SCOUT
BOND FUND
A no-load mutual fund
with primary emphasis
on maximum current
income consistent with
its quality and maturity
standards.
Annual Report
June 30, 1997
TO THE SHAREHOLDERS
Scout Bond Fund's total return (price change and reinvested distributions) for
the fiscal year ended June 30, 1997, was 6.33%. In comparison, the unmanaged
Lehman Brothers Intermediate Government/Corporate index had a return of 7.22%.
As of the fiscal year ended June 30, 1997, Scout Bond Fund was invested as
follows: 44.6% in high-grade corporate bonds, 53.5% in U.S. Government and
Federal Agency issues, and 1.9% in cash equivalent reserves due in less than
one year. The average maturity was 4.3 years, the average yield to maturity
was 6.60% and the average credit rating of the portfolio was AA.
Bond investors spent the past fiscal year carefully tracking U.S. economic
performance to gauge the pace of growth and the potential for damaging
inflation, as well as to anticipate possible Federal Reserve interest rate
changes. Official data at times provided conflicting signals, prompting a
wide-ranging debate on the strength of the economy as well as extremely
volatile market activity. After maintaining a hands-off approach in the second
half of 1996, the Fed took action in March 1997 with a 0.25-point increase to
5.50% in the key Federal Funds rate.
Following that move, fixed-income rates continued to rise early in the second
quarter as investors positioned for the possibility of a series of Fed rate
increases. Midway through the quarter, however, the economic indicators began
to soften, showing no surge in economic growth, and market rates began to move
back down. Investor optimism was reinforced when the Fed chose not to raise
rates at its mid-May meeting. A series of benign economic reports followed,
highlighted by several weak readings for the Producer Price Index, and calmed
many inflation fears. The markets finished the quarter with a strong rally
that drove the yield curve down to a level nearly 40 basis points below its
position when the quarter started.
Due to the extreme volatility of interest rates, the Scout Bond Fund has
maintained its moderate average maturity and will invest excess cash when
attractive opportunities arise. Purchases will focus on the 5- to 7-year
sector because of the current flatness of the yield curve, effectively
capturing most of the yield available inside 10 years without the additional
maturity risk. Corporate bonds will be used when attractive values are
available. The Fund will continue with core positions in Treasury and Agency
issues.
As always, we will continue to take advantage of any opportunities that meet
the high investment standards of the Fund. Your continued participation with
Scout Bond Fund as part of your investment portfolio is appreciated. We
welcome your comments and questions.
Sincerely,
/S/George W. Root
George W. Root
UMB Investment Advisors
GRAPH - PIE CHART
Government & Agency 54%
Corporate 44%
Less than 1 Year 2%
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.
GRAPH - Scout Bond Fund versus Lipper Fixed Income Funds
Scout Bond Fund's average annual componded returns for one, five and ten year
periods as of June 30, 1997, were 6.33%, 5.67%, and 7.23%, 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, redemption value may be more or less than
original cost.
