UMB SCOUT FUNDS
CAPITAL PRESERVATION FUND
Semiannual Report December 31, 1998
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.
TO THE SHAREHOLDERS
The UMB Scout Capital Preservation Fund closed the quarter ended December 31,
1998, at $8.91 per share and had a total return (price change and reinvested
distributions) of -0.99%. The Fund began trading February 23, 1998. Its
objective is to outpace commodity or raw material inflation over the long-
term by investing in common stocks of companies whose business is related to
the production and distribution of raw materials. These investments may be in
domestic or foreign securities.
Net deposits almost doubled the size of the Fund during the quarter.
Consequently, our stock position as a percentage of total assets was reduced
to 33% at December 31, 1998, from 66% at September 30, 1998. The Fund also
bought inflation-indexed U.S. Treasury notes as a strategic response to
commodity sales by many foreign countries, who were attempting to shore up
their finances in the face of global economic concerns.
This Treasury holding serves to temporarily lower the risk and volatility of
the portfolio as the market adjusts. The immediate benefit of this move is
evident in our quarterly return compared with the Goldman Sachs Commodity
Index return of -17.73%.
New positions were added this quarter in Casey's General Stores, Baker Hughes
and Kerr McGee Corp. The Fund sold holdings in Exxon Corp., and received
shares of Halliburton Co. in exchange for shares of Dresser Industries, Inc.,
as a result of the merger of these two companies. We increased holdings in
ASA Ltd.; Newmont Mining Corp.; ISCO, Inc.; and Valmont Industries, Inc.; and
decreased holdings in Barrick Gold Corp.; Homestake Mining Co.; Phelps Dodge
Corp.; Placer Dome, Inc., WMC Limited and Royal Dutch Petroleum Co.
Our continued strategy in the new year will be to invest in stocks expected
to outpace commodity inflation as we seek to minimize risk and volatility
when possible.
For the six months ended December 31, 1998, shareholders received an ordinary
income dividend of $.11 per share, a short-term capital gain of $.02 per
share and no long-term capital gain.
Thank you for your investment in the UMB 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
CHART - FUND DIVERSIFICATION
Energy 8.8%
Capital Goods 4.4%
Consumer Staples 0.7%
Fixed Income 29.2%
Transportation
& Services 1.5%
Basic Materials 16.5%
Consumer Cyclical 0.8%
Cash & Equivalents 38.1%
As of December 31, 1998, Statement of Assets. Subject to change.
COMPARATIVE RATES OF RETURN
as of December 31, 1998
Quarter Inception
UMB Scout Capital
Preservation Fund -0.99% -9.60%
Goldman Sachs Commodity Index* -17.73% -29.67%
Consumer Price Index 0.18% N.A.
Producer Price Index D Finished Goods 0.46% N.A.
Inception - February 23, 1998.
Performance data contained in this report are for past periods only. Past
performance is not indicative of future results. Investment return and share
value will fluctuate, and redemption value may be more or less than original
cost.
*Unmanaged index of stocks, bonds, commodities or mutual
funds (there are no direct investments or fees in these indices).
Index of average prices paid by various sectors of the U.S.
economy, as calculated by the U.S. Department of Labor.
HISTORICAL PER SHARE RECORD
Income & Cumulative*
Net Short-Term Long-Term Value Per
Asset Gains Gains Share Plus
Value Distribution Distribution Distributions
12/31/98 $ 8.91 0.13 - $ 9.04
*Does not assume any compounding of reinvested distributions.
Table shows calendar distributions and net asset values.
TOP TEN EQUITY HOLDINGS
Market Percent
Value (000'S) of Total
Barrick Gold Corp. $ 15.6 1.81%
Helmerich & Payne, Inc. 15.5 1.79%
Newmont Mining Corp. 14.5 1.67%
Isco, Inc. 14.2 1.65%
Valmont Industries, Inc. 13.9 1.61%
Engelhard Corp. 13.7 1.58%
Rio Tinto PLC 13.6 1.57%
Canadian Pacific Ltd. 13.2 1.53%
Homestake Mining Co. 12.9 1.49%
Placer Dome, Inc. 12.7 1.46%
Top Ten Equity Holdings Total: $139.8 16.16%
As of December 31, 1998, statement of assets. Subject to change.
Shares of the UMB 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 (OFDICO). These shares
involve investment risks, including the possible loss of the principal
invested.
