United
Municipal
Bond Fund,
Inc.
SEMIANNUAL
REPORT
---------------------------------------
For the six months ended March 31, 1999
<PAGE>
This report is submitted for the general information of the shareholders of
United Municipal Bond Fund, Inc. It is not authorized for distribution to
prospective investors in the Fund unless accompanied with or preceded by the
United Municipal Bond Fund, Inc. current prospectus.
<PAGE>
PRESIDENT'S LETTER
MARCH 31, 1999
Dear Shareholder:
As president of your Fund, I would like to thank you for your continued
confidence as an investor. From every area of Waddell & Reed, including your
personal financial advisor, our goal has been to provide the best service
possible to our shareholders.
While it is impossible to predict the future direction of the markets, there are
some basic principles that we stand by that can help investors achieve their
objectives:
. Develop a financial plan that helps you pinpoint your financial objectives,
and identify specific strategies for turning your dreams into reality. There
is no better way to plan for your future.
. Invest on a regular basis. It can be one of the best ways to invest long
term and provide a hedge against market volatility.
. Adopt a long-term view to take advantage of compounding. The key to
successful investing is time, not timing. The power of compounding is
awesome and, on a long-term basis, can overwhelm any nuances of timing.
. Review your financial plan regularly. Financial planning is an ongoing
process that requires periodic review.
Waddell & Reed is positioned to assist you as you work toward your financial
goals. We will continue to offer quality investment products and personal
service to make the financial planning and investment process convenient and
accessible to you. Our locally based financial advisors are ready to assist you
with your total financial plan to help you plan for your retirement, to help you
meet your education funding goals or to achieve other financial objectives.
We look forward to assisting you in the future. If you have any questions about
your account, wish to review your financial plan or have other financial issues
that are important to you, contact your financial advisor or your local Waddell
& Reed office.
Respectfully,
Robert L. Hechler
President
<PAGE>
SHAREHOLDER SUMMARY
- --------------------------------------------------------------
United Municipal Bond Fund, Inc.
PORTFOLIO STRATEGY:
Minimum 80% investment OBJECTIVE: Income not subject to Federal
quality Municipal Bonds income taxation. (Income may be subject
to state and local
taxes and a portion may be
Maximum 10% Non-Municipal subject to Federal taxes,
Bond Debt Securities including alternative
minimum tax.)
May own 25% or more
Industrial Revenue Bonds STRATEGY: Invests in municipal bonds
(debt securities the interest on which
is generally exempt from Federal income
tax).
FOUNDED: 1976
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
<PAGE>
PERFORMANCE SUMMARY - Class A Shares
PER SHARE DATA
For the Six Months Ended March 31, 1999
- ---------------------------------------
DIVIDENDS PAID $0.19
=====
CAPITAL GAINS DISTRIBUTION $0.11
=====
NET ASSET VALUE ON
3/31/99 $7.38 adjusted to: $7.49(A)
9/30/98 7.63
-----
CHANGE PER SHARE $(0.14)
=====
(A) This number includes the capital gains distribution of $0.11 paid in
December 1998 added to the actual net asset value on March 31, 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 3-31-99 0.90% 5.38%
5-year period ended 3-31-99 6.83% 7.76%
10-year period ended 3-31-99 8.05% 8.52%
*Performance data quoted represents past performance and is based on deduction
of 4.25% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On March 31, 1999, United Municipal Bond Fund, Inc. had net assets totaling
$964,590,009 invested in a diversified portfolio.
As a shareholder of United Municipal Bond Fund, Inc., for every $100 you had
invested on March 31, 1999, your Fund owned:
$14.30 Derivative Bonds
13.81 Industrial Revenue/Pollution Control Revenue Bonds
12.47 Airport Revenue Bonds
11.17 Housing Revenue Bonds
10.84 Hospital Revenue Bonds
10.73 Public Power Revenue Bonds
10.13 Other Municipal Bonds
4.68 Cash and Cash Equivalents
4.16 Lease/Certificates of Participation Bonds
4.13 Student Loan Bonds
3.58 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.
