TO THE SHAREHOLDERS
For the six months ended December 31, 1995, Scout Bond Fund earned a total
return (price change and reinvested distributions) of 4.39%, and 14.03% for
the entire year.
In comparison, the unmanaged Lehman Brothers Intermediate Government/
Corporate Bond index returned 5.24% for the six-month period and 15.33% for
the year.
The Fund's average annual compounded total returns for one, five and ten year
periods were 14.03%, 7.65% and 7.85%, respectively. 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 December 31, 1995, Scout Bond Fund was invested 39.6% in high-grade
corporate bonds, 53.8% in U.S. Government and Federal Agency Issues, and
5.4% in cash equivalent reserves. The average maturity was 4.6 years, the
average yield to maturity was 5.82% and the credit rating of the portfolio
was AA or better. The net assets at year end were $79.1 million.
1995 was an interesting year for the bond market. In the last six months, the
Federal Reserve twice dropped the Federal Funds rate by 25 basis points, on
July 6 and December 19. This caused an overall shift of the yield curve
downward from June 30 to December 31. Shorter maturity bonds were immediately
affected by the reduction in rates, and the 5-year and 10-year bond dropped
by approximately 60 basis points. The yield on the 30-year treasury bond
decreased from 6.62% on June 30 to 5.95% at year end. A slight upward
movement in the yield curve occurred in mid-August due to inflationary fears,
but inflation remained low for the year.
Lower bond yields throughout the year resulted in higher bond valuations and
good performance for Scout Bond Fund. With the economy slowing and concerns
of recession, we would expect that the Federal Reserve will lower interest
rates again. Due to Congress' indecision over the budget, interest rates
remain unpredictable. With this in mind, Scout Bond Fund will continue its
shorter average portfolio maturity. As always, we will search for quality
debt issues in line with the high investment standards of the Fund as
buying opportunities become available.
Your continued participation with Scout Bond Fund as part of your investment
portfolio is appreciated.
Sincerely,
Larry D. Armel
President
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 federally
insured by the Federal Deposit Insurance Corporation or any other federal
agency. These shares involve investment risks, including the possible loss
of the principal amount invested.
<PAGE>
FINANCIAL STATEMENTS
Statement of Net Assets
December 31, 1995 (unaudited)
Principal Market
Amount Description Value
CORPORATE BONDS _ 39.57%
$ 500,000 Albertson's, Incorporated Medium Term Notes,
5.71%, due March 23, 1998 $ 501,655
500,000 Albertson's, Incorporated Medium Term Notes,
6.18%, due March 22, 2000 507,900
500,000 Albertson's, Incorporated Medium Term Notes,
6.375%, due December 1, 2000 511,350
500,000 Amoco Canada Petroleum Company Notes,
7.25%, due December 1, 2002 536,730
500,000 Avery/Dennison Incorporated Medium Term Notes,
8.22%, due August 15, 1996 507,845
500,000 Baltimore Gas & Electric Company 1st & Refunding
Mortgage, 6.50%, due February 15, 2003 512,970
500,000 BellSouth Telecommunications Incorporated Notes,
6.25%, due May 15, 2003 508,065
500,000 British Petroleum America, Incorporated Notes,
8.875%, due December 1, 1997 530,165
500,000 Carolina Power & Light Company Secured Medium
Term Notes, 5.00%, due September 15, 1998 492,155
500,000 Carolina Power & Light Company Secured Medium
Term Notes, 5.875%, due January 15, 2004 493,409
500,000 Central Power & Light Company 1st Mortgage,
Series BB, 6.00%, due October 1, 1997 504,190
500,000 Chevron Canada Financial Limited Guaranteed
