United
Municipal
Bond Fund,
Inc.
SEMIANNUAL
REPORT
---------------------------------------
For the six months ended March 31, 2000
<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, 2000
Dear Shareholder:
We are delighted to share with you this report on your Fund's operations for the
six months ended March 31, 2000.
This six-month period provided some remarkable gains, especially in many of the
so-called "new economy" stocks. The exceptional performance of these stocks was
evident in the Nasdaq Composite Index, which is made up primarily of technology-
oriented companies; and in the Russell 2000, which includes many small-cap
growth companies. The Nasdaq Composite recorded a remarkable gain of 67 percent
over the six months ended March 31, 2000. The Russell 2000 rose a very strong
27 percent over the period.
The performance of the two other major indices -- the Dow Jones Industrial
Average and the Standard & Poor's 500 -- did not match the Nasdaq or Russell,
reflecting a growing investor sentiment that the "old economy" companies that
they include could not provide the growth opportunity of their "new economy"
counterparts. Still, their performance, by historical standards, was very
strong. The S&P 500, the index most often used to track the performance of the
largest U.S. stocks, rose 18 percent for the six months ended March 31. The Dow
Jones Industrial Average, which includes 30 of the nation's largest companies,
rose 6 percent.
The across-the-board strength of the equity market and, especially, the enormous
gains in the Nasdaq over this period, left many investors wondering if this
upward trend was sustainable. The answer came just after the period's end, as a
sharp sell-off erased all of the market's gains of the first three months of
2000. The sell-off was most pronounced, by far, in the Nasdaq Composite.
Nonetheless, at May 1, 2000, the Nasdaq remained up 41 percent from its
September 30, 1999 level.
For the six months ended March 31, bonds remained depressed, the result of
several forces weighing on all fixed-income markets. The Federal Reserve began
raising short-term interest rates at the end of June 1999, and has now raised
interest rates five times. Tax-loss selling and investor preference for
equities over fixed-income securities placed additional pressure on bonds.
Looking ahead, the market is still trying to find direction. Currently,
economic news suggests that the economy remains sufficiently strong to perhaps
prompt additional interest rate hikes by the Federal Reserve. Other factors
that may affect the market during the coming year include the presidential
election, the high trade deficit and the implications of that deficit for the
value of the U.S. dollar abroad.
Overall, investors have been rewarded well in recent years. Those who continue
a structured and consistent investment program remain well positioned to take
advantage of opportunities, including those presented by the market's occasional
downdrafts. Just as we urge you not to become unduly concerned if the market
moves downward in the near term, we would urge that you not become too exuberant
when it moves higher in similarly short periods.
It is impossible to predict with certainty where markets will go next, but one
thing that remains certain is that a well-thought-out investment plan is
essential. Remember, a plan that is appropriate for you is appropriate
regardless of inevitable market changes. You have a partnership with your
Waddell & Reed financial advisor, and that partnership is built upon a
customized program based on your specific needs. Focusing on that plan, despite
market fluctuations, is your key to a sound financial future. Thank you for
your ongoing commitment and support.
Respectfully,
Robert L. Hechler
President
<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
Federal alternative minimum
May own 25% or more tax.)
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
Investors Service, Inc.)
* During normal market conditions.
FOUNDED: 1976
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
PERFORMANCE SUMMARY - Class A Shares
PER SHARE DATA
For the Six Months Ended March 31, 2000
---------------------------------------
DIVIDENDS PAID $0.18
=====
CAPITAL GAINS DISTRIBUTION $0.07
=====
NET ASSET VALUE ON
3/31/00 $6.70 adjusted to: $ 6.77(A)
9/30/99 6.90
------
CHANGE PER SHARE $(0.13)
======
(A) This number includes the capital gains distribution of $0.07 paid in
December 1999 added to the actual net asset value on March 31, 2000.
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 3-31-00 -7.42% -3.32%
5-year period ended 3-31-00 4.47% 5.38%
10-year period ended 3-31-00 6.66% 7.12%
*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, 2000, United Municipal Bond Fund, Inc. had net assets totaling
$782,715,061 invested in a diversified portfolio.
As a shareholder of United Municipal Bond Fund, Inc., for every $100 you had
invested on March 31, 2000, your Fund owned:
$13.99 Industrial Revenue/Pollution Control Revenue Bonds
11.17 Airport Revenue Bonds
10.98 Public Power Revenue Bonds
10.97 Housing Revenue Bonds
10.52 Hospital Revenue Bonds
10.40 Derivative Bonds
9.19 Other Municipal Bonds
8.16 Cash and Cash Equivalents and Options
4.52 Student Loan Bonds
4.39 Transportation Revenue Bonds
3.38 Resource Recovery Bonds
2.33 Lease/Certificates of Participation Bonds
2000 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- 43,850 $ 0- 26,250 15% 5.88 7.06 8.24 9.41
$ 43,851-105,950 $ 26,251- 63,550 28% 6.94 8.33 9.72 11.11
$105,951-161,450 $ 63,551-132,600 31% 7.25 8.70 10.14 11.59
