United
Municipal
High Income
Fund, Inc.
ANNUAL
REPORT
--------------------------------------------
For the fiscal year ended September 30, 1997
<PAGE>
FUND MANAGER'S LETTER
- -----------------------------------------------------------------
SEPTEMBER 30, 1997
Dear Shareholder:
This report relates to the operation of United Municipal High Income Fund,
Inc. for the fiscal year ended September 30, 1997. The discussion, graphs and
tables contained in this report will provide you with information regarding the
Fund's performance during that period.
Long-term interest rates generally declined during the past fiscal year
with the prices of long-term bonds experiencing significant volatility, but
trading within a relatively narrow range. Balanced budget legislation was
approved by Congress during the year and the federal budget deficit declined
sharply to less than one percent of Gross Domestic Product. The domestic
economy experienced its seventh consecutive year of expansion, with inflation
actually declining despite tight labor markets. Economic activity throughout
the rest of the developed world remained mostly sluggish, making U.S. financial
assets attractive to foreign investors and causing a huge flow of cash into U.S.
stocks and bonds.
Due to the strengthening economic activity and moderating credit risk
prevailing during much of the fiscal year, we maintained an overweighted
position in bonds with ratings below investment grade. We also were
overweighted in the healthcare sector. We continued to emphasize broad
diversification and credit research before and after the purchase of
investments, choosing bonds from the available supply that possessed acceptable
credit quality.
The strategies and techniques we applied resulted in the Fund's performance
exceeding that of the indexes charted on the following page during the fiscal
year. Those indexes reflect the performance of securities that generally
represent the municipal bond market (the Lehman Brothers Municipal Bond Index)
and the universe of funds with similar investment objectives (the Lipper High
Yield Municipal Bond Fund Universe Average). The superior performance of the
Fund during the fiscal year resulted primarily from holding a high percentage of
lower quality bonds and the excellent credit experience of the Fund's portfolio.
We anticipate that the available supply of bonds with attractive yields
commensurate with their credit risks will be limited during the next fiscal
year. This may cause us to increase our focus on general market issues. We
will strive to remain fully invested, but in a slightly higher quality
portfolio, in an effort to meet the Fund's investment objectives.
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. Class A Shares,
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
------------------ ----------
09/30/87 Purchase $9,575 $10,000 $10,000
09/30/88 10,271 11,319 11,184
09/30/89 11,439 12,302 12,228
09/30/90 12,113 13,138 12,842
09/30/91 13,609 14,870 14,223
09/30/92 15,117 16,425 15,606
09/30/93 17,199 18,518 17,536
09/30/94 17,207 18,066 17,135
09/30/95 19,037 20,088 18,759
09/30/96 20,447 21,302 19,871
09/30/97 22,789 23,225 21,781
==== United Municipal High Income Fund, Inc.*-- $22,789
++++ Lehman Brothers Municipal Bond Index -- $23,225
---- Lipper High Yield Municipal Bond Fund Universe Average - $21,781
*The value of the investment in the Fund is impacted by the sales load at the
time of the investment and by the ongoing expenses of the Fund.
Average Annual Total Return
Class A+
--------------------
Year Ended
9/30/97 6.72%
5 Years Ended
9/30/97 7.61%
10 Years Ended
9/30/97 8.58%
+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
options and futures.)
FOUNDED: 1986
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
<PAGE>
PERFORMANCE SUMMARY
PER SHARE DATA
For the Fiscal Year Ended September 30, 1997
- --------------------------------------------
DIVIDENDS PAID $0.33
=====
CAPITAL GAINS DISTRIBUTION $0.01
=====
NET ASSET VALUE ON
3/31/97 $5.55 adjusted to: $5.56(A)
9/30/96 5.31
-----
CHANGE PER SHARE $0.25
=====
(A)This number includes the capital gains distribution of $0.01 paid in December
1996 added to the actual net asset value on September 30, 1997.
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 9-30-97 6.72% 11.45%
5-year period ended 9-30-97 7.61% 8.55%
10-year period ended 9-30-97 8.58% 9.06%
*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, 1997, United Municipal High Income Fund, Inc. had net assets
totaling $473,755,797 invested in a diversified portfolio.
As a shareholder of United Municipal High Income Fund, Inc., for every $100 you
had invested on September 30, 1997, your Fund owned:
$20.81 Life Care/Nursing Center Revenue Bonds
15.66 Other Municipal Bonds
12.08 Industrial Development Revenue Bonds
11.28 Hospital Revenue Bonds
11.22 Airport Revenue Bonds
5.53 Housing Revenue Bonds
5.07 Resource Recovery Bonds
4.23 Water and Sewer Revenue Bonds
3.57 Transportation Revenue Bonds
3.52 Prerefunded ETM
2.65 General Obligation Bonds
2.26 Cash and Cash Equivalents
2.12 Lease/Certificates of Participation Bonds
1997 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- 41,200 $ 0- 24,650 15% 5.88 7.06 8.24 9.41
$ 41,201- 99,600 $ 24,651- 59,750 28% 6.94 8.33 9.72 11.11
$ 99,601-151,750 $ 59,751-124,650 31% 7.25 8.70 10.14 11.59
$151,751-271,050 $124,651-271,050 36% 7.81 9.38 10.94 12.50
$271,051 and above$271,051 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 High Income Fund, Inc.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS
ALABAMA - 1.57%
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 $ 5,337,500
The Marshall County Health Care Authority,
Hospital Revenue Refunding Bonds,
Series 1992 (Guntersville-Arab
Medical Center),
7.0%, 10-1-2013 ....................... 1,000 1,053,750
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 1,045,810