Notes, 5.60%, due April 1, 1998 499,750
500,000 Consolidated Edison Company New York,
Incorporated Debentures,
6.625%, due February 1, 2002 512,480
500,000 Delmarva Power & Light Company Medium Term Notes,
7.50%, due May 1, 1999 525,910
500,000 Duke Power Company Medium Term Notes,
5.17%, due September 1, 1998 494,745
500,000 Duke Power Company 1st & Refunding Mortgage,
5.625%, due August 12, 1997 501,035
500,000 Duke Power Company 1st & Refunding Mortgage,
7.00%, due June 1, 2000 517,860
500,000 Duke Power Company 1st & Refunding Mortgage,
5.875%, due June 1, 2001 496,151
500,000 Emerson Electric, 6.30%, due November 1, 2005 513,036
500,000 Florida Power & Light Company Secured Medium
Term Notes, 6.20%, due February 2, 1998 505,665
500,000 Florida Power & Light Company Secured Medium
Term Notes, 5.70%, due March 5, 1998 500,775
750,000 Florida Power & Light Company 1st Mortgage,
5.50%, due July 1, 1999 744,502
500,000 General Mills Incorporated Medium Term Notes,
7.50%, due June 5, 2000 531,980
500,000 General Mills Incorporated Medium Term Notes,
5.98%, due July 9, 2001 500,850
500,000 GTE California Incorporated Debentures, Series A,
5.625%, due February 1, 2001 493,420
500,000 Houston Light & Power Company 1st Mortgage,
7.625%, due March 1, 1997 511,100
1,000,000 International Business Machines Corporation
Notes, 6.375%, due November 1, 1997 1,015,830
500,000 International Business Machines Corporation
Notes, 6.375%, due June 15, 2000 512,350
500,000 International Business Machines Corporation
Notes, 7.25%, due November 1, 2002 530,795
500,000 International Paper Company Medium Term Notes,
8.05%, due March 25, 1999 531,235
500,000 Kansas City Power & Light Company Medium Term
Notes, 6.50%, due February 14, 2000 511,430
500,000 Kansas City Power & Light Company Medium Term
Notes, 6.50%, due January 2, 2001 511,065
500,000 Kmart Corporation Medium Term Notes,
8.00%, due December 13, 2001 413,120
250,000 McDonald's Corporation Medium Term Notes,
8.75%, due November 15, 2000 280,740
500,000 McDonald's Corporation Notes, 7.375%,
due July 15, 2002 524,550
500,000 Minnesota Mining & Manufacturing Company
Medium Term Notes,
6.25%, due March 29, 1999 509,980
500,000 Monongahela Power Company 1st Mortgage,
5.625%, due April 1, 2000 496,935
500,000 Monongahela Power Company 1st Mortgage,
7.375%, due July 1, 2002 535,840
1,000,000 New York Telephone Company Notes,
5.875%, due September 1, 2003 986,880
500,000 Newell Company Medium Term Notes,
6.18%, due July 11, 2000 503,680
500,000 Northern Illinois Gas Company 1st Mortgage,
5.50%, due February 1, 1997 499,465
500,000 Northwest Natural Gas Company Secured Medium
Term Notes, 5.98%, due December 15, 2000 502,250
500,000 Pacific Bell Telephone Company Notes,
7.25%, due July 1, 2002 535,135
500,000 Pacific Gas & Electric Company 1st &
Refunding Mortgage,
6.25%, due March 1, 2004 500,810
500,000 PepsiCo, Incorporated Notes, 7.625%,
due November 1, 1998 527,195
12,742 Sears Mortgage Securities Corporation Mortgage
Pass Through Certificates, Series 86 C,
9.00%, due July 25, 2001 12,997
500,000 Sears Roebuck & Company Senior Medium
Term Notes, 7.17%, due January 15, 1997 507,515
500,000 Southern California Gas Company 1st Mortgage,
Series AA, 6.50%, due December 15, 1997 507,955
500,000 Southwestern Bell Capital Corporation Medium
Term Notes, 7.80%, due November 5, 1998 530,450
500,000 Southwestern Bell Telephone Company Medium Term
Notes, 6.125%, due March 12, 2001 507,320
500,000 Southwestern Bell Telephone Company Medium Term
Notes, 5.77%, due October 14, 2003 493,700
CORPORATE BONDS (Continued)
500,000 Texaco Capital Incorporated Medium Term Notes,
8.24%, due October 15, 2001 555,775
500,000 Tribune Company Medium Term Notes,
