BABSON
Value
FUND
Semiannual Report
May 31, 1996
JONES & BABSON
MUTUAL FUNDS
MESSAGE
To Our Shareholders
At the close of the first half of our 1996 fiscal year net assets of
Babson Value Fund had reached $493 million, up sharply from $293 million
at the end of the fiscal year ended November 30, 1995, and $202 million
a year ago. Net assets crossed the $500 million mark for the first time
a short time later, and are at $513 million as this report is being
written. Thus, your Fund is participating nicely in the strong inflow of
money into equity mutual funds that has been at record levels through
the first five months of 1996. This surge began in November, 1994, which
was the start of the sustained upward move in stock prices that we have
enjoyed since then.
Total return (price change and reinvested distributions), was 6.7% for
the quarter, and 12.9% for the six months ended May 31, 1996. For the
same periods the returns of the unmanaged Standard & Poor's 500 stock
index of larger company stocks were 5.0% and 11.7%, respectively.
Average annual compounded total returns for one, five and ten year
periods as of June 30, 1996, were 23.54%, 17.71% and 13.62%,
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. The longer term comparisons of
the Fund with its peers for three, five and ten years are intact as
shown in the tables on the previous page. We are particularly pleased
with our very favorable return ranking over the last three years since
it occurred while the growth style of investing was favored for most of
the period, and our returns were achieved with a risk level that was
more than 40% lower than the average equity fund as calculated by
Morningstar.
Net asset value per share rose from $31.78 on November 30, 1995, to
$35.19 at the end of May. In March an ordinary income dividend of $0.12
was distributed. For shareholders who elected reinvestment, the
distribution was reinvested at a price of $32.84 per share on March 8,
1996. In addition, the year-end distributions of $0.1671 of ordinary
income and $0.3395 in long term capital gains were reinvested on
December 22, 1995 at a price of $31.47 per share.
Turnover has remained low reflecting the continued emphasis on companies
with price momentum in the stock market. In the latest period, the only
company eliminated was our holding of Eli Lilly, a leading
pharmaceutical producer. The shares had risen dramatically from our
early purchases in the range of $22-$28 (after adjustment of a 2-for-1
split), and had displayed waning relative price strength when they were
sold in May at $57. Since earlier spin-offs had increased the number of
companies in the portfolio to 42 from our normal level of 40, the
company was not replaced by a new one. Shortly after the end of the
fiscal half, the Guidant shares we received as a spinoff from Lilly were
also sold at a substantial profit, completing the reduction in the
number of portfolio companies to 40.
The Fund continues to have attractive valuation characteristics. The
average price/earnings ratio based on estimated earnings for 1996 for
the companies in the Fund is only 14.7, compared with 16.7 times for the
S&P 500 companies. The average price to book value of the Fund's
companies is 2.6, compared to 4.6 for the S&P 500 companies, and their
current yield is higher.
The stock market's strength has occurred in an environment of rising
interest rates and falling bond prices. This represents an uncoupling of
the two markets. Stock and bond prices moved sharply higher in tandem
during 1995, and during the terrible bond market of 1994, stocks were
stagnant in spite of sharply higher earnings, held down by competition
form higher bond yields.
Although there has been a minor increase in inflation recently, and the
economy was stronger than expected in the first quarter, we continue to
view prospects for economic growth as moderate and we don't expect
inflation to gather a head of steam. While the higher levels of stock
prices may be viewed as riskier, Babson Value Fund's risk levels have
been very moderate over the last five years. The value style of
investing generally carries a lower level of risk or volatility than the
growth style. For these reasons we think our Fund has appeal for
investors who wish to remain invested in equities for the long term, but
who may wish to reduce their risk profiles.
We appreciate your continued use of Babson Value Fund in your investment
program.
Sincerely,
/s/Larry D. Armel
Larry D. Armel
President
Babson Value Fund
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Comparison with all 05/31/95 to 05/31/93 to 05/31/91 to 05/31/86 to
Lipper Growth & Income Funds 05/31/96 05/31/96 05/31/96 05/31/96
</CAPTION>
<S> <C> <C> <C> <C>
Babson Value Fund Total Return 26.70% 20.47% 16.53% 13.82%
Lipper Growth & Income Funds Average Total Return 25.24% 14.69% 13.46% 12.00%
BVF Rank among Lipper Growth & Income Funds 178 3 13 17
# of Lipper Growth & Income Funds 483 280 204 119
Babson Value Fund Percentile, Top 37% 1% 6% 14%
</TABLE>
Source: Lipper Analytical Securities Corporation
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Comparison with all 05/31/95 to 05/31/93 to 05/31/91 to 05/31/86 to
Morningstar Growth & Income Funds 05/31/96 05/31/96 05/31/96 05/31/96
</CAPTION>
<S> <C> <C> <C> <C>
Babson Value Fund Total Return 26.70% 20.47% 16.53% 13.82%
Morningstar Growth & Income Funds Average Total Return 25.49% 14.57% 13.05% 11.39%
BVF Rank among Morningstar Growth & Income Funds 187 2 11 13
# of Morningstar Growth & Income Funds 464 283 197 110
Babson Value Fund Percentile, Top 40% 1% 6% 12%
</TABLE>
Source: Morningstar, Inc.
