UMB SCOUT FUNDS
STOCK FUND
QUARTERLY REPORT
SEPTEMBER 30, 1998
A no-load mutual fund with primary emphasis
on long-term growth of both capital and income.
TO THE SHAREHOLDERS
The UMB Scout Stock Fund closed the quarter ended September 30, 1998, at
$18.02 per share and had a total return (price change and reinvested
distributions) of -8.20% for the period. This result was better than the
average for comparable funds, as shown in the Lipper Growth Fund Index
return of -11.94% and the Value Line Composite Index return of
- -17.80%. The Fund's objective is to provide investors with long-term
growth of both capital and dividend income; current yield is secondary
to the long-term growth objective.
Stock market activity during the quarter served as a wake-up call to
some investors. After a peak in early July, the market declined steadily
and closed August with a loss of more than 500 points in the Dow Jones
Industrial Average. September provided moderate recovery as the "flight
to quality" out of small capitalization stocks and into large caps
drove up prices.
Much of the broad market had been falling since the end of the first
quarter, but the most popular stock market indices, the Dow Jones
Industrial Average and the Standard & Poor's 500 Index, did not reflect
this. The Dow is an index of 30 stocks and represents a very small part
of the universe of over 10,000 stocks available for investment.
The S&P 500 Index includes a larger number of companies and is weighted
by the capitalization of each company. Because the large companies have
grown so quickly in the past three years, the bulk of the index return
is in the largest 14 stocks. The largest four stocks in the index
represent over 50% of its year-to-date return. To match or beat the
return of the S&P 500 Index, a fund portfolio must be positioned like
the index, or overweighted in the top stocks of the index. This approach
accepts an inordinate amount of risk in the hope that the bull market
will continue indefinitely.
Rather than assume such risk in the midst of economic and market
conditions that do not favor continued extremely high returns, we
continue to use an equally weighted portfolio in your Fund, diversifying
our investments among various industries. The Fund is overweighted in
utilities, relative to the S&P 500 Index, in order to capture the
extraordinary dividends that utility stocks provide. As in the past, the
Fund is underweighted in financial and technology stocks because the
volatility in these sectors is inconsistent with our risk-averse style
of management.
The Fund added shares of IMS Health Systems during the quarter. Holdings
in Rohm & Haas, Waste Management, Masco, Archer Daniels Midland and
CISCO were increased. Holdings were eliminated in Cognizant, Hillenbrand
and AMP, and reduced in Black & Decker, Media One Group, American Home
Products, Anheuser Busch, Bard, Brinker International, Bristol Myers,
First Chicago NBD, Apple Computer, IBM and Lucent Technologies. In the
utility sector, the Fund sold shares in Central & Southwest, Dominion
Resources, SBC Communications, Texas Utilities and Williams Companies.
Even with these sales of utility stocks, the exposure to this sector
increased from last quarter because of increases in stock prices.
The cash reserves held in the Fund fulfilled their intended purpose
during August. Although the Fund's net asset value did decline, it
retained more value than the major indices and many comparable funds.
The last three years have tested the Fund, but we have held to our
investment discipline. We intend to maintain our objective of consistent
long-term growth, balancing risk and reward in a diversified portfolio.
We want to remind all shareholders that the Fund name is changing to UMB
Scout Stock Fund, Inc., effective October 31, 1998. However, the ticker
symbol will remain UMBSX.
We appreciate you as a valued shareholder of UMB Scout Stock Fund and
encourage your questions and comments.
Sincerely,
David B. Anderson
/S/David B. Anderson
UMB Investment Advisors
FUND DIVERSIFICATION - PIE CHART
COMPARATIVE RATES OF RETURN
as of September 30, 1998
3 3/4 Years 9 3/4 Years 15 3/4 Years
UMB Scout Stock Fund 12.55% 10.94% 12.04%
Lipper Growth
Fund Index* 21.00% 15.23% 14.35%
S&P 500* 26.18% 17.40% 17.04%
Value Line Composite* 11.48% 7.88% 8.63%
UMB Scout Stock Fund's average annual compound returns for 1-, 5- and
10-year periods ended September 30, 1998, are -1.67%, 10.85% and 10.91%,
respectively.
Performance data contained in this report are for past periods only.
