Shadow
Stock
Fund
Semiannual Report
December 31, 1998
MESSAGE
To Our Shareholders
Shadow Stock Fund's total return (price change and reinvested distributions)
for the semiannual period ended December 31, 1998 was -6.7%. While negative,
this compared favorably to the -7.1% recorded by the unmanaged Russell 2000
index of small capitalization stocks and the average -10.8% decline in the
Morningstar Small Cap Value universe. The Fund's average annual compounded
total returns for the most recent one, three, five and ten year periods ended
December 31, 1998, are summarized in the table below:
Investment Results - Total Return
Periods Ended 12/31/98
1 Year 3 Years 5 Years 10 Years
Shadow Stock Fund -1.5% 15.1% 12.5% 11.9%
Russell 2000* -2.6% 11.6% 11.9% 12.9%
Lipper Micro Cap
Fund Avg.* -1.4% 15.4% 11.1% 10.1%
Morningstar Small Cap
Value Avg.* -6.7% 13.9% 12.6% 12.1%
Morningstar Small Cap
Value Avg.* (Funds with
Median Market Cap
< $200 Million) -9.9% 13.0% 10.0% 9.7%
*Unmanaged stock index
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 Fund's returns compare favorably with the Russell 2000 for all the
trailing periods shown above except for 10 years. Comparisons with the Lipper
Micro Cap universe were favorable for the longer two periods, but lagged for
one and three years, a period in which the market's focus has been on growth.
Against the
Morningstar Small Cap Value peer group results were strong for the two
shorter periods, and lagged slightly for the longer periods. However, if the
comparison is narrowed to include only funds with median market
capitalizations smaller than $200 million (Shadow Stock Fund's median is only
$140 million) the comparisons are quite favorable across the board.
Several of our holdings had spectacular returns for the last six months led
by Egghead, National Information and Tarrant Apparel that all doubled or
more. Their outstanding performance resulted in their market capitalizations
and/or their price-to-book value ratios becoming too high to be retained in
the Fund, and all three were sold in January. Joining these three, other
holdings that more than doubled for the calendar year were Dataram, Bangor
Hydro-Electric, and Stewart Information Services. Another ten holdings
returned between 50 and 100%.
A few other outstanding holdings were sold during the last six months. Among
them were Doral Financial where total proceeds represented a gain of 811%
over cost, RLI Corp. with a 466% gain and Landamerica Financial which had
increased 221% in value. While few of these outstanding investments had
become widely known to investors generally, their strong appreciation
certainly had removed them from the shadows of Wall Street.
Although we had many successes, Wall Street is not a one way street when it
comes to investment returns. We had our share of negative returns as well,
and companies were also sold that had lost money in recent operations,
dropped to market capitalizations below our minimum of $20 million, or fallen
to prices below $4 per share. These companies were also sold, but they
typically had small market values compared to the successes that had grown
too large to hold, and stay true to our microcap charter. The degree to which
the successes outweighed the failures was apparent in the year-end capital
gain distribution. On December 17, ordinary income dividends of $0.14 per
share (including short-term capital gains of $0.10) and realized capital
gains of $0.58 per share were distributed and reinvested at $11.15 per share.
We had taken steps to minimize the distribution by postponing the sales of
Tarrant Apparel, Egghead and National Information until after the end of the
calendar year in order to soften the tax impact of the gains for our taxable
shareholders.
The Fund's valuation characteristics put it in a favorable position relative
to the indices and peer groups. The average price/earnings ratio of the
Fund's holdings on estimated 1999 earnings is 11.8, compared to 18.2 for the
unmanaged Standard & Poor's Small Cap 600 and 25.9 for the unmanaged large
cap Standard & Poor's 500. Forward P/E ratios are not available for the
Russell 2000, but Morningstar reports the trailing P/E of the Fund to be 17.5
compared to 23.8 for the Russell 2000. Price-to-book value comparisons are
also compelling. The Fund's 1.5 P/B ratio is significantly lower than the
Russell 2000's 4.1 and 2.5 for the Morningstar Small Cap Value category.
