Babson Funds
Annual Report
Equities
Enterprise Fund
Enterprise Fund II
Growth Fund
Shadow Stock Fund
Value Fund
International Fund
Fixed income
Bond Trust
Money Market Fund
Tax-Free Income Fund
Babson Funds
Table of Contents
Economic Review 1
Babson Enterprise Fund 2
Babson Enterprise Fund II 6
Babson Growth Fund 10
Shadow Stock Fund 14
Babson Value Fund 19
Babson-Stewart Ivory International Fund 22
Babson Bond Trust 27
Babson Bond Trust
Portfolio L 29
Babson Bond Trust
Portfolio S 33
Babson Money Market Fund 36
Babson Money Market Fund
Prime 37
Babson Money Market Fund
Federal 38
Babson Tax-Free Income Fund 39
Babson Tax-Free Income Fund
Portfolio L 40
Babson Tax-Free Income Fund
Portfolio S 42
Babson Tax-Free Income Fund
Portfolio MM 44
Statements of Assets and Liabilities 46
Statements of Operations 48
Statements of Changes in Net Assets 50
Notes to Financial Statements 54
Financial Highlights 57
Report of Ernst & Young LLP,
Independent Auditors 64
Message to our Shareholders
As Chairman of Jones & Babson since 1993, I have enjoyed a leadership role
in the strategic evolution of the company. In January of this year, I
assumed the role of President and CEOfrom Larry Armel, who retired from the
position after a tenure of 16 years. We experienced significant growth
under Larry's leadership, adding new funds and fund families, entering new
markets and dramatically updating technology. During that time our assets
under management grew tenfold. In my new position I have the opportunity to
build on Larry's legacy of shareholder service, quality products, and
committed employees.
Serving as Chairman has given me a solid base and perspective on which to
build for the future. We have seen tremendous growth and change in the
mutual fund industry, and as we enter the 21st century I believe there is
real opportunity for those companies dedicated to providing the investor
high quality products and services. We intend to take advantage of that
opportunity with an ongoing focus that strives for exceptional money
management, creation of quality, new products and the evolving use of
technology.
What will set us apart is the high priority we place on people - our
shareholders and those dedicated to serving them. We have the distinction
of being a "high-touch" company in a conveyor belt world, and we value the
relationships we have built over the years. We look forward to growing and
strengthening these relationships by adding value whenever and wherever
possible.
Thank you for your continued interest in our Funds. I welcome your input
and invite you to call or e-mail me with your questions or suggestions.
Sincerely,
/s/Stephen S. Soden
Stephen S. Soden
President
Economic Review
Momentum is the name of the game for sports teams, stocks and it seems, the
U.S. economy. The domestic economy rolled right through the Y2K scare and
into the new Millennium with a solid tailwind. Economic activity
expanded at roughly a 5% real rate in the first half of 2000,
well above earlier forecasts. Fortunately, this momentum has not,
as yet, translated into significantly higher levels of inflation.
Nonetheless, the Federal Reserve has been aggressively tightening monetary
policy in an effort to slow the economy to what it perceives to be a more
stable, long-term non- inflationary growth rate. Exactly what that rate is,
is debatable to say the least. The Fed has raised short-term lending
rates in the U.S. by 175 basis points since June, 1999 and has indicated
rates will continue to rise as necessary to head off inflationary pressures.
Interestingly, longer term rates have not risen as much as short rates over
this period, creating an inverted yield curve. The unusual shape of the
yield curve reflects a vote of confidence in the Fed, but also the large
budget surplus which has developed thanks to burgeoning tax receipts.
Unless, or until, Congress spends it or gives it back via tax cuts, budget
surpluses will be used to reduce outstanding Government debt, keeping
downward pressure on long- term bond yields.
Tighter monetary policy may be having the desired effect. Fed Chairman
Greenspan has regularly voiced his concern over time about the inflationary
implications of excess demand led growth, especially in an environment of
historically high employment as is the case today. After a long run, signs
are pointing to a slowdown in consumer spending this summer, perhaps due to
a waning of the wealth effect. Lower stock prices, a slower housing market,
and higher interest rates should result in declining consumer confidence.
Add to this the tax-like effect of higher oil prices over the past year and
the average consumer is looking a little cash strapped.
At the same time, investment spending seems to be ramping up again, as
companies apparently can't keep up with technology and systems growth. New
era economists are much more comfortable with this supply-driven surge in
spending, however, as the net result is improved corporate productivity.
Technology-driven productivity enhancement is the other big driver for this
economy's long lived expansion. Even Mr. Greenspan recently conceded in
public testimony that recent historically high levels of productivity
growth may be more structural and less than cyclical than previously
assumed. Translation: the economy can probably grow at some faster level of
sustainable growth, without inflation, than was previously believed.
Prospects for an economic "soft landing," where overall growth slows to
some sustainable (higher) speed limit appear reasonable, though risks still
exist. Chairman Greenspan specifically cited two: the growing U.S. current
account deficit and the ever tightening labor market. Beyond these we continue
to watch energy costs, stock prices, overseas economic growth (central
banks have been tightening worldwide) and, of course, the U.S. elections.
David L. Babson & Co. Inc.
Babson Enterprise Fund
The Enterprise Fund had a tremendous first half, ended June 30, 2000
returning 14.46% (price change and reinvested distributions), easily
beating the unmanaged Russell 2000 Index 3.04% and the unmanaged
Russell 2000 Value Index 5.85%.
Market volatility was the overriding theme in the first half of 2000.
Speculative growth stocks, especially in the technology and biotechnology
sectors, dominated performance through the first week of March. Market
sentiment then swung 180 degrees in favor of value stocks in one of the
more dramatic reversals in leadership in recent memory, as the speculative
bubble in "new economy" stocks began to deflate. Internet entrepreneurs
looked on with surprise as investors began to focus on such arcane matters
as revenues, cash flows, and potential profits, rather than "clicks" and
"hits."
The best performing stock in the portfolio was Zygo (high-precision
measurement tools) which returned 351.24% in the first half of this year.
Zygo's gain is attributable to continued strength in its core semiconductor
business and the announcement of a major new fiber optics contract. Lamson
& Sessions (electrical equipment products) returned 214.11% to the
portfolio, after reporting an outstanding first quarter that far surpassed
expectations. The good results were driven by strength in the
telecommunications market and the benefits of cost reductions and
restructuring efforts over the last few years. Tetra Technologies' (+95.70)
stock has recovered along with the strong energy market and the pick-up in
U.S. drilling activity.
Poor performers included Terex (off-highway trucks and cranes) which was
down (-49.10%) with the announcement that management's earnings outlook for
the coming year would be less than previously anticipated. Corrpro (-
44.68%), a corrosion control services company, preannounced a disappointing
quarter as a result of cost overruns on two corrosion projects. Norstan (-
37.25%) reported a fourth quarter loss. The telecommunications equipment
company is expected to return to profitability by the end of this year.
We are pleased to see the market begin to refocus on revenue, earnings, and
valuations. While volatility remains high, the change in market sentiment
that was initiated in mid-March appears to be sustaining. The recent signs
of slowing economic growth, coupled with continuing low inflation, may
signal that we are near the end of the Federal Reserve rate hikes. A
stabilization of interest rates in a non-recessionary, low inflation
economy would be an ideal backdrop for broad market equity performance.
