SCOUT REGIONAL FUND
SEMIANNUAL REPORT
JUNE 30, 1995
TO THE SHAREHOLDERS
Scout Regional Fund had a total return (price change and reinvested
distributions) of 5.68% for the quarter ended June 30, 1995 and earned 11.77%
for the first six months of the year.
In comparison, the unmanaged Value Line Composite index returned 11.47% for
the quarter and 13.36% for year to date.
The table below shows calendar year performance since Scout Regional Fund
established its small capitalization objective in August, 1991:
Comparative Returns
6-mos.
1992 1993 1994 1995
Scout Regional Fund 10.96% 5.95% 0.70% 11.77%
Value Line Composite 9.76% 13.34% -3.82% 13.36%
As of June 30, 1995, average annual compounded total returns for one year and
since the change in the Fund's investment objective on August 16, 1991 were
13.98% and 7.70%, respectively. Average annual compounded total returns for
one year, five years and the life of the Fund (which includes performance
prior to the change in investment objective) were 13.98%, 7.54% and 5.10%,
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.
Regional small capitalization stocks have participated in the overall market
rise during the first half of 1995, albeit at a lesser rate than large cap
stocks. As we enter the third quarter, they remain more attractively priced
versus their large cap counterparts on a basis of earnings and improving
earnings momentum. Additionally, we would expect takeover activity to become
even more prevalent as long as interest rates remain under reasonable control.
During the second quarter, Scout Regional Fund benefited from takeover
activity surrounding Puritan Bennett (since sold), Insituform Mid-America,
Plains Petroleum and Advantage Companies.
New positions were added to oil stocks: Murphy Oil, St. Mary Land &
Exploration and Total Petroleum North America. We also were able to establish
positions in Werner Enterprises (trucking), Rival (small appliance company),
Caremark (home health care) and IES Industries (Iowa utility). Finally, we
initiated holdings in metal benders _ Atchison Casting and Huntco.
Scout Regional Fund's cash equivalent reserves were reduced slightly to 9%
during the quarter.
The predecessor to Scout Regional Fund (UMB Qualified Dividend Fund) had tax
loss carry-forwards that were used to offset realized Fund gains until
December, 1994 when capital gains were first paid out. The historical
distributions are as follows:
Total
Dividends Capital Gains Distribution
Year Per Share Per Share Per Share
1992 0.115 _ 0.115
1993 0.138 _ 0.138
1994 0.180 0.171 0.351
6 mos. 1995 0.090 0.300 0.390
We appreciate you as a valued shareholder of Scout Regional Fund and welcome
your questions or comments.
Sincerely,
Larry D. Armel
President
<PAGE>
Top 10 Equity Holdings
Market Percent
Value of Total
Sanfilippo (John B. & Son), Inc. $ 615,000 2.19%
Jones Medical Industries, Inc. 589,625 2.10%
Insituform Mid-America Inc. Cl. A 580,000 2.07%
Dillard Dept. Stores, Inc. Cl. A 528,750 1.89%
Caremark International Inc. 500,000 1.78%
May Department Stores Co. 499,500 1.78%
California Energy Co., Inc. 491,250 1.75%
Sigma-Aldrich Corp. 491,250 1.75%
Laclede Gas Co. 490,625 1.75%
Southwestern Energy Co. 485,625 1.73%
Top 10 Equity Holdings Total: 5,271,625 18.79%
Note: All market values based on 6/30/95 statement of assets.
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
June 30, 1995 (unaudited)
Market
Shares Company Value
COMMON STOCKS - 89.75%
BASIC MATERIALS - 7.53%
50,000 Amax Gold, Inc. $ 275,000
10,000 Atchison Casting Corp. 143,750
3,500 Cyprus Amax Minerals Co. 99,750
20,000 Fansteel, Inc. 137,500
20,000 Huntco, Inc. Cl. A 325,000
30,000 Laclede Steel Co. 360,000
20,000 Midwest Grain Products, Inc. 370,000
14,000 Petrolite Corp. 423,500
20,000 Santa Fe Pacific Gold 242,500
2,377,000
CAPITAL GOODS - 8.69%
7,500 Baldor Electric Co. 214,687
2,000 Bandag, Inc. 125,000
25,000 BHA Group Inc. Cl. A 312,500
500 Emerson Electric Co. 35,750
7,500 Green (A.P.) Industries, Inc. 148,125
10,000 HON Industries Inc. 265,000
40,000 Insituform Mid-America, Inc. Cl. A 580,000
64,000 Layne Inc. 480,000
