Scout SM
Bond Fund
A no-load mutual fund
with primary emphasis
on maximum current income consistent with
its quality and maturity
standards.
Quarterly Report
March 31, 1998
TO THE SHAREHOLDERS
Scout Bond Fund's share price did not change for the quarter ended March
31, 1998, remaining at $11.17 per share. However, investors earned a
total return from reinvested dividend distributions of 1.4% for the
quarter. The Fund seeks to provide maximum current income consistent
with its quality and maturity standards by investing in fixed-income
obligations.
The bond markets entered the year with a bias toward lower interest
rates, but had difficulty maintaining confidence in that outlook during
the first quarter. The Federal Reserve held the Fed Funds rate steady at
5.50%. A mixed bag of economic releases provided the impetus for a
series of wide trading swings within a 40-basis-point range. For
example, the 10-year Treasury note began the quarter at a yield of
5.73%, but dropped quickly to 5.35% on January 12. The yield bounced
between those levels for the remainder of the quarter before finishing
at 5.65%.
The yield curve remained extremely flat at the close of the quarter,
with the 10-year Treasury note yielding only 10 basis points more than
the 2-year note, providing very little incentive to extend maturities.
The Fund performed well during the quarter despite its aversion to
credit risk. We continue to avoid the higher-risk sectors of the
corporate market, such as financial companies and BBB-rated companies.
We enhanced yield by replacing those sectors with greater exposure to
the GNMA market, capturing higher yields without exposing the Fund to
additional credit risk.
The Fund will maintain a moderate average maturity, in keeping with our
belief that current economic conditions make it virtually impossible to
predict the direction of interest rates.
We believe the Fund remains an outstanding choice for investors seeking
a stable fixed-income return while avoiding the volatility associated
with interest rate speculation or aggressive exposure to credit risk.
Your continued participation in the Scout Bond Fund as part of your
investment portfolio is appreciated. We welcome your comments and
questions.
Chart - Hypothetical Growth of $10,000
Chart - Taxable Yield Curves
Chart - Comparative Rates of Return
1 1/4 Yrs 3 1/4 Yrs 7 1/4 Yrs 15 1/4 Yrs
Scout Bond Fund 6.97% 8.01% 6.95% 8.18%
Lipper Short Inv. Grade Fund Index* 6.00% 7.08% 6.47% N.A.
Lehman Bros. Gov./Corp. Int.* 7.57% 8.78% 7.79% 9.32%
Scout Bond Fund's average annual compound returns for 1-, 5- and
10-year periods ended March 31, 1998, are 9.1%, 5.4% and 7.2%,
respectively.
Performance data contained in this report are for past periods
only. Past performance is not predictive of future
performance. Investment return and share value will flucuate,
and redemption value may be more or less than the original cost.
*Unmanaged index of stocks, bonds, or mutual funds (there are no
direct investments or fees in these indicies).
Chart - Fund Diversification
Short-Term 3.93%
Corporate 40.29%
Government & Agency 55.78%
Sincerely,
/s/George W. Roots
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 ("FDIC").
These shares involve investment risks, including the possible loss of
the principal invested.
FINANCIAL STATEMENTS
Statement of Net Assets
March 31, 1998 (unaudited)
Principal Market
Amount Description Value
CORPORATE BONDS - 40.29%
$ 500,000 Albertson's Incorporated, Medium Term Notes,
6.18%, due March 22, 2000 $ 502,270
500,000 Albertson's Incorporated Notes,
6.375%, due June 1, 2000 504,460
500,000 Amoco Canada Petroleum
Company Notes,
7.25%, due December 1, 2002 523,610
500,000 Baltimore Gas & Electric Company,
1st & Refunding Mortgage,
6.50%, due February 15, 2003 507,795
500,000 BellSouth Telecommunications
Incorporated Notes,
6.25%, due May 15, 2003 505,340
500,000 BellSouth Telecommunications
Incorporated Notes,
6.375%, due June 15, 2004 505,380
500,000 Carolina Power & Light Company,
1st Mortgage,