Looking back at the not-too-distant past, following aggressive Fed rate
hikes in 1994 and a strong technology market in 1995, the low inflation,
benign interest rate environment of 1996 and 1997 provided the underpinning
for two exceptionally strong years for small cap value stocks. We are
hopeful that a similar economic climate is forming and that the recent
leadership of small cap value can be sustained over the next several years.
The volatility and remaining speculative forces in the market promise that
it won't be a smooth ride going forward, but for small cap value investors,
we believe it will be a profitable journey.
The following companies were added to the Fund: Advanced Marketing Services
distributes general interest books to membership warehouse clubs and
specialty retailers. DT Industries produces automated production equipment
that is used to assemble, test, or package industrial and consumer
products. NN Ball & Roller is a leading manufacturer of precision steel
balls and rollers that are a critical component of anti-friction ball
bearings. Robotic Visions provides inspection systems for the semiconductor
and industrial markets. UCBH Holdings is the holding company for United
Commercial Bank, a California bank serving the ethnic Chinese community.
Ultimate Electronics is a specialty retailer of high-end home entertainment
and consumer electronics products. United Natural Foods is the largest
distributor of natural and organic food products in the United States.
The following positions were liquidated: Chicago Bridge & Iron, Enesco,
FLIR, Interface, MDC Communications, Petco, RailAmerica, Starrett, and
Styling Technologies. These companies were sold because, in our estimation,
the new portfolio holdings and a number of current positions offer brighter
future earnings prospects than these names.
Five previously announced buyouts were completed: We received cash for our
positions in Aavid Thermal Technologies, Dayton Superior and Pulaski
Furniture. We received part cash and part stock as a result of
RailAmerica's buyout of Railtex. RailAmerica was subsequently sold.
Fund Composition
Top Ten Holdings: % of Total
Zygo Corp. 6.31
Lamson & Sessions Co. 4.77
Penford Corp. 2.80
Spectrum Control, Inc. 2.49
Jason, Inc. 2.40
ESCO Electronics Corp. 2.37
J&J Snack Foods Corp. 2.31
Oneida Ltd. 2.29
Engineered Support Systems, Inc. 2.23
Compx International, Inc. 2.17
Total 30.14%
Total Securities in Portfolio 67
As of June 30, 2000, schedule of investments. Subject to change.
CHART - Babson Enterprise Fund
versus Russell 2000
Babson Enterprise Fund's average annual compounded total returns for one,
five and ten year periods as of June 30, 2000, were 2.84%, 9.97% and
11.82%, 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.
Schedule of Investments
June 30, 2000
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 98.77%
BASIC MATERIALS - 4.09%
136,800 NN, Inc. $ 1,436,400
145,050 Penford Corp. 3,118,575
4,554,975
CAPITAL GOODS - 22.27%
138,900 ABC-Naco, Inc.* 1,111,200
223,900 Brown & Sharpe Manufacturing Co. Cl. A 629,719
184,500 Channell Commercial Corp.* 2,214,000
231,900 Congoleum Corp. Cl. A* 927,600
294,463 Corrpro Companies, Inc. 957,005
99,600 Cubic Corp. 1,867,500
76,500 Cuno, Inc.* 1,769,062
104,900 DT Industries, Inc. 983,438
186,300 EDO Corp. 1,176,019
180,400 Engineered Support Systems, Inc. 2,480,500
83,043 K-Tron International, Inc. 1,305,332
346,800 Lamson & Sessions Co.* 5,310,375
149,100 Schawk, Inc. Cl. A 1,397,812
49,200 Terex Corp. 694,950
180,100 TransTechnology Corp. 1,981,100
24,805,612
CONSUMER CYCLICAL - 14.32%
60,000 Advanced Marketing Services 1,106,250
99,200 Fab Industries, Inc. 1,054,000
223,770 Falcon Products, Inc. 2,125,815
114,900 Fred's, Inc. 2,068,200
231,600 Gottschalks, Inc.* 1,461,975
194,400 Helen of Troy Ltd. 1,087,425
204,400 Jacobson Stores, Inc. 1,022,000
144,050 Oneida Ltd. 2,556,888
210,500 Spartan Motors, Inc. 881,469
108,200 Swiss Army Brands, Inc.* 554,524
76,000 Ultimate Electronics, Inc.* 2,036,562
15,955,108
CONSUMER STAPLES - 6.41%
37,100 Genesee Corp. Cl. B 690,988
143,900 J & J Snack Foods Corp.* 2,572,212
36,700 Marsh Supermarkets, Inc. Cl. A 566,556
84,700 Marsh Supermarkets, Inc. Cl. B 847,000
212,700 Northland Cranberries, Inc. Cl. A 824,213
119,500 United Natural Foods, Inc. 1,643,125
7,144,094
ENERGY - 6.15%
449,500 Kaneb Services, Inc.* 1,798,000
278,300 Matrix Service Co. 1,287,138
94,600 Petroleum Helicopters, Inc. (non-voting) 910,525
73,700 Petroleum Helicopters, Inc. (voting) 700,150
151,600 Tetra Technologies, Inc. 2,150,825
6,846,638
FINANCIAL - 8.03%
65,500 Bank of the Ozarks, Inc. 1,072,562
155,540 Capital Corp. of the West 1,613,728
94,200 Cass Commercial Corp. 1,954,650
94,900 Haven Bancorp, Inc. 1,761,581
146,900 Sterling Financial Corp. 1,689,350
32,100 UCBH Holdings, Inc. 856,669
8,948,540
HEALTH CARE - 3.34%
152,375 Penwest Pharmaceutical Co.* 1,533,273
122,200 Young Innovations, Inc.* 2,184,325
3,717,598
MISCELLANEOUS - 7.32%
98,900 Alltrista Corp.* 2,113,988
277,683 Jason, Inc. 2,672,699
164,300 Kaman Corp. Cl. A 1,755,956
63,000 Sea Containers Ltd. Cl. A 1,330,875
12,000 Sea Containers Ltd. Cl. B 284,250
8,157,768
TECHNOLOGY - 23.59%
119,300 Compx International, Inc. 2,423,281
266,400 Ennis Business Forms 2,131,200
155,500 ESCO Electronics Corp. 2,643,500
88,500 Landauer, Inc. 1,377,281
224,600 MSC Software Corp. 2,091,588
106,100 Nashua Corp. 875,325
79,700 New England Business Service, Inc. 1,295,125
172,700 Norstan, Inc. 690,800
56,800 Robotic Vision Systems* 1,022,400
203,700 Spectrum Control, Inc.* 2,775,412
42,900 Titan Corp.* 1,919,775
77,400 Zygo Corp. 7,028,888
26,274,575
TRANSPORTATION & SERVICES - 2.17%
104,900 ABM Industries, Inc. 2,412,700
UTILITIES - 1.08%
18,200 E'town Corp. 1,209,162
TOTAL COMMON STOCKS 110,026,770
(Cost $102,869,406)
FACE
AMOUNT DESCRIPTION MARKET VALUE
REPURCHASE AGREEMENT - 1.66%
$ 1,850,000 UMB Bank, n.a.,
5.90%, due July 3, 2000
(Collateralized by U.S.
