UMB SCOUT FUNDS
KANSAS TAX-EXEMPT BOND FUND
SEMIANNUAL REPORT DECEMBER 31, 1999
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
UMB Bank, n.a. and the Scout Family of funds would like to
wish you and your family a Happy New Year. As we begin the
new millennium, we will take a general look at the current
state of the Kansas economy and the possibilities for its future.
The following are comments reflected in the October 29,
1999, Standard & Poor's CreditWeek Municipal State Review
for the State of Kansas: "The outlook reflects the
expectation that ongoing strong financial and capital
planning should enable the state to maintain healthy reserve
levels, and continue providing high service levels and
infrastructure improvements to an expanding economic base."
This may be due in part to Kansas' lower-than-average unemployment
figures, strong fiscal management and low level of debt.
In 1998, the State of Kansas reported an annual unemployment
rate of 3.60%, compared to the federal level of 4.30%.
The farming and agribusiness sectors have experienced the
largest drop in numbers of those who rely on this sector for
their main source of income, plus a large drop in net
revenues. The farm employment has dropped around 12% for the
year. The decrease in net revenues for farming are a result
of decreasing prices in commodities and of fewer commodities
being exported from the United States.
The manufacturing sector has also seen some jobs eliminated
in the aircraft building industries by Boeing. These cuts
are a direct result of the cutbacks in the defense budget by
the Federal Government. However, Cessna and Raytheon have
offset the Boeing layoffs with expansions at their firms in
the metropolitan Wichita area.
The State also experienced some new job creation in the
sectors of construction, finance, insurance and the general
service area. Construction continues to be the fastest-
expanding employment sector at 4.80% and will probably
remain strong in the Northeast and South Central portions of
the state, as long as interest rates remain low.
The State of Kansas continues a long history of strong general fund
balance, reporting a fund balance increase of 10.8% in 1998.
The health of the Kansas and national economies has allowed
Kansas to remain one of the better fiscally managed states.
The largest percentage expense was for the general education
account (at 68% of the 1998 total budget). There was a
slight increase in educational spending because of the
changes in the school funding formula and an increase in
total school enrollments within the state.
The debt for the municipalities in the state of Kansas and
its agencies remains low. The State cannot constitutionally
issue debt, but several of its agencies did increase their
borrowing in 1999. One of those agencies, the Kansas
Department of Transportation (KDOT), continued to borrow to
complete its long-term projects. KDFA (Kansas Development
Finance Authority) had several of its agencies borrow under
this agency umbrella during 1999. For instance, the Kansas
Board of Regents borrowed to complete building and
facilities upgrades on several university campuses and the
Department of Corrections borrowed to complete prison-
building expansion programs.
As we start the new year, we find the Kansas economy in good
shape and expect that next year will hold more of the same -
steady growth and fiscal strength. However, we feel that
borrowing by municipalities will be less in 2000 than in
1999. As fund managers, we will continue to look at all
opportunities for the fund.
The UMB Scout Kansas Tax-Exempt Bond Fund closed the quarter
ending December 31, 1999, at $9.68 per share, compared with
$10.05 per share as of September 30, 1999. Investors earned
a total return (price change and reinvested distributions)
of (.13%) for the quarter, and (.68%) for the year. The UMB
Scout Kansas Tax-Exempt Bond Fund was able to return
positive returns, in spite of negative returns in Treasury
yields and general market municipal yields. The state of
Kansas has seen a limited supply of bonds for investment,
and therefore, the yields and returns on the bonds have
remained favorable to its investors because of the steady
demand for tax-exempt income in Kansas.
Thank you for your continued investment in the UMB Scout
Kansas Tax-Exempt Bond fund and the UMB Scout family of
funds. If you have any questions, please feel free to contact us.
Sincerely,
/s/M. Kathryn Gellings
M. Kathryn Gellings
/s/Rex W. Matlack
Rex W. Matlack
UMB Investment Advisors
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") or any other
government agency. These shares involve investment risks,
including the possible loss of the principal invested.
