UMB Scout Funds
Stock Fund
(UMBSX)
Stock Select Fund
Annual Report June 30, 2000
No-load mutual funds with primary emphasis
on long-term growth of both capital and income.
TO THE SHAREHOLDERS
In the past year, the financial markets continued to capture the nation's
fancy. The major drivers regarding financial asset prices over the last 12
months have been earnings and interest rates, as is typically the case.
However, last fall we witnessed a temporary detour from the "norm" as we
saw what turned out to be a speculative "bubble" being created when
investors purchased anything labeled ".com." While that bubble has not
burst, it is fair to say that much of the speculative "froth" has since
been eliminated from asset valuation levels.
In an effort to get a handle on the economy, Alan Greenspan conducted a
series of six interest rate increases designed to slow the economic
environment and ease any upward pressure on inflation rates. We are
beginning to see signs that the growth rate in the economy is decreasing.
For the time being, it appears that Mr. Greenspan's efforts were successful.
But what about the future? Will the economy continue to slow? And if it
does slow, could we slip into a recession? These are very significant
questions on many investors' minds. While we do not know what the future
holds, history would suggest that the economy is going to slow during the
remainder of 2000. Keep in mind that historically, the Federal Reserve,
currently headed by Greenspan, has had difficulty "fine tuning" the
economy. It has been shown that once the economy starts to slow, keeping it
out of a recessionary environment can be difficult. In our minds, recession
poses a major potential risk which investors may have to wrestle with
during the next 12 months.
Longer term, we continue to look at the investment landscape in a positive
sense. Inflation is low, and the economy is growing nicely. As long as
these two trends are at work, we believe that financial assets will
generate satisfactory returns.
In closing, we at UMB Investment Advisors would like to thank you, our
shareholders, for your continued support of the UMB Scout Funds. We fully
understand and appreciate the trust you have placed in our hands. We will
work hard to maintain that trust.
Respectfully,
/s/William B. Greiner
William B. Greiner
Executive Vice President
Chief Investment Officer
UMB Investment Advisors
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.
TO THE SHAREHOLDERS
The UMB Scout Stock Fund closed the quarter ended June 30, 2000 at $18.50
per share and had a total return (price change and reinvested
distributions) of -3.44% for the quarter and 2.68% for the fiscal year. The
UMB Scout Stock Select Fund closed the quarter ended June 30, 2000 at $9.59
per share and had a total return (price change and reinvested
distributions) of -3.70% for the quarter and
-3.75% for the fiscal year.
The objective of the Fund is to provide investors with long-term growth of
both capital and dividend income; current yield is secondary to the long-
term growth objective.
The stock market has provided much excitement and movement over the last
year. But when you consider the net change, not a lot has happened - with
the exception of the NASDAQ Index which is up 48%. In contrast, the Dow's
return was -3.57% and Standard & Poor's 500 return was up 7.25%. The real
excitement, of course, has been in technology, which is heavily weighted in
the Nasdaq Index. Technology took off at the end of October and had an
incredible run into early March.
These stock price movements have been against a background of very
favorable economic news. Earnings growth in general has come through very
nicely, and inflation has been pretty much under control.
The biggest variable has been the policies of the Federal Reserve Bank,
which has been concerned about the economy becoming too stimulated by the
irrational exuberance originating from the stock market. The Fed has also
been worried about inflation rising as unemployment levels have come down
and some commodity prices have risen, particularly oil prices.
Oil may, in fact, turn out to be the major fly in the ointment as OPEC
restricted production in early 1999, leading to higher oil prices. As much
as we would like to totally blame OPEC for higher prices, it also coincided
with the economic recovery in Southeast Asia and increased demand for gasoline
in the U.S. - to fuel the gas-guzzling vehicles which have become so popular.
The Fed began raising interest rates at this time last year, but those
increases had little effect as the supply of money was increased near the
end of the year. Late in 1999, the major concern was Y2K and the widely
held fear that the computers running today's society would crash. The Fed
wanted to make sure there was enough money in the system, particularly cash
in circulation, to enable us to cope with the situation. Only after the
first of the year did they implement a modestly restrictive monetary policy.
The Fed's policies appear to be working as the air has been let out of the
technology bubble and the cyclical components in the economy, like home
building and retail sales, are slowing down.
In managing the Fund, we have reduced some of our cyclical exposure and
have continued to increase our exposure to technology. As technology pulled
back, we have continued to make purchases, adding names like Microsoft,
Oracle, Computer Sciences and Cisco Systems to the portfolio.