FINANCIAL STATEMENTS
Statement of Net Assets
June 30, 1997
<TABLE>
<CAPTION>
Face Market
Amount Description Cost Value
<S> <C> <C>
CORPORATE BONDS - 44.31%
$ 500,000 Albertson's Incorporated, Medium Term Notes,
5.71%, due March 23, 1998 $ 500,000 $ 498,740
500,000 Albertson's Incorporated, Medium Term Notes,
6.18%, due March 22, 2000 500,000 495,005
500,000 Albertson's Incorporated Notes,
6.375%, due June 1, 2000 500,000 497,290
500,000 Amoco Canada Petroleum Company Notes,
7.25%, due December 1, 2002 498,230 512,750
500,000 Baltimore Gas & Electric Company 1st & Refunding Mortgage,
6.50%, due February 15, 2003 494,225 492,610
500,000 BellSouth Telecommunications Incorporated Notes,
6.25%, due May 15, 2003 498,493 489,205
500,000 BellSouth Telecommunications Incorporated Notes,
6.375%, due June 15, 2004 482,995 489,775
500,000 British Petroleum America, Incorporated Notes,
8.875%, due December 1, 1997 497,800 506,275
500,000 Carolina Power & Light Company Secured Medium Term Notes,
5.00%, due September 15, 1998 499,778 493,420
500,000 Carolina Power & Light Company 1st Mortgage,
5.875%, due January 15, 2004 492,332 474,030
500,000 Central Power & Light Company 1st Mortgage, Series BB,
6.00%, due October 1, 1997 497,340 500,175
500,000 Chevron Canada Financial Limited Guaranteed Notes,
5.60%, due April 1, 1998 499,625 498,650
500,000 Consolidated Edison Company New York, Incorporated Debentures,
6.625%, due February 1, 2002 494,905 495,960
500,000 Delmarva Power & Light Company Medium Term Notes,
7.50%, due May 1, 1999 497,570 509,320
1,000,000 Dillard Department Stores Inc.,
6.875%, due June 1, 2005 986,460 988,010
500,000 duPont (E.I.) deNemours & Company Notes,
6.75%, due October 15, 2002 491,891 500,450
500,000 Duke Power Company Medium Term Notes,
5.17%, due September 1, 1998 500,000 494,885
500,000 Duke Power Company 1st & Refunding Mortgage,
7.00%, due June 1, 2000 485,165 506,385
500,000 Duke Power Company 1st & Refunding Mortgage,
5.875%, due June 1, 2001 496,999 484,975
500,000 Emerson Electric Company Notes,
6.30%, due November 1, 2005 498,456 482,510
500,000 Engelhard Corporation Senior Note,
7.00%, due August 1, 2001 499,134 504,585
750,000 Florida Power & Light Company 1st Mortgage,
5.50%, due July 1, 1999 744,612 738,840
500,000 Florida Power & Light Company Secured Medium Term Notes,
6.20%, due February 2, 1998 500,000 500,270
500,000 Florida Power & Light Company Secured Medium Term Notes,
5.70%, due March 5, 1998 500,000 498,860
500,000 General Mills Incorporated Medium Term Notes,
7.50%, due June 5, 2000 500,000 510,720
500,000 General Mills Incorporated Medium Term Notes,
5.98%, due July 9, 2001 500,000 484,830
500,000 GTE California Incorporated Debentures, Series A,
5.625%, due February 1, 2001 496,763 482,445
500,000 GTE Southwest Incorporated Debentures,
6.00%, due January 15, 2006 495,671 466,850
500,000 GTE Southwest Incorporated Debentures,
6.00%, due February 15, 2008 482,845 460,245
500,000 Honeywell Inc.,
6.75%, due March 15, 2002 499,395 500,515
500,000 International Business Machines Corporation Notes,
5.65%, due January 22, 1998 499,520 498,345
500,000 International Business Machines Corporation Notes,
6.375%, due June 15, 2000 499,248 498,375
500,000 International Business Machines Corporation Notes,
7.25%, due November 1, 2002 496,185 511,495
500,000 International Paper Company Medium Term Notes,
8.05%, due March 25, 1999 500,500 512,120
500,000 Kansas City Power & Light Company Medium Term Notes,
6.50%, due January 2, 2001 500,000 495,245
1,000,000 May Department Stores Inc.,
6.875%, due November 1, 2005 979,147 990,440
250,000 McDonald's Corporation, Series C, Medium Term Notes,
8.75%, due November 15, 2000 249,590 265,443
500,000 McDonald's Corporation Medium Term Notes,
