SCOUT
BOND FUND
A no-load mutual fund
with primary emphasis
on maximum current
income consistent with
its quality and maturity
standards.
Quarterly Report
September 30, 1996
TO THE SHAREHOLDERS
Scout Bond Fund's total return (price change and reinvested distributions) was
1.53% for the quarter ended September 30, 1996. In comparison, the unmanaged
Lehman Brothers Intermediate Government/Corporate index earned 1.77% for the
same time period.
Performance data contained in this report is for past periods only. Past
performance is not predictive of future performance. Investment return and
share value will fluctuate, and redemption value may be more or less than
original cost.
At the end of the quarter, Scout Bond Fund was invested 39% in high-grade
corporate bonds, 47% in U.S. Government and Federal Agency Issues, and 14% in
issues due in less than one year. The average maturity was 3.9 years, the
average yield to maturity was 6.55% and the credit rating of the portfolio was
AA or better. The net assets as of September 30, 1996, were $80.2 million.
PIE CHART
The yield curve on September 30, 1996 mirrored the yield curve seen on June
28, 1996 despite slight fluctuations in bond yields during the interim. In
July we saw a slight upward shift in the yield curve which widened to its
largest gap near the end of August. Since then, bond yields have dropped back
to the June 30 levels with 5.67% on the 1-year, 6.45% on the 5-year, 6.70% on
the 10-year and 6.92% on the 30-year treasury bond.
GRAPH -- Taxable Yield Curves November 15, 1996
The bond market has been extremely volatile throughout the quarter in reaction
to conflicting economic reports. Strong employment numbers coupled with strong
GDP and consumer confidence numbers were offset by continued moderate
inflation. Consequently, we saw a strong rally in bonds in July followed by a
major sell-off in August resulting in lackluster performance for the quarter.
The Federal Reserve has left the Fed Funds Rate unchanged at 5.25% since
January 31 of this year and it seems unlikely that the Fed will tighten at the
next FOMC meeting scheduled in November. In fact, we believe it is more
probable that the Federal Reserve will ease rates in 1997 as the economy
becomes increasingly sluggish. During this time of uncertainty, we will remain
shorter in the average maturity of the fund taking advantage of higher
yielding bonds as they become available.
Your continued participation with Scout Bond Fund as part of your investment
portfolio is appreciated.
Sincerely,
/S/George W Root
George W. Root
UMB Investment Advisors
Shares of the 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 or any other applicable deposit
insurance. These shares involve investment risks, including the possible loss
of the principal amount invested.
FINANCIAL STATEMENTS
Statement of Net Assets
September 30, 1996
Principal Market
Amount Description Value
CORPORATE BONDS - 43.24%
$ 500,000 Albertson's, Incorporated
Medium Term Notes,
5.71%, due March 23, 1998 $ 496,720
500,000 Albertson's, Incorporated
Medium Term Notes,
6.18%, due March 22, 2000 491,665
500,000 Albertson's, Incorporated
Medium Term Notes,
6.375%, due June 1, 2000 494,705
500,000 Amoco Canada Petroleum Company Notes,
7.25%, due December 1, 2002 506,530
500,000 Baltimore Gas & Electric Company
1st & Refunding Mortgage,
6.50%, due February 15, 2003 487,150
500,000 BellSouth Telecommunications,
Incorporated Notes,
6.25%, due May 15, 2003 482,195
500,000 BellSouth Telecommunications,
Incorporated Notes,
6.375%, due June 15, 2004 481,945
500,000 British Petroleum America,
Incorporated Notes,
8.875%, due December 1, 1997 514,935
500,000 Carolina Power & Light
1st Mortgage,
5.875%, due January 15, 2004 462,490
500,000 Carolina Power & Light Company
Secured Medium Term Notes,
5.00%, due September 15, 1998 486,625
500,000 Central Power & Light Company
1st Mortgage, Series BB,
6.00%, due October 1, 1997 499,285
500,000 Chevron Canada Financial Limited
Guaranteed Notes,
5.60%, due April 1, 1998 494,235
500,000 Consolidated Edison Company New York,
Incorporated Debentures,
6.625%, due February 1, 2002 492,745
500,000 Delmarva Power & Light Company
Medium Term Notes,
7.50%, due May 1, 1999 509,320
500,000 Duke Power Company