We have also increased our weightings in the consumer staples, buying
Proctor & Gamble, and in the consumer discretionary sector, buying Knight
Ridder and McDonald's. In the health care area, we have added Genentech. We
have reduced our weightings in consumer discretionary, basic materials,
utilities and finance. These changes are designed to continue our process
of adding more growth in the portfolio at attractive prices. As a result of
these changes, the expected growth rate of the stocks in the portfolio is
higher, while the average price/earnings ratio and the beta of the average
stock are still below average.
The exception to this policy has been increasing our weighting of energy.
We think that the oil cycle is going to take several years to work out, and
while oil prices will eventually come down from their present level, they
will likely remain fairly high.
Over the last year, we have made improvements to the Fund which are
designed to increase growth, and at the same time, maintain the Fund's
value bias. What has changed is our definition of value. Previously we
valued stocks relative to their assets; now we value stocks relative to
their earnings and the prospects for growth in those earnings.
Thank you for your interest and participation in the UMB Scout Stock or UMB
Scout Stock Select Funds. We welcome your questions and comments.
Sincerely,
/s/James L. Moffett
James L. Moffett
UMB Investment Advisors
Chart - HYPOTHETICAL GROWTH OF $10,000
UMB Scout Stock Fund (UMBSX)
as of June 30, 2000
Chart - COMPARATIVE RATES OF RETURN
UMB Scout Stock Fund (UMBSX)
as of June 30, 2000
1 Year 3 Years 5 Years 10 Years
UMB Scout Stock Fund 2.68% 10.52% 11.87% 11.24%
Lipper Growth and Income
Fund Index* -0.63% 11.29% 16.73% 14.16%
S&P 500* 7.25% 19.67% 23.80% 17.80%
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).
Chart - HYPOTHETICAL GROWTH OF $10,000
UMB Scout Stock Select Fund
as of June 30, 2000
Chart - COMPARATIVE RATES OF RETURN
UMB Scout Stock Select Fund
as of June 30, 2000
Quarter Year Inception
UMB Scout Stock
Select Fund -3.70% -3.75% -2.65
Lipper Growth & Income
Fund Index* -2.51% -0.63% N.A.
S&P 500* -2.66% 7.25% N.A.
Inception - May 17, 1999.
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).
Chart - Top Ten Equity Holdings
UMB Scout Stock Fund (UMBSX)
Market Percent
Value (000's) of Total
Intel Corp. $ 5,281 4%
International Business Machines Corp. 4,383 3%
Sun Microsystems, Inc. 3,819 3%
Molex, Inc. 3,369 2%
PepsiCo, Inc. 3,311 2%
Apple Computer, Inc. 3,300 2%
McDonald's Corp. 2,964 2%
Gateway, Inc. 2,951 2%
Kimberly-Clark Corp. 2,869 2%
Halliburton Co. 2,831 2%
Top Ten Equity Holdings Total: $35,077* 23%*
As of June 30, 2000, statement of assets. Subject to change.
*Market Values and Percents of Total are rounded; may not equal total.
Top Ten Equity Holdings
UMB Scout Stock Select Fund
Market Percent
Value (000's) of Total
Intel Corp. $ 334 4%
International Business Machines Corp. 233 3%
Apple Computer, Inc. 210 2%
Sun Microsystems, Inc. 193 2%
McDonald's Corp. 188 2%
Kimberly-Clark Corp. 178 2%
Molex, Inc. 168 2%
Hewlett-Packard Co. 162 2%
Burlington Resources, Inc. 153 2%
Southwest Airlines Co. 152 2%
Top Ten Equity Holdings Total: $ 1,971* 22%*
As of June 30, 2000, statement of assets. Subject to change.
*Market Values and Percents of Total are rounded; may not equal total.
