SCOUT BOND FUND, INC.
A no-load mutual fund with primary emphasis
on maximum current income consistent with
its quality and maturity standards.
Quartely Report
March 31, 1996
TO THE SHAREHOLDERS
Scout Bond Fund's total return (price change and reinvested
dividends) was -0.68% for quarter ending March 31, 1996. In
comparison, the unmanaged Lehman Brothers Intermediate
Government/Corporate index earned -0.83% 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 first quarter 1996, Scout Bond Fund was
invested 38% in high-grade corporate bonds, 45% in U.S.
Government and Federal Agency Issues, and 17% in issues due
in less than one year. The average maturity was 4.0 years,
the average yield to maturity was 6.44% and the credit
rating of the portfolio was AA or better. The net assets as
of March 31, 1996, was $78.9 million.
Unlike the lower interest rates seen in 1995, rates rose
dramatically in the first quarter of 1996. Initially, on
January 31, the Federal Open Market Committee eased the
Federal Funds rate 25 basis points from 5.50% to 5.25%, but
bond prices had already risen in anticipation of the drop
and therefore the change had little effect on bond yields.
However, during the month of February, renewed inflationary
fears caused investors to sell bonds in expectation of
higher yields. Later in March, market reports of a healthier
than expected economy sent yields even higher and lead to an
overall dramatic shift in the yield curve. The yields on the
5-year and 30-year bond rose 71 and 75 basis points,
respectively, from December 29, 1995 to March 31, 1996. The
yield on the 30-year bond also rose from 5.95% to 6.67% for
the same time period.
Higher bond yields throughout the quarter caused bond
valuations to fall. If economic indicators depict a strong
economy, we may see interest rates continue to rise
throughout the year. On the other hand if indicators predict
a slowing economy with possibilities of recession, we would
expect rates to begin to fall. In response to this
uncertainty, Scout Bond Fund has reduced its average
maturity from 4.6 years to 4.0 years during this fluctuating
interest rate environment. We will continue to search for
high quality debt issues and make appropriate purchases as
attractive yields become available.
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. The
chart below shows current U.S. yield curves:
Your continued participation with Scout Bond Fund as part of
your investment portfolio is appreciated.
Sincerely,
George W. Root
UMB Investment Advisors
FINANCIAL STATEMENTS
Statement of Net Assets
March 31, 1996
Principal Market
Amount Description Value
CORPORATE BONDS 40.29%
$ 500,000 Albertson's, Incorporated Medium Term Notes,
5.71%, due March 23, 1998 $ 496,190
500,000 Albertson's, Incorporated Medium Term Notes,
6.18%, due March 22, 2000 495,705
500,000 Albertson's, Incorporated Medium Term Notes,
6.375%, due June 1, 2000 497,685
500,000 Amoco Canada Petroleum Company Notes, 7.25%,
due December 1, 2002 514,855
500,000 Avery/Dennison, Incorporated Medium Term
Notes, 8.22%, due August 15, 1996 504,685
500,000 Baltimore Gas & Electric Company 1st &
Refunding Mortgage, 6.50%,
due February 15, 2003 491,650
500,000 BellSouth Telecommunications, Incorporated
Notes, 6.25%, due May 15, 2003 486,380
500,000 British Petroleum America, Incorporated
Notes, 8.875%, due December 1, 1997 521,820
500,000 Carolina Power & Light 1st Mortgage, 5.875%,
due January 15, 2004 471,070
500,000 Carolina Power & Light Company Secured Medium