7.375%, due July 15, 2002 499,470 506,925
500,000 Minnesota Mining & Manufacturing Company Medium Term Notes,
6.25%, due March 29, 1999 500,000 500,675
750,000 Monongahela Power Company 1st Mortgage,
5.625%, due April 1, 2000 731,030 731,925
500,000 Monongahela Power Company 1st Mortgage,
7.375%, due July 1, 2002 499,500 511,710
1,000,000 New York Telephone Company Notes,
5.875%, due September 1, 2003 990,688 949,800
500,000 Newell Company Medium Term Notes,
6.18%, due July 11, 2000 497,695 491,110
500,000 Northwest Natural Gas Company Secured Medium Term Notes,
5.98%, due December 15, 2000 500,000 489,100
500,000 Pacific Bell Telephone Company Notes,
7.25%, due July 1, 2002 497,975 510,660
500,000 Pacific Bell Telephone Company Notes,
6.25%, due March 1, 2005 498,143 479,535
500,000 Pacific Gas & Electric Company 1st Mortgage,
6.25%, due March 1, 2004 500,000 483,790
500,000 PepsiCo, Incorporated Notes,
7.625%, due November 1, 1998 498,790 508,765
1,000,000 Public Service Company of Oklahoma Medium Term Notes,
6.02%, due March 1, 2001 987,664 977,420
500,000 Sara Lee Corporation, Series C, Medium Term Notes,
6.45%, due September 26, 2005 482,948 481,245
500,000 Southern California Gas Company 1st Mortgage,
Series AA, 6.50%, due December 15, 1997 499,700 501,350
500,000 Southwestern Bell Capital Corporation Medium Term Notes,
7.80%, due November 5, 1998 500,000 510,705
500,000 Southwestern Bell Telephone Company Medium Term Notes,
6.125%, due March 12, 2001 500,000 490,950
500,000 Southwestern Bell Telephone Company Medium Term Notes,
5.77%, due October 14, 2003 500,000 472,020
500,000 Sysco Corporation Notes,
7.00%, due May 1, 2006 500,000 501,350
500,000 Texaco Capital Incorporated Medium Term Notes,
8.24%, due October 15, 2001 500,500 527,045
1,000,000 Texas Instruments Incorporated, Unsecured Note,
6.125%, due February 1, 2006 933,224 940,140
500,000 Tribune Company Medium Term Notes,
5.30%, due April 17, 2000 500,000 482,455
500,000 Tribune Company Medium Term Notes,
5.75%, due September 15, 2003 500,000 469,690
500,000 Union Electric Company 1st Mortgage,
6.75%, due October 15, 1999 497,740 501,780
500,000 Union Pacific Corporation Notes,
6.25%, due March 15, 1999 500,000 498,480
500,000 Union Pacific Corporation Notes,
7.875%, due February 15, 2002 500,000 519,050
500,000 Union Pacific Railroad Company Equipment Trust Series C.,
7.01%, due June 1, 2004 500,000 505,625
500,000 Wal-Mart Stores, Incorporated Notes,
6.125%, due October 1, 1999 489,610 497,415
500,000 Wisconsin Electric Power Company
6.625%, due November 5, 2006 499,600 488,680
35,250,000 34,959,151 34,859,438
U.S. GOVERNMENTAL AGENCIES - 6.43%
66,688 Government National Mortgage Association,
9.00%, due July 15, 2001 66,458 69,248
69,901 Government National Mortgage Association,
8.00%, due February 20, 2002 69,595 71,180
123,454 Government National Mortgage Association,
8.50%, due February 20, 2002 125,769 125,918
39,477 Government National Mortgage Association,
8.00%, due January 15, 2004 39,477 40,700
154,828 Government National Mortgage Association,
9.50%, due April 15, 2005 155,178 163,778
175,103 Government National Mortgage Association,
9.75%, due May 15, 2005 175,103 185,226
90,828 Government National Mortgage Association,
9.00%, due October 20, 2005 89,920 95,227
138,666 Government National Mortgage Association,
7.50%, due February 15, 2006 136,239 140,523
100,191 Government National Mortgage Association,
7.50%, due March 15, 2006 98,438 101,533
142,542 Government National Mortgage Association,
8.00%, due June 20, 2006 141,473 146,330
170,520 Government National Mortgage Association,
8.50%, due July 15, 2006 169,614 177,184
239,204 Government National Mortgage Association,
8.00%, due August 15, 2006 239,204 248,307