MARCH 31, 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 $ 1,942,500
ALASKA _ 3.84%
City of Valdez, Alaska, Marine
Terminal Revenue Refunding Bonds
(BP Pipelines (Alaska) Inc. Project),
Series 1993A,
5.85%, 8-1-2025 ....................... 28,650 29,831,813
State of Alaska, International Airports
System Revenue Bonds, Series 1999A,
5.0%, 10-1-2019 ....................... 3,000 2,906,250
Alaska Energy Authority, Power Revenue
Refunding Bonds, Fifth Series (Bradley
Lake Hydroelectric Project),
5.0%, 7-1-2021 ........................ 2,350 2,264,812
Alaska Housing Finance Corporation,
Housing Development Bonds, 1997
Series B (AMT),
5.8%, 12-1-2029 ....................... 2,000 2,045,000
Total ................................. 37,047,875
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 1,869,562
City of Gurdon, Arkansas, Pollution Control
Revenue Refunding Bonds,
1998 Series A (Non-AMT),
5.375%, 3-1-2020 ...................... 1,250 1,251,563
Total ................................. 3,121,125
CALIFORNIA _ 9.96%
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 21,396,375
Hospital Revenue Certificates of Participation,
Series 1992, Cedars-Sinai Medical Center,
6.5%, 8-1-2012 ........................ 5,200 5,954,000
Hospital Refunding Revenue Certificates of
Participation, Series 1993, Cedars-Sinai Medical
Center, Inverse Floating Rate Securities (INFLOS),
7.626%, 11-1-2015 (A) ................. 3,300 3,361,875
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA (Continued)
East Bay Municipal Utility District (Alameda
and Contra Costa Counties, California),
Wastewater System Subordinated Revenue
Refunding Bonds, Series 1993B-2,
Inverse Floating Securities:
7.17%, 6-1-2013 (A) ................... $ 8,450 $ 9,474,563
7.27%, 6-1-2020 (A) ................... 7,250 7,920,625
Transmission Agency of Northern California,
California-Oregon Transmission Project
Revenue Bonds, 1990 Series A,
7.0%, 5-1-2013 ........................ 12,000 14,895,000
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 9,891,875
Southern California Public Power Authority:
Multiple Project Revenue Bonds, 1989 Series,
6.75%, 7-1-2012 ....................... 3,455 4,202,144
Mead-Adelanto Project Revenue Bonds,
1994 Series A, Linked Inverse Floating
Rate Security,
5.15%, 7-1-2015 ....................... 2,800 2,894,500
Mead-Phoenix Project Revenue Bonds,
1994 Series A, Linked Inverse Floating
Rate Security,
5.15%, 7-1-2015 ....................... 2,600 2,687,750
California Rural Home Mortgage Finance
Authority, Single Family Mortgage
Revenue Bonds (Mortgage-Backed Securities
Program):
1998 Series A,
5.75%, 12-1-2029 ...................... 3,345 3,700,406
1997 Series C,
6.75%, 3-1-2029 ....................... 2,050 2,288,312
1998 Series B,
5.75%, 12-1-2029 ...................... 2,000 2,212,500
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 3,144,988
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 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 $ 2,040,880
Total ................................. 96,065,793
COLORADO _ 4.43%
City and County of Denver, Colorado,
Airport System Revenue Bonds:
Series 1991D,
7.75%, 11-15-2013 ..................... 11,905 14,970,537
Series 1992B,
7.25%, 11-15-2023 ..................... 11,990 13,114,063
Series 1996D,
5.5%, 11-15-2025 ...................... 2,000 2,072,500
Colorado Housing and Finance Authority,
Single Family Program Senior and Subordinate
Bonds:
1996 Series B-1,
7.65%, 11-1-2026 ...................... 2,750 3,066,250
1997 Series C-2,
6.875%, 11-1-2028 ..................... 2,500 2,765,625
1999 Series A-2,
6.45%, 4-1-2030 ....................... 2,185 2,395,306
1997 Series A-2,
7.25%, 5-1-2027 ....................... 2,000 2,255,000
1998 Series A-3,
6.5%, 5-1-2016 ........................ 1,000 1,095,000
Highlands Ranch Metropolitan District No. 3,
Douglas County, Colorado,
General Obligation Bonds, Series 1998A,
5.125%, 12-1-2012 ..................... 1,000 1,021,250
Total ................................. 42,755,531
CONNECTICUT _ 4.90%
Connecticut Development Authority, Water
Facilities Revenue Bonds (Bridgeport
Hydraulic Company Project):
1996 Series,
6.0%, 9-1-2036 ........................ 15,000 15,956,250
1995 Series,
6.15%, 4-1-2035 ....................... 9,200 9,936,000
Eastern Connecticut Resource Recovery
Authority, Solid Waste Revenue Bonds
(Wheelabrator Lisbon Project),
Series 1993A,
5.5%, 1-1-2014 ........................ 13,700 13,751,375
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CONNECTICUT (Continued)
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 $ 7,656,250
Total ................................. 47,299,875
FLORIDA _ 2.99%
Escambia County, Florida, Pollution Control Revenue
Bonds (Champion International Corporation Project):
Series 1994,
6.9%, 8-1-2022 ........................ 8,855 9,696,225
Series 1996,
6.4%, 9-1-2030 ........................ 6,200 6,626,250
Pasco County, Florida, Solid Waste Disposal
and Resource Recovery System, Revenue
Bonds, Series 1998 (AMT),
6.0%, 4-1-2011 ........................ 4,930 5,509,275
Housing Finance Authority of Lee County, Florida,
Single Family Mortgage Revenue Bonds:
Series 1998A, Subseries 6,
6.45%, 3-1-2031 ....................... 2,800 3,059,000
Series 1999A, Subseries 2,
5.0%, 9-1-2030 ........................ 1,620 1,617,975
City of Miami, Florida, Health Facilities