$161,451-288,350 $132,601-288,350 36% 7.81 9.38 10.94 12.50
$288,351 and above$288,351 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, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS
ALABAMA - 0.23%
BMC Special Care Facilities Financing
Authority of the City of Montgomery,
Revenue Bonds, Series 1998-B (Baptist
Health),
4.875%, 11-15-18 ...................... $ 2,000 $ 1,760,000
ALASKA - 3.15%
City of Valdez, Alaska, Marine
Terminal Revenue Refunding Bonds
(BP Pipelines (Alaska) Inc. Project),
Series 1993A,
5.85%, 8-1-25 ......................... 18,150 17,628,188
State of Alaska, International Airports
System Revenue Bonds, Series 1999A,
5.0%, 10-1-19 ......................... 3,000 2,636,250
Alaska Housing Finance Corporation,
Housing Development Bonds, 1997
Series B (AMT),
5.8%, 12-1-29 ......................... 2,390 2,276,475
Alaska Energy Authority, Power Revenue
Refunding Bonds, Fifth Series (Bradley
Lake Hydroelectric Project),
5.0%, 7-1-21 .......................... 2,350 2,085,625
Total ................................. 24,626,538
CALIFORNIA - 9.23%
California Statewide Communities Development Authority:
Special Facilities Lease Revenue Bonds,
1997 Series A (United Air Lines, Inc. - San
Francisco International Airport Projects),
5.7%, 10-1-33 ......................... 20,900 18,183,000
Hospital Revenue Certificates of Participation,
Series 1992, Cedars-Sinai Medical Center,
6.5%, 8-1-12 .......................... 5,200 5,531,500
Hospital Refunding Revenue Certificates of
Participation, Series 1993, Cedars-Sinai Medical
Center, Inverse Floating Rate Securities (INFLOS),
7.049%, 11-1-15 (A) ................... 3,300 3,036,000
East Bay Municipal Utility District (Alameda
and Contra Costa Counties, California),
Wastewater System Subordinated Revenue
Refunding Bonds, Series 1993B-2,
Inverse Floating Securities:
6.62%, 6-1-13 (A) ..................... 8,450 8,587,312
6.72%, 6-1-20 (A) ..................... 7,250 7,077,812
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA (Continued)
Southern California Public Power Authority:
Multiple Project Revenue Bonds, 1989 Series,
6.75%, 7-1-12 ......................... $ 3,455 $ 3,912,788
Mead-Adelanto Project Revenue Bonds,
1994 Series A:
Auction Rate Securities (ACES),
4.01%, 7-1-15 ......................... 1,400 1,400,000
Inverse Floaters,
6.01%, 7-1-15 (A) ..................... 1,400 1,326,500
Mead-Phoenix Project Revenue Bonds,
1994 Series A:
Auction Rate Securities (ACES),
4.01%, 7-1-15 ......................... 1,300 1,300,000
Inverse Floaters,
6.01%, 7-1-15 (A) ..................... 1,300 1,239,875
Transmission Agency of Northern California,
California-Oregon Transmission Project
Revenue Bonds, 1990 Series A,
7.0%, 5-1-13 .......................... 7,500 8,868,750
Foothill/Eastern Transportation Corridor Agency,
Toll Road Refunding Revenue Bonds, Series 1999:
Capital Appreciation Bonds,
0.0%, 1-15-17 ......................... 8,000 3,010,000
Current Interest Bonds,
5.125%, 1-15-19 ....................... 3,000 2,838,750
California Rural Home Mortgage Finance
Authority, Single Family Mortgage
Revenue Bonds (Mortgage-Backed Securities
Program):
1997 Series C,
6.75%, 3-1-29 ......................... 2,050 2,152,500
1998 Series B,
6.35%, 12-1-29 ........................ 1,940 2,024,875
Delta Counties Home Mortgage Finance Authority
(California), Single Family Mortgage Revenue
Bonds (Mortgage-Backed Securities Program),
1998 Series A,
5.2%, 12-1-14 ......................... 1,865 1,764,756
Total ................................. 72,254,418
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
COLORADO - 3.70%
City and County of Denver, Colorado,
Airport System Revenue Bonds:
Series 1991D,
7.75%, 11-15-13 ....................... $11,905 $13,809,800
Series 1996D,
5.5%, 11-15-25 ........................ 2,000 1,907,500
Colorado Housing and Finance Authority,
Single Family Program Senior and Subordinate
Bonds:
1997 Series C-2 Senior Bonds,
6.875%, 11-1-28 ....................... 2,500 2,625,000
1999 Series A-2 Senior Bonds,
6.45%, 4-1-30 ......................... 2,185 2,215,044
1997 Series A-2 Senior Bonds,
7.25%, 5-1-27 ......................... 2,000 2,147,500
1999 Series C-2 Senior Bonds,
7.05%, 4-1-31 ......................... 2,000 2,127,500
Series B-3,
6.7%, 10-1-16 ......................... 1,000 1,077,500
1998 Series A-3,
6.5%, 5-1-16 .......................... 1,000 1,047,500
Highlands Ranch Metropolitan District No. 3,
Douglas County, Colorado, General
Obligation Bonds, Series 1999,
5.3%, 12-1-19 ......................... 1,250 1,118,750
University of Colorado Hospital Authority,
Revenue Bonds, Series 1999A,
5.0%, 11-15-19 ........................ 1,000 890,000
Total ................................. 28,966,094
CONNECTICUT - 4.27%
Connecticut Development Authority, Water
Facilities Revenue Bonds (Bridgeport
Hydraulic Company Project - 1996 Series),
6.0%, 9-1-36 .......................... 13,875 14,031,094
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
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%, 1-1-14 .......................... $13,700 $ 12,141,625
Bristol Resource Recovery Facility,
Operating Committee, Solid Waste Revenue
Refunding Bonds (Ogden Martin Systems of
Bristol, Inc. Project - 1995 Series),
6.5%, 7-1-14 .......................... 7,000 7,245,000
Total ................................. 33,417,719
FLORIDA - 2.81%
Escambia County, Florida, Pollution Control Revenue
Bonds (Champion International Corporation Project):
Series 1994,
6.9%, 8-1-22 .......................... 9,855 10,039,781