30,000 Myers (L.E.) Company Group 371,250
500 Noble Affiliates, Inc. 12,750
5,000 Paul Mueller Co. 157,500
2,000 Valmont Industries Inc. 43,250
2,745,812
CONSUMER CYCLICAL - 25.95%
1,500 Advantage Companies, Inc. 24,375
18,500 Angelica Corp. 462,500
16,000 Brown Group, Inc. 364,000
25,000 Brunswick Corp. 425,000
25,000 Caremark International Inc. 500,000
5,000 Casey's General Stores, Inc. 90,000
20,000 CPI Corp. 382,500
18,000 Dillard Department Stores, Inc. Cl. A 528,750
CONSUMER CYCLICAL (Continued)
1,500 Donnelley (R.R.) & Sons 54,000
30,000 Flexsteel Industries, Inc. 307,500
27,000 Kellwood Co. 459,000
10,000 Lee Enterprises, Inc. 381,250
9,400 Leggett & Platt 413,600
7,500 Mallinckrodt Group Inc. 266,250
12,000 May Department Stores Co. 499,500
29,000 Maytag Corp. 464,000
9,000 NPC International Inc. Cl. A 55,125
77,000 NPC International Inc. Cl. B 442,750
25,000 O'Sullivan Industries, Inc. 190,625
15,000 Outboard Marine Corp. 294,375
28,000 Safety-Kleen Corp. 451,500
60,000 Sanfilippo (John B. & Son), Inc. 615,000
7,500 Sonic Corp. 206,250
30,000 Stuart Entertainment, Inc. 112,500
34,000 Toastmaster Inc. 204,000
8,194,350
CONSUMER STAPLES _ 17.69%
15,000 Alberto-Culver Co. Cl. A 386,250
1,500 Alberto-Culver Co. Cl. B 45,375
15,000 Beverly Enterprises, Inc. 185,625
10,000 Clarcor Inc. 228,750
7,500 DEKALB Genetics Corp. Cl. B 330,000
25,000 Exabyte Corp. 346,875
18,000 Fleming Companies Inc. 477,000
40,000 Isco, Inc. 430,000
53,000 Jones Medical Industries, Inc. 589,625
25,000 Lawter International, Inc. 300,000
8,000 Medicine Shoppe International, Inc. 281,000
5,000 Pioneer Hybrid International, Inc. 210,000
20,000 Rival Co. 295,000
CONSUMER STAPLES (Continued)
20,000 Sealright Co. 335,000
10,000 Sigma-Aldrich Corp. 491,250
10,425 TCBY Enterprises, Inc. 62,550
33,000 VICORP Restaurants, Inc. 462,000
15,000 Winnebago Industries, Inc. 131,250
5,587,550
ENERGY - 8.65%
7,500 Helmerich & Payne Inc. 221,250
7,500 Kerr-McGee Corp. 402,188
10,000 KN Energy, Inc. 253,750
25,000 Laclede Gas Co. 490,625
7,500 MAPCO Inc. 435,000
35,000 Maverick Tube Corp. 266,875
5,000 Murphy Oil Corp. 205,000
7,500 Plains Petroleum Co. 222,187
10,000 St. Mary Land & Exploration Co. 125,000
10,000 Total Petroleum North America Ltd. 110,000
2,731,875
FINANCIAL - 6.45%
5,000 Boatmen's Bancshares 176,250
15,000 Brenton Banks 268,125
6,000 Commerce Bancshares Inc. 189,000
14,000 Commerce Clearing House Cl. B 304,500
7,500 Edwards (A.G.), Inc. 168,750
1,500 Kansas City Life Insurance Co. 72,000
3,500 Magna Group, Inc. 77,000
2,000 Mercantile Bancorporation Inc. 89,750
10,000 Old Republic International 261,250
15,000 Reinsurance Group America, Inc. 429,375
2,036,000
MISCELLANEOUS - 1.26%
60,000 B. I. Inc. 397,500
TECHNOLOGY - 1.05%
1,500 Data Transmission Network Corp. 38,250
12,000 DOVatron International, Inc. 294,000
332,250
TRANSPORTATION & SERVICES - 1.24%
15,000 Werner Enterprises, Inc. 300,000
5,000 Yellow Corp. 90,625
390,625
UTILITIES - 11.24%
30,000 California Energy Co., Inc. 491,250
26,000 Empire District Electric Co. 451,750
20,000 IES Industries, Inc. 445,000
17,000 Interstate Power Co. 410,125
15,000 Kansas City Power & Light Co. 343,125
30,000 Lincoln Telecommunications Co. 472,500
35,000 Southwestern Energy Co. 485,625
1,500 Sprint Corp. 50,438
10,000 Union Electric Co. 372,500
1,000 Utilicorp United, Inc. 28,125
3,550,438
TOTAL COMMON STOCKS - 89.75% 28,343,400
CONVERTIBLE CORPORATE BOND - 1.16%
$ 384,000 Beverly Enterprises, Inc., Cv. Sub. Deb.,
7.625%, due March 15, 2003 366,720
SHORT-TERM CORPORATE NOTES - 7.87%
500,000 Bell Atlantic Network Funding Corp.,
5.95%, due July 6, 1995 498,595
500,000 duPont (E.I.) deNemours & Co.,
5.87%, due July 7, 1995 497,554
500,000 PepsiCo, Inc.,
5.93%, due July 20, 1995 496,953
500,000 Philip Morris Corp.,
5.94%, due July 14, 1995 498,762
500,000 3M Corp., 5.88%, due July 25, 1995 493,875
TOTAL SHORT-TERM CORPORATE NOTES - 7.87% 2,485,739
U.S. GOVERNMENT SECURITY - 1.56%
500,000 U.S. Treasury Bills,
5.65%, due September 7, 1995 493,074
REPURCHASE AGREEMENT - 1.85%
585,000 Northern Trust Co., 5.75%,
due July 3, 1995
(Collateralized by U.S.
