UMB SCOUT FUNDS
TAX-FREE MONEY MARKET FUND
(UMTXX)
SEMIANNUAL REPORT DECEMBER 31, 1999
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 finished the fourth
quarter with a seven-day yield of 3.8%. Short-term, tax-free
yields moved sharply higher during the quarter, finishing 82
basis points above second-quarter levels. While a mid-
November increase of Fed Funds (to 5.50%) was labeled a "pre-
emptive strike" against inflation, market participants
continued to debate the likelihood of a pending series of
increases in the Funds rate. A brisk economy and lofty
equity markets are continuing to drive speculation that the
Federal Open Market Committee (FOMC) hasn't finished its
tightening moves. A lack of institutional buyers, attributed
to Y2K fears, helped drive overnight rates even higher
during the final days of the quarter. During that period, we
experienced a rare combination of events that resulted in
tax-exempt rates moving above taxable rates.
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.
Y2K fears in September and October caused issuers to "black
out" the timeframe around year-end. This "black out" made it
impossible to maintain a maturity schedule through the late-
December/early-January period. Our only reasonable strategy
was to increase our holdings of overnight maturities -
decreasing our average maturity from 25 to 15 days. As
mentioned previously, overnight rates spiked during the
final weeks of the fourth quarter, and this shorter
structure helped bolster returns in the Fund. As the year
unfolds, we expect to move the average maturity back to the 25-day range.
The issue of credit enhancement will be an ongoing theme for
the Fund. Many issuers of short-term securities rely on
outside parties to bolster their ratings via insurance
agreements and bank letters of credit. These relationships
give the appearance of stronger credit ratings than would be
available to the issuers without the insurance.
We continue to maintain what we believe to be a high level
of credit quality fund by reviewing issuers'
creditworthiness on a "stand-alone" basis, without the
enhancement of the insurance provider.
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 welcome your comments and suggestions.
Sincerely,
/S/J. Eric Kelley
J. Eric Kelley
UMB Investment Advisors
FUND DIVERSIFICATION 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") or any other
government agency. These shares involve investment risks,
including the possible loss of the principal invested.
FINANCIAL STATEMENTS DECEMBER 31, 1999 (UNAUDITED)
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
FACE MARKET
STATE AMOUNT DESCRIPTION VALUE
<S> <C>
ALASKA
$ 1,700,000 Valdez Alaska ARCO, 3.85%, due January 21, 2000 $ 1,700,000
ARIZONA
1,000,000 Salt River Project Agricultural Improvement, Series A,
Tax-Exempt Commercial Paper, 3.85%, due January 14, 2000 1,000,000
1,000,000 Salt River Project Agricultural Improvement, Series A,
Tax-Exempt Commercial Paper, 3.85%, due January 19, 2000 1,000,000
FLORIDA
600,000 Dade County Florida, Florida Power & Light Co. Rev.,
Var. Rate, due June 1, 2021 600,000
1,300,000 Florida Power Agency, 3.85%, due February 8, 2000 1,300,000
2,500,000 Jacksonville Florida, Tax-Exempt Commercial Paper,
3.50%, due January 18, 2000 2,500,000
1,000,000 Jacksonville Florida, Tax-Exempt Commercial Paper,
3.50%, due January 19, 2000 1,000,000
GEORGIA
2,000,000 Burke County Georgia Development Auth.,
Var. Rate, due July 1, 2024 2,000,000
400,000 Richmond Georgia Pollution Control Rev. (Monsanto),
Var. Rate, due June 1, 2021 400,000
2,000,000 Muni Elec Auth of Georgia, 3.90%, due February 15, 2000 2,000,000
ILLINOIS
910,000 Illinois Development Finance Auth., Pollution Control Rev.,
(Amoco Oil Co. Project), Var. Rate, due November 1, 2012 910,000
1,000,000 Sauget Illinois Pollution Control Rev., (Monsanto),
Var. Rate, due September 1, 2014 1,000,000
600,000 Sauget Illinois Pollution Control Rev., (Monsanto),
Var. Rate, due May 1, 2028 600,000
INDIANA
3,000,000 Sullivan City Indiana Pollution Control Rev.,
Tax-Exempt Commercial Paper, 3.85%, due January 14, 2000 3,000,000
IOWA
500,000 Muscatine County Iowa Pollution Control Rev. (Monsanto Project),
Var. Rate, due October 1, 2007 500,000
KANSAS
370,000 Shawnee County Kansas, Temp Note,
3.65%, due May 15, 2000 370,090
KENTUCKY
1,000,000 Trimble County Kentucky Pollution Control Rev., Series 92A,
Tax-Exempt Commercial Paper, 3.85%, due January 20, 2000 1,000,000
