UMB SCOUT FUNDS
Balanced Fund
Semiannual Report December 31, 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 December 31, 1998, at
$10.01 per share and had a total return (price change and reinvested
distributions) of 1.11%. The Fund seeks long-term capital growth and high
current income by investing in both equities and fixed-income obligations.
As the stock market recovered some of its losses from the previous quarter
and additional interest rate cuts pushed bond prices higher, we used this
quarter to do some restructuring of your Fund.
We increased our stock investments as a percentage of total assets to 35% as
of December 31, 1998, from 28% as of September 30, 1998. While increasing our
overall stock holdings, we replaced some value-oriented stocks with stocks we
think may have more growth potential. Positions were eliminated in
Mallinckrodt, Inc.; Fila Holdings SPA; Rubbermaid, Inc.; Murphy Oil Corp.;
Phillips Petroleum; Dominion Resources, Inc.; Entergy Corp.; and Florida
Progress Corp.
New positions were purchased in ASA, Ltd.; Falcon Products, Inc.; Kennametal,
Inc.; Newmont Mining Corp.; Placer Dome, Inc.; BHA Group, Inc.; Butler
Manufacturing Co.; Harmon Industries; ISCO, Inc.; Superior Industries;
Valmont Industries, Inc.; Bandag, Inc.; Casey's General Stores; NPC
International, Inc.; Roadway Express, Inc.; Baker Hughes, Inc.; and Racing
Champions Corp.
Because the yield curve continues to be relatively flat, the Fund remains
invested in higher-quality bonds with short to intermediate maturities. The
bond investments decreased to 38% of total assets at year end from 44% at
September 30, 1998. In addition to reinvesting the proceeds from maturing
U.S. Treasury and agency notes, we also purchased $250,000 Public Service
Electric & Gas. This purchase allowed the Fund to take advantage of a premium
yield spread between this corporate bond and the U.S. Treasury yield curve.
For the six months ended December 31, 1998, shareholders received an ordinary
income dividend of $.24 per share, a short-term capital gain of $.01 per
share and
a long-term capital gain of $.49 per share.
For corporate shareholders, 100% of ordinary income distributions qualify for
the corporate dividends received deduction.
We appreciate your continued interest in the UMB Scout Balanced fund, and
welcome your questions and comments.
Sincerely,
/s/David R. Bagby
David R. Bagby
UMB Investment Advisors
Chart - Fund Diversification
Energy 3.7%
Cash &
Equivalents 26.7%
Technology 1.6%
Capital Goods 7.4%
Consumer Cyclical 6.3%
Basic Materials 8.4%
Transportation
& Services 1.2%
Fixed Income 37.9%
As of December 31, 1998, Statement of Assets. Subject to change.
COMPARATIVE RATES OF RETURN
as of December 31, 1998
1 Year 2 Years 3 Years
UMB Scout Balanced Fund 3.16% 6.58% 6.42%
Lipper Balanced Fund Index* 15.03% 17.51% 15.99%
Inception - December 6, 1995.
UMB Scout Balanced Fund's average annual compound return for the life of the
fund for the period ended December 31, 1998, is 6.45%.
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).
