TO THE SHAREHOLDERS
Scout Tax-Free Money Market Fund earned an annualized yield of 3.20% for the
six months ended December 31, 1995.
Money market funds are neither insured nor guaranteed by the U.S. Government.
There is no assurance that the fund will maintain a stable net asset value of
one dollar per share. Income from the fund may be subject to the federal
Alternative Minimum Tax as well as state and local taxes.
Late in the quarter, on December 19, in a widely anticipated move the Federal
Reserve lowered the Federal Funds rate by 25 basis points. At quarter end
three and six-month Treasury bills were down 33 and 43 basis points to yield
5.07% and 5.15% versus 5.40% and 5.57%, respectively, at the start of the
quarter. As we entered the new year the market widely anticipated further
easing, and on January 31, the Fed lowered both the Fed Funds rate and the
Discount rate by 25 basis points. The effect of this rate cut was immediately
seen in the money markets as three-month through one-year Treasury bills fell
below 5.00%.
A growing number of economists are concerned over the possibility of a
recession and, barring any unexpected strength in the economy, the market
clearly expects additional easing by the Federal Reserve at its March meeting.
We believe the possibility of a recession has, to a large extent offset the
negative impact of the failure of the President and Congress to reach an
agreement on a credible deficit reduction package. If economic weakness
continues and the Fed does reduce rates at the March meeting, yields on
money market instruments will reach their lowest levels since September of
1994.
We appreciate your continuing interest in Scout Tax-Free Money Market Fund,
Inc.
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.
<PAGE>
FINANCIAL STATEMENTS
Statement of Net Assets
December 31, 1995 (unaudited)
Principal Market
State Amount Description Value
ALABAMA
$ 1,000,000 Columbia, Alabama Industrial Dev. Board Pollution
Control Rev. Ref. (Alabama Power Co.), Series D,
Fltg. Rate, 6.00%, due October 1, 2022 $ 1,000,000
ARIZONA
1,000,000 Salt River Project Agricultural Improvement &
Power Dist., Arizona Tax-Exempt Commercial
Paper (LOC: Union Bank of Switzerland),
3.45%, due February 27, 1996 1,000,000
1,420,000 Salt River Project Agricultural Improvement
& Power Dist., Arizona Tax-Exempt Commercial
Paper (LOC: Union Bank of Switzerland),
3.65%, due March 6, 1996 1,420,000
2,000,000 Salt River Project Agricultural Improvement &
Power Dist., Arizona Tax-Exempt Commercial
Paper (LOC: Union Bank of Switzerland),
3.55%, due March 12, 1996 2,000,000
1,000,000 Tempe, Arizona GO (Pre-refunded 7/1/96 @ 102),
Fltg. Rate, 7.40%, due July 1, 1997 1,038,541
CONNECTICUT
600,000 Connecticut Economic Recovery Notes (SBPA:
National Westminster Bank; Canadian Imperial
Bank of Commerce; Industrial Bank of Japan),
Fltg. Rate, 5.10%, due June 1, 1996 600,000
COLORADO
4,000,000 Denver, Colorado City & Cnty. Rev. (Childrens
Hospital Assn.),
Fltg Rate, 5.25%, due October 1, 4,000,000
FLORIDA
1,500,000 Jacksonville, Florida Electric Auth. Tax-Exempt
Commercial Paper,
3.75%, due January 8, 1996 1,500,000
1,000,000 Jacksonville, Florida Electric Auth. Tax-Exempt
Commercial Paper (Line: Credit Suisse Bank),
3.65%, due January 30, 1996 1,000,000
1,000,000 Jacksonville, Florida Electric Auth. Tax-Exempt
Commercial Paper (LOC: Morgan Guaranty Trust
Co.), 3.40%, due March 20, 1996 1,000,000
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, 5.15%, due January 1, 2019 3,000,000
1,200,000 Burke Cnty., Georgia Dev. Auth. Pollution
Control Rev. (Georgia Power Co.), Series 5,
Fltg. Rate, 6.00%, due September 1, 2025 1,200,000
1,000,000 Georgia GO, Series B,
7.60%, due April 1, 1996 1,009,618
ILLINOIS
3,000,000 Illinois Revenue Anticipation Certificates,
4.50%, due April 12, 1996 3,007,057
1,000,000 Illinois Educational Fac. Auth. Rev. (National
Louis Univ.),
Fltg. Rate, 5.10%, due May 1, 2022 1,000,000
IOWA
3,000,000 Muscatine Cnty., Iowa Pollution Control Rev.