Term Notes, 5.00%, due September 15, 1998 485,970
500,000 Central Power & Light Company 1st Mortgage,
Series BB, 6.00%, due October 1, 1997 499,820
500,000 Chevron Canada Financial Limited Guaranteed
Notes, 5.60%, due April 1, 1998 494,485
500,000 Consolidated Edison Company New York,
Incorporated Debentures,
6.625%, due February 1, 2002 493,635
500,000 Delmarva Power & Light Company Medium Term
Notes, 7.50%, due May 1, 1999 514,925
500,000 Duke Power Company 1st & Refunding Mortgage,
5.625%, due August 12, 1997 497,115
500,000 Duke Power Company 1st & Refunding Mortgage,
7.00%, due June 1, 2000 502,520
500,000 Duke Power Company 1st & Refunding Mortgage,
5.875%, due June 1, 2001 479,535
500,000 Duke Power Company Medium Term Notes, 5.17%,
due September 1, 1998 488,360
500,000 Emerson Electric Company, 6.30%,
due November 1, 2005 485,850
750,000 Florida Power & Light Company 1st Mortgage
5.50%, due July 1, 1999 731,077
500,000 Florida Power & Light Company Secured Medium
Term Notes, 6.20%, due February 2, 1998 500,330
500,000 Florida Power & Light Company Secured Medium
Term Notes, 5.70%, due March 5, 1998 495,615
500,000 General Mills Incorporated Medium Term Notes,
7.50%, due June 5, 2000 517,680
500,000 General Mills Incorporated Medium Term Notes,
5.98%, due July 9, 2001 485,225
500,000 GTE California Incorporated Debentures Series
A, 5.625%, due February 1, 2001 480,455
500,000 GTE Southwest Incorporated Debentures, 6.00%,
due January 15, 2006 472,230
500,000 GTE Southwest Incorporated Debentures, 6.00%,
due February 15, 2008 466,410
500,000 Houston Light & Power Company 1st Mortgage,
7.625%, due March 1, 1997 507,590
1,000,000 International Business Machines
Corporation Notes, 6.375%, due November 1, 1997 1,005,440
500,000 International Business Machines Corporation
Notes, 6.375%, due June 15, 2000 499,665
500,000 International Business Machines Corporation
Notes, 7.25%, due November 1, 2002 516,280
500,000 International Paper Company Medium Term
Notes, 8.05%, due March 25, 1999 519,925
500,000 Kansas City Power & Light Company Medium Term
Notes, 6.50%, due January 2, 2001 496,815
CORPORATE BONDS (Continued)
250,000 McDonald's Corporation Medium Term Notes,
8.75%, due November 15, 2000 272,197
500,000 McDonald's Corporation Medium Term Notes,
7.375%, due July 15, 2002 512,740
500,000 Minnesota Mining & Manufacturing Company
Medium Term Notes,
6.25%, due March 29, 1999 500,315
500,000 Monongahela Power Company 1st Mortgage,
5.625%, due April 1, 2000 484,640
500,000 Monongahela Power Company 1st Mortgage,
7.375%, due July 1, 2002 514,585
1,000,000 New York Telephone Company Notes,
5.875%, due September 1, 2003 941,510
500,000 Newell Company Medium Term Notes, 6.18%,
due July 11, 2000 490,820
500,000 Northern Illinois Gas Company 1st Mortgage,
5.50%, due February 1, 1997 498,565
500,000 Northwest Natural Gas Company Secured Medium
Term Notes,
5.98%, due December 15, 2000 488,545
500,000 Pacific Bell Telephone Company Notes, 7.25%,
due July 1, 2002 514,980
500,000 Pacific Bell Telephone Company Notes, 6.25%,
due March 1, 2005 480,955
500,000 Pacific Gas & Electric Company 1st Mortgage,
6.25%, due March 1, 2004 477,100
500,000 PepsiCo, Incorporated Notes, 7.625%, due
November 1, 1998 517,045
1,000,000 Public Service Oklahoma Notes, 6.02%,
due March 1, 2001 984,160
500,000 Sears Roebuck & Company Senior Medium Term
Notes, 7.17%, due January 15, 1997 504,840
11,214 Sears Roebuck & Corporation Mortgage Pass
Through Certificates, Series 86 C,
9.00%, due July 25, 2001 11,438