Chart - fund diversification
UMB Scout Stock Fund (UMBSX)
Chart - fund diversification
UMB Scout Stock Select Fund
FINANCIAL STATEMENTS JUNE 30, 2000
Statement of Net Assets
Market
Shares DESCRIPTION Value
STOCK PORTFOLIO
COMMON STOCKS - 84.6%
Consumer Discretionary - 8.0%
40,000 Brinker International, Inc.* $ 1,170,000
33,000 Knight Ridder, Inc. 1,755,188
57,868 Limited, Inc. 1,251,396
90,000 McDonald's Corp. 2,964,375
50,000 Snap-On, Inc. 1,331,250
54,500 TJX Companies, Inc. 1,021,874
40,000 Target Corp. 2,320,000
11,814,083
Consumer Staples - 6.4%
13,000 Anheuser-Busch Companies, Inc. 970,938
105,000 Archer Daniels Midland Co. 1,030,313
50,000 Kimberly-Clark Corp. 2,868,750
74,500 PepsiCo, Inc. 3,310,593
20,000 Procter & Gamble Co. 1,145,000
9,325,594
Energy - 7.6%
32,800 BP Amoco PLC, Sponsored ADR 1,855,250
60,000 Halliburton Co. 2,831,250
35,000 Kerr-McGee Corp. 2,062,813
30,000 Phillips Petroleum Co. 1,520,625
60,000 USX Marathon Group 1,503,750
65,000 Union Pacific Resources Group, Inc. 1,430,000
11,203,688
Finance - 3.0%
54,000 AON Corp. 1,677,375
34,500 Firstmerit Corp. 738,531
57,000 Lincoln National Corp. Indiana 2,059,125
4,475,031
Health Care - 14.0%
40,000 Alza Corp.* 2,365,000
30,000 Amgen, Inc.* 2,107,500
40,000 Bard, (C.R.), Inc. 1,925,000
24,000 Bristol-Myers Squibb Co. 1,398,000
200,000 Covance, Inc.* 1,779,758
12,600 Genentech, Inc.* 2,167,200
46,000 Mallinckrodt, Inc. 1,998,125
30,000 Merck & Co., Inc. 2,298,750
65,400 Mylan Laboratories, Inc. 1,193,550
24,100 PE Corp.-PE Biosystems Group 1,587,587
33,191 Pharmacia Corp. 1,715,560
20,536,030
Industrials - 7.5%
40,000 Block, (H&R), Inc. 1,295,000
48,000 FedEx Corp.* 1,824,000
40,000 Genuine Parts Co. 800,000
35,000 Grainger, (W.W.), Inc. 1,078,438
70,000 Molex, Inc. 3,368,750
138,000 Southwest Airlines Co. 2,613,375
10,979,563
information Technology - 24.6%
5,530 Agilent Technologies, Inc.* 407,860
63,000 Apple Computer, Inc.* 3,299,625
34,500 Cisco Systems, Inc.* 2,192,906
23,625 Compaq Computer Corp. 603,914
21,000 Computer Sciences Corp.* 1,568,438
52,000 Gateway, Inc.* 2,951,000
14,500 Hewlett-Packard Co. 1,810,688
39,500 Intel Corp. 5,280,656
40,000 International Business Machines Corp. 4,382,500
30,000 Lucent Technologies, Inc. 1,777,500
24,300 Microsoft Corp.* 1,944,000
78,000 Motorola, Inc. 2,266,875
40,000 Novell, Inc.* 370,000
19,000 Oracle Corp.* 1,597,188
42,000 Sun Microsystems, Inc.* 3,819,374
28,000 Texas Instruments, Inc. 1,923,250
36,195,774
Materials - 4.0%
77,000 Brush Engineered Materials, Inc. Holding Co.* 1,203,125
100,000 Engelhard Corp. 1,706,250
50,100 International Paper Co. 1,493,606
43,300 Rohm & Haas Co. 1,493,850
5,896,831
Telecommunication Services - 4.8%
17,300 AT&T Corporation 547,113
47,800 BellSouth Corporation 2,037,475
7,000 GTE California, Inc. 435,750
50,000 SBC Communications, Inc. 2,162,500
22,373 US West, Inc. 1,918,484
7,101,322
Utilities - 4.7%
12,100 Ameren Corp. 408,375
65,000 Entergy Corp. 1,767,188
43,000 Florida Progress Corp. 2,015,625
35,000 TXU Corp. 1,032,500
35,000 Williams Companies, Inc. 1,459,062
6,682,750
TOTAL COMMON STOCKS (Cost $87,527,600) - 84.6% 124,210,666
FACE Market
AMOUNT DESCRIPTION Value
Short-Term Corporate Notes - 6.8%
$1,000,000 AT&T Company, 6.50%, due July 21, 2000 996,208
1,500,000 Becton Dickinson & Co., 6.45%, due July 7, 2000 1,498,119
1,000,000 BellSouth Telecommunications,
6.51%, due July 28, 2000 994,937
1,000,000 Dun & Bradstreet Corp., 6.60%, due July 18, 2000 996,700
1,000,000 Hershey Foods Corp., 6.54%, due August 4, 2000 993,671
1,500,000 IBM Credit Corp., 6.47%, due July 11, 2000 1,497,035
1,500,000 Merck & Co., Inc., 6.63%, due July 13, 2000 1,496,409
1,500,000 SBC Communications, Inc.,
6.53%, due July 10, 2000 1,497,277
TOTAL SHORT-TERM CORPORATE NOTES (Cost $9,970,356) - 6.8% 9,970,356
REPURCHASE AGREEMENT (Cost $15,250,000) - 10.4%
15,250,000 Northern Trust Co., 6.40%, due July 3, 2000