"Value" and small market capitalizations have been out of favor for and
extended period and are now at historic extremes. We believe the resulting
valuations should begin to attract attention when the market shifts its
preference once again toward the characteristics that have led to favorable
results over long periods of time.
We appreciate your continued interest in the Fund, and look forward to being
part of your investment program in the future.
Sincerely,
/s/Larry D. Armel
Larry D. Armel
President
STATEMENT OF NET ASSETS
December 31, 1998 (unaudited)
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 98.34%
BASIC MATERIALS - 3.80%
14,101 Aceto Corp. $ 186,838
15,200 American Pacific Corp. 119,700
8,500 Badger Paper Mills, Inc. 68,000
4,480 Baltek Corp. 44,240
40,600 Global Industrial Technologies, Inc. 433,912
17,700 Hauser Chemical Research, Inc. 78,544
14,417 Insteel Industries, Inc. 70,283
13,200 Pitt-Des Moines, Inc. 316,800
19,000 Roanoke Electric Steel Corp. 279,062
8,500 Stephan Co. 87,125
17,500 Tuscarora, Inc. 234,062
1,918,566
CAPITAL GOODS - 16.74%
8,900 AG Services of America 127,381
7,200 American Technical Ceramics Corp. 47,700
11,044 Athey Products Corp. 27,610
11,000 Autocam Corp. 181,500
3,600 Badger Meter, Inc. 128,250
15,000 Baker (Michael) Corp. 146,250
5,727 Binks Manufacturing Co. 94,495
14,000 Blonder Tongue Labs. 92,750
29,900 Building Materials Holding Corp. 362,537
16,300 Cameron Ashley Building Products, Inc. 212,919
21,000 Cascade Corp. 332,062
14,800 Ceradyne, Inc. 53,650
20,200 Cherry Corp. Cl. A 308,050
9,000 Cherry Corp. Cl. B 124,875
17,000 Coastcast Corp. 148,750
7,000 Devcon International Corp. 18,375
9,300 Diodes, Inc. 46,500
7,315 Ecology and Environment, Inc. Cl. A 67,664
19,100 Engle Homes, Inc. 292,469
14,800 Exponent, Inc. 88,800
15,000 Farr Co. 151,875
14,300 Fibermark, Inc. 194,837
18,900 GP Strategies Corp. 283,500
11,500 Gehl Co. 176,812
3,150 Graham Corp. 24,412
8,000 Heist (C.H.) Corp. 52,000
23,006 Intermagnetics General Corp. 140,912
13,100 JLM Industries 67,137
7,600 Liberty Homes, Inc. Cl. A 80,750
15,100 M/I Schottenstein Homes, Inc. 332,200
16,800 Mestek, Inc. 336,000
23,112 Met-Pro Corp. 288,900
22,950 Monaco Coach Corp. 608,175
16,000 Nanometrics, Inc. 125,000
6,300 Noland Co. 166,950
12,000 Northwest Pipe Co. 193,500
16,300 Novametrix Medical Systems, Inc. 116,137
6,000 Oilgear Co. 73,125
9,600 Oriole Homes Corp. Cl. A 22,800
28,800 OOSullivan Corp. 284,400
3,200 Penn Engineering & Manufacturing
Corp. (voting) 71,600
11,900 Penn Engineering & Manufacturing
Corp. (non-voting) 266,262
10,200 Puerto Rican Cement Co., Inc. 356,362
10,000 Selas Corp. of America 82,500
9,600 SL Industries, Inc. 122,400
9,426 Southwest Water Co. 147,281
26,900 Symmetricom, Inc. 179,894
25,700 URS Corp. New 600,737
8,449,045
CONSUMER CYCLICAL - 20.05%