500,000 Southern California Gas Company 1st Mortgage,
Series AA, 6.50%, due December 15, 1997 502,435
500,000 Southwestern Bell Capital Corporation Medium
Term Notes, 7.80%, due November 5, 1998 519,130
500,000 Southwestern Bell Capital Corporation Medium
Term Notes, 6.125%, due March 12, 2001 492,375
500,000 Southwestern Bell Capital Corporation Medium
Term Notes, 5.77%, due October 14, 2003 471,095
500,000 Texaco Capital Incorporated Medium Term
Notes, 8.24%, due October 15, 2001 536,225
500,000 Tribune Company Medium Term Notes, 5.30%, due
April 17, 2000 478,860
500,000 Tribune Company Medium Term Notes, 5.75%, due
September 15, 2003 467,230
500,000 Union Electric Company 1st Mortgage, 6.75%,
due October 15, 1999 504,080
500,000 Union Pacific Corporation Notes, 6.25%, due
March 15, 1999 496,275
500,000 Union Pacific Corporation Notes, 7.875%, due
February 15, 2002 524,150
500,000 Wal-Mart Stores, Incorporated Notes, 5.50%,
due September 15, 1997 496,380
500,000 Wal-Mart Stores, Incorporated Notes, 6.125%,
due October 1, 1999 494,615
500,000 Weyerhaeuser Company Medium Term Notes,
8.53%, due April 21, 1997 513,950
32,011,214 31,808,227
U.S. GOVERNMENT AGENCIES 4.95%
109,910 Government National Mortgage Association,
9.00%, due July 15, 2001 116,565
104,720 Government National Mortgage Association,
8.00%, due January 20, 2002 108,056
185,403 Government National Mortgage Association,
8.50%, due February 20, 2002 192,285
54,575 Government National Mortgage Association,
8.00%, due January 15, 2004 56,461
212,359 Government National Mortgage Association,
9.50%, due April 15, 2005 226,213
235,380 Government National Mortgage Association,
9.75%, due May 15, 2005 250,737
115,597 Government National Mortgage Association,
9.00%, due October 20, 2005 121,442
178,198 Government National Mortgage Association,
7.50%, due February 15, 2006 180,319
145,896 Government National Mortgage Association,
7.50%, due March 15, 2006 147,544
37,162 Government National Mortgage Association,
8.00%, due April 20, 2006 38,448
182,336 Government National Mortgage Association,
8.00%, due June 20, 2006 188,548
214,759 Government National Mortgage Association,
8.50%, due July 15, 2006 225,617
75,201 Government National Mortgage Association,
8.00%, due August 15, 2006 77,986
206,644 Government National Mortgage Association,
8.00%, due August 15 2006 214,244
302,506 Government National Mortgage Association,
7.50%, due August 20, 2006 306,102
190,455 Government National Mortgage Association,
7.50%, due September 15, 2006 192,607
101,713 Government National Mortgage Association,
7.50%, due April 15, 2007 102,862
232,411 Government National Mortgage Association,
7.50%, due March 20, 2009 235,228
495,405 Government National Mortgage Association,
6.00%, due May 15, 2009 477,025
447,112 Government National Mortgage Association,
7.00%, due May 15, 2009 449,804
3,827,742 3,908,093
U.S. GOVERNMENT SECURITIES 20.74%
1,000,000 U.S. Treasury Notes, 4.25%,
due May 15, 1996 998,750
1,000,000 U.S. Treasury Notes, 6.125%,
due December 31, 1996 1,005,470
1,000,000 U.S. Treasury Notes, 8.00%,
due January 15, 1997 1,019,220
500,000 U.S. Treasury Notes, 5.875%,
due March 31, 1999 499,060
500,000 U.S. Treasury Notes, 8.50%,
due July 15, 1997 517,655
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 517,500
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 986,870
U.S. GOVERNMENT SECURITIES (Continued)
1,500,000 U.S. Treasury Notes, 7.125%,
due October 15, 1998 1,543,125
1,500,000 U.S. Treasury Notes, 6.375%,