CHART - HYPOTHETICAL GROWTH OF $10,000
CHART - COMPARATIVE RATES OF RETURN
UMB Scout Kansas Tax-Exempt Bond Fund
as of December 31, 1999
Quarter 1 Year Inception
UMB Scout Kansas Tax-Exempt
Bond Fund 0.13% 0.68% 2.21%
Lehman Brothers
5-Year Municipals Index* 0.01% 0.74% 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).
CHART - FUND DIVERSIFICATION
CHART - HISTORICAL PER-SHARE RECORD
UMB Scout Kansas Tax-Exempt Bond Fund
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
12/31/99 9.68 0.40 $ - 10.40
*Does not assume any compounding of reinvested distributions.
Table shows calendar distributions and net asset values.
FINANCIAL STATEMENTS DECEMBER 31, 1999 (UNAUDITED)
Statement of Net Assets
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT DESCRIPTION VALUE
</CAPTION>
<S> <C>
KANSAS
$ 100,000 Baldwin City Kansas, 4.38%, due September 1, 2000 $ 100,050
165,000 Barton County Kansas, Series A, 4.75%, due September 1, 2011 156,131
125,000 Bonner Springs Kansas, 4.90%, due September 1, 2009 119,844
100,000 City of Wichita Kansas, 4.50%, due September 1, 2009 93,750
150,000 Cloud County Kansas, Unified School District 333,
5.10%, due September 1, 2004 150,563
55,000 Concordia Kansas, Water & Sewer Rev., 4.70%, due November 1, 2007 52,456
25,000 Derby Kansas G.O., Series A, 4.65%, due June 1, 2009 23,938
100,000 Douglas County Kansas, Unified School District 497,
4.50%, due September 1, 2002 99,625
200,000 Douglas County Kansas, Unified School District 497, Series A,
4.30%, due September 1, 2005 193,250
10,000 Ellsworth Kansas, Public Building Rev., 4.50%, due June 1, 2005 9,538
20,000 Ellsworth Kansas, Public Building Rev., 4.70%, due June 1, 2007 18,825
50,000 Finney County Kansas, G.O., 4.30%, due December 1, 2011 45,125
50,000 Garden City Kansas, 4.10%, due November 1, 2004 48,188
50,000 Hays Kansas, 4.40%, due September 1, 2010 46,188
100,000 Johnson County Kansas, Series A, 5.10%, due September 1, 2000 100,699
100,000 Johnson County Kansas, Park Facility, 4.90%, due September 1, 2009 92,750
125,000 Johnson County Kansas, Unified School District 229, Series B,
4.00%, due September 1, 2003 122,031
100,000 Johnson County Kansas, Unified School District 229, Series A,
5.20%, due October 1, 2003 101,875
100,000 Johnson County Kansas, Unified School District 229, Series A,
5.50%, due October 1, 2005 102,000
50,000 Johnson County Kansas, Unified School District 229, Series A,
5.125%, due October 1, 2006 50,563
25,000 Johnson County Kansas, Unified School District 231, Refinance &
Improvement, Series A, 5.25%, due October 1, 2002 25,438
300,000 Johnson County Kansas, Unified School District 231, Refinance &
Improvement, Series A, 5.10%, due October 1, 2004 303,750
5,000 Johnson County Kansas, Unified School District 231, Refinance &
Improvement, Series A, 4.35%, due October 1, 2005 4,869
100,000 Johnson County Kansas, Unified School District 232, Series A,
5.00%, due March 1, 2005 100,500
100,000 Johnson County Kansas, Unified School District 512,
5.00%, due October 1, 2009 98,625
100,000 Johnson County Kansas, Water District, 4.90%, due June 1, 2012 94,875
50,000 Johnson County Kansas, Unified School District 512,
4.95%, due October 1, 2009 49,125
5,000 Junction City Kansas, Water & Sewer Rev., Series A,
4.50%, due September 1, 2003 4,963
5,000 Kansas City Kansas, Series A, 5.625%, due September 1, 2009 5,088
200,000 Kansas State Dept. of Transportation, Highway Rev.,
4.25%, due September 1, 2000 199,750
5,000 Kansas State Dept. of Transportation, Highway Rev.,
4.80%, due March 1, 2002 5,013
200,000 Kansas State Dept. of Transportation, Highway Rev.,
5.10%, due March 1, 2005 201,750
50,000 Kansas State Dev. Finance Auth., Board of Regents Rev.,
4.70%, due March 1, 2002 49,438
100,000 Kansas State Dev. Finance Auth., Board of Regents Rev.,
4.80%, due March 1, 2003 98,375
100,000 Kansas State Dev. Finance Auth., Board of Regents Rev.,
4.875%, due March 1, 2004 97,375