(Collateralized by U.S. Treasury Bonds,
11.875%, due November 15, 2003) 15,250,000
TOTAL INVESTMENTS (Cost $112,747,956) - 101.8% 149,431,022
Other assets less liabilities - (1.8%) (2,565,423)
TOTAL NET ASSETS - 100.0%
(equivalent to $18.50 per share; 20,000,000 shares
of $1.00 par value capital shares authorized;
7,937,825 shares outstanding) $146,865,599
For federal income tax purposes, the identified cost of investments owned
at June 30, 2000 was $113,594,590.
Net unrealized appreciation for federal income tax purposes was
$35,836,423, which is comprised of unrealized appreciation of $40,861,544
and unrealized depreciation of $5,025,121.
*Non-income producing security
ADR - American Depository Receipt
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS JUNE 30, 2000
Statement of Net Assets
Market
Shares DESCRIPTION Value
STOCK SELECT PORTFOLIO
COMMON STOCKS - 90.5%
Consumer Discretionary - 10.6%
4,300 Darden Restaurants, Inc. $ 69,875
2,375 Knight Ridder, Inc. 126,320
4,800 Limited, Inc. 103,800
5,700 McDonald's Corp. 187,744
4,200 Snap-On, Inc. 111,825
6,000 TJX Companies, Inc. 112,500
2,000 TRW, Inc. 86,750
1,800 Target Corp. 104,400
903,214
Consumer Staples - 6.3%
800 Anheuser-Busch Companies, Inc. 59,750
8,290 Archer Daniels Midland Co. 81,346
3,100 Kimberly-Clark Corp. 177,862
3,400 PepsiCo, Inc. 151,088
1,200 Procter & Gamble Co. 68,700
538,746
Energy - 6.8%
4,000 Burlington Resources, Inc. 153,000
3,000 Halliburton Co. 141,563
1,400 Kerr-McGee Corp. 82,513
4,400 USX Marathon Group 110,274
4,300 Union Pacific Resources Group, Inc. 94,600
581,950
Finance - 4.4%
3,400 AON Corp. 105,613
6,900 Firstmerit Corp. 147,488
3,300 Lincoln National Corp. Indiana 119,212
372,313
Health Care - 14.9%
2,500 Alza Corp.* 147,813
1,800 Amgen, Inc.* 126,450
2,800 Bard, (C.R.), Inc. 134,750
2,000 Bristol-Myers Squibb Co. 116,500
11,400 Covance, Inc.* 100,463
700 Genentech, Inc.* 120,400
2,350 Mallinckrodt, Inc. 102,078
1,900 Merck & Co., Inc. 145,588
5,700 Mylan Laboratories, Inc. 104,025
1,300 PE Corp.-PE Biosystems Group* 85,638
1,666 Pharmacia Corp. 86,110
1,269,815
Industrials - 8.4%
1,400 Block, (H&R), Inc. 45,325
2,000 Emerson Electric Co. 120,750
2,700 FedEx Corp.* 102,600
2,600 Genuine Parts Co. 52,000
2,400 Grainger, (W.W.), Inc. 73,950
3,500 Molex, Inc. 168,438
8,000 Southwest Airlines Co. 151,500
714,563
information Technology - 26.0%
496 Agilent Technologies, Inc.* 36,567
4,000 Apple Computer, Inc.* 209,500
2,000 Cisco Systems, Inc.* 127,125
1,500 Compaq Computer Corp.* 38,344
1,200 Computer Sciences Corp.* 89,625
2,600 Gateway, Inc.* 147,550
1,300 Hewlett-Packard Co. 162,338
2,500 Intel Corp. 334,219
2,130 International Business Machines Corp. 233,368
1,900 Lucent Technologies, Inc. 112,575
1,500 Microsoft Corp.* 120,000
4,000 Motorola, Inc. 116,250
2,400 Novell, Inc.* 22,200
1,200 Oracle Corporation * 100,875
2,120 Sun Microsystems, Inc.* 192,788
1,700 Texas Instruments, Inc. 116,767
2,700 Xerox Corp. 56,025
2,216,116
Materials - 4.2%
5,000 Brush Engineered Materials, Inc. Holding Co.* 78,125
7,500 Engelhard Corp. 127,969
2,200 International Paper Co. 65,587
2,500 Rohm & Haas Co. 86,250
357,931
Telecommunication Services - 5.0%
1,000 AT&T Corporation 31,625
2,200 BellSouth Corporation 93,775
1,300 GTE Corp. 80,925
2,400 SBC Communications, Inc. 103,800
1,500 US West, Inc.* 128,625
438,750
Utilities - 3.9%
195 Ameren Corp. 6,581
4,000 Entergy Corp. 108,750
1,600 Florida Progress Corp. 75,000
1,600 TXU Corp. 47,200
2,200 Williams Companies, Inc. 91,711
329,242
TOTAL COMMON STOCKS (Cost $7,778,202) - 90.5% 7,722,640
FACE Market
AMOUNT DESCRIPTION Value
REPURCHASE AGREEMENT (Cost $1,250,000) - 14.7%
$1,250,000 Northern Trust Co., 6.40%, due July 3, 2000
(Collateralized by U.S. Treasury Bonds,
11.875%, due November 15, 2003) 1,250,000
TOTAL INVESTMENTS (Cost $9,028,202) - 105.2% 8,972,640
Other assets less liabilities - (5.2%) (443,250)
TOTAL NET ASSETS - 100.0%
