UMB SCOUT FUNDS
Tax-Free Money Market Fund
(UMTXX)
Semiannual Report December 31, 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 0.68% for the quarter ended
December 31, 1998. The Fund's 7-day current yield was 2.83% 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 of 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.
Short-term tax-free yields were only slightly lower this quarter than at the
close of the previous quarter, which is somewhat surprising in light of the
reductions in the Fed Funds interest rate in October and November.
The Fund began the latest quarter with global economic forecasts hinting at a
widespread slowdown, a likely harbinger of a significant drop in short-term
interest rates in coming months. We therefore kept an average maturity in the
25- to 30-day range to help insulate the Fund from rapid drops in overnight
rates. The forecasts proved to be partially accurate, as signs of global
weakness inspired the Federal Reserve to twice cut the key Fed Funds rate
during the quarter, falling to 4.75% from 5.25%. However, this entire 50
basis point reduction did not follow through in the tax-exempt market, which
dropped only about 20 basis points during that time.
The tax-exempt money market finished the year with an "inverted" yield curve,
in which 30-day issues delivered higher yields than the 60-day and longer
maturities. This environment allowed us to capture the highest available
yields while maintaining our 25- to 30-day maturity target. While some
consider an inverted yield curve to be a clear indication of lower rates in
the future, we are reluctant to lengthen the fund's average maturity and make
an aggressive bet on the future direction of rates.
The Fund has maintained what we believe is a higher-than-average level of
credit quality by avoiding issuers that rely heavily on credit enhancement -
such as insurance agreements and bank letters of credit - for their ratings.
The Fund is somewhat insulated from many ratings scares because all of our
positions are evaluated on a stand-alone basis to ensure sufficient credit
quality without such
third-party 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 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
Chart - Fund Diversification
Demand Notes 31%
Commercial Paper 69%
As of December 31, 1999, Statement of Net Assets. Subject to change.
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 is they
insured by the Federal Deposit Insurance Corporation ("FDIC"). These shares
involve investment risks, including the possible loss of the principal
invested.
FINANCIAL STATEMENTS December 31, 1998 (unaudited)
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
FACE MARKET
STATE AMOUNT DESCRIPTION VALUE
</CAPTION>
<S> <C>
ALABAMA
300,000 Columbia Alabama Pollution Control Rev.,
(Alabama Power),
Var. Rate, due December 1, 2022 $ 300,000
ARIZONA
1,000,000 Maricopa County Arizona,
(Southern California Edition),
Tax-Exempt Commercial Paper,
3.05%, due January 14, 1999 1,000,000
2,600,000 Maricopa County Arizona,
(Southern California Edition),
Tax-Exempt Commercial Paper,
3.05%, due January 19, 1999 2,600,000
1,000,000 Salt River Project Agricultural Improvement,
Series A,
Tax-Exempt Commercial Paper,
3.25%, due January 8, 1999 1,000,000
2,700,000 Salt River Project Arizona,
Tax Exempt Commercial Paper,
3.00%, due February 22, 1999 2,700,000
CONNECTICUT
4,000,000 Connecticut State Health & Educational Auth.,
(Yale University), Rev.,
Var. Rate, due July 1, 2029 4,000,000
FLORIDA
3,250,000 Jacksonville Florida CLE., Series 94A,
Tax-Exempt
Commercial Paper,
3.25%, due January 4, 1999 3,250,000
1,000,000 Jacksonville Florida Pollution Control Rev.,
Series 92,
Tax Exempt Commercial Paper,
3.20%, due January 11, 1999 1,000,000
1,000,000 Jacksonville Florida Pollution Control Rev.,
Series 94,
Tax Exempt Commercial Paper,
3.00%, due January 11, 1999 1,000,000
2,500,000 Jacksonville Florida Pollution Control Rev.,
Series 92A,
Tax-Exempt Commercial Paper,
3.25%, due January 20, 1999 2,500,000
2,900,000 Pinellas County Florida Higher Education,
Tax Exempt Commercial Paper,
3.20%, due January 8, 1999 2,900,000
GEORGIA
4,000,000 Burke County Georgia Dev. Auth.,
Tax Exempt Commercial Paper,
3.20%, due January 17, 1999 4,000,000
3,000,000 Effingham County Georgia,
Pollution Control Rev.,
(Savannah Electric & Power),
Var. Rate, due April 1, 2037 3,000,000
2,165,000 Municipal Electric Auth. of Georgia,
Tax Exempt Commercial Paper,
3.05%, due January 21, 1999 2,165,000
ILLINOIS
600,000 Illinois Dev. Finance Auth.
