United
Municipal
High Income
Fund, Inc.
SEMIANNUAL
REPORT
---------------------------------------
For the six months ended March 31, 1998
<PAGE>
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>
PRESIDENT'S LETTER
MARCH 31, 1998
Dear Shareholder:
As Waddell & Reed celebrates its 60th anniversary in the financial services
industry, I would like to thank you for your continued confidence in our
products and services. Since we opened our doors in 1937, our goal has been and
continues to be to provide the best service possible to our shareholders. This
commitment is reflected in every area of our organization: starting with your
financial advisor and continuing with our investment management and customer
service people of our affiliated companies.
Your confidence in the success of the products and services offered by Waddell &
Reed and its affiliates is reflected in the growth the Funds have experienced
over our 60 years. Total mutual fund assets under management reached the $1
billion mark in 1961, and over the $5 billion mark in 1985. As of March 31,
1998, mutual fund assets under management totaled more than $22.9 billion.
We look forward to helping you meet the financial goals that are important to
you, now and for many years to come. Should you have any questions about your
account or other financial issues that are important to you, contact your
financial advisor or your local Waddell & Reed office. They're ready to help
you make the most of your financial future.
Respectfully,
Keith A. Tucker
President
<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.
FOUNDED: 1986
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
<PAGE>
PERFORMANCE SUMMARY
PER SHARE DATA
For the Six Months Ended March 31, 1998
- ---------------------------------------
DIVIDENDS PAID $0.16
=====
CAPITAL GAINS DISTRIBUTION $0.07
=====
NET ASSET VALUE ON
3/31/98 $5.61 adjusted to: $5.68(A)
9/30/97 $5.55
-----
CHANGE PER SHARE $0.13
=====
(A)This number includes the capital gains distribution of $0.07 paid in December
1997 added to the actual net asset value on March 31, 1998.
Past performance is not necessarily indicative of future results.
TOTAL RETURN HISTORY
Average Annual Total Return
---------------------------
With Without
Period Sales Load* Sales Load**
- ------ ----------- ------------
1-year period ended 3-31-98 7.85% 12.64%
5-year period ended 3-31-98 7.49% 8.43%
10-year period ended 3-31-98 8.77% 9.24%
*Performance data quoted represents past performance and is based on deduction
of 4.25% sales load on the initial purchase in each of the three periods.
**Performance data quoted in this column represents past performance without
taking into account the sales load deducted on an initial purchase.
Investment return and principal value will fluctuate and an investor's shares,
when redeemed, may be worth more or less than their original cost.
<PAGE>
PORTFOLIO HIGHLIGHTS
On March 31, 1998, United Municipal High Income Fund, Inc. had net assets
totaling $500,194,556 invested in a diversified portfolio.
As a shareholder of United Municipal High Income Fund, Inc., for every $100 you
had invested on March 31, 1998, your Fund owned:
$21.99 Life Care/Nursing Center Revenue Bonds
16.92 Other Municipal Bonds
12.98 Industrial Development Revenue Bonds
11.95 Hospital Revenue Bonds
9.57 Airport Revenue Bonds
6.15 Housing Revenue Bonds
5.42 Resource Recovery Bonds
4.05 Water and Sewer Revenue Bonds
3.76 Transportation Revenue Bonds
1.99 General Obligation Bonds
1.96 Prerefunded ETM Bonds
1.76 Lease/Certificates of Participation Bonds
1.50 Cash and Cash Equivalents
1998 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- 42,350 $ 0- 25,350 15% 5.88 7.06 8.24 9.41
$ 42,351-102,300 $ 25,351- 61,400 28% 6.94 8.33 9.72 11.11
$102,301-155,950 $ 61,401-128,100 31% 7.25 8.70 10.14 11.59
$155,951-278,450 $128,101-278,450 36% 7.81 9.38 10.94 12.50
$278,451 and above$278,451 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.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS
ALABAMA - 1.53%
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 $ 5,518,750
The Marshall County Health Care Authority,
Hospital Revenue Refunding Bonds,
Series 1992 (Guntersville-Arab
Medical Center),
7.0%, 10-1-2013 ....................... 1,000 1,085,000
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 1,038,990
Total ................................. 7,642,740
ALASKA - 0.75%
City of Seward, Alaska, Revenue Bonds, 1996
(Alaska Sealife Center Project),
7.65%, 10-1-2016 ...................... 2,000 2,147,500
Anchorage Parking Authority, Lease Revenue
Refunding Bonds, Series 1993 (5th Avenue
Garage Project),
6.75%, 12-1-2008 ...................... 1,500 1,618,125
Total ................................. 3,765,625
ARIZONA - 1.58%
The Industrial Development Authority of the
County of Gila, Arizona, Environmental
Revenue Refunding Bonds (ASARCO Incorporated
Project), Series 1998,
5.55%, 1-1-2027 ....................... 4,750 4,791,563
Hayden-Winkelman Unified School District
No. 41 of Gila County, Arizona, Capital
Appreciation Refunding Bonds, Series 1995,
0.0%, 7-1-2010 ........................ 6,145 3,133,950