1st & Refunding Mortgage,
5.625%, due August 12, 1997 497,825
500,000 Duke Power Company
1st & Refunding Mortgage,
7.00%, due June 1, 2000 497,850
500,000 Duke Power Company
1st & Refunding Mortgage,
5.875%, due June 1, 2001 475,840
500,000 Duke Power Company
Medium Term Notes,
5.17%, due September 1, 1998 488,600
500,000 duPont EI de Nemours & Company,
6.75%, due October 15, 2002 495,870
500,000 Emerson Electric Company,
6.30%, due November 1, 2005 474,330
500,000 Engelhard Corporation Senior Note,
7.00%, due August 1, 2001 502,570
750,000 Florida Power & Light Company
1st Mortgage
5.50%, due July 1, 1999 730,057
500,000 Florida Power & Light Company
Secured Medium Term Notes,
6.20%, due February 2, 1998 500,435
500,000 Florida Power & Light Company
Secured Medium Term Notes,
5.70%, due March 5, 1998 496,880
500,000 General Mills Incorporated
Medium Term Notes,
7.50%, due June 5, 2000 510,975
500,000 General Mills Incorporated
Medium Term Notes,
5.98%, due July 9, 2001 479,520
500,000 GTE California Incorporated
Debentures Series A,
5.625%, due February 1, 2001 476,775
500,000 GTE Southwest Incorporated Debentures,
6.00%, due January 15, 2006 459,655
500,000 GTE Southwest Incorporated Debentures,
6.00%, due February 15, 2008 450,140
500,000 Houston Light & Power Company
1st Mortgage,
7.625%, due March 1, 1997 503,570
1,000,000 International Business Machines
Corporation Notes,
6.375%, due November 1, 1997 1,002,180
500,000 International Business Machines
Corporation Notes,
6.375%, due June 15, 2000 495,365
500,000 International Business Machines
Corporation Notes,
7.25%, due November 1, 2002 508,555
CORPORATE BONDS (Continued)
500,000 International Paper Company
Medium Term Notes,
8.05%, due March 25, 1999 513,965
500,000 Kansas City Power & Light Company
Medium Term Notes,
6.50%, due January 2, 2001 491,885
250,000 McDonald's Corporation, Series C,
Medium Term Notes,
8.75%, due November 15, 2000 267,410
500,000 McDonald's Corporation Medium Term Notes,
7.375%, due July 15, 2002 507,230
500,000 Minnesota Mining & Manufacturing Company
Medium Term Notes,
6.25%, due March 29, 1999 498,220
750,000 Monongahela Power Company 1st Mortgage,
5.625%, due April 1, 2000 724,538
500,000 Monongahela Power Company 1st Mortgage,
7.375%, due July 1, 2002 504,975
1,000,000 New York Telephone Company Notes,
5.875%, due September 1, 2003 936,400
500,000 Newell Company Medium Term Notes,
6.18%, due July 11, 2000 486,870
500,000 Northern Illinois Gas Company
1st Mortgage, 5.50%, due February 1, 1997 499,470
500,000 Northwest Natural Gas Company
Secured Medium Term Notes,
5.98%, due December 15, 2000 484,465
500,000 Pacific Bell Telephone Company Notes,
7.25%, due July 1, 2002 507,980
500,000 Pacific Bell Telephone Company Notes,
6.25%, due March 1, 2005 471,125
500,000 Pacific Gas & Electric Company
1st Mortgage, 6.25%, due March 1, 2004 475,445
500,000 PepsiCo, Incorporated Notes,
7.625%, due November 1, 1998 511,605
1,000,000 Public Service Oklahoma Notes,
6.02%, due March 1, 2001 967,920
500,000 Sara Lee Corporation,
Series C, Medium Term Notes,
6.45%, due September 26, 2005 473,780
500,000 Sears Roebuck & Company Senior
Medium Term Notes,
7.17%, due January 15, 1997 501,835
500,000 Southern California Gas Company
1st Mortgage, Series AA,
6.50%, due December 15, 1997 500,875
500,000 Southwestern Bell Capital Corporation
Medium Term Notes,
7.80%, due November 5, 1998 513,320
500,000 Southwestern Bell Telephone Company
Medium Term Notes,
6.125%, due March 12, 2001 487,145
500,000 Southwestern Bell Telephone Company
Medium Term Notes,
5.77%, due October 14, 2003 466,060
500,000 Sysco Corporation,
7.00%, due May 1, 2006 495,670
500,000 Texaco Capital Incorporated
Medium Term Notes,
8.24%, due October 15, 2001 526,725
500,000 Texas Instruments Incorporated,
Unsecured Note,
6.125%, due February 1, 2006 462,120
500,000 Tribune Company Medium Term Notes,
5.30%, due April 17, 2000 476,445
500,000 Tribune Company Medium Term Notes,
5.75%, due September 15, 2003 462,140
500,000 Union Electric Company 1st Mortgage,
6.75%, due October 15, 1999 500,390
500,000 Union Pacific Corporation Notes,
6.25%, due March 15, 1999 493,900
500,000 Union Pacific Corporation Notes,
7.875%, due February 15, 2002 518,945
500,000 Union Pacific Railroad Co.