Series 1996,
6.4%, 9-1-30 .......................... 6,200 6,052,750
Housing Finance Authority of Lee County, Florida,
Single Family Mortgage Revenue Bonds:
Series 1998A, Subseries 6,
6.45%, 3-1-31 ......................... 2,175 2,234,812
Series 1999A, Subseries 2,
5.0%, 9-1-30 .......................... 1,620 1,536,975
City of Miami, Florida, Health Facilities
Authority, Health Facilities Revenue Refunding
Bonds (Mercy Hospital Project), Series 1994A,
Inverse Floating Rate Security (INFLOS),
6.27%, 8-15-15 (A) .................... 2,200 2,090,000
Total ................................. 21,954,318
GEORGIA - 3.81%
Municipal Electric Authority of Georgia:
Project One Special Obligation Bonds,
Fifth Crossover Series,
6.4%, 1-1-13 .......................... 15,500 17,069,375
General Power Revenue Bonds,
1992B Series,
8.25%, 1-1-11 ......................... 8,700 10,907,625
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
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%, 10-1-20 ........................ $ 2,000 $ 1,820,000
Total ................................. 29,797,000
HAWAII - 3.34%
State of Hawaii, Airports System Revenue
Bonds, Second Series of 1991,
6.9%, 7-1-12 .......................... 20,195 22,567,912
Department of Budget and Finance of the State
of Hawaii, Special Purpose Revenue Bonds
(Citizens Utilities Company Project):
Residual Interest Bonds (RIBS), Series 1991B,
8.727%, 11-1-21 (A) ................... 1,750 1,855,000
Select Auction Variable Rate Securities (SAVRS),
Series 1991A,
4.25%, 11-1-21 ........................ 1,750 1,750,000
Total.................................. 26,172,912
IDAHO - 0.86%
Idaho Health Facilities Authority, Hospital
Revenue Refunding Bonds, Series 1992
(IHC Hospitals, Inc.),
6.632%, 2-15-21 ....................... 6,000 6,742,500
ILLINOIS - 2.30%
City of Chicago, Collateralized Single Family
Mortgage Revenue Bonds:
Series 1998C-1,
6.3%, 9-1-29 .......................... 3,980 4,104,375
Series 1998A-1,
6.45%, 9-1-29 ......................... 2,480 2,591,600
Series 1999A,
6.35%, 10-1-30 ........................ 2,500 2,537,500
Series 1999C,
7.05%, 10-1-30 ........................ 2,000 2,137,500
Series 1997-B,
6.95%, 9-1-28 ......................... 1,835 1,929,044
Illinois Health Facilities Authority, Revenue Bonds:
Series 1997A (Victory Health Services),
5.375%, 8-15-16 ....................... 3,000 2,523,750
Series 1999 (Alexian Brothers Health System),
5.0%, 1-1-19 .......................... 1,500 1,320,000
School District Number 116, Champaign County,
Illinois (Urbana), General Obligation School
Building Bonds, Series 1999C,
0.0%, 1-1-12 .......................... 1,695 862,331
Total ................................. 18,006,100
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
INDIANA - 4.84%
Indiana State Office Building Commission,
Capitol Complex Revenue Bonds:
Series 1990B (State Office Building I Facility),
7.4%, 7-1-15 .......................... $ 8,000 $ 9,580,000
Series 1990A (Senate Avenue Parking Facility),
7.4%, 7-1-15 .......................... 4,775 5,718,062
Indiana Transportation Finance Authority,
Highway Revenue Bonds, Series 1990A,
7.25%, 6-1-15 ......................... 9,000 10,485,000
Indianapolis Airport Authority,
Special Facility Revenue Bonds, Series 1995 A
(United Air Lines, Inc., Indianapolis
Maintenance Center Project),
6.5%, 11-15-31 ........................ 10,850 10,321,062
Indiana Health Facility Financing Authority,
Hospital Revenue Bonds, Series 1999A
(Deaconess Hospital Obligated Group),
5.75%, 3-1-19 ......................... 2,000 1,815,000
Total ................................. 37,919,124
KANSAS - 2.02%
Sedgwick County, Kansas and Shawnee County,
Kansas, Single Family Mortgage Revenue Bonds
(Mortgage-Backed Securities Program):
1998 Series A-1 (AMT),
6.5%, 12-1-22 ......................... 7,760 8,157,700
1997 Series A-1 (AMT),
6.95%, 6-1-29 ......................... 5,225 5,577,688
1999 Series A-1 (AMT),
5.5%, 12-1-26 ......................... 2,000 2,107,500
Total ................................. 15,842,888
KENTUCKY - 0.07%
County of Jefferson, Kentucky, Insured
Hospital Revenue Bonds, Series 1992 (Alliant
Health System, Inc. Project), Inverse Floaters,
6.418%, 10-23-14 (A) .................. 500 543,125
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
LOUISIANA - 0.72%
Parish of East Baton Rouge, State of
Louisiana, Refunding Revenue Bonds
(Georgia-Pacific Corporation Project),
Series 1998,
5.35%, 9-1-11 ......................... $ 3,000 $ 2,756,250
Louisiana Public Facilities Authority,
Hospital Revenue and Refunding Bonds,
St. Francis Medical Center Project
(Pendleton Memorial Methodist Hospital
Project), Series 1998,
5.25%, 6-1-17 ......................... 2,000 1,557,500
Parish of Webster, Louisiana, Pollution
Control Revenue Refunding Bonds,
1998 Series B (Non-AMT),
5.2%, 3-1-13 .......................... 1,435 1,338,137
Total ................................. 5,651,887
MASSACHUSETTS - 1.57%
City of Quincy, Massachusetts, Revenue Refunding
Bonds, Quincy Hospital Issue, Series 1993,
Inverse Floating Rate Security (INFLOS),
6.353%, 1-15-11 (A) ................... 5,700 5,671,500
Massachusetts Housing Finance Agency,
Single Family Housing Revenue Bonds,
Series 57 (AMT),
5.6%, 6-1-30 .......................... 4,670 4,325,588
Massachusetts Municipal Wholesale Electric
Company, Power Supply System Revenue Bonds,
1993 Series A, Inverse Floating Rate Security (INFLOS),
6.245%, 7-1-18 (A) .................... 2,500 2,290,625
Total ................................. 12,287,713