5.00%, due September 15, 1998 498,010
500,000 Carolina Power & Light Company,
1st Mortgage,
5.875%, due January 15, 2004 492,990
500,000 Chevron Canada Financial Limited,
Guaranteed Notes,
5.60%, due April 1, 1998 500,000
500,000 Consolidated Edison Company New York,
Incorporated Debentures,
6.625%, due February 1, 2002 506,350
500,000 Cooper Industries Inc.,
Medium Term Notes,
5.88%, due February 20, 2003 495,540
500,000 Delmarva Power & Light Company,
Medium Term Notes,
7.50%, due May 1, 1999 508,520
1,000,000 Dillard Department Stores Incorporated,
6.875%, due June 1, 2005 1,027,330
500,000 duPont (E.I.) deNemours &
Company Notes,
6.75%, due October 15, 2002 512,040
500,000 Duke Power Company,
1st & Refunding Mortgage,
5.17%, due September 1, 1998 498,505
500,000 Duke Power Company,
1st & Refunding Mortgage,
7.00%, due June 1, 2000 509,350
500,000 Duke Power Company,
1st & Refunding Mortgage,
5.875%, due June 1, 2001 496,530
500,000 Emerson Electric
Company Notes,
6.30%, due November 1, 2005 503,675
500,000 Engelhard Corporation,
Senior Note,
7.00%, due August 1, 2001 513,190
750,000 Florida Power & Light Company,
1st Mortgage,
5.50%, due July 1, 1999 746,018
500,000 General Mills Incorporated,
Medium Term Notes,
7.50%, due June 5, 2000 514,975
500,000 General Mills Incorporated,
Medium Term Notes,
5.98%, due July 9, 2001 497,985
500,000 GTE California Incorporated,
Debentures, Series A,
5.625%, due February 1, 2001 493,720
500,000 GTE Southwest Incorporated,
Debentures,
6.00%, due January 15, 2006 490,405
500,000 GTE Southwest Incorporated,
Debentures,
6.00%, due February 15, 2008 489,275
500,000 Honeywell Incorporated,
6.75%, due March 15, 2002 510,555
500,000 International Business Machines
Corporation Notes,
6.375%, due June 15, 2000 504,975
500,000 International Business Machines
Corporation Notes,
7.25%, due November 1, 2002 523,590
500,000 International Paper Company,
Medium Term Notes,
8.05%, due March 25, 1999 508,640
500,000 Kansas City Power & Light Company,
Medium Term Notes,
6.50%, due January 2, 2001 504,850
1,000,000 May Department Stores Incorporated,
6.875%, due November 1, 2005 1,024,850
250,000 McDonald's Corporation,
Series C, Medium Term Notes,
8.75%, due November 15, 2000 266,345
500,000 McDonald's Corporation,
Medium Term Notes,
7.375%, due July 15, 2002 507,010
500,000 Minnesota Mining & Manufacturing Company,
Medium Term Notes,
6.25%, due March 29, 1999 502,275
750,000 Monongahela Power Company,
1st Mortgage,
5.625%, due April 1, 2000 743,048
500,000 Monongahela Power Company,
1st Mortgage,
7.375%, due July 1, 2002 523,140
1,000,000 New York Telephone
Company Notes,
5.875%, due September 1, 2003 987,430
500,000 Newell Company,
Medium Term Notes,
6.18%, due July 11, 2000 500,120
500,000 Northwest Natural Gas Company,
Secured Medium Term Notes,
5.98%, due December 15, 2000 499,660
500,000 Pacific Bell Telephone
Company Notes, 7.25%, due July 1, 2002 521,025
500,000 Pacific Bell Telephone
Company Notes, 6.25%, due March 1, 2005 502,020
500,000 Pacific Gas & Electric Company,
1st Mortgage,
6.25%, due March 1, 2004 500,850
500,000 PepsiCo,
Incorporated Notes,
7.625%, due November 1, 1998 504,825
1,000,000 Public Service Company of Oklahoma,
Medium Term Notes
6.02%, due March 1, 2001 1,000,000
500,000 Sara Lee Corporation,
Series C, Medium Term Notes,
6.45%, due September 26, 2005 505,714
500,000 Southwestern Bell Capital Corporation,
Medium Term Notes,
7.80%, due November 5, 1998 505,555
500,000 Southwestern Bell Telephone Company,
Medium Term Notes,
6.125%, due March 12, 2001 502,065
500,000 Southwestern Bell Telephone Company,
Medium Term Notes,
5.77%, due October 14, 2003 492,965
500,000 Sysco
Corporation Notes,
7.00%, due May 1, 2006 523,985
500,000 Texaco Capital Incorporated,
Medium Term Notes,
8.24%, due October 15, 2001 534,685
1,000,000 Texas Instruments Incorporated,
Unsecured Note,
6.125%, due February 1, 2006 987,760
500,000 Tribune Company,
Medium Term Notes,
5.30%, due April 17, 2000 492,940
500,000 Tribune Company,
Medium Term Notes,