230,961 Government National Mortgage Association,
7.50%, due August 20, 2006 230,961 234,307
160,930 Government National Mortgage Association,
7.50%, due September 15, 2006 158,113 163,084
83,576 Government National Mortgage Association,
7.50%, due April 15, 2007 80,511 84,695
192,309 Government National Mortgage Association,
7.50%, due March 20, 2009 191,228 195,450
421,505 Government National Mortgage Association,
6.00%, due May 15, 2009 420,188 410,419
366,165 Government National Mortgage Association,
7.00%, due May 15, 2009 370,168 369,343
574,353 Government National Mortgage Association,
7.00%, due August 20, 2011 573,994 573,779
479,293 Government National Mortgage Association,
7.00%, due October 20, 2011 477,495 478,061
493,193 Government National Mortgage Association,
6.50%, due February 15, 2012 489,186 486,151
496,507 Government National Mortgage Association,
7.00%, due April 20, 2012 489,913 495,231
5,010,194 4,988,225 5,055,674
U.S. GOVERNMENT SECURITIES - 14.61%
1,000,000 U.S. Treasury Notes, 5.125%, due March 31, 1998 996,719 996,090
1,500,000 U.S. Treasury Notes, 7.125%, due October 15, 1998 1,526,719 1,522,035
1,500,000 U.S. Treasury Notes, 6.375%, due January 15, 1999 1,483,750 1,508,670
500,000 U.S. Treasury Notes, 5.875%, due March 31, 1999 497,540 498,750
1,000,000 U.S. Treasury Notes, 6.00%, due October 15, 1999 1,005,195 997,970
1,500,000 U.S. Treasury Notes, 5.50%, due April 15, 2000 1,498,398 1,472,580
1,000,000 U.S. Treasury Notes, 7.50%, due November 15, 2001 1,053,516 1,042,030
1,500,000 U.S. Treasury Notes, 6.375%, due August 15, 2002 1,528,054 1,499,535
1,000,000 U.S. Treasury Notes, 6.25%, due February 15, 2003 996,563 992,190
1,000,000 U.S. Treasury Notes, 5.875%, due February 15, 2004 959,531 968,910
11,500,000 11,545,985 11,498,760
GOVERNMENT SPONSORED ENTERPRISES - 32.47%
500,000 Federal Farm Credit Bank, Medium Term Notes,
6.70%, due October 11, 2006 494,337 494,060
250,000 Federal Home Loan Banks,
5.66%, due November 9, 1998 249,964 248,710
500,000 Federal Home Loan Banks
6.48%, due December 29, 2000 500,000 496,560
500,000 Federal Home Loan Banks
6.31%, due March 29, 2001 500,000 497,030
500,000 Federal Home Loan Banks
6.18%, due December 19, 2001 499,273 492,890
1,000,000 Federal Home Loan Mortgage Corporation,
6.75%, due May 30, 2006 977,012 999,690
1,000,000 Federal Home Loan Mortgage Corporation, Deb.,
6.13%, due August 19, 1999 996,797 997,660
1,000,000 Federal National Mortgage Association, Deb.,
8.20%, due March 10, 1998 996,562 1,015,780
1,000,000 Federal National Mortgage Association, Series SM-E, Deb.,
8.15%, due May 11, 1998 994,375 1,015,620
1,000,000 Federal National Mortgage Association, Series SM-98-G, Deb.,
7.85%, due September 10, 1998 1,016,875 1,017,810
500,000 Federal National Mortgage Association, Deb.,
5.05%, due November 10, 1998 498,349 492,890
1,500,000 Federal National Mortgage Association, Series H, Deb.,
7.05%, due December 10, 1998 1,494,687 1,519,455
1,000,000 Federal National Mortgage Association, Series H, Deb.,
6.35%, due August 10, 1999 998,750 998,590
1,500,000 Federal National Mortgage Association, Deb.,
6.10%, due February 10, 2000 1,545,469 1,492,965
1,000,000 Federal National Mortgage Association, Series I, Deb.,
8.25%, due December 18, 2000 1,018,672 1,053,910
1,250,000 Federal National Mortgage Association, Deb.,
7.50%, due February 11, 2002 1,238,516 1,298,050
1,000,000 Federal National Mortgage Association, Series SM-E, Deb.,
7.55%, due April 22, 2002 993,438 1,039,060
500,000 Federal National Mortgage Association, Series K., Deb.,
7.05%, due November 12, 2002 499,062 509,685
500,000 Federal National Mortgage Association, Deb.,
6.80%, due January 10, 2003 500,234 505,390
500,000 Federal National Mortgage Association Medium Term Notes,