5,000 Kansas State Dev. Finance Auth., Comprehensive Rehab Project Rev.,
4.60%, due October 1, 2002 4,988
5,000 Kansas State, Highway Rev., Series A, 4.50%, due July 1, 2003 4,963
5,000 Kansas State, Turnpike Auth., 4.50%, due September 1, 2000 5,015
75,000 Lawrence Kansas, 5.10%, due September 1, 2000 75,066
30,000 Lawrence Kansas, G.O., 4.35%, due September 1, 2002 29,813
150,000 Lawrence Kansas, Series P, 5.20%, due September 1, 2002 150,594
275,000 Leawood Kansas, Series A, 4.90%, due September 1, 2000 277,063
5,000 Leawood Kansas, Series A, 5.00%, due September 1, 2002 5,038
100,000 Leawood Kansas, 4.35%, due September 1, 2004 98,250
100,000 Lyons County Kansas, Sales Tax Rev., 4.70%, due September 1, 2009 96,000
100,000 Miami County Kansas, Unified School District 367,
4.35%, due September 1, 2005 97,375
200,000 Overland Park Kansas, Internal Improvements,
4.20%, due September 1, 2002 198,250
5,000 Overland Park Kansas, Series B, 5.20%, due September 1, 2002 5,050
100,000 Prairie Village Kansas, Series B, 5.10%, due September 1, 2005 100,625
5,000 Riley County Kansas, Series A, 4.35%, due September 1, 2007 4,775
5,000 Riley County Kansas, Unified School District 383,
4.70%, due November 1, 2003 5,000
80,000 Sabetha Kansas, Electric Rev., 4.00%, due September 1, 2004 76,200
155,000 Salina Kansas, Water & Sewer, Series B, 4.05%, due October 1, 2000 154,031
50,000 Salina Kansas, Water & Sewer, Series B, 4.10%, due October 1, 2002 49,313
100,000 Salina Kansas, Water & Sewer, Series B, 4.40%, due October 1, 2008 94,125
300,000 Sedgwick County Kansas, Series A, 5.00%, due August 1, 2002 301,875
5,000 Sedgwick County Kansas, Unified School District 260,
4.60%, due October 1, 2010 4,719
200,000 Sedgwick County Kansas, Unified School District 263,
5.30%, due September 1, 2003 204,250
340,000 Sedgwick County Kansas, Unified School District 265,
5.40%, due October 1, 2005 348,500
50,000 Sedgwick County Kansas, Unified School District 265,
4.25%, due October 1, 2008 46,625
50,000 Sedgwick County Kansas, Unified School District 261,
4.10%, due November 1, 2009 45,375
100,000 Shawnee County Kansas, Series 3, 4.47%, due August 1, 2000 100,036
180,000 Shawnee County Kansas, Series C, 5.30%, due September 1, 2000 182,250
35,000 Shawnee County Kansas, Series D, 4.15%, due September 1, 2005 33,469
50,000 Shawnee County Kansas, Unified School District 501,
4.30%, due February 1, 2005 48,438
50,000 Shawnee County Kansas, Unified School District 501,
4.00%, due August 1, 2006 47,188
200,000 Shawnee Kansas, Series A, 4.30%, due December 1, 2004 195,500
100,000 Topeka Kansas, Series C, 5.00%, due August 15, 2000 100,606
100,000 Topeka Kansas, Refunding & Improvement Rev. Series A,
4.30% due August 15, 2005 96,625
5,000 Topeka Kansas, Series A, 5.25%, due August 15, 2011 4,944
70,000 Topeka Kansas, Water Works Improvement & Rev.,
4.30%, due August 1, 2007 65,975
30,000 Wellington Kansas, Electric Water Works & Sewer Utility Rev.,
4.60%, due May 1, 2007 29,025
100,000 Wichita Kansas, Sales Tax, 4.50%, due June 1, 2000 100,193
20,000 Wichita Kansas, Water & Sewer Utilities, 3.85%, due April 1, 2000 19,900
25,000 Winfield Kansas, Electric Rev., 4.65%, due September 1, 2000 25,053
300,000 Wyandotte County Kansas, Unified School District 204,
5.20%, due September 1, 2004 302,250
50,000 Wyandotte County Kansas, Utility Service Revenue,
4.25%, due September 1, 2009 45,875
MISSOURI
50,000 Missouri State Health & Ed., Var. Rate, due September 1, 2030 50,000
200,000 Missouri State Health & Ed., Var. Rate, due October 1, 2024 200,000
TOTAL INVESTMENTS - 98.64% 7,196,518
Other assets less liabilities - 1.36% 99,063
TOTAL NET ASSETS - 100.00%
(equivalent to $9.68 per share; 10,000,000 shares of $1.00 par value
capital shares authorized; 754,016.875 shares outstanding) $ 7,295,581
Valuation of securities is on the basis of amortized cost, which approximates
market value.