Authority, Health Facilities Revenue Refunding
Bonds (Mercy Hospital Project), Series 1994A,
Inverse Floating Rate Security (INFLOS),
6.97%, 8-15-2015 (A) .................. 2,200 2,293,500
Total ................................. 28,802,225
GEORGIA _ 3.08%
Municipal Electric Authority of Georgia:
Project One Special Obligation Bonds,
Fifth Crossover Series,
6.4%, 1-1-2013 ........................ 15,500 18,096,250
General Power Revenue Bonds,
1992B Series,
8.25%, 1-1-2011 ....................... 8,700 11,592,750
Total ................................. 29,689,000
HAWAII _ 2.49%
State of Hawaii, Airports System Revenue
Bonds, Second Series of 1991,
6.9%, 7-1-2012 ........................ 20,195 24,032,050
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
IDAHO _ 0.74%
Idaho Health Facilities Authority, Hospital
Revenue Refunding Bonds, Series 1992
(IHC Hospitals, Inc.),
6.65%, 2-15-2021 ...................... $ 6,000 $ 7,162,500
ILLINOIS _ 2.23%
City of Chicago:
Collateralized Single Family Mortgage Revenue Bonds:
Series 1998C-1,
6.3%, 9-1-2029 ........................ 4,000 4,360,000
Series 1998A-1,
6.45%, 9-1-2029 ....................... 2,500 2,756,250
Series 1997-B,
6.95%, 9-1-2028 ....................... 1,890 2,104,987
Chicago-O'Hare International Airport, General Airport
Revenue Refunding Bonds, 1993 Series A,
5.0%, 1-1-2012 ........................ 3,000 3,037,500
Illinois Health Facilities Authority,
Revenue Bonds:
Series 1999 (Alexian Brothers Health
System):
5.0%, 1-1-2025 ........................ 5,000 4,818,750
5.0%, 1-1-2019 ........................ 1,500 1,464,375
Series 1997A (Victory Health
Services),
5.375%, 8-15-2016 ..................... 3,000 2,996,250
Total ................................. 21,538,112
INDIANA _ 5.17%
Indiana State Office Building Commission,
Capitol Complex Revenue Bonds:
Series 1990B (State Office Building I Facility),
7.4%, 7-1-2015 ........................ 8,000 10,260,000
Series 1990A (Senate Avenue Parking Facility),
7.4%, 7-1-2015 ........................ 4,775 6,123,937
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 11,677,313
Indiana Transportation Finance Authority,
Highway Revenue Bonds, Series 1990A,
7.25%, 6-1-2015 ....................... 9,000 11,160,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
INDIANA (Continued)
East Chicago Elementary School Building
Corporation (Lake County, Indiana), First
Mortgage Refunding Bonds, Series 1996,
6.25%, 1-5-2016 ....................... $ 7,655 $ 8,631,013
Indiana Health Facility Financing Authority,
Hospital Revenue Bonds, Series 1999A
(Deaconess Hospital Obligated Group),
5.75%, 3-1-2019 ....................... 2,000 2,045,000
Total ................................. 49,897,263
KANSAS - 1.39%
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 8,610,000
1997 Series A-1 (AMT),
6.95%, 6-1-2029 ....................... 4,320 4,757,400
Total ................................. 13,367,400
LOUISIANA _ 2.45%
Louisiana Public Facilities Authority:
Hospital Revenue and Refunding Bonds:
St. Francis Medical Center Project,
Residual Interest Bonds (RIBS), Series 1994C,
7.355%, 7-22-2024 (A) ................. 7,150 8,374,437
Pendleton Memorial Methodist Hospital
Project, Series 1998,
5.25%, 6-1-2017 ....................... 2,000 1,932,500
Hospital Revenue Bonds,
Franciscan Missionaries of Our Lady Health
System Project, Series 1998C,
5.0%, 7-1-2019 ........................ 2,250 2,193,750
Parish of Jefferson Home Mortgage Authority,
Tax-Exempt Agency Mortgage-Backed
Securities, Series 1994A,
7.55%, 12-1-2026 ...................... 5,495 6,655,819
Parish of East Baton Rouge, State of
Louisiana, Refunding Revenue Bonds
(Georgia-Pacific Corporation Project),
Series 1998,
5.35%, 9-1-2011 ....................... 3,000 3,015,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
LOUISIANA (Continued)
Parish of Webster, Louisiana, Pollution
Control Revenue Refunding Bonds,
1998 Series B (non-AMT),
5.2%, 3-1-2013 ........................ $ 1,435 $ 1,445,763
Total ................................. 23,617,269
MASSACHUSETTS _ 1.21%
Massachusetts Housing Finance Agency,
Single Family Housing Revenue Bonds,
Series 57 (AMT),
5.6%, 6-1-2030 ........................ 4,945 5,050,081
Massachusetts Municipal Wholesale Electric
Company, Power Supply System Revenue Bonds,
1993 Series A, Inverse Floating Rate Security (INFLOS),
7.12%, 7-1-2018 (A) ....2,500 2,668,750
Massachusetts State College Building
Authority, Project and Refunding
Revenue Bonds, Senior Series 1994-A,
7.5%, 5-1-2014 ........................ 1,750 2,220,312
Boston Water and Sewer Commission,
General Revenue Bonds, 1992 Series A
(Senior Series),
5.75%, 11-1-2013 ...................... 1,575 1,716,750
Total ................................. 11,655,893
MICHIGAN - 3.34%
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 9,750,000
WMX Technologies, Inc. Project, Series 1993,
6.0%, 12-1-2013 ....................... 3,600 3,771,000
City of Detroit, Michigan, Sewage Disposal
System Revenue and Revenue Refunding Bonds,
Series 1993-A, Inverse Floating Rate Security
(INFLOS),
7.922%, 7-1-2023 (A) .................. 11,200 13,017,750
Michigan State Hospital Finance Authority:
Hospital Revenue and Refunding Bonds
(Bay Medical Center), Series 1997A,
5.375%, 7-1-2011 ...................... 2,190 2,304,975
Hospital Revenue Bonds (The Detroit Medical
Center Obligated Group), Series 1998A,
