UMB SCOUT FUNDS
Kansas Tax-Exempt Bond Fund
Semiannual Report December 31, 1998
A no-load mutual fund that seeks current income exempt from
regular federal income tax and Kansas state personal income tax
by investing in municipal bonds or debt instruments.
TO THE SHAREHOLDERS
The UMB Scout Kansas Tax-Exempt Bond Fund closed the quarter ended December
31, 1998, at $10.01 per share and investors realized a total return (price
change and reinvested distributions) of 0.63% 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 Kansas municipal new-issue market was busy during the quarter as
municipalities borrowed their final loan amounts for 1998. From October
through mid-November, there were no new competitive issues on the Kansas tax-
exempt calendar. Municipalities were attempting to sort out the changes in
the other markets and determine when they could get the lowest borrowing
costs. However, the first two weeks of December then turned very busy with
last-minute borrowings and a few refundings or refinancings.
Your Fund purchased several new investments during the quarter: Haysville
Water & Wastewater Utility System (Nonrated), Sabetha Electric Revenue
(Nonrated), Unified Government of Wyandotte County/Kansas City, Kansas
Utility System Revenue (Moody's rated A-1/Standard & Poor's rated A+) and
Shawnee County Unified School District 501, Topeka (Moody's rated A-1).
The Unified Government of Wyandotte County/Kansas City, Kansas was created on
October 1, 1997, when Wyandotte County and the City of Kansas City, Kansas,
merged their respective governments. Such a combined entity is becoming more
common as government bodies try to create economies of scale and avoid
duplicating offices on the county and city levels. The bonds purchased in the
Fund were from an issue that refunded the old debt at lower interest cost to
the users of the utility.
For the six months ended December 31, 1998, shareholders received an ordinary
income dividend of $.21 per share and no short-term or long-term capital
gains.
We appreciate your interest in the UMB Scout Kansas Tax-Exempt Bond Fund. We
look forward to 1999 and the completion of the Fund's first year on February
23, 1999. Please feel free to call us if you have any questions or comments.
Sincerely,
/s/M. Kathryn Gellings
M. Kathryn Gellings
/s/Rex W. Matlack
Rex W. Matlack
UMB Investment Advisors
CHART - FUND DIVERSIFICATION
Kansas 96.1%
Other 3.9%
As of December 31, 1998, Statement of Assets. Subject to change.
COMPARATIVE RATES OF RETURN
as of December 31, 1998
Month Quarter Inception
UMB Scout Kansas Tax-Exempt
Bond Fund 0.35% 0.63% 3.42%
Lehman Brothers
5-Year Municipals Index* 0.35% 0.82% 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).
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 $10.01 $0.33 - $10.34
*Does not assume any compounding of reinvested distributions.
Table shows calendar distributions and net asset values.
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
FACE MARKET
AMOUNT DESCRIPTION VALUE
KANSAS
$ 165,000 Barton County Kansas, Series A,
4.75%, due September 1, 2011 $ 167,475
115,000 Bonner Springs Kansas, Series A,
4.125%, due October 1, 1999 115,223
100,000 Bonner Springs Kansas, Series B,
4.125%, due August 1, 2000 100,213
100,000 City of Wichita Kansas G.O.,
4.5%, due September 1, 2009 102,125
250,000 Cloud County Kansas,
Unified School District 333,
5.10%, due September 1, 2004 262,500
55,000 Concordia Kansas, Water & Sewer Rev.,
4.70%, due November 1, 2007 55,894
25,000 Derby Kansas G.O., Series A,
4.65%, due June 1, 2009 25,500
100,000 Desoto Kansas Temp. Notes,
3.85%, due September 1, 1999 100,109
100,000 Douglas County Kansas,
Unified School District 497,
4.50%, due September 1, 2002 102,125
200,000 Douglas County Kansas,
Unified School District 497, Series A,
4.30%, due September 1, 2005 203,000
10,000 Ellsworth Kansas, Public Building Rev.,
4.50%, due June 1, 2005 9,962
20,000 Ellsworth Kansas, Public Building Rev.,
4.70%, due June 1, 2007 19,900
5,000 Eudora Kansas Water & Sewer Rev.,
3.90%, due October 1, 1999 4,996
85,000 Finney County Kansas,
Unified School District 457,
5.50%, due October 1, 1999 86,444
50,000 Garden City Kansas,
4.10%, due November 1, 2004 50,437
30,000 Haysville Kansas, Water & Sewer Rev.,
