Scout SM
Capital
Preservation
Fund
A no-load mutual fund
that seeks long-term capital
growth by investing in
companies whose earnings
or tangible assets are
expected to outpace
inflation.
Quarterly Report
March 31, 1998
TO THE SHAREHOLDERS
The Scout Capital Preservation Fund was approved by the Securities and
Exchange Commission on February 23, 1998.
The goal of the Fund is to outpace commodity or raw material inflation
over the long-term through investments in commons stocks of companies
whose business is related to the production and distribution of raw
materials. These investments may be in domestic or foreign securities.
The Fund's initial investments can be divided into five sectors: gold,
water, oil, farming and timber. The investments in gold stocks seek to
take advantage of a 16-year decline in gold prices and the uncertain
direction of foreign currencies. Water is often overlooked as a precious
resource; our investments are in drilling, related chemicals and
distribution.
The price of crude oil has dropped steeply, and the Fund has invested in
stocks of oil producers. Farming investments have been made through the
stocks of food processing and agriculture companies, which are expected
to benefit from a relatively strong agricultural environment. Strong
housing markets, low interest rates and deflationary pressures are
expected to have a positive impact on the value of investments in
timber-related stocks.
The Fund can work well in a balanced portfolio as a tool for further
diversification and risk reduction. It is not recommended as a sole
investment or as a large percentage of total assets.
Thank you for your investment in the Scout Capital Preservation Fund. We
value you as a shareholder and welcome your questions and comments.
Sincerely,
/s/David R. Bagby
David R. Bagby
UMB Investment Advisors
Shares of the Scout Funds are not deposits or obligations of, nor
guaranteed by, UMB Bank, n.a. or any other banking institution; nor are
they insured by the Federal Deposit Insurance Corporation ("FDIC").
These shares involve investment risks, including the possible loss of
the principal invested.
FINANCIAL STATEMENTS
Statement of Net Assets
March 31, 1998 (unaudited)
Market
Shares Company Value
COMMON STOCKS - 54.30%
BASIC MATERIALS - 20.52%
100 ASA Ltd. $ 2,250
200 Barrick Gold Corp. 4,325
100 Deltic Timber Corp. 2,994
200 Georgia Pacific Corp. Timber Group 5,138
200 Homestake Mining Co. 2,175
100 Nalco Chemical Co. 4,056
350 Placer Dome, Inc. 4,616
50 Rio Tinto PLC 2,747
300 WMC Ltd. 4,069
32,370
CAPITAL GOODS - 19.16%
400 Calgon Carbon Corp. 4,675
100 Deere & Co. 6,194
500 Instituform Technologies, Inc., Cl. A 5,594
500 Isco, Inc. 4,375
300 Layne Christensen Co. 4,537
200 Valmont Industries, Inc. 4,850
30,225
CONSUMER STAPLES - 1.71%
200 Midwest Grain Products, Inc. 2,700
ENERGY - 12.91%
100 Helmerich & Payne, Inc. 3,125
100 Imperial Oil Ltd. 5,656
50 Repsol S.A. 2,544
300 Union Pacific Resources Group, Inc. 7,162
50 USX-Marathon Group 1,881
20,368
TOTAL COMMON STOCKS - 54.30% 85,663
Face Market
Amount Description Value
REPURCHASE AGREEMENT - 47.55%
$ 75,000 Northern Trust Co.,
5.88%, due April 1, 1998
(Collateralized by U.S. Treasury Notes,
6.25%, due April 30, 2001) $ 75,000
TOTAL INVESTMENTS - 101.85% $ 160,663
Other assets less liabilities - (1.85%) (2,932)
TOTAL NET ASSETS - 100.00%
(equivalent to $10.24 per share;
10,000,000 shares of $1.00 par value
capital shares authorized;
15,406 shares outstanding) $ 157,731
BASIS OF DETERMINING MARKET VALUE. Debt securities (other than short-
term obligations), including listed issues, are valued on the basis of
valuations furnished by a pricing service which utilizes both dealer-
supplied valuations and electronic data processing techniques. Short-
term obligations are valued at amortized cost.
This report has been prepared for the information of the Shareholders of
Scout Capital Preservation Fund, Inc., and is not to be construed as an
offering of the shares of the Fund. Shares of this Fund and of the other
Scout Funds are offered only by the Prospectus, a copy of which may be
obtained from Jones & Babson, Inc.
Board of Directors
and Officers
Board of Directors
Larry D. Armel
William E. Hoffman, D.D.S.
Eric T. Jager
Stephen F. Rose
Stuart Wien
Officers
Larry D. Armel, President
P. Bradley Adams, Vice President & Treasurer
Michael A. Brummel, Vice President
Martin A. Cramer, Vice President & Secretary
John G. Dyer, Vice President
Constance E. Martin, Vice President
Investment Counsel
UMB Bank, n.a., Kansas City, Missouri
Auditors
Baird, Kurtz & Dobson, Kansas City, Missouri
Legal Counsel
Stradley, Ronon, Stevens & Young,
Philadelphia, Pennsylvania
John G. Dyer, Kansas City, Missouri
Custodian
UMB Bank, n.a., Kansas City, Missouri
Jones & Babson
Mutual Funds
P.O. Box 410498
Kansas City, MO 64141-0498
TOLL-FREE (800) 996-2862
www.umb.com
JB151A 5/98