5.125%, 8-15-2018 ..................... 2,000 1,822,500
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MICHIGAN (Continued)
Charter County of Wayne, Michigan, Detroit
Metropolitan Wayne County Airport, Airport
Revenue Bonds, Subordinate Lien, Series 1993B,
5.25%, 12-1-2013 ...................... $ 1,500 $ 1,539,375
Total ................................. 32,205,600
MINNESOTA - 0.75%
City of Rochester, Minnesota, Health
Care Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center),
Series 1992D, Floating Inverse
Rate Securities (FIRS),
8.36%, 11-15-2009 (A) ................. 4,500 5,242,500
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 ........................ 2,000 2,032,500
Total ................................. 7,275,000
MISSISSIPPI _ 2.34%
Lowndes County, Mississippi, Solid Waste
Disposal and Pollution Control
Refunding Revenue Bonds (Weyerhaeuser
Company Project), Series 1992B, Indexed
Inverse Floating/Fixed Term Bonds,
8.95%, 4-1-2022 (A) ................... 11,000 13,131,250
Mississippi Higher Education Assistance
Corporation, Student Loan Revenue Bonds,
Subordinate Series 1996-C:
6.75%, 9-1-2014 ....................... 5,500 5,726,875
6.7%, 9-1-2012 ........................ 1,470 1,530,638
Mississippi Home Corporation, Single Family
Mortgage Revenue Bonds, Series 1999A,
5.25%, 6-1-2031 ....................... 2,000 2,185,000
Total ................................. 22,573,763
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MISSOURI _ 3.07%
Missouri Housing Development Commission,
Single Family Mortgage Revenue Bonds
(Homeownership Loan Program):
1995 Series C,
7.25%, 9-1-2026 ....................... $ 2,805 $ 3,120,562
1997 Series C-1 (Non-AMT),
6.55%, 9-1-2028 ....................... 1,960 2,151,100
1996 Series C,
7.45%, 9-1-2027 ....................... 1,465 1,660,944
1998 Series D-2 (AMT),
6.3%, 3-1-2029 ........................ 1,150 1,265,000
1998 Series B-2 (AMT),
6.4%, 3-1-2029 ........................ 975 1,059,094
1997 Series A-2,
7.3%, 3-1-2028 ........................ 925 1,044,094
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 4,825,000
Freeman Health System Project, Series 1998,
5.25%, 2-15-2018 ...................... 2,460 2,429,250
Lake of the Ozarks General Hospital, Inc.,
Series 1998,
5.1%, 2-15-2018 ....................... 2,220 2,178,375
Health Facilities Revenue Bonds
(Barnes-Jewish, Inc./Christian Health
Services), Series 1993A:
6.0%, 5-15-2011 ....................... 3,000 3,375,000
5.25%, 5-15-2014 ...................... 2,900 3,005,125
Poplar Bluff, Missouri, Public Building Corporation,
Leasehold Refunding and Improvement Revenue Bonds
(Poplar Bluff, Missouri), Series 1998,
5.1%, 9-1-2018 ........................ 2,000 1,985,000
Missouri Higher Education Loan Authority
(A Public Instrumentality and Body
Corporate and Politic of the State of
Missouri), Student Loan Revenue Bonds,
Subordinate Series 1994A,
5.45%, 2-15-2009 ...................... 1,500 1,505,625
Total ................................. 29,604,169
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MONTANA - 0.21%
Montana Higher Education Student Assistance
Corporation, Student Loan Revenue Bonds,
Subordinate Series 1998-B,
5.5%, 12-1-2031 ....................... $ 2,000 $ 2,007,500
NEBRASKA _ 1.88%
Nebraska Higher Education Loan Program, Inc.,
1993-2 Series A-6 Junior Subordinate Bonds,
6.4%, 6-1-2013 ........................ 14,500 15,496,875
Hospital Authority No. 1 of Scotts Bluff
County, Nebraska, Revenue Bonds (Regional
West Medical Center Project), Series 1998,
5.125%, 11-15-2019 .................... 2,750 2,657,188
Total ................................. 18,154,063
NEVADA _ 0.53%
Nevada Housing Division, Single Family
Mortgage Bonds:
1998 Series A-1 Mezzanine Bonds,
5.35%, 4-1-2016 ....................... 2,050 2,062,812
1996 Series C Subordinate Bonds,
6.35%, 4-1-2009 ....................... 940 992,875
Clark County, Nevada, Industrial Development
Revenue Bonds (Nevada Power Company Project)
Series 1997A,
5.9%, 11-1-2032 ....................... 2,000 2,032,500
Total ................................. 5,088,187
NEW HAMPSHIRE - 1.06%
State of New Hampshire, Turnpike System Revenue
Bonds, 1994 Series C, Residual Interest
Bonds (RIBS),
6.827%, 2-1-2024 (A) .................. 10,000 10,212,500
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW MEXICO _ 1.63%
New Mexico Educational Assistance Foundation:
Student Loan Program Bonds:
Second Subordinate 1996 Series A-3,
6.75%, 11-1-2008 ...................... $ 2,175 $ 2,340,844
First Subordinate 1996 Series A-2,
6.2%, 11-1-2008 ....................... 2,210 2,290,112
Second Subordinate 1995 Series A-3,
6.6%, 11-1-2010 ....................... 1,235 1,265,875
Student Loan Purchase Bonds,
Senior 1995 Series IV-A1 (AMT),
7.05%, 3-1-2010 ....................... 4,645 4,975,956
New Mexico Hospital Equipment Loan Council,
Hospital Revenue Bonds (Memorial Medical
Center, Inc. Project), Series 1998,
5.5%, 6-1-2028 ........................ 5,000 4,887,500
Total ................................. 15,760,287
NEW YORK _ 3.52%
Mental Health Services Facilities Improvement
Revenue Bonds, 1993 Series F Refunding,
5.375%, 2-15-2014 ..................... 12,000 12,465,000
The City of New York, General Obligation Bonds:
Fiscal 1997 Series H,
6.125%, 8-1-2025 ...................... 5,730 6,274,350
Fiscal 1994 Series C, Inverse Floaters,