5.75%, due September 15, 2003 490,395
500,000 Union Electric Company,
1st Mortgage,
6.75%, due October 15, 1999 504,595
500,000 Union Pacific
Corporation Notes,
6.25%, due March 15, 1999 500,755
500,000 Union Pacific
Corporation Notes,
7.875%, due February 15, 2002 525,265
500,000 Union Pacific Railroad Company,
Equipment Trust, Series C.,
7.01%, due June 1, 2004 525,250
500,000 Wal-Mart Stores Incorporated Notes,
6.125%, due October 1, 1999 501,700
500,000 Wisconsin Electric Power Company,
6.625%, due November 15, 2006 511,765
32,250,000 32,583,865
U.S. GOVERNMENTAL AGENCIES - 9.20%
40,390 Government National Mortgage Association,
9.00%, due July 15, 2001 41,511
56,226 Government National Mortgage Association,
8.00%, due February 20, 2002 57,184
94,989 Government National Mortgage Association,
8.50%, due February 20, 2002 96,937
32,759 Government National Mortgage Association,
8.00%, due January 15, 2004 33,702
127,842 Government National Mortgage Association,
9.50%, due April 15, 2005 135,159
159,882 Government National Mortgage Association,
9.75%, due May 15, 2005 169,033
76,304 Government National Mortgage Association,
9.00%, due October 20, 2005 79,694
118,928 Government National Mortgage Association,
7.50%, due February 15, 2006 122,316
57,012 Government National Mortgage Association,
7.50%, due March 15, 2006 58,781
114,825 Government National Mortgage Association,
8.00%, due June 20, 2006 117,841
145,574 Government National Mortgage Association,
8.50%, due July 15, 2006 151,420
158,680 Government National Mortgage Association,
8.00%, due August 15, 2006 164,941
55,467 Government National Mortgage Association,
8.00%, due August 15, 2006 57,656
215,175 Government National Mortgage Association,
7.50%, due August 20, 2006 220,219
142,991 Government National Mortgage Association,
7.50%, due September 15, 2006 147,428
75,664 Government National Mortgage Association,
7.50%, due April 15, 2007 78,012
166,825 Government National Mortgage Association,
7.50%, due March 20, 2009 171,814
400,743 Government National Mortgage Association,
6.00%, due May 15, 2009 399,024
319,777 Government National Mortgage Association,
7.00%, due May 15, 2009 325,642
496,487 Government National Mortgage Association,
6.00%, due April 15, 2011 494,049
546,610 Government National Mortgage Association,
7.00%, due August 20, 2011 556,640
439,788 Government National Mortgage Association,
6.50%, due October 15, 2011 443,874
401,884 Government National Mortgage Association,
7.00%, due October 20, 2011 409,259
461,102 Government National Mortgage Association,
6.50%, due February 15, 2012 465,385
481,509 Government National Mortgage Association,
7.00%, due April 20, 2012 490,041
491,401 Government National Mortgage Association,
6.50%, due September 20, 2012 493,509
476,372 Government National Mortgage Association,
6.50%, due October 20, 2012 477,520
497,698 Government National Mortgage Association,
6.00%, due February 20, 2013 489,342
500,000 Government National Mortgage Association,
6.00%, due March 20, 2013 491,605
7,352,904 7,439,538
U.S. GOVERNMENT SECURITIES - 13.80%
1,500,000 U.S. Treasury Notes,
7.125%, due October 15, 1998 1,512,885
1,500,000 U.S. Treasury Notes,
6.375%, due January 15, 1999 1,509,615
500,000 U.S. Treasury Notes,
5.875%, due March 31, 1999 501,560
1,000,000 U.S. Treasury Notes,
6.00%, due October 15, 1999 1,005,780
500,000 U.S. Treasury Notes,
5.50%, due March 31, 2000 499,295
1,500,000 U.S. Treasury Notes,
5.50%, due April 15, 2000 1,497,420
1,000,000 U.S. Treasury Notes,
7.50%, due November 15, 2001 1,059,220
1,500,000 U.S. Treasury Notes,
6.375%, due August 15, 2002 1,540,545
1,000,000 U.S. Treasury Notes,
6.25%, due February 15, 2003 1,024,530
1,000,000 U.S. Treasury Notes,
5.875%, due February 15, 2004 1,010,000
11,000,000 11,160,850
GOVERNMENT SPONSORED ENTERPRISES - 32.78%
$ 500,000 Federal Farm Credit Bank,
Medium Term Notes,
6.70%, due October 11, 2006 $ 520,155
250,000 Federal Home Loan Banks,
5.66%, due November 9, 1998 250,000
500,000 Federal Home Loan Banks
6.31%, due March 29, 2001 506,720