21,600 Amplicon, Inc. 325,350
6,600 Analysis & Technology, Inc. 132,000
15,000 Ben & Jerry's Homemade, Inc. Cl. A 335,625
28,200 Bon-Ton Stores, Inc. 215,025
19,200 Carmike Cinemas, Inc. Cl. A 390,000
9,000 Childtime Learning Centers, Inc. 131,625
17,000 Conso Products Co. 99,875
15,000 Deckers Outdoor Corp. 32,812
6,750 Decorator Industries, Inc. 53,367
20,900 Dixie Group, Inc. Cl. A 169,812
9,500 Duckwall-Alto Stores, Inc. 125,875
38,200 Egghead, Inc. 795,037
9,300 ELXSI Corp. 117,412
12,750 Equinox Systems, Inc. 153,000
2,700 Federal Screw Works 134,325
13,100 Gart Sports Co. 85,150
8,400 Globe Business Resources, Inc. 105,000
23,200 Gottschalks, Inc. 176,900
16,700 Government Technology Services, Inc. 75,672
9,573 Hampton Industries, Inc. 59,233
28,700 InaCom Corp. 426,912
10,916 Knape & Vogt Manufacturing Co. 186,937
9,498 M/A/R/C (The) Group 100,916
18,000 Maxwell Shoe, Inc. Cl. A 196,875
8,500 McRae Industries, Inc. Cl. A 53,125
12,000 Motorcar Parts & Accessories, Inc. 137,250
21,000 Nobel Education Dynamics, Inc. 115,500
20,600 Optical Coating Laboratory, Inc. 535,600
11,000 OroAmerica Inc. 108,625
20,000 Piccadilly Cafeterias, Inc. 210,000
7,000 Pulaski Furniture Corp. 168,000
16,400 R & B, Inc. 134,275
13,700 Reading Entertainment, Inc. 107,888
14,000 Rex Stores Corp. 189,000
17,000 Rock Bottom Restaurants, Inc. 92,437
10,100 Rocky Shoes & Boots, Inc. 59,338
35,200 RPC Energy Services, Inc. 259,600
8,400 S & K Famous Brands, Inc. 77,962
14,600 Scheib (Earl), Inc. 80,300
21,285 Supreme Industries, Inc. Cl. A 204,868
12,400 Supreme International Corp. 148,800
30,000 Syms Corp. 270,000
24,000 Tarrant Apparel Group 954,000
39,500 TCBY Enterprises, Inc. 276,500
11,000 Thomaston Mills, Inc. Cl. A 35,063
1,000 Thomaston Mills, Inc. Cl. B 3,000
7,000 Trimark Holdings, Inc. 17,500
23,800 Uni-Marts, Inc. 65,450
7,875 Valley Forge Corp. 145,688
9,000 Weyco Group, Inc. 228,375
42,000 Winnebago Industries, Inc. 635,250
13,828 Wolohan Lumber Co. 179,764
10,117,893
CONSUMER STAPLES - 7.02%
9,300 Cagle's, Inc. Cl. A 181,350
15,800 Chalone Wine Group Ltd. 164,913
9,500 Christiana Companies, Inc. 182,875
4,000 Foodarama Supermarkets, Inc. 128,000
31,200 Frozen Food Express Industries, Inc. 245,700
3,200 Genesee Corp. Cl. B 74,400
38,200 Ingles Markets, Inc. Cl. A 417,813
7,325 Marsh Supermarkets, Inc. Cl. A 128,187
12,725 Marsh Supermarkets, Inc. Cl. B 189,284
19,000 Orange-Co. Inc. 125,875
22,800 Quaker Fabric Corp. 142,500
8,800 Safety Components International, Inc. 139,700
23,250 Sanderson Farms, Inc. 357,469
11,400 Seaway Food Town, Inc. 188,100
6,900 Seneca Foods Corp. Cl. A 84,525
7,900 Seneca Foods Corp. Cl. B 97,762
5,000 Span-America Medical Systems, Inc. 29,375
14,000 Swiss Army Brands, Inc. 134,750
13,000 Toastmaster Inc. 91,000
7,000 Triple S Plastics, Inc. 31,500
12,900 Vallen Corp. 258,000
