TO THE SHAREHOLDERS
For the six months ended December 31, 1995, Scout Stock Fund's total return
(price change and reinvested distributions) was 5.62% compared to the 14.45%
earned by the unmanaged Standard & Poor's 500 index of larger companies for
the same period. The Funds average annual compounded total returns for one,
five and ten year periods were, 19.69%, 12.71% and 11.06%, respectively.
Scout Stock Fund's long-term performance shows that a stable, contrarian
approach to investing continues to serve our shareholders well.
Performance data contained in this report is for past periods only. Past
performance is not predictive of future performance. Investment returns and
share value will fluctuate, and redemption value may be more or less than
original cost.
Despite a weak October, the market rallied the last two months of 1995
resulting in a strong fourth quarter and a remarkable performance for the
year. Low inflation, falling interest rates, growing profits and record cash
inflows continued throughout the year and helped sustain the market's overall
momentum.
The technology sector which led the way most of the year started to falter
in the fourth quarter as the health stocks returned to favor and utilities
and energy rallied. In accordance with its value orientation, Scout Stock
Fund rotated out of many of the growth momentum stocks which appeared over-
valued and moved into the consumer cyclical, utility and capital goods groups
where more favorably priced stocks could be found.
In fourth quarter, Scout Stock Fund acquired American Greetings (media/paper)
and Texas Instruments (electronics/semiconductors) and eliminated its
position in Cigna (insurance).
It is highly doubtful that 1996's market will mimic 1995 despite continued
low inflation and possible interest rate reductions. In fact, fears of
recession and slower company profit growth have made 1996's market
unpredictable. With this in mind, Scout Stock Fund will defensively position
itself with value-oriented stocks. We will also continue to equally weight
all stock positions within the portfolio and maintain a generous cash reserve.
As always, Scout Stock Fund will use such reserve when buying opportunities
arise.
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)
Market
Shares Company Value
COMMON STOCKS _ 68.92%
BASIC MATERIALS _ 7.26%
70,000 Brush Wellman, Inc. 1,207,500
5,000 Carpenter Technology Corp. 205,625
40,000 Cyprus Amax Minerals Co. 1,045,000
4,000 duPont (E.I.) deNemours & Co. 279,500
5,000 Ecolab, Inc. 150,000
30,000 Engelhard Corp. 652,500
25,000 International Paper Co. 946,875
49,000 Nalco Chemical Co. 1,476,125
22,000 Rohm & Haas Co. 1,416,250
20,000 Union Camp Corp. 952,500
35,000 Weyerhaeuser Co. 1,513,750
60,000 Worthington Industries, Inc. 1,248,750
11,094,375
CAPITAL GOODS _ 4.96%
100,000 Calgon Carbon Corp. 1,200,000
36,000 Cooper Industries, Inc. 1,323,000
24,000 Deere & Co. 846,000
2,500 Emerson Electric Co. 204,375
6,000 Fluor Corp. 396,000
30,000 Giddings & Lewis, Inc. 495,000
21,500 Grainger (W.W.), Inc. 1,424,375
25,000 Hillenbrand Industry, Inc. 846,875
29,550 TRINOVA Corp. 845,870
7,581,495
CONSUMER CYCLICAL _ 13.79%
25,000 American Greetings Corp. 690,625
48,000 Bassett Furniture Industries, Inc. 1,116,000
30,000 Block (H&R), Inc. 1,215,000
50,000 Brown Group, Inc. 712,500
40,000 Dillard Department Stores, Inc. Cl. A 1,140,000
7,500 Donnelley (R.R.) & Sons 295,312
28,000 Dun & Bradstreet Corp. 1,813,000
22,000 Gannett Co. 1,350,250