Ref. (Monsanto Co.),
Fltg Rate, 5.10%, due October 1, 2007 3,000,000
KANSAS
3,500,000 Kansas Dept. of Transportation Highway Rev.,
Series 94 B,
Fltg. Rate, 5.05%, due September 1, 2014 3,500,000
LOUISIANA
1,500,000 Louisiana Offshore Terminal Auth. Deepwater
Port Rev., Fltg. Rate, 6.00%, due July 1, 1997 1,500,000
900,000 Louisiana Offshore Terminal Auth. Deepwater
Port Rev. (SBPA: Swiss Bank Corp.),
Fltg. Rate, 6.00%, due July 1, 1998 900,000
700,000 Louisiana Offshore Terminal Auth. Deepwater
Port Rev. Ref. (LOC: Union Bank of Switzerland),
Fltg. Rate, 5.90%, due September 1, 2006 700,000
MASSACHUSETTS
4,000,000 Massachusetts GO Tax-Exempt Commercial Paper,
Series A (LOC: Union Bank of Switzerland),
Fltg. Rate, 3.80%, due January 10, 1996 4,000,000
2,500,000 Massachusetts Bay Transportation Auth. System
Rev. (LOC: State Street Bank) (Optional
Putable 3/1/96 @ 100), Series 84 A,
Fltg. Rate, 3.75%, due March 1, 2014 2,500,000
1,700,000 Massachusetts Industrial Finance Agency Pollution
Control Rev. Tax-Exempt Commercial Paper
(New England Power & Light Co.), Series A,
3.70%, due January 4, 1996 1,700,000
MICHIGAN
2,500,000 Delta Cnty., Michigan Economic Dev. Corp.
Environmental Improvement Rev. Tax-Exempt
Commercial Paper (Mead Paper) (LOC: Swiss
Bank), 3.60%, due February 1, 1996 2,500,000
4,100,000 Michigan State Hospital Finance Auth. Rev.
Ref. (St. Joseph Hospital Corp.),
Series A (Pre-refunded 1/1/96 @ 102),
8.125%, due July 1, 2005 4,182,000
MINNESOTA
1,500,000 Rochester Minnesota Health Fac. Rev.
(Mayo Foundation/Mayo Medical Center)
(SBPA: Credit Suisse Bank),
3.70%, due February 7, 1996 1,500,000
1,000,000 Rochester, Minnesota Health Fac. Rev.
(Mayo Foundation/Mayo Medical Center)
(SBPA: Credit Suisse Bank),
3.80%, due February 8, 1996 1,000,000
1,100,000 Rochester Minnesota Health Fac. Rev.
(Mayo Foundation/Mayo Medical Center)
(SBPA: Credit Suisse Bank),
3.65%, due March 7, 1996 1,100,000
MISSISSIPPI
1,000,000 Jackson Cnty, Mississippi Port Fac. Rev.
(Chevron USA Inc.),
Fltg Rate, 5.95%, due June 1, 2023 1,000,000
MISSOURI
1,900,000 Missouri Environmental Improvement Auth.
Pollution Control Rev. Tax-Exempt
Commercial Paper (Union Electric Co.)
(LOC: Union Bank of Switzerland),
3.45%, due February 5, 1996 1,900,000
1,000,000 Missouri Environmental Improvement Auth.
Pollution Control Rev. Tax-Exempt
Commercial Paper (Union Electric Co.)
(LOC: Union Bank of Switzerland),
3.60%, due February 13, 1996 1,000,000
1,200,000 Missouri Environmental Improvement Auth.
Pollution Control Rev. Tax-Exempt
Commercial Paper (Union Electric Co.)
(LOC: Union Bank of Switzerland),
3.70%, due February 15, 1996 1,200,000
1,250,000 Missouri GO (Third State Building)
(Pre-refunded 8/1/96 @ 102),
7.50%, due August 1, 2007 1,302,190
NORTH CAROLINA
3,100,000 Wake Cnty., North Carolina Industrial Fac.