10,800 Western Beef, Inc. 77,625
8,100 Zaring National Corp. 70,875
3,541,578
ENERGY - 1.43%
10,500 Adams Resources & Energy, Inc. 60,375
33,203 HS Resources, Inc. 251,098
21,500 Key Production, Inc. 112,875
9,100 Maynard Oil Co. 68,250
10,200 Prima Energy Corp. 129,413
5,000 Roanoke Gas Co. 101,562
723,573
FINANCIAL - 16.36%
6,700 Amwest Insurance Group, Inc. 95,475
19,000 Capitol Transamerica Corp. 355,063
16,500 Chartwell Re Corp. 391,875
11,952 Cotton States Life and Health
Insurance Co. 177,786
6,000 DeWolfe Companies, Inc. 45,750
20,000 EMC Insurance Group, Inc. 255,000
8,000 First Cash, Inc. 114,500
11,000 First Investors Financial
Services Group, Inc. 54,313
17,000 Guarantee Life Companies, Inc. 314,500
17,000 Homegold Financial, Inc. 8,500
11,500 Interstate/Johnson Lane, Inc. 360,094
12,300 Litchfield Financial Corp. 233,700
5,000 Merchants Group, Inc. 103,125
13,530 Meridian Insurance Group, Inc. 273,982
17,400 Midland Co. 419,775
6,100 Minuteman International, Inc. 73,963
26,100 National Discount Brokers
Group, Inc. 520,369
8,000 National Information Group 166,000
4,850 National Western Life Insurance Co. 705,000
15,400 Navigators Group, Inc. 238,700
16,500 Penn-America Group, Inc. 149,531
14,000 Penn Treaty American Corp. 391,125
13,640 Professionals Insurance Company
Management Group 422,840
22,800 PXRE Corp. 571,425
22,000 RTW, Inc. 140,250
5,550 Scott & Stringfellow Financial, Inc. 219,919
20,000 South Jersey Industries, Inc. 523,750
13,400 Stewart Information Services Corp. 777,200
4,600 Ziegler (The) Companies, Inc. 86,250
8,257,054
HEALTH CARE - 0.44%
13,000 Advocat, Inc. 72,313
18,060 Graham-Field Health Products, Inc. 60,953
13,700 Merit Medical Systems, Inc. 90,762
224,028
MISCELLANEOUS - 3.25%
14,000 Andersons, Inc. 161,875
8,910 Astronics Corp. 85,759
11,900 Celebrity, Inc. 5,950
31,400 Drypers Corp. New 102,050
10,400 Edelbrock Corp. 166,400
4,966 Enstar Group, Inc. 36,624
2,250 FRM Nexus, Inc. 7,453
MISCELLANEOUS (Continued)
21,750 Hardinge, Inc. 401,016
15,500 Hoenig Group, Inc. 112,375
10,600 Primesource Corp. 70,225
4,500 Programming and Systems, Inc. 4,500
17,400 Rottlund Inc. 69,600
2,600 Scope Industries 171,600
12,000 Sun Hydraulics Corp. 99,750
18,000 Todd AO Corp. Cl. A 144,000
1,639,177
TECHNOLOGY - 9.57%
2,100 Allen Organ Co. Cl. B 79,800
12,400 Autologic Information International, Inc. 52,700
11,400 BEI Medical Systems Company, Inc. 22,088
12,600 BEI Technologies, Inc. 118,125
17,320 Bell Industries Inc. 197,015
15,100 Bell Microproducts Inc. 139,675
22,500 Brite Voice Systems, Inc. 174,375
12,700 CPAC Inc. 95,250
10,000 Data Research Associates, Inc. 140,000
23,000 Data Systems & Software Inc. 60,375
9,200 Dataram Corp. 87,400
5,000 Datron Systems, Inc. 27,188
13,200 Del Global Technologies Corp. 151,800
11,400 DRS Technologies, Inc. 124,688
5,200 Eastern (The) Co. 131,950