Treasury Notes,
8.625%, due October 15, 1995) 585,000
TOTAL INVESTMENTS - 102.19% $ 32,273,933
Other assets less liabilities - (2.19%) (692,466)
TOTAL NET ASSETS - 100.00%
(equivalent to $9.89 per share;
10,000,000 shares of $1.00 par value
capital shares authorized;
3,193,603 shares outstanding) $ 31,581,467
See accompanying Notes to Financial Statements.
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
June 30, 1995 (unaudited)
ASSETS:
Investment securities, at market value
(identified cost $30,864,697) $ 32,273,933
Dividends receivable 54,949
Interest receivable 18,564
Receivable for investments sold 44,375
Total assets 32,391,821
LIABILITIES AND NET ASSETS:
Cash overdraft 193,226
Payable for investments purchased 617,128
Total liabilities 810,354
NET ASSETS $ 31,581,467
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 29,729,990
Accumulated undistributed income:
Undistributed net investment income 23,907
Accumulated net realized gain on
investment transactions 418,334
Net unrealized appreciation of investments 1,409,236
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 31,581,467
Capital shares, $1.00 par value
Authorized 10,000,000
Outstanding 3,193,603
NET ASSET VALUE PER SHARE $ 9.89
See accompanying Notes to Financial Statements.
<PAGE>
FINANCIAL STATEMENTS
Statement of Operations
Six Months Ended June 30, 1995 (unaudited)
INVESTMENT INCOME:
Income:
Dividends $ 300,005
Interest 133,708
433,713
Expenses:
Management fees (Note 3) 125,864
Governmental fees 4,125
129,989
Net investment income 303,724
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 1):
Realized gain from investment transactions
(excluding repurchase agreements
and short-term corporate notes):
Proceeds from sales of investments 4,763,440
Cost of investments sold 3,549,861
Net realized gain from investment
transactions 1,213,579
Unrealized appreciation (depreciation) of investments:
Beginning of period (402,358)
End of period 1,409,236
Net unrealized appreciation of investments
during the period 1,811,594
Net gain on investments 3,025,173
Net increase in net assets resulting from
operations $ 3,328,897
See accompanying Notes to Financial Statements.
<PAGE>
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
Six Months Ended Year Ended
June 30, 1995 December 31,
(unaudited) 1994
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 303,724 $ 527,641
Net realized gain from investment transactions 1,213,579 1,047,916
Net unrealized appreciation (depreciation) of
investments 1,811,594 (1,388,928)
Net increase in net assets resulting from
operations 3,328,897 186,629
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (281,135) (529,476)
Net realized gain from investment transactions (937,116) (511,597)
Total distributions to shareholders (1,218,251) (1,041,073)
INCREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 334,976 and 679,634 shares sold 3,230,134 6,424,818
Net asset value of 65,805 and 62,998 shares
issued for reinvestment of distributions 646,876 574,404
3,877,010 6,999,222
Cost of 250,453 and 369,416 shares redeemed (2,405,641) (3,480,748)
Net increase from capital share transactions 1,471,369 3,518,474
Total increase in net assets 3,582,015 2,664,030
NET ASSETS:
Beginning of period 27,999,452 25,335,422
End of period (including undistributed net
investment income of $23,907 and $1,318,
respectively) $ 31,581,467 $ 27,999,452
*Distributions to shareholders:
Income dividends per share $ 0.09 $ 0.180
Capital gains distribution per share $ 0.30 $ 0.171
See accompanying Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - The Fund is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. Effective on July 12,
1991, the Fund's shareholders approved a change in the fiscal year-end and
the investment objective of the Fund. A summary of significant accounting
policies that the Fund uses in the preparation of its financial statements
follows. The policies are in conformity with generally accepted accounting
principles.
Investments - Common stocks 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. Investment transactions are recorded on the
date securities are purchased or sold. 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. Short-term investments
are valued at cost with interest income recorded on the accrual basis.
Federal Income Taxes - The Fund's policy is to comply with the Internal
Revenue Code requirements applicable to regulated investment companies and
will distribute all income to its shareholders. Therefore, no Federal income
tax provision is required.
2. PURCHASES AND SALES OF SECURITIES - The aggregate amounts of security
transactions during the period ended June 30, 1995 (excluding repurchase
agreements and short-term corporate notes), were as follows:
Purchases $ 6,452,698
Proceeds from sales 4,763,440
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.
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 they are sufficient to
protect the Fund in the event of default by the seller.
This report has been prepared for the information of the Shareholders of
Scout Regional 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.
