43)
----- ----- ----- ----- -----
Net asset value,
end of period .... $6.90 $7.63 $7.47 $7.32 $7.25
===== ===== ===== ===== =====
Total return* ...... -3.46% 8.67% 9.77% 7.16% 11.51%
Net assets, end of
period (in
millions) ........ $874 $997 $994 $997 $975
Ratio of expenses to
average net assets 0.79% 0.72% 0.67% 0.68% 0.65%
Ratio of net investment
income to average
net assets ....... 4.98% 4.95% 5.14% 5.23% 5.51%
Portfolio
turnover rate .... 30.93% 50.65% 47.24% 74.97% 70.67%
*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.
FINANCIAL HIGHLIGHTS
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout the Period:
For the
period
from
12/30/98*
through
9/30/99
-------
Net asset value,
beginning of period $7.41
-----
Income from investment
operations:
Net investment
income .......... 0.28
Net realized and
unrealized loss
on investments .. (0.51)
-----
Total from investment
operations ....... (0.23)
-----
Less dividends from
net investment
income ........... (0.28)
-----
Net asset value,
end of period .... $6.90
=====
Total return ....... -3.21%
Net assets, end of
period (in
thousands) ....... $2
Ratio of expenses
to average net
assets ........... 0.67%**
Ratio of net
investment income
to average net
assets ........... 5.08%**
Portfolio
turnover rate .... 30.93%***
*Commencement of operations.
**Annualized.
***For the fiscal year ended September 30, 1999.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
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 tax. 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 business day following 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. As of June
30, 1999, the fee is payable by the Fund at the annual rate of 0.525% of net
assets up to $500 million, 0.50% of net assets over $500 million and up to $1
billion, 0.45% of net assets over $1 billion and up to $1.5 billion, and 0.40%
of net assets over $1.5 billion. Prior to June 30, 1999, the fee consisted 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 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 the 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 for Class A shares (which are not an expense of the Fund) of
$993,053, out of which W&R paid sales commissions of $571,128 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 $36,815, 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 $280,808,480 while proceeds from maturities and
sales aggregated $305,245,576. Purchases of options aggregated $14,910,184
while proceeds from options aggregated $15,131,272 Purchases of short-term
securities aggregated $1,442,892,420 while proceeds from maturities and sales
aggregated $1,442,184,774. No long-term U.S. Government securities were bought
or sold during the period ended September 30, 1999.
For Federal income tax purposes, cost of investments owned at September 30,
1999 was $872,568,649, resulting in net unrealized appreciation of $9,018,305,
of which $22,876,651 related to appreciated securities and $31,894,956 related
to depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $8,892,543 during its fiscal year ended September 30, 1999, of which a
portion was paid to the Fund's shareholders during the period ended September
30, 1999. Remaining capital gain net income 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
The Fund is authorized to offer four classes of shares, Class A, Class B,
Class C and Class Y, each of which have equal rights as to assets and voting
privileges. Only Class A and Class Y shares were issued during the fiscal year
ended September 30, 1999. Class Y shares are not subject to a sales charge on
purchases, are not subject to a Rule 12b-1 Distribution and Service Plan and are
subject to a separate transfer agency and dividend disbursement services fee
structure. A comprehensive discussion of the terms under which shares of either
class are offered is contained in the Prospectus and the Statement of Additional
Information for the Fund.
Income, non-class specific expenses, and realized and unrealized gains and
losses are allocated daily to each class of shares based on the value of their
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity.