Total ................................. 7,925,513
CALIFORNIA - 7.40%
Foothill/Eastern Transportation Corridor
Agency, Toll Road Revenue Bonds, Series
1995A,
0.0%, 1-1-2013 (A) .................... 11,925 9,092,812
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA (Continued)
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 $ 8,090,000
Hospital Refunding Revenue Certificates
of Participation, Series 1993,
California Statewide Communities
Development Authority, Inverse Floating
Rate Security,
7.119%, 11-1-2015 (B) ................. 4,000 3,950,000
Hi-Desert Memorial Hospital District,
Revenue Bonds, Series 1994A,
8.0%, 10-1-2019 ....................... 3,000 3,416,250
Sierra Kings Health Care District Revenue
Bonds, Series 1996,
6.5%, 12-1-2026 ....................... 3,000 3,093,750
Transmission Agency of Northern California,
California-Oregon Transmission Project,
Revenue Refunding Bonds, 1993 Series A,
INFLOS,
6.814%, 4-29-2024 (B) ................. 2,500 2,581,250
San Joaquin Hills Transportation Corridor
Agency (Orange County, California),
Senior Lien Toll Road Revenue Bonds,
0.0%, 1-1-2011 (A) .................... 2,500 2,471,875
Certificates of Participation (1991 Capital
Improvement Project), Bella Vista Water
District (California),
7.375%, 10-1-2017 ..................... 1,500 1,612,500
Carson Redevelopment Agency (California),
Redevelopment Project Area No. 1,
Tax Allocation Bonds, Series 1993B,
6.0%, 10-1-2016 ....................... 1,500 1,575,000
Kings County Waste Management Authority,
Solid Waste Revenue Bonds, Series 1994
(California),
7.2%, 10-1-2014 ....................... 1,000 1,113,750
Total ................................. 36,997,187
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
COLORADO - 6.90%
City and County of Denver, Colorado:
Revenue Bonds (Jewish Community Centers
of Denver Project), Series 1994:
8.25%, 3-1-2024 ....................... 2,390 2,569,250
7.875%, 3-1-2019 ...................... 815 867,975
Airport System Revenue Bonds,
Series 1994A,
7.5%, 11-15-2023 ...................... $ 2,480 $ 2,852,000
Special Facilities Airport Revenue Bonds
(United Air Lines Project), Series 1992A,
6.875%, 10-1-2032 ..................... 2,500 2,718,750
Colorado Housing and Finance Authority,
Single Family Program Bonds:
1998 Series A-2 Senior Bonds (AMT),
6.6%, 5-1-2028 ........................ 2,500 2,746,875
1997 Series B-2, Senior Bonds (AMT),
7.0%, 5-1-2026 ........................ 2,250 2,548,125
Boulder County, Colorado, Hospital Development
Revenue Bonds (Longmont United Hospital
Project), Series 1997,
5.6%, 12-1-2027 ....................... 4,000 4,115,000
City of Colorado Springs, Colorado,
Airport System Revenue Bonds, Series 1992A,
7.0%, 1-1-2022 ........................ 2,200 2,403,500
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 2,052,500
Parker Jordan Metropolitan District,
Arapahoe County, Colorado, General
Obligation Bonds,
6.1%, 12-1-2017 ....................... 1,935 1,884,206
City of Black Hawk, Colorado, Device Tax
Revenue Bonds, Series 1998:
5.625%, 12-1-2021 ..................... 1,250 1,220,312
5.5%, 12-1-2012 ....................... 650 643,500
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
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
COLORADO (Continued)
Highlands Ranch Metropolitan District No. 3,
Douglas County, Colorado, General Obligation
Bonds, Series 1998A,
5.25%, 12-1-2018 ...................... $ 1,500 $ 1,473,750
Bachelor Gulch Metropolitan District,
Eagle County, Colorado, General Obligation
Bonds, Series 1996,
7.0%, 12-1-2015 ....................... 1,095 1,149,750
Eaglebend Affordable Housing Corporation,
Multifamily Housing Project Revenue
Refunding Bonds, Series 1997A,
6.45%, 7-1-2021 ....................... 1,000 1,062,500
Town of Erie, Colorado (In Boulder and
Weld Counties), Water Enterprise
Revenue Bonds, Series 1997B,
6.125%, 12-1-2021 ..................... 1,000 1,043,750
Colorado Health Facilities Authority,
Hospital Revenue Bonds (Steamboat Springs
Health Care Association Project),
Series 1997,
5.75%, 9-15-2022 ...................... 1,000 1,013,750
Mountain Village Metropolitan District, San
Miguel County, Colorado, General
Obligation Refunding Bonds, Series 1992,
8.1%, 12-1-2011 ....................... 465 522,544
Total ................................. 34,515,537
CONNECTICUT - 1.76%
Eastern Connecticut Resource Recovery
Authority, Solid Waste Revenue Bonds
(Wheelabrator Lisbon Project),
Series 1993A,
5.5%, 1-1-2014 ........................ 5,250 5,230,312
State of Connecticut Health and
Education Facilities Authority,
Revenue Bonds, Edgehill Issue
Series A (Fixed Rate),
6.875%, 7-1-2027 ...................... 2,400 2,550,000
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 1,021,250
Total ................................. 8,801,562
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
DISTRICT OF COLUMBIA - 1.12%
Certificates of Participation, Series 1993,
District of Columbia,
7.3%, 1-1-2013 ........................ $ 3,000 $ 3,393,750
District of Columbia Revenue Bonds
(National Public Radio Issue),
Series 1992,