(equivalent to $9.59 per share; 10,000,000 shares
of $1.00 par value capital shares authorized;
889,421 shares outstanding) $ 8,529,390
For federal income tax purposes, the identified cost of investments owned
at June 30, 2000 was $9,028,202.
Net unrealized depreciation for federal income tax purposes was $55,562,
which is comprised of unrealized appreciation of $791,220 and unrealized
depreciation of $846,782.
*Non-income producing security
FINANCIAL STATEMENTS JUNE 30, 2000
Statements of Assets and Liabilities
<TABLE>
<CAPTION>
Stock
Stock Select
</CAPTION>
<S> <C> <C>
ASSETS:
Investment securities, at market value
(identified cost $112,747,956 and
$9,028,202, respectively) $149,431,022 $ 8,972,640
Cash - 8,002
Dividends receivable 142,470 7,713
Receivable for investments sold 3,638,416 152,969
Total assets 153,211,908
9,141,324
LIABILITIES:
Disbursements in excess of demand deposit cash 1,308,008 -
Payable for investment purchases 5,038,301 611,934
Total liabilities 6,346,309 611,934
NET ASSETS $146,865,599 $ 8,529,390
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $103,201,225 $ 8,761,394
Accumulated undistributed income:
Net investment income 305,306 10,419
Net realized gain (loss) on investment transactions 6,676,002 (186,861)
Net unrealized appreciation (depreciation)
on investments 36,683,066 (55,562)
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $146,865,599 $ 8,529,390
Capital shares, $1.00 par value
Authorized 20,000,000 10,000,000
Outstanding 7,937,825 889,421
NET ASSET VALUE PER SHARE $ 18.50 $ 9.59
</TABLE>
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS Year Ended June 30, 2000
Statements of Operations
<TABLE>
<CAPTION>
Stock
Stock Select
</CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends $ 2,293,616 $ 84,471
Interest 1,241,185 51,843
3,534,801 136,314
Expenses:
Management fees 1,408,111 53,002
Government fees 15,633 -
1,423,744 53,002
Net investment income 2,111,057 83,312
REALIZED and unrealized gain (loss) ON INVESTMENTS:
Net realized gain (loss) from investment transactions 16,284,971 (186,861)
Decrease in net unrealized appreciation on investments (14,377,996) (86,948)
Net realized and unrealized gain (loss)
on investments 1,906,975 (273,809)
Net increase (decrease) in net assets resulting
from operations $ 4,018,032 $ (190,497)
</TABLE>
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Stock Stock
Year Ended Year Ended
June 30, 2000 June 30, 1999
</CAPTION>
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 2,111,057 $ 3,493,940
Net realized gain from investment transactions 16,284,971 15,649,630
Increase (decrease) in net unrealized
appreciation on investments (14,377,996) 4,475,877
Net increase in net assets resulting from operations 4,018,032 23,619,447
Net equalization included in the price
of shares issued and redeemed (52,253) (183,501)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income 2,227,967 (3,667,370)
In excess of net investment income - (78,521)
Net realized gain from investment transactions (18,265,897) (11,380,820)
Decrease in net assets from distributions (20,493,864) (15,126,711)
DECREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 837,599 and 1,609,570 shares
sold, respectively 16,420,440 30,716,658
Net asset value of 1,003,274 and 369,217 shares
issued for reinvestment of distributions,
respectively 18,587,862 7,133,312
35,008,302 37,849,970
Cost of 2,777,794 and 3,022,551 shares redeemed,
respectively (53,837,877) (58,614,795)
Net decrease in net assets from capital
share transactions (18,829,575) (20,764,825)
Net decrease in net assets (35,357,660) (12,455,590)
NET ASSETS:
Beginning of year 182,223,259 194,678,849
End of year (including undistributed net investment income
of $305,306 and ($78,521), respectively) $146,865,599 $182,223,259
</TABLE>
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Stock Select
For the Period
Stock Select May 17, 1999
Year Ended (Inception) to
