UMB SCOUT FUNDS
KANSAS TAX-EXEMPT BOND FUND
QUARTERLY REPORT
SEPTEMBER 30, 1998
A no-load mutual fund with primary emphasis
on long-term growth of both capital and income.
TO THE SHAREHOLDERS
The UMB Scout Kansas Tax-Exempt Bond Fund closed the quarter ended
September 30, 1998, at $10.05 per share, compared with $9.94 at June 30,
1998. Investors earned a total return (price change and reinvested
distributions) of 2.15% for the quarter. The Fund seeks current income
exempt from regular federal income tax and Kansas state personal income
tax.
Income from the Fund may be subject to the federal Alternative Minimum
Tax as well as certain state and local taxes. Capital gains are not
exempt from federal income tax.
The Comparative Rates of Return table in this report compares the Fund
with the Lehman Brothers 5-Year Municipal Index. It is important to
remember that a general market index reflects bonds that do not have a
state income tax benefit, as your Fund does, and these bonds thus may
garner larger yields and returns.
The Fund's assets are growing steadily and reached a total asset value
of $7,898,595 as of September 30, 1998, compared with $6,035,957 for the
quarter ended June 30, 1998.
The calendar for Kansas municipal bond issues was active during the
quarter as some municipalities took advantage of lower borrowing costs
and gained substantial savings.
The Fund gained a benefit from the fact that many of its holdings are in
"non-callable" bonds. We have not had to replace these bonds with
those offering lower rates in the current market. Several of the
holdings have been "pre-refunded" or escrowed to their call date or
final maturity in 100% U.S. government securities. This improves the
quality of the Fund's holdings and increases the value of the Fund
because of the higher rated, higher quality bonds.
The forward calendar of new municipal bond issues was quiet at the end
of the quarter. Saline County Unified School District 305 (Salina,
Kansas) has a $98 million issue on the November 3, 1998, ballot. We are
not concerned by this apparent lack of supply because the secondary
municipal market is active and constant.
We want to remind all shareholders that the Fund name is changing to UMB
Scout Kansas Tax-Exempt Bond Fund, Inc., effective October 31, 1998.
We thank you for your continued participation in the UMB Scout Kansas
Tax-Exempt Bond Fund. Please feel free to call us if you have any
questions regarding your investment in the Fund.
Sincerely,
/s/M. Kathryn Gellings
M. Kathryn Gellings
/s/Rex W. Matlack
Rex W. Matlack
UMB Investment Advisors
FUND DIVERSIFICATION - PIE CHART
COMPARATIVE RATES OF RETURN
as of September 30, 1998
Month Quarter Inception
UMB Scout Kansas Tax-Exempt
Bond Fund 0.84% 2.15% 2.78%
Lehman Brothers
5-Year Municipals Index* 1.03% 2.63% 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 or mutual funds (there are no direct
investments or fees in these indices).
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 ("FDIC").
These shares involve investment risks, including the possible loss of
the principal invested.
FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 (unaudited)
Statement of Net Assets
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<CAPTION>
Face Market
Amount Description Value
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<S> <C>
KANSAS
$ 165,000 Barton County Kansas, Series A, 4.75%, due September 1, 2011 $ 168,919
115,000 Bonner Springs Kansas, Series A, 4.125%, due October 1, 1999 115,195
100,000 Bonner Springs Kansas, Series B, 4.125%, due August 1, 2000 100,280
100,000 City of Wichita Kansas G.O., 4.50%, due September 1, 2009 102,125
250,000 Cloud County Kansas, Unified School District 333, 5.10%,
due September 1, 2004 263,750
55,000 Concordia Kansas, Water & Sewer Rev., 4.70%, due November 1, 2007 56,169
25,000 Derby Kansas G.O., Series A, 4.65%, due June 1, 2009 25,688
100,000 Desoto Kansas Temp. Notes, 3.85%, due September 1, 1999 100,240
100,000 Douglas County Kansas, Unified School District 497, 4.50%,
due September 1, 2002 102,000
200,000 Douglas County Kansas, Unified School District 497,
Series A, 4.30%, due September 1, 2005 204,250
10,000 Ellsworth Kansas, Public Building Rev., 4.50%, due June 1, 2005 10,000
20,000 Ellsworth Kansas, Public Building Rev., 4.70%, due June 1, 2007 20,000
5,000 Eudora Kansas Water & Sewer Rev., 3.90%, due October 1, 1999 4,998
85,000 Finney County Kansas, Unified School District 457, 5.50%,
due October 1, 1999 86,846
50,000 Garden City Kansas, 4.10%, due November 1, 2004 50,562
100,000 Johnson County Kansas, Series A, 5.10%, due September 1, 2000 102,750
100,000 Johnson County Kansas Park Facility, 4.90%, due September 1, 2009 100,000
100,000 Johnson County Kansas, Unified School District 229, Series A,
5.20%, due October 1, 2003 106,500
100,000 Johnson County Kansas, Unified School District 229, Series A,
5.50%, due October 1, 2005 107,125
50,000 Johnson County Kansas, Unified School District 229, Series A,
