TO THE SHAREHOLDERS
Scout Regional Fund's total return (price change and reinvested distributions)
for the quarter ended December 31, 1995, was 1.19% in comparison to the
unmanaged Value Line Composite index which earned .52% for the same time
period. For the calendar year ended December 31, 1995, returns were 19.96%
and 21.85% for Scout Regional Fund and the Value Line Composite index,
respectively.
With the help of strength in technology stocks, large capitalization stocks
outpaced small-capitalization stocks throughout the year. Although value-
oriented smaller stocks were more fairly priced than large stocks, low
inflation, falling interest rates and strong cash inflows sustained their
continued growth in 1995 as well.
As we begin 1996, it would be unreasonable to expect the same performance
seen in 1995. The continued economic slowdown, and Congress' indecision over
the budget have kept this year's interest rates unpredictable. If inflation
remains moderate, and the Federal Reserve continues to lower interest rates,
smaller capitalization stocks may have an opportunity to show their earn-
ings potential. In addition, investors seeking better-valued stocks may turn
to the longer-term growth of small stocks as the earnings momentums of larger
stocks slows.
During the fourth quarter, Scout Regional Fund sold its position in Pioneer
Hybrid Int'l. (food processing). Additionally, Medicine Shoppe Int'l.
(retail/drug stores) was taken over by Cardinal Health Corp. As we enter
1996, Scout Regional Fund will rely on its value-oriented investment style
and use its cash reserves when buying opportunities become available.
For our corporate shareholders, 54% of ordinary income distributions qualify
for the corporate dividends received deduction.
We appreciate you as a valued shareholder of the Scout Regional Fund and
continually welcome your questions or comments.
Sincerely,
Larry D. Armel
President
<PAGE>
Top 10 Equity Holdings
Market Percent
Value of Total
Layne Inc. $ 697,500 2.31%
NPC International Inc. Cl. B 623,500 2.07%
Brunswick Corp. 600,000 1.99%
Interstate Power Co. 565,250 1.87%
Sanfilippo (John B. & Son), Inc. 555,000 1.84%
Commerce Clearing House Cl. B. 551,250 1.83%
Kellwood Co. 550,125 1.82%
Laclede Gas Co. 549,250 1.82%
Alberto-Culver Co. Cl. A 549,000 1.82%
Insituform Technologies, Inc. CI. A 534,750 1.77%
Top 10 Equity Holdings Total: 5,775,625 19.14%
NOTE: All market values based on 12/31/95 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
December 31, 1995
Market
Shares Company Cost Value
COMMON STOCKS _ 83.44%
BASIC MATERIALS _ 8.02%
50,000 Amax Gold, Inc.* $ 372,843 $ 362,500
15,000 Atchison Casting Co.* 208,125 180,000
15,000 Cyprus Amax Minerals Co. 385,065 391,875
20,000 Fansteel, Inc. 146,140 137,500
30,000 Huntco, Inc. Cl. A 534,460 461,250
35,000 Laclede Steel Co.* 455,024 262,500
25,000 Midwest Grain Products, Inc. 495,000 350,000
18,000 Petrolite Corp. 523,424 513,000
20,000 Santa Fe Pacific Gold 256,478 242,500
3,376,559 2,901,125
CAPITAL GOODS _ 9.99%
9,000 Bandag, Inc. 507,365 487,125
25,000 BHA Group Inc. Cl. A 334,521 331,250
200 Emerson Electric Co. 11,237 16,350
5,000 Green (A.P.) Industries, Inc. 53,608 97,500
15,000 Harmon Industries, Inc. New 236,250 236,250
14,925 HON Industries Inc. 373,163 347,006
46,000 Insituform Technologies, Inc. Cl. A 442,624 534,750
62,000 Layne Inc.* 379,889 697,500
40,000 MYR Group 357,216 425,000
9,000 Noble Affiliates, Inc. 218,700 268,875
5,000 Paul Mueller Co. 152,912 171,250
3,067,485 3,612,856
CONSUMER CYCLICAL _ 22.08%
1,500 Advantage Companies, Inc.* 16,905 27,000
22,000 Angelica Corp. 554,777 451,000