5.30%, due April 17, 2000 490,205
500,000 Tribune Company Medium Term Notes,
5.75%, due September 15, 2003 489,775
500,000 Union Electric Company 1st Mortgage Notes,
6.75%, due October 15, 1999 515,950
500,000 Union Pacific Corporation Notes,
6.25%, due March 15, 1999 505,505
500,000 Union Pacific Corporation Notes,
7.875%, due February 15, 2002 542,150
250,000 Virginia Electric & Power Company Medium
Term Notes, 9.00%, due February 28, 1996 251,100
500,000 Wal-Mart Stores, Incorporated Notes,
5.50%, due September 15, 1997 499,780
500,000 Wal-Mart Stores, Incorporated Notes,
6.125%, due October 1, 1999 505,250
500,000 Weyerhaeuser Company Medium Term Notes,
8.53%, due April 21, 1997 518,730
30,762,742 31,319,135
U.S. GOVERNMENTAL AGENCIES _ 3.89%
113,917 Government National Mortgage Association,
9.00%, due July 15, 2001 120,799
110,479 Government National Mortgage Association,
8.00%, due February 20, 2002 114,616
194,842 Government National Mortgage Association,
8.50%, due February 20, 2002 201,801
55,880 Government National Mortgage Association,
8.00%, due January 15, 2004 58,592
218,592 Government National Mortgage Association,
9.50%, due April 15, 2005 227,762
238,685 Government National Mortgage Association,
9.75%, due May 15, 2005 248,698
117,775 Government National Mortgage Association,
9.00%, due October 20, 2005 123,123
182,455 Government National Mortgage Association,
7.50%, due February 15, 2006 190,466
149,433 Government National Mortgage Association,
7.50%, due March 15, 2006 156,094
37,739 Government National Mortgage Association,
8.00%, due April 20, 2006 39,153
185,419 Government National Mortgage Association,
8.00%, due June 20, 2006 192,363
219,048 Government National Mortgage Association,
8.50%, due July 15, 2006 230,158
292,882 Government National Mortgage Association,
8.00%, due August 15, 2006 308,762
312,250 Government National Mortgage Association,
7.50%, due August 20, 2006 318,383
193,963 Government National Mortgage Association,
7.50%, due September 15, 2006 202,607
103,453 Government National Mortgage Association,
7.50%, due April 15, 2007 108,064
235,341 Government National Mortgage Association,
7.50%, due March 20, 2009 239,963
2,962,153 3,081,404
U.S. GOVERNMENT SECURITIES _ 21.72%
500,000 U.S. Treasury Notes, 7.75%, due March 31, 1996 502,890
1,000,000 U.S. Treasury Notes, 4.25%, due May 15, 1996 996,410
1,000,000 U.S. Treasury Notes, 6.125%, due December 31, 1996 1,008,910
1,000,000 U.S. Treasury Notes, 8.00%, due January 15, 1997 1,027,340
500,000 U.S. Treasury Notes, 8.50%, due July 15, 1997 524,140
500,000 U.S. Treasury Notes, 5.50%, due July 31, 1997 502,500
1,000,000 U.S. Treasury Notes, 5.50%, due September 30, 1997 1,005,160
500,000 U.S. Treasury Notes, 7.875%, due January 15, 1998 525,390
1,000,000 U.S. Treasury Notes, 5.125%, due March 31, 1998 998,280
1,000,000 U.S. Treasury Notes, 5.125%, due April 30, 1998 997,970
1,500,000 U.S. Treasury Notes, 7.125%, due October 15, 1998 1,572,180
1,500,000 U.S. Treasury Notes, 6.375%, due January 15, 1999 1,546,635
500,000 U.S. Treasury Notes, 5.875%, due March 31, 1999 508,905
1,000,000 U.S. Treasury Notes, 6.00%, due October 15, 1999 1,025,000
1,500,000 U.S. Treasury Notes, 5.50%, due April 15, 2000 1,512,420
1,000,000 U.S. Treasury Notes, 7.50%, due November 15, 2001 1,101,410
1,000,000 U.S. Treasury Notes, 6.375%, due August 15, 2002 1,048,590
750,000 U.S. Treasury Notes, 6.25%, due February 15, 2003 782,460
16,750,000 17,186,590
GOVERNMENT SPONSORED ENTERPRISES _ 28.14%
500,000 Federal Home Loan Banks,
4.73%, due December 23, 1996 497,265
250,000 Federal Home Loan Banks,
5.66%, due November 9, 1998 251,875
500,000 Federal Home Loan Banks,
6.48%, due December 29, 2000 500,704