Equipment Trust, Series G,
7.01%, due March 15, 1999 500,715
500,000 Wal-Mart Stores, Incorporated Notes,
5.50%, due September 15, 1997 497,125
500,000 Wal-Mart Stores, Incorporated Notes,
6.125%, due October 1, 1999 494,065
500,000 Weyerhaeuser Company
Medium Term Notes,
8.53%, due April 21, 1997 507,155
35,250,000 34,675,450
U.S. GOVERNMENT AGENCIES - 4.27%
88,912 Government National Mortgage Association,
9.00%, due July 15, 2001 92,814
87,140 Government National Mortgage Association,
8.00%, due January 20, 2002 89,077
154,349 Government National Mortgage Association,
8.50%, due February 20, 2002 159,434
47,078 Government National Mortgage Association,
8.00%, due January 15, 2004 48,331
187,013 Government National Mortgage Association,
9.50%, due April 15, 2005 196,313
208,257 Government National Mortgage Association,
9.75%, due May 15, 2005 218,614
105,350 Government National Mortgage Association,
9.00%, due October 20, 2005 109,437
161,934 Government National Mortgage Association,
7.50%, due February 15, 2006 163,099
116,338 Government National Mortgage Association,
7.50%, due March 15, 2006 117,120
167,583 Government National Mortgage Association,
8.00%, due June 20, 2006 171,559
199,742 Government National Mortgage Association,
8.50%, due July 15, 2006 208,239
72,709 Government National Mortgage Association,
8.00%, due August 15, 2006 74,835
199,025 Government National Mortgage Association,
8.00%, due August 15 2006 204,845
256,598 Government National Mortgage Association,
7.50%, due August 20, 2006 258,430
171,214 Government National Mortgage Association,
7.50%, due September 15, 2006 172,365
93,887 Government National Mortgage Association,
7.50%, due April 15, 2007 94,518
211,660 Government National Mortgage Association,
7.50%, due March 20, 2009 213,122
441,517 Government National Mortgage Association,
6.00%, due May 15, 2009 423,688
411,159 Government National Mortgage Association,
7.00%, due May 15, 2009 408,935
3,381,465 3,424,775
U.S. GOVERNMENT SECURITIES - 18.71%
1,000,000 U.S. Treasury Notes,
8.00%, due January 15, 1997 1,007,190
500,000 U.S. Treasury Notes,
8.50%, due July 15, 1997 510,470
500,000 U.S. Treasury Notes,
5.50%, due July 31, 1997 499,060
1,000,000 U.S. Treasury Notes,
5.50%, due September 30, 1997 997,500
500,000 U.S. Treasury Notes,
7.875%, due January 15, 1998 511,795
1,000,000 U.S. Treasury Notes,
5.125%, due March 31, 1998 987,810
1,000,000 U.S. Treasury Notes,
5.125%, due April 30, 1998 986,560
1,500,000 U.S. Treasury Notes,
7.125%, due October 15, 1998 1,528,590
1,500,000 U.S. Treasury Notes,
6.375%, due January 15, 1999 1,506,795
500,000 U.S. Treasury Notes,
5.875%, due March 31, 1999 496,250
U.S. GOVERNMENT SECURITIES (Continued)
1,000,000 U.S. Treasury Notes,
6.00%, due October 15, 1999 992,190
1,500,000 U.S. Treasury Notes,
5.50%, due April 15, 2000 1,458,990
1,000,000 U.S. Treasury Notes,
7.50%, due November 15, 2001 1,043,280
1,500,000 U.S. Treasury Notes,
6.375%, due August 15, 2002 1,489,680
1,000,000 U.S. Treasury Notes,
6.25%, due February 15, 2003 984,060
15,000,000 15,000,220
GOVERNMENT SPONSORED ENTERPRISES - 28.78%
500,000 Federal Home Loan Banks,
4.73%, due December 23, 1996 499,455
250,000 Federal Home Loan Banks,
5.66%, due November 9, 1998 247,070
500,000 Federal Home Loan Banks,
6.48%, due December 29, 2000 493,360
500,000 Federal Home Loan Banks,
6.31%, due March 29, 2001 495,015
1,000,000 Federal Home Loan Mortgage Corporation,
6.13%, due August 19, 1999 992,660
1,000,000 Federal Home Loan Mortgage Corporation,
6.75%, due May 30, 2006 985,940
500,000 Federal National Mortgage Association,
8.20%, due December 23, 1996 503,045
1,000,000 Federal National Mortgage Association,
Deb., 7.05%, due October 10, 1996 1,000,310
1,000,000 Federal National Mortgage Association,
Deb., 8.20%, due March 10, 1998 1,028,590
1,000,000 Federal National Mortgage Association,
