UMB SCOUT FUNDS
BALANCED FUND
SEMIANNUAL REPORT DECEMBER 31, 1999
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, 1999, at $9.24 per share and had a total return
(price change and reinvested distributions) of
- -2.31% for the quarter. The Fund seeks long-term capital
growth and high current income by investing in both equities
and fixed-income obligations.
As we reported last quarter, we consider the Fund to be
fully invested when 65% of its assets are invested in common
stock and 35% is in fixed-income securities. During the
third quarter, we reduced equities to 49%, with fixed-income
securities accounting for the remaining 51% of the Fund.
This was based on our belief that the stock market had not
yet adjusted to rising commodity prices, tight labor market
and increasingly hostile Federal Reserve. On this last
point, the Federal Reserve, on numerous occasions, expressed
its concern about an overheating economy and speculation in
the stock market. Furthermore, the Federal Reserve raised
the interest rates under their control three times in the
second half of the year. At that same time, overcome by Y2K
concerns, they also aggressively injected funds into our
financial system. It is possible that this stimulation
fueled some of the manic-like conditions in the speculative
areas of the stock market, especially those related to the
Internet and initial public offerings. With the Y2K
transition behind us, we do expect the Federal Reserve to
implement a more restrictive policy.
In spite of the euphoria that consumed investors in the
fourth quarter, a look behind the curtain reveals a
dramatically different set of facts.
The Standard & Poor's 500 Index sold at its highest
price/earnings ratio ever, and was as much as 1.5 times the
P/E ratio seen at other major tops in 1929, 1973 or 1987.
While the S&P 500 hit a new high, 60% of all NYSE-listed stocks
showed losses for the year, and 65% are currently in downtrending patterns.
Stock indices may have been setting new highs, but bond
indices were at their yearly lows. In fact, the Lehman Long-
term Treasury Bond Total Return Index lost 8.7% for the
year, its worst performance since the index began in 1981.
In summary, certain sectors of the stock market, which are
heavily weighted in the commonly quoted stock indices,
exhibited manic-like behavior in the fourth quarter.
However, as previously mentioned, the average stock did not
behave in this fashion. We currently expect the first few
months of the new year to be quite volatile as some of last
Fall's speculative favorites undergo a correction.
Accordingly, the Fund is conservatively postured with
approximately 40% in stocks and 44% in intermediate-length,
high-quality, fixed-income securities and 16% in buying
reserves. The reserves will be deployed in equity securities
once quality growth issues can be acquired at more reasonable prices.
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
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.
CHART - FUND DIVERSIFICATION
CHART - COMPARATIVE RATES OF RETURN
UMB Scout Balanced Fund
as of December 31, 1999
1 Year 3 Years Inception
UMB Scout Balanced Fund -1.03% 3.98% 4.56%
Lipper Balanced Fund Index* 8.99% 14.60% N.A.
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).
CHART - HYPOTHETICAL GROWTH OF $10,000
CHART - TOP TEN EQUITY HOLDINGS
UMB Scout Balanced Fund
Market Percent
Value (000's) of Total
Novell, Inc. $ 119 3.09%
Newmont Mining Corp. 74 1.90%
Knight Ridder, Inc. 71 1.84%
Kerr-McGee Corp. 68 1.76%
Corn Products International, Inc. 66 1.69%
Mallinckrodt Group, Inc. 64 1.64%
BHA Group, Inc. 63 1.63%
NPC International 63 1.63%
Harmon Industries 61 1.57%
Intel Corp. 58 1.49%
Top Ten Equity Holdings Total: $706* 18.24%
As of December 31, 1999, statement of assets. Subject to change.
*Market Values are rounded; may not equal total.
CHART - HISTORICAL PER-SHARE RECORD
UMB Scout Balanced Fund
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
12/31/99 9.24 0.64 0.03 12.01
*Does not assume any compounding of reinvested distributions.
Table shows calendar year distributions and net asset
values; may differ from fiscal year annual reports.
FINANCIAL STATEMENTS DECEMBER 31, 1999 (UNAUDITED)
Statement of Net Assets
MARKET
SHARES COMPANY VALUE
COMMON STOCKS - 40.18%
BASIC MATERIALS - 5.77%
2,000 Mallinckrodt Group, Inc. $ 63,625
3,000 Newmont Mining Corp. 73,500
3,000 Safety-Kleen Corp. 33,938
3,000 Worthington Industries 49,688
220,750
CAPITAL GOODS - 5.22%
8,000 BHA Group, Inc. 63,000
2,000 Butler Manufacturing Co. 44,625
5,000 Harmon Industries 60,625
6,300 Isco, Inc. 31,500
199,750
CONSUMER CYCLICAL - 4.37%
2,500 Kellwood Co. 48,594
1,200 Knight Ridder, Inc. 71,400
1,000 Masco Corp. 25,375
500 The Limited Inc. 21,656
167,025
CONSUMER STAPLES - 7.43%
900 Bard, (C.R.) Inc. 47,700
1,000 Celestial Seasonings, Inc. 18,609
2,000 Corn Products International, Inc. 65,500
450 MCI Worldcom, Inc. 23,878
8,000 NPC International 63,000
600 Pepsico, Inc. 21,150
2,741 VICORP Restaurants, Inc. 44,199
284,036
ENERGY - 5.23%
800 El Paso Energy Corp. 31,050
800 Halliburton Co. 32,200
2,000 Helmerich & Payne, Inc. 43,625
1,100 Kerr-McGee Corp. 68,200
1,000 USX-Marathon Group 24,688
199,763
FINANCIAL - 3.40%
1,500 Firstmerit Corp. 34,500
1,000 Lincoln National Corp. Indiana 40,000
