UMB SCOUT FUNDS
TAX-FREE MONEY MARKET FUND
QUARTERLY REPORT
SEPTEMBER 30, 1998
A no-load mutual fund principally invested in short-term municipal
securities seeking to provide maximum income exempt from federal income
tax consistent with safety of principal and maintenance of liquidity.
TO THE SHAREHOLDERS
The UMB Scout Tax-Free Money Market Fund earned 0.73% for the quarter
ended September 30, 1998. The Fund's 7-day current yield was 3.02% as of
that date. The Fund principally invests in short-term municipal
securities, and seeks to provide maximum investment income exempt from
federal income tax consistent with safety of principal and liquidity.
An investment in the Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although
the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund. Income
from the Fund may be subject to the federal Alternative Minimum Tax as
well as state and local taxes.
The Fund finished the quarter with a 30-day annualized yield of 2.87%,
compared with the 2.90% average for the Tax-Free Money Market as a
whole. Short-term tax-free yields were slightly lower than at the close
of the previous quarter, primarily because of a cut in the benchmark Fed
Funds interest rate in late September.
Money market rates remained relatively stable through July and August,
but September was much different. The continued weakness in the global
economy combined with the economic turmoil in Russia caused many to
expect the Federal Reserve to cut interest rates to spur economic
activity. The Fed met these expectations when it cut the Fed Funds rate
to 5.25% from 5.50% on September 29.
Global economic forecasts indicate the possibility of a widespread
slowdown in coming months. This could promote a gradual drop in short-
term interest rates over the next several months. The Fund therefore
will maintain an average maturity in the 25- to 30-day range, which will
provide ample liquidity while insulating the Fund from rapid drops in
overnight rates.
An important topic during recent months relates to "credit
enhancement." Many issuers of short-term securities are referred to as
"second-tier" because their credit quality is not sufficient for a
"top-tier" rating. These issuers use third-party providers of credit
enhancement to bolster their ratings using insurance agreements and
letters of credit. This process secures top-tier ratings for otherwise
sub-standard borrowers, and many money market funds increase returns by
investing heavily in such issues.
Your Fund will maintain a substantially higher level of credit quality
than the average fund by avoiding issuers that rely on credit
enhancement for their ratings. This prudent approach provided an added
measure of security during the last quarter, as many of the major
providers of third-party credit enhancement fell on hard times due to
the turbulence of international markets. The Fund is somewhat insulated
from such turbulence because the credit quality of all positions is
evaluated on a stand-alone basis, without credit enhancement.
This management style should continue to make the Fund an outstanding
option for investors in the upper tax brackets who seek solid yields
combined with top-tier credit quality.
We want to remind all shareholders that the Fund name is changing to UMB
Scout Tax-Free Money Market Fund, Inc., effective October 31, 1998.
However, the ticker symbol will remain UMTXX.
We appreciate your continued interest in the UMB Scout Tax-Free Money
Market Fund and we welcome your comments and questions.
Sincerely,
/s/J. Eric Kelley
J. Eric Kelley
UMB Investment Advisors
FUND DIVERSIFICATION - PIE CHART
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").
These shares involve investment risks, including the possible loss of
the principal invested.
FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 (unaudited)
Statement of Net Assets
<TABLE>
<CAPTION>
FACE Market
STATE AMOUNT DESCRIPTION Value
</CAPTION>
<S> <C>
ARIZONA
$ 1,500,000 Arizona State Health Facilities Auth., Pooled Loan Program Rev.,
Var. Rate, due October 1, 2015 $ 1,500,000
1,000,000 Maricopa County Arizona (Southern California Edison),
Tax-Exempt Commercial Paper,
3.55%, due October 21, 1998 1,000,000
2,600,000 Maricopa County Arizona (Southern California Edison),
Tax-Exempt Commercial Paper,
3.45%, due November 2, 1998 2,600,000
1,000,000 Mesa Arizona, Series 85, Tax-Exempt Commercial Paper,
3.375%, due October 7, 1998 1,000,000
2,000,000 Salt River Project Agricultural Improvement & Power District, Series A,
Tax-Exempt Commercial Paper,
3.20%, due November 5, 1998 2,000,000
1,000,000 Salt River Project Agricultural Improvement & Power District, Series A,
Tax-Exempt Commercial Paper,
3.10%, due October 13, 1998 1,000,000
2,700,000 Salt River Project Agricultural Improvement & Power District,
Tax-Exempt Commercial Paper,
3.35%, due December 2, 1998 2,700,000
CONNECTICUT
4,000,000 Connecticut State Health & Educational Facilities Auth.,
(Yale University),
Var. Rate, due July 1, 2029 4,000,000
FLORIDA
2,000,000 Gainesville Florida, Utility Bonds, Series C,
3.50%, due November 3, 1998 2,000,000
2,000,000 Gainesville Florida, Utility Bonds, Series C,
3.20%, due November 4, 1998 2,000,000
1,500,000 Jacksonville Florida, Electric Auth., Series 94A,
Tax-Exempt Commercial Paper,
3.35%, due October 5, 1998 1,500,000
1,750,000 Jacksonville Florida, Electric Auth., Series A,
Tax-Exempt Commercial Paper,
4.20%, due October 5, 1998 1,750,000
1,000,000 Jacksonville Florida, Pollution Control Rev., Series 92,
Tax-Exempt Commercial Paper,
3.45%, due October 7, 1998 1,000,000
2,500,000 Jacksonville Florida, Pollution Control Rev., Series 92,
Tax-Exempt Commercial Paper,
3.35%, due October 14, 1998 2,500,000
1,000,000 Jacksonville Florida, Pollution Control Rev., Series 94,
Tax-Exempt Commercial Paper,
3.20%, due November 4, 1998 1,000,000
GEORGIA
3,000,000 Effingham County Georgia, Pollution Control Rev.
(Savannah Electric & Power),
Var. Rate, due April 1, 2037 3,000,000
2,165,000 Georgia Municipal Electric Auth., Series B,
Tax-Exempt Commercial Paper,
3.375%, due October 30, 1998 2,165,000
ILLINOIS
600,000 Illinois Development Financial Auth., Pollution Control Rev.
(Amoco Oil Co. Project),
Var. Rate, due November 1, 2012 600,000
500,000 Sauget Illinois, Pollution Control Rev.
(Monsanto Co. Project),
Var. Rate, due September 1, 2014 500,000
5,000,000 Sauget Illinois, Pollution Control Rev.
(Monsanto Co. Project),
Var. Rate, due May 1, 2028 5,000,000
INDIANA
1,000,000 Jasper County Indiana, Pollution Control Rev. (NIPS),
Tax-Exempt Commercial Paper,
3.15%, due October 13, 1998 1,000,000
1,100,000 Jasper County Indiana, Pollution Control Rev. (NIPS),
Tax-Exempt Commercial Paper,
3.60%, due October 22, 1998 1,100,000
1,000,000 Sullivan County Indiana, Pollution Control Rev., Series 85 L2,
Tax-Exempt Commercial Paper,
3.45%, due October 5, 1998 1,000,000
2,000,000 Sullivan County Indiana, Pollution Control Rev., Series 85 L3,
Tax-Exempt Commercial Paper,
3.55%, due October 28, 1998 2,000,000
KANSAS
1,000,000 Leawood Kansas, Project # 146,
3.75%, due March 15, 1999 1,000,000
1,000,000 Leawood Kansas, Project # 165,
3.75%, due March 15, 1999 1,000,000
KENTUCKY
2,000,000 Trimble County Kentucky, Pollution Control Rev., Series 92A,
Tax-Exempt Commercial Paper,
3.10%, due October 8, 1998 2,000,000
1,500,000 Trimble County Kentucky, Pollution Control Rev., Series 92A,
Tax-Exempt Commercial Paper,
3.10%, due October 16, 1998 1,500,000
3,500,000 Trimble County Kentucky, Pollution Control Rev., Series 92A,
Tax-Exempt Commercial Paper,
3.30%, due December 1, 1998 3,500,000
MARYLAND
2,100,000 Baltimore County Maryland, Pollution Control Rev. (BG&E),
Tax-Exempt Commercial Paper,
3.40%, due October 2, 1998 2,100,000
3,000,000 Baltimore County Maryland, Pollution Control Rev. (BG&E),
Tax-Exempt Commercial Paper,
3.35%, due October 27, 1998 3,000,000
MASSACHUSETTS
2,000,000 Massachusetts Industrial Finance Agency, Series 93A,
Tax-Exempt Commercial Paper,
3.55%, due October 23, 1998 2,000,000
6,000,000 Massachusetts State, Series B,
Var. Rate, due August 1, 2015 6,000,000
MISSISSIPPI
300,000 Jackson County Mississippi Port Facility
(Chevron USA Inc.),
Var. Rate, due June 1, 2023 300,000
MISSOURI
1,000,000 Missouri Environment Improvement Rev. (UEP),
Tax-Exempt Commercial Paper,
3.45%, due October 9, 1998 1,000,000
1,000,000 Missouri Environment Improvement Rev. (UEP),
Tax-Exempt Commercial Paper,
3.35%, due October 14, 1998 1,000,000
1,000,000 Missouri Environment Improvement Rev. (UEP),
Tax-Exempt Commercial Paper,
3.35%, due October 19, 1998 1,000,000
2,000,000 Missouri Environment Improvement Rev. (UEP),
Tax-Exempt Commercial Paper,
3.45%, due October 20, 1998 2,000,000
2,500,000 Missouri Environment Improvement Rev. (UEP),
Tax-Exempt Commercial Paper,
3.40%, due October 22, 1998 2,500,000
600,000 Missouri Health & Education Auth.