5.40%, due March 12, 1999 490,615 493,360
500,000 Federal National Mortgage Association Medium Term Notes,
6.362%, due August 16, 2000 499,394 499,765
500,000 Federal National Mortgage Association Medium Term Notes,
5.72%, due March 8, 2001 493,281 487,420
1,000,000 Federal National Mortgage Association Medium Term Notes,
6.45%, due April 23, 2001 993,818 999,370
500,000 Federal National Mortgage Association Medium Term Notes,
6.625%, due May 21, 2001 497,555 502,030
500,000 Federal National Mortgage Association Medium Term Notes,
6.41%, due February 6, 2002 497,315 497,890
1,000,000 Federal National Mortgage Association Medium Term Notes,
6.38%, due April 29, 2003 1,000,000 974,370
1,000,000 Federal National Mortgage Association Medium Term Notes,
6.38%, due June 25, 2003 999,783 973,280
1,000,000 Federal National Mortgage Association Medium Term Notes,
6.82%, due August 23, 2005 994,612 1,001,410
500,000 Federal National Mortgage Association Medium Term Notes,
5.875%, due February 14, 2006 483,570 468,830
1,500,000 Federal National Mortgage Association Medium Term Notes,
6.41%, due March 8, 2006 1,465,292 1,458,990
500,000 Federal National Mortgage Association Medium Term Notes,
6.96%, due April 2, 2007 492,940 507,500
500,000 Federal National Mortgage Association Medium Term Notes,
6.70%, due June 19, 2007 500,000 496,560
25,500,000 25,420,547 25,546,580
REPURCHASE AGREEMENT - 0.84%
660,000 Northern Trust Company, 5.80%, due July 1, 1997
(Collateralized by U.S. Treasury Notes,
5.625%, due January 31, 1998) 660,000 660,000
TOTAL INVESTMENTS - 98.66% $ 77,573,908 77,620,452
Other assets less liabilities - 1.34% 1,050,990
TOTAL NET ASSETS - 100.00%
(equivalent to $10.98 per share; 10,000,000 shares of $1.00 par value
capital shares authorized; 7,168,076 shares outstanding) $ 78,671,442
For federal income tax purposes, the identified cost of investments owned at
June 30, 1997 was $77,573,908.
Net unrealized depreciation for federal income tax purposes was $46,544,
which is comprised of unrealized appreciation of $703,213 and unrealized
depreciation of $656,669.
See accompanying Notes to Financial Statements.
</TABLE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
June 30, 1997
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $77,573,908) $ 77,620,452
Interest receivable 1,219,197
Total assets 78,839,649
LIABILITIES:
Disbursements in excess of demand deposit cash 168,207
Total liabilities 168,207
NET ASSETS $ 78,671,442
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 78,247,357
Accumulated undistributed income:
Net investment income 448,731
Net realized loss on investment transactions (71,190)
Net unrealized appreciation on investments 46,544
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 78,671,442
Capital shares, $1.00 par value
Authorized 10,000,000
Outstanding 7,168,076
NET ASSET VALUE PER SHARE $ 10.98
See accompanying Notes to Financial Statements.
</TABLE>
FINANCIAL STATEMENTS
Statement of Operations
Year Ended June 30, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest $ 5,234,817
Expenses:
Management fees 679,849
Government fees 12,536
692,385
Net investment income 4,542,432
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain from investment transactions:
Proceeds from sales of investments 14,723,909
Cost of investments sold 14,715,260
Net realized gain from investment transactions 8,649
Unrealized appreciation (depreciation) on investments:
Beginning of year (274,413)
End of year 46,544
Increase in net unrealized appreciation (depreciation) on investments 320,957
Net realized and unrealized gain on investments 329,606
Net increase in net assets resulting from operations $ 4,872,038
See accompanying Notes to Financial Statements.