LOUISIANA
1,300,000 St. Charles Parish Louisiana Pollution Control Rev.,
Var. Rate, due October 1, 2022 1,300,000
MARYLAND
4,500,000 Baltimore County Maryland, Tax-Exempt Commercial Paper,
3.75%, due January 10, 2000 4,500,000
MASSACHUSETTS
1,000,000 Massachusetts State, Series B,
Var. Rate, due August 1, 2015 1,000,000
MISSOURI
760,000 Missouri Environmental Improvement/Energy Auth.,
State Water Pollution Revolving Fund,
4.00%, due January 1, 2000 760,000
2,000,000 Missouri Environmental Improvement/Energy Auth.,
State Water Pollution Revolving Fund,
3.30%, due February 1, 2000 2,000,000
500,000 Missouri Environmental Improvement/Energy Auth.,
State Water Pollution Revolving Fund,
3.30%, due March 1, 2000 498,842
3,900,000 Missouri Health & Education Auth., St. Louis University Rev.,
Var. Rate, due October 1, 2024 3,900,000
1,000,000 Missouri Health & Education Auth., St. Louis University Rev.,
Var. Rate, due September 1, 2030 1,000,000
2,800,000 Missouri Health & Education Auth., Washington University,
Var. Rate, due September 1, 2030 2,800,000
1,700,000 Missouri Health & Education Auth., Washington University,
Var. Rate, due September 1, 2030 1,700,000
1,000,000 Missouri Health & Education Auth., KC Art Institute,
Var. Rate, due November 1, 2029 1,000,000
NEBRASKA
1,000,000 Omaha Public Power District Electric Rev., Series A,
Tax-Exempt Commercial Paper, 3.20%, due January 18, 2000 1,000,000
1,000,000 Omaha Public Power District Electric Rev., Series A,
Tax-Exempt Commercial Paper, 3.75%, due January 18, 2000 1,000,000
1,000,000 Omaha Public Power District Electric Rev., Series A,
Tax-Exempt Commercial Paper, 3.70%, due February 3, 2000 1,000,000
1,250,000 Omaha Public Power District Electric Rev., Series A,
Tax-Exempt Commercial Paper, 3.75%, due January 18, 2000 1,250,000
1,000,000 Omaha Public Power District Electric Rev., Series A,
Tax-Exempt Commercial Paper, 3.85%, due January 18, 2000 1,000,000
NEW MEXICO
1,250,000 Hurley New Mexico, Pollution Control Rev.,
(Kennecott Sante Fe Project),
Var. Rate, due December 1, 2015 1,250,000
NORTH CAROLINA
3,500,000 Wake County North Carolina,
Industrial Facility & Pollution Control Auth., (CP&L),
Var. Rate, due May 1, 2015 3,500,000
OKLAHOMA
2,300,000 Garfield County Oklahoma, Pollution Control Rev., Series A,
(Oklahoma Gas & Electric Co.), Var. Rate, due January 1, 2025 2,300,000
PENNSYLVANIA
2,650,000 Beaver County Pennsylvania, Industrial Dev. Auth.,
Pollution Control Rev.,
Var. Rate, due September 1, 2025 2,650,000
RHODE ISLAND
3,000,000 Rhode Island State, Var. Rate, due June 1, 2018 3,000,000
SOUTH CAROLINA
2,000,000 York County South Carolina (Duke Power),
Tax-Exempt Commercial Paper,
3.35%, due January 24, 2000 2,000,000
1,400,000 York County South Carolina (Duke Power),
Tax-Exempt Commercial Paper,
3.40%, due February 2, 2000 1,400,000
TEXAS
5,000,000 Austin Texas Combined Utility, Series A,
Tax-Exempt Commercial Paper,
3.70%, due January 19, 2000 5,000,000
1,000,000 Austin Texas Combined Utility, Series A,
Tax-Exempt Commercial Paper,
3.80%, due January 11, 2000 1,000,000
1,100,000 Brazos River Auth. Texas, Pollution Control Rev., (Monsanto),
Var. Rate, due February 1, 2004 1,100,000
2,000,000 El Paso Texas, Water/Sewer, Tax-Exempt Commercial Paper,
3.85%, due January 20, 2000 2,000,000
1,550,000 Gulf Coast Texas Waste Disposal, (Monsanto),
Var. Rate, due April 1, 2013 1,550,000
5,000,000 Lower Neches Valley Auth., Pollution Control Rev.,
(River Treatment Industrial Deb. Corp.),
Var. Rate, due February 1, 2004 5,000,000
1,600,000 Port Authority Texas Naval Dist, Var. Rate, due October 1, 2024 1,600,000
UTAH
1,000,000 Intermountain Power, Series B2, Tax-Exempt Commercial Paper,
3.85%, due January 12, 2000 1,000,000
1,100,000 Intermountain Power, Series B2, Tax-Exempt Commercial Paper,
3.50%, due January 19, 2000 1,100,000
1,000,000 Intermountain Power, Series B2, Tax-Exempt Commercial Paper,
3.50%, due February 1, 2000 1,000,000
1,550,000 Utah State, Var. Rate, due July 1, 2016 1,550,000
VIRGINIA
1,500,000 Alexandria Virginia, Public Improvement,
Tax-Exempt Commercial Paper,
4.00%, due January 1, 2000 1,500,000
1,600,000 Chesterfield County Virginia, (VEPCO),
Tax-Exempt Commercial Paper,
3.90%, due January 13, 2000 1,600,000
3,000,000 Louisa County Virginia, Pollution Control Rev.,
Tax-Exempt Commercial Paper, 3.25%, due January 18, 2000 3,000,000
WASHINGTON
1,000,000 Seattle Municipal Light & Power Rev.,
3.75%, due February 9, 2000 1,000,000
