United
Municipal
High Income
Fund, Inc.
ANNUAL
REPORT
--------------------------------------------
For the fiscal year ended September 30, 1996
<PAGE>
FUND MANAGER'S LETTER
- -----------------------------------------------------------------
SEPTEMBER 30, 1996
Dear Shareholder:
This report relates to the operation of United Municipal High Income Fund,
Inc. for the fiscal year ended September 30, 1996. The discussion, graphs and
tables contained in this report will provide you with information regarding the
Fund's performance during that period.
During the first part of the fiscal year, the Federal Reserve lowered
short-term interest rates in an attempt to stimulate a sluggish economy. As
interest rates declined, the prices of long-term bonds rose, peaking during the
beginning of the second fiscal quarter. An apparently strengthening economy
during the first half of 1996 caused interest rates to rise and bond prices to
decline. However, economic growth in fact had been moderate, and recent
recognition of this resulted in interest rates returning close to where they
began the year. Election-year proposals to balance the federal budget, reduce
the size of government and cut taxes also contributed to market volatility.
Consistent with the primary objective of the Fund to maximize tax-free
income, we continued to search for investment opportunities in municipal bonds
with comparatively higher yields. The Fund has continued to invest
significantly in non-rated bonds and in more liquid medium-grade issues during
the past fiscal year.
The strategies and techniques we applied resulted in the Fund's performance
exceeding that of the indexes charted on the following page. Those indexes
reflect the performance of securities that generally represent the municipal
bond market (the Lehman Brothers Municipal Bond Index) and the universe of funds
with similar investment objectives (the Lipper High Yield Municipal Bond Fund
Universe Average). The superior performance of the Fund during the fiscal year
resulted primarily from focusing on the maximization of yield, while avoiding
major credit problems.
We anticipate relatively stable interest rates as the new fiscal year
begins. Economic growth is expected to remain moderate and indications are that
inflation should continue at low levels. In this environment, we will continue
attempting to identify municipal issues that offer attractive yields.
Thank you for your continued confidence.
Respectfully,
John M. Holliday
Manager, United Municipal High Income Fund
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
UNITED MUNICIPAL HIGH INCOME FUND, INC.,
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX,
AND THE LIPPER HIGH YIELD MUNICIPAL BOND FUND UNIVERSE AVERAGE
Lipper
High Yield
United Lehman Municipal
MunicipalBrothers Bond
High IncomeMunicipal Fund
Fund, Bond Universe
Inc. Index Average
------------------ ----------
09/30/86 Purchase$9,575 10,000 10,000
09/30/87 9,917 10,050 10,037
09/30/88 10,637 11,375 11,225
09/30/89 11,848 12,363 12,273
09/30/90 12,545 13,203 12,889
09/30/91 14,095 14,944 14,275
09/30/92 15,657 16,507 15,663
09/30/93 17,813 18,609 17,600
09/30/94 17,822 18,156 17,197
09/30/95 19,717 20,187 18,828
09/30/96 21,177 21,407 19,944
==== United Municipal High Income Fund, Inc.*-- $21,177
++++ Lehman Brothers Municipal Bond Index -- $21,407
---- Lipper High Yield Municipal Bond Fund Universe Average - $19,944
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund.
Annual Average Total Return
Class A+
--------------------
Year Ended
9/30/96 2.84%
5 Years Ended
9/30/96 7.54%
10 Years Ended
9/30/96 7.79%
+ Performance data quoted represents past performance and is based on deduction
of a 4.25% sales load on the initial purchase in each of the three periods.
Investment return and principal value will fluctuate and an investor's
shares, when redeemed, may be worth more or less than their original cost.
Past performance is not predictive of future performance. Indexes are
unmanaged.
<PAGE>
SHAREHOLDER SUMMARY
- --------------------------------------------------------------
United Municipal High Income Fund, Inc.
PORTFOLIO STRATEGY:
Ordinarily, at least 75% OBJECTIVE: High level of income
medium and lower rated which is not
Municipal Bonds subject to Federal income taxation.
(Income may be
Generally less than 20% subject to state and
Taxable Debt Securities local taxes. A portion may be subject
to Federal
No more than 25% in taxes, including
industrial revenue alternative minimum tax.)
bonds of any one industry
STRATEGY: Invests primarily in municipal bonds
(debt securities the interest on which
is generally exempt from Federal income
tax) in the medium- and lower-rated
categories as classified by recognized
rating agencies. (May invest in
securities subject to repurchase
agreements. May invest in certain
futures.)
FOUNDED: 1986
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
PERFORMANCE SUMMARY
PER SHARE DATA
For the Fiscal Year Ended September 30, 1996
- --------------------------------------------
DIVIDENDS PAID $0.34
=====
NET ASSET VALUE ON
9/30/96 $5.31
9/30/95 5.27
-----
CHANGE PER SHARE $0.04
=====
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ------------ -------------
1-year period ended 9-30-96 2.84% 7.40%
5-year period ended 9-30-96 7.54% 8.48%
10-year period ended 9-30-96 7.79% 8.26%
Performance data quoted represents past performance and is based on deduction of
4.25% sales load on the initial purchase in each of the three periods.
Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On September 30, 1996, United Municipal High Income Fund, Inc. had net assets
totaling $399,823,693 invested in a diversified portfolio.
As a shareholder of United Municipal High Income Fund, Inc., for every $100 you
had invested on September 30, 1996, your Fund owned:
$24.80 Life Care/Nursing Center Revenue Bonds
18.30 Other Municipal Bonds
14.88 Industrial Development Revenue Bonds
11.17 Hospital Revenue Bonds
9.69 Airport Revenue Bonds
5.35 Water and Sewer Revenue Bonds
4.82 Resource Recovery Bonds
3.48 Zero Coupon Municipal Bonds
3.00 Lease/Certificates of Participation Bonds
2.43 Housing Revenue Bonds
2.08 Cash and Cash Equivalents
1996 TAX YEAR TAXABLE EQUIVALENT YIELDS*
- --------------------------------------------------------------------------------
If your Taxable Income is:
Your
Marginal Equivalent Tax Free Yields
Joint Single Tax -----------------------------------
Return ReturnBracket Is 5% 6% 7% 8%
- -----------------------------------------------------------------
$ 0- 40,100$ 0- 24,000 15% 5.88 7.06 8.24 9.41
$ 40,101- 96,900$ 24,001- 58,150 28% 6.94 8.33 9.72 11.11
$ 96,901-147,700$ 58,151-121,300 31% 7.25 8.70 10.14 11.59
$147,701-263,750$121,301-263,750 36% 7.81 9.38 10.94 12.50
$263,751 and above$263,751 and above 39.6% 8.28 9.93 11.59 13.25
Above table is for illustration only and does not represent the actual
performance of United Municipal High Income Fund, Inc.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS
ALABAMA - 1.76%
The Industrial Development Board of the Town of
Courtland (Alabama), Solid Waste Disposal
Revenue Bonds (Champion International
Corporation Project), Series 1995A,
6.5%, 9-1-2025 ........................ $ 5,000 $ 4,987,500
The Medical Clinic Board of the City of Ozark,
Alabama, First Mortgage Revenue Bonds (United
States Health & Housing Foundation, Inc.