1,000,000 Federal Home Loan Mortgage Corporation,
6.13%, due August 19, 1999 1,020,310
500,000 Federal National Mortgage Association,
7.00%, due February 10, 1996 501,015
500,000 Federal National Mortgage Association,
9.35%, due February 12, 1996 502,345
1,500,000 Federal National Mortgage Association,
8.00%, due July 10, 1996 1,520,160
1,000,000 Federal National Mortgage Association,
7.05%, due October 10, 1996 1,011,870
500,000 Federal National Mortgage Association,
8.20%, due December 23, 1996 513,280
1,000,000 Federal National Mortgage Association,
5.70%, due September 11, 1997 999,370
1,000,000 Federal National Mortgage Association,
6.05%, due November 10, 1997 1,012,500
1,000,000 Federal National Mortgage Association,
8.20%, due March 10, 1998 1,057,970
1,000,000 Federal National Mortgage Association,
8.15%, due May 11, 1998 1,060,470
1,000,000 Federal National Mortgage Association,
7.85%, due September 10, 1998 1,060,620
500,000 Federal National Mortgage Association,
5.05%, due November 10, 1998 495,470
GOVERNMENT SPONSORED ENTERPRISES (Continued)
1,500,000 Federal National Mortgage Association,
7.05%, due December 10, 1998 1,564,920
1,000,000 Federal National Mortgage Association,
6.35%, due August 10, 1999 1,027,340
1,500,000 Federal National Mortgage Association,
6.10%, due February 10, 2000 1,529,535
1,000,000 Federal National Mortgage Association,
8.25%, due December 18, 2000 1,113,750
1,250,000 Federal National Mortgage Association,
7.50%, due February 11, 2002 1,364,450
1,000,000 Federal National Mortgage Association,
7.55%, due April 22, 2002 1,098,750
500,000 Federal National Mortgage Association,
7.05%, due November 12, 2002 537,735
1,000,000 Federal National Mortgage Association,
6.38%, due April 29, 2003 1,001,050
1,000,000 Federal National Mortgage Association
Medium Term Notes (Callable 6/24/96 @ 100),
6.38%, due June 25, 2003 1,030,210
21,500,000 22,272,964
SHORT-TERM CORPORATE NOTES _ 4.39%
477,000 Abbott Laboratories, 5.80%, due January 4, 1996 476,692
500,000 American Greetings Corporation,
5.75%, due January 3, 1996 499,760
500,000 Chevron Corporation, 5.63%, due January 5, 1996 499,609
500,000 Duke Power Company, 5.72%, due January 12, 1996 499,047
500,000 GTE North, Incorporated,
5.68%, due January 18, 1996 498,580
500,000 GTE South, Incorporated,
5.76%, due January 19, 1996 498,480
500,000 Gannett, Incorporated, 5.77%, due January 17, 1996 498,638
3,477,000 3,470,806
REPURCHASE AGREEMENT _ 1.04%
820,000 Northern Trust Company,
5.10%, due January 2, 1996
(Collateralized by U.S. Treasury Notes,
7.50%, due February 29, 1996) 820,000
TOTAL INVESTMENTS _ 98.75% $ 78,150,899
Other assets less liabilities _ 1.25% 988,256
TOTAL NET ASSETS _ 100.00%
(equivalent to $11.26 per share;
10,000,000 shares of $1.00 par value
capital shares authorized;
7,029,342 shares outstanding) $ 79,139,155
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
December 31, 1995 (unaudited)
ASSETS:
Investment securities, at market value
(identified cost $76,246,136) $ 78,150,899
Interest receivable 1,199,610
Other assets 3,263
Total assets 79,353,772
LIABILITIES AND NET ASSETS:
Cash overdraft 214,617
Total liabilities 214,617
NET ASSETS $ 79,139,155
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 76,717,924
Accumulated undistributed income:
Undistributed net investment income 448,731
Accumulated net realized gain on investment transactions 67,737
Net unrealized appreciation in value of investments 1,904,763
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 79,139,155
Capital shares, $1.00 par value
Authorized 10,000,000
Outstanding 7,029,342
NET ASSET VALUE PER SHARE $ 11.26
See accompanying Notes to Financial Statements.