Total ................................. 7,437,060
ALASKA - 0.78%
City of Seward, Alaska, Revenue Bonds, 1996
(Alaska Sealife Center Project),
7.65%, 10-1-2016 ...................... 2,000 2,092,500
Anchorage Parking Authority, Lease Revenue
Refunding Bonds, Series 1993 (5th Avenue
Garage Project),
6.75%, 12-1-2008 ...................... 1,500 1,606,875
Total ................................. 3,699,375
ARIZONA - 0.60%
Hayden-Winkelman Unified School District
No. 41 of Gila County, Arizona, Capital
Appreciation Refunding Bonds, Series 1995,
0.0%, 7-1-2010 ........................ 6,145 2,857,425
CALIFORNIA - 8.02%
Foothill/Eastern Transportation Corridor
Agency, Toll Road Revenue Bonds, Series
1995A,
0.0%, 1-1-2013 (A) .................... 11,925 8,615,813
California Statewide Communities Development
Authority, Special Facilities Lease
Revenue Bonds, 1997 Series A (United Air
Lines, Inc. - San Francisco International
Airport Projects),
5.7%, 10-1-2033 ....................... 8,000 7,910,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA (Continued)
San Joaquin Hills Transportation Corridor
Agency (Orange County, California):
Senior Lien Toll Road Revenue Bonds,
0.0%, 1-1-2011 (A) .................... $ 2,500 $ 2,378,125
Junior Lien Toll Road Revenue Bonds,
0.0%, 1-1-2002 ........................ 2,755 2,283,206
Hospital Refunding Revenue Certificates
of Participation, Series 1993,
California Statewide Communities
Development Authority, Inverse Floating
Rate Security,
6.86%, 11-1-2015 ...................... 4,000 3,800,000
Hi-Desert Memorial Hospital District,
Revenue Bonds, Series 1994A,
8.0%, 10-1-2019 ....................... 3,000 3,232,500
Sierra Kings Health Care District Revenue
Bonds, Series 1996,
6.5%, 12-1-2026 ....................... 3,000 3,033,750
Transmission Agency of Northern California,
California-Oregon Transmission Project,
Revenue Refunding Bonds, 1993 Series A,
INFLOS,
6.609%, 4-29-2024 ..................... 2,500 2,518,750
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 1,537,500
Kings County Waste Management Authority,
Solid Waste Revenue Bonds, Series 1994
(California),
7.2%, 10-1-2014 ....................... 1,000 1,095,000
Total ................................. 38,013,394
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
COLORADO - 4.61%
City and County of Denver, Colorado:
Airport System Revenue Bonds,
Series 1994A,
7.5%, 11-15-2023 ...................... $ 3,000 $ 3,452,050
Revenue Bonds (Jewish Community Centers
of Denver Project), Series 1994:
8.25%, 3-1-2024 ....................... 2,390 2,548,338
7.875%, 3-1-2019 ...................... 815 857,788
Special Facilities Airport Revenue Bonds
(United Air Lines Project), Series 1992A,
6.875%, 10-1-2032 ..................... 2,500 2,678,125
Colorado Housing and Finance Authority,
Single Family Program Senior and
Subordinate Bonds, 1997 Series B-2,
Senior Bonds (AMT),
7.0%, 5-1-2026 ........................ 2,250 2,522,813
City of Colorado Springs, Colorado,
Airport System Revenue Bonds, Series 1992A,
7.0%, 1-1-2022 ........................ 2,200 2,395,250
Sand Creek Metropolitan District, Adams
County and City and County of Denver,
Colorado, General Obligation Limited
Tax Bonds, Series 1997,
7.125%, 12-1-2016 ..................... 2,000 2,035,000
Pitkin County, Colorado, Lease Purchase
Agreement, Certificates of Participation
(County Administration Building Project),
Series 1991,
7.4%, 10-1-2011 ....................... 1,500 1,627,500
Mountain Village Metropolitan District, San
Miguel County, Colorado, General
Obligation Refunding Bonds, Series 1992,
8.1%, 12-1-2011 ....................... 1,435 1,598,231
Bachelor Gulch Metropolitan District,
Eagle County, Colorado, General Obligation
Bonds, Series 1996,
7.0%, 12-1-2015 ....................... 1,095 1,141,538
Town of Erie, Colorado (In Boulder and
Weld Counties), Water Enterprise
Revenue Bonds, Series 1997B,
6.125%, 12-1-2021 ..................... 1,000 1,003,750
Total ................................. 21,860,383
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CONNECTICUT - 1.15%
State of Connecticut Health and
Education Facilities Authority,
Revenue Bonds, Edgehill Issue
Series B (Weekly Rate),
6.875%, 7-1-2027 ...................... $ 2,400 $ 2,460,000
Eastern Connecticut Resource Recovery
Authority, Solid Waste Revenue Bonds
(Wheelabrator Lisbon Project),
Series 1993A,
5.5%, 1-1-2014 ........................ 2,000 1,970,000
Connecticut Development Authority, First
Mortgage Gross Revenue Health Care
Project Refunding Bonds (Church Homes,
Inc., Congregational Avery Heights
Project - 1997 Series),
5.8%, 4-1-2021 ........................ 1,000 1,003,750
Total ................................. 5,433,750
DISTRICT OF COLUMBIA - 1.17%
Certificates of Participation, Series 1993,
District of Columbia,
7.3%, 1-1-2013 ........................ 3,000 3,360,000
District of Columbia Revenue Bonds
(National Public Radio Issue),
Series 1992,
7.625%, 1-1-2013 ...................... 2,000 2,195,000
Total ................................. 5,555,000
FLORIDA - 5.04%
Lake County, Florida, Resource Recovery
Industrial Development Refunding Revenue
Bonds (NRG/Recovery Group Project),
Series 1993A,
5.95%, 10-1-2013 ...................... 8,350 8,558,750
Sanford Airport Authority (Florida),
Industrial Development Revenue Bonds
(Central Florida Terminals, Inc. Project):
Series 1995A,
7.75%, 5-1-2021 ....................... 4,000 4,215,000
Series 1995C,
7.5%, 5-1-2021 ........................ 500 518,750
St. Johns County Industrial Development
Authority, Health Care Revenue Bonds,
Tax Exempt Series 1997A (Bayview Project),
7.1%, 10-1-2026 ....................... 4,000 4,130,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
FLORIDA (Continued)
Sarasota County (Florida) Health Facilties
Authority, Health Care Facilities Revenue
Refunding Bonds, Series 1995 (Sarasota-
Manatee Jewish Housing Council, Inc.