7.625%, 1-1-2013 ...................... 2,000 2,205,000
Total ................................. 5,598,750
FLORIDA - 5.58%
Lake County, Florida, Resource Recovery
Industrial Development Refunding Revenue
Bonds (NRG/Recovery Group Project),
Series 1993A,
5.95%, 10-1-2013 ...................... 8,350 8,684,000
St. Johns County Industrial Development
Authority (Florida):
Health Care Revenue Bonds, Tax Exempt
Series 1997A (Bayview Project),
7.1%, 10-1-2026 ....................... 4,000 4,365,000
Industrial Development Revenue Bonds,
Series 1997A (Professional Golf Hall of
Fame Project),
5.5%, 3-1-2017 ........................ 1,000 1,022,500
Sanford Airport Authority (Florida),
Industrial Development Revenue Bonds
(Central Florida Terminals, Inc. Project):
Series 1995A,
7.75%, 5-1-2021 ....................... 4,000 4,400,000
Series 1995C,
7.5%, 5-1-2021 ........................ 500 545,000
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 3,157,500
Housing Finance Authority of Broward
County, Florida, Multifamily Housing
Revenue Bonds:
Pembroke Park Apartments Project,
Series 1998,
5.75%, 4-1-2038 ....................... 1,385 1,386,731
Stirling Apartments Project,
Series 1998,
5.75%, 4-1-2038 ....................... 1,000 1,001,250
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
FLORIDA (Continued)
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 $ 2,056,750
City of Fort Walton Beach, First Mortgage
Industrial Development Revenue Bonds,
Series 1986 (Ft. Walton Beach Ventures,
Inc. Project),
10.5%, 12-1-2016 ...................... 1,270 1,316,672
Total ................................. 27,935,403
GEORGIA - 1.04%
Coffee County Hospital Authority (Georgia),
Revenue Anticipation Certificates (Coffee
Regional Medical Center, Inc. Project),
Series 1997A,
6.75%, 12-1-2016 ...................... 5,000 5,200,000
GUAM - 0.66%
Guam Airport Authority, General Revenue
Bonds, 1993 Series B,
6.6%, 10-1-2010 ....................... 3,000 3,292,500
HAWAII - 0.59%
Department of Transportation of the State
of Hawaii, Special Facility Revenue Bonds
(Continental Airlines, Inc.), Series 1997,
5.625%, 11-15-2027 .................... 3,000 2,970,000
IDAHO - 0.48%
Idaho Health Facilities Authority, Hospital
Revenue Refunding Bonds, Series 1992
(IHC Hospitals, Inc.), Indexed Inverse
Floating Rate Securities,
8.35%, 2-15-2021 (B) .................. 2,000 2,402,500
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
ILLINOIS - 4.18%
Illinois Health Facilities Authority:
Revenue Refunding Bonds, Series
1995A (Fairview Obligated Group),
7.125%, 8-15-2017 ..................... $ 3,525 $ 3,864,281
Revenue Bonds, Series 1995 (Mercy
Center for Health Care Services),
6.375%, 10-1-2015 ..................... 2,500 2,668,750
Revenue Bonds, Series 1997A (Victory
Health Services),
5.375%, 8-15-2016 ..................... 2,000 1,982,500
City of Hillsboro, Montgomery County,
Illinois, General Obligation Bonds
(Alternate Revenue Source), Series 1991,
7.5%, 12-1-2021 ....................... 2,640 2,917,200
Illinois Development Finance Authority
Revenue Bonds, Series 1993C (Catholic
Charities Housing Development
Corporation Project),
6.1%, 1-1-2020 ........................ 2,500 2,590,625
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 2,200,000
Village of Hodgkins, Cook County, Illinois,
Tax Increment Revenue Refunding Bonds,
Series 1995A,
7.625%, 12-1-2013 ..................... 1,750 1,951,250
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 1,567,500
Village of Bourbonnais, Kankakee County,
Illinois, Sewerage Revenue Bonds,
Series 1993,
7.25%, 12-1-2012 ...................... 1,085 1,171,800
Total ................................. 20,913,906
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
INDIANA - 3.44%
Indianapolis Airport Authority, Special
Facilities Revenue Bonds:
Series 1995 A, United Air Lines, Inc.,
Indianapolis Maintenance Center Project,
6.5%, 11-15-2031 ...................... $ 6,000 $ 6,510,000
Series 1994, Federal Express
Corporation Project,
7.1%, 1-15-2017 ....................... 4,500 5,073,750
Indiana Health Facility Financing Authority:
Hospital Revenue Refunding Bonds, Series 1996
(Hancock Memorial Hospital and Health Services),
6.125%, 8-15-2017 ..................... 1,250 1,317,188
Hospital Revenue Bonds, Series 1998
(Jackson County Schneck Memorial Hospital Project),
5.25%, 2-15-2022 ...................... 1,200 1,167,000
Hospital Revenue Bonds, Series 1992
(Fayette Memorial Hospital Project),
7.2%, 10-1-2022 ....................... 1,000 1,081,250
City of Carmel, Indiana, Retirement Rental
Housing Revenue Refunding Bonds (Beverly
Enterprises - Indiana, Inc. Project),
Series 1992,
8.75%, 12-1-2008 ...................... 1,450 1,625,812
Indiana Housing Finance Authority, Residential
Mortgage Bonds, 1988 Series R-A,
0.0%, 1-1-2013 ........................ 1,525 434,625
Total ................................. 17,209,625
IOWA - 1.52%
City of Creston, Iowa, Industrial Development
Revenue Bonds, Series 1997A (CF Processing,
L.C. Project),
8.0%, 8-1-2026 ........................ 5,000 5,075,000
Iowa Finance Authority, Community Rehabilitation
Providers Revenue Bonds (Lutheran Children's