Project), Series 1988-A,
10.0%, 10-1-2015 ...................... 1,000 1,047,500
The Marshall County Health Care Authority,
Hospital Revenue Refunding Bonds,
Series 1992 (Guntersville-Arab
Medical Center),
7.0%, 10-1-2013 ....................... 1,000 1,008,750
Total ................................. 7,043,750
ALASKA - 1.25%
City of Seward, Alaska, Revenue Bonds, 1996
(Alaska Sealife Center Project),
7.65%, 10-1-2016 ...................... 2,000 2,010,000
Anchorage Parking Authority, Lease Revenue
Refunding Bonds, Series 1993 (5th Avenue
Garage Project),
6.75%, 12-1-2008 ...................... 1,500 1,565,625
Alaska Industrial Development and Export
Authority, Refunding Revenue Bonds, Series
1989 (American President Lines Project),
8.0%, 11-1-2009 ....................... 1,320 1,419,000
Total ................................. 4,994,625
ARIZONA - 0.63%
Hayden-Winkelman Unified School District
No. 41 of Gila County, Arizona, Capital
Appreciation Refunding Bonds, Series 1995,
0.0%, 7-1-2010 ........................ 6,145 2,504,087
ARKANSAS - 0.44%
The Fayetteville Public Facilities Board,
Refunding and Improvement Revenue Bonds,
Series 1989A (Butterfield Trail Village
Project),
9.5%, 9-1-2014 ........................ 1,600 1,746,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA - 5.64%
Foothill/Eastern Transportation Corridor
Agency, Toll Road Revenue Bonds, Series
1995A,
0.0%, 1-1-2013 (A) .................... $11,925 $ 7,453,125
San Joaquin Hills Transportation Corridor
Agency (Orange County, California):
Junior Lien Toll Road Revenue Bonds,
0.0%, 1-1-2002 ........................ 2,755 2,014,594
Senior Lien Toll Road Revenue Bonds,
0.0%, 1-1-2011 (A) .................... 2,500 1,946,875
Hi-Desert Memorial Hospital District,
Revenue Bonds, Series 1994A,
8.0%, 10-1-2019 ....................... 3,000 3,146,250
Huntington Beach Public Financing Authority
(Orange County, California), 1992 Revenue
Bonds (Huntington Beach Redevelopment
Projects),
7.0%, 8-1-2024 ........................ 3,000 2,962,500
Certificates of Participation (1991 Capital
Improvement Project), Bella Vista Water
District (California),
7.375%, 10-1-2017 ..................... 1,500 1,608,750
Carson Redevelopment Agency (California),
Redevelopment Project Area No. 1,
Tax Allocation Bonds, Series 1993B,
6.0%, 10-1-2016 ....................... 1,500 1,449,375
Kings County Waste Management Authority,
Solid Waste Revenue Bonds, Series 1994
(California),
7.2%, 10-1-2014 ....................... 1,000 1,068,750
Inglewood Public Financing Authority,
1992 Revenue Bonds, Series C (In-Town,
Manchester-Prairie and North Inglewood
Industrial Park Redevelopment Projects-
Housing Set-Aside Loans),
7.0%, 5-1-2022 ........................ 880 914,100
Total ................................. 22,564,319
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
COLORADO - 4.41%
City of Central, Gilpin County, Colorado:
General Obligation Water Bonds:
Series 1996,
6.3%, 12-1-2011 ....................... 2,250 2,174,062
Series 1992,
7.5%, 12-1-2012 ....................... 1,500 1,713,750
Water Revenue Bonds, Series 1991,
8.625%, 9-15-2011 ..................... 500 596,250
City and County of Denver, Colorado,
Airport System Revenue Bonds,
Series 1994A,
7.5%, 11-15-2023 ...................... $ 3,000 $ 3,281,250
City and County of Denver, Colorado,
Revenue Bonds (Jewish Community Centers
of Denver Project), Series 1994:
8.25%, 3-1-2024 ....................... 2,390 2,440,788
7.875%, 3-1-2019 ...................... 815 832,319
City of Colorado Springs, Colorado,
Airport System Revenue Bonds, Series 1992A,
7.0%, 1-1-2022 ........................ 2,200 2,301,750
Pitkin County, Colorado, Lease Purchase
Agreement, Certificates of Participation
(County Administration Building Project),
Series 1991,
7.4%, 10-1-2011 ....................... 1,500 1,610,625
Mountain Village Metropolitan District, San
Miguel County, Colorado, General
Obligation Refunding Bonds, Series 1992,
8.1%, 12-1-2011 ....................... 1,435 1,576,706
Bachelor Gulch Metropolitan District,
Eagle County, Colorado, General Obligation
Bonds, Series 1996,
7.0%, 12-1-2015 ....................... 1,095 1,084,050
Total ................................. 17,611,550
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CONNECTICUT - 1.53%
Connecticut Development Authority, First
Mortgage Gross Revenue Health Care
Project Bonds, Church Homes, Inc.:
Congregational Avery Heights Project -
1990 Series,
9.0%, 4-1-2020 ........................ $ 2,500 $ 2,684,375
Congregational Avery Nursing Facilities
Project - 1991 Series,
8.5%, 4-1-2021 ........................ 1,490 1,577,537
Eastern Connecticut Resource Recovery
Authority, Solid Waste Revenue Bonds
(Wheelabrator Lisbon Project),
Series 1993A,
5.5%, 1-1-2014 ........................ 2,000 1,860,000
Total ................................. 6,121,912
DISTRICT OF COLUMBIA - 1.27%
Certificates of Participation, Series 1993,
District of Columbia,
7.3%, 1-1-2013 ........................ 3,000 3,015,000
District of Columbia Revenue Bonds
(National Public Radio Issue),
Series 1992,
7.625%, 1-1-2013 ...................... 2,000 2,070,000
Total ................................. 5,085,000
FLORIDA - 3.19%
Sanford Airport Authority (Florida),
Industrial Development Revenue Bonds
(Central Florida Terminals, Inc. Project),
Series 1995A,
7.75%, 5-1-2021 ....................... 4,000 3,970,000
Lake County, Florida, Resource Recovery
Industrial Development Refunding Revenue
Bonds (NRG/Recovery Group Project),
Series 1993A,
5.95%, 10-1-2013 ...................... 4,060 3,948,350
Dade County Industrial Development Authority,
Industrial Development Revenue Bonds,
Series 1995 (Miami Cerebral Palsy
Residential Services, Inc. Project),
8.0%, 6-1-2022 ........................ 2,000 2,045,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
FLORIDA (Continued)
City of Fort Walton Beach, First Mortgage
Industrial Development Revenue Bonds,
Series 1986 (Ft. Walton Beach Ventures,
Inc. Project),
10.5%, 12-1-2016 ...................... $ 1,315 $ 1,361,025
The Lee County (Florida) Industrial
Development Authority, Economic Development
Revenue Refunding Bonds (Encore Nursing
Center Partners, Ltd.-85 Project),
