SCOUT BALANCED FUND
A no-load mutual fund investing in both equities
and fixed income obligations with emphasis on both
long-term growth of capital and high current income.
Quarterly Report
March 31, 1996
TO THE SHAREHOLDERS
Scout Balanced Fund's total return (price change and reinvested
distributions) was 2.00% for its first quarter ending March 31,
1996. This return compares with the Lipper Balanced Fund average
return of 2.29% for the same period.
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.
At March 31, 1996, Scout Balanced Fund was 32% invested in
equities, 54% invested in fixed income securities and 14%
invested in cash equivalents, which is in line with the Fund's
investment management policy to normally invest at least 25% of
its total assets in equity securities and a minimum of 25% of its
total assets in fixed income senior obligations.
We have positioned the equity portion of Scout Balanced Fund to
benefit from a strong dollar and moderately growing domestic
economy. As the U.S. dollar strengthens versus the currencies of
our major trading partners, the stocks of U.S. headquartered
firms conducting substantial business overseas tend to
underperform the stocks of companies generating most of their
revenues and earnings at home in the United States. Therefore, we
have concentrated our equity position in those firms doing much
of their business locally. We have also been able to identify
companies with reasonable fundamental valuations using such
measures as dividend yield and price relative to earnings, cash
flow, sales and tangible book value. As with any investment we
make, we stress a strong balance sheet and the capability of a
company to meet its financial obligations.
The fixed income portion of the portfolio performed splendidly in
the quarter. The recent rise in interest rates during the quarter
represents the worst three month sell-off in bond prices since
the third quarter of 1987. We stressed a short average maturity
of 2 years and excellent credit quality of AAA. The short
maturity of the Fund managed to keep volatility low as interest
rates rose and bond priced declines. We anticipate increasing the
average maturity of duration of the Fund at today's high yields.
Top 10 Equity Holdings
Market Percent
Value of Total
O'Sullivan Industries Holdings, Inc. $ 48,762 2.00%
Bassett Furniture Industries, Inc. 40,950 1.68%
Giddings & Lewis, Inc. 39,425 1.62%
Novell, Inc. 36,112 1.48%
Nokia Corp. 35,962 1.48%
Brinker International 35,175 1.45%
Wal Mart Stores, Inc. 34,500 1.42%
Vicorp Restaurants, Inc. 32,450 1.33%
USX-Marathon Group 30,800 1.27%
Cyprus Amax Minerals Co. 29,662 1.22%
Top 10 Equity Holdings Total: $363,798 14.95%
Note: All market values based on 3/31/96 statement of assets.
The recent rise in the dollar, interest rates and commodity
prices are cause for concern. In response, our strategy is to
establish an initial defensive posture, consistent with some of
the excesses we have identified in the capital markets.
We welcome you as shareholders and appreciate your support of
Scout Balanced Fund.
Sincerely,
Christopher P. Bloomstran, CFA
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
or any other applicable deposit insurance. These shares involve
investment risks, including the possible loss of the principal
amount invested.
FINANCIAL STATEMENTS
Statement of Net Assets
March 31, 1996
Market
Shares Company Value
Common stocks 31.09%
BASIC MATERIALS 4.90%
1,350 Brush Wellman, Inc. $ 24,131
2,000 Calgon Carbon Corp. 24,250
1,050 Cyprus Amax Minerals Co. 29,662
1,200 Huntco, Inc. Cl. A 23,250
425 International Paper Co. 16,734
50 Weyerhaeuser Co. 2,306
100 Worthington Industries, Inc. 1,987
122,321
CAPITAL GOODS 2.27%
550 Browning Ferris Industries 17,325
2,075 Giddings & Lewis 39,425
56,750
CONSUMER CYCLICAL 8.54%
1,575 Bassett Furniture Industries 40,950
800 Dillards Dept. Stores, Inc. Cl A 27,700
200 May Department Stores 9,650
8,300 O'Sullivan Industries, Inc. 48,762
425 Penney (J.C.) & Co., Inc. 21,143
2,200 Stride Rite Corp. 20,075
552 Limited (The), Inc. 10,488
1,500 Wal-Mart Stores, Inc. 34,687
213,456
CONSUMER STAPLES 4.09%
1,000 Archer Daniels Midland Co. 18,375
1,500 Exabyte Corp. 24,468
1,600 Lance, Inc. 24,900
75 Rubbermaid, Inc. 2,128
2,200 Vicorp Restaurants, Inc. 32,450
102,321
ENERGY 4.12%
325 Murphy Oil Corp. 13,934
750 Phillips Petroleum Co. 29,625
1,100 Rhone-Poulenc S.A.