MICHIGAN - 2.14%
Michigan Strategic Fund:
Limited Obligation Refunding Revenue Bonds,
The Detroit Edison Company Pollution Control
Bonds Project, Collateralized Series 1991 AA,
6.95%, 5-1-11 ......................... 8,000 9,170,000
Limited Obligation Revenue Bonds, WMX
Technologies, Inc. Project, Series 1993,
6.0%, 12-1-13 ......................... 4,000 3,595,000
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
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),
7.294%, 7-1-23 (A) .................... $ 2,600 $ 2,489,500
Michigan State Hospital Finance Authority,
Hospital Revenue Bonds (The Detroit Medical
Center Obligated Group), Series 1998A,
5.125%, 8-15-18 ....................... 2,000 1,477,500
Total ................................. 16,732,000
MINNESOTA - 0.73%
City of Rochester, Minnesota, Health
Care Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center),
Series 1992D, Floating Inverse
Rate Securities (FIRS),
7.629%, 11-15-09 (A) .................. 4,500 4,770,000
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,
5.804%, 7-1-13 (A) .................... 1,000 955,000
Total ................................. 5,725,000
MISSISSIPPI - 2.67%
Lowndes County, Mississippi, Solid Waste
Disposal and Pollution Control
Refunding Revenue Bonds (Weyerhaeuser
Company Project), Series 1992B,
6.608%, 4-1-22 ........................ 11,000 11,825,000
Mississippi Higher Education Assistance
Corporation, Student Loan Revenue Bonds,
Subordinate Series 1996-C:
6.75%, 9-1-14 ......................... 5,500 5,548,125
6.7%, 9-1-12 .......................... 1,470 1,481,025
Mississippi Home Corporation, Single Family
Mortgage Revenue Bonds, Series 1999A,
6.3%, 6-1-31 .......................... 1,995 2,024,925
Total ................................. 20,879,075
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MISSOURI - 1.75%
Health and Educational Facilities Authority
of the State of Missouri, Health Facilities
Revenue Bonds:
Barnes-Jewish, Inc./Christian Health
Services, Series 1993A,
6.0%, 5-15-11 ......................... $ 3,000 $ 3,116,250
Freeman Health System Project, Series 1998,
5.25%, 2-15-18 ........................ 2,460 2,007,975
Lake of the Ozarks General Hospital, Inc.,
Series 1998,
5.1%, 2-15-18 ......................... 2,220 1,995,225
Missouri Housing Development Commission,
Single Family Mortgage Revenue Bonds
(Homeownership Loan Program):
1997 Series C-1 (Non-AMT),
6.55%, 9-1-28 ......................... 1,960 2,045,750
1998 Series D-2 (AMT),
6.3%, 3-1-29 .......................... 1,145 1,150,725
1998 Series B-2 (AMT),
6.4%, 3-1-29 .......................... 950 982,063
1997 Series A-2 (AMT),
7.3%, 3-1-28 .......................... 855 927,675
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%, 2-15-09 ........................ 1,500 1,445,625
Total ................................. 13,671,288
MONTANA - 0.41%
Montana Higher Education Student Assistance
Corporation, Student Loan Revenue Bonds,
Subordinate Series 1998-B,
5.5%, 12-1-31 ......................... 3,500 3,189,375
NEBRASKA - 1.97%
Nebraska Higher Education Loan Program, Inc.,
1993-2 Series A-6 Junior Subordinate Bonds,
6.4%, 6-1-13 .......................... 14,500 15,424,375
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEVADA - 1.18%
Clark County, Nevada:
Industrial Development Refunding Revenue
Bonds (Nevada Power Company Project),
Series 1995B,
5.9%, 10-1-30 ......................... $ 5,500 $ 4,826,250
Industrial Development Revenue Bonds (Nevada
Power Company Project), Series 1997A,
5.9%, 11-1-32 ......................... 2,000 1,752,500
Nevada Housing Division, Single Family
Mortgage Bonds:
1998 Series A-1 Mezzanine Bonds,
5.35%, 4-1-16 ......................... 1,915 1,816,856
1996 Series C Subordinate Bonds,
6.35%, 4-1-09 ......................... 830 853,863
Total ................................. 9,249,469
NEW HAMPSHIRE - 2.30%
State of New Hampshire, Turnpike System
Revenue Bonds, 1994 Series C, Linked Select Auction
Variable Rate Securities (SAVRS) and Residual Interest
Bonds (RIBS),
5.23%, 2-1-24 ......................... 20,000 18,025,000
NEW MEXICO - 0.42%
New Mexico Educational Assistance Foundation,
Student Loan Program Bonds:
Second Subordinate 1996 Series A-3,
6.75%, 11-1-08 ........................ 2,175 2,234,813
Second Subordinate 1995 Series A-3,
6.6%, 11-1-10 ......................... 1,105 1,087,044
Total ................................. 3,321,857
NEW YORK - 3.42%
New York State Medical Care Facilities Finance Agency,
Mental Health Services Facilities Improvement
Revenue Bonds, 1993 Series F Refunding,
5.375%, 2-15-14 ....................... 9,750 9,603,750
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
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,
19.108%, 9-30-03 (B) .................. $ 3,250 $ 4,208,750
Tsasc, Tobacco Flexible Amortization Bonds (TFABs),
Series 1999-1,
6.0%, 7-15-2019 ....................... 4,000 3,960,000
Dormitory Authority of the State of New York,
State University Educational Facilities,
Revenue Bonds, Series 1990B,
7.5%, 5-15-11 ......................... 2,000 2,275,000
Nyack Hospital, Revenue Bonds, Series 1996,
6.25%, 7-1-13 ......................... 1,000 983,750
New York State Urban Development Corporation,
Correctional Capital Facilities Revenue Bonds,
1993A Refunding Series,
5.25%, 1-1-14 ......................... 3,000 2,966,250
New York City Transitional Finance Authority,
Future Tax Secured Bonds, Fiscal 1999 Series C
Tax-Exempt Bonds,
5.0%, 5-1-19 .......................... 3,000 2,733,750