</TABLE>
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
For The Years Ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
</CAPTION>
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 4,542,432 $ 4,442,720
Net realized gain (loss) from investment transactions 8,649 (142,998)
Increase (decrease) in net unrealized appreciation (depreciation) on investments 320,957 (1,033,608)
Net increase in net assets resulting from operations 4,872,038 3,266,114
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (4,542,432) (4,442,720)
Net realized gain from investment transactions - (37,183)
Decrease in net assets from distribuions (4,542,432) (4,479,903)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 1,691,400 and 1,547,000 shares sold 18,498,442 17,129,689
Net asset value of 89,096 and 85,740 shares issued for
reinvestment of distributions 976,474 951,111
19,474,916 18,080,800
Cost of 2,049,491 and 1,133,636 shares redeemed (22,446,473) (12,561,407)
Net increase (decrease) in net assets from capital share transactions (2,971,557) 5,519,393
Net increase (decrease) in net assets (2,641,951) 4,305,604
NET ASSETS:
Beginning of year 81,313,393 77,007,789
End of year (including undistributed net investment income
of $448,731 in 1997 and 1996) $ 78,671,442 $ 81,313,393
*Distributions to shareholders:
Income dividends per share $ 0.62 $ 0.62
Capital gains distribution per share $ - $ 0.01
See accompanying Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIF-ICANT 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. The policies are in conformity
with generally accepted accounting principles.
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
formula-based techniques. Short-term obligations are valued at amortized cost,
which approximates market value. 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 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 year ended June 30, 1997 (excluding commercial paper
and repurchase agreements), were as follows:
Other than
U.S. Government U.S. Government
Securties Securities
Purchases $ 5,356,910 $ 9,458,308
Proceeds from sales 3,509,486 11,214,423
3. MANAGEMENT FEES - UMB Bank, n.a. is the Fund's manager and investment
adviser 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.
FINANCIAL HIGHLIGHTS
The following table sets forth information as to capital and income changes
for a share outstanding for each of the five years in the period ended
June 30, 1997:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
</CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 10.93 $ 11.10 $ 10.75 $ 11.53 $ 11.14
Income from investment operations:
Net investment income 0.62 0.62 0.63 0.62 0.68
Net realized and unrealized gains or losses on securities 0.05 (0.16) 0.35 0.74 0.39
Total from Investment Operations 0.67 0.46 0.98 (0.12) 1.07
Distributions from:
Net investment income (0.62) (0.62) (0.63) (0.62) (0.68)
Net realized gain on investment transactions - (0.01) -* (0.04) -
Total Distributions (0.62) (0.63) (0.63) (0.66) (0.68)
Net asset value, end of year $ 10.98 $ 10.93 $ 11.10 $ 10.75 $ 11.53
Total Return 6% 4% 10% (1%) 10%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 79 $ 81 $ 77 $ 82 $ 87
Ratio of expenses to average net assets 0.87% 0.86% 0.86% 0.87% 0.87%
Ratio of net investment income to average net assets 5.69% 5.63% 5.91% 5.50% 5.95%
Portfolio turnover rate 19% 12% 2% 9% 19%
</TABLE>
*Capital gain distribution of .003 not significant for per share table.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
of Scout Bond Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of Scout
Bond Fund, Inc., including the statement of net assets, as of June 30, 1997,
and the related statement of operations, statements of changes in net assets
and the financial highlights for the periods indicated thereon (periods
presented prior to June 30, 1996 were audited by other independent accountants
whose reports thereon expressed unqualified opinions). These financial
statements and financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included verification of securities
owned as of June 30, 1997, by confirmation, or by the application of
alternative auditing procedures with respect to unsettled portfolio security
transactions. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scout Bond Fund, Inc. as of June 30, 1997, the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated in the first paragraph, in conformity with generally accepted
accounting principles.
BAIRD, KURTZ & DOBSON
Kansas City, Missouri
July 22, 1997
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
Elizabeth L. Allwood, Vice President
Michael A. Brummel, Vice President
Martin A. Cramer, Vice President & Secretary
John G. Dyer, Vice President
Constance E. Martin, Vice President
Investment Counsel
UMB Bank, n.a., Kansas City, Missouri
Auditors
Baird, Kurtz & Dobson, 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
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