Project),
6.7%, 7-1-2025 ........................ $ 3,000 $ 3,112,500
Dade County Industrial Development Authority,
Industrial Development Revenue Bonds,
Series 1995 (Miami Cerebral Palsy
Residential Services, Inc. Project),
8.0%, 6-1-2022 ........................ 1,900 2,009,250
City of Fort Walton Beach, First Mortgage
Industrial Development Revenue Bonds,
Series 1986 (Ft. Walton Beach Ventures,
Inc. Project),
10.5%, 12-1-2016 ...................... 1,295 1,346,800
Total ................................. 23,891,050
GEORGIA - 1.08%
Coffee County Hospital Authority (Georgia),
Revenue Anticipation Certificates (Coffee
Regional Medical Center, Inc. Project),
Series 1997A,
6.75%, 12-1-2016 ...................... 5,000 5,106,250
GUAM - 0.69%
Guam Airport Authority, General Revenue
Bonds, 1993 Series B,
6.6%, 10-1-2010 ....................... 3,000 3,273,750
IDAHO - 0.48%
Idaho Health Facilities Authority, Hospital
Revenue Refunding Bonds, Series 1992
(IHC Hospitals, Inc.), Indexed Inverse
Floating Rate Securities,
8.18%, 2-15-2021 (B) .................. 2,000 2,280,000
ILLINOIS - 4.36%
Illinois Health Facilities Authority:
Revenue Refunding Bonds,
Series 1995A (Fairview Obligated
Group),
7.125%, 8-15-2017 ..................... 3,525 3,692,437
Revenue Bonds, Series 1995 (Mercy
Center for Health Care Services),
6.375%, 10-1-2015 ..................... 2,500 2,625,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
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 $ 2,857,800
Illinois Development Finance Authority
Revenue Bonds, Series 1993C (Catholic
Charities Housing Development
Corporation Project),
6.1%, 1-1-2020 ........................ 2,500 2,553,125
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 2,187,500
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 2,097,880
Village of Hodgkins, Cook County, Illinois,
Tax Increment Revenue Refunding Bonds,
Series 1995A,
7.625%, 12-1-2013 ..................... 1,750 1,929,375
Village of Carol Stream, DuPage County,
Illinois, First Mortgage Revenue
Refunding Bonds, Series 1997 (Windsor
Park Manor Project),
7.0%, 12-1-2013 ....................... 1,500 1,543,125
Village of Bourbonnais, Kankakee County,
Illinois, Sewerage Revenue Bonds,
Series 1993,
7.25%, 12-1-2012 ...................... 1,085 1,160,950
Total ................................. 20,647,192
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
INDIANA - 4.59%
Indianapolis Airport Authority, Special
Facilities Revenue Bonds:
Series 1995A, United Air Lines, Inc.,
Indianapolis Maintenance Center Project,
6.5%, 11-15-2031 ...................... $ 6,000 $ 6,367,500
Series 1994, Federal Express
Corporation Project,
7.1%, 1-15-2017 ....................... 4,500 5,017,500
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 3,191,250
Indiana Development Finance Authority, Pollution
Control Refunding Revenue Bonds (Inland Steel
Company Project No. 12), Series 1995,
6.85%, 12-1-2012 ...................... 2,500 2,690,625
Indiana Health Facility Financing Authority:
Hospital Revenue Refunding Bonds, Series 1996
(Hancock Memorial Hospital and Health Services),
6.125%, 8-15-2017 ..................... 1,250 1,276,562
Hospital Revenue Bonds, Series 1992
(Fayette Memorial Hospital Project),
7.2%, 10-1-2022 ....................... 1,000 1,066,250
City of Carmel, Indiana, Retirement Rental
Housing Revenue Refunding Bonds (Beverly
Enterprises - Indiana, Inc. Project),
Series 1992,
8.75%, 12-1-2008 ...................... 1,500 1,674,375
Indiana Housing Finance Authority, Residential
Mortgage Bonds, 1988 Series R-A,
0.0%, 1-1-2013 ........................ 1,635 447,581
Total ................................. 21,731,643
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
KANSAS - 2.46%
Kansas Development Finance Authority:
Community Provider Loan Program (Community
Living Opportunities, Inc.), Series
1992A Revenue Bonds,
8.875%, 9-1-2011 ...................... $ 2,790 $ 2,995,762
Multifamily Housing Revenue Bonds,
(Oak Ridge Park Apartments Project),
Series 1997F,
6.625%, 8-1-2029 ...................... 1,875 1,879,688
City of Lenexa, Kansas (Lakeview Village),
Health Care Facility Revenue Bonds,
Series 1997B,
6.25%, 5-15-2026 ...................... 4,500 4,584,375
City of Prairie Village, Kansas, Claridge
Court Project Revenue Bonds, Series 1993A:
8.5%, 8-15-2004 ....................... 1,000 1,108,750
8.75%, 8-15-2023 ...................... 1,000 1,106,250
Total ................................. 11,674,825
KENTUCKY - 0.93%
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 3,307,500
County of Perry, Kentucky, Solid Waste
Disposal Revenue Bonds (TJ International
Project), Series 1994,
7.0%, 6-1-2024 ........................ 1,000 1,077,500
Total ................................. 4,385,000
LOUISIANA - 1.77%
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 2,970,000
Pollution Control Revenue Bonds
(Union Carbide Project),
Series 1992,
7.35%, 11-1-2022 ...................... 2,000 2,210,000
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 2,192,500
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
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 $ 1,014,750
Total ................................. 8,387,250
MAINE - 0.61%
Maine Veterans' Homes, Revenue Bonds,
1995 Series,
7.75%, 10-1-2020 ...................... 2,810 2,887,275
MARYLAND - 0.95%
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 3,428,750
Baltimore County, Maryland, Pollution
Control Revenue Refunding Bonds,
Series 1994A (Bethlehem Steel
Corporation Project),
7.55%, 6-1-2017 ....................... 1,000 1,093,750
Total ................................. 4,522,500
MASSACHUSETTS - 6.98%
Massachusetts Industrial Finance Agency:
First Mortgage Revenue Bonds, Reeds
Landing Project, Series 1993,
8.625%, 10-1-2023 ..................... 9,945 10,964,362