Total ................................. 26,731,250
NORTH CAROLINA - 2.61%
County of Cumberland, North Carolina, Hospital
Facility Revenue Bonds (Cumberland County
Hospital System, Inc.), Series 1999:
5.25%, 10-1-14 ........................ 4,830 4,546,237
5.25%, 10-1-19 ........................ 2,500 2,259,375
5.25%, 10-1-11 ........................ 2,250 2,140,312
The Columbus County Industrial Facilities
and Pollution Control Financing Authority
(North Carolina), Environmental Improvement
Revenue Bonds, 1996 Series A,
5.85%, 12-1-20 ........................ 5,000 4,675,000
North Carolina Medical Care Commission,
Hospital Revenue Bonds:
Gaston Health Care, Series 1998,
5.0%, 2-15-19 ......................... 2,500 2,137,500
Halifax Regional Medical Center, Series 1998,
5.0%, 8-15-18 ......................... 2,170 1,689,887
Rex Healthcare, Series 1998,
5.0%, 6-1-17 .......................... 750 681,563
The Martin County Industrial Facilities and
Pollution Control Financing Authority (North
Carolina), Solid Waste Disposal Revenue Bonds
(Weyerhaeuser Company Project), Series 1993,
5.65%, 12-1-23 ........................ 2,500 2,262,500
Total ................................. 20,392,374
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NORTH DAKOTA - 0.75%
City of Fargo, North Dakota, Health System
Revenue Bonds (Meritcare Obligated Group),
Series 1996A,
5.55%, 6-1-16 ......................... $ 2,800 $ 2,751,000
County of Burleigh, North Dakota, Healthcare
Revenue Refunding Bonds, Series 1999
(Medcenter One, Inc.),
5.25%, 5-1-13 ......................... 1,900 1,847,750
State of North Dakota, North Dakota Housing
Finance Agency, Housing Finance Program Bonds,
Home Mortgage Finance Program, 1998 Series A,
5.25%, 7-1-18 ......................... 1,350 1,248,750
Total ................................. 5,847,500
OHIO - 0.69%
County of Erie, Ohio, Franciscan Services
Corporation, Revenue Refunding Bonds,
Series 1993 A (Providence Hospital, Inc.),
6.0%, 1-1-13 .......................... 4,000 3,940,000
State of Ohio Air Quality Development Revenue
Bonds (Columbus Southern Power Company
Project), Series 1985 B,
6.25%, 12-1-20 ........................ 1,500 1,488,750
Total ................................. 5,428,750
OKLAHOMA - 0.74%
Oklahoma Housing Finance Agency, Single
Family Mortgage Revenue Bonds
(Homeownership Loan Program):
1995 Series B, Subseries B-2 (AMT),
7.625%, 9-1-26 ........................ 4,495 4,820,887
1996 Series A,
7.05%, 9-1-26 ......................... 925 974,719
Total ................................. 5,795,606
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
OREGON - 0.73%
State of Oregon, Housing and Community
Services Department, Mortgage Revenue
Bonds, Single-Family Mortgage Program:
1996 Series D,
6.375%, 7-1-27 ........................ $ 3,045 $ 3,090,675
1992 Series B,
6.875%, 7-1-28 ........................ 2,500 2,590,625
Total ................................. 5,681,300
PENNSYLVANIA - 3.47%
City of Philadelphia, Pennsylvania, Water
and Wastewater Revenue Bonds, Series 1993,
Inverse Rate Securities,
6.78%, 6-15-12 (A) .................... 7,100 7,313,000
Allegheny County Hospital Development Authority
(Pennsylvania), UPMC Health System Revenue
Refunding Bonds, Series 1999B,
5.0%, 12-15-17 ........................ 5,000 4,506,250
The Philadelphia Parking Authority, Airport
Parking Revenue Bonds, Series of 1999,
5.25%, 9-1-20 ......................... 3,000 2,812,500
Pennsylvania Higher Education Assistance Agency,
Student Loan Revenue Bonds, Fixed Rate Bonds,
1991 Series C,
7.15%, 9-1-21 ......................... 2,190 2,332,350
City of Philadelphia, Pennsylvania, General
Obligation Bonds, Series 1998:
4.75%, 3-15-17 ........................ 1,615 1,433,313
4.75%, 3-15-18 ........................ 1,000 878,750
Pennsylvania Intergovernmental Cooperation
Authority, Special Tax Revenue Refunding
Bonds (City of Philadelphia Funding Program),
Series of 1999,
5.0%, 6-15-21 ......................... 2,500 2,225,000
Falls Township Hospital Authority, Refunding
Revenue Bonds, The Delaware Valley Medical Center
Project (FHA Insured Mortgage), Series 1992,
7.0%, 8-1-22 .......................... 2,000 2,122,500
Delaware Valley Regional Finance Authority
(Bucks, Chester, Delaware and Montgomery Counties,
Pennsylvania), Local Government Revenue Bonds,
1997 Series B,
5.6%, 7-1-17 .......................... 2,000 1,992,500
Pennsylvania Higher Educational Facilities Authority,
Revenue Bonds (Thomas Jefferson University),
1999 Series A,
5.0%, 7-1-19 .......................... 1,750 1,581,563
Total ................................. 27,197,726
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
SOUTH CAROLINA - 1.71%
South Carolina Jobs - Economic Development
Authority, Hospital Revenue Refunding and
Improvement Bonds (South Carolina Baptist
Hospital), Series 1993D, Intermediate Longs,
Inverse Floating Securities,
7.339%, 8-1-21 (A) .................... $14,550 $ 13,386,000
TENNESSEE - 0.89%
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%, 8-1-16 .......................... 2,745 2,504,813
Multi-Modal Interchangeable Rate, Health Facility
Revenue Bonds (Richland Place, Inc. Project),
Series 1993,
5.5%, 5-1-23 .......................... 1,950 1,789,125
Volunteer State Student Funding Corporation,
Educational Loan Revenue Bonds,
Junior Subordinate Series 1993C Bonds,
5.85%, 12-1-08 ........................ 2,700 2,649,375
Total ................................. 6,943,313
TEXAS - 6.19%
AllianceAirport Authority, Inc.,
Special Facilities Revenue Bonds,
Series 1991 (American Airlines, Inc.