<PAGE>
Statement of Operations
Six Months Ended December 31, 1995 (unaudited)
INVESTMENT INCOME:
Income:
Interest $ 2,554,647
Expenses:
Management fees (Note 3) 333,953
Registration fees and other expenses 5,056
339,009
Net investment income 2,215,638
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (Note 1):
Realized gain from investment transactions (excluding
commercial paper and repurchase agreements):
Proceeds from sales of investments 4,321,634
Cost of investments sold 4,317,056
Net realized gain from investment transactions 4,578
Unrealized appreciation on investments:
Beginning of period 759,195
End of period 1,904,763
Increase in net unrealized appreciation on investments 1,145,568
Net gain on investments 1,150,146
Increase in net assets resulting from operations $ 3,365,784
<PAGE>
Statements of Changes in Net Assets
Six Months Ended
December 31, 1995 Year Ended
(unaudited) June 30, 1995
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 2,215,638 $ 4,549,127
Net realized gain from investment transactions 4,578 57,569
Increase in net unrealized appreciation on
investments 1,145,568 2,302,213
Net increase in net assets resulting from
operations 3,365,784 6,908,909
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (2,215,638) (4,549,127)
Net realized gain from investment transactions (37,184) (21,636)
Total distributions to shareholders (2,252,822) (4,570,763)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 727,799 and 823,896 shares sold 7,672,365 8,821,921
Net asset value of 39,374 and 40,160 shares
issued for reinvestment of distributions 851,506 430,480
8,523,871 9,252,401
Cost of 675,799 and 1,532,198 shares redeemed (7,505,467) (16,336,469)
Net increase (decrease) from capital share
transactions 1,018,404 (7,084,068)
Total increase (decrease) in net assets 2,131,366 (4,745,922)
NET ASSETS:
Beginning of period 77,007,789 81,753,711
End of period (including undistributed net
investment income of $448,731) $ 79,139,155 $ 77,007,789
Distributions to shareholders:
Income dividends per share $ 0.31 $ 0.63
Capital gains distribution per share $ 0.0053 $ 0.003
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES _ The Fund is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of
its financial statements.
Investments _ 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 electronic data processing techniques. Short-term obligations are valued
at amortized cost, which constitutes fair value as determined by the Fund's
Board of Directors. Investment transactions are recorded on the trade date.
Investment income is recorded daily 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 and State Taxes _ The Fund's policy is to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Therefore, no provision for federal or state tax is required.
2. PURCHASES AND SALES OF SECURITIES _ The aggregate amounts of security
transactions during the period ended December 31, 1995 (excluding commercial
paper and repurchase agreements), were as follows:
Purchases $ 5,005,273
Proceeds from sales 4,321,634
3. MANAGEMENT FEES _ Management fees, which include all normal expenses of
the Fund other than taxes, fees and other charges of governmental agencies
for qualifying the Fund's shares for sale, special legal fees, interest and
brokerage commissions, are paid to Jones & Babson, Inc., an affiliated
company. These 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.
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.
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