(Washington University),
Var. Rate, due September 1, 2030 600,000
NEBRASKA
1,000,000 Omaha Public Power District Electric Rev., Series A,
Tax-Exempt Commercial Paper,
3.35%, due October 5, 1998 1,000,000
NEW JERSEY
3,000,000 New Jersey T/RANS,
Tax-Exempt Commercial Paper,
3.50%, due October 19, 1998 3,000,000
NEW MEXICO
50,000 Hurley New Mexico, Pollution Control Rev.
(Kennecott Santa Fe Project),
Var. Rate, due December 1, 2015 50,000
NORTH CAROLINA
1,600,000 Wake County North Carolina, Industrial Facility & Pollution Control Auth.
(Carolina Power & Light),
3.55%, due October 5, 1998 1,600,000
2,500,000 Wake County North Carolina Industrial Facility & Pollution Control Auth.
(Carolina Power & Light),
Var. Rate, due May 1, 2015 2,500,000
OKLAHOMA
500,000 Garfield County Oklahoma Industrial Auth. Pollution Control Rev.
(Oklahoma Gas & Electric Company),
Var. Rate, due January 1, 2025 500,000
SOUTH CAROLINA
1,000,000 South Carolina Public Services Auth.,
Tax-Exempt Commercial Paper,
3.45%, due October 5, 1998 1,000,000
1,000,000 York County South Carolina (Duke Power),
Tax-Exempt Commercial Paper,
3.375%, due October 1, 1998 1,000,000
2,100,000 York County South Carolina (Duke Power),
Tax-Exempt Commercial Paper,
3.45%, due October 13, 1998 2,100,000
TENNESSEE
2,000,000 Shelby County Tennessee, Series 97A,
Tax-Exempt Commercial Paper,
3.45%, due October 6, 1998 2,000,000
TEXAS
1,500,000 Austin Texas Combined Utility System Rev., Series A,
Tax-Exempt Commercial Paper,
3.10%, due October 7, 1998 1,500,000
1,100,000 Brazos River Auth. Texas (Monsanto Co.),
Var. Rate, due February 1, 2004 1,100,000
2,500,000 Dallas Texas Water & Sewer, Series B,
Tax-Exempt Commercial Paper,
3.35%, due October 26, 1998 2,500,000
2,076,000 Dallas Texas Water & Sewer, Series B,
Tax-Exempt Commercial Paper,
3.375%, due October 30, 1998 2,076,000
900,000 Gulf Coast Texas Waste Disposal Auth. (Monsanto Co.),
Var. Rate, due July 1, 2001 900,000
1,200,000 Gulf Coast Texas Waste Disposal Auth. (Exxon),
Var. Rate, due June 1, 2020 1,200,000
1,781,000 Harris County Texas, Series A,
Tax-Exempt Commercial Paper,
3.55%, due October 2, 1998 1,781,000
1,200,000 Harris County Texas, Series A,
Tax-Exempt Commerical Paper,
3.20%, due November 5, 1998 1,200,000
1,317,000 Harris County Texas, Series A,
Tax-Exempt Commercial Paper,
3.15%, due November 5, 1998 1,317,000
1,700,000 Lower Neches Valley Texas Auth. Pollution Control Rev.