Past performance is not indicative of future results. Investment return
and share value will fluctuate, and redemption value may be more or less
than original cost.
* Unmanaged index of stocks, bonds or mutual funds (there are no direct
investments or fees in these indices).
TOP TEN EQUITY HOLDINGS
Market Percent
Value (000's) of Total
SBC Communications, Inc. $ 3,111 1.78%
International Business Machines Corp. 2,560 1.46%
Unicom Corp. 2,317 1.32%
Bob Evans Farms, Inc. 2,293 1.31%
Alza Corp. 2,169 1.24%
Williams Companies, Inc. 2,156 1.23%
USX-Marathon Group 2,126 1.21%
Comsat Corp. 2,115 1.21%
Bassett Furniture Industries, Inc. 2,088 1.19%
Entergy Corp. 1,999 1.14%
Top 10 Equity Holdings Total: $ 22,934 13.09%
As of September 30, 1998, statement of assets.
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
Market
Shares Company Value
COMMON STOCKS - 76.71%
Basic Materials - 10.15%
5,000 Aluminum Co. of America $ 355,000
85,000 Brush Wellman, Inc. 1,179,375
20,000 Carpenter Technology Corp. 731,250
12,000 Corning, Inc. 353,250
69,150 Cyprus Amax Minerals Co. 916,237
6,000 duPont (E.I.) deNemours & Co. 336,750
25,000 Eastman Chemical Co. 1,260,938
100,000 Engelhard Corp. 1,768,750
7,000 Georgia Pacific Corp. 319,375
7,000 Georgia Pacific Corp. Timber Group 136,062
25,000 Hercules, Inc. 751,563
35,000 International Paper Co. 1,631,875
53,000 Mallinckrodt Group, Inc. 1,076,562
50,000 Nalco Chemical Co. 1,475,000
30,000 Newmont Mining Co. 727,500
30,000 Rohm & Haas Co. 834,375
27,000 Union Camp Corp. 1,063,125
35,000 Weyerhaeuser Co. 1,476,563
110,000 Worthington Industries, Inc. 1,375,000
17,768,550
Capital Goods - 4.94%
30,000 Aeroquip-Vickers, Inc. 862,500
15,000 Briggs & Stratton Corp. 616,875
50,000 Browning Ferris Industries, Inc. 1,512,500
125,000 Calgon Carbon Corp. 929,688
33,000 Cooper Industries, Inc. 1,344,750
7,000 Deere & Co. 211,750
2,500 Fluor Corp. 102,656
18,000 Global Industries Technologies, Inc. 126,000
24,000 Grainger (W.W.), Inc. 1,011,000
40,000 Snap-On, Inc. 1,232,500
14,500 Waste Management International PLC 96,906
8,647,125
Consumer Cyclical - 12.45%
40,000 American Greetings Corp. 1,582,500
20,000 Ascent Entertainment Group 160,000
71,375 Bassett Furniture Industries, Inc. 2,087,719
10,000 Black & Decker Corp. 416,250
40,000 Block (H & R), Inc. 1,655,000
40,000 Brown Group, Inc. 615,000
50,000 Dillards, Inc. 1,415,625
40,000 Donnelley (R.R.) & Sons Co. 1,407,500
28,000 Dun & Bradstreet 756,000
5,000 Ford Motor Co. 234,688
14,000 Gannett Co., Inc. 749,875
15,000 General Motors Corp. 820,312
40,000 Genuine Parts Co. 1,202,500
25,000 Hillenbrand Industries, Inc. 1,225,000
50,000 Limited, Inc. 1,096,875
24,000 Masco Corp. 591,000
10,000 May Department Stores Co. 515,000
15,000 Media General, Inc., Cl. A 581,250
5,000 Media One Group, Inc. 222,187
25,000 Penney (J.C.) & Co., Inc. 1,123,438
18,000 Pharmacia & Upjohn, Inc. 903,375
25,000 Readers Digest Assc. `A' 478,125
100,000 Sensormatic Electronics Corp. 587,500
120,000 Stride Rite Corp. 982,500
25,000 Toys `R' Us, Inc. 404,687
21,813,906
Consumer Staples - 14.85%
20,000 Abbott Laboratories 868,750