800 Newhall Land & Farming Co. 21,600
500 Wachovia Corp. 34,000
130,100
TECHNOLOGY - 5.83%
400 AT&T Corporation 20,300
300 Biogen, Inc. 25,350
700 Intel Corp. 57,619
3,000 Novell, Inc. 119,438
222,706
TRANSPORTATION & SERVICES - 1.83%
400 FDX Corp. 16,375
300 Minnesota Mining & Manufacturing 29,363
1,500 Southwest Airlines Co. 24,281
70,019
UTILITIES - 1.10%
300 Bell Atlantic Corporation 18,469
500 BellSouth Corporation 23,406
41,875
TOTAL COMMON STOCKS - 40.18% 1,536,024
FACE MARKET
AMOUNT COMPANY VALUE
CORPORATE BONDS - 12.48%
$250,000 Pepsico Incorporated, Notes,
5.75%, due January 2, 2003 240,530
250,000 The Stanley Works, Notes,
5.75%, due March 1, 2004 236,460
TOTAL CORPORATE BONDS - 12.48% 476,990
GOVERNMENT-SPONSORED ENTERPRISES - 30.92%
250,000 Federal Home Loan Banks,
5.22%, due January 12, 2004 235,548
125,000 Federal Home Loan Banks,
5.42%, due February 24, 2004 118,496
200,000 Federal Home Loan Banks,
5.81%, due August 24, 2005 189,438
250,000 Federal Home Loan Banks,
5.84%, due July 6, 2005 237,423
36,513 Federal National Mortgage Association,
6.00%, due April 1, 2001 36,071
11,357 Federal National Mortgage Association,
7.00%, due February 1, 2003 11,364
250,000 Federal National Mortgage Association,
6.00%, due September 29, 2008 227,423
127,574 Government National Mortgage Association,
7.00%, due September 15, 2010 126,258
TOTAL GOVERNMENT-SPONSORED ENTERPRISES - 30.92% 1,182,020
REPURCHASE AGREEMENT - 17.65%
675,000 Northern Trust Co., 3.50%, due January 3, 2000
(Collateralized by U.S. Treasury Notes,
5.38%, due July 31, 2000) 675,000
TOTAL INVESTMENTS - 101.23% 3,870,033
Other assets less liabilities - (1.23%) (46,967)
TOTAL NET ASSETS - 100.00%
(equivalent to $9.24 per share; 10,000,000 shares
of $1.00 par value capital shares authorized;
413,684.908 shares outstanding) $ 3,823,066
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS DECEMBER 31, 1999 (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
ASSETS:
Investment securities, at market
value (identified cost $3,962,157) $ 3,870,033
Dividends receivable 36,218
Interest receivable 1,301
Receivable for investments sold 42,921
Cash (49,311)
Total assets 3,901,162
LIABILITIES:
Payable for investments purchased 78,096
Total liabilities 78,096
NET ASSETS $ 3,823,066
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 4,073,213
Accumulated undistributed income:
Net investment income 19,692
Net realized gain (loss) on
investment transactions (177,513)
Net unrealized depreciation on investments (92,326)
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 3,823,066
Capital shares, $1.00 par value
Authorized 10,000,000
Outstanding 413,685
NET ASSET VALUE PER SHARE $ 9.24
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
STATEMENT OF OPERATIONS
INVESTMENT INCOME:
Income:
Dividends $ 15,492
Interest 67,746
83,238
Expenses:
Management fees 19,546
19,546
Net investment income 63,692
REALIZED and unrealized GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from investment
transactions (42,379)
Decrease in net unrealized appreciation
(depreciation) on investments (216,288)
Net realized and unrealized gain (loss)
on investments (258,667)
Net increase (decrease) in net assets
resulting from operations $ (194,975)
See accompanying Notes to Financial Statements.
FINANCIAL STATEMENTS
Statements of Changes in net assets
SIX MONTHS ENDED
DECEMBER 31, 1999 YEAR ENDED
(UNAUDITED) JUNE 30, 1999
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 63,692 $ 229,236
Net realized gain (loss) from investment
transactions (42,379) 70,581
Increase (decrease) in net unrealized
appreciation on investments (216,288) (184,994)
Net increase (decrease) in net assets
resulting from operations (194,975) 114,823
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (49,271) (248,871)
Net realized gain (loss) from investment
transactions (145,446) (344,326)
Increase (decrease) in net assets
from distributions (194,717) (593,197)
DECREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 36,331 and 185,671 shares sold 359,199 1,921,356
Net asset value of 21,230 and 17,636 shares
issued for reinvestment of distributions 193,449 174,851
552,648 2,096,207
Cost of 153,926 and 394,307 shares redeemed (1,468,376) (4,075,129)
Net increase (decrease) in net assets
from capital share transactions (915,728) (1,978,922)
Net increase (decrease) in net assets (1,305,420) (2,457,296)
NET ASSETS:
Beginning of period 5,128,486 7,585,782
End of period (including undistributed
net investment income of $19,692 and
$5,270, respectively) $ 3,823,066 $ 5,128,486
*Distributions to shareholders:
Income dividends per share $ 0.13 $ 0.41
Capital gains distribution per share $ 0.37 $ 0.50
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, 1999 (excluding repurchase agreements and short-
term securities), were as follows:
Other than
U.S. Government U.S. Government
Securities Securities
Purchases $ 761,293 $ -
Proceeds from sales 1,597,131 687,520
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.
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
Stock Select Fund
Regional Fund
WorldWide Fund
WorldWide Select Fund
Capital Preservation Fund
Balanced Fund
Bond Fund
Kansas Tax-Exempt Bond Fund*
Money Market Fund
Federal Portfolio
Prime Portfolio
Tax-Free Money Market 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.
