United
Municipal
High Income
Fund, Inc.
ANNUAL
REPORT
--------------------------------------------
For the fiscal year ended September 30, 1998<PAGE>
MANAGER'S LETTER----------------------------------------------------------------
SEPTEMBER 30, 1998
Dear Shareholder:
This report relates to the operation of United Municipal High Income Fund, Inc.
for the fiscal year ended September 30, 1998. The discussion, graphs and tables
contained in this report will provide you with information regarding the Fund's
performance during that period.
Interest rates, as measured by the long U.S. Treasury bond, fell from
approximately 6.25% to 5.0% over the past fiscal year. Yields on municipal
bonds followed this trend, but underperformed somewhat because of an
extraordinary shift in preference for safety. This flight to quality left
municipals at historically attractive levels versus Treasuries. In late
September, the Federal Reserve reduced short term interest rates, which pushed
all interest rates lower.
During the year, we kept the Fund fully invested in longer-maturity bonds that
would appreciate in value as yields declined. We continually reworked the
Fund's portfolio to eliminate lower yielding bonds. We also added inverse
floaters, priced to relatively short call dates, as yields on these bonds move
in the opposite direction of general interest rates. Buying inverse floaters
provides a relatively short duration bond with a yield that actually goes up as
short-term interest rates decline.
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). We credit the superior performance
of the Fund during the fiscal year to active management designed to add value.
Fundamentals for the bond market appear to be favorable heading into the next
fiscal year. The economy is showing evidence of slowing, inflation is low and
the supply of bonds should shrink. Municipalities and corporations are
generally in good financial shape. These are all conditions that should keep
bond prices high. We expect to remain fully invested in bonds with slightly
longer maturities that should perform well in a declining interest rate
environment.
Thank you for your continued confidence.
Respectfully
John M. Holliday
Manager, United Municipal High Income Fund, Inc.
<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
------------------ ----------
09/30/88 Purchase$9,575 $10,000 $10,000
09/30/89 10,665 10,868 10,934
09/30/90 11,292 11,607 11,482
09/30/91 12,688 13,137 12,718
09/30/92 14,093 14,511 13,954
09/30/93 16,034 16,360 15,679
09/30/94 16,042 15,961 15,321
09/30/95 17,748 17,747 16,773
09/30/96 19,063 18,820 17,767
09/30/97 21,247 20,519 19,475
09/30/98 23,346 22,307 21,089
==== United Municipal High Income Fund, Class A*-- $23,346
++++ Lehman Brothers Municipal Bond Index -- $22,307
---- Lipper High Yield Municipal Bond Fund Universe Average - $21,089
*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
9/30/98 5.21%
5 Years Ended
9/30/98 6.87%
10 Years Ended
9/30/98 8.85%
+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.
FOUNDED: 1986
SCHEDULED DIVIDEND FREQUENCY: MONTHLY
<PAGE>
PERFORMANCE SUMMARY
PER SHARE DATA
For the Fiscal Year Ended September 30, 1998
- --------------------------------------------
DIVIDENDS PAID $0.32
=====
CAPITAL GAINS DISTRIBUTION $0.07
=====
NET ASSET VALUE ON
9/30/98 $5.69 adjusted to: $5.76(A)
9/30/97 5.55
-----
CHANGE PER SHARE $0.21
=====
(A)This number includes the capital gains distribution of $0.07 paid in December
1997 added to the actual net asset value on September 30, 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 9-30-98 5.21% 9.88%
5-year period ended 9-30-98 6.87% 7.80%
10-year period ended 9-30-98 8.85% 9.32%
*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, 1998, United Municipal High Income Fund, Inc. had net assets
totaling $522,195,119 invested in a diversified portfolio.
As a shareholder of United Municipal High Income Fund, Inc., for every $100 you
had invested on September 30, 1998, your Fund owned:
$21.15 Life Care/Nursing Center Revenue Bonds
19.41 Other Municipal Bonds
12.36 Industrial Development Revenue Bonds
10.50 Hospital Revenue Bonds
7.55 Housing Revenue Bonds
6.59 Airport Revenue Bonds
4.44 Resource Recovery Bonds
3.88 Water and Sewer Revenue Bonds
3.27 Cash and Cash Equivalents
3.27 Prerefunded ETM Bonds
3.27 Transportation Revenue Bonds
2.53 General Obligation Bonds
1.78 Lease/Certificates of Participation Bonds
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 OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS
ALABAMA - 0.41%
The Marshall County Health Care Authority,
Hospital Revenue Refunding Bonds,
Series 1992 (Guntersville-Arab
Medical Center),
7.0%, 10-1-2013 ....................... $1,000 $ 1,081,250
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 1,039,410
Total ................................. 2,120,660
ALASKA - 0.73%
City of Seward, Alaska, Revenue Bonds, 1996
(Alaska Sealife Center Project),
7.65%, 10-1-2016 ...................... 2,000 2,160,000
Anchorage Parking Authority, Lease Revenue
Refunding Bonds, Series 1993 (5th Avenue
Garage Project),
6.75%, 12-1-2008 ...................... 1,500 1,633,125
Total ................................. 3,793,125
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 4,833,125
Hayden-Winkelman Unified School District No.