Project),
7.0%, 12-1-11 ......................... 14,400 15,426,000
Trinity River Authority of Texas (Tarrant
County Water Project), Improvement and Refunding
Revenue Bonds, Series 1999,
5.25%, 2-1-20 ......................... 7,415 6,933,025
Amarillo Health Facilities Corporation,
Hospital Revenue Bonds (Baptist St. Anthony's
Hospital Corporation Project), Series 1998,
5.5%, 1-1-15 .......................... 6,320 6,272,600
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TEXAS (Continued)
City of Austin, Texas, Subordinate Lien
Revenue Refunding Bonds, Series 1998,
5.25%, 5-15-19 ........................ $ 5,000 $ 4,662,500
Texas Department of Housing and Community
Affairs, Single Family Mortgage Revenue
Bonds, 1997 Series D (AMT) TEAMS Structure:
5.65%, 3-1-29 ......................... 2,500 2,334,375
5.7%, 9-1-29 .......................... 1,500 1,410,000
Gulf Coast Waste Disposal Authority,
Multi-Modal Interchangeable Rate Revenue
Bonds (Champion International Corporation
Project), Series 1992A,
6.875%, 12-1-28 ....................... 3,220 3,244,150
Lufkin Health Facilities Development
Corporation, Health System Revenue and
Refunding Bonds (Memorial Health System
of East Texas), Series 1995,
6.875%, 2-15-26 ....................... 2,960 2,789,800
City of Houston, Texas, Airport System,
Special Facilities Revenue Bonds
(Continental Airlines, Inc. Terminal
Improvement Projects), Series 1997B,
6.125%, 7-15-17 ....................... 2,850 2,589,937
Midland County Hospital District, Hospital
Revenue Refunding Bonds, Series 1997,
5.375%, 6-1-16 ........................ 2,000 1,927,500
Collin County Housing Finance Corporation,
Student Housing Revenue Bonds (Collin
County Community College District Foundation,
Inc. Project), Series 1998A,
5.25%, 6-1-31 ......................... 1,000 877,500
Total ................................. 48,467,387
UTAH - 4.14%
Tooele County, Utah, Hazardous Waste Treatment
Revenue Bonds (Union Pacific Corporation
USPCI, Inc. Project), Series A,
5.7%, 11-1-26 ......................... 37,200 32,364,000
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WASHINGTON - 8.24%
Washington Public Power Supply System:
Nuclear Project No. 3, Refunding Revenue Bonds:
Series 1989B,
7.125%, 7-1-16 ........................ $20,750 $ 23,862,500
Series 1993C, Inverse Floating Rate Security,
6.87%, 7-1-12 (A) ..................... 7,000 6,781,250
Nuclear Project No. 1, Refunding Revenue Bonds:
Series 1989B,
7.125%, 7-1-16 ........................ 8,200 9,430,000
Series 1993A, Inverse Floating Rate Security,
6.67%, 7-1-11 (A) ..................... 7,500 7,987,500
Nuclear Project No. 2, Refunding Revenue
Bonds, Series 1994A, Inverse Floating Rate
Securities,
6.23%, 7-1-12 (A) ..................... 2,500 2,446,875
State of Washington, Various Purpose General
Obligation Bonds, Series 1990A,
6.75%, 2-1-15 ......................... 4,995 5,550,694
Pilchuck Development Public Corporation (State
of Washington), Special Facilities Airport
Revenue Bonds, Series 1993 (TRAMCO, INC. Project),
6.0%, 8-1-23 .......................... 3,500 3,311,875
Public Utility District No. 1 of Douglas County,
Washington, Wells Hydroelectric Revenue Bonds,
Series of 1965,
3.7%, 9-1-18 .......................... 3,980 3,203,900
Housing Authority of the City of Seattle,
Low-Income Housing Assistance Revenue Bonds,
1995 (GNMA Collateralized Mortgage
Loan - Kin On Project),
7.4%, 11-20-36 ........................ 1,750 1,942,500
Total ................................. 64,517,094
WEST VIRGINIA - 0.71%
Braxton County, West Virginia, Solid Waste
Disposal Revenue Bonds (Weyerhaeuser Company
Project), Series 1995A,
6.5%, 4-1-25 .......................... 3,500 3,513,125
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%, 4-1-13 ......................... 2,000 2,037,500
Total ................................. 5,550,625
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WISCONSIN - 1.06%
Wisconsin Public Power Incorporated SYSTEM
(The), Power Supply System Revenue Bonds,
Series 1993B-2, Yield Curve Notes (YCNs),
6.582%, 7-1-14 (A) .................... $ 5,500 $ 5,479,375
Wisconsin Housing and Economic Development
Authority, Home Ownership Revenue Bonds,
1997 Series H,
5.75%, 9-1-28 ......................... 3,000 2,846,250
Total ................................. 8,325,625
TOTAL MUNICIPAL BONDS - 91.84% $718,788,325
(Cost: $730,057,777)
Number of
Contracts
OPTION - 0.00%
June 88 Put Options on June 00
Treasury Bond Futures ................. 1,000 $ 15,625
(Cost: $918,750)
TOTAL SHORT-TERM SECURITIES - 7.12% $ 55,733,710
(Cost: $55,733,710)
TOTAL INVESTMENT SECURITIES - 98.96% $774,537,660
(Cost: $786,710,237)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.04% 8,177,401
NET ASSETS - 100.00% $782,715,061
See Notes to Schedule of Investments on page 22.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL BOND FUND, INC.
MARCH 31, 2000
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, 2000.
(B) 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, 2000.
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, 2000
(In Thousands, Except for Per Share Amounts)
Assets
Investment securities--at value
(Notes 1 and 3) ............................... $774,538
Cash ........................................... 1
Receivables:
Interest ...................................... 11,378
Investment securities sold..................... 2,740
Fund shares sold .............................. 139
Prepaid insurance premium ...................... 24
--------
Total assets ................................ 788,820
--------
Liabilities
Payable to Fund shareholders ................... 4,756
Payable for investment securities purchased ..... 1,074
Accrued service fee (Note 2) ................... 149
Accrued transfer agency and dividend
disbursing (Note 2) ........................... 82
Accrued distribution fee (Note 2) .............. 12
Accrued management fee (Note 2) ................ 11
Accrued accounting services fee (Note 2) ........ 7
Other .......................................... 14
--------
Total liabilities ........................... 6,105
--------
Total net assets ........................... $782,715
========
Net Assets
$0.001 par value capital stock
Capital stock ................................. $ 117
Additional paid-in capital .................... 808,078
Accumulated undistributed income (loss):
Accumulated undistributed net investment
income ...................................... 696
Accumulated undistributed net realized loss on
investment transactions ..................... (9,678)
Distributions in excess of net realized loss on
investment transactions ..................... (4,325)
Net unrealized depreciation in value of
investments ................................. (12,173)
--------
Net assets applicable to outstanding units
of capital ................................. $782,715
========
Net asset value per share (net assets divided
by shares outstanding)
Class A ........................................ $6.70
Class B ........................................ $6.70
Class C ........................................ $6.70
Class Y ........................................ $6.70
Capital shares outstanding
Class A ........................................ 115,505
Class B ........................................ 63
Class C ........................................ 30
Class Y ........................................ 1,186
Capital shares authorized ........................ 600,000
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended MARCH 31, 2000
(In Thousands)
Investment Income
Interest and amortization (Note 1B) .............. $25,374
-------
Expenses (Note 2):
Investment management fee ....................... 2,109
Service fee:
Class A ........................................ 946
Class B ........................................ ---*
Class C ........................................ ---*
Transfer agency and dividend disbursing:
Class A ........................................ 395
Class B ........................................ 1
Class C ........................................ ---*
Distribution fee:
Class A ........................................ 43
Class B ........................................ 1
Class C ........................................ 1
Accounting services fee ......................... 43
Custodian fees .................................. 15
Audit fees ...................................... 12
Legal fees ...................................... 8
Other ........................................... 115
-------
Total expenses ................................ 3,689
-------
Net investment income ........................ 21,685
-------
Realized and Unrealized Loss on
Investments (Notes 1 and 3)
Realized net loss on securities .................. (6,743)
Realized net gain on put options purchased ....... 385
Realized net loss on futures contracts closed .... (3,135)
-------
Realized net loss on investments ................ (9,493)
-------
Net unrealized depreciation in value of
securities during the period .................... (6,583)
Net unrealized depreciation in value of
options during the period (903)
-------
Net unrealized depreciation in value of
investments during the period .................. (7,486)
-------
Net loss on investments ....................... (16,979)
-------
Net increase in net assets resulting
from operations ............................ $ 4,706
=======
*Not shown due to rounding.