Treasury Notes, 6.625%,
due June 30, 2001 with
a value of $1,887,768) 1,850,000
(Cost $1,850,000)
TOTAL INVESTMENTS - 100.43% 111,876,770
(Cost $104,719,406)
Other assets less liabilities - (0.43%) (482,383)
TOTAL NET ASSETS - 100.00% $ 111,394,387
For federal income tax purposes, the identified cost of investments owned
at June 30, 2000 was $104,941,185.
Net unrealized appreciation for federal income tax purposes was $6,935,585,
which is comprised of unrealized appreciation of $27,344,797 and unrealized
depreciation of $20,409,212.
*Non-income producing security
See accompanying Notes to Financial Statements.
Babson Enterprise Fund II
The Fund posted positive returns for the six month period ended June 30,
2000 and handily beat the indexes, returning 7.22% (price change and
reinvested distributions) vs. 3.04% for the unmanaged Russell 2000 Index
and 5.85% for the unmanaged Russell 2000 Value Index.
Babson Enterprise Fund II's focus is on companies that are largely
neglected by other institutional investors, but which have real businesses
that can produce accelerating earnings growth, positive earnings surprises,
and upward future earnings estimate revisions. This strategy has protected
us against the deflating speculative bubble of "new economy" stocks that
has created recent record-level volatility in the markets.
The strongest performing sectors of the Russell 2000 in the first six
months of 2000 were energy (+58.05%), health care (+36.84%), and producer
durables (+13.03%). Energy stocks built upon their first quarter surge as
pricing improved and supply/demand conditions remained favorable. Health
care performance was driven by exceptional strength in biotechnology
stocks, as growth investors appeared to transfer their speculative
affections from the Internet to the human genome.
The weakest areas of the small cap market (Russell 2000) in the first half
were consumer discretionary (-17.01%), integrated oils (-12.45%) and
utilities (-10.13%). Rising interest rates had a particularly depressing
effect on utility and consumer discretionary stocks, while overall
concerns about a slowing economy provided a further blow to consumer
discretionary valuations. Technology stocks also suffered as speculation in
Internet and other communication sectors began to wane. Internet
entrepreneurs looked on with disgust as investors began to focus on such
arcane matters as revenues, cash flows, and potential profits, rather than
"clicks" and "hits."
The best performing holding in the Fund's portfolio was Exar (integrated
circuits), which was up 122.14%. Their products continue to be in high
demand for broadband communications applications. Stein Mart was up
80.22%, as new merchandising initiatives in their retail locations are
bearing fruit. Advo (+76.84%) continues to benefit from accelerating sales
growth in its direct mail business as its core supermarket and drugstore
customers increase spending, while newer client segments, such as home
electronics retailers, make use of higher margin supplemental mailings.
Central Newspapers (+60.63%) received an attractive cash buyout offer from
Gannett which is expected to close in the third quarter.
Among the worst performing stocks in our portfolio was Information
Resources (-57.43%), a market information services company, which is
suffering from a bloated cost structure and account losses under its former
management team. A new CEO and the possibility of a victory in the lawsuit
against its key competitor are potential catalysts to drive up stock
performance. At Enesco (-57.06%) frustration with the CEO's inability to
turn around performance caused the shares to underperform and led to the
CEO's resignation. However, the company recently signed an exclusive
licensing agreement to distribute collectibles associated with the popular
"Harry Potter" books and upcoming motion picture, and we expect this to
have a positive impact going forward.
As a small cap value investor, it is heartening to see the market begin to
refocus on revenue, earnings, and valuations. While volatility remains high
as the speculative excesses work their way out of the system, the change in
market sentiment that was initiated in mid-March appears to be
sustaining. It is no surprise that small cap value is a successful approach
in this environment, given the outstanding combination of earnings growth
and valuation in this sector.
The following companies were added to the Fund: Cable Design Technologies
is a manufacturer of network and specialty cables. The company should
participate directly in the strong demand for communications bandwidth, yet
is trading at only 13 times calendar year 2000 estimated earnings. A
position in Elcor was established after the stock overreacted to a downward
earnings revision. Its premium laminated roof shingles are taking market
share from traditional shingles due to superior performance. Rent-Way is
the second largest domestic operator of rent-to-own stores, and it should
be a prime beneficiary of industry consolidation. Respironics is the
dominant maker of medical equipment for the treatment of respiratory
disorders. The stock is depressed due to a combination of internal and
external factors, both of which appear to be improving. Robotic Vision is a
leader in machine vision systems, with the majority of its sales in
semiconductor inspection equipment. The strong recovery in the
semiconductor cycle is finally beginning to benefit back-end suppliers such
as Robotic. Scott Technologies is a leading manufacturer of respiratory
safety products for the aviation, industrial, and fire fighting markets.
Over the past several years, it has shed its conglomerate mentality,
emerging with a focused management team with ample cost-cutting and product
extension opportunities. UCBH Holdings is a niche California bank
targeting the fast-growing Chinese-American population. Despite its superior
prospects, its stock trades at a multiple of only 11x earnings per share.
The following positions were eliminated: Adaptive Broadband, on the grounds
of valuation, having appreciated almost 700% in 1999 as it became caught up
in the euphoria for technology stocks. Foster Wheeler, as financial
difficulties became apparent, Helen of Troy, due to a continued
deterioration in its competitive position, Lee Enterprises, due to
anticipated profit margin pressures from higher newsprint prices and lower
classified advertising revenues.
Fund Composition
Top Ten Holdings: % of Total
Carlisle Companies, Inc. 4.93
Central Newspapers, Inc. Cl. A 4.85
BJ's Wholesale Club, Inc. 4.20
Commerce Bancorp, Inc. 3.84
True North Communications, Inc. 3.76
Nabors Industries, Inc. 3.71
Herman Miller, Inc. 3.58
Petco Animal Supplies, Inc. 3.18
Golden State Bancorp, Inc. 3.09
Cuno, Inc. 2.95
Total 38.09%
Total Securities in Portfolio 55
As of June 30, 2000, schedule of investments. Subject to change.
CHART - Babson Enterprise Fund II
versus S&P 500 and Russell 2000
Babson Enterprise Fund II's average annual compounded total returns for one
year, five years and the life of the Fund (inception August 5, 1991) as of
June 30, 2000, were 5.63%, 15.11% and 13.29%, 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.