500,000 Federal Home Loan Banks
6.18%, due December 19, 2001 505,310
1,000,000 Federal Home Loan Mortgage Corporation,
6.75%, due May 30, 2006 1,048,750
1,000,000 Federal Home Loan Mortgage Corporation,
Deb., 6.13%, due August 19, 1999 1,003,590
1,000,000 Federal Home Loan Mortgage Corporation,
6.05%, due March 12, 2003 997,190
1,000,000 Federal National Mortgage Association,
Series SM-98-G, Deb.,
7.85%, due September 10, 1998 1,010,620
500,000 Federal National Mortgage Association,
Deb., 5.05%, due November 10, 1998 496,955
1,500,000 Federal National Mortgage Association,
Series H, Deb.,
7.05%, due December 10, 1998 1,514,760
1,000,000 Federal National Mortgage Association,
Series H, Deb.,
6.35%, due August 10, 1999 1,002,810
1,500,000 Federal National Mortgage Association,
Deb., 6.10%, due February 10, 2000 1,508,910
500,000 Federal National Mortgage Association,
5.90%, due November 20, 2000 501,560
1,000,000 Federal National Mortgage Association,
Series I, Deb.,
8.25%, due December 18, 2000 1,058,280
1,250,000 Federal National Mortgage Association,
Deb., 7.50%, due February 11, 2002 1,318,750
1,000,000 Federal National Mortgage Association,
Series SM-E, Deb.,
7.55%, due April 22, 2002 1,060,000
500,000 Federal National Mortgage Association,
Series K., Deb.,
7.05%, due November 12, 2002 523,905
500,000 Federal National Mortgage Association,
Deb., 6.80%, due January 10, 2003 519,375
498,056 Federal National Mortgage Association,
6.50%, due November 1, 2004 501,563
500,000 Federal National Mortgage Association
Medium Term Notes,
5.40%, due March 12, 1999 498,830
500,000 Federal National Mortgage Association
Medium Term Notes,
6.36%, due August 16, 2000 506,875
500,000 Federal National Mortgage Association
Medium Term Notes,
5.72%, due March 8, 2001 499,220
1,000,000 Federal National Mortgage Association
Medium Term Notes,
6.45%, due April 23, 2001 1,018,750
500,000 Federal National Mortgage Association
Medium Term Notes,
6.625%, due May 21, 2001 511,330
500,000 Federal National Mortgage Association
Medium Term Notes,
6.41%, due February 6, 2002 510,155
500,000 Federal National Mortgage Association
Medium Term Notes,
6.09%, due September 30, 2002 504,530
500,000 Federal National Mortgage Association
Medium Term Notes,
6.15%, due January 27, 2003 495,860
1,000,000 Federal National Mortgage Association
Medium Term Notes,
6.36%, due December 27, 2004 998,440
500,000 Federal National Mortgage Association
Medium Term Notes,
6.10%, due January 26, 2005 494,060
1,000,000 Federal National Mortgage Association
Medium Term Notes,
6.82%, due August 23, 2005 1,048,120
500,000 Federal National Mortgage Association
Medium Term Notes
5.875%, due February 14, 2006 496,015
1,500,000 Federal National Mortgage Association
Medium Term Notes
6.41%, due March 8, 2006 1,533,045
500,000 Federal National Mortgage Association
Medium Term Notes
6.96%, due April 2, 2007 531,795
500,000 Federal National Mortgage Association
Medium Term Notes
6.70%, due June 19, 2007 522,500
500,000 Federal National Mortgage Association
Medium Term Notes
6.38%, due February 20, 2008 492,185
25,998,056 26,510,913
SHORT-TERM CORPORATE NOTES - 3.08%
$ 500,000 Abbott Laboratories,
5.47%, due April 22, 1998 $ 498,329
500,000 Bell Atlantic,
5.52%, due April 28, 1998 497,853
500,000 Disney Walt Co.,
5.46%, due April 15, 1998 498,862
500,000 Progress Capital Co.,
5.53%, due April 6, 1998 499,539
500,000 Texaco Inc.,
5.51%, due April 14, 1998 498,929
2,500,000 2,493,512
REPURCHASE AGREEMENT - 0.79%
640,000 Northern Trust Co.,
5.88%, due April 1, 1998
(Collateralized by U.S. Treasury Notes,
6.25%, due April 30, 2001) 640,000
TOTAL INVESTMENTS - 99.94% $ 80,828,678
Other assets less liabilities - 0.06% 49,690
TOTAL NET ASSETS - 100.00%
(equivalent to $11.17 per share;
20,000,000 shares of $1.00 par value
capital shares authorized;
7,237,797 shares outstanding) $ 80,878,368
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
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 (800) 996-2862
www.umb.com
JB27A 5/98