Note: All returns for periods of longer than one year are compound
annual rates.
All returns for Babson Value Fund are net of all fees and
expenses.
Returns for the growth and income averages are net of fees and
expenses, but do not include the impact of sales charges.
Morningstar includes S&P 500 index funds in its Growth & Income
Fund category, while Lipper has a separate category.
STATEMENT OF NET ASSETS
May 31, 1996 (unaudited)
MARKET VALUE
SHARES COMPANY (NOTE 1-A)
COMMON STOCKS - 93.78%
AEROSPACE - 4.72%
131,000 Boeing Co. $ 11,167,750
144,000 Lockheed Martin Corp. 12,078,000
23,245,750
AIRLINES - 2.39%
332,000 KLM Royal Dutch Airlines 11,786,000
BANKS - 9.29%
154,000 Chase Manhattan Corp. 10,780,000
199,000 First Bank System, Inc. 12,014,625
328,000 National City Corp. 11,685,000
47,033 Wells Fargo & Co. 11,334,953
45,814,578
CHEMICALS - 2.43%
150,000 duPont (E.I.) deNemours & Co. 11,962,500
COMPUTER SOFTWARE - 2.27%
167,000 Shared Medical Systems Corp. 11,168,125
COMPUTER SYSTEMS - 4.59%
409,000 Apple Computer Inc. 10,685,125
112,000 International Business
Machines Corp. 11,956,000
22,641,125
CONSUMER PRODUCTS - 6.70%
434,889 Grand Metropolitan PLC, ADR 11,687,642
670,000 Huffy Corp. 9,128,750
402,000 Reebok International Ltd. 12,210,750
33,027,142
DIVERSIFIED - 2.35%
793,000 Hanson PLC, ADR 11,597,625
ENVIRONMENTAL CONTROL - 2.41%
715,000 Safety-Kleen Corp. 11,886,875
FINANCIAL SERVICES - 11.49%
249,000 American Express Co. 11,391,750
265,000 Salomon Inc. 11,096,875
309,000 Student Loan Corp. 11,085,375
148,000 Student Loan Marketing Assn. 11,007,500
149,000 Transamerica Corp. 12,069,000
56,650,500
FOREST PRODUCTS AND PAPER - 6.92%
291,000 Potlatch Corp. 12,003,750
239,000 Weyerhaeuser Co. 10,844,625
188,000 Willamette Industries, Inc. 11,280,000
34,128,375
HEALTH - 3.23%
78,605 Guidant Corp. 4,559,090
529,000 Tenet Healthcare 11,373,500
15,932,590
INSURANCE - 7.18%
162,000 Aetna Life & Casualty Co. 11,947,500
285,000 Allstate Corporation 12,041,250
78,000 General Re Corp. 11,388,000
35,376,750
OFFICE EQUIPMENT AND SUPPLIES - 4.31%
157,000 Wallace Computer Services, Inc. 9,420,000
75,000 Xerox Corp. 11,803,125
21,223,125
PETROLEUM - 4.50%
95,000 Atlantic Richfield Co. 11,364,375
72,000 Royal Dutch Petroleum Co. 10,800,000
22,164,375
PROFESSIONAL SERVICES - 4.79%
309,600 ABM Industries, Inc. 11,803,500
213,000 PHH Corp. 11,794,875
23,598,375
RETAIL - 9.86%
247,000 Harcourt General, Inc. 12,535,250
1,165,000 K mart Corp. 13,543,125
220,000 Penney (J.C.) Co., Inc. 11,412,500
218,000 Sears, Roebuck & Co. 11,090,750
48,581,625
TRANSPORTATION - 2.05%
540,000 Overseas Shipholding Group, Inc. 10,125,000
UTILITIES - 2.30%
277,000 Texas Utilities Co. 11,322,375
TOTAL COMMON STOCKS - 93.78% 462,232,810
MARKET VALUE
FACE AMOUNT DESCRIPTION (NOTE 1-A)
SHORT-TERM CORPORATE NOTES - 6.29%
$ 4,000,000 Ford Motor Credit Co.,
5.29%, due June 12, 1996 4,000,000
5,000,000 Ford Motor Credit Co.,
5.28%, due June 19, 1996 5,000,000
2,000,000 General Electric Capital Corp.,
5.32%, due June 5, 1996 2,000,000
4,000,000 General Electric Capital Corp.,
5.28%, due June 12, 1996 4,000,000
2,000,000 General Motors Acceptance Corp.,
5.25%, due June 5, 1996 2,000,000
5,000,000 General Motors Acceptance Corp.,
5.22%, due June 26, 1996 5,000,000
4,000,000 Sears Roebuck Acceptance Corp.,
5.25%, due June 5, 1996 4,000,000
2,000,000 Sears Roebuck Acceptance Corp.,
5.25%, due June 19, 1996 2,000,000
3,000,000 Sears Roebuck Acceptance Corp.,
5.29%, due June 19, 1996 3,000,000
TOTAL SHORT-TERM
CORPORATE NOTES - 6.29% 31,000,000
REPURCHASE AGREEMENT - 1.26%
6,250,000 UMB Bank, n.a.,
4.75%, due June 3, 1996
(Collateralized by U.S.
