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Tuesday, January 25, 2011

Scout Does a Deal

Reported by Armie Margaret Lee

Scout Investments [see profile] is acquiring two mutual funds from Frontegra Asset Management [see profile]. If fund shareholders give their OK, the Frontegra Columbus Core Plus Fund and Frontegra Columbus Core Fund would be reorganized with and into the Scout Core Plus Bond Fund and Scout Bond Fund, respectively, in April [SEC filing]. Financial terms of the deal were not made public.

The Scout Core Plus fund will be a newly created series of Scout Funds and the Scout Bond fund is an existing series. The latter will be renamed Scout Core Bond Fund.

Frontegra has three other institutional mutual funds in its lineup. Those are not part of the Scout deal.

Reams Asset Management, which Scout purchased last year, has been the sub-adviser of the two Frontegra funds since their inception. The investment team will continue to manage the reorganized fund.

When the transaction is complete, Scout will have total of eight mutual funds, six of which are equity products and two are fixed income.

Asked if Scout is planning to do more deals, Scout Investments CEO Andy Iseman said: "We're focused on the integration with Reams and continuing the build-out of our distribution efforts. We are also focusing on our rebranding efforts this year." (Click here to see related story).

"Opportunistically, we will look at other options out there," he said, of possible deals. "We don't have anything in the pipeline currently."

On the distribution front, Scout is building out its institutional distribution and marketing efforts to complement its traditional distribution through RIAs.
Company Press Release

Scout Investments to Acquire Two 5 Star Funds

Firm to Diversify Existing Equity Offerings with Two Bond Funds

KANSAS CITY, Mo -- Scout Investments (Scout) announced today that it has agreed to acquire the mutual fund advisory business of the Frontegra Columbus Core Fund (Core Fund) and the Frontegra Columbus Core Plus Fund (Core Plus Fund) from Frontegra Asset Management, a sponsor of institutional mutual funds, subject to shareholder approvals. Institutional fixed-income specialist Reams Asset Management, which was acquired by Scout in 2010, has been the sub-adviser of the Core and Core Plus Funds since their respective inceptions and their investment team will continue to manage the reorganized funds. The investment objectives and investment strategies for the funds will remain the same following the acquisition.

If approved, the Core Fund will be reorganized into the Scout Bond Fund and renamed the Scout Core Bond Fund. The Core Plus Fund will be reorganized into a new fund to be named the Scout Core Plus Bond Fund.

With this acquisition, Scout will continue to integrate Reams’ three decades of fixed income experience for the benefit of Scout’s clients. The Core Fund and the Core Plus Fund, both with 5-star overall ratings from Morningstar, will broaden the range of investment options offered by Scout and complement the firm’s well-regarded equity products, which include the 5-star Overall Morningstar RatedTM Scout International Fund and Scout Mid Cap Fund.

"Investors are increasingly demanding a comprehensive set of investment solutions, and the reorganization of these funds under the leadership of our Reams division will allow us to further meet our clients' investment needs," said Andy Iseman, chief executive officer of Scout Investments. "We are pleased to introduce Reams' fixed income capabilities to our investors."

A shareholder proxy solicitation and related shareholder meeting regarding the fund reorganizations is expected to be conducted in the first quarter of 2011. About Scout Investments

Scout Investments, Inc, headquartered in Kansas City, Mo., offers equity and fixed income investment management strategies for separate accounts and mutual funds through high-quality institutional asset managers.

Domestic large cap, mid cap, small cap, international, international small/mid-cap, and global equity portfolios are offered through Scout Investments. Fixed income portfolios in core plus, core, intermediate, long duration, low duration, absolute return and real return (TIPS) are offered through Scout's fixed income division, Reams Asset Management. Scout is the investment subsidiary of UMB Financial Corporation (NASDAQ: UMBF). Additional information can be found at www.scoutinv.com.

Consider the Funds' investment objectives, risks, charges and expenses carefully before investing. For a prospectus, which contains this and other information about the Funds call 800.996.2862. Please read the prospectus carefully before investing.