Schedule of Investments
June 30, 2000
BABSON ENTERPRISE FUND II
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 92.85%
BASIC MATERIALS - 2.85%
12,100 Elcor Corp. $ 278,300
148,500 Interface, Inc. Cl. A 566,156
70,000 Metals USA, Inc. 328,125
32,700 New England Business Service, Inc. 531,375
1,703,956
CAPITAL GOODS - 15.52%
32,800 Commscope, Inc.* 1,344,800
76,200 Cuno, Inc.* 1,762,125
35,800 Gardner Denver, Inc. 639,925
111,400 Gerber Scientific, Inc. 1,281,100
82,700 Herman Miller, Inc. 2,139,862
77,500 MagneTek, Inc.* 620,000
42,800 Roper Industries, Inc. 1,096,750
22,600 Scott Technologies, Inc. 388,438
9,273,000
CONSUMER CYCLICAL - 31.38%
18,400 AC Nielsen Corp.* 404,800
38,300 ADVO, Inc. 1,608,600
76,100 BJ's Wholesale Club, Inc. 2,511,300
45,800 Central Newspapers, Inc. Cl. A 2,896,850
49,100 Enesco Group, Inc. 233,225
74,300 Exide Corp. 594,400
104,400 Huffy Corp. 450,225
117,800 La-Z Boy, Inc. 1,649,200
39,900 Penton Media, Inc. 1,396,500
96,800 Petco Animal Supplies, Inc. 1,899,700
42,300 Rayovac Corp.* 946,463
17,300 Rent-Way, Inc. 504,944
97,900 Stein Mart, Inc. 1,003,475
67,100 Stride Rite Corp. 410,988
51,000 True North Communications, Inc. 2,244,000
18,754,670
ENERGY - 5.00%
53,400 Nabors Industries, Inc.* 2,219,438
54,600 Stolt Comex Seaway 771,225
2,990,663
FINANCIAL - 13.83%
11,900 BancFirst Corp. 374,850
122,608 Cash America International, Inc. 904,234
49,942 Commerce Bancorp, Inc. 2,297,332
102,600 Golden State Bancorp, Inc. 1,846,800
30,200 Golden State Bancorp, Inc.
Litigation Tracking Warrants* 33,975
25,100 Haven Bancorp, Inc. 465,919
48,600 SL Green Realty Corp. 1,300,050
7,000 UCBH Holdings, Inc. 186,813
25,400 Urban Shopping Centers 855,662
8,265,635
HEALTH CARE - 2.01%
83,775 PSS World Medical, Inc. 562,863
35,300 Respironics, Inc. 635,400
1,198,263
MISCELLANEOUS - 8.55%
65,500 Carlisle Companies, Inc. 2,947,500
4,800 CDI, Inc.* 97,800
53,000 Kaman Corp. Cl. A 566,437
67,400 Sea Containers Ltd. Cl. A 1,423,825
3,200 Sea Containers Ltd. Cl. B 75,800
5,111,362
TECHNOLOGY - 11.77%
34,100 Benchmark Electronics 1,246,781
30,300 Cable Design Technologies 1,015,050
11,900 Exar Corp. 1,037,531
76,000 Information Resources, Inc. 299,250
33,900 Newport News Shipbuilding, Inc. 1,245,825
48,500 Robotic Vision Systems* 873,000
18,100 Titan Corp.* 809,975
10,600 Xircom, Inc.* 503,500
7,030,912
TRANSPORTATION & SERVICES - 1.94%
46,200 Circle International Group, Inc. 1,160,775
TOTAL COMMON STOCKS 55,489,236
(Cost $42,984,114)
FACE
AMOUNT DESCRIPTION MARKET VALUE
REPURCHASE AGREEMENT - 3.77%
$ 2,250,000 UMB Bank, n.a.,
5.90%, due July 3, 2000
(Collateralized by U.S.
Treasury Notes, 6.625%,
due June 30, 2001 with
a value of $2,295,150) 2,250,000
(Cost $2,250,000)
TOTAL INVESTMENTS - 96.62% 57,739,236
(Cost $45,234,114)
Other assets less liabilities - 3.38% 2,018,906
TOTAL NET ASSETS - 100.00% $ 59,758,142
The identified cost of investments owned at June 30, 2000 was the same for
financial statement and federal income tax purposes.
Net unrealized appreciation for federal income tax purposes was
$12,505,122, which is comprised of unrealized appreciation of $20,034,667
and unrealized depreciation of $7,529,545.
*Non-income producing security
Babson Growth Fund
Our focus on high quality, rapidly growing companies has benefited the Fund
in the past six months, and has earned us a sizeable performance lead over
our benchmarks and many of our competitors. Babson Growth Fund is up 9.88%
(price change and reinvested distributions) for the six month period ended
June 30, 2000, easily surpassing a -0.42% decline in the unmanaged Standard
& Poor's 500 Index, and 2.81% for the unmanaged Lipper Growth Fund Index.
The Fund has benefited from avoiding most parts of the Internet sector and
its recent sharp correction. The Internet investing bubble was finally
pierced when investors woke up in late March to realize that corporate
earnings really do matter. From its high in March to the recent trough in
early June, the NASDAQ market, where many speculative Internet and
technology companies trade, declined by 37%. Many Internet stocks
experienced declines of 70% to 90% from their highs as they rapidly burned
through cash without generating earnings or cash flow. In our view this
reaction to irrational and uneconomic business models was long overdue.
In the past few months we have been diversifying our risk within the
technology sector as this part of the market has become more volatile. We
are maintaining our commitment to this rapidly growing part of the economy,
but are doing so with a larger number of investments in the Fund. We also
slightly reduced our finance weighting due to concerns over a decline in
credit quality in the banking sector.
Strong performing investments in the first half of 2000 included several of
our semiconductor companies Linear Technology (+79%), Analog Devices (+64%)
and Intel (+63%). We also experienced impressive gains in our investments
in the fiber optics industry, including Corning (+110%) and JDS Uniphase
(+49%). Laggards in the past six months tended to be companies that
investors perceived to be economically sensitive. Building products
retailer Home Depot, cable television operators Comcast and Cox
Communications, and cable programming provider Liberty Media were all down
between 15 and 25% in this time period.
In the near term we expect the stock market to continue its volatile
trading pattern as investors deal with rising interest rates and the threat
of inflation creeping into the economy. As the summer progresses and we
near the end of 2000, we expect interest rate hikes by the Fed to subside,
making room for companies that generate strong, sustainable earnings growth
to perform well for investors in late 2000 and into 2001.
The following additions have been made to the portfolio in the last six
months:
Adobe Systems - internet publishing software
America Online - internet media and content
Best Buy - electronics retailing
Infinity Broadcasting - radio broadcasting
IBM - diversified computer hardware and services
JDS Uniphase - fiber optic components
Medtronic - medical devices
Qwest - telecom services
Siebel Systems - sales force management software
Sun Microsystems - computer hardware and storage
Tyco International - diversified capital goods and healthcare
Veritas - data storage software.
Five positions were eliminated during the last six months, including Boston
Scientific (slowing revenue growth), Cardinal Health (margin pressure),
Cadence Design (slowing software demand), CVS, and Mellon Financial
(reducing weighting in banking sector).
Fund Composition
Top Ten Holdings: % of Total
Cisco Systems, Inc. 5.03
AT&T Corp. - Liberty Media Corp. 4.44
Pfizer, Inc. 3.95
American International Group, Inc. 3.62
Corning, Inc. 3.48
General Electric Co. 3.18
Intel Corp. 3.16
Paychex, Inc. 3.14
Microsoft Corp. 3.02
EMC Corp. 2.92
Total 35.94%
Total Securities in Portfolio 53
As of June 30, 2000, schedule of investments. Subject to change.
CHART - Babson growth Fund
versus S&P 500 and russell 1000 growth
Babson Growth Fund's average annual compounded total returns for one, five
and ten year periods as of June 30, 2000, were 20.69%, 23.42% and 16.36%,
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.