20,000 Brown Group, Inc. 575,662 285,000
25,000 Brunswick Corp. 404,074 600,000
27,000 Caremark International Inc. 482,220 489,375
2,500 Casey's General Stores, Inc. 20,156 54,688
33,000 CPI Corp. 519,763 528,000
10,000 Dillard Department Stores, Inc. Cl. A 258,906 285,000
500 Donnelley (R.R.) & Sons 14,338 19,688
35,000 Flexsteel Industries, Inc. 370,785 358,750
27,000 Kellwood Co. 486,458 550,125
7,000 Lee Enterprises, Inc. 108,138 161,000
6,000 Leggett & Platt 108,900 145,500
10,000 Mallinckrodt Group, Inc. 318,057 363,750
8,000 May Department Stores Co. 291,515 338,000
CONSUMER CYCLICAL (Continued)
24,000 Maytag Corp. 356,950 486,000
86,000 NPC International Inc. Cl. B 526,340 623,500
25,000 O'Sullivan Industries Holdings, Inc.* 216,875 165,625
20,000 Outboard Marine Corp. 346,450 407,500
33,000 Safety-Kleen Corp. 561,070 515,625
60,000 Sanfilippo (John B. & Son), Inc.* 625,625 555,000
3,000 Sonic Corp.* 34,875 57,000
30,000 Stuart Entertainment, Inc.* 214,107 217,500
75,000 Toastmaster Inc. 484,495 300,000
7,897,441 7,984,626
CONSUMER STAPLES _ 15.63%
18,000 Alberto-Culver Co. Cl. A 419,780 549,000
20,000 Beverly Enterprises, Inc.* 223,500 212,500
4,144 Cardinal Health 103,825 226,884
10,000 Clarcor Inc. 174,270 203,750
35,000 Exabyte Corp.* 514,594 511,875
20,000 Fleming Companies Inc. 531,570 412,500
45,000 Isco, Inc. 497,731 416,250
20,000 Jones Medical Industries, Inc. 131,270 482,500
40,000 Lawter International, Inc. 504,678 465,000
20,000 Rival Co. 290,000 442,500
35,000 Sealright Co. 560,750 389,375
10,000 Sigma-Aldrich Corp. 463,313 495,000
75,000 TCBY Enterprises, Inc. 352,362 300,000
36,000 VICORP Restaurants, Inc.* 534,125 351,000
25,000 Winnebago Industries, Inc. 208,125 193,750
5,509,893 5,651,884
ENERGY _ 9.44%
9,750 Barrett Resources Corp.* 189,173 286,406
7,500 Helmerich & Payne Inc. 188,376 223,125
3,000 Kerr-McGee Corp. 124,307 190,500
7,500 KN Energy, Inc. 168,187 218,438
26,000 Laclede Gas Co. 525,205 549,250
9,000 MAPCO, Inc. 493,069 491,625
40,225 Maverick Tube Corp.* 298,608 311,744
12,000 Murphy Oil Corp. 484,100 498,000
11,500 St. Joseph Light & Power 312,512 408,250
10,000 St. Mary Land & Exploration Co. 121,250 140,000
10,000 Total Petroleum North America Ltd. 105,500 97,500
3,010,287 3,414,838
FINANCIAL _ 5.22%
3,500 Boatmen's Bancshares 76,517 143,063
15,000 Brenton Banks 277,500 318,750
1,575 Commerce Bancshares Inc. 39,107 60,244
10,000 Commerce Clearing House Cl. B 155,000 551,250
5,000 Edwards (A.G.), Inc. 83,375 119,375
1,500 Kansas City Life Insurance Co. 60,017 78,750
1,500 Magna Group, Inc. 27,750 35,625
2,000 Mercantile Bancorporation Inc. 60,246 92,000
3,500 Old Republic International 72,362 124,250
10,000 Reinsurance Group of America, Inc. 268,770 366,250
1,120,644 1,889,557
MISCELLANEOUS _ 1.92%
60,000 B.I. Inc.* 297,250 457,500
25,000 Stimsonite Corp.* 255,125 237,500
552,375 695,000
TECHNOLOGY _ 0.47%
5,000 DOVatron International Inc.* 92,187 168,750
TRANSPORTATION & SERVICES _ 0.94%
15,000 Werner Enterprises, Inc. 288,750 303,750
3,000 Yellow Corp. 74,066 37,125
362,816 340,875
UTILITIES _ 9.73%
20,000 California Energy Co., Inc.* 321,655 390,000
26,000 Empire District Electric Co. 500,070 464,750
20,000 IES Industries, Inc. 484,782 530,000
17,000 Interstate Power Co. 487,170 565,250
12,000 Kansas City Power & Light Co. 260,055 313,500
20,000 Lincoln Telecommunications Co. 282,000 422,500
40,000 Southwestern Energy Co. 599,580 510,000
7,000 Union Electric Co. 253,346 292,250
1,000 Utilicorp United, Inc. 27,117 29,375
3,215,775 3,517,625
TOTAL COMMON STOCKS _ 83.44% 28,205,462 30,177,136
CONVERTIBLE CORPORATE BOND _ 1.01%
$ 384,000 Beverly Enterprises, Inc., Cv.