41 of Gila County, Arizona, Capital
Appreciation Refunding Bonds, Series 1995,
0.0%, 7-1-2010 ........................ 6,145 3,395,112
Total ................................. 8,228,237
ARKANSAS - 0.31%
City of Little Rock, Arkansas, Capital
Improvement Revenue Bonds (Parks and
Recreation Projects), Series 1998A,
5.8%, 1-1-2023 ........................ 1,600 1,614,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
CALIFORNIA - 7.53%
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 $ 8,330,000
Hospital Refunding Revenue Certificates
of Participation, Series 1993, Cedars-Sinai
Medical Center, Inverse Floating Rate Security,
7.068%, 11-1-2015 (A) ................. 4,000 4,195,000
Foothill/Eastern Transportation Corridor
Agency, Toll Road Revenue Bonds, Series
1995A,
0.0%, 1-1-2013 (B) .................... 11,925 10,195,875
Hi-Desert Memorial Hospital District,
Revenue Bonds, Series 1994A,
8.0%, 10-1-2019 ....................... 3,000 3,720,000
Sierra Kings Health Care District Revenue
Bonds, Series 1996,
6.5%, 12-1-2026 ....................... 3,000 3,120,000
Transmission Agency of Northern California,
California-Oregon Transmission Project,
Revenue Refunding Bonds, 1993 Series A,
INFLOS,
6.782%, 4-29-2024 (A) ................. 2,500 2,728,125
San Joaquin Hills Transportation Corridor
Agency (Orange County, California),
Senior Lien Toll Road Revenue Bonds,
0.0%, 1-1-2011 (B) .................... 2,500 2,621,875
Certificates of Participation (1991 Capital
Improvement Project), Bella Vista Water
District (California),
7.375%, 10-1-2017 ..................... 1,500 1,651,875
Carson Redevelopment Agency (California),
Redevelopment Project Area No. 1,
Tax Allocation Bonds, Series 1993B,
6.0%, 10-1-2016 ....................... 1,500 1,606,875
Kings County Waste Management Authority,
Solid Waste Revenue Bonds, Series 1994
(California),
7.2%, 10-1-2014 ....................... 1,000 1,168,750
Total ................................. 39,338,375
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
COLORADO - 5.97%
Colorado Housing and Finance Authority,
Single Family Program Bonds:
1998 Series A-2 Senior Bonds (AMT),
6.6%, 5-1-2028 ........................ $ 2,500 $ 2,803,125
1997 Series B-2, Senior Bonds (AMT),
7.0%, 5-1-2026 ........................ 2,250 2,539,688
Sand Creek Metropolitan District, Adams
County and City and County of Denver,
Colorado, General Obligation Limited
Tax Bonds:
Series 1998,
6.625%, 12-1-2017 ..................... 3,070 3,089,188
Series 1997,
7.125%, 12-1-2016 ..................... 2,000 2,070,000
Boulder County, Colorado, Hospital Development
Revenue Bonds (Longmont United Hospital
Project), Series 1997,
5.6%, 12-1-2027 ....................... 4,000 4,125,000
City and County of Denver, Colorado,
Revenue Bonds (Jewish Community Centers
of Denver Project), Series 1994:
8.25%, 3-1-2024 ....................... 2,390 2,575,225
7.875%, 3-1-2019 ...................... 815 870,012
Colorado Health Facilities Authority:
Revenue Bonds (National Jewish Medical
and Research Center Project),
Series 1998,
5.375%, 1-1-2028 ...................... 2,000 1,987,500
Hospital Revenue Bonds (Steamboat Springs
Health Care Association Project),
Series 1997,
5.75%, 9-15-2022 ...................... 1,000 1,025,000
Parker Jordan Metropolitan District,
Arapahoe County, Colorado, General
Obligation Bonds, Series 1998B,
6.1%, 12-1-2017 ....................... 1,935 1,910,813
Pitkin County, Colorado, Lease Purchase
Agreement, Certificates of Participation
(County Administration Building Project),
Series 1991,
7.4%, 10-1-2011 ....................... 1,500 1,635,000
Highlands Ranch Metropolitan District No. 3,
Douglas County, Colorado, General Obligation
Bonds, Series 1998A,
5.25%, 12-1-2018 ...................... 1,500 1,520,625
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
COLORADO (Continued)
City of Black Hawk, Colorado, Device Tax
Revenue Bonds, Series 1998,
5.625%, 12-1-2021 ..................... $ 1,250 $ 1,242,187
Bachelor Gulch Metropolitan District,
Eagle County, Colorado, General Obligation
Bonds, Series 1996,
7.0%, 12-1-2015 ....................... 1,095 1,156,594
Eaglebend Affordable Housing Corporation,
Multifamily Housing Project Revenue
Refunding Bonds, Series 1997A,
6.45%, 7-1-2021 ....................... 1,000 1,070,000
Town of Erie, Colorado (In Boulder and
Weld Counties), Water Enterprise
Revenue Bonds, Series 1997B,
6.125%, 12-1-2021 ..................... 1,000 1,050,000
Mountain Village Metropolitan District, San
Miguel County, Colorado, General
Obligation Refunding Bonds, Series 1992,
8.1%, 12-1-2011 ....................... 465 519,638
Total ................................. 31,189,595
CONNECTICUT - 2.19%
Eastern Connecticut Resource Recovery
Authority, Solid Waste Revenue Bonds
(Wheelabrator Lisbon Project),
Series 1993A,
5.5%, 1-1-2014 ........................ 5,250 5,341,875
State of Connecticut Health and
Education Facilities Authority,
Revenue Bonds, Edgehill Issue
Series A (Fixed Rate),
6.875%, 7-1-2027 ...................... 2,400 2,541,000
Connecticut Development Authority, Pollution
Control Revenue Refunding Bonds (The
Connecticut Light and Power Company
Project - 1993B Series),
5.95%, 9-1-2028 ....................... 2,500 2,528,125
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 1,030,000
Total ................................. 11,441,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
DISTRICT OF COLUMBIA - 1.07%
Certificates of Participation, Series 1993,
District of Columbia,
7.3%, 1-1-2013 ........................ $ 3,000 $ 3,375,000
District of Columbia Revenue Bonds
(National Public Radio Issue),
Series 1992,
7.625%, 1-1-2013 ...................... 2,000 2,200,000
Total ................................. 5,575,000
FLORIDA - 5.10%
Lake County, Florida, Resource Recovery
Industrial Development Refunding Revenue
Bonds (NRG/Recovery Group Project),
Series 1993A,
5.95%, 10-1-2013 ...................... 6,850 7,261,000
St. Johns County Industrial Development
Authority (Florida):
Health Care Revenue Bonds, Tax Exempt
Series 1997A (Bayview Project),
7.1%, 10-1-2026 ....................... 4,000 4,380,000
Industrial Development Revenue Bonds,
Series 1997A (Professional Golf Hall of
Fame Project),
5.5%, 3-1-2017 ........................ 1,000 1,066,250
Sanford Airport Authority (Florida),
Industrial Development Revenue Bonds
(Central Florida Terminals, Inc. Project):
Series 1995A,
7.75%, 5-1-2021 ....................... 4,000 4,415,000
Series 1995C,
7.5%, 5-1-2021 ........................ 500 547,500
Sarasota County (Florida) Health Facilities
Authority, Health Care Facilities Revenue
Refunding Bonds, Series 1995 (Sarasota-
Manatee Jewish Housing Council, Inc.