Home Society - Bremwood Project), Series 1998,
5.8%, 12-1-2024 ....................... 2,545 2,545,000
Total ................................. 7,620,000
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
KANSAS - 1.47%
Kansas Development Finance Authority,
Community Provider Loan Program (Community
Living Opportunities, Inc.), Series
1992A Revenue Bonds,
8.875%, 9-1-2011 ...................... $ 2,790 $ 2,999,250
City of Prairie Village, Kansas, Revenue Bonds,
(Claridge Court Project), Series 1993A:
8.5%, 8-15-2004 ....................... 1,000 1,113,750
8.75%, 8-15-2023 ...................... 1,000 1,110,000
Sedgwick County, Kansas and Shawnee County,
Kansas, Single Family Mortgage Revenue
Bonds (Mortgage-Backed Securities Program),
1997 Series A-1 (AMT),
5.5%, 6-1-2029 ........................ 1,000 1,122,500
Shawnee County, Kansas, Revenue Refunding
Bonds (United Methodist Homes, Inc. Project),
Revenue Refunding Bonds, Series 1997A,
6.125%, 11-15-2019 .................... 1,000 1,016,250
Total ................................. 7,361,750
KENTUCKY - 0.88%
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 3,322,500
County of Perry, Kentucky, Solid Waste
Disposal Revenue Bonds (TJ International
Project), Series 1994,
7.0%, 6-1-2024 ........................ 1,000 1,091,250
Total ................................. 4,413,750
LOUISIANA - 1.70%
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 3,028,438
Pollution Control Revenue Bonds
(Union Carbide Project),
Series 1992,
7.35%, 11-1-2022 ...................... 2,000 2,217,500
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
LOUISIANA (Continued)
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 $ 2,217,500
LaFourche Parish Home Mortgage Authority,
Tax-Exempt Capital Appreciation Refunding
Bonds, Series 1990-B, Class B-2,
0.0%, 5-20-2014 ....................... 3,300 1,047,750
Total ................................. 8,511,188
MAINE - 0.58%
Maine Veterans' Homes, Revenue Bonds,
1995 Series,
7.75%, 10-1-2020 ...................... 2,810 2,925,913
MARYLAND - 0.70%
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 3,485,625
MASSACHUSETTS - 7.54%
Massachusetts Industrial Finance Agency:
First Mortgage Revenue Bonds, Reeds
Landing Project, Series 1993,
8.625%, 10-1-2023 ..................... 9,945 11,461,613
Resource Recovery Revenue Bonds (SEMASS
Project), Series 1991B,
9.25%, 7-1-2015 ....................... 4,900 5,573,750
Revenue Bonds, Glenmeadow Retirement
Community Project, Series 1996C:
8.625%, 2-15-2026 ..................... 2,200 2,585,000
8.375%, 2-15-2018 ..................... 1,260 1,460,025
Revenue Bonds, Beaver Country Day School
Issue, Series 1992, Subseries A,
8.1%, 3-1-2008 ........................ 1,415 1,501,669
Fixed Rate Revenue Refunding Bonds,
Chestnut Knoll at Glenmeadow Project,
Series 1998A,
5.625%, 2-15-2025 ..................... 1,300 1,288,625
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MASSACHUSETTS (Continued)
Massachusetts Municipal Wholesale Electric
Company Power Supply System Revenue Bonds,
1993 Series A INFLOS,
6.87%, 7-1-2018 (B) ................... 8,000 8,170,000
Massachusetts Health and Educational
Facilities Authority,
Revenue Bonds, Beth Israel Hospital
Issue, Series G-4, Inverse Floating
Rate Securities,
8.422%, 7-1-2025 (B) .................. $ 5,000 $ 5,656,250
Total ................................. 37,696,932
MICHIGAN - 0.39%
City of Flint Hospital Building Authority,
Revenue Rental Bonds, Series 1998B
(Hurley Medical Center),
5.375%, 7-1-2028 ...................... 1,250 1,225,000
Michigan Strategic Fund, Limited Obligation
Revenue Bonds, Knollwood Corporation
Project, Series A,
10.146%, 10-1-2016 (C)................. 1,300 715,000
Total ................................. 1,940,000
MISSISSIPPI - 0.48%
Lowndes County, Mississippi, Solid Waste
Disposal and Pollution Control Refunding
Revenue Bonds (Weyerhaeuser Company
Project), Series 1992B, Indexed Inverse
Floating/Fixed Term Bonds,
8.35%, 4-1-2022 (B) ................... 2,000 2,425,000
MISSOURI - 4.51%
Lake of the Ozarks Community Bridge
Corporation, Bridge System Revenue Bonds,
Series 1996:
6.4%, 12-1-2025 ....................... 3,500 4,060,000
6.25%, 12-1-2016 ...................... 1,500 1,725,000
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 ....................... 535 577,131
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MISSOURI (Continued)
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 $ 3,183,669
The Industrial Development Authority of the
City of Bolivar, Missouri, Health
Facility Refunding and Improvement
Revenue Bonds (Citizens Memorial Health
Care Foundation), Series 1998:
5.75%, 7-1-2017 ....................... 1,245 1,221,656
5.625%, 7-1-2010 ...................... 1,095 1,079,944
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 2,142,500
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 1,659,375
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 ..................... 1,080 1,099,364
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 ....................... 900 988,875
Total ................................. 22,538,639