Series 1992,
8.125%, 12-1-2007 ..................... 700 745,500
Sarasota County (Florida) Health Facilities
Authority, Health Care Facilities Revenue
Bonds, Series 1996 (Sarasota Manatee
Jewish Housing Council, Inc. Project),
7.125%, 7-1-2026 ...................... 700 685,125
Total ................................. 12,755,000
GUAM - 0.77%
Guam Airport Authority, General Revenue
Bonds, 1993 Series B,
6.6%, 10-1-2010 ....................... 3,000 3,075,000
IDAHO - 0.54%
Idaho Health Facilities Authority, Hospital
Revenue Refunding Bonds, Series 1992
(IHC Hospitals, Inc.), Indexed Inverse
Floating Rate Securities,
8.57%, 2-15-2021 (B) .................. 2,000 2,167,500
ILLINOIS - 5.33%
Illinois Health Facilities Authority:
Revenue Refunding Bonds,
Series 1995A (Fairview Obligated
Group),
7.125%, 8-15-2017 ..................... 2,765 2,678,594
Revenue Bonds, Series 1995 (Mercy
Center for Health Care Services),
6.375%, 10-1-2015 ..................... 2,500 2,406,250
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
ILLINOIS (Continued)
City of Hillsboro, Montgomery County,
Illinois, General Obligation Bonds
(Alternate Revenue Source), Series 1991,
7.5%, 12-1-2021 ....................... $ 2,640 $ 2,834,700
City of Chicago, Chicago-O'Hare
International Airport, Special Facility
Revenue Refunding Bonds, Series 1994
(American Airlines, Inc. Project),
8.2%, 12-1-2024 ....................... 2,400 2,775,000
Illinois Development Finance Authority
Revenue Bonds, Series 1993C (Catholic
Charities Housing Development
Corporation Project),
6.1%, 1-1-2020 ........................ 2,500 2,409,375
Village of Lansing, Illinois, Landings
Redevelopment Project Area, Tax Increment
Refunding Revenue Bonds (Limited Sales
Tax Pledge), Series 1992,
7.0%, 12-1-2008 ....................... 2,000 2,140,000
Village of Hanover Park, Cook and DuPage
Counties, Illinois, First Mortgage
Revenue Bonds, Series 1989 (Windsor
Park Manor Project),
9.5%, 12-1-2014 ....................... 2,000 2,107,500
Village of Hodgkins, Cook County, Illinois,
Tax Increment Revenue Refunding Bonds,
Series 1995A,
7.625%, 12-1-2013 ..................... 1,750 1,802,500
Village of Bourbonnais, Kankakee County,
Illinois, Sewerage Revenue Bonds,
Series 1993,
7.25%, 12-1-2012 ...................... 1,085 1,146,031
City of Eureka, Woodford County, Illinois,
General Obligation Refunding Bonds
(Alternate Revenue Source), Series 1993,
6.25%, 7-1-2013 ....................... 1,000 996,250
Total ................................. 21,296,200
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
INDIANA - 5.67%
Indianapolis Airport Authority, Special
Facilities Revenue Bonds:
Series 1995A, United Air Lines, Inc.,
Indianapolis Maintenance Center Project,
6.5%, 11-15-2031 ...................... $ 6,000 $ 6,007,500
Series 1994, Federal Express
Corporation Project,
7.1%, 1-15-2017 ....................... 4,500 4,775,625
Indiana Health Facility Financing Authority,
Hospital Revenue Bonds, Series 1990
(Hancock Memorial Hospital Project),
8.3%, 8-15-2020 ....................... 3,000 3,202,500
City of East Chicago, Indiana, Pollution
Control Refunding Revenue Bonds, Inland
Steel Company Project No. 10,
Series 1993,
6.8%, 6-1-2013 ........................ 3,000 3,000,000
Indiana Development Finance Authority, Pollution
Control Refunding Revenue Bonds (Inland Steel
Company Project No. 12), Series 1995,
6.85%, 12-1-2012 ...................... 2,500 2,568,750
City of Carmel, Indiana, Retirement Rental
Housing Revenue Refunding Bonds (Beverly
Enterprises - Indiana, Inc. Project),
Series 1992,
8.75%, 12-1-2008 ...................... 1,500 1,631,250
Indiana Health Facility Financing
Authority, Hospital Revenue Bonds,
Series 1992 (Fayette Memorial Hospital
Project),
7.2%, 10-1-2022 ....................... 1,000 1,015,000
Indiana Housing Finance Authority, Residential
Mortgage Bonds, 1988 Series R-A,
0.0%, 1-1-2013 ........................ 1,885 473,606
Total ................................. 22,674,231
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
IOWA - 0.36%
City of Ottumwa, Iowa, Hospital Facility
Revenue Refunding and Improvement Bonds,
Series 1993 (Ottumwa Regional Health
Center, Incorporated),
6.0%, 10-1-2018 ....................... $ 1,550 $ 1,431,813
KANSAS - 1.28%
Kansas Development Finance Authority,
Community Provider Loan Program (Community
Living Opportunities, Inc.), Series
1992A Revenue Bonds,
8.875%, 9-1-2011 ...................... 2,790 2,967,862
City of Prairie Village, Kansas, Claridge
Court Project Revenue Bonds, Series 1993A:
8.75%, 8-15-2023 ...................... 1,000 1,087,500
8.5%, 8-15-2004 ....................... 1,000 1,056,250
Total ................................. 5,111,612
KENTUCKY - 1.06%
Kenton County Airport Board (Commonwealth
of Kentucky), Special Facilities Revenue
Bonds, 1992 Series A (Delta Air Lines,
Inc. Project),
7.5%, 2-1-2020 ........................ 3,000 3,210,000
County of Perry, Kentucky, Solid Waste
Disposal Revenue Bonds (TJ International
Project), Series 1994,
7.0%, 6-1-2024 ........................ 1,000 1,027,500
Total ................................. 4,237,500
LOUISIANA - 1.98%
Parish of St. Charles, State of Louisiana:
Environmental Revenue Bonds (Louisiana
Power & Light Company Project),
Series 1994-A,
6.875%, 7-1-2024 ...................... 2,750 2,866,875
Pollution Control Revenue Bonds
(Union Carbide Project),
Series 1992,
7.35%, 11-1-2022 ...................... 2,000 2,150,000
Board of Commissioners of the Port of New
Orleans, Industrial Development Revenue
Refunding Bonds (Continental Grain Company
Project), Series 1993,
7.5%, 7-1-2013 ........................ 2,000 2,075,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
LOUISIANA (Continued)
LaFourche Parish Home Mortgage Authority,
Tax-Exempt Capital Appreciation Refunding
Bonds, Series 1990-B, Class B-2,
0.0%, 5-20-2014 ....................... $ 3,300 $ 808,500
Total ................................. 7,900,375
MAINE - 0.69%
Maine Veterans' Homes, Revenue Bonds,
1995 Series,
7.75%, 10-1-2020 ...................... 2,810 2,778,387
MARYLAND - 1.08%
Maryland Economic Development Corporation,
Senior Lien Revenue Bonds (Rocky Gap
Golf Course and Hotel/Meeting Center