22.46%, 9-30-2003 (C) ................. 3,250 4,883,125
Dormitory Authority of the State of New York:
State University Educational Facilities,
Revenue Bonds, Series 1990B,
7.5%, 5-15-2011 ....................... 2,000 2,467,500
Department of Health of the State of
New York, Revenue Bonds, Series 1996,
5.5%, 7-1-2010 ........................ 2,000 2,127,500
Nyack Hospital, Revenue Bonds, Series 1996,
6.25%, 7-1-2013 ....................... 1,000 1,080,000
New York State Urban Development Corporation,
Correctional Capital Facilities Revenue Bonds,
1993A Refunding Series,
5.25%, 1-1-2014 ....................... 3,000 3,206,250
New York City Industrial Development Agency,
Special Facility Revenue Bonds, Series 1998
(1998 British Airways Plc Project),
5.25%, 12-1-2032 ...................... 1,500 1,479,375
Total ................................. 33,983,100
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NORTH CAROLINA - 1.47%
North Carolina Medical Care Commission,
Hospital Revenue Bonds:
Gaston Health Care, Series 1998,
5.0%, 2-15-2019 ....................... $ 2,500 $ 2,421,875
Halifax Regional Medical Center, Series 1998,
5.0%, 8-15-2018 ....................... 2,170 2,061,500
Rex Healthcare, Series 1998,
5.0%, 6-1-2017 ........................ 2,000 1,985,000
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 5,168,750
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 2,515,625
Total ................................. 14,152,750
NORTH DAKOTA _ 0.73%
City of Fargo, North Dakota, Health System
Revenue Bonds (Meritcare Obligated Group),
Series 1996A,
5.55%, 6-1-2016 ....................... 5,350 5,637,562
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 1,400,425
Total ................................. 7,037,987
OHIO _ 1.12%
State of Ohio Air Quality Development Revenue
Bonds (Columbus Southern Power Company
Project), Series 1985 B,
6.25%, 12-1-2020 ...................... 4,500 4,753,125
County of Erie, Ohio, Franciscan Services
Corporation, Revenue Refunding Bonds,
Series 1993 A (Providence Hospital, Inc.),
6.0%, 1-1-2013 ........................ 4,000 4,190,000
City of Moraine, Ohio, Solid Waste
Disposal Revenue Bonds (General Motors
Corporation Project), Series 1994,
6.75%, 7-1-2014 ....................... 1,550 1,832,875
Total ................................. 10,776,000
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
OKLAHOMA _ 0.70%
Oklahoma Housing Finance Agency, Single
Family Mortgage Revenue Bonds
(Homeownership Loan Program):
1995 Series B, Subseries B-2 (AMT),
7.625%, 9-1-2026 ...................... $ 5,050 $ 5,630,750
1996 Series A,
7.05%, 9-1-2026 ....................... 1,000 1,108,750
Total ................................. 6,739,500
OREGON _ 0.62%
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 3,339,000
1992 Series B,
6.875%, 7-1-2028 ...................... 2,500 2,643,750
Total ................................. 5,982,750
PENNSYLVANIA _ 3.42%
City of Philadelphia, Pennsylvania, Water
and Wastewater Revenue Bonds, Series 1993,
Inverse Rate Securities,
7.63%, 6-15-2012 (A) .................. 11,750 13,277,500
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 5,437,500
Allegheny County Hospital Development Authority
(Pennsylvania), UPMC Health System Revenue
Refunding Bonds, Series 1999B,
5.0%, 12-15-2017 ...................... 5,000 4,910,450
County of Allegheny, Pennsylvania, Airport
Revenue Refunding Bonds,
Series 1997A-1 (AMT),
5.75%, 1-1-2012 ....................... 4,000 4,380,000
City of Philadelphia, Pennsylvania, General
Obligation Bonds, Series 1998:
4.75%, 3-15-2017 ...................... 1,615 1,566,550
4.75%, 3-15-2018 ...................... 1,000 967,500
Pennsylvania Intergovernmental Cooperation
Authority, Special Tax Revenue Refunding
Bonds (City of Philadelphia Funding Program),
Series of 1999,
5.0%, 6-15-2021 ....................... 2,500 2,456,250
Total ................................. 32,995,750
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
PUERTO RICO - 1.30%
Puerto Rico Public Buildings Authority,
Public Education and Health Facilities,
Refunding Bonds, Series M,
5.7%, 7-1-2016 ........................ $12,000 $ 12,570,000
SOUTH CAROLINA _ 1.80%
South Carolina Jobs - Economic Development
Authority, Hospital Revenue Refunding and
Improvement Bonds (South Carolina Baptist
Hospital), Series 1993D, Intermediate Longs,
Inverse Floating Securities,
7.57%, 8-1-2021 (A) ................... 14,550 15,332,063
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 2,067,500
Total ................................. 17,399,563
TENNESSEE _ 0.94%
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 2,710,687
Multi-Modal Interchangeable Rate, Health Facility
Revenue Bonds (Richland Place, Inc. Project),
Series 1993,
5.5%, 5-1-2023 ........................ 1,990 2,054,675
Volunteer State Student Funding Corporation,
Educational Loan Revenue Bonds,
Junior Subordinate Series 1993C Bonds,
5.85%, 12-1-2008 ...................... 2,700 2,733,750
Memphis-Shelby County Airport Authority,
Special Facilities Revenue Bonds,
Refunding Series 1997 (Federal Express
Corporation),
5.35%, 9-1-2012 ....................... 1,500 1,561,875
Total ................................. 9,060,987
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TEXAS _ 5.25%
AllianceAirport Authority, Inc.,
Special Facilities Revenue Bonds,
Series 1991 (American Airlines, Inc.
