UMB SCOUT FUNDS
BALANCED FUND
QUARTERLY REPORT
SEPTEMBER 30, 1998
A no-load mutual fund investing in both equities
and fixed income obligations with emphasis on both
long-term growth of capital and high current income.
TO THE SHAREHOLDERS
The UMB Scout Balanced Fund closed the quarter ended September 30, 1998,
at $10.64 per share and had a total return (price change and reinvested
distributions) of -2.47%. This result was better than the average for
comparable funds, as shown in the Lipper Balanced Fund Index return of -
5.79% for the same period. The Fund seeks long-term capital growth and
high current income by investing in both equities and fixed-income
obligations.
As of September 30, the Fund held 28% stocks, 44% bonds and 28% cash
equivalents. The stock position is down from 37% at the end of last
quarter because of declines in stock values and net sales of stock
during the quarter.
Stock market volatility tested the stamina of many investors during the
period. After a peak in early July, the market declined in August to
close the month with a loss of more than 500 points in the Dow Jones
Industrial Average. Although there was some recovery in September,
stocks overall posted negative returns for the quarter.
While stocks tumbled, bonds rallied as investors fled the stock market
for the safety of U.S. Treasury bonds and notes. Global economic turmoil
and uncertainty prompted the Federal Reserve on September 29 to lower
the key Fed Funds interest rate to 5.25% from 5.50%.
Your Fund took advantage of market volatility to eliminate positions in
Kinross Gold Corp., Hitachi LTD, Mylan Laboratories, Niagara Mohawk
Power Corp. and Unicom Corp. We added new positions in Barrick Gold
Corp., Chevron Corp. and Helmerich & Payne, Inc.
Our fixed-income position continues to be invested in short and
intermediate maturity U.S. government and agency obligations. Cash
reserves are invested in high-quality commercial paper and U.S.
government agency discount notes.
We want to remind all shareholders that the Fund name is changing to UMB
Scout Balanced Fund, Inc., effective October 31, 1998.
I assumed portfolio manager responsibility for the UMB Scout Balanced
Fund during the quarter, and appreciate your continued interest in the
Fund. We welcome your questions and comments.
Sincerely,
/s/David R. Bagby
David R. Bagby
UMB Investment Advisors
FUND DIVERSIFICATION - PIE CHART
COMPARATIVE RATES OF RETURN
as of September 30, 1998
Calendar YTD 1 3/4 Years 2 3/4 Years
UMB Scout Balanced Fund 2.03% 6.88% 6.59%
Lipper Balanced
Fund Index* 3.16% 13.00% 13.00%
UMB Scout Balanced Fund's average annual compound returns for
1 year and the life of the fund for periods ended September 30, 1998,
are 1.38% and 6.62%, respectively. Inception - December 6, 1995.
Performance data contained in this report are for past periods only.
Past performance is not predictive of future results. Investment return
and share value will fluctuate, and redemption value may be more or less
than the 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
Basset Furniture Industries, Inc. $ 146 2.01%
Dominion Resources, Inc. V.A. 134 1.84%
Florida Progress Corp. 130 1.79%
Novell, Inc. 110 1.52%
Cyprus Amax Minerals Co. 106 1.46%
B. I., Inc. 102 1.40%
O'Sullivan Industries, Inc. 97 1.33%
Rubbermaid, Inc. 96 1.32%
Barrick Gold Corp. 80 1.10%
Bob Evans Farms, Inc. 80 1.10%
Top 10 Equity Holdings Total: $ 1,081 14.87%
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
<TABLE>
<CAPTION>
Market
Shares Company Value
</CAPTION>
<S> <C>
COMMON STOCKS - 28.21%
BASIC MATERIALS - 5.46%
4000 Barrick Gold Corp. $ 80,000
4,500 Brush Wellman, Inc. 62,437
8,000 Cyprus Amax Minerals Co. 106,000
92 Deltic Timber Corp. 1,656
6,000 Homestake Mining Co. 72,750
5,000 Huntco, Inc. Cl. A 35,000
1,000 Mallinckrodt, Inc. 20,313