Resource Recovery Revenue Bonds (SEMASS
Project), Series 1991B,
9.25%, 7-1-2015 ....................... 4,900 5,579,875
Revenue Bonds, Glenmeadow Retirement
Community Project, Series 1996C:
8.625%, 2-15-2026 ..................... 2,200 2,378,750
8.375%, 2-15-2018 ..................... 1,260 1,349,775
Revenue Bonds, Beaver Country Day School
Issue, Series 1992, Subseries A,
8.1%, 3-1-2008 ........................ 1,505 1,582,131
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MASSACHUSETTS (Continued)
Massachusetts Health and Educational
Facilities Authority:
Revenue Bonds, Beth Israel Hospital
Issue, Series G1, Inverse Floating
Rate Securities,
8.37%, 7-1-2025 ....................... $ 5,000 $ 5,450,000
Revenue Bonds, New England Deaconess
Hospital Issue, Series D,
6.875%, 4-1-2022 ...................... 3,490 3,817,188
Massachusetts Municipal Wholesale Electric
Company Power Supply System Revenue Bonds,
INFLOS,
3.6%, 7-1-2018 ........................ 2,000 1,960,000
Total ................................. 33,082,081
MICHIGAN - 0.15%
Michigan Strategic Fund, Limited Obligation
Revenue Bonds, Knollwood Corporation
Project, Series A,
10.146%, 10-1-2016 (C)................. 1,300 715,000
MISSISSIPPI - 0.50%
Lowndes County, Mississippi, Solid Waste
Disposal and Pollution Control Refunding
Revenue Bonds (Weyerhaeuser Company
Project), Series 1992B, Indexed Inverse
Floating/Fixed Term Bonds,
8.18%, 4-1-2022 (D) ................... 2,000 2,367,500
MISSOURI - 4.16%
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 4,801,125
8.25%, 4-1-2002 ....................... 535 576,462
Lake of the Ozarks Community Bridge
Corporation, Bridge System Revenue Bonds,
Series 1996,
6.4%, 12-1-2025 ....................... 3,500 3,640,000
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 3,154,019
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
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 $ 2,122,500
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 ....................... 1,425 1,690,406
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 1,629,375
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 ..................... 1,105 1,123,940
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 ....................... 900 983,250
Total ................................. 19,721,077
NEVADA - 0.56%
Reno-Sparks Convention & Visitors Authority,
Nevada, Limited Obligation Medium-Term
Refunding Bonds, Series November 1, 1996,
6.0%, 11-1-2006 ....................... 2,640 2,640,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW HAMPSHIRE - 3.55%
New Hampshire Higher Educational and Health
Facilities Authority:
Hospital Revenue Bonds:
Catholic Medical Center Issue,
Series 1989,
8.25%, 7-1-2013 ....................... $ 3,000 $ 3,195,000
Monadnock Community Hospital
Issue, Series 1990,
9.125%, 10-1-2020 ..................... 1,440 1,580,400
St. Joseph Hospital Issue,
Series 1991,
7.5%, 1-1-2016 ........................ 1,000 1,082,500
First Mortgage Revenue Bonds,
RiverMead at Peterborough Issue,
Series 1994,
8.5%, 7-1-2024 ........................ 4,110 4,551,825
Revenue Bonds, RiverWoods at Exeter
Issue, Series 1997A,
6.5%, 3-1-2023 ........................ 1,000 1,010,000
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 2,130,000
1991 Tax-Exempt Series C,
7.65%, 5-1-2021 ....................... 2,000 2,130,000
Lisbon Regional School District, New
Hampshire, General Obligation Capital
Appreciation School Bonds,
0.0%, 2-1-2013 ........................ 1,720 1,120,150
Total ................................. 16,799,875
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW JERSEY - 4.38%
New Jersey Economic Development Authority:
First Mortgage Revenue Fixed Rate Bonds:
Franciscan Oaks Project - Series 1992A,
8.5%, 10-1-2023 ....................... $ 3,500 $ 3,854,375
Winchester Gardens at Ward Homestead
Project - Series 1996A,
8.625%, 11-1-2025 ..................... 3,000 3,198,750
Fellowship Village Project - Series 1995A,
9.25%, 1-1-2025 ....................... 2,500 3,003,125
Senior Mortgage Revenue Bonds, Arbor
Glen of Bridgewater Project - Series
1996A,
8.75%, 5-15-2026 ...................... 3,060 3,358,350
First Mortgage Revenue Bonds, The
Evergreens - Series 1992,
9.25%, 10-1-2022 ...................... 2,000 2,285,000
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 5,062,500
Total ................................. 20,762,100
NEW MEXICO - 1.36%
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 3,705,625
New Mexico Educational Assistance
Foundation, Student Loan Purchase Bonds,
Second Subordinate 1994 Series II-C (AMT),
6.0%, 12-1-2008 ....................... 2,705 2,755,719
Total ................................. 6,461,344
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW YORK - 1.86%
The City of New York, General
Obligation Bonds, Fiscal 1998,
5.25%, 8-1-2012 ....................... $ 5,000 $ 4,931,250
Tompkins County Industrial Development
Agency, Life Care Community Revenue Bonds,
1994 (Kendal at Ithaca, Inc. Project),
7.875%, 6-1-2024 ...................... 3,700 3,885,000
Total ................................. 8,816,250
NORTH CAROLINA - 0.48%
City of Durham, North Carolina, Multifamily
Housing Revenue Bonds (Ivy Commons Project),
Series 1997,
8.0%, 3-1-2029 ........................ 2,250 2,264,063
OHIO - 0.69%
Hamilton County, Ohio, Health System Revenue
Bonds, Providence Hospital Issue,
Series 1992,
6.875%, 2-1-2015 ...................... 2,000 2,130,000
County of Lorain, Ohio, First Mortgage
Revenue Bonds, 1992 Series A (Kendal at
Oberlin Project),
8.625%, 2-1-2022 ...................... 1,000 1,130,000
Total ................................. 3,260,000
OKLAHOMA - 3.21%
Bixby Public Works Authority, Utility
System Revenue Bonds, Refunding
Series 1994,