Project),
7.0%, 12-1-2011 ....................... $14,300 $ 16,731,000
Texas Department of Housing and Community
Affairs, Single Family Mortgage Revenue
Bonds:
1997 Series A (AMT) TEAMS Structure,
5.8%, 9-1-2029 ........................ 5,000 5,143,750
1997 Series D (AMT) TEAMS Structure:
5.65%, 3-1-2029 ....................... 2,500 2,553,125
5.7%, 9-1-2029 ........................ 1,500 1,543,125
Amarillo Health Facilities Corporation,
Hospital Revenue Bonds (Baptist St. Anthony's
Hospital Corporation Project), Series 1998,
5.5%, 1-1-2015 ........................ 6,320 6,746,600
City of Austin, Texas, Subordinate Lien
Revenue Refunding Bonds, Series 1998,
5.25%, 5-15-2019 ...................... 5,000 5,175,000
Gulf Coast Waste Disposal Authority,
Multi-Modal Interchangeable Rate Revenue
Bonds (Champion International Corporation
Project), Series 1992A,
6.875%, 12-1-2028 ..................... 3,220 3,489,675
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 3,305,731
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 2,946,187
Midland County Hospital District, Hospital
Revenue Refunding Bonds, Series 1997,
5.375%, 6-1-2016 ...................... 2,000 2,047,500
Collin County Housing Finance Corporation,
Student Housing Revenue Bonds (Collin
County Community College District Foundation,
Inc. Project), Series 1998A,
5.25%, 6-1-2031 ....................... 1,000 965,000
Total ................................. 50,646,693
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
UTAH - 5.83%
Tooele County, Utah, Hazardous Waste Treatment
Revenue Bonds (Union Pacific Corporation/
USPCI, Inc. Project), Series A,
5.7%, 11-1-2026 ....................... $37,200 $ 36,781,500
Intermountain Power Agency, Power Supply
Revenue Refunding Bonds, 1993 Series A,
Inverse Floating Rate Securities (INFLOS),
7.671%, 7-1-2021 (A) .................. 18,200 19,428,500
Total ................................. 56,210,000
WASHINGTON _ 7.07%
Washington Public Power Supply System:
Nuclear Project No. 3, Refunding Revenue Bonds:
Series 1989B,
7.125%, 7-1-2016 ...................... 20,750 25,496,563
Series 1993C, Inverse Floating Rate Security,
7.24%, 7-1-2012 (A) ................... 7,000 7,350,000
Nuclear Project No. 1, Refunding Revenue Bonds:
Series 1989B,
7.125%, 7-1-2016 ...................... 8,200 10,075,750
Series 1993A, Inverse Floating Rate Securities,
7.72%, 7-1-2011 (A) ................... 7,500 9,000,000
Nuclear Project No. 2, Refunding Revenue
Bonds, Series 1994A, Linked Inverse
Floating Rate Securities,
5.4%, 7-1-2012 ........................ 5,000 5,293,750
State of Washington, Various Purpose General
Obligation Bonds, Series 1990A,
6.75%, 2-1-2015 ....................... 4,995 5,994,000
Public Utility District No. 1 of Douglas
County, Washington, Wells Hydroelectric
Revenue Bonds, Series of 1965,
3.7%, 9-1-2018 ........................ 4,200 3,927,000
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 1,012,813
Total ................................. 68,149,876
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 1999
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WEST VIRGINIA _ 0.40%
Braxton County, West Virginia, Solid Waste
Disposal Revenue Bonds (Weyerhaeuser Company
Project), Series 1995A,
6.5%, 4-1-2025 ........................ $ 3,500 $ 3,828,125
WISCONSIN - 0.94%
Wisconsin Public Power Incorporated SYSTEM (The),
Power Supply System Revenue Bonds,
Series 1993B-2, Yield Curve Notes (YCNs),
7.4%, 7-1-2014 (A) .................... 5,500 5,960,625
Wisconsin Housing and Economic Development
Authority, Home Ownership Revenue Bonds,
1997 Series H,
5.75%, 9-1-2028 ....................... 3,000 3,086,250
Total ................................. 9,046,875
TOTAL MUNICIPAL BONDS _ 95.32% $919,455,436
(Cost: $860,460,826)
TOTAL SHORT-TERM SECURITIES _ 4.18% $ 40,268,873
(Cost: $40,268,873)
TOTAL INVESTMENT SECURITIES _ 99.50% $959,724,309
(Cost: $900,729,699)
CASH AND OTHER ASSETS, NET OF LIABILITIES _ 0.50% 4,865,700
NET ASSETS - 100.00% $964,590,009
See Notes to Schedule of Investments on page 23.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 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 March 31, 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
March 31, 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 March 31, 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
MARCH 31, 1999
(In Thousands, Except for Per Share and Share Amounts)
Assets
Investment securities--at value
(Notes 1 and 3) ............................... $959,724
Cash ........................................... 48
Receivables:
Interest ...................................... 13,377
Investment securities sold .................... 7,232
Fund shares sold .............................. 398
Prepaid insurance premium ...................... 25
.......................................... --------
Total assets ................................ 980,804
--------
Liabilities
Payable for investment securities purchased .... 12,933
Payable to Fund shareholders ................... 2,983
Accrued service fee (Note 2) ................... 151
Accrued transfer agency and dividend
disbursing (Note 2) ........................... 82
Accrued management fee (Note 2) ................ 11
Accrued distribution fee (Note 2) .............. 10
Accrued accounting services fee (Note 2) ....... 7
Other .......................................... 37
--------
Total liabilities ........................... 16,214
--------
Total net assets ........................... $964,590
========
Net Assets
$1.00 par value capital stock
Capital stock ................................. $130,780
Additional paid-in capital .................... 772,851