4.50%, due October 1, 1999 30,282
100,000 Johnson County Kansas, Series A,
5.10%, due September 1, 2000 102,625
100,000 Johnson County Kansas Park Facility,
4.90%, due September 1, 2009 99,500
125,000 Johnson County Kansas,
Unified School District 229,
Series B, 4.00%, due September 1, 2003 125,781
100,000 Johnson County Kansas,
Unified School District 229,
Series A, 5.20%, due October 1, 2003 105,875
100,000 Johnson County Kansas,
Unified School District 229,
Series A, 5.50%, due October 1, 2005 106,375
50,000 Johnson County Kansas,
Unified School District 229,
Series A, 5.125%, due October 1, 2006 53,375
25,000 Johnson County Kansas,
Unified School District 231,
Refinance & Improvement, Series A,
5.25%, due October 1, 2002 26,344
300,000 Johnson County Kansas,
Unified School District 231,
Refinance & Improvement, Series A,
5.10%, due October 1, 2004 314,625
5,000 Johnson County Kansas,
Unified School District 231,
Refinance & Improvement, Series A,
4.35%, due October 1, 2005 5,100
5,000 Johnson County Kansas,
Unified School District 512,
Shawnee Mission, Series C,
6.00%, due October 1, 2007 5,074
100,000 Johnson County Kansas,
Unified School District 512,
5.00%, due October 1, 2009 105,250
5,000 Junction City Kansas, Water & Sewer Rev.,
Series A,
4.50%, due September 1, 2003 5,150
5,000 Kansas City Kansas, Series A,
5.625%, due September 1, 2009 5,362
200,000 Kansas State Dept. of Transportation
Highway Rev.,
4.25%, due September 1, 2001 202,500
5,000 Kansas State Dept. of Transportation
Highway Rev.,
4.80%, due March 1, 2002 5,137
200,000 Kansas State Dept. of Transportation
Highway Rev.,
5.10%, due March 1, 2005 211,000
50,000 Kansas State Dev. Finance Auth.,
Board of Regents Rev.,
4.70%, due March 1, 2002 50,500
100,000 Kansas State Dev. Finance Auth.,
Board of Regents Rev.,
4.80%, due March 1, 2003 101,000
100,000 Kansas State Dev. Finance Auth.,
Board of Regents Rev.,
4.875%, due March 1, 2004 100,625
5,000 Kansas State Dev. Finance Auth.,
Comprehensive Rehab Project Rev.,
4.60%, due October 1, 2002 5,112
250,000 Kansas State Dev. Finance Auth.,
Skills Program Rev.,
5.30%, due June 1, 2000 254,335
5,000 Kansas State Highway Rev., Series A,
4.50%, due July, 1, 2003 5,144
5,000 Kansas State Turnpike Auth.,
4.50%, due September 1, 2000 5,075
75,000 Lawrence Kansas,
5.10%, due September 1, 2001 75,706
30,000 Lawrence Kansas G.O.,
4.35%, due September 1, 2002 30,563
150,000 Lawrence Kansas, Series P,
5.20%, due September 1, 2002 153,563
275,000 Leawood Kansas, Series A,
4.90%, due September 1, 2001 283,250
5,000 Leawood Kansas, Series A,
5.00%, due September 1, 2002 5,169
100,000 Leawood Kansas,
4.35%, due September 1, 2004 102,250
100,000 Miami County Kansas,
Unified School District 367,
4.35%, due September 1, 2005 101,750
100,000 Overland Park Kansas,
6.45%, due September 1, 1999 100,489
200,000 Overland Park Kansas,
Internal Improvements,
4.20%, due September 1, 2002 203,000
5,000 Overland Park Kansas, Series B,
5.20%, due September 1, 2002 5,187
100,000 Prairie Village Kansas, Series B,
5.10%, due September 1, 2005 102,875
5,000 Riley County Kansas, Series A,
4.35%, due September 1, 2007 5,069
5,000 Riley County Kansas,
Unified School District 383,
4.70%, due November 1, 2003 5,181
80,000 Sabetha Kansas Electric Revenue,
4.00%, due September 1, 2004 79,000
155,000 Salina Kansas Water & Sewer, Series B,
4.05%, due October 1, 2001 155,775
100,000 Salina Kansas Water & Sewer, Series B,
4.40%, due October 1, 2008 101,250
5,000 Sedgwick County Kansas, Series B,
4.20%, due August 1, 1999 5,029
300,000 Sedgwick County Kansas, Series A,
5.00%, due August 1, 2002 309,000
5,000 Sedgwick County Kansas,
Unified School District 260,
4.60%, due October 1, 2010 5,063
200,000 Sedgwick County Kansas,
Unified School District 263,
5.30%, due September 1, 2003 212,250
340,000 Sedgwick County Kansas,
Unified School District 265,
5.40%, due October 1, 2005 363,800
180,000 Shawnee County Kansas, Series C,
5.30%, due September 1, 2001 187,200
35,000 Shawnee County Kansas, Series D,
4.15%, due September 1, 2005 35,219
50,000 Shawnee County Kansas,
Unified School District 501,
4.30%, due February 1, 2005 51,081
200,000 Shawnee Kansas, Series A,
4.30%, due December 1, 2004 202,500