NEVADA - 0.54%
Reno-Sparks Convention & Visitors Authority,
Nevada, Limited Obligation Medium-Term
Refunding Bonds, Series November 1, 1996,
6.0%, 11-1-2006 ....................... 2,640 2,679,600
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW HAMPSHIRE - 1.60%
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 $ 4,752,188
Hospital Revenue Bonds, St. Joseph
Hospital Issue, Series 1991,
7.5%, 1-1-2016 ........................ 1,000 1,080,000
Revenue Bonds, RiverWoods at Exeter
Issue, Series 1997A,
6.5%, 3-1-2023 ........................ 1,000 1,037,500
Lisbon Regional School District, New
Hampshire, General Obligation Capital
Appreciation School Bonds,
0.0%, 2-1-2013 ........................ 1,610 1,110,900
Total ................................. 7,980,588
NEW JERSEY - 4.83%
New Jersey Economic Development Authority:
First Mortgage Revenue Bonds,
Franciscan Oaks Project, Series 1997:
5.75%, 10-1-2023 ...................... 3,300 3,328,875
5.7%, 10-1-2017 ....................... 1,750 1,765,313
Senior Mortgage Revenue Bonds, Arbor
Glen of Bridgewater Project - Series
1996A,
8.75%, 5-15-2026 ...................... 3,525 4,212,375
First Mortgage Revenue Fixed Rate Bonds,
Winchester Gardens at Ward Homestead
Project - Series 1996A,
8.625%, 11-1-2025 ..................... 3,000 3,356,250
First Mortgage Revenue Fixed Rate Bonds,
Fellowship Village Project - Series 1995A,
9.25%, 1-1-2025 ....................... 2,500 3,093,750
First Mortgage Revenue Bonds,
The Evergreens - Series 1992,
9.25%, 10-1-2022 ...................... 2,000 2,427,500
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW JERSEY (Continued)
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
New Jersey Health Care Facilities Financing
Authority, Revenue and Refunding Bonds,
Christian Health Care Center Issue,
Series 1997A Bonds,
5.5%, 7-1-2018 ........................ 1,000 991,250
Total ................................. 24,169,063
NEW MEXICO - 1.65%
New Mexico Educational Assistance Foundation,
Student Loan Purchase Bonds, Second Subordinate
1994 Series II-C (AMT):
6.0%, 12-1-2008 ....................... 2,460 2,536,875
5.5%, 11-1-2010 ....................... 2,000 1,982,500
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 3,723,125
Total ................................. 8,242,500
NEW YORK - 2.04%
Tompkins County Industrial Development
Agency, Life Care Community Revenue Bonds,
1994 (Kendal at Ithaca, Inc. Project),
7.875%, 6-1-2024 ...................... 4,035 4,277,100
New York City Industrial Development Agency,
Industrial Development Revenue Bonds
(Brooklyn Navy Yard Cogeneration Partners,
L.P. Project), Series 1997,
5.75%, 10-1-2036 ...................... 3,000 3,063,750
New York City Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, Inflos,
6.82%, 6-15-2012 (B) .................. 2,750 2,839,375
Total ................................. 10,180,225
NORTH CAROLINA - 0.46%
City of Durham, North Carolina, Multifamily
Housing Revenue Bonds (Ivy Commons Project),
Series 1997,
8.0%, 3-1-2029 ........................ 2,250 2,297,812
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NORTH DAKOTA - 0.71%
City of Grand Forks, North Dakota, Senior
Housing Revenue Bonds (4000 Valley
Square Project), Series 1997:
6.25%, 12-1-2034 ...................... $ 2,000 $ 2,030,000
6.375%, 12-1-2034 ..................... 1,500 1,524,375
Total ................................. 3,554,375
OHIO - 1.95%
Ohio Water Development Authority, State of
Ohio, Solid Waste Disposal Revenue Bonds
(Bay Shore Power Project), Tax-Exempt
Series 1998 A,
5.875%, 9-1-2020 ...................... 4,000 4,045,000
County of Franklin, Ohio, Health Care
Facilities Refunding Revenue Bonds,
Series 1997 (Ohio Presbyterian Retirement
Services):
5.5%, 7-1-2021 ........................ 1,500 1,464,375
5.5%, 7-1-2017 ........................ 1,000 985,000
Hamilton County, Ohio, Health System Revenue
Bonds, Providence Hospital Issue,
Series 1992,
6.875%, 7-1-2015 ...................... 2,000 2,150,000
County of Lorain, Ohio, First Mortgage
Revenue Bonds, 1992 Series A (Kendal at
Oberlin Project),
8.625%, 2-1-2022 ...................... 1,000 1,126,250
Total ................................. 9,770,625
OKLAHOMA - 2.75%
Bixby Public Works Authority, Utility
System Revenue Bonds, Refunding
Series 1994,
7.25%, 11-1-2019 ...................... 2,685 2,953,500
The Clinton Public Works Authority,
Refunding and Improvement Revenue
Bonds, Series 1994,
6.25%, 1-1-2019 ....................... 2,575 2,719,844
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
OKLAHOMA (Continued)
Oklahoma County Industrial Authority,
Industrial Development Revenue Bonds:
1986 Series B (Choctaw Nursing
Center Project):
10.25%, 9-1-2016 (C) .................. $ 1,230 $ 861,000
10.125%, 9-1-2006 (C) ................. 525 367,500
1986 Series A (Westlake Nursing Center
Project):
10.25%, 9-1-2016 ...................... 905 922,077
10.125%, 9-1-2006 ..................... 430 438,118
The Broken Arrow Public Golf Authority
(Broken Arrow, Oklahoma), Recreational
Facilities Revenue Bonds, Series 1995,
7.25%, 8-1-2020 ....................... 2,025 2,174,344