Accumulated undistributed income:
Accumulated undistributed net investment
income ...................................... 811
Accumulated undistributed net realized gain on
investment transactions ..................... 1,153
Net unrealized appreciation in value of
investments ................................. 58,995
--------
Net assets applicable to outstanding units
of capital ................................. $964,590
========
Net asset value per share (net assets divided
by shares outstanding)
Class A ........................................ $7.38
Class Y ........................................ $7.38
Capital shares outstanding
Class A ........................................ 130,780,125
Class Y ........................................ 274
Capital shares authorized ........................ 600,000,000
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended MARCH 31, 1999
(In Thousands)
Investment Income
Interest and amortization (Note 1B) .............. $27,556
-------
Expenses (Note 2):
Investment management fee ....................... 2,045
Service fee - Class A............................ 964
Transfer agency and dividend disbursing - Class A 352
Distribution fee - Class A....................... 66
Accounting services fee ......................... 42
Custodian fees .................................. 19
Audit fees ...................................... 12
Legal fees ...................................... 8
Other ........................................... 92
-------
Total expenses ................................ 3,600
-------
Net investment income ........................ 23,956
-------
Realized and Unrealized Gain (Loss) on
Investments (Notes 1 and 3)
Realized net gain on securities .................. 6,085
Realized net gain on put options purchased ....... 473
Realized net loss on futures contracts closed .... (954)
-------
Net realized gain on investments ................ 5,604
Net unrealized depreciation in value of
investments during the period ................... (23,060)
-------
Net loss on investments ....................... (17,456)
-------
Net increase in net assets resulting
from operations ............................ $ 6,500
=======
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
(Dollars In Thousands)
For the For the
six months fiscal year
ended ended
March 31, September 30,
1999 1998
------------ --------------
Increase (Decrease) in Net Assets
Operations:
Net investment income.............. $ 23,956 $ 48,804
Realized net gain on
investments ..................... 5,604 16,941
Unrealized appreciation
(depreciation) ................... (23,060) 16,492
-------- --------
Net increase in net assets
resulting from operations ...... 6,500 82,237
-------- --------
Distributions to shareholders from (Note 1D):*
Net investment income:
Class A ......................... (24,572) (48,648)
Class Y** ....................... --- ---
Realized gains on securities transactions:
Class A ......................... (14,344) (12,104)
Class Y ......................... --- ---
-------- --------
(38,916) (60,752)
-------- --------
Capital share transactions:
Proceeds from sale of shares:
Class A (12,966,204 and 41,023,912
shares, respectively) .......... 96,903 307,508
Class Y (270 and 0 shares,
respectfully) .................. 2 ---
Proceeds from reinvestment of
dividends and/or capital gains
distribution:
Class A (4,385,218 and 6,763,886
shares, respectively) .......... 32,641 50,042
Class Y (4 and 0 shares,
respectively)** ................ --- ---
Payments for shares redeemed:
Class A (17,259,889 and 50,159,643
shares, respectively) .......... (129,429) (376,023)
Class Y (0 and 0 shares, respectively) --- ---
--------- --------
Net increase (decrease) in net
assets resulting from capital
share transactions ............. 117 (18,473)
--------- --------
Total increase (decrease) ...... (32,299) 3,012
Net Assets
Beginning of period ................ 996,889 993,877
--------- --------
End of period, including undistributed
net investment income of $811 and
$1,427, respectively .............. $964,590 $996,889
======== ========
*See "Financial Highlights" on pages 27 - 28.
**Amounts for the fiscal period ended March 31, 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
six For the fiscal year ended
months September 30,
ended ------------------------------------
3/31/99 1998 1997 1996 1995 1994
------- ------ ------ ------ ------ ------
Net asset value,
beginning of period $7.63 $7.47 $7.32 $7.25 $6.91 $7.83
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... 0.18 0.37 0.38 0.39 0.39 0.38
Net realized and
unrealized gain
(loss) on
investments ..... (0.13) 0.25 0.30 0.12 0.38 (0.67)
----- ----- ----- ----- ----- -----
Total from investment
operations ....... 0.05 0.62 0.68 0.51 0.77 (0.29)
----- ----- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.19) (0.37) (0.37) (0.39) (0.39) (0.38)
From capital gains (0.11) (0.09) (0.16) (0.05) (0.00) (0.25)
In excess of capital
gains ........... (0.00) (0.00) (0.00) (0.00) (0.04) (0.00)
----- ----- ----- ----- ----- -----
Total distributions (0.30) (0.46) (0.53) (0.44) (0.43) (0.63)
----- ----- ----- ----- ----- -----
Net asset value,
end of period .... $7.38 $7.63 $7.47 $7.32 $7.25 $6.91
===== ===== ===== ===== ===== =====
Total return* ...... 0.68% 8.67% 9.77% 7.16% 11.51% -3.91%
Net assets, end of
period (in
millions) ........ $965 $997 $994 $997 $975 $951
Ratio of expenses to
average net assets 0.74%** 0.72% 0.67% 0.68% 0.65% 0.64%
Ratio of net investment
income to average
net assets ....... 4.94%** 4.95% 5.14% 5.23% 5.51% 5.17%
Portfolio
turnover rate .... 17.98% 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.