Pollution Control Rev.,
(Amoco Oil Co. Project),
Var. Rate, due November 1, 2012 600,000
500,000 Sauget Illinois Pollution Control Rev.,
Var. Rate, due November 1, 2014 500,000
5,000,000 Sauget Illinois Pollution Control Rev.,
(Monsanto),
Var. Rate, due May 1, 2028 5,000,000
INDIANA
1,100,000 Jasper County Indiana Pollution Control,
Tax Exempt Commercial Paper,
3.15%, due January 4, 1999 1,100,000
1,000,000 Jasper County Indiana Pollution Control Rev.,
Tax Exempt Commercial Paper,
3.30%, due January 7, 1999 1,000,000
1,400,000 Sullivan City Indiana Pollution Control Rev.,
Series 85 L3,
Tax Exempt Commercial Paper,
3.10%, due January 5, 1999 1,400,000
KENTUCKY
2,000,000 Trimble County Kentucky Pollution Control Rev.,
Series 92A,
Tax Exempt Commercial Paper,
3.20%, due January 12, 1999 2,000,000
2,000,000 Trimble County Kentucky Pollution Control Rev.,
Series 92A,
Tax Exempt Commercial Paper,
3.00%, due February 9, 1999 2,000,000
3,500,000 Trimble County Kentucky Pollution Control Rev.,
Series 92A,
Tax Exempt Commercial Paper,
3.00%, due February 17, 1999 3,500,000
LOUISIANA
1,300,000 Lake Charles Louisiana Harbor & Term Dist
Port FACS Rev.,
(Conoco Dupont),
Var. Rate, due November 11, 2011 1,300,000
MARYLAND
3,700,000 Anne Arundal County Maryland G.O.,
Tax Exempt Commercial Paper,
3.15%, due January 4, 1999 3,700,000
2,100,000 Baltimore County Maryland Pollution Control Rev.,
(BG&E),
Tax Exempt Commercial Paper,
3.05%, due January 27, 1999 2,100,000
3,000,000 Baltimore County Maryland Pollution Control Rev.,
(BG&E),
Tax Exempt Commercial Paper,
3.05%, due January 6, 1999 3,000,000
MASSACHUSETTS
1,000,000 Massachusetts Bay Transportation Auth.,
Tax Exempt Commercial Paper,
3.15%, due January 20, 1999 1,000,000
1,000,000 Massachusetts Bay Transportation Auth.,
Tax Exempt Commercial Paper,
3.00%, due February 5, 1999 1,000,000
3,700,000 Massachusetts Industrial Finance Agency,
Series 93A,
Tax Exempt Commercial Paper,
3.20%, due January 13, 1999 3,700,000
5,600,000 Massachusetts State Health & Educational Auth.