Deb., 7.85%, due September 10, 1998 1,029,530
500,000 Federal National Mortgage Association,
Deb., 5.05%, due November 10, 1998 487,970
1,500,000 Federal National Mortgage Association,
Deb., 6.10%, due February 10, 2000 1,482,420
500,000 Federal National Mortgage Association,
Deb., 6.80%, due January 10, 2003 500,935
1,250,000 Federal National Mortgage Association,
Deb., 7.50%, due February 11, 2002 1,293,750
1,000,000 Federal National Mortgage Association,
Deb., Series U,
6.05%, due November 10, 1997 1,000,000
1,000,000 Federal National Mortgage Association,
Deb., Series SM-E,
8.15%, due May 11, 1998 1,029,220
1,500,000 Federal National Mortgage Association,
Deb., Series H,
7.05%, due December 10, 1998 1,523,670
1,000,000 Federal National Mortgage Association,
Deb., Series H,
6.35%, due August 10, 1999 998,440
1,000,000 Federal National Mortgage Association,
Deb., Series I,
8.25% due December 18, 2000 1,060,780
500,000 Federal National Mortgage Association,
Deb., Series K,
7.05%, due November 12, 2002 506,640
1,000,000 Federal National Mortgage Association,
Deb., Series SM-E,
7.55%, due April 22, 2002 1,038,910
500,000 Federal National Mortgage Association,
Medium Term Note,
5.40%, due March 12, 1999 490,080
1,000,000 Federal National Mortgage Association,
Medium Term Note,
6.38%, due April 29, 2003 964,840
1,000,000 Federal National Mortgage Association,
Medium Term Note,
6.38%, due June 25, 2003 975,680
1,000,000 Federal National Mortgage Association,
Medium Term Note,
6.41%, due March 08, 2006 965,000
1,000,000 Federal National Mortgage Association,
Medium Term Note,
6.45%, due April 23, 2001 992,190
500,000 Federal National Mortgage Association,
Medium Term Note,
6.625%, due May 21, 2001 499,375
23,000,000 23,084,875
SHORT-TERM CORPORATE NOTES - 3.42%
500,000 AIG Funding Incorporated,
5.31%, due October 10, 1996 499,264
500,000 Coca-Cola Company,
5.28%, due October 8,1996 499,413
500,000 Hewlett Packard Company,
5.30%, due October 9, 1996 499,337
500,000 Monsanto Company,
5.42%, due October 25, 1996 498,118
500,000 Nalco Chemical Company,
5.36%, due October 23, 1996 498,288
250,000 Wal-Mart Stores, Incorporated,
5.25%, due October 29, 1996 248,943
2,750,000 2,743,363
REPURCHASE AGREEMENT - 0.22%
180,000 Northern Trust Company,
5.58%, due October 1, 1996
(Collateralized by U.S. Treasury Notes,
6.125%, due August 31, 1998) 180,000
TOTAL INVESTMENTS - 98.64% $ 79,108,683
Other assets less liabilities - 1.36% 1,093,407
TOTAL NET ASSETS - 100.00%
(equivalent to $10.94 per share;
20,000,000 shares of $1.00 par value
capital shares authorized;
7,332,861.334 shares outstanding) $ 80,202,090
BASIS OF DETERMINING MARKET VALUE. Debt securities (other than short-term
obligations), including listed issues, are valued on the basis of valuations
furnished by a pricing service which utilizes both dealer-supplied valuations
and electronic data processing techniques. Short-term obligations are valued
at amortized cost.
This report has been prepared for the information of the Shareholders of Scout
Bond 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 Scout Funds are offered only by
the Prospectus, a copy of which may be obtained from Jones & Babson, Inc.
BOARD OF DIRECTORS
AND OFFICERS
Board of Directors
Larry D. Armel
William E. Hoffman, D.D.S.
Eric T. Jager
Stephen F. Rose
Stuart Wien
Officers
Larry D. Armel, President
P. Bradley Adams, Vice President & Treasurer
Michael A. Brummel, Vice President
Martin A. Cramer, Vice President & Secretary
John G. Dyer, Vice President
Manager and Investment Counsel
UMB Bank, n.a., Kansas City, Missouri
Legal Counsel
Stradley, Ronon, Stevens & Young,
Philadelphia, Pennsylvania
John G. Dyer, Kansas City, Missouri
Custodian
UMB Bank, n.a., Kansas City, Missouri
JONES & BABSON
MUTUAL FUNDS
P.O. Box 410498
Kansas City, MO 64141-0498
TOLL-FREE 1-800-996-2862