FINANCIAL STATEMENTS December 31, 1998 (unaudited)
STATEMENT OF NET ASSETS
Market
Shares Company Value
COMMON STOCKS - 32.71%
Basic Materials - 16.50%
800 ASA Ltd. $ 12,450
800 Barrick Gold Corp. 15,600
800 Broken Hill Propietary Ltd. 11,500
700 Cyprus Amax Minerals Co. 7,000
100 Deltic Timber Corp. 2,037
700 Engelhard Corp. 13,650
400 Georgia Pacific Corp. Timber Group 9,525
1,400 Homestake Mining Co. 12,863
200 Nalco Chemical Co. 6,200
800 Newmont Mining Corp. 14,450
100 Phelps Dodge Corp. 5,087
1,100 Placer Dome, Inc. 12,650
300 Rio Tinto PLC 13,594
500 WMC Ltd. 6,000
142,606
Capital Goods - 4.45%
2,500 Isco, Inc. 14,219
1,400 Layne Christensen Co. 10,325
1,000 Valmont Industries, Inc. 13,875
38,419
Consumer Cyclical - 0.75%
500 Caseys General Stores 6,516
Consumer Staples - 0.71%
450 Midwest Grain Products, Inc. 6,131
Energy - 8.77%
600 Baker Hughes Inc. 10,613
600 Imperial Oil Ltd. 9,638
150 Halliburton Co. 4,444
800 Helmerich & Payne, Inc. 15,500
300 Kerr McGee Corp. 11,475
1,300 Maverick Tube Corp. 7,231
100 Royal Dutch Petroleum Co. 4,788
500 Union Pacific Resources Group, Inc. 4,531
250 USX-Marathon Group 7,531
75,751
Transportation & Services - 1.53%
700 Canadian Pacific Ltd. 13,212
TOTAL COMMON STOCKS - 32.71% 282,635
FACE Market
Amount Description Value
U.S. GOVERNMENT SECURITIES - 29.16%
$ 253,873 U.S. Treasury Notes,
3.625%, due July 15, 2002 $ 251,968
REPURCHASE AGREEMENT - 37.62%
325,000 Northern Trust Co.,
4.85%, due January 4, 1999
(Collateralized by U.S. Treasury Notes,
5.875%, due February 28, 1999) 325,000
TOTAL INVESTMENTS - 99.49% $ 859,603
Other assets less liabilities - 0.51% 4,423
TOTAL NET ASSETS - 100.00%
(equivalent to $8.91 per share;
10,000,000 shares of $1.00 par value
capital shares authorized;
96,974 shares outstanding) $ 864,026
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS December 31, 1998 (unaudited)
STATEMENT OF ASSETS AND LIABILITIES
ASSETS:
Investment securities, at market value
(identified cost 930,452) $ 859,603
Cash (269)
Dividends receivable 466
Interest receivable 4,226
Total assets 864,026
NET ASSETS $ 864,026
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 948,861
Accumulated undistributed income:
Net investment income 468
Net realized loss on investment transactions (14,440)
Net unrealized depreciation on investments (70,863)
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 864,026
Capital shares, $1.00 par value
Authorized 10,000,000
Outstanding 96,974
NET ASSET VALUE PER SHARE $ 8.91
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS Six Months Ended DECEMBER 31, 1998 (unaudited)
STATEMENT OF OPERATIONS
INVESTMENT INCOME:
Income:
Dividends $ 3,334
Interest 5,978
9,312
Expenses:
Management fees 2,419
Net investment income 6,893
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss from investment transactions (14,440)
Decrease in net unrealized depreciation on investments (44,990)
Net realized and unrealized loss on investments (59,430)
Net decrease in net assets resulting from operations $ (52,537)
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JANUARY 13, 1998
DECEMBER 31, 1998 (CAPITALIZATION) TO
(UNAUDITED) JUNE 30, 1998
</CAPTION>
<S> <C> <C>
DECREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 6,893 $ 3,883
Net realized gain (loss) from investment activities (14,440) 1,611
Increase in net unrealized depreciation on investments (44,990) (27,484)
Net decrease in net assets resulting from operations (52,537) (21,990)
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (10,308) -
Decrease in net assets from distributions (10,308) -
INCREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 45,918 and 56,610 shares sold 414,032 573,218
Net asset value of 1,327 shares issued for
reinvestment of distributions 11,879 -
425,911 573,218
Cost of 5,306 and 248 shares redeemed (47,755) (2,513)
Net increase in net assets from capital
share transactions 378,156 570,705
Total increase in net assets 315,311 548,715
NET ASSETS:
Beginning of period 548,715 -
End of period (including undistributed
net investment income of $3,883 and $3,883,
respectively) $ 864,026 $ 548,715
*Distributions to shareholders:
Income dividends per share $ 0.13 $ -
</TABLE>
See accompanying Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - The Fund is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. A summary of significant
accounting policies that the Fund uses in the preparation of its financial
statements follows. The policies are in conformity with generally accepted
accounting principles.