50,000 Alza Corp. 2,168,750
16,000 American Home Products Corp. 838,000
8,000 Anheuser-Busch Companies, Inc. 432,000
99,750 Archer-Daniels-Midland Co. 1,670,812
40,000 Bard (C.R.), Inc. 1,475,000
115,000 Bob Evans Farms, Inc. 2,292,813
85,000 Brinker International 1,593,750
12,000 Bristol-Myers Squibb Co. 1,246,500
25,000 Covance, Inc. 648,437
70,000 Darden Restaurants, Inc. 1,120,000
10,000 Eastman Kodak Co. 773,125
19,000 Heinz (H.J.) Co. 971,375
15,000 IMS Health, Inc. 929,063
40,000 International Flavors & Fragrances, Inc. 1,320,000
25,000 Kimberly Clark Corp. 1,012,500
95,000 Lance, Inc. 1,876,250
10,000 Merck & Co., Inc. 1,295,625
65,000 Mylan Laboratories, Inc. 1,917,500
5,000 Nielsen Media Research 51,250
5,600 R H Donnelley Corp. 69,300
60,000 Rubbermaid, Inc. 1,436,250
26,007,050
Energy - 7.29%
30,000 Amoco Corp. 1,616,250
17,000 Atlantic Richfield Co. 1,205,937
40,000 Baker Hughes, Inc. 837,500
10,000 Burlington Resources, Inc. 373,750
30,000 Dresser Industries, Inc. 918,750
30,000 Halliburton Co. 856,875
25,000 Kerr-McGee Corp. 1,137,500
80,000 Mitchell Energy & Development 1,015,000
25,000 Phillips Petroleum Co. 1,128,125
15,000 Schlumberger LTD 754,688
65,000 Union Pacific Resources Group, Inc. 800,313
60,000 USX-Marathon Group 2,126,250
12,770,938
Financial - 0.77%
7,500 First Chicago NBD Corp. 513,750
20,000 Liberty Corp. S.C. 831,250
1,345,000
Technology - 6.02%
35,000 Apple Computer, Inc. 1,334,375
20,000 Boeing Co. 686,250
1,500 Cisco Systems, Inc. 92,719
23,625 Compaq Computer Corp. 747,141
10,000 Electronic Data Systems Corp. 331,875
20,000 International Business Machines Corp. 2,560,000
3,000 Lucent Technologies, Inc. 207,187
32,000 Motorola, Inc. 1,366,000
40,000 Novell, Inc. 490,000
20,000 Perkin-Elmer Corp. 1,373,750
1,147 Raytheon Co. Cl. A 59,429
12,000 Telxon Corp. 244,500
20,000 Texas Instruments, Inc. 1,055,000
10,548,226
Transportation & Services - 3.28%
40,000 CNF Transportation, Inc. 1,165,000
20,000 Consolidated Freightways Corp. 165,000
3,000 Cotelligent Group, Inc. 52,687
15,000 CSX Corp. 630,938
900 Duke Realty Investment, Inc. 20,869
24,000 FDX Corp. 1,083,000
15,000 Norfolk Southern Corp. 435,937
20,000 Roadway Express, Inc. 220,000
45,000 Southwest Airlines Co. 900,000
25,000 Union Pacific Corp. 1,065,625
5,739,056
Utilities - 16.96%
28,000 AT&T Corp. 1,636,250
40,000 Ameren Corp. 1,677,500
32,000 Bell Atlantic Corp. 1,550,000
22,000 Bell South Corp. 1,655,500
25,000 Central & South West Corp. 714,062
60,000 Comsat Corp. 2,115,000
40,000 Dominion Resources Inc. VA 1,785,000
6,000 Duke Energy Corp. 397,125
65,000 Entergy Corp. 1,998,750
45,000 Florida Progress Corp. 1,949,063
10,000 GTE Corp. 550,000
75,000 Niagara Mohawk Power Corp. 1,153,125
70,000 SBC Communications, Inc. 3,110,625
50,000 Scana Corp. 1,678,125
38,000 Texas Utilities Co. 1,769,375
22,273 U. S. West, Inc. 1,167,940
62,000 Unicom Corp. 2,317,250
75,000 Williams Companies, Inc. 2,156,250
10,000 Wisconsin Energy Corp. 315,625
29,696,565
TOTAL COMMON STOCKS - 76.71% 134,336,416
<TABLE>
<CAPTION>
Face Market
Amount Description Value
</CAPTION>
<S> <C>
CONVERTIBLE CORPORATE BONDS - 0.87%