Project),
6.7%, 7-1-2025 ........................ 3,000 3,180,000
Housing Finance Authority of Broward
County, Florida, Multifamily Housing
Revenue Bonds:
Pembroke Park Apartments Project,
Series 1998,
5.75%, 4-1-2038 ....................... 1,385 1,400,581
Stirling Apartments Project,
Series 1998,
5.75%, 4-1-2038 ....................... 1,000 1,011,250
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 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 $ 2,063,875
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 1,309,878
Total ................................. 26,635,334
GEORGIA - 1.34%
Coffee County Hospital Authority (Georgia),
Revenue Anticipation Certificates (Coffee
Regional Medical Center, Inc. Project),
Series 1997A,
6.75%, 12-1-2016 ...................... 5,000 5,243,750
Development Authority of Fulton County
(Georgia), Special Facilities Revenue Bonds
(Delta Air Lines, Inc. Project), Series 1998,
5.5%, 5-1-2033 ........................ 1,750 1,752,187
Total ................................. 6,995,937
HAWAII - 0.57%
Department of Transportation of the State
of Hawaii, Special Facility Revenue Bonds
(Continental Airlines, Inc.), Series 1997,
5.625%, 11-15-2027 .................... 3,000 3,000,000
IDAHO - 0.48%
Idaho Health Facilities Authority, Hospital
Revenue Refunding Bonds, Series 1992
(IHC Hospitals, Inc.), Indexed Inverse
Floating Rate Securities,
8.25%, 2-15-2021 (A) .................. 2,000 2,490,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
ILLINOIS - 3.55%
Illinois Health Facilities Authority:
Revenue Refunding Bonds, Series
1995A (Fairview Obligated Group),
7.125%, 8-15-2017 ..................... $ 3,525 $ 3,881,906
Revenue Refunding Bonds, Series 1998
(Lifelink Corporation Obligated Group),
5.7%, 2-15-2024 ....................... 2,200 2,164,250
City of Hillsboro, Montgomery County,
Illinois, General Obligation Bonds
(Alternate Revenue Source), Series 1991,
7.5%, 12-1-2021 ....................... 2,640 2,940,300
Illinois Development Finance Authority
Revenue Bonds, Series 1993C (Catholic
Charities Housing Development
Corporation Project),
6.1%, 1-1-2020 ........................ 2,500 2,628,125
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 2,217,500
Village of Hodgkins, Cook County, Illinois,
Tax Increment Revenue Refunding Bonds,
Series 1995A,
7.625%, 12-1-2013 ..................... 1,750 1,955,625
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 1,578,750
Village of Bourbonnais, Kankakee County,
Illinois, Sewerage Revenue Bonds,
Series 1993,
7.25%, 12-1-2012 ...................... 1,085 1,182,650
Total ................................. 18,549,106
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
INDIANA - 3.57%
Indiana Health Facility Financing Authority:
Revenue Refunding Bonds, Series 1998
(Greenwood Village South Project),
5.625%, 5-15-2028 ..................... $ 4,100 $ 4,079,500
Hospital Revenue Refunding Bonds, Series 1998
(Jackson County Schneck Memorial Hospital Project),
5.25%, 2-15-2022 ...................... 1,600 1,600,000
Hospital Revenue Refunding Bonds, Series 1996
(Hancock Memorial Hospital and Health Services),
6.125%, 8-15-2017 ..................... 1,250 1,342,187
Hospital Revenue Bonds, Series 1992
(Fayette Memorial Hospital Project),
7.2%, 10-1-2022 ....................... 1,000 1,085,000
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 6,540,000
City of Goshen, Indiana, Revenue Bonds,
Series 1998 (Greencroft Obligated Group),
5.75%, 8-15-2028 ...................... 2,000 1,970,000
City of Carmel, Indiana, Retirement Rental
Housing Revenue Refunding Bonds (Beverly
Enterprises - Indiana, Inc. Project),
Series 1992,
8.75%, 12-1-2008 ...................... 1,450 1,620,375
Indiana Housing Finance Authority, Residential
Mortgage Bonds, 1988 Series R-A,
0.0%, 1-1-2013 ........................ 1,315 391,213
Total ................................. 18,628,275
IOWA - 2.43%
City of Creston, Iowa, Industrial Development
Revenue Bonds, Series 1997A (CF Processing,
L.C. Project),
8.0%, 8-1-2026 ........................ 5,000 5,187,500
City of Cedar Rapids, Iowa, First Mortgage
Revenue Bonds, Series 1998-A (Cottage Grove
Place Project),
5.875%, 7-1-2028 ...................... 5,000 4,931,250
Iowa Finance Authority, Community Rehabilitation
Providers Revenue Bonds (Lutheran Children's
Home Society - Bremwood Project), Series 1998,
5.8%, 12-1-2024 ....................... 2,545 2,560,906
Total ................................. 12,679,656
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
KANSAS - 1.94%
Certificates of Participation, Series 1998A,
Evidencing Proportionate Interests of the
Owners Thereof in Rental Payments to be
Made by the City of Spring Hill, Kansas, to
Spring Hill Golf Corporation,
6.5%, 1-15-2028 ....................... $ 4,000 $ 3,895,000
Kansas Development Finance Authority,
Community Provider Loan Program (Community
Living Opportunities, Inc.), Series
1992A Revenue Bonds,
8.875%, 9-1-2011 ...................... 2,790 2,988,788
City of Prairie Village, Kansas, Revenue Bonds,
(Claridge Court Project), Series 1993A:
8.75%, 8-15-2023 ...................... 1,000 1,108,750
8.5%, 8-15-2004 ....................... 890 989,013
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 1,141,250