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 1,774,000
The Guthrie Public Works Authority
(Guthrie, Oklahoma), Utility System
Revenue Bonds, Series 1994A,
6.75%, 9-1-2019 ....................... 1,415 1,540,581
Total ................................. 13,750,964
OREGON - 1.39%
Klamath Falls Intercommunity Hospital
Authority, Gross Revenue Bonds,
Series 1994 (Merle West Medical Center
Project),
7.1%, 9-1-2024 ........................ 3,500 3,863,125
Myrtle Creek Building Authority, Gross
Revenue Bonds, Series 1996A (Myrtle Creek
Golf Course Project),
8.0%, 6-1-2021 ........................ 3,000 3,112,500
Total ................................. 6,975,625
PENNSYLVANIA - 5.56%
Delaware County Authority (Pennsylvania),
First Mortgage Revenue Bonds
(Riddle Village Project),
Series 1994,
8.25%, 6-1-2022 ....................... 4,000 4,910,000
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
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 $ 3,692,500
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 2,202,500
Exempt Facilities Revenue Bonds, 1992
Series B (Pennsylvania Gas and Water
Company Project),
7.125%, 12-1-2022 ..................... 1,000 1,101,250
Allegheny County Industrial Development
Authority (Pennsylvania), Environmental
Improvement Revenue Bonds (USX Corporation
Project), Refunding Series A 1994,
6.7%, 12-1-2020 ....................... 3,000 3,266,250
Allentown Area Hospital Authority, Hospital
Revenue Bonds (Sacred Heart Hospital of
Allentown), Series A of 1993,
6.75%, 11-15-2014 ..................... 2,865 3,133,594
McKeesport Hospital Authority (Commonwealth
of Pennsylvania), Hospital Revenue Bonds,
Series of 1993 (McKeesport Hospital Project),
6.5%, 7-1-2008 ........................ 2,500 2,659,375
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 2,187,500
Clearfield Hospital Authority, Hospital
Revenue and Refunding Bonds (Clearfield
Hospital Project), Series 1994,
6.875%, 6-1-2016 ...................... 2,000 2,155,000
South Wayne County Water and Sewer Authority
(Wayne County, Pennsylvania), Sewer Revenue
Bonds, Series of 1992,
8.2%, 4-15-2013 ....................... 1,780 1,866,775
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
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 $ 616,219
Total ................................. 27,790,963
RHODE ISLAND - 0.43%
City of Providence, Rhode Island, Special
Obligation Tax Increment Bonds, Series D,
6.65%, 6-1-2016 ....................... 2,000 2,170,000
SOUTH CAROLINA - 1.74%
Connector 2000 Association, Inc., Toll Road
Revenue Bonds (Southern Connector Project,
Greenville, South Carolina:
Senior Capital Appreciation Bonds, Series 1998B,
0.0%, 1-1-2035 ........................ 17,000 2,018,750
Senior Current Interest Bonds, Series 1998A,
5.25%, 1-1-2023 ....................... 2,000 1,915,000
McCormick County, South Carolina, Hospital
Facilities Revenue Refunding Improvement
Bonds, Series 1997 (McCormick Health Care
Center Project),
7.0%, 3-1-2018 ........................ 2,530 2,586,925
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 2,202,500
Total ................................. 8,723,175
SOUTH DAKOTA - 0.42%
South Dakota Health and Educational
Facilities Authority, Refunding Revenue
Bonds (Westhills Village Retirement
Community Issue), Series 1993,
7.25%, 9-1-2013 ....................... 2,000 2,082,500
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TENNESSEE - 1.55%
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 $ 2,157,500
The Health, Educational and Housing Facility
Board of the County of Shelby, Tennessee,
Health Care Facilities Revenue Bonds,
Series 1997A (Kirby Pines Retirement
Community Project),
6.375%, 11-15-2025 .................... 2,100 2,134,125
The Health and Educational Facilities Board
of the Metropolitan Government of Nashville
and Davidson County, Tennessee, Revenue
Refunding Bonds, Series 1998 (The
Blakeford at Green Hills),
5.65%, 7-1-2024 ....................... 2,000 1,975,000
Upper Cumberland Gas Utility District
(of Cumberland County, Tennessee),
Gas System Revenue Bonds, Series 1996,
7.0%, 3-1-2016 ........................ 1,400 1,477,000
Total ................................. 7,743,625
TEXAS - 6.66%
AllianceAirport Authority, Inc., Special
Facilities Revenue Bonds:
Federal Express Corporation Project,
Series 1996,
6.375%, 4-1-2021 ...................... 8,500 9,201,250
American Airlines, Inc. Project,
Series 1991,
7.0%, 12-1-2011 ....................... 4,700 5,534,250
American Airlines, Inc. Project,
Series 1990,
7.5%,12-1-2029 ........................ 2,885 3,133,831
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 6,360,000
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
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 ....................... $ 2,955 $ 3,014,100
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 2,365,506
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 2,082,500
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 1,623,750
Total ................................. 33,315,187
UTAH - 0.72%
Utah Housing Finance Agency, Revenue Bonds
(RHA Community Services of Utah, Inc.