$ 500,000 Telxon Corp., Cv. Sub. Deb., 7.50%, due June 1, 2012 $ 510,000
1,000,000 WMX Technologies, Inc., Cv. Sub. Notes, 2.00%, due January 24, 2005 1,010,000
TOTAL CONVERTIBLE CORPORATE BONDS - 0.87% 1,520,000
SHORT-TERM CORPORATE NOTES - 17.65%
1,500,000 Amoco Co., 5.15%, due November 10, 1998 1,491,202
1,500,000 Beckton Dickenson, 5.46%, due October 26, 1998 1,494,085
1,500,000 Bellsouth Telecommunications Inc., 5.48%, due October 14, 1998 1,496,803
1,000,000 Bellsouth Telecommunications Inc., 5.47%, due October 20, 1998 996,961
1,500,000 Chevron USA, Inc., 5.53%, due October 2, 1998 1,499,539
1,500,000 Coca-Cola Co., 5.42%, due November 6, 1998 1,491,644
1,500,000 duPont (E.I.) deNemours & Co., 5.49%, due October 2, 1998 1,499,543
1,500,000 duPont (E.I.) deNemours & Co., 5.48%, due October 21, 1998 1,495,205
1,500,000 Gannett Inc., 5.48%, due October 23, 1998 1,494,748
1,500,000 General Mills Inc., 5.48%, due October 2, 1998 1,499,543
1,500,000 General RE Corp., 5.49%, due October 6, 1998 1,498,627
1,000,000 General RE Corp., 5.50%, due November 17, 1998 992,667
1,500,000 Heinz (H.J.) Co., 5.46%, due October 22, 1998 1,494,995
1,500,000 Hershey Foods Corp., 5.48%, due October 7, 1998 1,498,402
1,500,000 Lucent Technologies, Inc., 5.46%, due October 16, 1998 1,496,360
1,500,000 Motorola, Inc., 5.48%, due October 7, 1998 1,498,402
1,500,000 Penney (J.C.) & Co., 5.52%, due October 5, 1998 1,498,850
1,500,000 PepsiCo, Inc., 5.49%, due October 9, 1998 1,497,941
1,000,000 Proctor & Gamble Co., 5.45%, due October 13, 1998 998,032
1,500,000 Sara Lee Corp., 5.20%, due October 28, 1998 1,493,933
1,000,000 Times Mirror Co., 5.47%, due November 3, 1998 994,834
1,500,000 Toys `R' Us, Inc., 5.30%, due October 27, 1998 1,494,038
TOTAL SHORT-TERM CORPORATE NOTES - 17.65% 30,916,354
GOVERNMENT SPONSORED ENTERPRISES - 3.98%
2,000,000 Federal Home Loan Banks, Discount Notes,
5.37%, due November 23, 1998 1,983,890
1,500,000 Federal Home Loan Mortgage Corp., Discount Notes,
5.35%, due October 2, 1998 1,499,554
2,000,000 Federal Home Loan Mortgage Corp., Discount Notes,
5.40%, due October 6, 1998 1,998,200
1,500,000 Federal Home Loan Mortgage Corp., Discount Notes,
5.34%, due November 25, 1998 1,487,540
TOTAL GOVERNMENT SPONSORED ENTERPRISES - 3.98% 6,969,184
REPURCHASE AGREEMENT - 0.26%
455,000 Northern Trust Co., 5.35%, due October 1, 1998
(Collateralized by U.S. Treasury Notes, 5.875%, due March 31, 1999) 455,000
TOTAL INVESTMENTS - 99.47% $ 174,196,954
Other assets less liabilities - 0.53% 925,691
TOTAL NET ASSETS - 100.00%
(equivalent to $18.02 per share; 20,000,000 shares of $1.00 par value
capital shares authorized; 9,719,849 shares outstanding) $ 175,122,645
</TABLE>
BASIS OF DETERMINING MARKET VALUE. Each investment is valued at the latest
sales price on September 30, 1998, as reported by the
principal exchange on which the issue is listed. If no sale is reported, or
if unlisted, the average of the latest bid and asked price is used.
This report has been prepared for the information of the Shareholders of
UMB Scout Stock 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.