Total ................................. 10,122,801
KENTUCKY - 1.05%
Kentucky Economic Development Finance Authority,
Health Care Facilities Revenue Bonds, Series
1998 (The Christian Church Homes of Kentucky,
Inc. Obligated Group),
5.5%, 11-15-2030 ...................... 4,425 4,413,937
County of Perry, Kentucky, Solid Waste
Disposal Revenue Bonds (TJ International
Project), Series 1994,
7.0%, 6-1-2024 ........................ 1,000 1,093,750
Total ................................. 5,507,687
LOUISIANA - 1.18%
Louisiana Public Facilities Authority,
Hospital Revenue and Refunding Bonds
(Pendleton Memorial Methodist Hospital
Project), Series 1998,
5.25%, 6-1-2028 ....................... 3,000 2,868,750
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 2,215,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
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 $ 1,093,125
Total ................................. 6,176,875
MAINE - 0.57%
Maine Veterans' Homes, Revenue Bonds,
1995 Series,
7.75%, 10-1-2020 ...................... 2,810 2,957,525
MARYLAND - 0.69%
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 3,579,062
MASSACHUSETTS - 7.63%
Massachusetts Industrial Finance Agency:
First Mortgage Revenue Bonds, Reeds
Landing Project, Series 1993,
8.625%, 10-1-2023 ..................... 9,945 11,411,888
Resource Recovery Revenue Bonds (SEMASS
Project), Series 1991B,
9.25%, 7-1-2015 ....................... 4,800 5,400,000
Revenue Bonds, Glenmeadow Retirement
Community Project, Series 1996C:
8.625%, 2-15-2026 ..................... 2,200 2,868,250
8.375%, 2-15-2018 ..................... 1,260 1,622,250
Resource Recovery Revenue Refunding Bonds
(Ogden Haverhill Project),
Series 1998A Bonds,
5.6%, 12-1-2019 ....................... 2,500 2,525,000
Revenue Bonds, Beaver Country Day School
Issue, Series 1992, Subseries A,
8.1%, 3-1-2008 ........................ 1,415 1,503,437
Massachusetts Municipal Wholesale Electric
Company, Power Supply System Revenue Bonds,
1993 Series A INFLOS,
6.966%, 7-1-2018 (A) .................. 8,000 8,750,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MASSACHUSETTS (Continued)
Massachusetts Health and Educational
Facilities Authority, Revenue Bonds,
Beth Israel Hospital Issue, Series G-4,
Inverse Floating Rate Securities,
8.471%, 7-1-2025 (A) .................. $ 5,000 $ 5,756,250
Total ................................. 39,837,075
MICHIGAN - 0.24%
City of Flint Hospital Building Authority,
Revenue Rental Bonds, Series 1998B
(Hurley Medical Center),
5.375%, 7-1-2028 ...................... 1,250 1,264,062
MISSISSIPPI - 0.47%
Lowndes County, Mississippi, Solid Waste
Disposal and Pollution Control Refunding
Revenue Bonds (Weyerhaeuser Company
Project), Series 1992B, Indexed Inverse
Floating/Fixed Term Bonds,
8.25%, 4-1-2022 (A) ................... 2,000 2,472,500
MISSOURI - 5.99%
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 4,779,425
8.25%, 4-1-2002 ....................... 445 477,819
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 3,268,913
Multifamily Housing Revenue Bonds (Village
Green Apartments Project),
Series 1998,
6.25%, 4-1-2030 ....................... 1,750 1,765,312
The Industrial Development Authority of the
City of Bridgeton, Missouri, Senior Housing
Revenue Bonds (The Sarah Community Project),
Series 1998,
5.9%, 5-1-2028 ........................ 5,000 5,012,500
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MISSOURI (Continued)
The Industrial Development Authority of the
County of Taney, Missouri, Hospital Revenue
Bonds (The Skaggs Community Hospital
Association), Series 1998,
5.4%, 5-15-2028 ....................... $ 2,860 $ 2,910,050
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 ....................... 1,215 1,208,925
5.625%, 7-1-2010 ...................... 1,095 1,090,894
The Industrial Development Authority of
St. Joseph, Missouri, Multifamily Housing
Revenue Bonds (Hillcrest Village Apartments
Project), Series 1998A,
6.375%, 9-1-2028 ...................... 2,250 2,258,437
Health and Educational Facilities Authority
of the State of Missouri, Educational
Facilities Revenue Bonds (Southwest Baptist
University Project), Series 1998,
5.375%, 10-1-2023 ..................... 2,100 2,155,125
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 2,145,000
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 1,653,750
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 ..................... 1,060 1,070,240
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
MISSOURI (Continued)
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 $ 979,875
Certificates of Participation, Series 1998A,
City of Lake Saint Louis, Missouri, Lessee,
6.25%, 6-1-2005 ....................... 500 504,375
Total ................................. 31,280,640
NEVADA - 0.52%
Reno-Sparks Convention & Visitors Authority,
Nevada, Limited Obligation Medium-Term
Refunding Bonds, Series November 1, 1996,
6.0%, 11-1-2006 ....................... 2,640 2,732,400
NEW HAMPSHIRE - 1.74%
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 5,086,125
Hospital Revenue Bonds, St. Joseph
Hospital Issue, Series 1991,
7.5%, 1-1-2016 ........................ 1,000 1,076,250
Revenue Bonds, RiverWoods at Exeter