25,000 General Motors Corp. 1,321,875
CONSUMER CYCLICAL (Continued)
30,000 Genuine Parts Co. 1,230,000
5,000 Knight-Ridder, Inc. 312,500
50,000 Limited (The), Inc. 868,750
35,000 Mallinckrodt Group, Inc. 1,273,125
40,000 Masco Corp. 1,255,000
25,000 May Department Stores Co. 1,056,250
10,000 Mercantile Stores Co., Inc. 462,500
15,000 Penney (J.C.) & Co., Inc. 714,375
38,000 Snap-On, Inc. 1,719,500
125,000 Stride Rite Corp. 937,500
50,000 TJX Companies, Inc. 943,750
30,000 Toys "R" Us, Inc. 652,500
21,080,312
CONSUMER STAPLES _ 9.61%
65,000 ALZA Corp. 1,608,750
7,500 American Home Products Corp. 727,500
88,750 Archer-Daniels-Midland Co. 1,597,500
15,000 Bard (C.R.), Inc. 483,750
5,000 Baxter International, Inc. 209,375
80,000 Bob Evans Farms, Inc. 1,520,000
75,000 Brinker International 1,134,375
16,000 Bristol-Myers Squibb Co. 1,374,000
40,850 Community Psychiatric Centers 500,412
25,000 Corning, Inc. 800,000
10,000 Eastman Kodak Co. 670,000
90,000 Lance, Inc. 1,473,750
10,000 Merck & Co., Inc. 657,500
4,000 Pioneer Hi-Bred International, Inc. 222,500
50,000 Rubbermaid, Inc. 1,275,000
10,000 Service Corp. International 440,000
14,694,412
ENERGY _ 8.41%
12,000 Amoco Corp. 862,500
12,500 Atlantic Richfield Co. 1,384,375
ENERGY (Continued)
45,000 Baker Hughes, Inc. 1,096,875
50,000 Dresser Industries, Inc. 1,218,750
15,000 Halliburton Co. 759,375
20,000 Kerr-McGee Corp. 1,270,000
25,000 Louisiana Land & Exploration 1,071,875
50,825 Mitchell Energy & Development Corp. Cl. A 940,262
35,000 Phillips Petroleum Co. 1,194,375
14,000 Schlumberger, Ltd. 969,500
4,000 Texaco, Inc. 314,000
60,000 USX-Marathon Group 1,170,000
20,000 WMX Technologies, Inc. 597,500
12,849,387
FINANCIAL _ 2.37%
15,000 Aon Corp. 748,125
30,000 First Chicago NBD Corp. 1,185,000
20,000 Liberty Corp. S.C. 675,000
3,000 Unicom Corp. 98,250
20,000 Wachovia Corp. 915,000
3,621,375
TECHNOLOGY _ 7.34%
60,000 ADT, Ltd. 900,000
6,300 AMP, Inc. 241,762
35,000 Apple Computer, Inc. 1,115,625
25,000 Digital Equipment Corp. 1,603,125
14,000 International Business Machines Corp. 1,284,500
20,000 Motorola, Inc. 1,140,000
50,000 Novell, Inc. 712,500
35,000 Perkin-Elmer Corp. 1,321,250
50,000 Sensormatic Electronics Corp. 868,750
100,000 Tandem Computers, Inc. 1,062,500
20,000 Telxon Corp. 452,500
10,000 Texas Instruments, Inc. 517,500
11,220,012
TRANSPORTATION & SERVICES _ 3.45%
20,000 Consolidated Freightways, Inc. 530,000
10,000 CSX Corp. 456,250
10,000 Norfolk Southern Corp. 793,750
25,000 Roadway Services, Inc. 1,221,875
20,000 Southwest Airlines Co. 465,000
20,000 Union Pacific Corp. 1,320,000
6,500 U.S. West Media Group 123,500
29,175 Yellow Corp. 361,041
5,271,416
UTILITIES _ 11.73%
25,000 AT & T Corp. 1,618,750
20,000 Bell Atlantic Corp. 1,337,500
10,000 BellSouth Corp. 435,000
15,000 Central & South West Corp. 418,125
50,000 Comsat Corp. 931,250
30,000 Dominion Resources 1,237,500
55,000 Entergy Corp. 1,608,750
10,000 Florida Progress Corp. 353,750
10,000 FPL Group, Inc. 463,750
27,000 MAPCO, Inc. 1,474,875
75,000 Niagara Mohawk Power Corp. 721,875
50,000 Pacific Telesis Group 1,681,250
35,000 Panhandle Eastern Corp. 975,625
50,000 SCANA Corp. 1,431,250
5,000 Sprint Corp. 199,375
40,000 Texas Utilities Co. 1,645,000
25,000 Union Electric Co. 1,043,750
10,000 U.S. West, Inc. 357,500
17,934,875
TOTAL COMMON STOCKS _ 68.92% 105,347,659
CONVERTIBLE PREFERRED STOCK _ 0.61%
35,000 Unisys Corp. ($3.75 Cm. Cv. A Pfd.) 940,625
CONVERTIBLE CORPORATE BONDS _ 2.11%
$ 1,000,000 Browning-Ferris Industries, Inc., Cv.