Treasury Notes, 7.50%,
due December 31, 1996) 6,250,000
TOTAL INVESTMENTS - 101.33% $ 499,482,810
Other assets less liabilities - (1.33%) (6,577,242)
TOTAL NET ASSETS - 100.00%
(equivalent to $35.19 per share;
20,000,000 shares of $1.00 par
value capital shares authorized;
14,007,362 shares outstanding) $ 492,905,568
STATEMENT OF ASSETS
AND LIABILITIES
May 31, 1996 (unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments in securities:
Common stocks, at market value (identified cost $370,400,593) $ 462,232,810
Short-Term corporate notes, at cost - approximates market value 31,000,000
Repurchase agreement, at cost - approximates market value 6,250,000
Total investments 499,482,810
Cash 1,369,743
Dividends receivable 1,114,989
Interest receivable 45,152
Total assets 502,012,694
LIABILITIES AND NET ASSETS:
Payable for investments purchased 9,107,126
Total liabilities 9,107,126
NET ASSETS $ 492,905,568
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 392,729,715
Accumulated undistributed income:
Undistributed net investment income 6,651,957
Undistributed net realized gain on investment transactions 1,691,679
Net unrealized appreciation in value of investments 91,832,217
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 492,905,568
Capital shares, $1.00 par value
Authorized 20,000,000
Outstanding 14,007,362
NET ASSET VALUE PER SHARE $ 35.19
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Six Months Ended May 31, 1996 (unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends $ 4,191,491
Interest 745,108
4,936,599
Expenses (Note 2):
Management fees 1,789,502
Registration fees and expenses 64,579
1,854,081
Net investment income (Note 1-B) 3,082,518
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain from investment transactions (excluding maturities of
short-term commercial notes and repurchase agreements):
Proceeds from sales of investments 7,229,651
Cost of investments sold 5,504,265
Net realized gain from investment transactions 1,725,386
Unrealized appreciation of investments:
Beginning of period 49,773,134
End of period 91,832,217
Unrealized appreciation of investments during the period 42,059,083
Net gain on investments 43,784,469
Increase in net assets resulting from operations $ 46,866,987
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
May 31, 1996 November 30,
(unaudited) 1995
</CAPTION>
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 3,082,518 $ 4,230,069
Net realized gain from investment transactions 1,725,386 3,229,264
Unrealized appreciation of investments during the period 42,059,083 45,123,545
Net increase in net assets resulting from operations 46,866,987 52,582,878
Net equalization included in the price of shares issued and redeemed 1,898,897 1,782,297
DISTRIBUTIONS TO SHAREHOLDERS FROM:**
Net investment income (2,901,081) (3,843,830)
Net realized gain from investment transactions (3,264,428) (2,881,610)
Total distributions to shareholders (6,165,509) (6,725,440)
INCREASE FROM CAPITAL SHARE TRANSACTIONS:*
Proceeds from shares sold 182,767,284 160,790,293
Net asset value of shares issued for reinvestment of distributions 4,626,129 5,928,779
187,393,413 166,719,072
Cost of shares repurchased (30,446,853) (40,566,129)
Net increase from capital share transactions 156,946,560 126,152,943
Total increase in net assets 199,546,935 173,792,678
NET ASSETS:
Beginning of period 293,358,633 119,565,955
End of period (including undistributed net investment income
of $6,651,957 and $4,571,623, respectively) $ 492,905,568 $ 293,358,633
*Shares issued and repurchased:
Number of shares sold 5,555,588 5,705,141
Number of shares issued for reinvestment of distributions 145,698 225,453
5,701,286 5,930,594
Number of shares repurchased (924,253) (1,446,569)
Net increase 4,777,033 4,484,025
**Distributions to shareholders:
Income dividends per share $ .282 $ .60
Capital gains distribution per share $ .3446 $ .6036
</TABLE>
See accompanying Notes to Financial Statements.