Project), Series 1997A,
6.875%, 7-1-2027 ...................... 2,000 2,087,500
Carbon County, Utah, Solid Waste Disposal
Refunding Revenue Bonds, Series 1991
(Sunnyside Cogeneration Associates Project),
9.25%, 7-1-2018 (C) ................... 2,500 1,500,000
Total ................................. 3,587,500
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
VERMONT - 1.59%
Vermont Industrial Development Authority,
Mortgage Revenue Bonds, Wake Robin
Corporation Project, Series 1993A:
8.75%, 4-1-2023 ....................... $ 4,465 $ 5,095,681
8.75%, 3-1-2023 ....................... 2,500 2,853,125
Total ................................. 7,948,806
VIRGIN ISLANDS - 0.31%
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 1,576,750
VIRGINIA - 1.35%
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 3,635,625
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 3,101,250
Total ................................. 6,736,875
WASHINGTON - 0.21%
Pilchuck Development Public Corporation
(State of Washington), Special Facilities
Airport Revenue Bonds, Series 1993
(TRAMCO, Inc. Project),
6.0%, 8-1-2023 ........................ 1,000 1,032,500
WEST VIRGINIA - 0.33%
Upshur County, West Virginia, Solid Waste
Disposal Revenue Bonds (TJ International
Project), Series 1995,
7.0%, 7-15-2025 ....................... 1,500 1,646,250
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WISCONSIN - 2.18%
Wisconsin Health and Educational Facilities
Authority, Revenue Bonds, Series 1995:
National Regency of New Berlin, Inc.
Project,
8.0%, 8-15-2025 ....................... $ 4,500 $ 5,023,125
Hess Memorial Hospital Association, Inc.
Project,
7.75%, 11-1-2015 ...................... 3,400 3,901,500
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 1,974,463
Total ................................. 10,899,088
WYOMING - 0.75%
Sweetwater County, Wyoming, Solid Waste
Disposal Revenue Bonds (FMC Corporation
Project), Series 1994B,
6.9%, 9-1-2024 ........................ 2,500 2,746,875
Teton County Hospital District (St. John's
Hospital and Living Center), Jackson Hole,
Wyoming, Hospital Refunding and Improvement
Revenue Bonds, Series 1998,
5.8%, 12-1-2017 ....................... 1,000 1,003,750
Total ................................. 3,750,625
TOTAL MUNICIPAL BONDS - 98.50% $492,694,866
(Cost: $457,739,497)
TOTAL SHORT-TERM SECURITIES - 1.59% $ 7,940,353
(Cost: $7,940,353)
TOTAL INVESTMENT SECURITIES - 100.09% $500,635,219
(Cost: $465,679,850)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.09%) (440,663)
NET ASSETS - 100.00% $500,194,556
See Notes to Schedule of Investments on page 27.
<PAGE>
THE INVESTMENTS OF
UNITED MUNICIPAL HIGH INCOME FUND, INC.
MARCH 31, 1998
Notes to Schedule of Investments
(A) The security does not bear interest for an initial period of time and
subsequently becomes interest bearing.
(B) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in
effect at March 31, 1998.
(C) 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
MARCH 31, 1998
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $500,635,219
Cash ............................................. 251,949
Receivables:
Interest ........................................ 9,039,154
Fund shares sold ................................ 614,902
Prepaid insurance premium ........................ 9,352
------------
Total assets .................................. 510,550,576
------------
Liabilities
Payable for investment securities purchased ...... 8,255,287
Payable to Fund shareholders ..................... 1,622,141
Dividends payable ................................ 305,692
Accrued service fee (Note 2) ..................... 91,037
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 28,926
Accrued management fee (Note 2) .................. 6,752
Accrued accounting services fee (Note 2) ......... 5,000
Other ............................................ 41,185
------------
Total liabilities ............................. 10,356,020
------------
Total net assets ............................. $500,194,556
============
Net Assets
$1.00 par value capital stock, authorized --
100,000,000; shares outstanding -- 89,150,694
Capital stock ................................... $ 89,150,694
Additional paid-in capital ...................... 371,215,432
Accumulated undistributed income:
Accumulated undistributed net realized
gain on investment transactions ............... 4,873,061
Net unrealized appreciation in value of
investments ................................... 34,955,369
------------
Net assets applicable to outstanding
units of capital ............................. $500,194,556
============
Net asset value per share (net assets divided
by shares outstanding) ........................... $5.61
=====
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL HIGH INCOME FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended MARCH 31, 1998
Investment Income
Interest and amortization (Note 1B) .............. $16,037,582
-----------
Expenses (Note 2):
Investment management fee ....................... 1,205,782
Service fee ..................................... 395,420
Transfer agency and dividend disbursing ......... 187,320
Accounting services fee ......................... 30,000
Custodian fees .................................. 13,741
Audit fees ...................................... 9,915
Legal fees ...................................... 3,747
Other ........................................... 118,333
-----------
Total expenses ................................ 1,964,258
-----------
Net investment income ........................ 14,073,324
-----------
Realized and Unrealized Gain on Investments
(Notes 1 and 3)
Realized net gain on investments ................. 5,974,858
Unrealized appreciation in value of
investments during the period ................... 4,819,041
-----------
Net gain on investments ......................... 10,793,899
-----------
Net increase in net assets resulting
from operations .............................. $24,867,223
===========
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL HIGH INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the For the
six months fiscal year
ended ended
March 31, September 30,
1998 1997
------------ ------------
Increase in Net Assets
Operations:
Net investment income ...............$ 14,073,324 $ 26,384,505
Realized net gain on
investments ....................... 5,974,858 6,519,836
Unrealized appreciation ............. 4,819,041 13,763,713
------------ ------------
Net increase in net assets
resulting from operations ........ 24,867,223 46,668,054
------------ ------------
Distributions to shareholders from (Note 1D):*
Net investment income ............... (14,073,324) (26,384,505)
Realized net gains on investment
transactions ...................... (6,027,244) (1,101,874)
------------ ------------
(20,100,568) (27,486,379)
------------ ------------
Capital share transactions:
Proceeds from sale of shares
(5,122,582 and 14,043,014 shares,
respectively) ..................... 29,030,092 76,429,172
Proceeds from reinvestment of
dividends and/or capital gains
distribution (2,977,818 and 4,105,285
shares, respectively) ............. 16,384,523 22,249,624
Payments for shares redeemed
(4,235,512 and 8,115,149 shares,
respectively) ..................... (23,742,511) (43,928,367)
------------ ------------
Net increase in net assets
resulting from capital
share transactions ............... 21,672,104 54,750,429
------------ ------------
Total increase ................... 26,438,759 73,932,104
Net Assets
Beginning of period ..................$473,755,797 399,823,693
------------ ------------
End of period ........................$500,194,556 $473,755,797
============ ============
Undistributed net investment
income ............................ $--- $---
==== ====
*See "Financial Highlights" on page 31.