Issue, Series 1997A,
6.5%, 3-1-2023 ........................ 1,000 1,047,500
Revenue Bonds, RiverMead at Peterborough
Issue, Series 1998,
5.75%, 7-1-2028 ....................... 665 668,325
Lisbon Regional School District, New
Hampshire, General Obligation Capital
Appreciation School Bonds,
0.0%, 2-1-2013 ........................ 1,610 1,193,413
Total ................................. 9,071,613
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NEW JERSEY - 2.08%
New Jersey Economic Development Authority:
Senior Mortgage Revenue Bonds, Arbor
Glen of Bridgewater Project - Series
1996A Bonds,
8.75%, 5-15-2026 ...................... $ 3,525 $ 4,207,969
First Mortgage Revenue Fixed Rate Bonds,
Winchester Gardens at Ward Homestead
Project - Series 1996A,
8.625%, 11-1-2025 ..................... 3,000 3,483,750
New Jersey Economic Development Authority,
Economic Development Bonds, Kapkowski
Road Landfill Reclamation Improvement
District Project (City of Elizabeth),
Series 1998A:
6.357%, 4-1-2018 ...................... 2,385 2,399,906
0.0%, 4-1-2011 ........................ 1,740 787,350
Total ................................. 10,878,975
NEW MEXICO - 1.58%
New Mexico Educational Assistance Foundation:
Student Loan Purchase Bonds, Second Subordinate
1994 Series II-C (AMT),
6.0%, 12-1-2008 ....................... 2,460 2,543,025
Education Loan Bonds, Second Subordinate
Series 1998C-1,
5.5%, 11-1-2010 ....................... 2,000 1,995,000
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 3,718,750
Total ................................. 8,256,775
NEW YORK - 1.99%
Tompkins County Industrial Development
Agency, Life Care Community Revenue Bonds,
1994 (Kendal at Ithaca, Inc. Project),
7.875%, 6-1-2024 ...................... 4,035 4,282,144
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 3,108,750
New York City Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, Inverse
Rate Securities, Fiscal 1994 Series E,
6.779%, 6-15-2012 (A) ................. 2,750 3,011,250
Total.................................. 10,402,144
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
NORTH CAROLINA - 0.84%
City of Durham, North Carolina, Multifamily
Housing Revenue Bonds (Ivy Commons Project),
Series 1997,
8.0%, 3-1-2029 ........................ $ 2,250 $ 2,317,500
City of Charlotte, North Carolina, Charlotte/
Douglas International Airport, Special
Facility Refunding Revenue Bonds, Series 1998
(US Airways, Inc. Project),
5.6%, 7-1-2027 ........................ 2,075 2,077,594
Total ................................. 4,395,094
NORTH DAKOTA - 0.69%
City of Grand Forks, North Dakota, Senior
Housing Revenue Bonds (4000 Valley
Square Project), Series 1997:
6.25%, 12-1-2034 ...................... 2,000 2,045,000
6.375%, 12-1-2034 ..................... 1,500 1,537,500
Total ................................. 3,582,500
OHIO - 1.96%
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 4,065,000
City of Toledo, Ohio, Multifamily Housing
Mortgage Revenue Bonds, Series 1998-A
(Hillcrest Apartments Project),
6.125%, 12-1-2029 ..................... 4,000 4,000,000
Hamilton County, Ohio, Health System Revenue
Bonds, Providence Hospital Issue,
Series 1992,
6.875%, 7-1-2015 ...................... 2,000 2,177,500
Total ................................. 10,242,500
OKLAHOMA - 2.65%
Bixby Public Works Authority, Utility
System Revenue Bonds, Refunding
Series 1994,
7.25%, 11-1-2019 ...................... 2,685 2,987,062
The Clinton Public Works Authority,
Refunding and Improvement Revenue
Bonds, Series 1994,
6.25%, 1-1-2019 ....................... 2,575 2,729,500
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 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 ...................... 905 930,729
10.125%, 9-1-2006 ..................... 430 442,229
The Broken Arrow Public Golf Authority
(Broken Arrow, Oklahoma), Recreational
Facilities Revenue Bonds, Series 1995,
7.25%, 8-1-2020 ....................... 2,025 2,207,250
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 1,764,000
The Guthrie Public Works Authority
(Guthrie, Oklahoma), Utility System
Revenue Bonds, Series 1994A,
6.75%, 9-1-2019 ....................... 1,415 1,558,269
Total ................................. 13,847,539
OREGON - 1.35%
Klamath Falls Intercommunity Hospital
Authority, Gross Revenue Bonds,
Series 1994 (Merle West Medical Center
Project),
7.1%, 9-1-2024 ........................ 3,500 3,893,750
Myrtle Creek Building Authority, Gross
Revenue Bonds, Series 1996A (Myrtle Creek
Golf Course Project),
8.0%, 6-1-2021 ........................ 3,000 3,138,750
Total ................................. 7,032,500
PENNSYLVANIA - 3.02%
Delaware County Authority (Pennsylvania),
First Mortgage Revenue Bonds
(Riddle Village Project),
Series 1994,
8.25%, 6-1-2022 ....................... 4,000 4,900,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 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 $ 3,745,000
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
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 ....................... 1,725 1,811,250
Total ................................. 15,744,844
RHODE ISLAND - 0.42%
City of Providence, Rhode Island, Special
Obligation Tax Increment Bonds, Series D,