Project), Series 1996 A,
8.375%, 10-1-2009 ..................... 3,250 3,270,312
Baltimore County, Maryland, Pollution
Control Revenue Refunding Bonds,
Series 1994A (Bethlehem Steel
Corporation Project),
7.55%, 6-1-2017 ....................... 1,000 1,047,500
Total ................................. 4,317,812
MASSACHUSETTS - 5.58%
Massachusetts Industrial Finance Agency:
First Mortgage Revenue Bonds, Reeds
Landing Project, Series 1993,
8.625%, 10-1-2023 ..................... 7,445 8,003,375
Resource Recovery Revenue Bonds (SEMASS
Project), Series 1991B,
9.25%, 7-1-2015 ....................... 5,000 5,656,250
Revenue Bonds:
Glenmeadow Retirement
Community Project, Series 1996C:
8.625%, 2-15-2026 ..................... 2,200 2,150,500
8.375%, 2-15-2018 ..................... 1,260 1,219,050
Beaver Country Day School Issue,
Series 1992, Subseries A,
8.1%, 3-1-2008 ........................ 1,590 1,615,838
Massachusetts Health and Educational
Facilities Authority, Revenue Bonds,
New England Deaconess Hospital Issue,
Series D,
6.875%, 4-1-2022 ...................... 3,490 3,660,138
Total ................................. 22,305,151
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MICHIGAN - 0.50%
Michigan Strategic Fund, Limited Obligation
Revenue Bonds:
Knollwood Corporation Project, Series A,
10.146%, 10-1-2016 (C) ................ $ 1,300 $ 1,105,000
Mercy Services for Aging Project,
Series 1990,
9.4%, 5-15-2020 ....................... 800 903,000
Total ................................. 2,008,000
MINNESOTA - 1.33%
City of St. Anthony, Minnesota, Housing
Development Refunding Revenue Bonds
(Autumn Woods Project), Series 1992,
6.875%, 7-1-2022 ...................... 1,500 1,528,125
City of Woodbury, Minnesota, Gross Revenue
Golf Course Bonds, Series 1996B,
6.75%, 2-1-2022 ....................... 1,500 1,494,375
Minneapolis Community Development Agency,
Limited Tax Supported Development Revenue
Bonds, Common Bond Fund Series 1995-1,
7.25%, 12-1-2015 ...................... 1,310 1,331,288
Housing and Redevelopment Authority of the
City of Saint Paul, Minnesota, Nursing Home
Development Revenue Bonds, Series 1988
(St. Mary's Home Project),
10.0%, 12-1-2018 ...................... 855 977,906
Total ................................. 5,331,694
MISSISSIPPI - 0.90%
Lowndes County, Mississippi, Solid Waste
Disposal and Pollution Control Refunding
Revenue Bonds (Weyerhaeuser Company
Project), Series 1992B, Indexed Inverse
Floating/Fixed Term Bonds,
8.57%, 4-1-2022 (D) ................... 2,000 2,215,000
Adams County, Mississippi, Hospital Revenue
Bonds, Series 1991 (Jefferson Davis Memorial
Hospital Project),
8.0%, 10-1-2016 ....................... 1,200 1,375,500
Total ................................. 3,590,500
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MISSOURI - 7.06%
State Environmental Improvement and Energy
Resources Authority (State of Missouri),
Water Facilities Revenue Bonds
(Tri-County Water Authority Project),
Series 1992:
8.75%, 4-1-2022 ....................... $ 4,340 $ 4,763,150
8.25%, 4-1-2002 ....................... 620 661,850
Lake of the Ozarks Community Bridge
Corporation, Bridge System Revenue Bonds,
Series 1996,
6.4%, 12-1-2025 ....................... 3,500 3,351,250
Bi-State Development Agency of the Missouri-
Illinois Metropolitan District, Adjustable
Rate Terminal Facilities, Revenue Refunding
Bonds (American Commercial Terminals, Inc.
Project), Series 1985,
7.75%, 6-1-2010 ....................... 3,000 3,262,500
The Industrial Development Authority of the
City of Kansas City, Missouri, Revenue Bonds
(The Bishop Spencer Place, Incorporated
Project), Series 1994,
8.0%, 9-1-2016 ........................ 2,965 3,009,475
The Industrial Development Authority of the
City of Hannibal, Missouri, Health
Facilities Revenue Bonds (Hannibal
Regional Healthcare System - Medical
Center of Northeast Missouri Project),
Series 1992,
9.5%, 3-1-2022 ........................ 2,250 2,812,500
Regional Convention and Sports Complex
Authority, Convention and Sports Facility
Project Bonds, Series C 1991 (The City of
St. Louis, Missouri, Sponsor):
7.9%, 8-15-2021 ....................... 1,500 1,650,000
7.75%, 8-15-2001 ...................... 780 819,975
Certificates of Participation,
Series 1994, Public Water
Supply District No. 2 of St. Charles
County, Missouri,
8.25%, 12-1-2020 ...................... 2,000 2,085,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MISSOURI (Continued)
The City of Lake Saint Louis, Missouri,
Public Facilities Authority, Certificates
of Participation (Municipal Golf Course
Project), Series 1993,
7.55%, 12-1-2014 ...................... $ 2,000 $ 2,062,500
The Industrial Development Authority of
the City of St. Louis, Missouri,
Industrial Revenue Refunding Bonds
(Kiel Center Multipurpose Arena Project),
Series 1992,
7.75%, 12-1-2013 ...................... 1,500 1,603,125
The Industrial Development Authority of the
City of Springfield, Missouri,
Industrial Development Refunding Revenue
Bonds (Health Care Realty of Springfield,
Ltd. Project), Series 1988,
10.25%, 12-1-2010 ..................... 1,150 1,178,969
The Industrial Development Authority of
Callaway County, Missouri, Industrial
Development Revenue Bonds (A.P. Green
Refractories Co. Project), Series 1984,
8.6%, 11-1-2014 ....................... 900 969,750
Total ................................. 28,230,044
NEVADA - 1.07%
Clark County, Nevada, Industrial Development
Revenue Bonds (Southwest Gas Corporation),
1992 Series B,
7.5%, 9-1-2032 ........................ 4,000 4,260,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW HAMPSHIRE - 4.83%
New Hampshire Higher Educational and Health
Facilities Authority:
First Mortgage Revenue Bonds:
RiverMead at Peterborough Issue,
Series 1994,
8.5%, 7-1-2024 ........................ $ 4,110 $ 4,361,738
RiverWoods at Exeter Issue,
Series 1993,
9.0%, 3-1-2023 ........................ 2,000 2,167,500
Hospital Revenue Bonds:
Catholic Medical
Center Issue, Series 1989,
8.25%, 7-1-2013 ....................... 3,000 3,206,250
Monadnock Community Hospital
Issue, Series 1990,
9.125%, 10-1-2020 ..................... 1,455 1,553,213
St. Joseph Hospital Issue,
Series 1991,