Schedule of Investments
June 30, 2000
BABSON GROWTH Fund
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 96.03%
CAPITAL GOODS - 4.24%
315,000 General Electric Co. $ 16,695,000
117,400 Tyco International Ltd. 5,561,825
22,256,825
CONSUMER CYCLICAL - 6.20%
85,600 Best Buy Company, Inc. 5,414,200
67,600 Corning, Inc. 18,243,550
177,000 Home Depot, Inc. 8,838,937
32,496,687
CONSUMER STAPLES - 2.89%
25,900 Anheuser-Busch Cos., Inc. 1,934,406
102,000 Gillette Co. 3,563,625
53,400 PepsiCo, Inc. 2,372,963
161,800 Safeway, Inc. 7,301,225
15,172,219
ENERGY - 0.57%
38,137 Exxon Mobil Corp. 2,993,754
FINANCIAL - 9.57%
161,812 American International
Group, Inc. 19,012,910
362,200 Federal Home Loan
Mortgage Corp. 14,669,100
392,918 Paychex, Inc. 16,502,556
50,184,566
HEALTH CARE - 13.99%
159,600 American Home Products Corp. 9,376,500
141,200 Bristol-Myers Squibb Co. 8,224,900
265,600 Guidant Corp. 13,147,200
173,000 Medtronic, Inc. 8,617,563
432,100 Pfizer, Inc. 20,740,800
257,518 Pharmacia Corp. 13,310,462
73,417,425
MEDIA & ENTERTAINMENT - 11.42%
266,700 America Online, Inc. 14,068,425
960,800 AT&T Corp.-Liberty Media Corp. 23,299,400
149,800 Comcast Corp. 5,823,475
147,900 Cox Communications, Inc. 6,738,694
274,600 Infinity Broadcasting Corp.* 10,005,738
59,935,732
TECHNOLOGY - 43.57%
26,600 Adobe Systems, Inc. 3,458,000
171,000 Analog Devices, Inc. 12,996,000
55,424 Applied Materials, Inc. 5,022,800
137,700 Automatic Data Processing, Inc. 7,375,556
415,600 Cisco Systems, Inc. 26,416,575
94,400 Citrix Systems, Inc. 1,787,700
199,500 EMC Corp. 15,349,031
146,500 Flextronics International Ltd. 10,062,719
124,000 Intel Corp. 16,577,250
91,600 International Business Machines 10,035,925
48,500 JDS Uniphase Corp. 5,813,937
30,700 KLA Tencor Corp. 1,797,869
59,000 Linear Technology 3,772,312
248,000 Lucent Technologies 14,694,000
50,500 Maxim Integrated Products 3,430,844
36,200 Microchip Technology, Inc. 2,109,216
198,000 Microsoft Corp. 15,840,000
277,200 Nokia Corp. 13,842,675
41,200 Qualcomm, Inc. 2,472,000
11,700 Red Hat, Inc. 316,631
21,800 Siebel Systems, Inc. 3,565,662
362,800 Solectron Corp. 15,192,250
121,800 Sun Microsystems, Inc. 11,076,188
140,500 Texas Instruments 9,650,594
31,800 Veritas Software Corp. 3,593,897
168,000 Vitesse Semiconductor Corp. 12,358,500
228,608,131
TELECOMMUNICATIONS SERVICES - 3.58%
205,900 Qwest Communications International 10,230,656
186,350 Worldcom, Inc. 8,548,806
18,779,462
TOTAL COMMON STOCKS 503,844,801
(Cost $325,638,745)
FACE
AMOUNT DESCRIPTION MARKET VALUE
REPURCHASE AGREEMENT - 3.93%
$20,625,000 UMB Bank, n.a.,
5.90%, due July 3, 2000
(Collateralized by U.S.
Treasury Notes, 6.625%,
due June 30, 2001 with
a value of $21,037,704) 20,625,000
(Cost $20,625,000)
TOTAL INVESTMENTS - 99.96% 524,469,801
(Cost $346,263,745)
Other assets less liabilities - 0.04% 207,074
TOTAL NET ASSETS - 100.00% $ 524,676,875
For federal income tax purposes, the identified cost of investments owned
at June 30, 2000 was $346,355,372.
Net unrealized appreciation for federal income tax purposes was
$178,114,429, which is comprised of unrealized appreciation of $197,128,006
and unrealized depreciation of $19,013,577.
*Non-income producing security
See accompanying Notes to Financial Statements.
Shadow Stock Fund
Shadow Stock Fund outperformed all relevant benchmarks in the six month
period ended June 30, 2000. The Fund gained 12.06% (price change and
reinvested distributions) for the first six months of the year,
significantly outperforming the unmanaged Russell 2000 Index, which
increased only 3.04%, and the unmanaged Russell 2000 Value Index, which
increased by 5.85%.
Superior stock selection in both energy and capital goods benefited the
Fund this period. The top performers, which included American Tech Ceramics
(+248%), Prima Energy (+233%), Symmetricon (+154%), Cherry (+148%), and II-
VI (+140%), comprised almost 7% of the portfolio.
Overweightings in consumer cyclicals and consumer staples, as well as poor
stock selection in healthcare adversely affected the Fund. Analytical
Surveys (-73%), Simione Central (-68%), Delia's (-67%), First Cash (-59%),
and Workflow Management (-59%) were among the worst performers for the
period and comprised a little more than 1% of the portfolio.
We continue to search for above-average performance by selecting stocks
that are small in size, neglected by Wall Street, and have low price-to-
book ratios. Rarely has there been such a combination of attractive
valuations and real earnings-growth potential from a market segment as
there is now in small-cap value stocks.
Portfolio additions for the six month period: Amrep - homebuilder, land
developer, magazine distributor; Analytical Surveys - digital maps;
Associated Materials - exterior residential building products; Dave &
Buster's - restaurant and entertainment centers; Delia's - casual apparel
for girls and young women; Encore Wire - copper electrical building wire
and cable; First International Bancorp - bank holding company; Investors
Title - title insurance holding company; Kennedy Wilson - integrated real
estate services and investment company; Kewaunee Scientific - scientific
laboratory products; Newmark Homes - holding company for a single family
home builder; Nobility Homes - manufactured homes; PLM International -
transportation equipment; PMC Capital - management investment company; QEP
- specialty tools for home improvement; Sizeler Property Investors - real
estate investment trust; Summa - plastic components; Tarrant Apparel -
private label apparel; United States Lime & Mineral - limestone and
limestone products and Vulcan International - rubber products, plastic
components and bowling pins.
The following companies were sold because their price fell below the Fund's
restriction: Bell Industries, Bon-Ton Stores, Frozen Food Express,
Piccadilly, R & B, Syms, Zaring National.
The following companies were sold because their market cap exceeded Fund
limitations: Computer Sciences (received through acquisition), E'town,
Intervoice-Brite, Nanometrics, Newport, Semitool, Southern Union, Wells
Fargo (received through acquisition).