The Overall Morningstar Rating™ for a fund is derived from the weighted-average of the performance figures associated with its three-, five-, and ten-year (if applicable). Morningstar Rating metrics. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variations in a fund's monthly performance (including the effects of sales charges, loads and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of the funds in a broad asset class receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) As of December 31, 2010, the Frontegra Columbus Core Plus Fund received the following star ratings among Intermediate-Term Bond funds for the following time periods: 5 stars (among 1,026 funds) for the three-year, 5 stars (among 878 funds) for the five-year and 5 stars (among 560 funds) for the ten-year time periods. The Frontegra Columbus Core Fund received the following star ratings among Intermediate-Term Bond funds for the following time periods: 5 stars (among 1,026 funds) for the three-year and 5 stars (among 878 funds) for the five-year time periods. The Scout International Fund received the following star ratings among U.S. domiciled Foreign Large Growth funds for the following time periods: 5 stars (among 209 funds) for the three-year, 5 stars (among 162 funds) for the five-year and 5 stars (among 89 funds) for the ten-year time periods. The Scout Bond Fund received the following star ratings among U.S. domiciled Short-Term Bond funds for the following time periods: 4 stars (among 376 funds) for the three-year, 4 stars (among 322 funds) for the five-year and 4 stars (among 185 funds) for the ten-year time periods. The Scout Mid Cap Fund received 5 stars (among 373 Mid-Cap Blend funds) for the 3-year time period. © 2010 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

The performance data quoted represents past performance and past performance is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information quoted. To obtain performance information current to the most recent month-end, please call 800.996.2862.

Average Annual Returns as of December 31, 2010: Scout International Fund: 1-Year: 13.17%, 5-Years: 6.34%, 10-Years: 6.70% Gross Expense Ratio 0.97% (as of 06/30/10), Scout Mid Cap Fund: 1-Year: 27.89%, Since inception (10/31/06): 10.56% Gross Expense Ratio: 1.10% (as of 06/30/10), Frontegra Columbus Core Plus Fund (Institutional Class): 1-Year: 10.06%, 5-Years: 9.20%, 10-Years: 7.58% Gross Expense Ratio 0.49% (as of 10/31/10), Frontegra Columbus Core Fund: 1-Year: 7.48%, 5-Years: 7.78%, Since inception (02/23/01): 6.51% Gross Expense Ratio 0.72% (as of 10/31/10).

Investing in fixed income securities such as bonds involves interest rate risk. When interest rates rise, the value of fixed income securities generally decreases. High-yield bonds involve a greater risk of default and price volatility than U.S. Government and other higher-quality bonds.

Foreign investments present additional risk due to currency fluctuations, economic and political factors, government regulations, differences in accounting standards and other factors. Investments in emerging markets involve even greater risks. Small, mid and large cap stocks are subject to substantial risks such as market, business, size volatility, management experience, product diversification, financial resource, competitive strength, liquidity, and potential to fall out of favor that may cause their prices to fluctuate over time, sometimes rapidly and unpredictably.

The Frontegra Funds, Inc. are distributed by Frontegra Strategies, LLC, an affiliate of Frontegra Funds, Inc., and managed by Frontegra Asset Management, Inc. Frontegra Strategies, LLC is located at 400 Skokie Boulevard, Suite 500, Northbrook, Illinois 60062, and can be contacted by calling (847) 509-9860. Frontegra Strategies, LLC is a member of the Financial Industry Regulatory Authority, Inc. and SIPC.

The Scout Funds are distributed by UMB Distribution Services, LLC, 803 W. Michigan St. Milwaukee, WI 53233, an affiliate of UMB Financial Corporation. Scout Investment Advisors, Inc., a subsidiary of UMB Financial Corp., serves as investment adviser to the Scout Funds.

"Scout" and the "Scout" design are registered service marks of UMB Financial Corporation.

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