7.5%, 1-1-2016 ........................ 1,000 1,051,250
Revenue Bonds, New Hampshire Catholic
Charities Issue, Series 1991,
8.4%, 8-1-2011 ........................ 1,700 1,829,625
The Industrial Development Authority of the
State of New Hampshire, Pollution Control
Revenue Bonds, Public Service Company of
New Hampshire Project:
1991 Tax-Exempt Series A,
7.65%, 5-1-2021 ....................... 2,000 2,035,000
1991 Tax-Exempt Series C,
7.65%, 5-1-2021 ....................... 2,000 2,035,000
Lisbon Regional School District, New
Hampshire, General Obligation Capital
Appreciation School Bonds,
0.0%, 2-1-2013 ........................ 1,830 1,084,275
Total ................................. 19,323,851
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW JERSEY - 4.94%
New Jersey Economic Development Authority:
First Mortgage Revenue Fixed Rate Bonds:
Franciscan Oaks Project - Series 1992A,
8.5%, 10-1-2023 ....................... $ 3,500 $ 3,745,000
Winchester Gardens at Ward Homestead
Project - Series 1996A,
8.625%, 11-1-2025 ..................... 3,000 3,033,750
Fellowship Village Project - Series 1995A,
9.25%, 1-1-2025 ....................... 2,500 2,725,000
Senior Mortgage Revenue Bonds, Arbor
Glen of Bridgewater Project, Series
1996A Bonds,
8.75%, 5-15-2026 ...................... 3,000 3,033,750
First Mortgage Revenue Bonds, The
Evergreens - Series 1992,
9.25%, 10-1-2022 ...................... 2,000 2,240,000
Pollution Control Financing Authority of
Camden County (Camden County, New Jersey),
Solid Waste Disposal and Resource
Recovery System Revenue Bonds,
Series 1991B (AMT),
7.5%, 12-1-2009 ....................... 5,000 4,993,750
Total ................................. 19,771,250
NEW MEXICO - 1.63%
City of Santa Fe, New Mexico, Industrial
Revenue Housing Refunding Bonds (Ponce
de Leon Limited Partnership Project),
Series 1995,
7.25%, 12-1-2005 ...................... 3,500 3,565,625
New Mexico Educational Assistance
Foundation, Student Loan Purchase Bonds,
Second Subordinate 1994 Series II-C (AMT),
6.0%, 12-1-2008 ....................... 3,000 2,962,500
Total ................................. 6,528,125
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW YORK - 1.06%
The Port Authority of New York and New
Jersey, Special Project Bonds, Series 2,
Continental Airlines, Inc. and Eastern Air
Lines, Inc. Project, LaGuardia Airport
Passenger Terminal,
9.125%, 12-1-2015 ..................... $ 1,945 $ 2,178,400
New York City Industrial Development Agency,
Civic Facility Revenue Bonds (YMCA of
Greater New York Project),
8.0%, 8-1-2016 ........................ 1,000 1,066,250
Tompkins County Industrial Development
Agency, Life Care Community Revenue Bonds,
1994 (Kendal at Ithaca, Inc. Project),
7.875%, 6-1-2024 ...................... 1,000 1,006,250
Total ................................. 4,250,900
OHIO - 0.78%
Hamilton County, Ohio, Health System Revenue
Bonds, Providence Hospital Issue,
Series 1992,
6.875%, 7-1-2015 ...................... 2,000 2,045,000
County of Lorain, Ohio, First Mortgage
Revenue Bonds, 1992 Series A (Kendal at
Oberlin Project),
8.625%, 2-1-2022 ...................... 1,000 1,082,500
Total ................................. 3,127,500
OKLAHOMA - 3.74%
Oklahoma County Industrial Authority,
Industrial Development Revenue Bonds:
1986 Series B (Choctaw Nursing
Center Project):
10.25%, 9-1-2016 (E) .................. 1,230 1,168,500
10.125%, 9-1-2006 (E) ................. 525 498,750
1986 Series A (Westlake Nursing Center
Project):
10.25%, 9-1-2016 ...................... 905 933,281
10.125%, 9-1-2006 ..................... 430 442,363
Bixby Public Works Authority, Utility
System Revenue Bonds, Refunding
Series 1994,
7.25%, 11-1-2019 ...................... 2,685 2,866,237
The Clinton Public Works Authority,
Refunding and Improvement Revenue
Bonds, Series 1994,
6.25%, 1-1-2019 ....................... 2,575 2,523,500
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
OKLAHOMA (Continued)
The Broken Arrow Public Golf Authority
(Broken Arrow, Oklahoma), Recreational
Facilities Revenue Bonds, Series 1995,
7.25%, 8-1-2020 ....................... $ 2,025 $ 2,068,031
Trustees of the Oklahoma Ordnance Works
Authority, Industrial Development Revenue
Refunding Bonds (A.P. Green Industries,
Inc. Project), Series 1992,
8.5%, 5-1-2008 ........................ 1,600 1,728,000
The Guthrie Public Works Authority
(Guthrie, Oklahoma), Utility System
Revenue Bonds, Series 1994A,
6.75%, 9-1-2019 ....................... 1,415 1,455,681
Holdenville Industrial Authority,
Correctional Facility Revenue Bonds,
Series 1995,
6.7%, 7-1-2015 ........................ 1,250 1,268,750
Total ................................. 14,953,093
OREGON - 1.66%
Klamath Falls Intercommunity Hospital
Authority, Gross Revenue Bonds,
Series 1994 (Merle West Medical Center
Project),
7.1%, 9-1-2024 ........................ 3,500 3,701,250
Myrtle Creek Building Authority, Gross
Revenue Bonds, Series 1996A (Myrtle Creek
Golf Course Project),
8.0%, 6-1-2021 ........................ 3,000 2,932,500
Total ................................. 6,633,750
PENNSYLVANIA - 7.72%
Delaware County Authority (Pennsylvania),
First Mortgage Revenue Bonds
(Riddle Village Project):
Series 1992,
9.25%, 6-1-2022 ....................... 6,000 6,652,500
Series 1994,
8.25%, 6-1-2022 ....................... 4,000 4,315,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
PENNSYLVANIA (Continued)
Luzerne County Industrial Development
Authority:
Exempt Facilities Revenue Refunding Bonds,
1992 Series A (Pennsylvania Gas and
Water Company Project),
7.2%, 10-1-2017 ....................... $ 2,000 $ 2,095,000
Exempt Facilities Revenue Bonds, 1992
Series B (Pennsylvania Gas and Water
Company Project),
7.125%, 12-1-2022 ..................... 1,000 1,041,250
Allegheny County Industrial Development
Authority (Pennsylvania), Environmental
Improvement Revenue Bonds (USX Corporation
Project), Refunding Series A 1994,
6.7%, 12-1-2020 ....................... 3,000 3,097,500
McKeesport Hospital Authority (Commonwealth
of Pennsylvania), Hospital Revenue Bonds,
Series of 1993 (McKeesport Hospital Project),
6.5%, 7-1-2008 ........................ 2,500 2,484,375
Pennsylvania Economic Development Financing