The following companies are no longer in the Fund because they were
subjects of buyouts: Aquarion, Autocam, Ben & Jerry's Homemade, Cameron
Ashley Building, Connecticut Energy, Conso, Farr, Global Industrial,
Guarantee Life, Moore Products, Onix, Palex, Pulaski Furniture, TCBY,
Vertex Communications.
Fund Composition
Top Ten Holdings: % of Total
HS Resources, Inc. 1.95
Prima Energy Corp. 1.80
Symmetricom, Inc. 1.49
NUI Corp. 1.29
SJW Corp. 1.26
Intermagnetics General Corp. 1.15
Diodes, Inc. 1.15
CTG Resources, Inc. 1.13
Liberty Livewire Corp. Cl. A 1.11
Cherry Corp. 1.11
Total 13.44%
Total Securities in Portfolio 230
As of June 30, 2000, schedule of investments. Subject to change.
CHART - Shadow stock Fund
versus Russell 2000
Shadow Stock Fund's average annual compounded total returns for one, five
and ten year periods as of June 30, 2000, were 9.91%, 14.13% and 12.60%,
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.
Schedule of Investments
June 30, 2000
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 86.34%
BASIC MATERIALS - 3.39%
14,101 Aceto Corp. $ 155,111
7,300 American Biltrite, Inc. 93,987
15,200 American Pacific Corp.* 85,500
4,500 Badger Paper Mills, Inc. 18,281
4,480 Baltek Corp. 32,760
669 IFCO Systems* 17,060
22,300 Newmark Homes Corp.* 143,556
15,000 PLM International, Inc. 101,250
15,800 Pitt-Des Moines, Inc. 300,200
22,500 Roanoke Electric Steel Corp. 281,250
8,500 Stephan Co. 38,250
17,500 Tuscarora, Inc. 273,438
1,540,643
CAPITAL GOODS - 19.31%
10,700 AG Services of America 163,175
4,400 Ablest, Inc.* 23,100
14,400 American Technical Ceramics Corp. 401,400
14,200 Amrep Corp.* 79,875
15,700 Associated Materials 238,444
7,500 Badger Meter, Inc. 189,375
15,000 Baker (Michael) Corp. 97,500
14,000 Blonder Tongue Labs.* 104,125
23,900 Building Material Holding Corp. 210,619
24,600 Cascade Corp. 293,662
14,800 Ceradyne, Inc.* 151,700
19,200 Cherry Corp. 505,200
1,800 Chicago Rivet & Machine Co. 38,025
16,500 Coastcast Corp.* 290,813
12,200 Diodes, Inc. 523,075
7,315 Ecology and Environment, Inc. Cl. A 45,719
30,100 Encore Wire Corp. 161,788
23,700 Engle Homes, Inc. 226,631
14,800 Exponent, Inc.* 123,950
14,300 Fibermark, Inc. 176,962
18,900 GP Strategies Corp. 89,775
11,500 Gehl Co. 163,875
3,150 Graham Corp. 24,019
27,706 Intermagnetics General Corp. 524,682
5,300 Investors Title Co. 55,650
13,100 JLM Industries* 45,850
7,600 Liberty Homes, Inc. Cl. A 46,550
15,100 M/I Schottenstein Homes, Inc. 237,825
18,100 Mestek, Inc. 319,012
14,112 Met-Pro Corp. 127,008
9,300 Nobility Homes, Inc. 46,500
6,300 Noland Co. 108,675
12,000 Northwest Pipe Co.* 142,500
3,000 Oilgear Co. 26,156
5,000 P & F Industries Cl. A* 42,500
3,200 Penn Engineering & Manufacturing
Corp. (voting) 112,800
11,900 Penn Engineering & Manufacturing
Corp. (non-voting) 419,475
10,600 Puerto Rican Cement Co., Inc. 294,813
5,300 QEP Company, Inc. 45,050
5,727 Sames Corp. 90,200
10,000 Selas Corp. of America 73,750
11,000 Sifco Industries 68,750
2,368 Simione Central Holdings, Inc. 7,104
15,500 Sizeler Property Investors 116,250
9,600 SL Industries, Inc. 93,600
13,839 Southwest Water Co. 179,907
8,500 Summa Industries 100,937
26,900 Symmetricom, Inc. 679,225
25,700 URS Corp. 391,925
7,700 United States Lime & Mineral 53,419
8,772,920
CONSUMER CYCLICAL - 9.66%
14,000 AC Moore Arts & Crafts, Inc.* 89,250
21,600 Amplicon, Inc. 205,200
8,000 Black Hawk Gaming & Development* 50,000
19,200 Carmike Cinemas, Inc. Cl. A* 74,400
9,000 Childtime Learning Centers, Inc.* 61,875
6,750 Decorator Industries, Inc. 31,219
29,300 Delia's, Inc.* 69,588
20,900 Dixie Group, Inc. Cl. A 80,987
9,500 Duckwall-Alto Stores, Inc. 78,375
12,400 Ellis (Perry) International, Inc. 99,200
9,300 ELXSI Corp. 102,881
9,750 Equinox Systems, Inc. 58,500
1,700 Federal Screw Works 70,125
13,100 Gart Sports Co.* 78,600
8,400 Globe Business Resources, Inc.* 109,200
23,200 Gottschalks, Inc.* 146,450
9,807 Knape & Vogt Manufacturing Co. 149,557
10,000 Lacrosse Footwear, Inc. 50,000
18,000 Maxwell Shoe, Inc. Cl. A* 177,750
16,000 Mazel Stores, Inc.* 136,000
4,500 McRae Industries, Inc. Cl. A 19,125
12,000 Motorcar Parts & Accessories, Inc.* 11,700
28,100 Navigant International, Inc.* 270,463
12,000 Nobel Learning Communities, Inc. 94,500
11,000 OroAmerica, Inc.* 76,313
13,700 Reading Entertainment, Inc.* 78,775
14,000 Rex Stores Corp.* 326,375
10,100 Rocky Shoes & Boots, Inc.* 51,131
35,200 RPC, Inc. 371,800
8,400 S & K Famous Brands, Inc. 60,244
5,000 Somerset Group, Inc. 109,375
24,639 Supreme Industries, Inc. Cl. A 110,875
31,000 Tarrant Apparel Group 277,062
7,000 Weyco Group, Inc. 178,500
10,828 Wolohan Lumber Co. 110,987
27,400 Workflow Management, Inc.* 325,375
4,391,757
CONSUMER STAPLES - 5.59%
36,900 Books-A-Million, Inc. 170,663
11,000 Bowl America, Inc. Cl. A 86,625
9,300 Cagle's, Inc. Cl. A 69,750
15,800 Chalone Wine Group Ltd.* 126,400
1,700 Foodarama Supermarkets, Inc.* 41,119
3,200 Genesee Corp. Cl. B 59,600
48,400 Ingles Markets, Inc. Cl. A 505,175
17,425 Marsh Supermarkets, Inc. Cl. A 268,998
28,125 Marsh Supermarkets, Inc. Cl. B 281,250
5,000 Max & Erma's Restaurants 42,969
33,700 Quaker Fabric Corp. 170,606
29,650 Sanderson Farms, Inc. 237,200
14,300 Seaway Food Town, Inc. 239,525