Sub. Deb., 6.25%, due August 15, 2012 997,500
300,000 Computervision Corp., Cv. Sub. Deb.,
8.00%, due December 1, 2009 220,875
1,000,000 Masco Corp., Cv. Sub. Deb., 5.25%,
due February 15, 2012 960,037
1,200,000 WMX Technologies, Inc., Cv. Sub. Nt.,
2.00%, due January 24, 2005 1,044,107
TOTAL CONVERTIBLE CORPORATE BONDS _ 2.11% 3,222,519
SHORT-TERM CORPORATE NOTES _ 20.23%
1,000,000 Abbott Laboratories, 5.80%,
due January 4, 1996 999,355
1,000,000 Air Products & Chemicals, Inc.,
5.70%, due January 4, 1996 999,367
1,000,000 American Greetings Corp., 5.75%,
due January 3, 1996 999,520
1,000,000 Ameritech Corp., 5.60%, due February 6, 1996 994,244
1,000,000 Anheuser-Busch Cos., Inc., 5.60%,
due January 23, 1996 996,422
1,500,000 BellSouth Corp., 5.70%, due January 24, 1996 1,494,300
1,000,000 Chevron Corp., 5.63%, due January 5, 1996 999,218
1,000,000 Coca-Cola Co., 5.58%, due January 8, 1996 998,760
1,000,000 Deere & Co., 5.66%, due January 19, 1996 997,012
1,000,000 Dover Corp., 5.71%, due January 10, 1996 998,414
1,000,000 duPont (E.I.) deNemours & Co., 5.58%,
due February 6, 1996 994,265
1,000,000 Duke Power Co., 5.72%, due January 12, 1996 998,094
500,000 Gannett, Inc., 5.77%, due January 17, 1996 498,637
1,500,000 Gillette Co., 5.70%, due January 5, 1996 1,498,812
1,000,000 GTE South, Inc., 5.76%, due January 19, 1996 996,960
1,500,000 Heinz (H.J.) Co., 5.69%, due January 26, 1996 1,493,836
1,500,000 Hewlett Packard Co., 5.67%,
due January 4, 1996 1,499,056
1,000,000 IBM Corp., 5.72%, due January 3, 1996 999,524
500,000 K N Energy, Inc., 5.83%,
due January 17, 1996 498,624
1,000,000 Nalco Chemical Co., 5.75%,
due January 12, 1996 998,083
1,500,000 Pacific Bell Telephone, 5.77%,
due January 26, 1996 1,493,749
1,500,000 PepsiCo, Inc., 5.72%, due January 26, 1996 1,493,804
1,000,000 Proctor & Gamble Co., 5.63%,
due January 22, 1996 996,560
1,500,000 Progress Capital Holdings, Inc., 5.62%,
due January 30, 1996 1,492,975
1,000,000 South Carolina Electric & Gas Co., 5.80%,
due January 26, 1996 995,811
1,500,000 Texaco, Inc., 5.83%, due January 11, 1996 1,497,328
1,000,000 Weyerhauser Co., 5.73%, due January 8, 1996 998,725
1,000,000 Xerox Credit Corp., 5.66%,
due January 19, 1996 996,872
TOTAL SHORT-TERM CORPORATE NOTES _ 20.23% 30,918,327
GOVERNMENT SPONSORED ENTERPRISES _ 7.79%
1,000,000 Federal Farm Credit Banks Discount Notes,
5.49%, due January 29, 1996 990,850
1,500,000 Federal Home Loan Banks Discount Notes,
5.60%, due January 17, 1996 1,496,034
2,000,000 Federal Home Loan Mortgage Credit Discount
Notes, 5.60%, due January 5, 1996 1,998,444
2,000,000 Federal Home Loan Mortgage Credit Discount
Notes, 5.46%, due March 8, 1996 1,979,373
1,000,000 Federal National Mortgage Association Discount
Notes, 5.57%, due January 5, 1996 999,226
1,000,000 Federal National Mortgage Association Discount
Notes, 5.45%, due March 19, 1996 988,040
3,500,000 Federal National Mortgage Association Discount
Notes, 5.44%, due March 25, 1996 3,455,044
TOTAL GOVERNMENT SPONSORED ENTERPRISES _ 7.79% 11,907,011
TOTAL INVESTMENTS _ 99.66% $ 152,336,141
Other assets less liabilities _ 0.34% 525,752
TOTAL NET ASSETS _ 100.00%
(equivalent to $16.34 per share;
10,000,000 shares of $1.00 par value
capital shares authorized;
9,354,527 shares outstanding) $ 152,861,893
<PAGE>
Statement of Assets and Liabilities
December 31, 1995 (unaudited)
ASSETS:
Investment securities, at market value
(identified cost $135,977,416) $ 152,336,141
Cash 776,942
Dividends receivable 256,057
Interest receivable 55,458
Receivable for investments sold 85,647
Total assets 153,510,245
LIABILITIES AND NET ASSETS:
Payable for investments purchased 648,352
Total liabilities 648,352
NET ASSETS $ 152,861,893
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 135,405,580
Accumulated undistributed income:
Undistributed net investment income 179,013