Authority, Exempt Facilities Revenue Bonds
(MacMillan Bloedel Clarion Limited
Partnership Project), Series of 1995,
7.6%, 12-1-2020 ....................... 2,000 2,215,000
Allentown Area Hospital Authority, Hospital
Revenue Bonds (Sacred Heart Hospital of
Allentown), Series A of 1993,
6.75%, 11-15-2014 ..................... 2,115 2,144,081
Clearfield Hospital Authority, Hospital
Revenue and Refunding Bonds (Clearfield
Hospital Project), Series 1994,
6.875%, 6-1-2016 ...................... 2,000 1,982,500
South Wayne County Water and Sewer Authority
(Wayne County, Pennsylvania), Sewer Revenue
Bonds, Series of 1992,
8.2%, 4-15-2013 ....................... 1,830 1,855,163
The Cambria County Industrial Development
Authority (Pennsylvania), Pollution
Control Revenue Refunding Bonds,
Series 1994 (Bethlehem Steel
Corporation Project),
7.5%, 9-1-2015 ........................ 1,440 1,488,600
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
PENNSYLVANIA (Continued)
Clarion County Industrial Development Authority
(Pennsylvania), Health Facilities Revenue
Refunding Bonds (Beverly Enterprises
Project), Series 1985,
10.125%, 5-1-2007 ..................... $ 830 $ 905,737
Wilkins Area Industrial Development Authority
(Pennsylvania), First Mortgage Revenue
Bonds (Longwood at Oakmont, Inc. Continuing
Care Retirement Community Project),
Series 1991A,
10.0%, 1-1-2021 ....................... 525 586,688
Total ................................. 30,863,394
RHODE ISLAND - 1.23%
City of Providence, Rhode Island, Special
Obligation Tax Increment Bonds, Series D,
6.65%, 6-1-2016 ....................... 2,000 2,042,500
Pawtucket Public Buildings Authority (Water
System Project), Revenue Bonds, Series 1991:
7.6%, 7-1-2010 ........................ 840 954,450
7.6%, 7-1-2009 ........................ 785 891,956
Rhode Island Health and Educational Building
Corporation, Hospital Financing Revenue Bonds,
South County Hospital Issue - Series 1991,
7.25%, 11-1-2011 ...................... 1,000 1,043,750
Total ................................. 4,932,656
SOUTH CAROLINA - 0.92%
South Carolina State Housing, Finance
and Development Authority, Multifamily
Housing Mortgage Revenue Bonds (United
Dominion-Plum Chase), Series 1991,
8.5%, 10-1-2021 ....................... 2,000 2,170,000
McCormick County, South Carolina, Hospital
Facilities Revenue Bonds, Series 1988
(McCormick Health Care Center Project),
10.5%, 3-1-2018 ....................... 1,455 1,489,134
Total ................................. 3,659,134
SOUTH DAKOTA - 0.49%
South Dakota Health and Educational
Facilities Authority, Refunding Revenue
Bonds (Westhills Village Retirement
Community Issue), Series 1993,
7.25%, 9-1-2013 ....................... 2,000 1,970,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TENNESSEE - 1.78%
The Industrial Development Board of the
County of McMinn, Solid Waste Recycling
Facilities Revenue Bonds, Series 1992
(Calhoun Newsprint Company Project -
Bowater Incorporated Obligor),
7.4%, 12-1-2022 ....................... $ 2,000 $ 2,147,500
The Health and Educational Facilities
Board of the City of Crossville, Tennessee,
Hospital Revenue Improvement Bonds,
Series 1992 (Cumberland Medical Center),
6.75%, 11-1-2012 ...................... 2,000 2,052,500
The Industrial Development Board of the
Metropolitan Government of Nashville and
Davidson County, Multi-Family Housing
Revenue Bonds (River Retreat II, Ltd.
Project), Series 1986,
9.5%, 5-1-2017 ........................ 1,500 1,518,960
Upper Cumberland Gas Utility District
(of Cumberland County, Tennessee),
Gas System Revenue Bonds, Series 1996,
7.0%, 3-1-2016 ........................ 1,400 1,408,750
Total ................................. 7,127,710
TEXAS - 5.37%
Alliance Airport Authority, Inc., Special
Facilities Revenue Bonds:
American Airlines, Inc. Project:
Series 1990,
7.5%, 12-1-2029 ....................... 7,885 8,387,669
Series 1991,
7.0%, 12-1-2011 ....................... 4,500 4,921,875
Federal Express Corporation Project,
Series 1996,
6.375%, 4-1-2021 ...................... 3,500 3,465,000
Dallas-Fort Worth International Airport
Facility Improvement Corporation:
American Airlines, Inc., Revenue Bonds,
Series 1990,
7.5%, 11-1-2025 ....................... 2,000 2,132,500
Delta Air Lines, Inc. Revenue Bonds,
Series 1991,
7.6%, 11-1-2011........................ 1,300 1,404,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TEXAS (Continued)
Housing Authority of the City of Odessa,
Texas, Multifamily Mortgage Revenue Bonds,
Series 1993A (Section 8 Assisted Project),
6.375%, 10-1-2010 ..................... $ 1,225 $ 1,176,000
Total ................................. 21,487,044
UTAH - 0.88%
Carbon County, Utah, Solid Waste Disposal
Refunding Revenue Bonds, Series 1991
(Sunnyside Cogeneration Associates Project),
9.25%, 7-1-2018 ....................... 2,500 1,750,000
Brigham City, Box Elder County, Utah,
Special Assessment Bonds, Series 1990
(Brigham City, Utah, Special Improvement
District No. 22),
9.25%, 8-1-2010 ....................... 1,690 1,749,150
Total ................................. 3,499,150
VERMONT - 1.89%
Vermont Industrial Development Authority,
Mortgage Revenue Bonds, Wake Robin
Corporation Project, Series 1993A:
8.75%, 4-1-2023 ....................... 4,465 4,838,944
8.75%, 3-1-2023 ....................... 2,500 2,709,375
Total ................................. 7,548,319
VIRGIN ISLANDS - 0.37%
Virgin Islands Public Finance Authority,
Revenue Refunding Bonds (Virgin Islands
General Obligation/Matching Fund Loan
Notes), Series 1992 A,
7.25%, 10-1-2018 ...................... 1,400 1,489,250
VIRGINIA - 0.68%
Industrial Development Authority of the
County of Prince William (Virginia),
Residential Care Facility First Mortgage
Revenue Bonds (Westminster at Lake Ridge),
Series 1992A,
10.0%, 1-1-2022 ....................... 2,500 2,706,250
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WEST VIRGINIA - 0.39%
Upshur County, West Virginia, Solid Waste
Disposal Revenue Bonds (TJ International
Project), Series 1995,
7.0%, 7-15-2025 ....................... $ 1,500 $ 1,545,000
WISCONSIN - 1.59%
Wisconsin Health and Educational Facilities
Authority, Revenue Bonds, Series 1995:
Hess Memorial Hospital Association, Inc.