6.65%, 6-1-2016 ....................... 2,000 2,212,500
SOUTH CAROLINA - 2.45%
South Carolina Jobs - Economic Development
Authority, Solid Waste Recycling Facilities
Revenue Bonds (Santee River Rubber Project),
Tax-Exempt Series 1998A,
8.0%, 12-1-2014 ....................... 4,000 4,030,000
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 2,103,750
Senior Current Interest Bonds, Series 1998A,
5.25%, 1-1-2023 ....................... 2,000 1,872,500
McCormick County, South Carolina, Hospital
Facilities Revenue Refunding and Improvement
Bonds, Series 1997 (McCormick Health Care
Center Project),
7.0%, 3-1-2018 ........................ 2,530 2,612,225
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
SOUTH CAROLINA (Continued)
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 $ 2,190,000
Total ................................. 12,808,475
SOUTH DAKOTA - 0.40%
South Dakota Health and Educational
Facilities Authority, Refunding Revenue
Bonds (Westhills Village Retirement
Community Issue), Series 1993,
7.25%, 9-1-2013 ....................... 2,000 2,092,500
TENNESSEE - 1.50%
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 2,186,625
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 2,167,500
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 1,990,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TENNESSEE (Continued)
Upper Cumberland Gas Utility District
(of Cumberland County, Tennessee),
Gas System Revenue Bonds, Series 1996,
7.0%, 3-1-2016 ........................ $ 1,400 $ 1,512,000
Total ................................. 7,856,125
TEXAS - 4.34%
AllianceAirport Authority, Inc., Special
Facilities Revenue Bonds:
American Airlines, Inc. Project,
Series 1991,
7.0%, 12-1-2011 ....................... 4,700 5,663,500
Federal Express Corporation Project,
Series 1996,
6.375%, 4-1-2021 ...................... 4,000 4,355,000
Gulf Coast Waste Disposal Authority, Waste
Disposal Revenue Bonds (Valero Energy
Corporation Project), Series 1998,
5.6%, 4-1-2032 ........................ 3,490 3,529,263
Alvarado Industrial Development Corporation,
Industrial Development Revenue Bonds
(Rich-Mix Products of Texas, Inc. Project),
Series 1996,
7.75%, 3-1-2010 ....................... 2,955 3,036,262
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 2,385,675
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 2,085,000
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
TEXAS (Continued)
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 $ 1,625,625
Total ................................. 22,680,325
UTAH - 4.92%
Tooele County, Utah, Hazardous Waste
Treatment Revenue Bonds (Union Pacific
Corporation/USPCI, Inc. Project),
Series A,
5.7%, 11-1-2026 ....................... 15,000 15,187,500
IPA (a political subdivision of the State of
Utah), Power Supply Revenue Refunding Bonds,
1993 Series A, Inverse Floating Rate
Securities,
7.266%, 7-1-2021 (A) .................. 5,950 6,448,312
Utah Housing Finance Agency, Revenue Bonds
(RHA Community Services of Utah, Inc.
Project), Series 1997A,
6.875%, 7-1-2027 ...................... 2,440 2,568,100
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 ................................. 25,703,912
VERMONT - 1.52%
Vermont Industrial Development Authority,
Mortgage Revenue Bonds, Wake Robin
Corporation Project, Series 1993A:
8.75%, 4-1-2023 ....................... 4,465 5,073,356
8.75%, 3-1-2023 ....................... 2,500 2,840,625
Total ................................. 7,913,981
VIRGIN ISLANDS - 0.49%
Virgin Islands Public Finance Authority
Revenue and Refunding Bonds (Virgin
Islands Matching Fund Loan Notes),
Series 1998 A (Senior Lien/Refunding):
5.625%, 10-1-2025 ..................... 1,500 1,546,875
5.5%, 10-1-2018 ....................... 1,000 1,025,000
Total ................................. 2,571,875
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
VIRGINIA - 1.86%
Norfolk Redevelopment and Housing Authority,
Multifamily Rental Housing Facility
Revenue Bonds, Series 1996 (1016 Limited
Partnership-Sussex Apartments Project),
8.0%, 9-1-2026 ........................ $ 3,495 $ 3,661,013
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 3,123,750
Pocahontas Parkway Association, Route 895
Connector, Toll Road Revenue Bonds, Senior
Capital Appreciation Bonds, Series 1998B,
0.0%, 8-15-2018 ....................... 9,000 2,925,000
Total ................................. 9,709,763
WASHINGTON - 1.19%
Port of Anacortes, Washington, Revenue and
Refunding Bonds, 1998 Series A (AMT),
5.625%, 9-1-2016 ...................... 3,790 3,794,737
Housing Authority of the City of Seattle,
Low-Income Housing Assistance Revenue
Bonds, 1995 (GNMA Collateralized Mortgage
Loan - Kin On Project),
7.4%, 11-20-2036 ...................... 1,142 1,343,278
Pilchuck Development Public Corporation
(State of Washington), Special Facilities
Airport Revenue Bonds, Series 1993
(TRAMCO, INC. Project),
6.0%, 8-1-2023 ........................ 1,000 1,050,000
Total ................................. 6,188,015
WEST VIRGINIA - 0.32%
Upshur County, West Virginia, Solid Waste
Disposal Revenue Bonds (TJ International
Project), Series 1995,
7.0%, 7-15-2025 ....................... 1,500 1,651,875
See Notes to Schedule of Investments on page 26.
