UMB SCOUT FUNDS
REGIONAL FUND
(UMBHX)
SEMIANNUAL REPORT
December 31, 1998
A no-load mutual fund that seeks long-term growth
of both capital and income by investing
in smaller regional companies.
TO THE SHAREHOLDERS
The UMB Scout Regional Fund closed the quarter ended December 31, 1998, at
$10.46 per share and had a total return (price change and reinvested
distributions) of 8.69% for the period. The Fund pursues an investment goal of
long-term growth of both capital and income by investing in smaller companies
in an eight-state region (Missouri, Kansas, Arkansas, Oklahoma, Iowa,
Nebraska, Colorado and Illinois).
The fourth quarter of 1998 was one of recovery for stocks in general. After
dropping to new lows across the board in mid-October, stocks of all
capitalization sizes rallied through year-end. Despite the similar directions of
stocks for companies of different sizes in both the first and the fourth
quarters of the calendar year, the damage done between those periods delivered
very different returns in these groups for the year.
While large-cap stocks, as measured by the Standard & PoorOs 500 Index,
finished the year up 28.58%, small-cap stocks, as measured by the Russell 2000
Index, finished the year down 2.55%. The mid-year uncertainties relating to
global economics caused a flight to quality that resulted in this wide
disparity between large- and small-cap stocks.
Since 1925, the only year with a greater spread favoring large-cap stocks was
1929. Other years with similar results included 1927, 1951, 1969-73 and 1989.
Although it is impossible to accurately predict stock market returns for the
coming year, the potential exists for small-cap stocks to recover and gain
ground on a relative basis. Many investors use a diversification of stock
investments that includes large- and small-cap domestic stocks, and even
international stocks, as a way to reduce long-term risk while potentially
increasing long-term returns.
During the quarter, the Fund had very few changes in stock holdings, largely
because of the price drop early in the quarter and the related market
uncertainty. Safety-Kleen Corp. was acquired by Laidlaw Environmental. The
Fund's 117,600 shares of Safety-Kleen Corp. were replaced with 33,500 new
shares following the acquisition, a reverse 1-to-4 split. As a result of
market appreciation in many of our holdings, cash reserves as of year-end
were 16%, down from 20% on September 30, 1998.
For the six months ended December 31, 1998, shareholders received an ordinary
income dividend of $.12 per share, a short-term capital gain of $.03 per share
and a long-term capital gain of $.39 per share.
For corporate shareholders, 90.68% of ordinary income distributions qualify for
the corporate dividends received deduction.
We appreciate you as a valued shareholder of UMB Scout Regional Fund and
encourage your questions and comments.
Sincerely,
/s/David B. Anderson
David B. Anderson
UMB Investment Advisors
Chart - Fund Diversification
Capital Goods 15.3%
Financial 1.5%
Basic Materials 9.3%
Consumer Staples 16.6%
Transportation &
Services 1.0%
Utilities 15.0%
Energy 6.3%
Cash &
Equivalents 16.3%
Consumer Cyclical 17.1%
Technology 1.9%
As of December 31, 1998, Statement of Assets. Subject to change.
COMPARATIVE RATES OF RETURN
as of December 31, 1998
2 Years 3 Years 4 Years
UMB Scout Regional Fund 8.85% 10.07% 12.46%
Lipper Small Co Fund Index* 6.37% 9.01% 14.27%
Russell 2000* 9.20% 11.58% 15.57%
UMB Scout Regional Fund's average annual compound returns for 1-, 5- and 10-year
periods ended December 31, 1998, are -3.68%, 10.01% and 8.13%, 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.
The Fund's investment objective was changed August 16, 1991.
*Unmanaged index of stocks, bonds or mutual funds (there are no
direct investments or fees in these indices).