(River Treatment Industrial Dev. Corp.),
Var. Rate, due February 1, 2004 1,700,000
2,800,000 San Antonio Texas Water Systems, Series 95,
Tax-Exempt Commercial Paper,
3.45%, due October 2, 1998 2,800,000
1,000,000 San Antonio Texas Water Systems, Series 95,
Tax-Exempt Commercial Paper,
3.10%, due October 15, 1998 1,000,000
1,000,000 San Antonio Texas Water Systems, Series 95,
Tax-Exempt Commercial Paper,
3.45%, due November 4, 1998 1,000,000
1,100,000 Texas Municipal Power Agency, Series 91,
Tax-Exempt Commercial Paper,
3.40%, due October 1, 1998 1,100,000
2,000,000 Texas Municipal Power Agency, Series 91,
Tax-Exempt Commercial Paper,
3.45%, due October 1, 1998 2,000,000
1,400,000 Texas Municipal Power Agency, Series 91,
Tax-Exempt Commercial Paper,
3.45%, due October 7, 1998 1,400,000
2,000,000 Texas Municipal Power Agency, Series 97,
Tax-Exempt Commercial Paper,
3.45%, due October 9, 1998 2,000,000
1,000,000 Texas Public Finance Auth., Series A,
Tax-Exempt Commercial Paper,
3.55%, due October 1, 1998 1,000,000
2,000,000 University of Texas System Rev., Series A,
Tax-Exempt Commercial Paper,
3.50%, due October 6, 1998 2,000,000
2,000,000 University of Texas System Rev., Series A,
Tax-Exempt Commercial Paper,
3.35%, due October 6, 1998 2,000,000
UTAH
2,000,000 Intermountain Power, Series 98 B5,
Tax-Exempt Commercial Paper,
3.45%, due October 7, 1998 2,000,000
2,000,000 Intermountain Power, Series 97 B1,
Tax-Exempt Commercial Paper,
3.10%, due October 8, 1998 2,000,000
2,000,000 Intermountain Power, Series 98 B5,
Tax-Exempt Commercial Paper,
3.45%, due October 8, 1998 2,000,000
1,000,000 Intermountain Power, Series 98 B5,
Tax-Exempt Commercial Paper,
3.35%, due October 19, 1998 1,000,000
1,700,000 Salt Lake City Utah, Pollution Control Rev. (British Petroleum),
Var. Rate, due February 1, 2008 1,700,000
VIRGINIA
1,300,000 Chesterfield County Virginia, Industrial Development Auth. (VEPCO),
Tax-Exempt Commercial Paper,
3.40%, due October 2, 1998 1,300,000
500,000 Louisa Virginia, Industrial Development Auth. (VEPCO),
Tax-Exempt Commercial Paper,
3.40%, due October 2, 1998 500,000
1,800,000 Louisa Virginia, Industrial Development Auth. (VEPCO),
Tax-Exempt Commercial Paper,
3.20%, due November 4, 1998 1,800,000
WASHINGTON
2,500,000 Seattle Municipal Power & Light,
Tax-Exempt Commercial Paper,
3.50%, due October 1, 1998 2,500,000
2,200,000 Seattle Municipal Power & Light Rev.,
Var. Rate, due November 1, 2018 2,200,000
3,500,000 Washington State, Series A,
Var. Rate, due June 1, 2020 3,500,000
2,000,000 Washington State Public Power Supply (Electric Project #2), Series 2A,
Var. Rate, due July 1, 2012 2,000,000
WISCONSIN
1,400,000 Oak Creek Wisconsin, Pollution Control Rev. (Wisconsin Electric Power Co.),
Var. Rate, due August 1, 2016 1,400,000
1,600,000 Sheboygan Wisconsin, Pollution Control Rev. (Wisconsin Power & Light Co.),
Var. Rate, due August 1, 2014 1,600,000
1,500,000 Sheboygan Wisconsin, Pollution Control Rev. (Wisconsin Electric Power Co.),
Var. Rate, due September 1, 2015 1,500,000
2,140,000 Wisconsin State G.O., Tax-Exempt Commercial Paper,
3.375%, due October 26, 1998 2,140,000
2,017,000 Wisconsin State, Series 97A, Tax-Exempt Commercial Paper,
3.45%, due October 29, 1998 2,017,000
WYOMING
500,000 Sublette County Wyoming, Pollution Control Rev. (Exxon Project),
Var. Rate, due November 1, 2014 500,000
TOTAL INVESTMENTS - 100.21% $ 152,396,000
Other assets less liabilities - (0.21%) (317,461)
TOTAL NET ASSETS - 100.00%
(equivalent to $1.00 per share; 1,000,000,000 shares of $0.01 par value
capital shares authorized; 152,178,368 shares outstanding) $ 152,078,539
</TABLE>
Valuation of securities is on the basis of amortized cost, which approximates
market value.
This report has been prepared for the information of the Shareholders of
UMB 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 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.