Chart - Hypothetical Growth of $10,000
Top Ten Equity Holdings
Market Percent
Value (000's) of Total
Butler Manufacturing Co. $ 134 1.83%
Bassett Furniture Industries, Inc. 121 1.64%
Harmon Industries 115 1.57%
BHA Group Inc. 111 1.51%
O'Sullivan Industries, Inc. 105 1.43%
Bob Evans Farms, Inc. 104 1.42%
Racing Champions Corp. 94 1.28%
B. I., Inc. 88 1.20%
Roadway Express Inc. 87 1.18%
Kennametal, Inc. 85 1.16%
Top Ten Equity Holdings Total: $1,044 14.22%
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
12/31/95 $ 10.02 $ 0.12 $ - $ 10.14
12/31/96 10.33 0.30 - 10.75
12/31/97 10.62 0.58 0.16 11.78
12/31/98 10.01 0.45 0.49 12.11
*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 ("FDIC"). 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 - 35.33%
BASIC MATERIALS - 8.42%
2,000 ASA Ltd. $ 31,125
3,000 Barrick Gold Corp. 58,500
4,500 Brush Wellman, Inc. 78,469
500 Chevron Corp. 41,469
8,000 Cyprus Amax Minerals Co. 80,000
92 Deltic Timber Corp. 1,874
4,000 Falcon Products Inc. 48,000
6,000 Homestake Mining Co. 55,125
5,000 Huntco, Inc. Cl. A 19,375
4,000 Kennametal Inc. 85,000
3,000 Newmont Mining Corp. 54,188
4,000 Placer Dome Inc. 46,000
1,500 Worthington Industries, Inc. 18,750
617,875
CAPITAL GOODS - 7.35%
8,000 BHA Group Inc. 111,000
6,000 Bulter Manufacturing Co. 134,250
5,000 Harmon Industries 115,312
7,000 Isco Inc. 39,813
2,000 Superior Industries 55,625
6,000 Valmont Industries Inc. 83,250
539,250
CONSUMER CYCLICAL - 6.25%
12,000 B. I., Inc. 87,750
2,000 Bandag Inc. 79,875
5,000 Bassett Furniture Industries, Inc. 120,625
5,000 Casey's General Store 65,156
10,000 O'Sullivan Industries, Inc. 105,000
458,406
CONSUMER STAPLES - 6.76%
3,307 Archer-Daniels-Midland Co. 56,839
4,000 Bob Evans Farms, Inc. 104,250
4,000 Lance, Inc. 79,750
7,000 NPC International 84,438
7,000 Racing Champions Corp. 93,625
5,000 VICORP Restaurants, Inc. 77,500
496,402
ENERGY - 3.73%
2,500 Baker Hughes Inc. 44,219
800 Halliburton Co. 23,700
3,000 Helmerich & Payne, Inc. 58,125
2,000 Kerr McGee Corp. 76,500
500 Schlumberger Limited 23,062
1,600 USX-Marathon Group 48,200
273,806
TECHNOLOGY - 1.64%
12,000 Exabyte Corp. 66,000
3,000 Novell, Inc. 54,375
120,375
TRANSPORTATION & SERVICES - 1.18%
6,000 Roadway Express Inc. 86,625
TOTAL COMMON STOCKS - 35.33% 2,592,739
FACE MARKET
AMOUNT DESCRIPTION VALUE
SHORT-TERM CORPORATE NOTES - 14.32%
$ 100,000 Anheuser-Busch Inc.,
5.20%, due February 5, 1999 $ 99,480
100,000 Chevron USA, Inc.,
5.00%, due January 28, 1999 99,611
100,000 duPont (E.I) deNemours & Co.,
5.40%, due January 26, 1999 99,610
100,000 Duke Power Co.,
5.14%, due January 7, 1999 99,900
100,000 Emerson Electric Co.,
5.45%, due January 26, 1999 99,606
100,000 Marsh McLennan Inc.,
5.33%, due January 13, 1999 99,808
100,000 Marsh McLennan Inc.,
5.40%, due January 15, 1999 99,775
250,000 Public Service Electric and Gas,
6.50%, due June 1, 2000 253,110
100,000 Progress Capital Holdings Inc.,
5.40% , due January 22, 1999 99,670
TOTAL SHORT-TERM CORPORATE NOTES - 14.32% 1,050,570
GOVERNMENT SPONSORED ENTERPRISES - 30.96%
100,000 Federal Farm Credit Banks,
5.20%, due January 25, 1999 100,000
150,000 Federal Home Loan Banks,
5.035%, due January 19, 1999 150,000
100,000 Federal Home Loan Banks,
5.86%, due April 2, 1999 100,172
250,000 Federal Home Loan Banks,
4.495%, due October 16, 2000 247,930
100,000 Federal Home Loan Banks,
5.50%, due January 10, 2001 101,000
100,000 Federal Home Loan Mortgage Corporation,
5.96%, due October 20, 2000 101,656
150,000 Federal Home Loan Mortgage Corporation,
6.745%, due August 1, 2001 156,070
100,000 Federal National Mortgage Association,
5.55%, due March 12, 1999 100,078
30,091 Federal National Mortgage Association,
7.00%, due October 1, 1999 30,063
250,000 Federal National Mortgage Association,
6.09%, due July 11, 2000 254,022
150,000 Federal National Mortgage Association,
6.29%, due October 4, 2000 153,467
51,050 Federal National Mortgage Association,
6.00%, due April 1, 2001 51,148
150,000 Federal National Mortgage Association,
7.05%, due November 12, 2002 159,797
25,297 Federal National Mortgage Association,