Chart - Hypothetical Growth of $10,000
Top Ten Equity Holdings
Market Percent
Value (000's) of Total
Instituform Technologies, Inc., CL. A $ 1,233 2.68%
Harmon Industries, Inc. 1,038 2.25%
Aliant Communications, Inc. 1,022 2.22%
CPI Corp. 1,007 2.19%
Empire District Electric Co. 990 2.15%
Federal Signal Corp. 958 2.08%
NPC International, Inc. CL. B 905 1.96%
IBP, Inc. 874 1.90%
Williams Companies, Inc. 873 1.90%
Laclede Gas Co. 803 1.74%
Top Ten Equity Holdings Total: $ 9,703 21.07%
As of December 31, 1998, statement of assets. Subject to change.
HISTORICAL PER SHARE RECORD
Income & Cumulative*
Net Short-Term Long-Term Value Per
Asset Gains Gains Share Plus
Value Distribution Distribution Distributions
12/31/86 $ 10.00 $ 0.08 $ - $ 10.08
12/31/87 9.87 0.63 - 10.58
12/31/88 8.67 0.72 - 10.10
12/31/89 8.32 0.60 - 10.36
12/31/90 7.61 0.64 - 10.28
12/31/91 8.30 0.29 - 11.26
12/31/92 9.09 0.12 - 12.17
12/31/93 9.49 0.14 - 12.70
12/31/94 9.20 0.20 0.15 12.77
12/31/95 10.11 0.33 0.57 14.57
12/31/96 10.43 0.23 0.69 15.81
12/31/97 11.89 0.26 0.63 18.16
12/31/98 10.46 0.24 0.74 17.71
*Does not assume any compounding of reinvested distributions.
Table shows calendar year distributions and net asset values; may differ from
fiscal year annual reports.
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 (OFDICO). These shares
involve investment risks, including the possible loss of the principal
invested.
FINANCIAL STATEMENTS
December 31, 1998 (unaudited)
STATEMENT OF NET ASSETS
MARKET
SHARES COMPANY VALUE
COMMON STOCKS - 83.68%
Basic Materials - 9.33%
35,000 ACX Technologies $ 463,750
25,000 Cyprus Amax Minerals Co. 250,000
15,000 Deltic Timber Corp. 305,625
15,000 Falcon Products, Inc. 180,000
40,000 Huntco, Inc. CL. A 155,000
40,020 Kinross Gold Corp. 92,546
60,000 Lawter International, Inc. 697,500
21,000 Mallinckrodt Group, Inc. 647,063
25,000 Republic Group, Inc. 501,562
33,500 Safety-Kleen Corp. 473,188
18,000 Sigma-Aldrich Corp. 528,750
4,294,984
Capital Goods - 15.26%
25,000 Atchison Casting Co. 231,250
15,000 Baldor Electric 303,750
53,240 BHA Group, Inc. 738,705
18,000 Butler Manufacturing Co. 402,750
35,000 Federal Signal Corp. 958,125
45,000 Harmon Industries, Inc. 1,037,812
10,000 Hon Industries Inc. 239,375
85,000 Instituform Technologies, Inc., CL. A 1,232,500
75,000 Isco, Inc. 426,563
50,000 Layne Christensen Co. 368,750
68,333 MYR Group, Inc. 785,830
5,000 Paul Mueller Co. 201,875
10,000 Trion, Inc. 30,000
5,000 Valmont Industries, Inc. 69,375
7,026,660
Consumer Cyclical - 17.12%
80,000 B.I., Inc. 585,000
16,500 Bandag, Inc. 658,969
10,000 Belden, Inc. 211,875
10,000 Block (H & R), Inc. 450,000
15,000 Brown Group, Inc. 263,437
24,000 Caseys General Stores, Inc. 312,750
37,500 Clarcor, Inc. 750,000
6,000 Dillards, Inc. 170,250
12,000 Donnelley (R.R.) & Sons 525,750
6,000 Esco Electronics Corp. 54,375
37,925 Flexsteel Industries, Inc. 488,284
30,000 Kellwood Co. 750,000
30,000 Lawson Products 690,000
10,000 Lee Enterprises, Inc. 315,000
10,000 Lonestar Steakhouse and Saloon Inc. 91,875