**Annualized.
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
3/31/99
-------
Net asset value,
beginning of period $7.41
-----
Income from investment
operations:
Net investment
income .......... 0.09
Net realized and
unrealized loss
on investments .. (0.03)
-----
Total from investment
operations ....... 0.06
-----
Less dividends from
net investment
income ........... (0.09)
-----
Net asset value,
end of period .... $7.38
=====
Total return ....... 0.85%
Net assets, end of
period (in
thousands) ....... $2
Ratio of expenses
to average net
assets ........... 0.60%**
Ratio of net
investment income
to average net
assets ........... 5.18%**
Portfolio
turnover rate .... 17.98%***
*Commencement of operations.
**Annualized.
***For the six months ended March 31, 1999
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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 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 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. 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 $21.5 billion of
combined net assets at March 31, 1999) 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 for Class A shares (which are not an expense of the Fund) of
$570,713, out of which W&R paid sales commissions of $329,283 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 $19,375, 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 $172,761,913 while proceeds from maturities and
sales aggregated $168,429,367. Purchases of options aggregated $9,264,075 while
proceeds from options aggregated $9,737,508 Purchases of short-term securities
aggregated $612,602,837 while proceeds from maturities and sales aggregated
$604,858,799. No long-term U.S. Government securities were bought or sold
during the period ended March 31, 1999.
For Federal income tax purposes, cost of investments owned at March 31,
1999 was $905,169,182, resulting in net unrealized appreciation of $54,555,127,
of which $56,672,237 related to appreciated securities and $2,117,110 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, which has been
distributed to the Fund's shareholders.
NOTE 5 -- Futures
The Fund may engage in buying and selling interest rate futures contracts,
but only Debt Futures and Municipal Bond Index Futures. Upon entering into a
futures contract, the Fund is required to deposit, in a segregated account, an
amount of cash or U.S. Treasury Bills equal to a varying specified percentage of
the contract amount. This amount is known as the initial margin. Subsequent
payments ("variation margins") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying debt security
or index. These changes in the variation margins are recorded by the Fund as
unrealized gains or losses. Upon the closing of the contracts, the cumulative
net change in the variation margin is recorded as realized gain or loss. The
Fund uses futures to attempt to reduce the overall risk of its investments.
NOTE 6 -- Options
Options purchased by the Fund are accounted for in the same manner as
marketable portfolio securities. The cost of portfolio securities acquired
through the exercise of call options is increased by the premium paid to
purchase the call. The proceeds from securities sold through the exercise of
put options are decreased by the premium paid to purchase the put. The Fund
uses options to attempt to reduce the overall risk of its investments.
NOTE 7 -- Multiclass Operations
On January 21, 1996, the Fund was authorized to offer two classes of
shares, Class A and Class Y, each of which has equal rights as to assets and
voting privileges. 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. 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
relative net assets as of the beginning of each day adjusted for the prior day's
capital share activity. The Fund commenced multiclass operations on December 30,
1998.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
United Municipal Bond Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of United Municipal Bond Fund,
Inc. (the _Fund_) as of March 31, 1999, and the related statement of
operations for the six-month period then ended, the statements of
changes in net assets for the six-month period ended March 31, 1999 and
the fiscal year ended September 30, 1998, and the financial highlights
for the six-month period then ended and for each of the five fiscal years
in the period ended September 30, 1998. 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 March 31, 1999, 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, 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 March 31, 1999, the
results of its operations for the six-month period then ended, the
changes in its net assets for the six-month period then ended and the
fiscal year ended September 30, 1998, and the financial highlights for
the six-month period ended March 31, 1999 and for each of the five fiscal
years in the period ended September 30, 1998 in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
May 7, 1999
<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
For shareholders who have chosen the Income-Earned option or the Cash option for
their distribution method: if the dividend distribution (for Income-Earned) or
the total distribution (for Cash) is less than ten dollars, the distribution
will be automatically paid in additional shares of the same class of the Fund.
Lower sales charges are available by combining the net asset value ("NAV") of
existing Class A shares of the Fund with additional purchases of Class A shares
of any fund in the United Group, except that only the Class A shares of United
Cash Management, Inc. that were acquired by exchange of another United Group
fund's Class A shares on which a sales charge was paid, plus the shares paid as
dividends on those acquired shares, may be combined.
<PAGE>
The United Group of Mutual Funds
United Cash Management, Inc.
United Government Securities Fund, Inc.
United Bond Fund
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Continental Income Fund, Inc.
United Retirement Shares, Inc.
United Asset Strategy Fund, Inc.
United Income Fund
United Accumulative Fund
United Vanguard Fund, Inc.
United New Concepts Fund, Inc.
United Science and Technology Fund
United International Growth Fund, Inc.
United Gold & Government Fund, Inc.
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
(800) 366-5465
Our INTERNET address is:
http://www.waddell.com
NUR1008SA(3-99)
printed on recycled paper