7.25%, 11-1-2019 ...................... 2,685 2,916,581
Oklahoma County Industrial Authority,
Industrial Development Revenue Bonds:
1986 Series B (Choctaw Nursing
Center Project):
10.25%, 9-1-2016 (C) .................. 1,230 1,045,500
10.125%, 9-1-2006 (C) ................. 525 446,250
1986 Series A (Westlake Nursing Center
Project):
10.25%, 9-1-2016 ...................... 905 930,096
10.125%, 9-1-2006 ..................... 430 441,928
The Clinton Public Works Authority,
Refunding and Improvement Revenue
Bonds, Series 1994,
6.25%, 1-1-2019 ....................... 2,575 2,655,469
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
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 $ 2,136,375
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 1,772,000
The Guthrie Public Works Authority
(Guthrie, Oklahoma), Utility System
Revenue Bonds, Series 1994A,
6.75%, 9-1-2019 ....................... 1,415 1,529,969
Holdenville Industrial Authority,
Correctional Facility Revenue Bonds,
Series 1995,
6.7%, 7-1-2015 ........................ 1,250 1,320,312
Total ................................. 15,194,480
OREGON - 1.46%
Klamath Falls Intercommunity Hospital
Authority, Gross Revenue Bonds,
Series 1994 (Merle West Medical Center
Project),
7.1%, 9-1-2024 ........................ 3,500 3,828,125
Myrtle Creek Building Authority, Gross
Revenue Bonds, Series 1996A (Myrtle Creek
Golf Course Project),
8.0%, 6-1-2021 ........................ 3,000 3,063,750
Total ................................. 6,891,875
PENNSYLVANIA - 7.53%
Delaware County Authority (Pennsylvania),
First Mortgage Revenue Bonds
(Riddle Village Project):
Series 1992,
9.25%, 6-1-2022 ....................... 6,000 7,335,000
Series 1994,
8.25%, 6-1-2022 ....................... 4,000 4,915,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
PENNSYLVANIA (Continued)
Philadelphia Authority for Industrial
Development, Commercial Development Revenue
Refunding Bonds (Doubletree Guest Suites
Project), Series 1997A,
6.5%, 10-1-2027........................ $ 3,500 $ 3,626,875
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 2,170,000
Exempt Facilities Revenue Bonds, 1992
Series B (Pennsylvania Gas and Water
Company Project),
7.125%, 12-1-2022 ..................... 1,000 1,082,500
Allegheny County Industrial Development
Authority (Pennsylvania), Environmental
Improvement Revenue Bonds (USX Corporation
Project), Refunding Series A 1994,
6.7%, 12-1-2020 ....................... 3,000 3,236,250
McKeesport Hospital Authority (Commonwealth
of Pennsylvania), Hospital Revenue Bonds,
Series of 1993 (McKeesport Hospital Project),
6.5%, 7-1-2008 ........................ 2,500 2,600,000
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 2,302,500
Allentown Area Hospital Authority, Hospital
Revenue Bonds (Sacred Heart Hospital of
Allentown), Series A of 1993,
6.75%, 11-15-2014 ..................... 2,115 2,257,763
Clearfield Hospital Authority, Hospital
Revenue and Refunding Bonds (Clearfield
Hospital Project), Series 1994,
6.875%, 6-1-2016 ...................... 2,000 2,132,500
South Wayne County Water and Sewer Authority
(Wayne County, Pennsylvania), Sewer Revenue
Bonds, Series of 1992,
8.2%, 4-15-2013 ....................... 1,780 1,848,975
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 1,558,800
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
PENNSYLVANIA (Continued)
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 $ 627,375
Total ................................. 35,693,538
RHODE ISLAND - 0.45%
City of Providence, Rhode Island, Special
Obligation Tax Increment Bonds, Series D,
6.65%, 6-1-2016 ....................... 2,000 2,127,500
SOUTH CAROLINA - 1.00%
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 2,185,000
McCormick County, South Carolina, Hospital
Facilities Revenue Refunding Improvement
Bonds, Series 1997 (McCormick Health Care
Center Project),
7.0%, 3-1-2018 ........................ 2,530 2,539,487
Total ................................. 4,724,487
SOUTH DAKOTA - 0.44%
South Dakota Health and Educational
Facilities Authority, Refunding Revenue
Bonds (Westhills Village Retirement
Community Issue), Series 1993,
7.25%, 9-1-2013 ....................... 2,000 2,060,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TENNESSEE - 1.23%
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 $ 2,225,000
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 2,145,000
Upper Cumberland Gas Utility District
(of Cumberland County, Tennessee),
Gas System Revenue Bonds, Series 1996,
7.0%, 3-1-2016 ........................ 1,400 1,456,000
Total ................................. 5,826,000
TEXAS - 9.08%
AllianceAirport Authority, Inc., Special
Facilities Revenue Bonds:
American Airlines, Inc. Project:
Series 1990,
7.5%, 12-1-2029 ....................... 7,885 8,584,794
Series 1991,
7.0%, 12-1-2011 ....................... 4,700 5,416,750
Federal Express Corporation Project,
Series 1996,
6.375%, 4-1-2021 ...................... 8,500 8,978,125
Harris County Health Facilities Development
Corporation, SCH Health Care System
Revenue Bonds (Sister of Charity of the
Incarnate Word, Houston, Texas),
Series 1997B,
5.75%, 7-1-2027 ....................... 6,000 6,135,000
Dallas-Fort Worth International Airport
Facility Improvement Corporation:
American Airlines, Inc., Revenue Bonds,
Series 1990,
7.5%, 11-1-2025 ....................... 2,000 2,175,000
Delta Air Lines, Inc., Revenue Bonds,
Series 1991,
7.6%, 11-1-2011........................ 1,300 1,430,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TEXAS (Continued)
Alvarado Industrial Development Corporation,
Industrial Development Revenue Bonds
(Rich-Mix Products of Texas, Inc. Project),
Series 1996,
7.75%, 3-1-2010 ....................... $ 3,100 $ 3,119,375
City of Houston Housing Corporation
No. 1, First Lien Revenue Refunding
