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, 1997
TO THE SHAREHOLDERS
Scout Balanced Fund's total return (price change and reinvested distributions)
for the quarter ended March 31, 1997, was 0.10%. The Lipper Balanced Fund
Index had a return of 0.43% 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.
The first quarter of 1997 perhaps confirms many analysts' theories that the
bull market is at least due for a rest. Profits have been easy in the last
couple of years for those managers utilizing momentum investing and passive
investment strategies. Although both of these styles were quite successful in
1995 and 1996, the peak may have come and gone. According to Lipper Analytical
Services, the average mutual fund lost nearly 2% during the first quarter of
this year - obviously not the kind of returns likely to satisfy today's
inexperienced investors. The rollercoaster-like environment of the current
market may cause some of these investors to move from stocks to more balanced
assets.
Investors (not ours) may not realize they lost money, but most have now heard
of Alan Greenspan, the "villain" who raised the Federal Funds rate by 0.25% to
5.50%. Should stock and bond prices continue their descent, the Federal
Reserve will certainly be blamed; however, a look at bond prices relative to
the rate increase shows that perhaps the Federal Reserve was more reactionary
in its decision. Rates on both short and long term investments had risen
substantially from their early 1996 lows BEFORE the Federal Reserve raised the
Fed Funds rate. The big question looming in the minds of investors now is
"When will the Federal Reserve raise rates again and by how much?". Only time
will tell.
Top 10 Equity Holdings
Market Percent
Value of Total
Alcatel Alsthom $ 142,500 1.75%
O'Sullivan Industries Hldgs. Inc. 126,250 1.55%
Bassett Furniture Industries Inc. 120,000 1.48%
Bob Evans Farms 110,000 1.35%
Mylan Laboratories Inc. 104,125 1.28%
Rubbermaid Inc. 99,500 1.23%
Cyprus Amax Mineral Co. 95,000 1.17%
B. I. Inc. 91,500 1.13%
Florida Progress Corp. 91,125 1.12%
Dominion Resources Inc. VA 90,938 1.12%
Top 10 Equity Holdings Total: $ 1,070,938 13.18%
Note: All market values based on 3/31/97 statement of assets.
Scout Balanced Fund remains defensively invested. However, the recent weakness
in the capital markets has created opportunity, especially in mid-cap
equities, small-cap equities, and fixed income securities. The Fund's equity
weighting increased from 30.11% to 34.28% during the first quarter, and the
fixed income portfolio was lengthened from 3.3 years (yielding 6.21% to
maturity) to 3.7 years (yielding 6.77% to maturity).
We welcome new shareholders and appreciate your continued support. Please feel
free to call with questions or comments.
GRAPH -- Sector Diversification
(Percent of Equity Holdings)
Sincerely,
/s/Christopher P. Bloomstran
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, 1997
Market
Shares Company Value
COMMON STOCKS - 34.67%
BASIC MATERIALS - 6.28%
3,500 ACX Technologies $ 67,375
13,200 Amax Gold Inc. 89,100
4,500 Brush Wellman, Inc. 81,562
4,000 Cyprus Amax Minerals Co. 95,000
4,000 Huntco, Inc. Cl. A 48,500
425 International Paper Co. 16,522
2,000 Newmont Mining Corp. 77,500
1,500 Worthington Industries, Inc. 28,688
504,247
CAPITAL GOODS - 2.43%
1,500 Browning Ferris Industries 43,312
7,000 Calgon Carbon Corp. 77,000
5,000 Giddings & Lewis, Inc. 74,375
194,687
CONSUMER CYCLICAL - 7.00%
12,000 B. I. Inc. 91,500
5,000 Bassett Furniture Industries, Inc. 120,000
2,500 Dillards Dept. Stores, Inc. Cl A 78,750
2,000 Limited (The), Inc. 36,750
200 May Department Stores Co. 9,100
10,000 O'Sullivan Industries, Inc. 126,250
425 Penney (J.C.) & Co., Inc. 20,241
2,500 Stride Rite Corp. 37,500
1,500 Wal-Mart Stores, Inc. 41,812
561,903
CONSUMER STAPLES - 8.78%
3,000 Archer-Daniels-Midland Co. 53,625
8,000 Bob Evans Farms Inc. 110,000
6,000 Brinker International 75,750
10,000 Darden Restaurants, Inc. 78,750
1,500 Fuji Photo Film
Unsponsored ADR 49,125
4,000 Lance, Inc. 72,000
7,000 Mylan Laboratories Inc. 102,375
4,000 Rubbermaid, Inc. 99,500
5,000 VICORP Restaurants, Inc. 63,750
704,875
ENERGY - 1.93%
92 Deltic Timber Corp. 2,611
1,000 Kerr McGee Corp. 61,875
325 Murphy Oil Corp. 15,275
