Scout Tax Free Money Market Fund
Annual Report
June 30, 1995
TO THE SHAREHOLDERS
For the fiscal year ended June 30, 1995, Scout Tax-Free Money Market Fund
returned an annual yield of 3.05%. This figure increased to 3.10% for those
shareholders who reinvested their dividends.
During the year, Federal Reserve tightening actions dominated the markets and
significantly increased short-term interest rates. Between February, 1994 and
February, 1995 the Fed increased the federal funds rate by an astonishing 300
basis points. This dramatic increase in the cost of short-term money was
clearly beneficial to Fund shareholders who realized their best annual return
since 1991.
By late March it was evident that the economy was slowing and as the fiscal
year came to a close, the Federal Reserve's aggressive actions began to take
their toll on the economy. As evidence continued to mount, the market began
to anticipate that the end of the tightening was at hand, and barring some
unexpected positive economic news, the next move would be to lower rates.
On July 6, 1995, the fed funds rate was reduced by 25 basis points.
With potential market turbulence in mind, Scout Tax-Free Money Market Fund
will adhere to its long-standing policy of focusing on quality and liquidity,
without the use of derivatives. This policy has and will continue to serve
our shareholders well during difficult market environments.
We appreciate your continued interest in Scout Tax-Free Money Market Fund and
the entire family of Scout Funds.
Sincerely,
Larry D. Armel
President
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 federally
insured by the Federal Deposit Insurance Corporation or any other federal
agency. These shares involve investment risks, including the possible loss of
the principal amount invested.
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Tables indicating Quality Ratings and Market Sector Diversification
of Scout Tax-Free Money Market Fund are shown below:
Quality Ratings
92% MIGI/P1 Commercial Paper, Variable Rate Demand Bonds and
Notes
8% Aaa/Aa General Obligation and Revenue Bonds
100%
Market Sector Diversification
General Obligation Bonds and Notes 5%
Revenue Bonds 10
Tax-Exempt Commercial Paper 16
Variable Rate Demand Bonds and Notes 69
TOTAL 100%
<PAGE>
FINANCIAL STATEMENTS
Statement of Net Assets
June 30, 1995
Principal Market
State Amount Description Cost Value
ALABAMA
$ 600,000 Mobile, Alabama Industrial Dev.
Board Solid Waste Disposal Rev.
(Scott Paper Co.), Series A (LOC:
Morgan Guaranty Trust Co.),
Fltg. Rate, 4.05%,
due December 1, 2019 $ 600,000 $ 600,000
2,000,000 Mobile, Alabama Industrial Dev.
Board Solid Waste Disposal Rev.
(Scott Paper Co.), Series D (LOC:
Swiss Bank Corp.),
Fltg. Rate, 4.05%,
due December 1, 2019 2,000,000 2,000,000
ARIZONA
700,000 Phoenix, Arizona GO, Series 95-1,
Fltg. Rate, 4.25%, due June 1, 2019 700,000 700,000
2,000,000 Salt River Project Agricultural
Improvement & Power District,
Arizona Tax-Exempt Commercial Paper
(Line: First Interstate Bank Arizona),
3.60%, due August 10, 1995 2,000,000 2,000,000
CONNECTICUT
1,200,000 Connecticut Economic Recovery
Notes (SBPA: National Westminster
Bank; Canadian Imperial Bank of
Commerce; Industrial Bank of Japan),
Fltg. Rate, 3.95%, due June 1, 1996 1,200,000 1,200,000
FLORIDA
3,000,000 Jacksonville, Florida Tax-Exempt
Commercial Paper,
4.15%, due September 11, 1995 3,000,000 3,000,000
2,500,000 Jacksonville Electric Auth., Florida
(Escrowed in U.S. Government Securities),
9.50%, due October 1, 1995 2,583,219 2,583,219
GEORGIA
3,000,000 Burke Cnty., Georgia Dev. Auth.
Pollution Control Rev. (Oglethorpe
Power Corp.) (FGIC Insured), Series A
(LOC: Credit Locale de France),
Fltg. Rate,
4.15%, due January 1, 2019 3,000,000 3,000,000
2,900,000 Burke Cnty., Georgia Dev. Auth.
Pollution Control Rev. (Georgia
Power Co.), 5th Series, Fltg. Rate,
4.25%, due July 1, 2024 2,900,000 2,900,000
HAWAII
1,500,000 Hawaii GO, Series BU,
7.00%, due November 1, 1995 1,513,408 1,513,408
KANSAS
3,500,000 Kansas Dept. of Transportation
Highway Rev., Series 94 B,
Fltg. Rate, 4.15%,
due September 1, 2014 3,500,000 3,500,000
KENTUCKY
2,135,000 Jefferson Cnty., Kentucky
Pollution Control Tax-Exempt
Commercial Paper (Louisville
Gas & Electric),
3.10%, due August 2, 1995 2,135,000 2,135,000
LOUISIANA
3,500,000 Louisiana Offshore Terminal Auth.