Bonds, Series 1996 (6800 Long Drive
Apartments - Section 8 New Construction
Program), Houston, Texas,
6.625%, 2-1-2020 ...................... 2,305 2,330,931
City of Houston, Texas, Airport System
Special Facilities Revenue Bonds
(Continental Airlines, Inc. Terminal
Improvement Projects), Series 1997B,
6.125%, 7-15-2027 ..................... 2,000 2,055,000
Tyler Health Facilities Development
Corporation, Hospital Revenue Bonds
(East Texas Medical Center Regional
Healthcare System Project),
Series 1993B,
6.75%, 11-1-2025 ...................... 1,500 1,584,375
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 1,208,156
Total ................................. 43,017,506
UTAH - 1.17%
Utah Housing Finance Agency, (RHA Community
Services of Utah, Inc. Project),
Series 1997A,
6.875%, 7-1-2027 ...................... 2,000 1,980,000
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 1,823,088
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
Total ................................. 5,553,088
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
VERMONT - 1.61%
Vermont Industrial Development Authority,
Mortgage Revenue Bonds, Wake Robin
Corporation Project, Series 1993A:
8.75%, 4-1-2023 ....................... $ 4,465 $ 4,894,756
8.75%, 3-1-2023 ....................... 2,500 2,740,625
Total ................................. 7,635,381
VIRGIN ISLANDS - 0.33%
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 1,569,750
VIRGINIA - 1.40%
Norfolk Redevelopment and Housing Authority,
Multifamily Rental Housing Facility
Revenue Bonds, Series 1996 (1016 Limited
Partnership-Sussex Apartments Project),
8.0%, 9-1-2026 ........................ 3,500 3,583,125
Fairfax County Redevelopment and Housing
Authority, Multifamily Housing Revenue
Refunding Bonds (Burke Shire Commons
Apartments Project), Series 1996,
7.6%, 10-1-2036 ....................... 3,000 3,056,250
Total ................................. 6,639,375
WASHINGTON - 0.22%
Pilchuck Development Public Corporation
(State of Washington), Special Facilities
Airport Revenue Bonds, Series 1993
(TRAMCO, Inc. Project),
6.0%, 8-1-2023 ........................ 1,000 1,017,500
WEST VIRGINIA - 0.34%
Upshur County, West Virginia, Solid Waste
Disposal Revenue Bonds (TJ International
Project), Series 1995,
7.0%, 7-15-2025 ....................... 1,500 1,629,375
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WISCONSIN - 2.16%
Wisconsin Health and Educational Facilities
Authority, Revenue Bonds, Series 1995:
National Regency of New Berlin, Inc.
Project,
8.0%, 8-15-2025 ....................... $ 4,500 $ 4,741,875
Hess Memorial Hospital Association, Inc.
Project,
7.75%, 11-1-2015 ...................... 3,400 3,544,500
City of Superior, Wisconsin, Water Supply
Facilities Revenue Refunding Bonds
(Superior Water, Light and Power Company
Project), Series 1996,
6.125%, 11-1-2021 ..................... 1,910 1,931,487
Total ................................. 10,217,862
WYOMING - 0.58%
Sweetwater County, Wyoming, Solid Waste
Disposal Revenue Bonds (FMC Corporation
Project), Series 1994B,
6.9%, 9-1-2024 ........................ 2,500 2,725,000
TOTAL MUNICIPAL BONDS - 97.74% $463,055,129
(Cost: $432,918,801)
TOTAL SHORT-TERM SECURITIES - 1.31% $ 6,213,954
(Cost: $6,213,954)
TOTAL INVESTMENT SECURITIES - 99.05% $469,269,083
(Cost: $439,132,755)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.95% 4,486,714
NET ASSETS - 100.00% $473,755,797
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1997
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 based on the formula 11.95% less the Kenny S&P Index.
Minimum coupon rate is 0%. On February 15, 1999, rate becomes fixed at
6.65%.
(C) Non-income producing as the issuer has either missed its most recent
interest
payment or declared bankruptcy.
(D) Coupon resets weekly based on the formula 11.95% less the Kenny S&P Index.
Minimum coupon rate is 0%. On April 1, 1999, rate becomes fixed at 6.70%.
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, 1997
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $469,269,083
Cash ............................................. 144,553
Receivables:
Interest ........................................ 9,201,561
Fund shares sold ................................ 1,038,008
Prepaid insurance premium ........................ 12,466
------------
Total assets .................................. 479,665,671
------------
Liabilities
Payable for investment securities purchased ...... 4,230,000
Payable to Fund shareholders ..................... 1,203,005
Dividends payable ................................ 302,940
Accrued service fee (Note 2) ..................... 122,530
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 38,700
Accrued management fee (Note 2) .................. 6,429
Accrued accounting services fee (Note 2) ......... 5,000
Other ............................................ 1,270
------------
Total liabilities ............................. 5,909,874
------------
Total net assets ............................. $473,755,797
============
Net Assets
$1.00 par value capital stock, authorized --
100,000,000; shares outstanding -- 85,285,806
Capital stock ................................... $ 85,285,806
Additional paid-in capital ...................... 353,408,216
Accumulated undistributed income:
Accumulated undistributed net realized
gain on investment transactions ............... 4,925,447
Net unrealized appreciation in value of
investments ................................... 30,136,328
------------
Net assets applicable to outstanding
units of capital ............................. $473,755,797
============
Net asset value per share (net assets divided
by shares outstanding) ........................... $5.55
=====
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL HIGH INCOME FUND, INC.