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.
A. Security Valuation - Corporate stocks and bonds traded on a national
securities exchange are valued at the latest sales price, or if no sale
was reported on that date, the mean between the closing bid and asked
price is used.
Securities which are traded over-the-counter are priced at the mean
between the latest bid and asked price. Securities not currently traded
are valued at fair value as determined by the Board of Directors.
B. Federal and State Taxes - It is the Fund's policy 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.
C. Equalization - The Fund uses the accounting practice of 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.
D. Other - Security transactions are accounted for on the date the
securities are purchased or sold. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Realized gains and
losses from investment transactions and unrealized appreciation and
depreciation of investments are reported on the identified cost basis.
2. MANAGEMENT FEES:
Management fees are paid to Jones & Babson, Inc. at the
rate of .95 of 1% per annum of the average daily net asset value of the
Fund for services which include administration, and all other operating
expenses of the Fund except the cost of acquiring and disposing of
portfolio securities, the taxes, if any, imposed directly on the Fund
and its shares and the cost of qualifying the Fund's shares for sale in
any jurisdiction. Certain officers and/or directors of the Fund are also
officers and/or directors of Jones & Babson, Inc.
3. INVESTMENT TRANSACTIONS:
Investment transactions for the period ended May 31, 1996 (excluding
maturities of short-term commercial notes and repurchase agreements) are
as follows:
Purchases $ 149,443,242
Proceeds from sales 7,229,651
This report has been prepared for the information of the Shareholders of
Babson Value 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 Babson Funds
are offered only by the Prospectus, a copy of which may be obtained from
Jones & Babson, Inc.
BOARD OF DIRECTORS
Larry D. Armel
Francis C. Rood
William H. Russell
H. David Rybolt
OFFICERS
Larry D. Armel
President
P. Bradley Adams
Vice President & Treasurer
Michael A. Brummel
Vice President
Martin A. Cramer
Vice President & Secretary
David G. Kirk
Vice President
Roland W. Whitridge
Vice President - Portfolio
INVESTMENT COUNSEL
David L. Babson & Co. Inc.
Cambridge, Massachusetts
INDEPENDENT AUDITORS
Ernst & Young LLP
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
EQUITIES
Growth Fund
Enterprise Fund*
Enterprise Fund II
Value Fund
Shadow Stock Fund
International Fund
FIXED INCOME
Bond Trust
Money Market Fund
Tax-Free Income Fund
*Closed to new investors.
JONES & BABSON
MUTUAL FUNDS
2440 Pershing Road
Kansas City, MO 64108-2518
816-471-5200
1-800-4-BABSON
(1-800-422-2766)
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 407650593
<INVESTMENTS-AT-VALUE> 499482810
<RECEIVABLES> 1160141
<ASSETS-OTHER> 1369743
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 502012694
<PAYABLE-FOR-SECURITIES> 9107126
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 9107126
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 392729715
<SHARES-COMMON-STOCK> 14007362
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 6651957
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 16916797
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 91832217
<NET-ASSETS> 492905568
<DIVIDEND-INCOME> 4191491
<INTEREST-INCOME> 745108
<OTHER-INCOME> 0
<EXPENSES-NET> 1854081
<NET-INVESTMENT-INCOME> 3082518
<REALIZED-GAINS-CURRENT> 1725386
<APPREC-INCREASE-CURRENT> 42059083
<NET-CHANGE-FROM-OPS> 46866987
<EQUALIZATION> 1898897
<DISTRIBUTIONS-OF-INCOME> 2901081
<DISTRIBUTIONS-OF-GAINS> 3264428
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5555588
<NUMBER-OF-SHARES-REDEEMED> 924253
<SHARES-REINVESTED> 145698
<NET-CHANGE-IN-ASSETS> 199546935
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<GROSS-ADVISORY-FEES> 1789502
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1854081
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> .282
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .282
<PER-SHARE-DISTRIBUTIONS> .345
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