<PAGE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL BONDS (Continued)
WISCONSIN - 2.11%
Wisconsin Health and Educational Facilities
Authority, Revenue Bonds, Series 1995:
National Regency of New Berlin, Inc.
Project,
8.0%, 8-15-2025 ....................... $ 4,500 $ 5,096,250
Hess Memorial Hospital Association, Inc.
Project,
7.75%, 11-1-2015 ...................... 3,400 3,905,750
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 2,005,500
Total ................................. 11,007,500
WYOMING - 0.20%
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 1,041,250
TOTAL MUNICIPAL BONDS - 96.73% $505,101,507
(Cost: $469,171,706)
TOTAL SHORT-TERM SECURITIES - 1.53% $ 8,001,584
(Cost: $8,001,584)
TOTAL INVESTMENT SECURITIES - 98.26% $513,103,091
(Cost: $477,173,290)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.74% 9,092,028
NET ASSETS - 100.00% $522,195,119
See Notes to Schedule of Investments on page 26.
<PGAE>
THE INVESTMENTS OFUNITED MUNICIPAL HIGH INCOME FUND, INC.
SEPTEMBER 30, 1998
Notes to Schedule of Investments
(A) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in
effect at September 30, 1998.
(B) The security does not bear interest for an initial period of time and
subsequently becomes interest bearing.
(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
SEPTEMBER 30, 1998
(In Thousands, Except for Per Share Amounts)
Assets
Investment securities - at value
(Notes 1 and 3) ................................. $513,103
Cash ............................................. 2,500
Receivables:
Interest ........................................ 8,854
Investment securities sold ...................... 1,655
Fund shares sold ................................ 487
Prepaid insurance premium ........................ 12
--------
Total assets .................................. 526,611
--------
Liabilities
Payable for investment securities purchased ...... 2,500
Payable to Fund shareholders ..................... 1,374
Dividends payable ................................ 399
Accrued service fee (Note 2) ..................... 92
Accrued transfer agency and dividend
disbursing (Note 2) ............................. 32
Accrued management fee (Note 2) .................. 7
Accrued accounting services fee (Note 2) ......... 5
Accrued distribution fee (Note 2) ................ 1
Other ............................................ 6
--------
Total liabilities ............................. 4,416
--------
Total net assets ............................. $522,195
========
Net Assets
$1.00 par value capital stock, authorized --
100,000; shares outstanding -- 91,701
Capital stock ................................... $ 91,701
Additional paid-in capital ...................... 383,028
Accumulated undistributed income:
Accumulated undistributed net realized
gain on investment transactions ............... 11,536
Net unrealized appreciation in value of
investments ................................... 35,930
--------
Net assets applicable to outstanding
units of capital ............................. $522,195
========
Net asset value per share (net assets divided
by shares outstanding) ........................... $5.69
=====
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL HIGH INCOME FUND, INC.STATEMENT OF OPERATIONS
For the Fiscal Year Ended SEPTEMBER 30, 1998
(In Thousands)
Investment Income
Interest and amortization (Note 1B) .............. $32,609
-------
Expenses (Note 2):
Investment management fee ....................... 2,461
Service fee ..................................... 991
Transfer agency and dividend disbursing ......... 374
Accounting services fee ......................... 60
Custodian fees .................................. 25
Audit fees ...................................... 16
Distribution fees ............................... 6
Legal fees ...................................... 5
Other ........................................... 152
-------
Total expenses ................................ 4,090
-------
Net investment income ........................ 28,519
-------
Realized and Unrealized Gain on Investments
(Notes 1 and 3)
Realized net gain on investments ................. 12,638
Unrealized appreciation in value of
investments during the period ................... 5,793
-------
Net gain on investments ......................... 18,431
-------
Net increase in net assets resulting
from operations .............................. $46,950
=======
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL HIGH INCOME FUND, INC.STATEMENT OF CHANGES IN NET ASSETS
(Dollars In Thousands)
For the fiscal year
ended September 30,
-----------------------------
1998 1997
Increase in Net Assets -------------- ------------
Operations:
Net investment income ............... $ 28,519 $ 26,384
Realized net gain on
investments ....................... 12,638 6,520
Unrealized appreciation ............. 5,793 13,764
-------- --------
Net increase in net assets
resulting from operations ........ 46,950 46,668
-------- --------
Distributions to shareholders from (Note 1D):*
Net investment income ............... (28,519) (26,384)
Realized net gains on investment
transactions ...................... (6,027) (1,102)
-------- --------
(34,546) (27,486)
-------- --------
Capital share transactions:
Proceeds from sale of shares:
Class A (11,013,539 and 14,043,014
shares, respectively) ............ 62,198 76,429
Class Y (3,493 and 0 shares,
respectively) .................... 20 ---
Proceeds from reinvestment of
dividends and/or capital gains
distribution:
Class A (4,977,786 and 4,105,285
shares, respectively) ............ 27,654 22,249
Class Y (15 and 0 shares,
respectively) .................... --- ---
Payments for shares redeemed:
Class A (9,576,509 and 8,115,149
shares, respectively) ............ (53,817) (43,928)
Class Y (3,508 and 0 shares,
respectively) .................... (20) ---
-------- --------
Net increase in net assets
resulting from capital
share transactions ............... 36,035 54,750
-------- --------
Total increase ................... 48,439 73,932
Net Assets
Beginning of period .................. 473,756 399,824
-------- --------
End of period ........................ $522,195 $473,756
======== ========
Undistributed net investment
income ............................ $--- $---
==== ====
*See "Financial Highlights" on pages 30 - 31.