June 30, 2000 June 30, 1999
</CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 83,312 $ 2,697
Net realized gain (loss) from investment transactions (186,861) 8,823
Increase (decrease) in net unrealized appreciation
on investments (86,948) 31,387
Net increase (decrease) in net assets resulting
from operations (190,497) 42,907
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (80,721) -
Decrease in net assets from distributions (80,721) -
INCREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 812,779 and 210,685 shares sold,
respectively 7,943,889 2,079,639
Net asset value of 19,623 shares issued for
reinvestment of distributions 231,979 -
8,175,868 2,079,639
Cost of 148,045 and 5,621 shares redeemed, respectively (1,442,100) (55,706)
Net increase in net assets from capital share
transactions 6,733,768 2,023,933
Net increase in net assets 6,462,550 2,066,840
NET ASSETS:
Beginning of period 2,066,840 -
End of period (including undistributed net investment
income of $10,419 and $2,697, respectively) $8,529,390 $2,066,840
</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. Its shares are
currently issued in two series (Stock and Stock Select) with each series,
in effect, representing a separate fund. 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 - Securities traded on a national securities exchange are
valued at the last reported sales price on the last business day of the
year or, if no sale was reported on that date, at the average of the last
reported bid and asked prices. Securities traded over-the-counter are
valued at the average of the last reported bid and asked prices. Short-term
obligations are valued at amortized cost, which approximates market value.
Investment transactions are recorded on the trade date. Interest income is
recorded daily. Dividend income and distributions to shareholders are
recorded on the ex-dividend dates. Realized gains and losses from
investment transactions and unrealized appreciation and depreciation of
investments are reported on the identified cost basis.
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 June 30, 2000,
the Stock Select Fund has a net capital loss carryover of $187,000
available to offset future realized capital gains and thereby reduce
further taxable gain distributions.
Net investment income and net realized gains differ for financial statement
and tax purposes primarily because of the deferral of wash sale losses and
post-October losses.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate
characterization for federal income tax purposes due to GAAP/tax
differences in the character of income recognition.
Equalization - The Fund uses the accounting practice known as equalization,
by which a portion of the proceeds from sales and costs of redemption of
capital shares, equivalent on a per share basis to the amount of
undistributed net investment income on the date of the transactions, is
credited or charged to undistributed income. As a result, undistributed net
investment income per share is unaffected by sales or redemptions of
capital shares.
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 year ended June 30, 2000 (excluding commercial
paper, repurchase agreements and short-term securities), were as follows:
Other than
U.S. Government U.S. Government
Stock Fund Securities Securities
Purchases $44,110,635 $ -
Proceeds from sales 73,323,512 -
Stock Select Fund
Purchases $6,636,677 $ -
Proceeds from sales 608,221 -
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 .85 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.
4. REPURCHASE AGREEMENTS - Securities purchased under agreements to resell
are held by the Fund's custodian and investment counsel, UMB Bank, n.a. The
custodian monitors the market values of the underlying securities which
they have purchased on behalf of the Fund to ensure that the collateral is
sufficient to protect the Fund in the event of default by the seller.