Sponsored ADR 28,600
1,600 USX-Marathon Group 30,800
102,959
MISCELLANEOUS 0.80%
1,100 ACX Technologies 19,937
TECHNOLOGY 3.54%
700 Apple Computer, Inc. 17,193
2,100 Brinker International 35,175
2,700 Novell, Inc. 36,112
88,481
UTILITIES 2.82%
1,100 Alcatel Alsthom CGE
Sponsored ADR 20,350
2,150 Niagara Mohawk Power Corp. 14,243
1,050 Nokia Corp.
Sponsored ADR 35,962
70,556
TOTAL COMMON STOCKS 31.09% 776,784
GOVERNMENT SPONSORED
ENTERPRISES 51.84%
$ 150,000 Federal Farm Credit Banks, 5.40%,
due March 6, 1998 148,687
100,000 Federal Farm Credit Banks, 5.20%,
due January 25, 1999 97,922
100,000 Federal Home Loan Banks, 5.30%,
due June 11, 1997 99,500
150,000 Federal Home Loan Banks, 5.035%,
due January 19, 1999 146,320
100,000 Federal National Mortgage
Association, 6.84%,
due October 3, 1997 101,657
5,000 Federal National Mortgage
Association, 6.05%,
due November 10, 1997 5,013
100,000 Federal National Mortgage
Association, 6.05%,
due January 12, 1998 100,297
86,802 Federal National Mortgage
Association, 7.00%,
due October 1, 1999 87,547
86,983 Federal National Mortgage
Association, 6.00%,
due April 1, 2001 84,941
74,688 Federal National Mortgage
Association, 7.00%,
due February 1, 2003 75,329
100,000 International Bank for
Reconstruction & Development,
5.875%, due July 16, 1997 100,109
100,000 Tennessee Valley Authority, 5.95%,
due September 15, 1998 99,969
150,000 Tennessee Valley Authority, 6.00%,
due November 1, 2000 148,171
TOTAL GOVERNMENT SPONSORED
ENTERPRISES 51.84% 1,295,464
U.S. GOVERNMENT SECURITIES 0.99%
5,000 U.S. Treasury Notes, 4.75%,
due February 15, 1997 4,969
5,000 U.S. Treasury Notes, 6.125%,
due May 31, 1997 5,028
5,000 U.S. Treasury Notes, 5.625%,
due August 31, 1997 4,996
5,000 U.S. Treasury Notes, 5.375%,
due November 30, 1997 4,970
5,000 U.S. Treasury Notes, 5.125%,
due February 28, 1998 4,942
TOTAL U.S. GOVERNMENT
securities 0.99% 24,907
REPURCHASE AGREEMENT 13.81%
345,000 Northern Trust Co.,
4.85%, due April 1, 1996
(Collateralized by U.S.
Treasury Notes, 5.75%,
due September 30, 1997) 345,000
TOTAL INVESTMENTS 97.73% $ 2,442,156
Other assets less liabilities 2.27% 56,625
TOTAL NET ASSETS 100.00%
(equivalent to $10.22 per share;
10,000,000 shares of $1.00 par
value capital shares authorized;
244,489.925 shares outstanding) $ 2,498,781
BASIS OF DETERMINING MARKET VALUE. Each investment is valued at
the latest sales price on March 31, 1996, as reported by the
principal exchange on which the issue is listed. If no sale is
reported, or if unlisted, the average of the latest
bid and asked price is used.
This report has been prepared for the information of the
Shareholders of Scout Balanced 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.
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
Jack G. Dyer, Vice President
Manager and Investment Counsel
UMB Bank, n.a., 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