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL HIGH INCOME FUND, INC.FINANCIAL HIGHLIGHTS
Class A Shares
For a Share of Capital Stock Outstanding
Throughout Each Period:
For the fiscal year ended
September 30,
------------------------------------
1998 1997 1996 1995 1994
------- ------ ------ ------ ------
Net asset value,
beginning of
period ........... $5.55 $5.31 $5.27 $5.12 $5.53
----- ----- ----- ----- -----
Income from investment
operations:
Net investment
income........... .32 .34 .34 .35 .34
Net realized and
unrealized gain
(loss) on
investments ..... .21 .25 .04 .17 (0.34)
----- ----- ----- ----- -----
Total from investment
operations ....... .53 .59 .38 .52 0.00
----- ----- ----- ----- -----
Less distributions:
Declared from net
investment income (0.32) (0.34) (0.34) (0.35) (0.34)
From capital gains (0.07) (0.01) (0.00) (0.00) (0.07)
In excess
of capital gains. (0.00) (0.00) (0.00) (0.02) (0.00)
----- ----- ----- ----- -----
Total distributions. (0.39) (0.35) (0.34) (0.37) (0.41)
----- ----- ----- ----- -----
Net asset value, end
of period ........ $5.69 $5.55 $5.31 $5.27 $5.12
===== ===== ===== ===== =====
Total return* ...... 9.88% 11.45% 7.40% 10.63% 0.05%
Net assets, end
of period (in
millions) ......... $522 $474 $400 $383 $345
Ratio of expenses to
average net
assets ........... 0.82% 0.78% 0.81% 0.76% 0.76%
Ratio of net investment
income to average
net assets ....... 5.72% 6.19% 6.41% 6.75% 6.39%
Portfolio turnover
rate ............. 35.16% 19.47% 26.91% 19.07% 26.26%
*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.FINANCIAL HIGHLIGHTS
Class Y Shares
For a Share of Capital Stock Outstanding
Throughout the Period:
For the period
from July 1, 1998*
to August 25, 1998
-------------------
Net asset value,
beginning of
period ........... $5.64
-----
Income from investment
operations:
Net investment
income........... 0.05
Net realized and
unrealized gain on
investments ..... 0.01
-----
Total from investment
operations ....... 0.06
Less distributions
declared from net
investment income (0.05)
-----
Net asset value, end
of period ........ $5.65
=====
Total return ....... 1.07%
Net assets, end
of period (000
omitted) .......... $0
Ratio of expenses to
average net
assets ........... 0.61%**
Ratio of net investment
income to average
net assets ....... 5.99%**
Portfolio turnover
rate ............. 35.16%**
*Class Y shares commenced operations on July 1, 1998 and continued operations
until August 25, 1998 when all outstanding Class Y shares were redeemed at the
ending net asset value shown in the table.
**Annualized.
See notes to financial statements.
<PAGE>
UNITED MUNICIPAL HIGH INCOME FUND, INC.NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 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 carryovers.
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 $18.9 billion of
combined net assets at September 30, 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
<PAGE>
$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 $1,691,251 out of which
W&R paid sales commissions of $978,031 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 $17,478, which are included in other
expenses.
W&R is a subsidiary of Waddell & Reed Financial, Inc., a holding company,
and a direct subsidiary of Waddell & Reed Financial Services, Inc., a holding
company.
NOTE 3 -- Investment Security Transactions
Purchases of investment securities, other than U.S. Government and short-
term securities, aggregated $194,695,718, while proceeds from maturities and
sales aggregated $172,055,386. Purchases of short-term securities aggregated
$241,461,705, while proceeds from maturities and sales aggregated $240,009,290.
<PAGE>
No U.S. Government securities were bought or sold during the period ended
September 30, 1998.
For Federal income tax purposes, cost of investments owned at September 30,
1998 was $477,286,097, resulting in net unrealized appreciation of $35,816,994,
of which $37,380,404 related to appreciated securities and $1,563,410 related to
depreciated securities.
NOTE 4 -- Federal Income Tax Matters
For Federal income tax purposes, the Fund realized capital gain net income
of $12,280,208 during its fiscal year ended September 30, 1998, of which a
portion was paid to shareholders during the period ended September 30, 1998.
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 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.
<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, 1998, and the related statements of operations for
the fiscal year then ended and changes in net assets for each of the fiscal
years in the two-year period then ended, and the financial highlights for each
of the fiscal periods in the five-year period 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 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
September 30, 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 September 30, 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
November 6, 1998
<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, 1998:
<TABLE>
<CAPTION>
PERCENTAGE OF AMOUNTS PAID REPORTABLE AS:
-------------------------------------------------------------------------
For Individuals For Corporations
--------------------------------------- -------------------------------
Record Ordinary Long-Term Capital Gain Exempt Non- Long-Term Exempt
Date Income 28% Rate 20% Rate Interest Qualifying CapitalGain Interest
- ------------ -------- --------- --------- -------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
October
through
December
1997 1.4300% ---% ---% 98.5700% 1.4300% ---% 98.5700%
December 1997 1.8341% 56.8381% 41.3278% ---% 1.8341% 98.1659% ---%
January
through
September
1998 1.3151% ---% ---% 98.6849% 1.3151% ---% 98.6849%
</TABLE>
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>
DIRECTORSKeith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, Menlo Park, California
Linda Graves, Topeka, Kansas
Joseph Harroz, Jr., Norman, Oklahoma
John F. Hayes, Hutchinson, Kansas
Robert L. Hechler, Overland Park, Kansas
Henry J. Herrmann, Overland Park, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Ronald C. Reimer, Mission Hills, Kansas
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Frederick Vogel III, Milwaukee, Wisconsin
OFFICERS
Robert L. Hechler, President
Henry J. Herrmann, Vice President
John M. Holliday, Vice President
Theodore W. Howard, Vice President and Treasurer
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(9-98)
printed on recycled paper