11,000 Environmental Technologies Corp. 8,250
6,000 Equitrac Corp. 114,000
4,000 Espey Mfg. & Electronics Corp. 51,000
14,700 Franklin Electronic Publishers, Inc. 172,725
7,000 Giga-tronics, Inc. 15,750
13,900 IEC Electronics Corp. 57,338
15,000 IFR Systems, Inc. 69,375
16,000 Integrated Measurement System, Inc. 120,000
14,000 Interphase Corp. 98,000
10,500 Isco, Inc. 59,719
8,500 Koss Corp. 95,891
4,800 Moore Products Co. 117,600
16,400 Newport Corp. 276,750
23,600 Nichols Research Corp. 492,650
18,200 Norstan, Inc. 323,050
16,000 Powell Industries, Inc. 160,000
8,900 Programmer's Paradise, Inc. 112,363
4,300 Quipp, Inc. 81,700
8,000 Refac Technology Develop Corp. 56,000
20,200 Thermo Power Group 155,287
28,300 Thermospectra Corp. 318,375
12,000 TRM Copy Center Corp. 90,750
11,400 Vertex Communications Corp. 180,975
4,829,977
TRANSPORTATION & SERVICES - 2.38%
12,000 International Shipholding Corp. 188,250
4,000 Kenan Transport Co. 134,000
8,066 KLLM Transport Services, Inc. 59,487
12,000 Marten Transport Ltd. 159,000
15,500 Old Dominion Freight Line, Inc. 176,313
5,000 Petroleum Helicopters, Inc. 80,625
12,000 Transport Corporation of America, Inc. 144,000
17,000 USA Truck, Inc. 197,625
5,250 VSE Corp. 59,719
1,199,019
UTILITIES - 17.30%
16,600 American States Water Co. 452,350
13,000 Aquarion Co. 533,000
6,600 Atrion Corp. 52,800
31,100 Bangor Hydro-Electric Co. 398,469
7,000 Berkshire Gas Co. 154,875
18,900 Cascade Natural Gas Corp. 342,563
8,700 Chesapeake Utilities Corp. 159,319
15,150 Colonial Gas Co. 528,356
17,600 Connecticut Energy Corp. 536,800
7,800 Connecticut Water Service, Inc. 210,600
17,800 Consumers Water Co. 559,587
19,000 CTG Rseources, Inc. 498,750
4,000 Delta Natural Gas Company, Inc. 74,500
3,300 Dominguez Services Corp. 92,400
14,400 E'town Corp. 682,200
4,026 Eastern Enterprises 176,118
6,000 EnergyNorth, Inc. 171,750
10,000 Florida Public Utilities Co. 171,250
9,700 Green Mountain Power Corp. 101,850
7,000 Maine Public Service Co. 106,750
7,600 Middlesex Water Co. 184,300
21,700 NUI Corp. 581,831
18,500 Pennsylvania Enterprises, Inc. 471,750
8,600 Philadelphia Suburban Corp. 254,238
10,800 Providence Energy Corp. 226,800
6,100 SJW Corp. 358,375
14,000 St. Joseph Light & Power Co. 251,125
9,176 UNITIL Corp. 233,414
4,590 WPS Resources Corp. 161,798
8,727,918
TOTAL COMMON STOCKS - 98.34% 49,627,828
FACE AMOUNT DESCRIPTION MARKET VALUE
REPURCHASE AGREEMENT - 1.54%
$ 775,000 UMB Bank, n.a.
4.35%, due January 4, 1999
(Collateralized by U.S.
Treasury Notes, 5.875%,
due February 28, 1999) 775,000
TOTAL INVESTMENTS - 99.88% $ 50,402,828
Other assets less liabilities - 0.12% 59,714
TOTAL NET ASSETS - 100.00%
(equivalent to $11.60 per share;
10,000,000 shares of $1.00 par
value capital shares authorized;
4,351,326 shares outstanding) $ 50,462,542
See accompanying Notes to Financial Statements.