STATEMENT OF OPERATIONS
For the Fiscal Year Ended SEPTEMBER 30, 1997
Investment Income
Interest and amortization (Note 1B) .............. $29,717,646
-----------
Expenses (Note 2):
Investment management fee ....................... 2,131,973
Service fee ..................................... 574,094
Transfer agency and dividend disbursing ......... 372,304
Accounting services fee ......................... 60,000
Audit fees ...................................... 20,291
Legal fees ...................................... 20,183
Custodian fees .................................. 18,045
Other ........................................... 136,251
-----------
Total expenses ................................ 3,333,141
-----------
Net investment income ........................ 26,384,505
-----------
Realized and Unrealized Gain on Investments
(Notes 1 and 3)
Realized net gain on investments ................. 6,519,836
Unrealized appreciation in value of
investments during the period ................... 13,763,713
-----------
Net gain on investments ......................... 20,283,549
-----------
Net increase in net assets resulting
from operations .............................. $46,668,054
===========
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL HIGH INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year
ended September 30,
-----------------------------
1997 1996
-------------- ------------
Increase in Net Assets
Operations:
Net investment income ...............$ 26,384,505 $ 25,039,519
Realized net gain on
investments ....................... 6,519,836 2,528,353
Unrealized appreciation ............. 13,763,713 772,319
------------ ------------
Net increase in net assets
resulting from operations ........ 46,668,054 28,340,191
------------ ------------
Distributions to shareholders (Note 1D):*
From net investment income .......... (26,384,505) (25,039,519)
Realized net gain (loss) on investment
transactions ...................... (1,101,874) ---
------------ ------------
(27,486,379) (25,039,519)
------------ ------------
Capital share transactions:
Proceeds from sale of shares
(14,043,014 and 7,034,526 shares,
respectively) ..................... 76,429,172 37,292,742
Proceeds from reinvestment of
dividends and/or capital gains
distribution (4,105,285 and 3,840,968
shares, respectively) ............. 22,249,624 20,390,179
Payments for shares redeemed
(8,115,149 and 8,297,041 shares,
respectively) ..................... (43,928,367) (43,964,829)
------------ ------------
Net increase in net assets
resulting from capital
share transactions ............... 54,750,429 13,718,092
------------ ------------
Total increase ................... 73,932,104 17,018,764
Net Assets
Beginning of period .................. 399,823,693 382,804,929
------------ ------------
End of period ........................$473,755,797 $399,823,693
============ ============
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,
------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $5.31 $5.27 $5.12 $5.53 $5.23
----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income........... .34 .34 .35 .34 .35
Net realized and
unrealized gain
(loss) on
investments ..... .25 .04 .17 (0.34) .34
----- ----- ----- ----- -----
Total from investment
operations ....... .59 .38 .52 0.00 .69
----- ----- ----- ----- -----
Less distributions:
declared from net
investment income (0.34) (0.34) (0.35) (0.34) (0.35)
Distribution from
capital gains ... (0.01) (0.00) (0.00) (0.07) (0.04)
Distribution in excess
of capital gains. (0.00) (0.00) (0.02) (0.00) (0.00)
----- ----- ----- ----- -----
Total distributions. (0.35) (0.34) (0.37) (0.41) (0.39)
----- ----- ----- ----- -----
Net asset value, end
of period ........ $5.55 $5.31 $5.27 $5.12 $5.53
===== ===== ===== ===== =====
Total return* ...... 11.45% 7.40% 10.63% 0.05% 13.77%
Net assets, end
of period (000
omitted) .......... $473,756$399,824$382,805$345,162$329,373
Ratio of expenses to
average net
assets ........... 0.78% 0.81% 0.76% 0.76% 0.70%
Ratio of net investment
income to average
net assets ....... 6.19% 6.41% 6.75% 6.39% 6.49%
Portfolio turnover
rate ............. 19.47% 26.91% 19.07% 26.26% 26.13%
*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, 1997
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 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 -- 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 dividends and capital gains distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are due to differing
treatments for items such as deferral of wash sales and post-October
losses, net operating losses and expiring capital loss 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 $18.0 billion of
combined net assets at September 30, 1997) at annual rates of .51% of the first
$750 million of combined net assets, .49% on that amount between $750 million
and $1.5 billion, .47% between $1.5 billion and $2.25 billion, .45% between
$2.25 billion and $3 billion, .43% between $3 billion and $3.75 billion, .40%
between $3.75 billion and $7.5 billion, .38% between $7.5 billion and $12
billion, and .36% of that amount over $12 billion. The Fund accrues and pays
this fee daily.
Pursuant to assignment of the Investment Management Agreement between the
Fund and Waddell & Reed, Inc. ("W&R"), Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly-owned subsidiary of W&R, serves as the Fund's
investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed Services
Company ("WARSCO"), a wholly-owned subsidiary of W&R. Under the agreement,
WARSCO acts as the agent in providing accounting services and assistance to the
Fund and pricing daily the value of shares of the Fund. For these services, the
Fund pays WARSCO a monthly fee of one-twelfth of the annual fee shown in the
following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
The Fund also pays WARSCO a monthly per account charge for transfer agency
and dividend disbursement services of $1.3125 for each shareholder account which
was in existence at any time during the prior month, plus $0.30 for each account
on which a dividend or distribution of cash or shares 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 gross sales
commissions (which are not an expense of the Fund) of $1,450,698, out of which
W&R paid sales commissions of $801,377 and all expenses in connection with the
sale of Fund shares, except for registration fees and related expenses.