145,000 Topeka Kansas, Series C,
5.00%, due August 15, 2000 147,668
5,000 Topeka Kansas, Series A,
5.25%, due August 15, 2011 5,162
70,000 Topeka Kansas, Water Works Improvement & Rev.,
4.30%, due August 1, 2007 70,000
30,000 Wellington Kansas,
Electric Water Works & Sewer Utility Rev.,
4.60%, due May 1, 2007 30,750
100,000 Wichita Kansas Sales Tax,
4.50%, due June 1, 2000 101,375
20,000 Wichita Kansas, Water & Sewer Utilities,
3.85%, due April 1, 2001 20,050
75,000 Wichita Kansas, Series 728,
5.50%, due September 1, 2001 76,936
300,000 Wyandotte County Kansas,
Unified School District 204,
5.20%, due September 1, 2004 309,375
50,000 Wyandotte County Kansas,
Utility Service Revenue,
4.25%, due September 1, 2009 49,625
7,129,209
ALABAMA
$ 200,000 Columbia Alabama P.C.R.
(Alabama Power Project),
Var. Rate, due October 1, 2022 $ 200,000
TOTAL INVESTMENTS - 98.79% $ 7,329,209
Other assets less liabilities - 1.21% 89,497
TOTAL NET ASSETS - 100.00%
(equivalent to $10.01 per share;
10,000,000 shares of $1.00 par value
capital shares authorized;
741,466 shares outstanding) $ 7,418,706
Valuation of securities is on the basis of amortized cost, which approximates
market value.
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 $7,153,217) $ 7,329,209
Cash (20,120)
Interest receivable 109,617
Total assets 7,418,706
NET ASSETS $ 7,418,706
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 7,241,804
Accumulated undistributed income:
Net investment income 4
Net realized gain on investment transactions 462
Net unrealized appreciation on investments 176,436
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 7,418,706
Capital shares, $1.00 par value
Authorized 10,000,000
Outstanding 741,466
NET ASSET VALUE PER SHARE $ 10.01
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS
SIX MONTHS ENDED DECEMBER 31, 1998 (unaudited)
STATEMENT OF OPERATIONS
INVESTMENT INCOME:
Income:
Interest $ 165,096
Expenses:
Management fees 18,036
Net investment income 147,060
UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investment transactions 463
Increase in net unrealized appreciation of investments 85,619
Net unrealized gain on investments 86,082
Net increase in net assets resulting from operations $ 233,142
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>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 147,060 $ 61,716
Net realized gain from investment transactions 463 -
Increase in net unrealized appreciation on investments 85,619 130,864
Net increase in net assets resulting from operations 233,142 192,580
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (147,060) (61,716 )
INCREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 247,685 and 638,344 shares sold 2,473,781 6,213,178
Net asset value of 1,066 and 200 shares issued
for reinvestment of distributions 10,666 1,986
2,484,447 6,215,164
Cost of 118,548 and 31,310 shares redeemed (1,187,780) (310,071)
Net increase in net assets from capital share transactions 1,296,667 5,905,093
Net increase in net assets 1,382,749 6,035,957
NET ASSETS:
Beginning of period 6,035,957 -
End of period $ 7,418,706 $ 6,035,957
*Distributions to shareholders:
Income dividends per share $ 0.21 $ 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 non-
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 - Debt securities (other than short-term obligations), including
listed issues, are valued at market on the basis of valuations furnished by
an independent pricing service which utilizes both dealer-supplied valuations
and formula-based techniques. Short-term obligations are valued at amortized
cost, which approximates market value. Investment transactions are recorded
on the trade date. Investment income is recorded daily 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 short-
term securities), were as follows:
Other than
U.S. Government U.S. Government
Securities Securities
Purchases $ 8,954,810 $ -
Proceeds from sales 7,810,463 -
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 Bank's
management fees are based on average daily net assets of the Fund at the
annual rate of .50 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.
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 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.
JB154D(3/99) 505512