8,500 Maytag Corp. 529,125
35,000 O'Sullivan Industries Holdings, Inc. 367,500
8,000 Pharmerica, Inc. 48,000
15,000 Rival Co. 201,563
60,000 Stimsonite Corp. 420,000
7,883,753
Consumer Staples - 16.60%
20,000 Alberto-Culver Co. CL. A 505,000
40,000 Angelica Corp. 745,000
40,000 Beverly Enterprises, Inc. 270,000
21,000 Brunswick Corp. 519,750
38,000 CPI Corp. 1,007,000
30,000 I B P, Inc. 873,750
11,000 JPS Packaging Co. 41,250
12,000 Medpartners, Inc. 63,000
25,000 Midwest Grain Products, Inc. 340,625
75,000 NPC International, Inc. CL. B 904,687
90,000 Sanfilippo (John B & Son), Inc. 382,500
85,000 TCBY Enterprises, Inc. 595,000
41,300 VICORP Restaurants, Inc. 640,150
50,000 Winnebago Industries, Inc. 756,250
7,643,962
Energy - 6.33%
25,000 Helmerich & Payne, Inc. 484,375
15,000 Kerr-McGee Corp. 573,750
35,000 Maverick Tube Corp. 194,687
15,000 Murphy Oil Corp. 618,750
78,000 Southwestern Energy Co. 585,000
5,000 St. Mary Land & Exploration Co. 92,500
15,000 Ultramar Diamond Sharmock Corp. 363,750
2,912,812
Financial - 1.16%
13,500 Brenton Banks 226,125
1,575 Commerce Bancshares, Inc. 66,938
500 Kansas City Life Insurance Co. 40,875
9,000 Old Republic International Corp. 202,500
536,438
Technology - 1.93%
7,000 DII Group, Inc. 163,187
35,000 Exabyte Corp. 192,500
40,000 Fansteel, Inc. 230,000
8,000 Molex, Inc. 305,000
890,687
Transportation & Services - 0.96%
25,000 Werner Enterprises, Inc. 442,187
Utilities - 14.99%
25,000 Aliant Communications, Inc. 1,021,875
12,000 Ameren Corp. 512,250
8,000 Calenergy, Inc. 277,500
40,000 Empire District Electric Co. 990,000
17,430 Interstate Energy Corp. 562,117
10,000 Kansas City Power & Light Co. 296,251
30,000 Laclede Gas Co. 802,500
35,000 St. Joseph Light & Power Co. 627,812
12,000 Utilicorp United, Inc. 440,250
15,000 Western Resources, Inc. 498,750
28,000 Williams Companies, Inc. 873,250
6,902,555
TOTAL COMMON STOCKS - 83.68% 38,534,038
FACE MARKET
AMOUNT DESCRIPTION VALUE
Short-Term Corporate Notes - 13.86%
$ 500,000 Arco British Ltd,
5.24%, due January 19, 1999 498,617
500,000 Arco British Ltd,
5.22%, due January 22, 1999 498,405
500,000 Bell Atlantic Network,
5.23%, due January 5, 1999 499,636
400,000 BellSouth Telecommunications,
4.95%, due January 12, 1999 399,340
500,000 Chevron USA, Inc.,
5.00%, due January 28, 1999 498,056
500,000 Deere and Co.,
4.90%, due February 12, 1999 497,073
500,000 Disney Walt Co.,
5.23%, due January 11, 1999 499,201
500,000 Duke Power Co.,
5.14%, due January 7, 1999 499,500
500,000 Hershey Foods Corp.,
5.35%, due January 27, 1999 497,994
500,000 Lucent Technologies, Inc.,
4.95%, due January 11, 1999 499,244
500,000 PepsiCo, Inc.,
5.03%, due January 13, 1999 499,092
500,000 Progress Capital Holdings Inc.,
5.30%, due January 20, 1999 498,528
500,000 Texaco Inc.,
5.16%, due January 8, 1999 499,427
TOTAL SHORT-TERM CORPORATE NOTES - 13.86% 6,384,113
GOVERNMENT SPONSORED ENTERPRISES - 3.24%
500,000 Federal Home Loan Banks,
5.04%, due January 4, 1999 499,720
1,000,000 Federal Home Loan Mortgage Corp.