Investments - Common stocks traded on a national securities exchange are
valued at the last reported sales price on the last business day of the
period or, if no sale was reported on that date, at the average of the last
reported bid and asked prices. Securities traded over-the-counter are valued
at the average of the last reported bid and asked prices. Short-term
obligations are valued at amortized cost, which approximates market value.
Investment transactions are recorded on the trade date. Interest income is
recorded daily. Dividend income and distributions to shareholders are
recorded on the ex-dividend dates. Realized gains and losses from investment
transactions and unrealized appreciation and depreciation of investments are
reported on the identified cost basis.
Federal Income Taxes - The Fund's policy is to comply with the requirements
of the Internal Revenue Code that are applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
Amortization - Discounts and premiums on securities purchased are amortized
over the life of the respective securities.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from those
estimates.
2. PURCHASES AND SALES OF SECURITIES - The aggregate amounts of security
transactions during the six months ended December 31, 1998 (excluding
repurchase agreements and short-term securities), were as follows:
Other than
U.S. Government U.S. Government
Securities Securities
Purchases $ 160,317 $ 254,057
Proceeds from sales 130,677 -
3. MANAGEMENT FEES - UMB Bank, n.a. is the Fund's manager and investment
adviser and provides or pays the cost of all management, supervisory and
administrative services required in the normal operation of the Fund. This
includes investment management; fees of the custodian, independent public
accountants and legal counsel; remuneration of officers and directors; rent;
and shareholder services, including maintenance of the shareholder accounting
system and transfer agency. Not considered normal operating expenses and
therefore payable by the Fund are taxes, interest, fees and the other charges
of governments and their agencies for qualifying the Fund's shares for sale,
special accounting and legal fees and brokerage commissions. UMB BankOs
management fees are based on average daily net assets of the Fund at the
annual rate of .85 of one percent of net assets. Certain officers and/or
directors of the Fund are also officers and/or directors of Jones & Babson,
Inc., which serves as the Fund's underwriter and distributor.
4. REPURCHASE AGREEMENTS - Securities purchased under agreements to resell
are held by the Fund's custodian and investment counsel, UMB Bank, n.a. The
custodian monitors the market values of the underlying securities which they
have purchased on behalf of the Fund to ensure that the collateral is
sufficient to protect the Fund in the event of default by the seller.
This report has been prepared for the information of the Shareholders of UMB
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 UMB
Scout Funds are offered only by the Prospectus, a copy of which may be
obtained from Jones & Babson, Inc.
Umb Scout Funds
100% No-Load Mutual Funds
Stock Fund
Regional Fund
WorldWide Fund
Capital Preservation Fund
Balanced Fund
Bond Fund
Kansas Tax-Exempt Bond Fund*
Money Market Fund
Tax-Free Money Market Fund
*Available in Kansas and Missouri only.
Manager and Investment Counsel
UMB Bank, n.a., Kansas City, Missouri
Auditors
Baird, Kurtz & Dobson, Kansas City, Missouri
Legal Counsel
Stradley, Ronon, Stevens & Young, LLP
Philadelphia, Pennsylvania
Custodian
UMB Bank, n.a., Kansas City, Missouri
Underwriter, Distributor
and Transfer Agent
Jones & Babson, Inc.
Kansas City, Missouri
UMB SCOUT FUNDS
P.O. Box 410498
Kansas City, MO 64141-0498
Toll Free 800-996-2862
www.umb.com
"UMB" and "Scout" are registered service marks of UMB Financial Corporation.
UMB Financial Corporation also claims service mark rights to the Scout
design.
JB151D(3/99) 505511