Rev.,
(Harvard University), Series I,
Var. Rate, due February 1, 2016 5,600,000
6,000,000 Massachusetts State, Series B,
Var. Rate, due August 1, 2015 6,000,000
MISSISSIPPI
300,000 Jackson County Mississippi, Port Facility Rev.,
(Chevron USA),
Var. Rate, due June 1, 2023 300,000
MISSOURI
1,000,000 Missouri Environmental Improvement Rev.,
Tax Exempt Commercial Paper,
3.25%, due January 12, 1999 1,000,000
1,000,000 Missouri Environmental Improvement Rev.,
Tax Exempt Commercial Paper,
3.00%, due January 14, 1999 1,000,000
1,500,000 Missouri Environmental Improvement Rev.,
Tax Exempt Commercial Paper,
3.00%, due February 5, 1999 1,500,000
1,700,000 Missouri State Health & Education Auth.,
(Washington University),
Var. Rate, due September 1, 2030 1,700,000
2,000,000 Missouri State Health & Education Auth.,
(Washington University), Series D,
Var. Rate, due September 1, 2030 2,000,000
1,500,000 Park Hill School District Missouri,
Tax Exempt Commercial Paper,
3.55%, due June 30, 1999 1,500,000
NEBRASKA
1,000,000 Omaha Public Power District Electric Rev.,
Series A,
Tax-Exempt Commercial Paper,
3.05%, due January 6, 1999 1,020,000
NEVADA
1,000,000 Las Vegas Nevada,
7.20%, due January 1, 2007 1,000,000
NEW JERSEY
1,500,000 New Jersey State T/RAN,
Tax Exempt Commercial Paper,
3.00%, due January 7, 1999 1,500,000
2,000,000 New Jersey State T/RAN,
Tax Exempt Commercial Paper,
3.05%, due January 15, 1999 2,000,000
NEW MEXICO
50,000 Hurley New Mexico Pollution Control Rev.,
(R-Kennecott Sante Fe Project),
Var. Rate, due December 1, 2015 50,000
NORTH CAROLINA
2,500,000 Wake County North Carolina, (CP&L),
Tax Exempt Commercial Paper,
3.20%, due January 7, 1999 2,500,000
1,600,000 Wake County North Carolina
Pollution Control Rev.,
Tax Exempt Commercial Paper,
3.05%, due January 21, 1999 1,600,000
2,500,000 Wake County North Carolina,
Industrial Facility & Pollution Control Auth.,
(CP&L),
Var. Rate, due May 1, 2015 2,500,000
OKLAHOMA
500,000 Garfield County Oklahoma,
Pollution Control Rev., Series A,
(Oklahoma Gas & Electric Co.),
Var. Rate, due January 1, 2025 500,000
SOUTH CAROLINA
1,600,000 Berkeley County South Carolina,
Pollution Control Rev.,
(Amoco Chemical Co.),
Var. Rate, due July 1, 2012 1,600,000
1,000,000 South Carolina Public Service Auth.,
Tax Exempt Commercial Paper,
3.05%, due January 13, 1999 1,000,000
2,100,000 York County South Carolina (Duke Power),
Tax Exempt Commercial Paper,
3.15%, due January 11, 1999 2,100,000
1,000,000 York County South Carolina (Duke Power),
Tax Exempt Commercial Paper,
3.00%, due January 13, 1999 1,000,000
TENNESSEE
1,000,000 Shelby County Tennessee,
Tax Exempt Commercial Paper,
3.25%, due January 5, 1999 1,000,000
2,000,000 Shelby County Tennessee, Ser 97A,
Tax Exempt Commercial Paper,
3.25%, due January 5, 1999 2,000,000
TEXAS
1,500,000 Austin Texas Combined Utility Series A,
Tax Exempt Commercial Paper,
3.20%, due January 8, 1999 1,500,000
1,100,000 Brazos River Auth. Texas,
Pollution Control Rev.,
(Monsanto),
Var. Rate, due February 1, 2004 1,100,000
900,000 Gulf Coast Texas Waste Disposal,
(Monsanto), Daily Put, due July 1, 2001 900,000
1,904,000 Harris County Texas G.O.,
Tax Exempt Commercial Paper,
3.00%, due January 14, 1999 1,904,000
2,617,000 Harris County Texas, Ser A,
Tax Exempt Commercial Paper,
3.00%, due January 14, 1999 2,617,000
633,000 Harris County Texas G.O.,
Tax Exempt Commercial Paper,
3.25%, due January 19, 1999 633,000
1,700,000 Lower Neches Valley Auth.,
Pollution Control Rev.,
(River Treatment Industrial Deb. Corp.),
Var. Rate, due February 1, 2004 1,700,000
1,000,000 San Antonio Texas Water Systems, Series 95,