14,000 Swiss Army Brands, Inc.* 71,750
7,000 Triple S Plastics, Inc.* 169,750
2,541,380
ENERGY - 5.22%
6,500 Adams Resources & Energy, Inc. 86,937
29,503 HS Resources, Inc.* 885,090
24,900 Key Production, Inc.* 435,750
9,100 Maynard Oil Co.* 145,600
15,300 Prima Energy Corp. 818,550
2,371,927
FINANCIAL - 13.21%
16,400 Aegis Realty, Inc. 162,975
6,900 American Business Financial Services 78,919
7,370 Amwest Insurance Group, Inc. 35,008
10,500 BancInsurance Corp. 43,969
24,100 Capitol Transamerica Corp. 284,681
11,952 Cotton States Life and Health
Insurance Co. 101,592
6,000 DeWolfe Companies, Inc. 43,500
16,000 Donegal Group, Inc. 92,000
20,000 EMC Insurance Group, Inc. 175,000
18,100 First Cash, Inc.* 61,088
16,391 First Albany Companies, Inc. 344,211
16,200 First International Bancorp 131,625
11,000 First Investors Financial
Services Group, Inc.* 53,625
18,197 JW Genesis Financial Corp. 159,224
15,000 Kaye Group, Inc. 87,188
6,000 KBK Capital Corp.* 25,500
17,800 Kennedy Wilson, Inc. 94,562
5,000 Merchants Group, Inc. 83,750
14,883 Meridian Insurance Group, Inc. 178,596
17,400 Midland Co. 426,300
6,100 Minuteman International, Inc. 50,325
3,250 National Security Group, Inc. 38,187
6,000 National Western Life Insurance Co.* 432,000
15,400 Navigators Group, Inc. 138,600
23,000 PMC Capital, Inc. 224,250
16,500 Penn-America Group, Inc. 129,937
16,800 Penn Treaty American Corp. 285,600
18,630 Professionals Group, Inc. 455,271
22,800 PXRE Corp. 307,800
17,200 South Jersey Industries, Inc. 447,200
14,000 Standard Management Corp. 49,875
29,900 Stewart Information Services Corp. 437,287
13,612 Trenwick Group, Inc. 198,225
2,200 Vulcan International Corp. 73,012
4,600 Ziegler (The) Companies, Inc. 71,875
6,002,757
HEALTH CARE - 1.34%
4,700 Kewaunee Scientific 61,100
13,700 Merit Medical Systems, Inc. 89,050
37,300 Provantage Health Services* 456,925
607,075
MISCELLANEOUS - 4.42%
9,000 AT&T Corp.-Liberty Media Corp. 218,250
14,000 Andersons, Inc. 133,000
8,910 Astronics Corp. 82,417
25,300 Dave & Buster's, Inc. 156,544
13,000 Detection Systems, Inc. 123,500
10,400 Edelbrock Corp. 104,650
2,250 FRM Nexus, Inc. 4,008
17,750 Hardinge, Inc. 185,266
15,500 Hoenig Group, Inc. 152,094
7,200 Liberty Livewire Corp. Cl. A* 505,800
10,600 Primesource Corp. 53,662
4,500 Programming and Systems, Inc.* 4,500
7,400 Prophet 21, Inc.* 107,300
1,700 Scope Industries 76,075
12,000 Sun Hydraulics Corp. 100,500
2,007,566
TECHNOLOGY - 9.39%
2,100 Allen Organ Co. Cl. B 122,587
13,500 Analytical Surveys 41,766
16,000 BEI Technologies, Inc. 409,000
18,900 Bell Microproducts, Inc.* 347,288
12,700 CPAC, Inc. 95,250
10,000 Data Research Associates, Inc. 78,594
16,600 Dataram Corp. 477,250
13,200 Del Global Technologies Corp. 128,287
19,900 DRS Technologies, Inc.* 231,338
7,800 Eastern (The) Co. 101,400
13,000 EDO Corp. 82,062
14,700 Franklin Electronic Publishers, Inc.* 130,463
16,800 Integrated Measurement System, Inc.* 264,600
11,000 Interphase Corp.* 251,625
5,500 Koss Corp.* 87,312
18,200 Norstan, Inc. 72,800
20,500 Ontrack Data International* 160,156
21,700 Powell Industries, Inc.* 211,575
8,900 Programmer's Paradise, Inc.* 35,044
2,900 Quipp, Inc. 55,100
8,000 Refac Technology Develop Corp. 27,500
29,700 RWD Technologies, Inc.* 172,631
22,000 Semitool, Inc. 380,875
12,000 TRM Copy Center Corp.* 64,500
4,900 II-VI, Inc. 237,038
4,266,041
TRANSPORTATION & SERVICES - 2.18%
12,000 International Shipholding Corp. 105,000
4,000 Kenan Transport Co. 82,500
30,000 Kitty Hawk, Inc.* 300
8,066 KLLM Transport Services, Inc. 63,772
9,000 Marten Transport, Ltd. 117,000
15,500 Old Dominion Freight Line, Inc.* 151,125
18,100 Pam Transportation Services* 171,950
10,600 Petroleum Helicopters, Inc. 100,700
12,000 Transport Corporation of America, Inc.* 78,000
17,000 USA Truck, Inc. 99,875
3,350 VSE Corp. 22,403
992,625
UTILITIES - 12.63%
14,100 American States Water Co. 419,475
4,000 Atrion Corp. 49,500
15,800 Bangor Hydro-Electric Co. 370,312
5,000 Berkshire Gas Co. 186,875
4,554 California Water Services Group 110,434
22,600 Cascade Natural Gas Corp. 377,137
11,200 Chesapeake Utilities Corp. 198,800
9,900 Connecticut Water Service, Inc. 264,825
14,000 CTG Resources, Inc. 513,625
4,000 Delta Natural Gas Company, Inc. 61,000
3,623 Energy East Corp. 69,063
6,000 EnergyNorth, Inc. 355,500
6,000 Florida Public Utilities Co. 93,750
9,700 Green Mountain Power Corp. 80,025
2,500 Maine Public Service Co. 50,313
10,200 Middlesex Water Co. 291,975
21,700 NUI Corp. 585,900
10,800 Providence Energy Corp. 437,400
2,900 RGC Resources, Inc. 51,113
4,800 SJW Corp. 570,600
17,000 St. Joseph Light & Power Co. 357,000
9,176 UNITIL Corp. 244,885
5,739,507
TOTAL COMMON STOCKS 39,234,198
(Cost $33,528,077)
FACE
AMOUNT DESCRIPTION MARKET VALUE
REPURCHASE AGREEMENT - 9.93%
$ 4,510,000 UMB Bank, n.a.,
5.90%, due July 3, 2000
(Collateralized by U.S.
Treasury Notes, 6.625%,
due June 30, 2001 with
a value of $4,600,309) 4,510,000
(Cost $4,510,000)
TOTAL INVESTMENTS - 96.27% 43,744,198
(Cost $38,038,077)
Other assets less liabilities - 3.73% 1,695,862
TOTAL NET ASSETS - 100.00% $ 45,440,060
For federal income tax purposes, the identified cost of investments owned
at June 30, 2000 was $38,313,301.