Project,
7.75%, 11-1-2015 ...................... 3,400 3,357,500
National Regency of New Berlin, Inc.
Project,
8.0%, 8-15-2025 ....................... 3,000 2,988,750
Total ................................. 6,346,250
WYOMING - 0.65%
Sweetwater County, Wyoming, Solid Waste
Disposal Revenue Bonds (FMC Corporation
Project), Series 1994B,
6.9%, 9-1-2024 ........................ 2,500 2,609,375
TOTAL MUNICIPAL BONDS - 97.92% $391,514,063
(Cost: $375,141,448)
TOTAL SHORT-TERM SECURITIES - 1.41% $ 5,628,822
(Cost: $5,628,822)
TOTAL INVESTMENT SECURITIES - 99.33% $397,142,885
(Cost: $380,770,270)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.67% 2,680,808
NET ASSETS - 100.00% $399,823,693
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1996
Notes to Schedule of Investments
(A) The security does not bear interest for an initial period of time and
subsequently becomes interest bearing.
(B) Coupon resets weekly to 11.95% - Kenny S&P Index. Minimum coupon rate is
0%. On February 15, 1999, rate becomes fixed at 6.65%.
(C) Security is paying partial interest.
(D) Coupon resets weekly to 11.95% - Kenny S&P Index. Minimum coupon rate is
0%. On April 1, 1999, rate becomes fixed at 6.70%.
(E) Non-income producing as the issuer has either missed its most recent
interest payment or declared bankruptcy.
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 HIGH INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $397,142,885
Cash ............................................. 157,206
Receivables:
Interest ........................................ 8,367,753
Fund shares sold ................................ 593,158
Prepaid insurance premium ........................ 11,213
------------
Total assets .................................. 406,272,215
------------
Liabilities
Payable for investment securities purchased ...... 4,515,690
Payable for Fund shares redeemed ................. 1,520,960
Dividends payable ................................ 206,153
Accrued service fee .............................. 114,800
Accrued transfer agency and dividend disbursing .. 27,434
Accrued accounting services fee .................. 5,000
Other ............................................ 58,485
------------
Total liabilities ............................. 6,448,522
------------
Total net assets ............................. $399,823,693
============
Net Assets
$1.00 par value capital stock, authorized --
100,000,000; shares outstanding -- 75,252,656
Capital stock ................................... $ 75,252,656
Additional paid-in capital ...................... 308,690,937
Accumulated undistributed income (loss):
Accumulated undistributed net realized
loss on investment transactions ............... (492,515)
Net unrealized appreciation in value of
investments at end of period .................. 16,372,615
------------
Net assets applicable to outstanding
units of capital ............................. $399,823,693
============
Net asset value per share (net assets divided
by shares outstanding) ........................... $5.31
=====
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL HIGH INCOME FUND, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended SEPTEMBER 30, 1996
Investment Income
Interest ......................................... $28,206,563
-----------
Expenses (Note 2):
Investment management fee ....................... 1,985,305
Service fee ..................................... 542,524
Transfer agency and dividend disbursing ......... 331,300
Legal fees ...................................... 82,152
Accounting services fee ......................... 60,000
Audit fees ...................................... 28,795
Custodian fees .................................. 20,964
Other ........................................... 116,004
-----------
Total expenses ................................ 3,167,044
-----------
Net investment income ........................ 25,039,519
-----------
Realized and Unrealized Gain on Investments
Realized net gain on investments ................. 2,528,353
Unrealized appreciation in value of investments
during the period ............................... 772,319
-----------
Net gain on investments ......................... 3,300,672
-----------
Net increase in net assets resulting
from operations .............................. $28,340,191
===========
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL HIGH INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year
ended September 30,
-----------------------------
1996 1995
-------------- ------------
Increase in Net Assets
Operations:
Net investment income ...............$ 25,039,519 $ 24,427,319
Realized net gain (loss)
on investments .................... 2,528,353 (2,721,891)
Unrealized appreciation ............. 772,319 15,084,134
------------ ------------
Net increase in net assets
resulting from operations ........ 28,340,191 36,789,562
------------ ------------
Dividends to shareholders:*
From net investment income .......... (25,039,519) (24,427,319)
In excess of realized net gain
from investment transactions ...... --- (1,673,583)
------------ ------------
(25,039,519) (26,100,902)
------------ ------------
Capital share transactions:
Proceeds from sale of shares
(7,034,526 and 9,693,367 shares,
respectively) ..................... 37,292,742 49,317,843
Proceeds from reinvestment of
dividends and/or capital gains
distribution (3,840,968 and 3,868,221
shares, respectively) ............. 20,390,179 19,837,687
Payments for shares redeemed
(8,297,041 and 8,253,031 shares,
respectively) ..................... (43,964,829) (42,201,117)
------------ ------------
Net increase in net assets
resulting from capital
share transactions ............... 13,718,092 26,954,413
------------ ------------
Total increase ................... 17,018,764 37,643,073
Net Assets
Beginning of period .................. 382,804,929 345,161,856
------------ ------------
End of period ........................$399,823,693 $382,804,929
============ ============
Undistributed net investment
income ............................ $--- $---
==== ====
*See "Financial Highlights" on page 30.