4.90% due March 12, 1999 990,336
TOTAL GOVERNMENT SPONSORED ENTERPRISES - 3.24% 1,490,056
TOTAL INVESTMENTS - 100.78% $ 46,408,207
Other assets less liabilities - (0.78%) (359,525)
TOTAL NET ASSETS - 100.00%
(equivalent to $10.46 per share;
10,000,000 shares of $1.00 par value
capital shares authorized;
4,402,895 shares outstanding) $ 46,048,682
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS December 31, 1998 (unaudited)
STATEMENT OF ASSETS AND LIABILITIES
ASSETS:
Investment securities, at market value
(identified cost $41,923,213) $ 46,408,207
Cash (444,566)
Dividends receivable 85,041
Total assets 46,048,682
NET ASSETS $ 46,048,682
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 41,885,506
Accumulated undistributed income:
Net investment income 9,625
Net realized gain on investment transactions (304,815)
Net unrealized appreciation on investments 4,458,366
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 46,048,682
Capital shares, $1.00 par value
Authorized 10,000,000
Outstanding 4,402,895
NET ASSET VALUE PER SHARE $ 10.46
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS
Six Months ended December 31, 1998 (unaudited)
STATEMENT OF OPERAITONS
INVESTMENT INCOME:
Income:
Dividends $ 402,348
Interest 235,496
637,844
Expenses:
Management fees 190,640
Government fees 6,798
197,438
Net investment income 440,406
REALIZED and unrealized LOSS ON INVESTMENTS:
Net realized loss from investment transactions (308,287)
Decrease in net unrealized appreciation on investments (3,148,296)
Net realized and unrealized loss on investments (3,456,583)
Net decrease in net assets resulting from operations $ (3,016,177)
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, 1998 YEAR ENDED
(unaudited) JUNE 30, 1998
</CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 440,406 $ 813,167
Net realized gain (loss) from investment transactions (308,287) 4,721,775
Increase (decrease) in net unrealized appreciation
(depreciation) on investments (3,148,296) 996,291
Net increase (decrease) in net assets resulting
from operations (3,016,177) 6,531,233
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (514,534) (890,559)
Net realized gain from investment transactions (1,806,949) (3,299,092)
Decrease in net assets from distributions (2,321,483) (4,189,651)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 734,100 and 1,338,087 shares sold 7,579,954 16,176,319
Net asset value of 33,169 and 222,022 shares issued for
reinvestment of distributions 327,050 2,577,097
7,907,004 18,753,416
Cost of 609,701 and 1,644,021 shares redeemed (6,429,511) (19,703,169)
Net increase (decrease) in net assets from
Capital share transactions 1,477,493 (949,753)
Net increase (decrease) in net assets (3,860,167) 1,391,829
NET ASSETS:
Beginning of period 49,908,849 48,517,020
End of period (including undistributed net investment income
of $9,625 and $89,565, respectively) $ 46,048,682 $ 49,908,849
*Distributions to shareholders:
Income dividends per share $ 0.12 $ 0.22
Capital gains distribution per share $ 0.42 $ 0.81
</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. Effective on April 24,
1996, the Fund's shareholders approved a change in the fiscal year-end. A
summary of significant accounting policies that the Fund uses in the
preparation of its financial statements follows. 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 period 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.
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, 1998 (excluding
repurchase agreements and short-term securities), were as follows:
Other than
U.S. Government U.S. Government
Securities Securities
Purchases $ 2,014,883 $ 2,461,561
Proceeds from sales 651,964 3,500,000
3. MANAGEMENT FEES - UMB Bank, n.a. is the Fund's manager and investment
adviser 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.
This report has been prepared for the information of the Shareholders of UMB
Scout Regional 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.
JB23D(3/99) 505505