5. SUBSEQUENT ACCOUNTING POLICY CHANGE - The Financial Accounting Standards
Board ("FASB") has issued Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities ("SFAS
133"). This statement, as amended by SFAS No. 137, requires all derivatives
to be recorded on the balance sheet date at fair value and establishes
standard accounting methodologies for hedging activities. The standard will
result in the recognition of offsetting changes in value or cash flows of
both the hedge and the hedged item in net investment income in the same
period. The statement is effective for the Fund's fiscal year ending June
30, 2001. Because the Fund does not normally hold derivative instruments,
the adoption of this statement is not expected to have a material impact on
the financial statements.
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share
outstanding throughout the period.
2000 1999 1998 1997 1996
Stock
Net assets, beginning of year $20.53 $19.63 $18.33 $16.69 $16.36
Income from investment operations:
Net investment income 0.32 0.37 0.41 0.43 0.48
Net realized and unrealized gains
on securities 0.16 2.18 2.33 2.23 1.36
Total from investment operations 0.48 2.55 2.74 2.66 1.84
Distributions from:
Net investment income (0.27) (0.41) (0.40) (0.42) (0.47)
Net realized gain on investment
transactions (2.24) (1.24) (1.04) (0.60) (1.04)
Total distributions (2.51) (1.65) (1.44) (1.02) (1.51)
Net asset value, end of year $18.50 $20.53 $19.63 $18.33 $16.69
Total return 3% 14% 15% 16% 12%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 147 $ 182 $ 195 $ 193 $ 171
Ratio of expenses to average
net assets 0.87% 0.87% 0.86% 0.86% 0.85%
Ratio of net investment income to
average net assets 1.29% 1.93% 2.07% 2.48% 2.81%
Portfolio turnover rate 30% 14% 10% 16% 28%
Average commission rate $.0407 $.0489 $.0450 $.0468 $.0501
See accompanying Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share
outstanding throughout the period.
2000 1999*
Stock select
Net assets, beginning of period $ 10.08 $ 10.00
Income (loss) from investment operations:
Net investment income 0.10 0.01
Net realized and unrealized gains (losses)
on securities (0.48) 0.07
Total from investment operations (0.38) 0.08
Distributions from:
Net investment income (0.10) -
Net realized gain on investment transactions (0.01) -
Total distributions (0.11) -
Net asset value, end of period $ 9.59 $10.08
Total return (4%) 6%**
Ratios/Supplemental Data
Net assets, end of period (in millions) $ 9 $ 2
Ratio of expenses to average net assets 0.80% 0.85%
Ratio of net investment income to average net assets 1.26% 2.35%
Portfolio turnover rate 11% 7%
Average commission rate $.0645 $.0723
*The Fund was capitalized on March 17, 1999, with $100,000, representing
10,000 shares at a net asset value of $10.00 per share. Initial public
offering was made on May 17, 1999, at which time net asset value was $10.00
per share. Ratios for this initial period of operation are annualized.
**The return is not annualized.
See accompanying Notes to Financial Statements.
INDEPENDENT ACCOUNTANTS' REPORT
To the Shareholders and Board of Directors of UMB Scout Stock Fund, Inc.:
We have audited the accompanying statements of assets and liabilities of
UMB Scout Stock Fund, Inc., includes two series: Stock and Stock Select,
including the statements of net assets, as of June 30, 2000, and the
related statements of operations, changes in net assets and the financial
highlights for the periods indicated thereon. These financial statements
and financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included verification of
securities owned as of June 30, 2000, by confirmation, or by the
application of alternative auditing procedures with respect to unsettled
portfolio security transactions. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of UMB Scout Stock Fund, Inc., includes two series: Stock and Stock Select,
as of June 30, 2000, the results of its operations, the changes in its net
assets and the financial highlights for the periods indicated in the first
paragraph, in conformity with generally accepted accounting principles.
BAIRD, KURTZ & DOBSON
Kansas City, Missouri
July 28, 2000
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
Balanced Fund
Bond Fund
Capital Preservation Fund
Equity Index Fund
Kansas Tax-Exempt Bond Fund*
Money Market Fund - Federal Portfolio
Money Market Fund - Prime Portfolio
Regional Fund
Stock Fund
Stock Select Fund
Tax-Free Money Market Fund
Technology Fund
WorldWide Fund
WorldWide Select 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.