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
six For the fiscal year ended
months September 30,
ended ------------------------------------
3/31/98 1997 1996 1995 1994 1993
------- ------ ------ ------ ------ ------
Net asset value,
beginning of
period ........... $5.55 $5.31 $5.27 $5.12 $5.53 $5.23
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income........... .16 .34 .34 .35 .34 .35
Net realized and
unrealized gain
(loss) on
investments ..... .13 .25 .04 .17 (0.34) .34
----- ----- ----- ----- ----- -----
Total from investment
operations ....... .29 .59 .38 .52 0.00 .69
----- ----- ----- ----- ----- -----
Less distributions:
Declared from net
investment income (0.16) (0.34) (0.34) (0.35) (0.34) (0.35)
From capital gains (0.07) (0.01) (0.00) (0.00) (0.07) (0.04)
In excess
of capital gains. (0.00) (0.00) (0.00) (0.02) (0.00) (0.00)
----- ----- ----- ----- ----- -----
Total distributions. (0.23) (0.35) (0.34) (0.37) (0.41) (0.39)
----- ----- ----- ----- ----- -----
Net asset value, end
of period ........ $5.61 $5.55 $5.31 $5.27 $5.12 $5.53
===== ===== ===== ===== ===== =====
Total return* ...... 5.32% 11.45% 7.40% 10.63% 0.05% 13.77%
Net assets, end
of period (000
omitted) ..........$500,195$473,756$399,824$382,805$345,162$329,373
Ratio of expenses to
average net
assets ........... 0.81%** 0.78% 0.81% 0.76% 0.76% 0.70%
Ratio of net investment
income to average
net assets ....... 5.78%** 6.19% 6.41% 6.75% 6.39% 6.49%
Portfolio turnover
rate ............. 14.69% 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.
**Annualized
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL HIGH INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
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 $19.8 billion of
combined net assets at March 31, 1998) 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 $788,136, out of which W&R
paid sales commissions of $452,477 and all expenses in connection with the sale
of Fund shares, except for registration fees and related expenses.
Under a Distribution and Service Plan for Class A shares adopted by the
Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund
may pay monthly a distribution and/or service fee to W&R in an amount not to
exceed .25% of the Fund's Class A average annual net assets. The fee is to be
paid to reimburse W&R for amounts it expends in connection with the distribution
of the Class A shares and/or provision of personal services to Fund shareholders
and/or maintenance of shareholder accounts.
The Fund paid Directors' fees of $8,808, which are included in other
expenses.
W&R is an indirect subsidiary of Torchmark Corporation, a holding company,
and Waddell & Reed Financial, Inc., a holding company, and a direct subsidiary
of Waddell & Reed Financial Services, Inc., a holding company.
NOTE 3 -- Investment Security Transactions
Purchases of investment securities, other than U.S. Government and short-
term securities, aggregated $88,958,519, while proceeds from maturities and
sales aggregated $70,537,499. Purchases of short-term securities aggregated
$100,235,889, while proceeds from maturities and sales aggregated $98,681,623.
No U.S. Government securities were bought or sold during the period ended March
31, 1998.
For Federal income tax purposes, cost of investments owned at March 31,
1998 was $466,150,372, resulting in net unrealized appreciation of $34,484,847,
of which $36,896,666 related to appreciated securities and $2,411,819 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, which has been
distributed to the Fund's shareholders.
NOTE 5 -- Multiclass Operations
On January 30, 1996, the Fund was authorized to offer investors 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 March 31, 1998, 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 March 31, 1998, and the related statements of operations for the
six-month period then ended and changes in net assets for the six-month period
then ended and the year ended September 30, 1997, and the financial highlights
for the six-month period then ended and for each of the years in the five-year
period ended September 30, 1997. The financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on the financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at March
31, 1998 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of United Municipal
High Income Fund, Inc. as of March 31, 1998, the results of its operations, the
changes in its net assets and the financial highlights for the respective stated
periods in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
May 8, 1998
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
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
<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
NUR1014SA(3-98)
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