Under a Distribution and Service Plan adopted by the Fund for Class A
shares adopted by the Fund pursuant to Rule 12b-1 under the Investment Company
Act of 1940, the Fund may pay monthly a distribution and/or service fee to W&R
in an amount not to exceed .25% of the Fund's average annual net assets. The
fee is to be paid to reimburse W&R for amounts it expends in connection with the
distribution of the Class A shares and/or provision of personal services to Fund
shareholders and/or maintenance of shareholder accounts.
The Fund paid Directors' fees of $15,975, which are included in other
expenses.
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 $131,725,579, while proceeds from maturities and
sales aggregated $81,010,522. Purchases of short-term securities aggregated
$180,057,668, while proceeds from maturities and sales aggregated $179,825,803.
No U.S. Government securities were bought or sold during the period ended
September 30, 1997.
For Federal income tax purposes, cost of investments owned at September 30,
1997 was $439,603,277, resulting in net unrealized appreciation of $29,665,806,
of which $31,441,559 related to appreciated securities and $1,775,753 related to
depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $6,216,572 during its fiscal year ended September 30, 1997. A portion of the
realized capital gain was paid to shareholders during the period ended September
27, 1997. Remaining net capital gains will be distributed to the Fund's
shareholders.
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 Distribution and Service Plan
and have a separate transfer agency and dividend disbursement services fee
structure. As of September 30, 1997, the Fund had not commenced multiclass
operations.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
United Municipal High Income Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of United Municipal High Income Fund,
Inc. (the "Fund") as of September 30, 1997, the related statements of operations
and changes in net assets for the year then ended, and the financial highlights
for the year then ended. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audit. The financial statements and the financial
highlights of the Fund for each of the periods in the four-year period ended
September 30, 1996 were audited by other auditors whose report, dated November
8, 1996, expressed an unqualified opinion on those statements and financial
highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at
September 30, 1997 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 audit provides a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of United Municipal
High Income Fund, Inc. as of September 30, 1997, the results of its operations,
the changes in its net assets, and the financial highlights for the year then
ended in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
November 7, 1997
<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.
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, 1997:
PERCENTAGE OF AMOUNTS PAID REPORTABLE AS:
-------------------------------------------------------------
For Individuals For Corporations
------------------------------- -----------------------------
Record Ordinary ExemptLong-Term Non- ExemptLong-Term
Date Income InterestCapital GainQualifyingInterestCapitalGain
- -------------------------------------------------------------------------
October
through
December
1996 1.0441% 98.9559% ---% 1.0441%98.9559% ---%
December 1996
Security Profit
Distribution6.8123% ---% 93.1877& 6.8123% ---% 93.1877%
January
through
September
1997 2.0034% 97.9966% ---% 2.0034%97.9966% ---%
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>
Shareholder Meeting Results
A special meeting of shareholders of United Municipal High Income Fund, Inc. was
held on July 24, 1997. The matters voted upon by the shareholders and the
resulting votes for each matter are presented below.
Item 1.To elect the Board of Directors;
Broker
For WithheldNon-Votes*
Henry L. Bellmon 43,247,126 773,050 0
Dodds I. Buchanan 43,288,216 731,960 0
James M. Concannon 43,290,913 729,263 0
John A. Dillingham 43,240,748 779,428 0
Linda Graves 43,279,893 740,283 0
John F. Hayes 43,243,478 776,698 0
Glendon E. Johnson 43,249,927 770,249 0
William T. Morgan 43,285,417 734,759 0
Ronald K. Richey 43,293,323 726,853 0
William L. Rogers 43,286,018 734,158 0
Frank J. Ross, Jr. 43,279,929 740,247 0
Eleanor B. Schwartz 43,296,069 724,107 0
Keith A. Tucker 43,286,584 733,592 0
Frederick Vogel III 43,286,532 733,644 0
Paul S. Wise 43,241,596 778,580 0
Item 2.To ratify the selection of Deloitte & Touche LLP as the Fund's
independent accountants for its current fiscal year;
Broker
For Against AbstainNon-Votes*
41,701,705 163,493 2,154,978 0
Item 3.To approve or disapprove changes to the following fundamental investment
policies and restrictions:
3.1 Elimination of Fundamental Restriction Regarding Restricted
Securities
Broker
For Against AbstainNon-Votes*
39,770,439 1,001,496 3,065,823 182,418
3.2 Modification and/or Elimination of Fundamental Restrictions
Regarding Options, Commodities, Forward Contracts and/or Futures
Contracts
Broker
For Against AbstainNon-Votes*
39,722,559 1,056,068 3,059,131 182,418
3.3 Elimination of Fundamental Restrictions Regarding Mortgaging or
Pledging Securities
Broker
For Against AbstainNon-Votes*
39,745,121 1,033,559 3,059,078 182,418
3.4 Modification of Fundamental Restriction Regarding Margin Purchases
of Securities
Broker
For Against AbstainNon-Votes*
39,721,889 1,056,791 3,059,078 182,418
3.5 Modification of Fundamental Restriction Regarding Short Sales of
Securities
Broker
For Against AbstainNon-Votes*
39,818,545 960,082 3,059,131 182,418
3.6 Elimination of Fundamental Restriction Regarding Arbitrage
Transactions
Broker
For Against AbstainNon-Votes*
39,812,575 966,105 3,059,078 182,418
3.7 Elimination of Fundamental Restriction Regarding Investments in
Issuers Whose Securities are Owned by Certain Persons
Broker
For Against AbstainNon-Votes*
39,878,991 899,689 3,059,078 182,418
3.8 Modification of Fundamental Policy Regarding Loans
Broker
For Against AbstainNon-Votes*
39,864,749 913,931 3,059,078 182,418
Item 4.To amend the terms of the service plan adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940.
Broker
For Against AbstainNon-Votes*
38,486,760 1,284,401 4,249,015 0
*Broker non-votes are proxies received by the Fund from brokers or nominees when
the broker or nominee neither has received instructions from the beneficial
owner or other persons entitled to vote nor has discretionary power to vote on
a particular matter.
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
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
(800) 366-5465
Our INTERNET address is:
http://www.waddell.com
NUR1014A(9-97)
printed on recycled paper
