Scout SM
Kansas
Tax-Exempt
Bond Fund
A no-load mutual fund
that seeks current income
exempt from regular federal
income tax and Kansas state
personal income taxes by
investing in municipal
bonds or debt instruments.
Quarterly Report
March 31, 1998
TO THE SHAREHOLDERS
The Scout Kansas Tax-Exempt Bond Fund was approved by the Securities and
Exchange Commission on February 23, 1998.
On April 1, the assets of the former Kansas Common Tax-Exempt Bond Fund
were merged into this new mutual fund, creating a fund of approximately
$5,600,000 in total assets. The greater asset value will allow the Fund
to purchase larger blocks of bonds and at a lower price, creating the
potential for a higher yield for shareholders.
The new-issue calendar has been very active during the last 30 days for
Kansas new bond issuance. The municipal borrowers are realizing lower
interest rates and investors are receiving lower yields as a result.
Municipalities that have been in the market since the inception of the
Fund include (ratings in parentheses): City of Overland Park (Moody's
Aaa/Standard & Poor's AAA); Sedgwick County (Aa1/AA); Kansas Department
of Transportation (Aa2/AA); and Miami County Unified School District
367, Osawatomie (No Ratings).
Municipal yields have remained constant for the first quarter of 1998,
and demand for tax-exempt income has kept pace with the supply of
municipal bonds. For the second quarter, the supply of municipal bonds
should be brisk as municipalities complete their borrowing for summer
projects. The refunding of outstanding bonds also will continue as long
as the U.S. Treasury 30-year bond stays in the 5.75% to 6.00% range.
We appreciate your participation in the Scout Kansas Tax-Exempt Bond
Fund as part of your investment portfolio, and we welcome your comments
and questions.
Sincerely,
/s/M. Kathryn Gellings
M. Kathryn Gellings
/s/Rex W. Matlack
Rex W. Matlack
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
Units Description Value
ALABAMA
15,000 Columbia Alabama Industrial Dev. Board,
Pollution Control Rev. (Alabama Power Co.),
Series D,
Var. Rate, due October 1, 2022 $ 15,000
KANSAS
5,000 Eudora Kansas Water & Sewer Rev.,
3.90% due October 1, 1999 4,987
5,000 Johnson County Kansas,
Unified School District #231,
Refinance & Improvement, Series A,
4.35%, due October 1, 2005 4,969
5,000 Johnson County Kansas,
Unified School District #512,
Shawnee Mission, Series C,
6.00%, due October 1, 2007 5,125
5,000 Junction City Kansas, Water & Sewer Rev.,
Series A, 4.50%, due September 1, 2003 5,063
5,000 Kansas City Kansas, Series A,
5.625%, due September 1, 2009 5,294
5,000 Kansas State Dept. of Transportation
Highway Rev., 4.80%, due March 1, 2002 5,131
5,000 Kansas State Dev. Finance Auth.,
Comprehensive Rehab Project Rev.,
4.60%, due October 1, 2002 5,087
5,000 Kansas State Highway Rev., Series A,
4.50%, due July, 1, 2003 5,069
5,000 Kansas State Turnpike Auth.,
4.50%, due September 1, 2000 5,062
5,000 Leawood Kansas, Series A,
5.00%, due September 1, 2002 5,131
5,000 Overland Park Kansas, Series B,
5.20%, due September 1, 2002 5,188
5,000 Riley County Kansas, Series A,
4.35%, due September 1, 2007 4,938
5,000 Riley County Kansas,
Unified School District #383,
4.70%, due November 1, 2003 5,125
5,000 Sedgwick County Kansas, Series B,
4.20%, due August 1, 1999 5,031
5,000 Sedgwick County Kansas #260,
4.60%, due October 1, 2010 4,931
5,000 Topeka Kansas, Series A,
5.25%, due August 15, 2011 5,113
81,244
TOTAL INVESTMENTS - 24.55% $ 96,244
Other assets less liabilities - 75.45% 295,769
TOTAL NET ASSETS - 100.00%
(equivalent to $9.95 per share;
10,000,000 shares of $1.00 par value
capital shares authorized;
39,412 shares outstanding) $ 392,013
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 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 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
JB154A 5/98