2,000,000 Seattle Municipal Light & Power Rev., 3.80%, due April 3, 2000 2,000,000
3,500,000 Seattle Municipal Light & Power Rev.,
Var. Rate, due November 1, 2018 3,500,000
1,000,000 Seattle Municipal Light & Power Rev.,
Var. Rate, due September 1, 2025 1,000,000
1,750,000 Spokane Washington, T/RAN, 3.50%, due January 31, 2000 1,749,527
1,300,000 Washington State, Public Power Supply, Electric Rev.,
Var. Rate, 1,300,000
2,000,000 Washington State, Public Power Supply, Electric Rev.,
Var. Rate, due July 1, 2012 2,000,000
2,400,000 Washington State, Public Power Supply, Electric Rev.,
Var. Rate, due July 1, 2017 2,400,000
1,000,000 Washington State, Series B, Var. Rate, due June 1, 2020 1,000,000
2,000,000 Washington State, Series B, Var. Rate, due June 1, 2020 2,000,000
WISCONSIN
1,000,000 Wisconsin G.O. Tax-Exempt Commercial Paper,
3.75%, due January 10, 2000 1,000,000
1,500,000 Wisconsin G.O. Tax-Exempt Commercial Paper,
3.75%, due January 11, 2000 1,500,000
3,861,000 Wisconsin G.O. Tax-Exempt Commercial Paper,
3.75%, due January 12, 2000 3,861,000
1,400,000 Oak Creek Wisconsin, Pollution Control Rev.,
(Wisconsin Electric Power Co.),
Var. Rate, due August 1, 2016 1,400,000
3,100,000 Sheboygan Wisconsin, Pollution Control Rev.,
(Wisconsin Power & Light Co.),
Var. Rate, due August 1, 2014 3,100,000
1,500,000 Sheboygan Wisconsin, Pollution Control Rev.,
(Wisconsin Power Co.),
Var. Rate, due September 1, 2015 1,500,000
WYOMING
500,000 Lincoln Co. Wyoming Poll Ctrl Rev,
Var. Rate, due August 1, 2015 500,000
TOTAL INVESTMENTS - 99.79% 121,499,459
Other assets less liabilities - 0.21% 257,331
TOTAL NET ASSETS - 100.00%
(Equivalent to $1.00 per share;
1,000,000,000 shares of $0.01 par value
capital shares authorized; 121,856,618.100 shares outstanding) $ 121,756,790
</TABLE>
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS DECEMBER 31, 1999 (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
ASSETS:
Investment securities, at market value $ 121,499,459
Interest receivable 733,570
Cash (483,819)
Total assets 121,749,210
LIABILITIES:
Dividends payable 315
Accrued expenses payable (7,895)
Total liabilities (7,580)
NET ASSETS $ 121,756,790
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 121,857,756
Accumulated net realized loss
on investment transactions (100,966)
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 121,756,790
Capital shares, $0.01 par value
Authorized 1,000,000,000
Outstanding 121,856,618
NET ASSET VALUE PER SHARE $ 1.00
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
STATEMENT OF OPERATIONS
INVESTMENT INCOME:
Income:
Interest $ 2,352,185
Expenses:
Management fees 347,125
Government fees 9,196
356,321
Net investment income 1,995,864
Net increase in net assets resulting
from operations $ 1,995,864
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, 1999 YEAR ENDED
(UNAUDITED) JUNE 30, 1999
</CAPTION>
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,995,864 $ 4,103,317
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,995,864) (4,103,317)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ($1.00 per share) 103,928,571 249,964,370
Net asset value of shares issued for reinvestment
of distributions ($1.00 per share) 285,267 579,679
104,213,838 250,544,049
Cost of shares redeemed ($1.00 per share) (108,564,581) (247,504,349)
Net increase (decrease) in net assets from
capital share transactions (4,350,743) 3,039,700
Net increase (decrease) in net assets (4,350,743) 3,039,700
NET ASSETS:
Beginning of period 126,107,533 123,067,833
End of period $121,756,790 $126,107,533
</TABLE>
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 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. The
policies are in conformity with generally accepted accounting principles.
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 amortized
cost basis, which is also used for federal income tax purposes.
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. At
December 31, 1999, the Fund has an accumulated net realized
loss on sale of investments for federal income tax purposes
of $100,966, which is available to offset future taxable gains.
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, were as follows:
Other than
U.S. Government U.S. Government
Securities Securities
Purchases $ 308,281,730 $ -
Proceeds from sales 331,155,200 -
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 Tax-Free Money Market 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.