Tax Exempt
Commercial Paper,
3.00%, due January 11, 1999 1,000,000
1,000,000 San Antonio Texas Water Systems, Series 95,
Tax Exempt
Commercial Paper,
3.05%, due January 8, 1999 1,000,000
1,000,000 San Antonio Texas Water Systems, Series 95,
Tax Exempt Commercial Paper,
3.25%, due January 4, 1999 1,000,000
2,500,000 San Antonio Water Rev.,
Tax Exempt Commercial Paper,
3.00%, due January 29, 1999 2,500,000
4,500,000 Texas G.O., Tax Exempt Commercial Paper,
2.90%, due May 26, 1999 4,500,000
1,600,000 Texas Municipal Power Agency, Ser 91,
Tax Exempt Commercial
Paper,
3.00%, due January 12, 1999 1,600,000
1,400,000 Texas Municipal Power Agency, Ser 91,
Tax Exempt Commercial
Paper,
3.00%, due February 8, 1999 1,400,000
2,000,000 Texas Municipal Power Agency, Ser 91,
Tax Exempt Commercial Paper,
3.05%, due January 12, 1999 2,000,000
2,000,000 University of Texas Sys Rev., Series A,
Tax Exempt Commercial Paper,
3.25%, due January 6, 1999 2,000,000
2,000,000 University of Texas Sys Rev., Series A,
Tax Exempt Commercial Paper,
3.25%, due January 7, 1999 2,000,000
UTAH
1,000,000 Intermountain Power, Ser 98 B5,
Tax Exempt Commercial Paper,
2.95%, due January 14, 1999 1,000,000
1,000,000 Intermountain Power, Series A,
7.00%, due July 1, 2021 1,038,415
2,000,000 Intermountain Power,
Tax Exempt Commercial Paper,
3.00%, due February 3, 1999 2,000,000
2,000,000 Intermountain Power,
Tax Exempt Commercial Paper,
3.00%, due February 4, 1999 2,000,000
2,000,000 Intermountain Power, Series 98B,
Tax Exempt Commercial
Paper,
3.05%, due January 5, 1999 2,000,000
1,700,000 Salt Lake City Utah, Pollution Control Rev.,
(British
Petroleum),
Var. Rate, due February 1, 2008 1,700,000
1,500,000 Utah State, Tax Exempt Commercial Paper,
3.35%, due January 6, 1999 1,500,000
VIRGINIA
1,600,000 Chesterfield County Virginia,
Industrial Dev. Auth., (VEPCO),
Tax Exempt Commercial Paper,
3.05%, due January 25, 1999 1,600,000
1,300,000 Chesterfield County Virginia,
(VEPCO), Tax Exempt Commercial Paper,
3.20%, due January 15, 1999 1,300,000
500,000 Louisa County Virginia,
Industrial Dev. Auth., (VEPCO),
Tax Exempt commercial Paper,
3.20%, due January 15, 1999 500,000
1,800,000 Louisa County Virginia,
Industrial Dev. Auth., (VEPCO),
Tax Exempt Commercial Paper,
3.05%, due January 15, 1999 1,800,000
WASHINGTON
1,500,000 Seattle Municipal Power and Light,
Tax Exempt Commercial
Paper,
3.10%, due February 2, 1999 1,500,000
2,200,000 Seattle Municipal Light & Power Rev.,
Var. Rate, due
November 1, 2018 2,200,000
2,000,000 Washington State Public Power Supply,
Electric Reb.,
Var. Rate, due July 1, 2012 2,000,000
3,500,000 Washington State, Series 96A,
Var. Rate, due June 1, 2020 3,500,000
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 Power Co.),
Var. Rate, due September 1, 2015 1,500,000
2,029,000 Wisconsin G.O., Series 97A,
Tax-Exempt Commercial Paper,
3.45%, due January 13, 1999 2,029,000
1,576,000 Wisconsin G.O.,
Tax Exempt Commercial Paper,
3.05%, due February 1, 1999 1,576,000
3,000,000 Wisconsin G.O.,
Tax Exempt Commercial Paper,
2.90%, due April 1, 1999 3,000,000
TOTAL INVESTMENTS - 99.19% 172,382,415
Other assets less liabilities - 0.81% 1,400,603
TOTAL NET ASSETS - 100.00%
(equivalent to $1.00 per share;
1,000,000,000 shares of $0.01 par value
capital shares authorized;
173,882,846 shares outstanding) $ 173,783,018
</TABLE>
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS December 31, 1998 (unaudited)
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
</CAPTION>
<S> <C>
ASSETS:
Investment securities, at market value $ 172,382,415
Cash 689,873
Interest receivable 704,219
Total assets
</TABLE>