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL HIGH INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the fiscal year ended
September 30,
------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $5.27 $5.12 $5.53 $5.23 $5.05
----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income........... .34 .35 .34 .35 .36
Net realized and
unrealized gain
(loss) on
investments ..... .04 .17 (0.34) .34 .18
----- ----- ----- ----- -----
Total from investment
operations ....... .38 .52 0.00 .69 .54
----- ----- ----- ----- -----
Less distributions:
Dividends declared from
net investment
income .......... (0.34) (0.35) (0.34) (0.35) (0.36)
Distribution from
capital gains ... (0.00) (0.00) (0.07) (0.04) (0.00)
Distribution in excess
of capital gains. (0.00) (0.02) (0.00) (0.00) (0.00)
----- ----- ----- ----- -----
Total distributions. (0.34) (0.37) (0.41) (0.39) (0.36)
----- ----- ----- ----- -----
Net asset value, end
of period ........ $5.31 $5.27 $5.12 $5.53 $5.23
===== ===== ===== ===== =====
Total return* ...... 7.40% 10.63% 0.05% 13.77% 11.08%
Net assets, end
of period (000
omitted) .......... $399,824$382,805$345,162$329,373$260,777
Ratio of expenses to
average net
assets ........... 0.81% 0.76% 0.76% 0.70% 0.72%
Ratio of net investment
income to average
net assets ....... 6.41% 6.75% 6.39% 6.49% 7.08%
Portfolio turnover
rate ............. 26.91% 19.07% 26.26% 26.13% 54.18%
*Total return calculated without taking into account the sales load deducted
on an initial purchase.
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL HIGH INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
NOTE 1 -- Significant Accounting Policies
United Municipal High Income 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 a high level of
income which is 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 by 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 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 -- All of the Fund's net investment income is
declared and recorded by the Fund as dividends payable on each day to
shareholders of record as of the close of the preceding business day. Net
investment income distributions and capital gains distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are due to
differing treatments for items such as deferral of wash sales and post-
October losses, net operating losses and expiring capital loss
carryforwards.
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 .10% 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 $14.7 billion of
combined net assets at September 30, 1996) 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 ($1.0208 per account prior
to April 1, 1996), plus $0.30 for each account on which a dividend or
distribution of cash or shares was paid 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 direct and
indirect gross sales commissions (which are not an expense of the Fund) of
$1,000,554, out of which W&R paid sales commissions of $558,497 and all expenses
in connection with the sale of Fund shares, except for registration fees and
related expenses.
Under a Service Plan adopted by the Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940, the Fund may pay monthly a fee to W&R in an
amount not to exceed .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
provision of personal services to Fund shareholders and/or maintenance of
shareholder accounts.
The Fund paid Directors' fees of $15,106.
W&R is an indirect subsidiary of Torchmark Corporation, a holding company,
and United Investors Management Company, 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 $113,817,344, while proceeds from maturities and
sales aggregated $102,880,776. Purchases of short-term securities aggregated
$131,082,029, while proceeds from maturities and sales aggregated $127,600,561.
No U.S. Government securities were bought or sold during the period ended
September 30, 1996.
For Federal income tax purposes, cost of investments owned at September 30,
1996 was $381,544,055, resulting in net unrealized appreciation of $15,598,830,
of which $17,584,973 related to appreciated securities and $1,986,143 related to
depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized net capital gain net
income of $279,195 during its fiscal year ended September 30, 1996, which
included losses of $1,960,745 deferred from the year ended September 30, 1995
(see discussion below). The capital gain will be distributed to the Fund's
shareholders.
Internal Revenue Code regulations permit the Fund to defer into its next
fiscal year net capital losses incurred between each November 1 and the end of
its next fiscal year ("post-October losses"). From November 1, 1994 through
September 30, 1995, the Fund incurred net capital losses of $1,960,745, which
were deferred to the fiscal year ended September 30, 1996.
NOTE 5 -- Multiclass Operations
On January 30, 1996, the Fund was authorized to offer investors a choice of
two classes of shares, Class A and Class Y, each of which has equal rights as to
assets and voting privileges. Class A shares represent existing shareholders;
Class Y shares are offered through a separate Prospectus to certain
institutional investors. Class Y shares are not subject to a sales charge on
purchases; they are not subject to a Rule 12b-1 Service Plan and have a separate
transfer agency and dividend disbursement services fee structure. As of
September 30, 1996, the Fund had not commenced multiclass operations.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
United Municipal High Income Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of United Municipal High Income Fund,
Inc. (the "Fund") at September 30, 1996, the results of its operations for the
year then ended and the changes in its net assets and the financial highlights
for each of the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 1996 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
Price Waterhouse LLP
Kansas City, Missouri
November 8, 1996
<PAGE>
INCOME TAX INFORMATION
Dividends are declared and recorded by the Fund on each day the New York Stock
Exchange is open for business. Dividends are paid monthly on the 27th of the
month or on the preceding business day if the 27th is a weekend or holiday.
Exempt Interest Dividends - The exempt interest portion of dividends paid
represents the distribution of state and municipal bond interest and is exempt
from Federal income taxation.
The table below shows the taxability of dividends paid during the fiscal year
ended September 30, 1996:
PER-SHARE AMOUNTS REPORTABLE AS:
-------------------------------------------------------------
For Individuals For Corporations
------------------------------- -----------------------------
Record Ordinary ExemptLong-Term Non- ExemptLong-Term
Date Income InterestCapital GainQualifyingInterestCapitalGain
- -------------------------------------------------------------------------
October
through
December
1995 1.2885% 98.7115% ---% 1.2885%98.7115% ---%
January
through
September
1996 1.2808 98.7192 --- 1.280898.7192 ---
NON-QUALIFYING DIVIDENDS -- The non-qualifying portion of distributions
represents the taxable portion of dividends paid and does not qualify for the
dividends received deduction for corporations.
The actual taxable amounts of dividends will be reported to you on Form 1099-DIV
after the close of the applicable calendar year.
Income from the Fund may be subject to the alternative minimum tax.
Shareholders are advised to consult with their tax advisors concerning the tax
treatment of dividends and distributions from the Fund.
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
Jay B. Dillingham, Kansas City, Missouri
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Doyle Patterson, Kansas City, Missouri
William L. Rogers, Los Angeles, California
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
OFFICERS
Keith A. Tucker, President
Robert L. Hechler, Vice President
Henry J. Herrmann, Vice President
John M. Holliday, Vice President
Theodore W. Howard, Vice President and Treasurer
Sharon K. Pappas, Vice President and Secretary
Carl E. Sturgeon, Vice President
This report is submitted for the general information of the shareholders of
United Municipal High Income Fund, Inc. It is not authorized for distribution
to prospective investors in the Fund unless accompanied with or preceded by the
United Municipal High Income Fund, Inc. current prospectus.
<PAGE>
The United Group of Mutual Funds
United Cash Management, Inc.
United Government Securities Fund, Inc.
United Bond Fund
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United Continental Income Fund, Inc.
United Retirement Shares, Inc.
United Asset Strategy Fund, Inc.
United Income Fund
United Accumulative Fund
United Vanguard Fund, Inc.
United New Concepts Fund, Inc.
United Science and Technology Fund
United International Growth Fund, Inc.
United Gold & Government Fund, Inc.
FOR MORE INFORMATION:
Contact your representative, or your
local office as listed on your
Account Statement, or contact:
WADDELL & REED
CUSTOMER SERVICE
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, KS 66201-9217
(913) 236-1303
Our INTERNET address is:
http://www.waddell.com
NUR1014A(9-96)
printed on recycled paper