Sub. Deb., 7.625%,
due March 15, 2003 377,010 366,720
SHORT-TERM CORPORATE NOTES _ 13.79%
500,000 Anheuser-Busch Cos., Inc.,
5.60%, due January 23, 1996 498,211 498,211
500,000 Chevron Corp., 5.63%,
due January 5, 1996 499,609 499,609
500,000 Dover Corp., 5.71%,
due January 10, 1996 499,207 499,207
500,000 Gannett Co., Inc., 5.77%,
due January 17, 1996 498,638 498,638
500,000 Gillette Co., 5.70%,
due January 5, 1996 499,604 499,604
500,000 Heinz (H.J.) Co., 5.69%,
due January 26, 1996 497,945 497,945
500,000 K N Energy Inc., 5.83%,
due January 17, 1996 498,623 498,623
500,000 PepsiCo, Inc., 5.72%,
due January 26, 1996 497,934 497,934
500,000 Progress Capital Holdings, Inc.,
5.62%, due January 30, 1996 497,658 497,658
500,000 Weyerhauser Co., 5.73%,
due January 8, 1996 499,363 499,363
TOTAL SHORT-TERM CORPORATE NOTES _ 13.79% 4,986,792 4,986,792
TOTAL INVESTMENTS _ 98.24% $ 33,569,264 35,530,648
Other assets less liabilities _ 1.76% 637,030
TOTAL NET ASSETS _ 100.00%
(equivalent to $10.11 per share;
10,000,000 shares of $1.00 par value
capital shares authorized;
3,577,133 shares outstanding) $ 36,167,678
For federal income tax purposes, the identified cost of investments owned at
December 31, 1995 was $33,569,264.
Net unrealized appreciation for federal income tax purposes was $1,961,384,
which is comprised of unrealized appreciation of $4,125,970 and unrealized
depreciation of $2,164,586.
<PAGE>
Statement of Assets and Liabilities
December 31, 1995
ASSETS:
Investment securities, at market value
(identified cost $33,569,264) $ 35,530,648
Cash 587,199
Dividends receivable 51,974
Interest receivable 8,540
Receivable for investments sold 162,480
Total assets 36,340,841
LIABILITIES AND NET ASSETS:
Payable for investments purchased 173,163
Total liabilities 173,163
NET ASSETS $ 36,167,678
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 33,630,051
Accumulated undistributed income:
Undistributed net investment income 6,906
Accumulated net realized gain on investment transactions 569,337
Net unrealized appreciation of investments 1,961,384
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 36,167,678
Capital shares, $1.00 par value
Authorized 10,000,000
Outstanding 3,577,133
NET ASSET VALUE PER SHARE $ 10.11
See accompanying Notes to Financial Statements.
<PAGE>
Statement of Operations
For the Year Ended December 31, 1995
INVESTMENT INCOME:
Income:
Dividends $ 631,370
Interest 283,408
914,778
Expenses:
Management fees (Note 3) 274,973
Governmental fees 11,245
286,218
Net investment income 628,560
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (Note 1):
Realized gain from investment transactions (excluding
repurchase agreements and short-term corporate notes):
Proceeds from sales of investments 10,327,682
Cost of investments sold 7,549,290
Net realized gain from investment transactions 2,778,392
Unrealized appreciation (depreciation) of investments:
Beginning of year (402,358)
End of year 1,961,384
Net unrealized appreciation of investments 2,363,742
Net gain on investments 5,142,134
Net increase in net assets resulting from operations $ 5,770,694
<PAGE>
Statements of Changes in Net Assets
For the Two Years Ended December 31, 1995
1995 1994
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 628,560 $ 527,641
Net realized gain from investment transactions 2,778,392 1,047,916
Net unrealized appreciation (depreciation) of
investments 2,363,742 (1,388,928)
Net increase in net assets resulting from
operations 5,770,694 186,629
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (622,972) (529,476)
Net realized gain from investment transactions (2,350,926) (511,597)
Total distributions to shareholders (2,973,898) (1,041,073)
INCREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 701,498 and 679,634 shares sold 6,981,171 6,424,818
Net asset value of 166,398 and 62,998 shares
issued for reinvestment of distributions 1,663,855 574,404
8,645,026 6,999,222
Cost of 334,038 and 369,416 shares redeemed (3,273,596) (3,480,748)
Net increase from capital share transactions 5,371,430 3,518,474
Total increase in net assets 8,168,226 2,664,030
NET ASSETS:
Beginning of year 27,999,452 25,335,422
End of year (including undistributed net
investment income of $6,906 and $1,318,
respectively) $ 36,167,678 $ 27,999,452
Distributions to shareholders:
Income dividends per share $ 0.190 $ 0.180
Capital gains distribution per share $ 0.705 $ 0.171
<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 has complied 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 year ended December 31, 1995 (excluding repurchase
agreements and short-term corporate notes), are as follows:
Purchases $ 11,551,090
Proceeds from sales 10,327,682
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 com-missions, 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.
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