</TABLE>
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS DECEMBER 31, 1999 (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
ASSETS:
Investment securities, at market value
(identified cost $7,285,950) $ 7,196,518
Cash (9,340)
Interest receivable 108,403
Total assets 7,295,581
NET ASSETS $ 7,295,581
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 7,377,630
Accumulated undistributed income:
Net realized gain (loss) on investment
transactions 6,100
Net unrealized appreciation (depreciation)
on investments (88,149)
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 7,295,581
Capital shares, $1.00 par value
Authorized 10,000,000
Outstanding 754,017
NET ASSET VALUE PER SHARE $ 9.68
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS DECEMBER 31, 1999 (UNAUDITED)
STATEMENT OF OPERATIONS
INVESTMENT INCOME:
Income:
Interest $ 173,993
Expenses:
Management fees 18,845
Net investment income 155,148
unrealized gain ON INVESTMENTS:
Net realized gain from investment transactions 3,360
Decrease in net unrealized appreciation
of investments (102,468)
Net realized and unrealized loss
on investments (99,108)
Net increase (decrease) in net assets
resulting from operations $ 56,040
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
SIX MONTHS ENDED
DECEMBER 31, 1999 YEAR ENDED
(UNAUDITED) JUNE 30, 1999
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 155,148 $ 300,304
Net realized gain from investment transactions 3,360 2,740
Increase (decrease) in net unrealized
appreciation on investments (102,468) (116,545)
Net increase in net assets resulting
from operations 56,040 186,499
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (155,148) (300,304)
INCREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 109,747 and 352,878 shares sold 1,070,355 3,526,358
Net asset value of 1,092 and 2,641 shares issued
for reinvestment of distributions 10,648 26,318
1,081,003 3,552,676
Cost of 151,924 and 167,651 shares redeemed (1,482,049) (1,679,093)
Net increase (decrease) in net assets from
capital share transactions (401,046) 1,873,583
Net increase (decrease) in net assets (500,154) 1,759,778
NET ASSETS:
Beginning of period 7,795,735 6,035,957
End of period $ 7,295,581 $ 7,795,735
*Distributions to shareholders:
Income dividends per share $ 0.20 $ 0.40
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, 1999 (excluding short-term securities), were as
follows:
Other than
U.S. Government U.S. Government
Securities Securities
Purchases $ 2,366,043 $ -
Proceeds from sales 2,898,197 -
3. MANAGEMENT FEES - UMB Bank, n.a. is the Fund's manager
and investment advisor 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
Stock Select Fund
Regional Fund
WorldWide Fund
WorldWide Select Fund
Capital Preservation Fund
Balanced Fund
Bond Fund
Kansas Tax-Exempt Bond Fund*
Money Market Fund
Federal Portfolio
Prime Portfolio
Tax-Free Money Market Fund
*Available in Kansas and Missouri only.
INVESTMENT ADVISORS AND MANAGER
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 219757
Kansas City, MO 64121-9757
Toll Free 800-996-2862
www.umb.com
"UMB", "Scout" and the "Scout" design are registered
service marks of UMB Financial Corporation.