Accumulated net realized gain on investment
transactions 918,575
Net unrealized appreciation in value of
investments 16,358,725
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 152,861,893
Capital shares, $1.00 par value
Authorized 10,000,000
Outstanding 9,354,527
NET ASSET VALUE PER SHARE $ 16.34
See accompanying Notes to Financial Statements.
<PAGE>
Statement of Operations
Six Months Ended December 31, 1995 (unaudited)
INVESTMENT INCOME:
Income:
Dividends $ 1,554,844
Interest 1,309,445
2,864,289
Expenses:
Management fees (Note 3) 623,906
Registration fees and other expenses 10,723
634,629
Net investment income 2,229,660
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (Note 1):
Realized gain from investment transactions (excluding
commercial paper and repurchase agreements):
Proceeds from sales of investments 19,102,412
Cost of investments sold 14,298,751
Net realized gain from investment transactions 4,803,661
Unrealized appreciation on investments:
Beginning of period 15,363,969
End of period 16,358,725
Increase in net unrealized appreciation on investments 994,756
Net gain on investments 5,798,417
Increase in net assets resulting from operations $ 8,028,077
<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 $ 2,229,660 $ 3,789,068
Net realized gain from investment transactions 4,803,661 10,677,919
Increase in net unrealized appreciation on
investments 994,756 5,889,433
Net increase in net assets resulting from
operations 8,028,077 20,356,420
Net equalization included in the price of shares
issued and redeemed (Note 1) 93,006 109,218
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (2,258,933) (3,747,111)
Net realized gain from investment transactions (6,161,702) (8,927,920)
Total distributions to shareholders (8,420,635) (12,675,031)
INCREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 830,606 and 1,107,974 shares sold 14,671,204 17,259,667
Net asset value of 393,163 and 469,642 shares
issued for reinvestment of distributions 5,508,435 7,311,709
20,179,639 24,571,376
Cost of 224,140 and 699,474 shares redeemed (3,725,185) (10,980,578)
Net increase from capital share transactions 16,454,454 13,590,798
Total increase in net assets 16,154,902 21,381,405
NET ASSETS:
Beginning of period 136,706,991 115,325,586
End of period (including undistributed net
investment income of $179,013 and $115,280,
respectively) $ 152,861,893 $ 136,706,991
Distributions to shareholders:
Income dividends per share $ .26 $ .47
Capital gains distribution per share $ .68 $ 1.13
<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 _ Securities traded on a national securities exchange are valued
at the last reported sales price on the last business day of the period or,
if no sale was reported on that date, at the average of the last reported
bid and asked prices. Securities traded over-the-counter are valued at the
average of the last reported bid and asked prices. Short-term obligations
are valued at amortized cost, which approximates market value. Investment
transactions are recorded on the trade date. Interest income is recorded
daily. Dividend income 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.
Equalization _ The Fund uses the accounting practice known as equalization,
by which a portion of the proceeds from sales and costs of redemption of
capital shares, equivalent on a per share basis to the amount of
undistributed net investment income on the date of the transactions, is
credited or charged to undistributed income. As a result, undistributed net
investment income per share is unaffected by sales or redemptions of capital
shares.
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 $ 20,119,354
Proceeds from sales 19,102,412
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 Stock 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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