5.125%, due October 1, 2006 53,938
125,000 Johnson County Kansas, Unified School District 229, Series B,
4.00%, due September 1, 2003 126,406
25,000 Johnson County Kansas, Unified School District 231,
Refinance & Improvement, Series A, 5.25%, due October 1, 2002 26,406
300,000 Johnson County Kansas, Unified School District 231,
Refinance & Improvement, Series A, 5.10%, due October 1, 2004 315,000
5,000 Johnson County Kansas, Unified School District 231,
Refinance & Improvement, Series A, 4.35%, due October 1, 2005 5,131
5,000 Johnson County Kansas, Unified School District 512,
Shawnee Mission, Series C, 6.00%, due October 1, 2007 5,106
100,000 Johnson County Kansas, Unified School District 512,
5.00%, due October 1, 2009 105,125
5,000 Junction City Kansas, Water & Sewer Rev.,
Series A, 4.50%, due September 1, 2003 5,156
5,000 Kansas City Kansas, Series A, 5.625%, due September 1, 2009 5,425
200,000 Kansas State Dept. of Transportation Highway Rev.,
4.25% due September 1, 2001 203,250
5,000 Kansas State Dept. of Transportation Highway Rev.,
4.80%, due March 1, 2002 5,169
200,000 Kansas State Dept. of Transportation Highway Rev.,
5/10% due March 1, 2005 212,250
50,000 Kansas State Dev. Finance Auth., Board of Regents Rev.,
4.70%, due March 1, 2002 50,688
100,000 Kansas State Dev. Finance Auth., Board of Regents Rev.,
4.80%, due March 1, 2003 101,250
100,000 Kansas State Dev. Finance Auth., Board of Regents Rev.,
4.875%, due March 1, 2004 100,875
5,000 Kansas State Dev. Finance Auth., Comprehensive Rehab Project Rev.,
4.60%, due October 1, 2002 5,137
250,000 Kansas State Dev. Finance Auth., Skills Program Rev.,
5.30%, due June 1, 2000 255,272
5,000 Kansas State Highway Rev., Series A, 4.50%, due July, 1, 2003 5,150
5,000 Kansas State Turnpike Auth., 4.50%, due September 1, 2000 5,081
75,000 Lawrence Kansas, 5.10%, due September 1, 2001 76,072
150,000 Lawrence Kansas, Series P, 5.20%, due September 1, 2002 154,125
275,000 Leawood Kansas, Series A, 4.90%, due September 1, 2001 284,625
5,000 Leawood Kansas, Series A, 5.00%, due September 1, 2002 5,169
100,000 Leawood Kansas, 4.35%, due September 1, 2004 102,625
100,000 Miami County Kansas, Unified School District 367,
4.35%, due September 1, 2005 102,375
100,000 Overland Park Kansas, 6.45%, due September 1, 1999 101,265
200,000 Overland Park Kansas, Internal Improvements, 4.20%, due September 1, 2002 203,750
5,000 Overland Park Kansas, Series B, 5.20%, due September 1, 2002 5,206
100,000 Prairie Village Kansas, Series B, 5.10%, due September 1, 2005 103,250
5,000 Riley County Kansas, Series A, 4.35%, due September 1, 2007 5,125
35,000 Riley County Kansas, Unified School District 383, 5.00%, due November 1, 1998 35,044
5,000 Riley County Kansas, Unified School District 383, 4.70%, due November 1, 2003 5,219
155,000 Salina Kansas Water & Sewer, Series B, 4.05%, due October 1, 2001 156,162
100,000 Salina Kansas Water & Sewer, Series B, 4.40%, due October 1, 2008 101,875
5,000 Sedgwick County Kansas, Series B, 4.20%, due August 1, 1999 5,037
300,000 Sedgwick County Kansas, Series A, 5.00%, due August 1, 2002 310,125
5,000 Sedgwick County Kansas, Unified School District 260,
4.60%, due October 1, 2010 5,113
200,000 Sedgwick County Kansas, Unified School District 263,
5.30%, due September 1, 2003 213,750
340,000 Sedgwick County Kansas, Unified School District 265,
5.40%, due October 1, 2005 366,775
180,000 Shawnee County Kansas, Series C, 5.30%, due September 1, 2001 188,100
200,000 Shawnee County Kansas, Series A, 4.30%, due December 1, 2004 203,750
35,000 Shawnee County Kansas, Series D, 4.15%, due September 1, 2005 35,437
145,000 Topeka Kansas, Series C, 5.00%, due August 15, 2000 148,081
5,000 Topeka Kansas, Series A, 5.25%, due August 15, 2011 5,181
70,000 Topeka Kansas, Water Works Improvement & Rev., 4.30%, due August 1, 2007 70,525
30,000 Wellington Kansas, Electric Water Works & Sewer Utility Rev.,
4.60%, due May 1, 2007 31,088
100,000 Wichita Kansas Sales Tax, 4.50%, due June 1, 2000 101,375
70,000 Wichita Kansas, Water & Sewer Utilities, 3.85%, due April 1, 2001 70,263
75,000 Wichita Kansas, Series 728, 5.50%, due September 1, 2001 77,254
300,000 Wyandotte County Kansas, Unified School District 204,
5.20%, due September 1, 2004 310,875
7,003,828
ALABAMA
$ 200,000 Columbia Alabama P.C.R. (Alabama Power Project),
Var. Rate, due October 1, 2022 $ 200,000
GEORGIA
635,000 Burke County Georgia P.C.R. (Georgia Power), Series 5,
Var. Rate, due July 1, 2024 635,000
TOTAL INVESTMENTS - 99.24% $ 7,838,828
Other assets less liabilities - 0.76% 59,767
TOTAL NET ASSETS - 100.00%
(equivalent to $10.05 per share; 10,000,000 shares of $1.00 par value
capital shares authorized; 786,174 shares outstanding) $ 7,898,595
Valuation of securities is on the basis of amortized cost, which
approximates market value.
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
UMB Scout Kansas Tax-Exempt Bond 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.
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