Deepwater Port Rev. Ref., Fltg. Rate,
4.10%, due September 1, 2006 3,500,000 3,500,000
1,400,000 Louisiana Recovery Dist. Sales Tax Rev.,
Fltg. Rate, 4.35%, due July 1, 1997 1,400,000 1,400,000
MASSACHUSETTS
2,000,000 Massachusetts Bay Transportation
Auth. Tax-Exempt Commercial Paper
(LOC: State Street Bank),
3.60%, due August 7, 1995 2,000,000 2,000,000
MISSISSIPPI
1,600,000 Jackson Cnty., Mississippi Port
Facilities Rev. (Chevron USA Inc.),
Fltg. Rate,
4.05%, due December 1, 2016 1,600,000 1,600,000
NEVADA
3,200,000 Clark Cnty., Nevada Airport
Improvement Rev., Series 95A-1
(LOC: Toronto-Dominion Bank),
Fltg. Rate, 4.15%, due July 1, 2025 3,200,000 3,200,000
NEW JERSEY
700,000 Mercer Cnty., New Jersey Improvement
Auth. Rev. (Pooled Government Loan
Program) (LOC: Credit Suisse Bank),
Fltg. Rate, 3.55%,
due November 1, 1998 700,000 700,000
NEW MEXICO
1,250,000 New Mexico Severence Tax Refunding,
Series A,
4.15%, due July 1, 1995 1,250,000 1,250,000
NEW YORK
1,400,000 New York City Municipal Water
Financing Auth. Water & Sewer
System Rev. (FGIC Insured),
Series G, Fltg. Rate,
4.10%, due June 15, 2024 1,400,000 1,400,000
NORTH CAROLINA
2,000,000 Winston-Salem, North Carolina
Water & Sewer System Rev.
(SBPA: Wachovia Bank NC),
Fltg. Rate, 4.10%,
due June 1, 2014 2,000,000 2,000,000
3,100,000 Wake Cnty., North Carolina
Industrial Fac. & Pollution
Control Financing Auth. Rev.
(Carolina Power & Light Co.),
Series A, Fltg. Rate,
4.00%, due May 1, 2015 3,100,000 3,100,000
OHIO
650,000 Ohio Pollution Control Rev.
Ref. (Alcoa), Fltg. Rate,
4.10%, due October 1, 2000 650,000 650,000
PENNSYLVANIA
600,000 Delaware Cnty., Pennsylvania
Industrial Dev. Auth. Solid
Waste Rev. (Scott Paper),
Series E (LOC: National
Westminster Bank), Fltg. Rate,
4.15%, due December 1, 2018 600,000 600,000
TEXAS
1,200,000 Angelina & Neches River Auth.,
Texas Industrial Dev. Corp.
Solid Waste Rev. (TEEC-Temple
Inland), Series 84 B
(LOC:Credit Suisse Bank),
Fltg. Rate, 4.65%, due May 1, 2014 1,200,000 1,200,000
300,000 Angelina & Neches River Auth.,
Texas Industrial Dev. Corp.
Solid Waste Rev. (TEEC-Temple
Inland), Series 84 D (LOC:
Credit Suisse Bank), Fltg. Rate,
4.65%, due May 1, 2014 300,000 300,000
900,000 Calhoun Cnty., Texas Navigation
Industrial Dev. Auth. Pollution
Control Rev. Ref. (ALCOA),
Series 87 (LOC: Credit Suisse
Bank), Fltg. Rate,
4.20%, due March 1, 2001 900,000 900,000
1,300,000 Grapevine, Texas Industrial Dev.
Corp. Rev. (American Airlines),
Series A-1 (LOC: Morgan Guaranty
Trust Co.), Fltg. Rate,
4.35%, due December 1, 2024 1,300,000 1,300,000
400,000 Grapevine, Texas Industrial Dev.
Corp. Rev. (American Airlines),
Series A-3 (LOC: Morgan Guaranty
Trust Co.), Fltg. Rate,
4.35%, due December 1, 2024 400,000 400,000
1,000,000 Grapevine, Texas Industrial Dev.
Corp. Rev. (American Airlines),
Series B-1 (LOC: Morgan Guaranty
Trust Co.), Fltg. Rate,
4.35%, due December 1, 2024 1,000,000 1,000,000
1,100,000 Harris Cnty., Texas Industrial Dev.
Corp. Pollution Control Rev.
(Exxon Corp.), Series 84 B,
Fltg. Rate,
4.25%, due March 1, 2024 1,100,000 1,100,000
3,800,000 North Central Texas Health
Facility Dev. Corp. Rev.