due January 15, 1999 1,516,875
1,000,000 U.S. Treasury Notes, 6.00%,
due October 15, 1999 1,000,310
1,500,000 U.S. Treasury Notes, 5.50%,
due April 15, 2000 1,472,340
1,000,000 U.S. Treasury Notes, 7.50%,
due November 15, 2001 1,061,250
1,000,000 U.S. Treasury Notes, 6.375%,
due August 15, 2002 1,005,780
750,000 U.S. Treasury Notes, 6.25%,
due February 15, 2003 747,772
16,250,000 16,376,347
GOVERNMENT SPONSORED ENTERPRISES 26.40%
500,000 Federal Home Loan Banks, 4.73%,
due December 23, 1996 497,655
250,000 Federal Home Loan Banks, 5.66%,
due November 9, 1998 247,812
500,000 Federal Home Loan Banks, 6.48%,
due December 29, 2000 495,860
500,000 Federal Home Loan Banks, 6.31%,
due March 29, 2001 500,216
1,000,000 Federal Home Loan Mortgage Corporation,
6.13%, due August 19, 1999 999,370
500,000 Federal National Mortgage Association, 6.41%,
due March 8, 2006 489,218
500,000 Federal National Mortgage Association, 8.20%,
due December 23, 1996 509,220
1,000,000 Federal National Mortgage Association,
8.25%, due December 18, 2000 1,079,060
1,500,000 Federal National Mortgage Association,
8.00%, due July 10, 1996 1,510,545
1,000,000 Federal National Mortgage Association,
8.20%, due March 10, 1998 1,041,870
1,000,000 Federal National Mortgage Association,
8.15%, due May 11, 1998 1,042,660
1,000,000 Federal National Mortgage Association,
7.85%, due September 10, 1998 1,042,340
1,000,000 Federal National Mortgage Association,
7.05%, due October 10, 1996 1,007,660
1,500,000 Federal National Mortgage Association,
7.05%, due December 10, 1998 1,537,740
1,250,000 Federal National Mortgage Association,
7.50%, due February 11, 2002 1,312,700
1,000,000 Federal National Mortgage Association,
7.55%, due April 22, 2002 1,055,310
1,000,000 Federal National Mortgage Association,
6.35%, due August 10, 1999 1,005,940
1,000,000 Federal National Mortgage Association,
6.05%, due November 10, 1997 1,002,660
500,000 Federal National Mortgage Association, 7.05%,
due November 12, 2002 514,920
1,500,000 Federal National Mortgage Association,
6.10%, due February 10, 2000 1,492,965
500,000 Federal National Mortgage Association, 5.05%,
due November 10, 1998 488,360
1,000,000 Federal National Mortgage Association,
6.38%, due April 29, 2003 979,570
1,000,000 Federal National Mortgage Association,
6.38%, due June 25, 2003 986,910
20,500,000 20,840,561
SHORT-TERM CORPORATE NOTES 5.69%
500,000 AIG Funding, Inc., 5.30%, due April 3, 1996 499,779
500,000 AT&T Corp., 5.29%, due April 17, 1996 498,750
500,000 BellSouth Telecommunications, 5.22%, due
April 9, 1996 499,347
500,000 GTE North, Inc., 5.42%, due April 11, 1996 499,171
500,000 IBM Corp., 5.40%, due April 2, 1996 499,850
500,000 Marsh & McClennan Cos., Inc., 5.27%, due
April 12, 1996 499,121
500,000 Shell Oil Co., 5.32%, due April 26, 1996 498,078
500,000 Wal-Mart Stores, Inc., 5.15%, due April 8, 1996 499,427
500,000 Xerox Corp., 5.20%, due April 2, 1996 499,855
4,500,000 4,493,378
REPURCHASE AGREEMENT 0.65%
515,000 Northern Trust Company, 4.85%, due April 1, 1996
(Collateralized by U.S. Treasury Notes,
5.75%, due September 30, 1997) 515,000
TOTAL INVESTMENTS 98.72% $ 77,941,606
Other assets less liabilities 1.28% 1,008,925
TOTAL NET ASSETS 100.00%
(equivalent to $11.03 per share; 10,000,000 shares of
$1.00 par value capital shares authorized;
7,159,648.010 shares outstanding) $ 78,950,531
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.
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
Jack 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