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1998 (unaudited)
ASSETS:
Investment securities, at market value
(identified cost $41,423,390) $ 50,402,828
Cash 84,023
Dividends receivable 59,828
Receivables for fund shares sold 25,001
Total assets 50,571,680
LIABILITIES AND NET ASSETS:
Fees payable 21,359
Payable for investments purchased 87,779
Total liabilities 109,138
NET ASSETS $ 50,462,542
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 41,581,078
Accumulated undistributed income (loss):
Undistributed net investment income 20,773
Undistributed net realized gain (loss)
on investment transactions (118,747)
Net unrealized appreciation in value of investments 8,979,438
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 50,462,542
Capital shares, $1.00 par value
Authorized 10,000,000
Outstanding 4,351,326
NET ASSET VALUE PER SHARE $ 11.60
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Six Months Ended December 31, 1998 (unaudited)
INVESTMENT INCOME:
Income:
Dividends $ 345,517
Interest 69,470
414,987
Expenses:
Management fees (Note 3) 187,564
Custodian fees 4,810
Pricing service fees 48,078
Registration fees 29,189
269,641
Net investment income 145,346
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 1):
Realized gain (loss) from investment transactions
(excluding repurchase agreements):
Proceeds from sales of investments 2,909,933
Cost of investments sold 1,890,116
Net realized gain (loss) from investment transactions 1,019,817
Unrealized appreciation (depreciation) on investments:
Beginning of period 13,362,511
End of period 8,979,438
Decrease in net unrealized appreciation (depreciation)
on investments (4,383,073)
Net loss on investments (3,363,256)
Decrease in net assets resulting from operations $ (3,217,910)
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
DECEMBER 31, 1998 JUNE 30,
(UNAUDITED) 1998
</CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 145,346 $ 288,033
Net realized gain from investment transactions 1,019,817 6,818,164
Increase (decrease) in net unrealized appreciation (depreciation)
on investments (4,383,073) 2,319,595
Net increase (decrease) in net assets resulting from operations (3,217,910) 9,425,792
Net equalization included in the price of shares issued and
redeemed (Note 1) 4,350 (12,049)
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (162,647) (349,675)
Net realized gain from investment transactions (2,765,309) (6,317,392)
Total distributions to shareholders (2,927,956) (6,667,067)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 787,935 and 3,766,494 shares sold 9,176,515 51,683,031
Net asset value of 235,143 and 490,161 shares issued for
reinvestment of distributions 2,621,850 6,122,001
11,798,365 57,805,032
Cost of (563,533) and 3,651,770 shares redeemed (6,713,594) (50,354,485)
Net increase (decrease) from capital share transactions 5,084,771 7,450,547
Total increase (decrease) in net assets (1,056,745) 10,197,223
NET ASSETS:
Beginning of period 51,519,287 41,322,064
End of period (including undistributed net investment income
of $20,773 and $33,724, respectively) $ 50,462,542 $ 51,519,287
*Distributions to shareholders:
Income dividends per share $ 0.0400 $ 0.1008
Capital gains distribution per share $ 0.6800 $ 1.8492
</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 financial
statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of
the financial statements. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of
its financial statements.
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. Common stocks traded over-the-counter are
valued at the average of the last reported bid and asked prices. Investment
transactions are recorded on the trade date. 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.
Federal and State Taxes - The fund's policy is 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.
Equalization - The Fund uses the accounting practice known as 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.
2. PURCHASES AND SALES OF SECURITIES:
The aggregate amounts of security transactions during the period ended
December 31, 1998 (excluding repurchase agreements), were as follows:
Purchases $ 6,359,543
Proceeds from sales 2,909,933
3. MANAGEMENT FEES:
Management fees, which include all normal expenses of the Fund other than
fees for pricing services, custodian fees, dues, 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 one percent of net assets.
Certain officers and/or directors of the Fund are also officers and/or
directors of Jones & Babson, Inc.
This report has been prepared for the information of the Shareholders of
Shadow Stock 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.
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.
Babson Funds
Jones & Babson Distributors
A member of the Generali Group
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306
816-751-5900
1-800-4-BABSON
(1-800-422-2766)
www.babsonfunds.com
JB1C-1 (2/99) 505497