7.00%, due February 1, 2003 25,560
250,000 Federal National Mortgage Association,
6.00%, due September 29, 2008 246,797
137,694 Government National Mortgage Association,
7.00%, due September 15, 2010 141,229
150,000 Tennessee Valley Authority,
6.00%, due November 1, 2000 152,625
TOTAL GOVERNMENT SPONSORED ENTERPRISES - 30.96% 2,271,614
U.S. GOVERNMENT SECURITIES - 6.99%
$ 250,000 U.S. Treasury Notes,
5.75%, due October 31, 2000 $ 254,765
250,000 U.S. Treasury Notes,
5.875%, due November 30, 2001 258,437
TOTAL U.S. GOVERNMENT SECURITIES - 6.99% 513,202
REPURCHASE AGREEMENT - 13.01%
955,000 Northern Trust Co.,
4.85%, due January 4, 1999
(Collateralized by U.S. Treasury Notes,
5.875%, due February 28, 1999 $ 955,000
TOTAL INVESTMENTS - 100.61% $ 7,383,125
Other assets less liabilities - (0.61%) (44,749)
TOTAL NET ASSETS - 100.00%
(equivalent to $10.01 per share;
10,000,000 shares of $1.00 par value
capital shares authorized;
732,904 shares outstanding) $ 7,338,376
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 $7,412,899) $ 7,383,125
Cash (25,530)
Dividends receivable 3,849
Interest receivable 41,363
Total assets 7,402,807
LIABILITIES:
Payable for investments purchased 64,431
Total liabilities 64,431
NET ASSETS $ 7,338,376
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 7,334,223
Accumulated undistributed income:
Net investment income 374
Net realized gain on investment transactions 46,184
Net unrealized depreciation on investments (42,405)
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 7,338,376
Capital shares, $1.00 par value
Authorized 10,000,000
Outstanding 732,904
NET ASSET VALUE PER SHARE $ 10.01
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS SIX MONTHS ENDED DECEMBER 31, 1998 (unaudited)
STATEMENT OF OPERAITONS
INVESTMENT INCOME:
Income:
Dividends $ 24,780
Interest 144,619
169,399
Expenses:
Management fees 30,923
Government fees 551
31,474
Net investment income 137,925
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from investment transactions 106,453
Decrease in net unrealized depreciation on investments (374,147)
Net realized and unrealized loss on investments (267,694)
Net decrease in net assets resulting from operations $ (129,769)
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 $ 137,925 $ 331,601
Net realized gain from investment transactions 106,453 472,173
Decrease in net unrealized appreciation on investments (374,147) (18,057)
Net increase (decrease) in net assets
resulting from operations (129,769) 785,717
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (162,456) (346,178)
Net realized gain from investment transactions (344,326) (279,276)
Decrease in net assets from distributions (506,782) (625,454)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 140,266 and 217,322 shares sold 1,468,844 2,402,628
Net asset value of 9,037 and 58,707 shares issued for
reinvestment of distributions 89,468 623,518
1,558,312 3,026,146
Cost of 109,527 and 350,576 shares redeemed (1,169,167) (3,856,194)
Net increase (decrease) in net assets from
capital share transactions 389,145 (830,048)
Net decrease in net assets (247,406) (669,785)
NET ASSETS:
Beginning of period 7,585,782 8,255,567
End of period (including undistributed net investment
income of $24,905 and $24,905, respectively) $ 7,338,376 $ 7,585,782
*Distributions to shareholders:
Income dividends per share $ 0.25 $ 0.45
Capital gains distribution per share $ 0.49 $ 0.33
</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. 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 - Common stocks 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. Debt securities
(other than short-term obligations), including listed issues, are valued at
market on the basis of valuations furnished by an independent pricing service
which utilizes both dealer-supplied valuations and formula-based techniques.
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 $ 1,781,691 $ 498,113
Proceeds from sales - 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 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.
JB28D(3/99) 505510