& Pollution Control Financing Auth. Rev.
(Carolina Power & Light Co.), Series A,
Fltg. Rate, 4.85%, due May 1, 2015 3,100,000
2,700,000 Winston-Salem, North Carolina Water &
Sewer System Rev.
(SBPA: Wachovia Bank NC),
Fltg. Rate, 5.05%, due June 1, 2014 2,700,000
TENNESSEE
2,000,000 Metropolitan Gov't. Nashville & Davidson
Cnty., Tennessee Water & Sewer Rev.
(Escrowed in U.S. Gov't. Securities)
(Pre-refunded 1/1/96 @ 102),
8.75%, due January 1, 1996 2,040,000
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, 6.10%, due May, 1, 2014 1,200,000
200,000 Angelina & Neches River Auth., Texas Industrial
Dev. Corp. Solid Waste Rev. (TEEC-Temple
Inland), Series 84 C,
Fltg. Rate, 6.10%, due May, 1, 2014 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, 6.10%, due May, 1, 2014 300,000
2,200,000 Angelina & Neches River Auth., Texas Industrial
Dev. Corp. Solid Waste Rev. (TEEC-Temple
Inland), Series 84 E,
Fltg. Rate, 6.10%, due May, 1, 2014 2,200,000
1,000,000 Austin, Texas Independent School Dist.
(Pre-refunded 8/1/96 @ 100),
6.60%, due August 1, 2001 1,017,040
1,015,000 Dallas Cnty., Texas Hospital Dist. Rev.
(MBIA Insured) (Pre-refunded 4/10/96 @ 100),
7.00%, due April 10, 1999 1,023,599
1,745,000 El Paso, Texas Water & Sewer Rev. Ref.
(MBIA Insured), 3.60%, due May 1, 2028 1,745,000
1,100,000 Grapevine, Texas Industrial Dev. Corp. Rev.
(American Airlines), Series A-1
(LOC: Morgan Guaranty Trust Co.),
Fltg. Rate, 6.00%, due December 1, 2024 1,100,000
TEXAS (Continued)
400,000 Grapevine, Texas Industrial Dev. Corp. Rev.
(American Airlines), Series A-3
(LOC: Morgan Guaranty Trust Co.),
Fltg. Rate, 6.00%, due December 1, 2024 400,000
2,600,000 Texas Public Finance Auth. GO, Series 93 A,
3.75%, due January 11, 1996 2,600,000
2,000,000 Texas Public Finance Auth. GO, Series 93 A,
3.40%, due February 8, 1996 2,000,000
1,500,000 Texas A & M Univ. Rev. (Permanent Univ. Fund)
(LOC: Morgan Guaranty Trust Co.)
3.65%, due January 23, 1996 1,500,000
1,000,000 Texas A & M Univ. Rev. (Permanent Univ. Fund)
(LOC: Morgan Guaranty Trust Co.),
3.70%, due January 25, 1996 1,000,000
1,400,000 Texas A & M Univ. Rev. (Permanent Univ. Fund)
(LOC: Morgan Guaranty Trust Co.),
3.60%, due February 21, 1996 1,400,000
3,000,000 Univ. of Texas Finance System Rev. Tax-Exempt
Commercial Paper,
3.80%, due January 9, 1996 3,000,000
1,025,000 Univ. of Texas Finance System Rev. Tax-Exempt
Commercial Paper (Permanent Univ. Fund),
Series A, 3.55%, due February 7, 1996 1,025,000
UTAH
1,000,000 Intermountain Power Agency, Utah Power
Supply Rev. (SBPA: Bank of America),
3.90%, due January 3, 1996 1,000,000
2,000,000 Intermountain Power Agency, Utah Power
Supply Rev., Series 85 F (LOC: Swiss Bank)
(Optional Putable 3/15/96 @ 100),
3.75%, due July 1, 2021 2,000,000
VIRGINIA
1,000,000 Peninsula Ports Auth., Virginia Rev. Ref.
(Shell Co.),
Fltg. Rate, 5.90%, due December 1, 2005 1,000,000
WASHINGTON
3,850,000 Seattle, Washington Municipal Light & Power
Rev., Series 91 (Mandatory Redemption
5/1/11 @ 100) (SBPA: Morgan Guaranty Trust
Co.), 3.70%, due January 23, 1996 3,850,000
WISCONSIN
3,400,000 Oak Creek, Wisconsin Pollution Control Rev.