(Presbyterian Medical Center)
(MBIA Insured), Series D
(SBPA: NationsBank NC),
Fltg. Rate, 4.35%
due December 1, 2015 3,800,000 3,800,000
2,000,000 Texas Public Finance Auth. GO
Tax-Exempt Commercial Paper,
Series 93 A,
4.20%, due July 11, 1995 2,000,000 2,000,000
1,800,000 Texas Tax & Rev. Anticipation Notes,
5.00%, due August 31, 1995 1,802,427 1,802,427
UTAH
1,900,000 Emery Cnty., Utah Pollution
Control Rev. (Pacificorp)
(AMBAC Insured) (Line: Bank
of Nova Scotia),
Fltg. Rate, 4.25%,
due November 1, 2024 1,900,000 1,900,000
1,500,000 Intermountain Power Agency,
Utah Power Supply Rev.,
Series 85 F (SBPA: Industrial
Bank of Japan),
3.60%, due August 17, 1995 1,500,000 1,500,000
2,200,000 Intermountain Power Agency,
Utah Power Supply Rev.,
Series 85 F (SBPA: Bank
of America) (Optional Putable
9/15/95 @ 100),
4.15%, due July 1, 2015 2,200,000 2,200,000
VERMONT
1,000,000 Vermont Educational & Health
Buildings Financing Agency
Rev. (Middlebury College),
Series 88 A (Optional Putable
11/1/95 @ 100),
4.15%, due November 1, 2027 1,000,000 1,000,000
WISCONSIN
3,400,000 Oak Creek, Wisconsin Pollution
Control Rev. (Wisconsin Electric
Power Co.), Series 86, Fltg. Rate,
4.10%, due August 1, 2016 3,400,000 3,400,000
1,600,000 Sheboygan, Wisconsin Pollution
Control Rev. (Wisconsin Power
& Light Co.), Fltg. Rate,
4.25%, due August 1, 2014 1,600,000 1,600,000
WYOMING
300,000 Lincoln Cnty., Wyoming Pollution
Control Rev. (Exxon Corp.),
Series B, Fltg. Rate,
4.25%, due November 1, 2014 300,000 300,000
300,000 Lincoln Cnty., Wyoming Pollution
Control Rev. (Exxon Corp.),
Fltg. Rate, 4.20%,
due August 1, 2015 300,000 300,000
1,500,000 Sweetwater Cnty., Wyoming Pollution
Control Rev. (Pacificorp.),
Series A (LOC: Union Bank of
Switzerland), Fltg. Rate,
4.60%, due December 1, 2014 1,500,000 1,500,000
500,000 Sweetwater Cnty., Wyoming Pollution
Control Rev. (Pacificorp.),
Series A (LOC: Union Bank of
Switzerland), Fltg. Rate,
3.95%, due July 1, 2015 500,000 500,000
1,700,000 Sublette Cnty., Wyoming Pollution
Control Rev. (Exxon Corp.),
Fltg. Rate, 4.20%,
due November 1, 2014 1,700,000 1,700,000
TOTAL INVESTMENTS - 97.70% $ 76,234,054 76,234,054
Other assets less liabilities - 2.30% 1,791,006
TOTAL NET ASSETS - 100.00%
(equivalent to $1.00 per share;
1,000,000,000 shares of $0.01 par value
capital shares authorized;
78,103,005 shares outstanding) $ 78,025,060
Line (Line of Credit)
LOC (Letter of Credit)
SBPA (Stand by Purchase Agreement)
For federal income tax purposes, the identified cost of investments owned
at June 30, 1995 was $76,234,054.
See accompanying Notes to Financial Statements.
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FINANCIAL STATEMENTS
Statement of Assets and Liabilities
June 30, 1995
ASSETS:
Investment securities, at market value
(identified cost $76,234,054) $ 76,234,054
Interest receivable 420,741
Receivable for investments sold 1,500,000
Total assets 78,154,795
LIABILITIES AND NET ASSETS:
Cash overdraft 128,789
Other liabilities 946
Total liabilities 129,735
NET ASSETS $ 78,025,060
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 78,104,143
Accumulated net realized loss on investment transactions (79,083)
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 78,025,060
Capital shares, $0.01 par value
Authorized 1,000,000,000
Outstanding 78,103,005
NET ASSET VALUE PER SHARE $ 1.00
See accompanying Notes to Financial Statements.
<PAGE>
FINANCIAL STATEMENTS
Statement of Operations
Year Ended June 30, 1995
INVESTMENT INCOME:
Income:
Interest $ 3,730,830
Expenses:
Management fees (Note 3) 516,862
Registration fees and other expenses 21,900
538,762
Net investment income 3,192,068
REALIZED LOSS ON INVESTMENTS (Note 1):
Realized loss from investment transactions:
Proceeds from sales of investments 476,775,365
Cost of investments sold 476,801,796
Net realized loss from investment transactions (26,431)
Increase in net assets resulting from operations $ 3,165,637
See accompanying Notes to Financial Statements.