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
For the For the
six months fiscal year
ended ended
March 31, September 30,
2000 1999
------------ --------------
Decrease in Net Assets
Operations:
Net investment income.............. 21,685 $47,065
Realized net gain (loss) on
investments ..................... (9,493) 9,001
Unrealized depreciation ........... (7,486) (86,742)
-------- --------
Net increase (decrease) in net assets
resulting from operations ...... 4,706 (30,676)
-------- --------
Distributions to shareholders (Note 1D):*
From net investment income:
Class A ......................... (21,648) (47,791)
Class B ......................... (5) ---
Class C ......................... (2) ---
Class Y ......................... (35) ---**
From realized gains on securities transactions:
Class A ......................... (4,738) (14,339)
Class B ......................... (1) ---
Class C ......................... (1) ---
Class Y ......................... ---** ---
In excess of realized gains on securities transactions:
Class A ......................... (4,324) ---
Class B ......................... (1) ---
Class C ......................... ---** ---
Class Y ......................... ---** ---
-------- --------
(30,755) (62,130)
-------- --------
Capital share transactions
(Note 7) .......................... (65,318) (30,001)
--------- --------
Total decrease ............... (91,367) (122,807)
Net Assets
Beginning of period ................ 874,082 996,889
--------- --------
End of period, including undistributed
net investment income of $696 and
$701, respectively ................ $782,715 $874,082
======== ========
*See "Financial Highlights" on pages 26 - 29.
**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 ------------------------------------
3/31/00 1999 1998 1997 1996 1995
------- ------ ------ ------ ------ ------
Net asset value,
beginning of period $6.90 $7.63 $7.47 $7.32 $7.25 $6.91
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income .......... 0.18 0.36 0.37 0.38 0.39 0.39
Net realized and
unrealized gain
(loss) on
investments ..... (0.13) (0.61) 0.25 0.30 0.12 0.38
----- ----- ----- ----- ----- -----
Total from investment
operations ....... 0.05 (0.25) 0.62 0.68 0.51 0.77
----- ----- ----- ----- ----- -----
Less distributions:
From net investment
income .......... (0.18) (0.37) (0.37) (0.37) (0.39) (0.39)
From capital gains (0.03) (0.11) (0.09) (0.16) (0.05) (0.00)
In excess of capital
gains ........... (0.04) (0.00) (0.00) (0.00) (0.00) (0.04)
----- ----- ----- ----- ----- -----
Total distributions (0.25) (0.48) (0.46) (0.53) (0.44) (0.43)
----- ----- ----- ----- ----- -----
Net asset value,
end of period .... $6.70 $6.90 $7.63 $7.47 $7.32 $7.25
===== ===== ===== ===== ===== =====
Total return* ...... 0.83% -3.46% 8.67% 9.77% 7.16% 11.51%
Net assets, end of
period (in
millions) ........ $774 $874 $997 $994 $997 $975
Ratio of expenses to
average net assets 0.90%** 0.79% 0.72% 0.67% 0.68% 0.65%
Ratio of net investment
income to average
net assets ....... 5.30%** 4.98% 4.95% 5.14% 5.23% 5.51%
Portfolio
turnover rate .... 9.41% 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.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Class B Shares
For a Share of Capital Stock Outstanding
Throughout The Period:
For the
period
from
10/5/99*
through
3/31/00
-------
Net asset value,
beginning of period $6.87
----
Income from investment
operations:
Net investment income 0.15
Net realized and
unrealized loss
on investments .. (0.10)
----
Total from investment
operations ....... 0.05
----
Less distributions:
From net investment
income .......... (0.15)
From capital gains (0.03)
In excess of capital
gains ........... (0.04)
----
Total distributions (0.22)
----
Net asset value,
end of period .... $6.70
====
Total return ....... 0.78%
Net assets, end of
period (000 omited) $421
Ratio of expenses to
average net assets 1.88%**
Ratio of net investment
income to average
net assets ....... 4.34%**
Portfolio turnover
rate ............. 9.41%***
*Commencement of operations.
**Annualized.
***For the six months ended March 31, 2000.
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Class C Shares
For a Share of Capital Stock Outstanding
Throughout The Period:
For the
period
from
10/7/99*
through
3/31/00
-------
Net asset value,
beginning of period $6.87
----
Income from investment
operations:
Net investment income 0.15
Net realized and
unrealized loss
on investments .. (0.10)
----
Total from investment
operations ....... 0.05
----
Less distributions:
From net investment
income .......... (0.15)
From capital gains (0.03)
In excess of capital
gains ........... (0.04)
----
Total distributions (0.22)
----
Net asset value,
end of period .... $6.70
====
Total return ....... 0.78%
Net assets, end of
period (000 omited) $202
Ratio of expenses to
average net assets 1.92%**
Ratio of net investment
income to average
net assets ....... 4.30%**
Portfolio turnover
rate ............. 9.41%***
*Commencement of operations.