<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, 1999, and the related statement of operations for the fiscal
year then ended, the statements of changes in net assets for each of the two
fiscal years in the period then ended, and the financial highlights for each of
the five fiscal years in the 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 as of
September 30, 1999, by correspondence with the custodian. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of United
Municipal Bond Fund, Inc. as of September 30, 1999, the results of its
operations for the fiscal year then ended, the changes in its net assets for
each of the two fiscal years in the period then ended, and the financial
highlights for each of the five fiscal years in the period then ended in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
November 5, 1999
<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 Exempt Non- Long-Term Exempt
Date Total IncomeCapital GainInterestQualifyingCapital Gain Interest
--------- --------------------------------------------------- --------
Class A
10-16-98$0.0310$0.0010 $--- $0.0300 $0.0010 $--- $0.0300
11-13-98 0.0310 0.0010 --- 0.0300 0.0010 --- 0.0300
12-16-98 0.1452 0.0016 0.1107 0.0329 0.0016 0.1107 0.0329
01-13-99 0.0310 0.0010 --- 0.0300 0.0010 --- 0.0300
02-10-99 0.0310 0.0010 --- 0.0300 0.0010 --- 0.0300
03-10-99 0.0310 0.0010 --- 0.0300 0.0010 --- 0.0300
04-14-99 0.0310 0.0010 --- 0.0300 0.0010 --- 0.0300
05-12-99 0.0300 0.0010 --- 0.0290 0.0010 --- 0.0290
06-09-99 0.0300 0.0010 --- 0.0290 0.0010 --- 0.0290
07-14-99 0.0300 0.0010 --- 0.0290 0.0010 --- 0.0290
08-11-99 0.0300 0.0010 --- 0.0290 0.0010 --- 0.0290
09-15-99 0.0300 0.0010 --- 0.0290 0.0010 --- 0.0290
------- ------ ------- ------- ------- ------- -------
Total $0.4812$0.0126 $0.1107 $0.3579 $0.0126 $0.1107 $0.3579
============== ======= ======= ======= ======= =======
Class Y
01-13-99$0.0310$0.0010 $--- $0.0300 $0.0010 $--- $0.0300
02-10-99 0.0310 0.0010 --- 0.0300 0.0010 --- 0.0300
03-10-99 0.0310 0.0010 --- 0.0300 0.0010 --- 0.0300
04-14-99 0.0310 0.0010 --- 0.0300 0.0010 --- 0.0300
05-12-99 0.0330 0.0011 --- 0.0319 0.0011 --- 0.0319
06-09-99 0.0310 0.0010 --- 0.0300 0.0010 --- 0.0300
07-14-99 0.0310 0.0010 --- 0.0300 0.0010 --- 0.0300
08-11-99 0.0310 0.0010 --- 0.0300 0.0010 --- 0.0300
09-15-99 0.0300 0.0010 --- 0.0290 0.0010 --- 0.0290
------- ------ ------- ------- ------- ------- -------
Total $0.2800 $.0091 $--- $.2709 $.0091 $ $0.2709
============== ======= ======= ======= ======= =======
NON-QUALIFYING DIVIDENDS -- The non-qualifying portion of distributions
represents the taxable portion of dividends paid and does not qualify for the
dividends received deduction for corporations.
The tax status of dividends paid will be reported to you on Form 1099-DIV after
the close of the applicable calendar year.
Income from the Fund may be subject to the alternative minimum tax.
Shareholders are advised to consult with their tax adviser concerning the tax
treatment of dividends and distributions from the Fund.
<PAGE>
Shareholder Meeting Results
A special meeting of United Municipal Bond Fund, Inc. was held on June 22, 1999.
The matters voted upon by the shareholders and the resulting votes for each
matter are presented below.
Item 1. To elect the Board of Directors:
Broker
For Withhold Non-Votes*
J. Concannon 72,401,750 2,416,229 0
J. Dillingham 72,410,765 2,407,214 0
D. Gardner 72,221,931 2,596,048 0
L. Graves 72,417,583 2,400,396 0
J. Harroz Jr. 72,228,755 2,589,224 0
J. Hayes 72,167,160 2,650,819 0
R. Hechler 72,304,514 2,513,465 0
H. Herrmann 72,286,253 2,531,726 0
G. Johnson 72,135,798 2,682,181 0
W. Morgan 72,259,139 2,558,840 0
R. Reimer 72,201,505 2,616,474 0
F. Ross 72,407,433 2,410,546 0
E. Schwartz 72,308,724 2,509,255 0
K. Tucker 72,378,206 2,439,773 0
F. Vogel 72,437,393 2,380,586 0
Item 2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent accountants for its current fiscal year:
Broker
For Against Abstain Non-Votes*
71,422,798 487,955 2,907,226 0
Item 3. To approve or disapprove the amendment to the Fund's investment
management agreement with Waddell & Reed Investment Management Company:
Broker
For Against Abstain Non-Votes*
66,831,336 4,161,123 3,581,761 243,759
Item 5. To approve or disapprove the Fund's Articles of Incorporation to
change the par value of Fund shares to $0.001:
Broker
For Against Abstain Non-Votes*
65,575,006 3,223,844 6,019,129 0
*Broker Non-Votes are proxies received by the Fund from brokers or nominees when
the broker or nominee neither has received instructions from the beneficial
owner or other persons entitled to vote nor has discretionary power to vote on a
particular matter.
<PAGE>
DIRECTORS
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 K. 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
Helge K. Lee, Vice President and Secretary
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 Accumulative Fund
United Asset Strategy Fund, Inc.
United Bond Fund
United Cash Management, Inc.
United Continental Income Fund, Inc.
United Government Securities Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Income Fund
United International Growth Fund, Inc.
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United New Concepts Fund, Inc.
United Retirement Shares, Inc.
United Science and Technology Fund
United Small Cap Fund, Inc.
United Vanguard 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(9-99)
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