<PAGE>
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
For The Two Years Ended June 30, 1995
1995 1994
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 3,192,068 $ 1,738,322
Net realized loss from investment transactions (26,431) (24,942)
Net increase in net assets resulting from
operations 3,165,637 1,713,380
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (3,192,068) (1,738,322)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ($1.00 per share) 215,514,530 207,029,029
Net asset value of shares issued for reinvestment
of distributions ($1.00 per share) 254,641 158,021
215,769,171 207,187,050
Cost of shares redeemed ($1.00 per share) (232,004,231)(178,929,319)
Net increase (decrease) from capital share
transactions (16,235,060) 28,257,731
Total increase (decrease) in net assets (16,261,491) 28,232,789
NET ASSETS:
Beginning of year 94,286,551 66,053,762
End of year $ 78,025,060 $ 94,286,551
See accompanying Notes to Financial Statements.
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NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES - The Fund is registered under the
Investment Company Act of 1940, as amended, as a diversified open-end
management investment company. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation
of its financial statements.
Investments - Valuation of securities is on the basis of amortized cost which
approximates market value. Investment transactions are recorded on the trade
date. Investment income and dividends to shareholders are recorded daily and
dividends are distributed monthly. Realized gains and losses from investment
transactions are reported on the identified cost basis.
Federal and State Taxes - The Fund's policy is to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income to its shareholders. Therefore, no
provision for federal or state tax is provided. At June 30, 1995, the Fund
has an accumulated net realized loss on sale of investments for federal
income tax purposes of $79,083, which is available to offset future taxable
gains.
2. PURCHASES AND SALES OF SECURITIES - The aggregate amounts of security
transactions during the year ended June 30, 1995, were as follows:
Purchases $ 455,862,784
Proceeds from sales 476,775,365
3. MANAGEMENT FEES - Management fees, which include all normal expenses of
the Fund other than taxes, fees and other charges of governmental agencies
for qualifying the Fund's shares for sale, special legal fees, interest and
brokerage com-missions, are paid to Jones & Babson, Inc., an affiliated
company. These fees are based on average daily net assets of the Fund at the
annual rate of one-half of one percent of net assets. Certain officers and/or
directors of the Fund are also officers and/or directors of Jones & Babson,
Inc.
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FINANCIAL HIGHLIGHTS
The following table sets forth information as to capital and income changes
for a share outstanding for each of the five years in the period ended
June 30, 1995:
1995 1994 1993 1992 1991
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.03 0.02 0.02 0.03 0.05
Less distributions:
Dividends from net investment income (0.03) (0.02) (0.02) (0.03) (0.05)
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return 3% 2% 2% 3% 5%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 78 $ 94 $ 66 $ 77 $ 67
Ratio of expenses to average net assets 0.54% 0.53% 0.52% 0.52% 0.53%
Ratio of net investment income to
average net assets 3.20% 2.06% 2.15% 3.32% 4.80%
See accompanying Notes to Financial Statements.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
of Scout Tax-Free Money Market Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the statement of net assets, of Scout Tax-Free Money Market Fund,
Inc. (formerly UMB Tax-Free Money Market Fund, Inc.) (a Maryland corporation),
as of June 30, 1995, and the related statement of operations for the year
then ended, the statements of changes in net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements and the financial highlights. Our procedures
included confirmation of securities owned as of June 30, 1995, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement and the financial
highlights presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scout Tax-Free Money Market Fund, Inc. as of June 30, 1995, the results of
its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Kansas City, Missouri,
August 4, 1995
This report has been prepared for the information of the Shareholders of
Scout Tax-Free Money Market 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.
<PAGE>
THE SCOUT FUNDS
Scout Stock Fund
A no-load mutual fund with primary emphasis
on long-term growth of both capital and income.
Scout Regional Fund
Seeks long-term growth of both capital and income by investing in smaller
regional companies.
Scout Bond Fund
Emphasis on maximum current income consistent with quality and maturity
standards.
Scout Money Market Fund
Primary emphasis on maximum income consistent with safety of principal and
maintenance of liquidity.
Scout Tax-Free Money Market Fund
Seeks to provide maximum income exempt
from federal income tax consistent with safety
of principal and maintenance of liquidity.
Scout WorldWide Fund
A diversified portfolio of stocks of established companies whose primary
business is carried on outside the United States.
For a free prospectus kit, which contains more complete information,
including all charges and expenses, write or call Jones & Babson at
1-800-996-2862. Please read the prospectus carefully before you invest or
send money. Money market funds are neither insured nor guaranteed by the U.S.
Government and there is no assurance that the funds will maintain a stable
net asset value.