750 Phillips Petroleum Co. 30,656
1,600 USX-Marathon Group 44,600
155,017
FINANCE - 0.05%
200 Echelon International Corp. 3,625
TECHNOLOGY - 4.30%
6,000 Alcatel Alsthom Sponsored ADR 142,500
4,000 Apple Computer, Inc. 73,000
6,000 Exabyte Corp. 72,750
6,000 Novell, Inc. 57,000
345,250
UTILITIES - 3.90%
2,500 Dominion Resources Inc. V.A. 90,938
3,000 Florida Progress Corp. 91,125
4,150 Niagara Mohawk Power Corp. 35,275
4,025 Unicom Corp. 78,487
500 U. S. West Communication
Group 17,000
312,825
TOTAL COMMON STOCKS - 34.67% 2,782,429
Face Market
Amount Description Value
SHORT-TERM CORPORATE NOTES - 12.43%
$ 100,000 Ameritech Corp.,
5.22%, due April 2, 1997 99,971
100,000 Armstrong World Industries,
5.24%, due April 4, 1997 99,942
100,000 du Pont (E.I.) de Nemours & Co.,
5.22%, due April 8, 1997 99,884
100,000 Engelhard Corp.,
5.47%, due April 21, 1997 99,681
100,000 General Mills Inc.,
5.32%, due April 18, 1997 99,734
100,000 General Re Corp.,
5.53%, due April 25, 1997 99,616
100,000 Gillette Co.,
5.27%, due April 10, 1997 99,854
100,000 Marsh & McLennan Cos. Inc.,
5.65%, due April 15, 1997 99,765
100,000 Marsh & McLennan Cos. Inc.,
5.60%, due April 28, 1997 99,564
100,000 Pepsico Inc.,
5.27%, due April 9, 1997 99,868
TOTAL SHORT TERM
CORPORATE NOTES - 12.43% 997,879
GOVERNMENT SPONSORED
ENTERPRISES - 36.70%
$ 150,000 Federal Farm Credit Banks,
5.40%, due March 6, 1998 148,945
100,000 Federal Farm Credit Banks,
5.20%, due January 25, 1999 97,766
100,000 Federal Home Loan Banks,
6.055% due, April 17, 1998 99,828
150,000 Federal Home Loan Banks,
5.035%, due January 19, 1999 146,296
100,000 Federal Home Loan Banks,
5.86%, due April 2, 1999 98,625
100,000 Federal Home Loan Banks,
5.50%, due January 10, 2001 95,531
100,000 Federal Home Loan Banks,
5.96%, due October 20, 2000 97,312
150,000 Federal Home Loan Banks,
6.75%, due April 5, 2004 147,046
150,000 Federal Home Loan
Mortgage Corporation,
6.745%, due August 1, 2001 149,039
200,000 Federal Home Loan
Mortgage Corporation,
6.704%, due January 1, 2007 191,782
150,000 Federal Home Loan
Mortgage Corporation, Debentures,
6.99%, due July 5, 2006 147,258
200,000 Federal National Mortgage
Association,
6.23%, due September 25, 1998 199,500
100,000 Federal National Mortgage
Association,
5.55%, due March 12, 1999 99,250
69,334 Federal National Mortgage
Association,
7.00%, due October 1, 1999 69,414
150,000 Federal National Mortgage
Association,
6.29%, due October 4, 2000 147,464
77,108 Federal National Mortgage
Association,
6.00%, due April 1, 2001 74,705
150,000 Federal National Mortgage
Association,
7.05%, due November 12, 2002 150,141
63,833 Federal National Mortgage
Association,
7.00%, due February 1, 2003 63,490
150,000 Federal National Mortgage
Association,
6.71%, due May 21, 2003 147,656
150,000 Federal National Mortgage
Association,
6.72%, due August 1, 2005 145,880
200,000 Federal National Mortgage
Association,
6.14%, due November 25, 2005 184,010
100,000 Tennessee Valley Authority,
5.95%, due September 15, 1998 98,375
150,000 Tennessee Valley Authority,
6.00%, due November 1, 2000 146,016
TOTAL GOVERNMENT
SPONSORED ENTERPRISES - 36.70% 2,945,329
U.S. GOVERNMENT SECURITIES - 12.17%
250,000 U.S. Treasury Notes,
5.625%, due November 30, 1998 247,110
250,000 U.S. Treasury Notes,
5.875%, due November 15, 1999 245,860
250,000 U.S. Treasury Notes,
5.75%, due October 31, 2000 242,617
250,000 U.S. Treasury Notes,
5.875%, due November 30, 2001 241,210
TOTAL U.S. GOVERNMENT
SECURITIES - 12.17% 976,797
REPURCHASE AGREEMENT - 5.04%
405,000 Northern Trust Co., 6.20%,
due April 1, 1997
(Collateralized by U.S.
Treasury Notes, 6.50%,
due May 15, 1997) 405,000
TOTAL INVESTMENTS - 101.01% $ 8,107,434
Other assets less liabilities - (1.01%) (81,049)
TOTAL NET ASSETS - 100.00%
(equivalent to $10.34 per share;
10,000,000 shares of $1.00 par value
capital shares authorized; 775,906
shares outstanding) $ 8,026,385
BASIS OF DETERMINING MARKET VALUE. Each investment is valued at the latest
sales price on March 31, 1997, 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.
Eric T. Jager
Stephen F. Rose
Stuart Wien
Officers
Larry D. Armel, President
P. Bradley Adams, Vice President & Treasurer
Elizabeth L. Allwood, Vice President
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 1-800-996-2862