(Wisconsin Electric Power Co.), Series 86,
Fltg. Rate, 5.00%, due August 1, 2016 3,400,000
1,600,000 Sheboygan, Wisconsin Pollution Control Rev.
(Wisconsin Power & Light Co.),
Fltg. Rate, 5.25%, due August 1, 2014 1,600,000
WYOMING
600,000 Lincoln Cnty., Wyoming Pollution Control
Rev. (Exxon Corp.), Series B,
Fltg. Rate, 3.55%, due November 1, 2014 600,000
500,000 Lincoln Cnty., Wyoming Pollution Control
Rev. (Exxon Corp.), Series D,
Fltg. Rate, 5.90%, due November 1, 2014 500,000
1,700,000 Sublette Cnty., Wyoming Pollution Control
Rev. (Exxon Corp.),
Fltg Rate, 5.95%, due November 1, 2014 1,700,000
500,000 Uinta Cnty., Wyoming Pollution Control Rev.
(Chevron USA Inc.),
Fltg. Rate, 5.90%, due December 1, 2022 500,000
TOTAL INVESTMENTS _ 107.40% $103,960,045
Other assets less liabilities _ (7.40%) (7,163,710)
TOTAL NET ASSETS _ 100.00%
(equivalent to $1.00 per share;
1,000,000,000 shares of $0.01 par value
capital shares authorized;
96,872,990 shares outstanding) $ 96,796,335
Line (Line of Credit)
LOC (Letter of Credit)
SBPA (Stand by Purchase Agreement)
<PAGE>
Statement of Assets and Liabilities
December 31, 1995 (unaudited)
ASSETS:
Investment securities, at market value
(identified cost $103,960,045) $ 103,960,045
Interest receivable 822,846
Other assets 1,889
Total assets 104,784,780
LIABILITIES AND NET ASSETS:
Cash overdraft 1,243,081
Payable for investments purchased 6,745,000
Payable to shareholders 364
Total liabilities 7,988,445
NET ASSETS $ 96,796,335
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 96,874,128
Accumulated net realized loss on investment transactions (77,793)
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 96,796,335
Capital shares, $0.01 par value
Authorized 1,000,000,000
Outstanding 96,872,990
NET ASSET VALUE PER SHARE $ 1.00
See accompanying Notes to Financial Statements.
<PAGE>
Statement of Operations
Six Months Ended December 31, 1995 (unaudited)
INVESTMENT INCOME:
Income:
Interest $ 1,601,188
Expenses:
Management fees (Note 3) 214,429
Registration fees and other expenses 6,882
221,311
Net investment income 1,379,877
REALIZED GAIN ON INVESTMENTS (Note 1):
Realized gain from investment transactions:
Proceeds from sales of investments 165,806,290
Cost of investments sold 165,805,000
Net realized gain from investment transactions 1,290
Increase in net assets resulting from operations $ 1,381,167
<PAGE>
Statements of Changes in Net Assets
Six Months Ended
December 31, 1995 Year Ended
(unaudited) June 30, 1995
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,379,877 $ 3,192,068
Net realized gain (loss) from investment
transactions 1,290 (26,431)
Net increase in net assets resulting from
operations 1,381,167 3,165,637
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,379,877) (3,192,068)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ($1.00 per share) 107,278,149 215,514,530
Net asset value of shares issued for
reinvestment of distributions ($1.00 per share) 128,327 254,641
107,406,476 215,769,171
Cost of shares redeemed ($1.00 per share) (88,636,491) (232,004,231)
Net increase (decrease) from capital share
transactions 18,769,985 (16,235,060)
Total increase (decrease) in net assets 18,771,275 (16,261,491)
NET ASSETS:
Beginning of period 78,025,060 94,286,551
End of period $ 96,796,335 $ 78,025,060
<PAGE>
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.
2. PURCHASES AND SALES OF SECURITIES _ The aggregate amounts of security
transactions during the period ended December 31, 1995, were as follows:
Purchases $ 193,656,998
Proceeds from sales 165,806,290
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.
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 other Scout
Funds are offered only by the Prospectus, a copy of which may be obtained
from Jones & Babson, Inc.
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