1,500 Worthington Industries, Inc. 18,750
396,906
CAPITAL GOODS - 0.72%
7,000 Calgon Carbon Corp. 52,063
CONSUMER CYCLICAL - 5.22%
12,000 B. I., Inc. 102,000
5,000 Bassett Furniture Industries, Inc. 146,250
4,000 Fila Holdings SPA, Sponsored ADR 34,000
10,000 O'Sullivan Industries, Inc. 96,875
379,125
CONSUMER STAPLES - 5.20%
3,307 Archer-Daniels-Midland Co. 55,392
4,000 Bob Evans Farms, Inc. 79,750
4,000 Lance, Inc. 79,000
4,000 Rubbermaid, Inc. 95,750
5,000 VICORP Restaurants, Inc. 67,813
377,705
ENERGY - 4.54%
500 Chevron Corp. 42,031
1,200 Halliburton Co. 34,275
2,000 Helmerich & Payne, Inc. 42,000
1,000 Kerr McGee Corp. 45,500
1,000 Murphy Oil Corp. 38,750
1,000 Phillips Petroleum Co. 45,125
500 Schlumberger LTD 25,156
1,600 USX-Marathon Group 56,700
329,537
TECHNOLOGY - 2.59%
12,000 Exabyte Corp. 78,000
9,000 Novell, Inc. 110,250
188,250
UTILITIES - 4.48%
3,000 Dominion Resources, Inc. V.A. 133,875
2,000 Entergy Corp. 61,500
3,000 Florida Progress Corp. 129,937
325,312
TOTAL COMMON STOCKS - 28.21% 2,048,898
FACE Market
AMOUNT Description Value
SHORT-TERM CORPORATE NOTES - 6.86%
$ 100,000 Chevron USA, Inc., 5.53%, due October 2, 1998 $ 99,969
100,000 duPont (E.I.) deNemours & Co., 5.48%, due October 21, 1998 99,680
100,000 General RE Corp., 5.49%, due October 6, 1998 99,909
100,000 Sara Lee Corp., 5.20%, due October 28, 1998 99,596
100,000 Times Mirror Co., 5.47%, due November 3, 1998 99,483
TOTAL SHORT-TERM CORPORATE NOTES - 6.86% 498,637
GOVERNMENT SPONSORED ENTERPRISES - 33.33%
100,000 Federal Farm Credit Banks, 5.20%, due January 25, 1999 100,062
100,000 Federal Home Loan Banks, 5.37%, due November 23, 1998 99,194
150,000 Federal Home Loan Banks, 5.035%, due January 19, 1999 150,024
100,000 Federal Home Loan Banks, 5.86%, due April 2, 1999 100,516
100,000 Federal Home Loan Banks, 5.50%, due January 10, 2001 101,578
100,000 Federal Home Loan Mortgage Corporation, 5.96%, due October 20, 2000 102,312
150,000 Federal Home Loan Mortgage Corporation, 6.745%, due August 1, 2001 157,781
100,000 Federal National Mortgage Association, 5.55%, due March 12, 1999 100,312
36,954 Federal National Mortgage Association, 7.00%, due October 1, 1999 37,230
250,000 Federal National Mortgage Association, 5.83%, due December 10, 1999 253,085
250,000 Federal National Mortgage Association, 6.09%, due July 11, 2000 255,665
150,000 Federal National Mortgage Association, 6.29%, due October 4, 2000 154,383
56,528 Federal National Mortgage Association, 6.00%, due April 1, 2001 56,706
150,000 Federal National Mortgage Association, 7.05%, due November 12, 2002 163,055
37,341 Federal National Mortgage Association, 7.00%, due February 1, 2003 38,177
250,000 Federal National Mortgage Association, 6.00%, due September 29, 2008 252,930
140,319 Government National Mortgage Association, 7.00%, due September 15, 2010 144,736
150,000 Tennessee Valley Authority, 6.00%, due November 1, 2000 153,679
TOTAL GOVERNMENT SPONSORED ENTERPRISES - 33.33% 2,421,425
U.S. GOVERNMENT SECURITIES - 10.61%
$ 250,000 U.S. Treasury Notes, 5.875%, due November 15, 1999 $ 253,515
250,000 U.S. Treasury Notes, 5.75%, due October 31, 2000 256,717
250,000 U.S. Treasury Notes, 5.875%, due November 30, 2001 260,860
TOTAL U.S. GOVERNMENT SECURITIES - 10.61% 771,092
REPURCHASE AGREEMENT - 19.62%
1,425,000 Northern Trust Co., 5.35%, due October 1, 1998
(Collateralized by U.S. Treasury Notes, 5.875%, due March 31, 1999) $ 1,425,000
TOTAL INVESTMENTS - 98.63% $ 7,165,052
Other assets less liabilities - 1.37% 99,460
TOTAL NET ASSETS - 100.00%
(equivalent to $10.64 per share; 10,000,000 shares of $1.00 par value
capital shares authorized; 682,668 shares outstanding) $ 7,264,512
</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 Balanced 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.