**Annualized.
***For the six months ended March 31, 2000.
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the
For the period
six from
months 12/30/98*
ended through
3/31/00 9/30/99
------- -------
Net asset value,
beginning of period $6.90 $7.41
----- -----
Income from investment
operations:
Net investment
income .......... 0.19 0.28
Net realized and
unrealized loss
on investments .. (0.14) (0.51)
----- -----
Total from investment
operations ....... 0.05 (0.23)
----- -----
Less distributions
From net investment
income .......... (0.18) (0.28)
From capital gains (0.03) (0.00)
In excess of capital
gains ........... (0.04) (0.00)
----- -----
Total distributions. (0.25) (0.28)
----- -----
Net asset value,
end of period .... $6.70 $6.90
===== =====
Total return ....... 0.84% -3.21%
Net assets, end of
period (000 omited) $7,954 $2
Ratio of expenses
to average net
assets ........... 0.74%** 0.67%**
Ratio of net
investment income
to average net
assets ........... 5.47%** 5.08%**
Portfolio
turnover rate .... 9.41% 30.93%***
*Commencement of operations.
**Annualized.
***For the fiscal year ended September 30, 1999.
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
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 accounting principles generally
accepted in the United States of America.
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 accounting
principles generally accepted in the United States of America. 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 accounting
principles generally accepted in the United States of America 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
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. 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
For Class A, Class B and Class C shares, the Fund 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. With respect to Class Y shares, the
Fund pays WARSCO a monthly fee at an annual rate of 0.15% of the average daily
net assets of the class for the preceding 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
$137,107. With respect to Class A, Class B and Class C shares, W&R paid sales
commissions of $79,555 and all expenses in connection with the sale of Fund
shares, except for registration fees and related expenses.
A contingent deferred sales charge ("CDSC") may be assessed against a
shareholder's redemption amount of Class B and Class C shares and is paid to
W&R. The purpose of the deferred sales charge is to compensate W&R for the
costs incurred by W&R in connection with the sale of Fund shares.
With respect to Class B shares, the amount of the CDSC will be the
following percent of the total amount invested during a calendar year to acquire
the shares or the value of the shares redeemed, whichever is less. Redemption
at any time during the first calendar year of investment, 5%; the second
calendar year, 4%; the third calendar year, 3%; the fourth calendar year, 3%;
the fifth calendar year, 2%; the sixth calendar year, 1% and thereafter, 0%.
If Class C shares are sold within 12 months of buying these shares, a 1%
CDSC will be imposed.
The deferred sales charge will not be imposed on shares representing
payment of dividends or distributions or on amounts which represent an increase
in the value of the shareholder's account resulting from capital appreciation
above the amount paid for shares purchased during the deferred sales charge
period. During the period ended March 31, 2000, W&R received $204 and $13 in
deferred sales charges from Class B shares and Class C shares, respectively.
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 0.25% of the Fund's average annual net assets. The fee is to be paid to
reimburse W&R for amounts it expends in connection with the distribution of the
Class A shares and/or provision of personal services to Fund shareholders and/or
maintenance of shareholder accounts.
Under the Distribution and Service Plan adopted by the Fund for Class B and
Class C shares, respectively, the Fund may pay W&R, on an annual basis, a
service fee of up to 0.25% of the average daily net assets of the class to
compensate W&R for providing services to shareholders of that class and/or
maintaining shareholder accounts for that class and a distribution fee of up to
0.75% of the average daily net assets of the class to compensate W&R for
distributing the shares of that class. The Class B Plan and the Class C Plan
each permit W&R to receive compensation, through the distribution and service
fee, respectively, for its distribution activities for that class, which are
similar to the distribution activities described with respect to the Class A
Plan, and for its activities in providing personal services to shareholders of
that class and/or maintaining shareholder accounts of that class, which are
similar to the corresponding activities for which is it entitled to
reimbursement under the Class A Plan.
The Fund paid Directors' fees of $14,746, 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 $72,630,433 while proceeds from maturities and sales
aggregated $169,737,807. Purchases of options aggregated $4,708,535 while
proceeds from options aggregated $4,175,008. Purchases of short-term securities
aggregated $833,574,430 while proceeds from maturities and sales aggregated
$812,717,902. No long-term U.S. Government securities were bought or sold
during the period ended March 31, 2000.
For Federal income tax purposes, cost of investments owned at March 31,
2000 was $789,819,687, resulting in net unrealized depreciation of $15,282,027,
of which $21,394,338 related to appreciated securities and $36,676,365 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, 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
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. 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 each 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.
Transactions in capital stock are summarized below. Amounts are in
thousands.
For the For the
six months fiscal year
ended ended
March 31, September 30,
2000 1999
------------ ------------
Shares issued from sale
of shares:
Class A ............ 5,419 25,267
Class B ............. 70 ---
Class C ............. 31 ---
Class Y ............ 1,181 ---*
Shares issued from
reinvestment of dividends
and/or capital gains
distribution:
Class A ............ 3,833 7,013
Class B ............. 1 ---
Class C ............. 1 ---
Class Y ............ 5 ---*
Shares redeemed:
Class A ............ (20,343) (36,372)
Class B ............. (8) ---
Class C ............. (2) ---
Class Y ............ --- ---
------- ------
Decrease in
outstanding capital
shares .............. (9,812) (4,092)
======= ======
Value issued from sale
of shares:
Class A ............ $35,979 $185,060
Class B ............. 463 ---
Class C ............. 210 ---
Class Y ............ 7,683 2
Value issued from
reinvestment of dividends
and/or capital gains
distribution:
Class A ............ 25,388 51,386
Class B ............. 7 ---
Class C ............. 4 ---
Class Y ............ 36 ---*
Value redeemed:
Class A ............ (135,022) (266,449)
Class B ............. (52) ---
Class C ............. (14) ---
Class Y ............ --- ---
-------- --------
Decrease in outstanding
capital ............ $(65,318) $(30,001)
======== ========
*Not shown due to rounding.
<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, 2000, 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 then ended and the fiscal year ended September 30, 1999, and the
financial highlights for the six-month period ended March 31, 2000, and for each
of the five fiscal years in the period ended September 30, 1999. 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 auditing standards generally accepted
in the United States of America. 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, 2000, 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, 2000, 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, 1999, and the
financial highlights for the six-month period ended March 31, 2000, and for each
of the five fiscal years in the period ended September 30, 1999, in conformity
with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Kansas City, Missouri
May 5, 2000
<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, San Mateo, 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
Kristen A. Richards, Vice President and Secretary
Daniel C. Schulte, Vice President
<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 Tax-Managed Equity 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
(888)-WADDELL
(888)-923-3355
Our INTERNET address is:
http://www.waddell.com
NUR1008SA(3-00)
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