Net unrealized appreciation for federal income tax purposes was $5,430,897,
which is comprised of unrealized appreciation of $11,761,232 and unrealized
depreciation of $6,330,335.
*Non-income producing security
See accompanying Notes to Financial Statements.
Babson Value Fund
Despite a difficult start to the year for all types of equity funds, it was
clear by the end of February that we were once again a value fund caught in
a growth market. Our deep value management style was very much out of favor
during the first two months of 2000, but the Fund beat all benchmarks when
the market's focus turned to "old economy" stocks in the March through May
period. After a generally directionless market in June, Babson Value
returned -6.34% (price change and reinvested distributions) for the first
six months of 2000, trailing the unmanaged Standard & Poor's 500 Index -
0.42% and the S&P/Barra Value Index - 4.07%.
Babson Value's healthcare holdings (UnitedHealth Group, Aetna, and Tenet
Healthcare) were the best performing group in the first half. Harcourt
General, which essentially put itself up for sale during that period, and
KLM Royal Dutch Airlines, which announced that it was exploring an alliance
with British Airways were also top performers. Negative contributors in the
first half included three basic materials holdings (USX-U.S. Steel Group,
Willamette Industries, and Weyerhaeuser). We have reduced our exposures in
the consumer cyclicals and basic materials groups, which has helped our
relative performance. We have also increased our exposure in consumer staples.
Babson Value Fund remains unquestionably a deep value fund. This means that
the price/earnings and price/book ratios of our holdings are generally much
lower than the value benchmarks' and remarkably lower than the broad
market's. Deep value stocks like this have been disproportionately punished
when value has been out of favor, but disproportionately rewarded when
value is in favor.
Uncertainty about interest rates, potentially slower economic growth, and a
renewed focus on real earnings are some of the factors that may be driving
investors away from speculative high-tech firms and toward more reasonably
valued companies. Until recently, the market didn't seem to care much about
real earnings. In 1999, for example, companies with no reported earnings
were up over 50%; those with good earnings were down 2%. The market's
renewed appreciation for value stocks helps to vindicate the Fund's long-
term strategy.
Going forward we expect a slowing economy. Companies with solid earnings
and positive earnings prospects do best in this environment. Our long-term
commitment to this type of investment should prove to be a benefit to the
Fund and its shareholders.
Portfolio additions for the six month period:
Fortune Brands - consumer and office products; Titleist golf equipment,
etc.
USX-Marathon - exploration, refining, and marketing of energy products
Norfolk Southern - Eastern railroad
Duke Energy - Southern utility and energy marketer
BP Amoco - received in exchange for our Arco holdings
Six positions were liquidated during the last six months, including Texas
Utilities which had become overvalued, and Kmart and J.C. Penney as part of
our consumer cyclicals reduction strategy. Travelers Property Casualty was
the target of a buy-out. Neiman Marcus (a spin-off holding) and Berkshire
Hathaway, both minor positions, were also sold.
Fund Composition
Top Ten Holdings: % of Total
Student Loan Corp. 4.99
KLM Royal Dutch Airlines 3.36
Tenet Healthcare 3.21
Diageo PLC, ADR 3.14
Boeing Co. 3.13
American Express Co. 3.10
Royal Dutch Petroleum Co. 3.06
Citigroup, Inc. 2.98
BP Amoco 2.95
International Business Machines Corp. 2.88
Total 32.80%
Total Securities in Portfolio 42
As of June 30, 2000, schedule of investments. Subject to change.
CHART - babson value Fund
versus S&P 500 and
S&P Barra Large Cap Value
Babson Value Fund's average annual compounded total returns for one, five
and ten year periods as of June 30, 2000, were -15.93%, 11.71% and 13.02%,
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.
Schedule of Investments
June 30, 2000
BABSON VALUE Fund
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 96.86%
BASIC MATERIALS - 12.04%
289,000 duPont (E.I.) deNemours & Co. $ 12,643,750
300,100 Potlatch Corp. 9,940,813
55,400 Martin Marietta Materials, Inc. 2,240,237
398,000 Millennium Chemicals, Inc. 6,766,000
594,000 USX-U.S. Steel Group 11,026,125
264,500 Weyerhaeuser Co. 11,373,500
354,300 Willamette Industries, Inc. 9,654,675
63,645,100
CAPITAL GOODS - 11.13%
395,000 Boeing Co. 16,515,937
202,100 Hanson PLC, ADR 7,124,025
379,772 Lockheed Martin Corp. 9,423,093
671,700 Raytheon Co. Cl. B 12,930,225
1,299,700 Wallace Computer Services, Inc. 12,834,537
58,827,817
CONSUMER CYCLICAL - 10.12%
572,200 Dana Corp. 12,123,487
268,700 Harcourt General, Inc. 14,610,563
670,000 Limited, Inc. 14,488,750
375,500 Sears, Roebuck & Co. 12,250,687
53,473,487
CONSUMER STAPLES - 6.40%
408,700 Albertson's, Inc. 13,589,275
467,000 Diageo PLC, ADR 16,607,688
156,000 Fortune Brands, Inc. 3,597,750
33,794,713
ENERGY - 7.51%
275,732 BP Amoco 15,596,091
262,500 Royal Dutch Petroleum Co. 16,160,156
317,000 USX-Marathon Group 7,944,813
39,701,060
FINANCIAL - 26.02%
557,000 Allstate Corp. 12,393,250
314,700 American Express Co. 16,403,738
273,000 Chase Manhattan Corp. 12,575,063
261,000 Citigroup, Inc. 15,725,250
801,000 National City Corp. 13,667,063
404,850 SLM Holding Corp. 15,156,572
628,200 Student Loan Corp. 26,384,400
624,700 U.S. Bancorp 12,025,475
339,330 Wells Fargo & Co. 13,149,038
137,479,849
HEALTH CARE - 8.80%
233,000 Aetna, Inc. 14,955,687
628,900 Tenet Healthcare 16,980,300
170,000 UnitedHealth Group, Inc. 14,577,500
46,513,487
TECHNOLOGY - 7.43%
216,000 Apple Computer, Inc. 11,313,000
139,000 International Business Machines Corp. 15,229,187
614,000 Xerox Corp. 12,740,500
39,282,687
TRANSPORTATION - 5.42%
372,000 CSX Corp. 7,881,750
667,707 KLM Royal Dutch Airlines 17,735,967
203,000 Norfolk Southern Corp. 3,019,625
28,637,342
UTILITIES - 1.99%
186,700 Duke Energy Corp. 10,525,212
TOTAL COMMON STOCKS 511,880,754
(Cost $422,848,154)
FACE
AMOUNT DESCRIPTION MARKET VALUE
REPURCHASE AGREEMENT - 1.81%
$ 9,545,000 UMB Bank, n.a.,
5.90%, due July 3, 2000
(Collateralized by U.S.
Treasury Bonds, 11.875%,
due November 15, 2003 with
a value of $9,831,583) 9,545,000
(Cost $9,545,000)
TOTAL INVESTMENTS - 98.67% 521,425,754
(Cost $432,393,154)
Other assets less liabilities - 1.33% 7,043,337
TOTAL NET ASSETS - 100.00% $ 528,469,091
For federal income tax purposes, the identified cost of investments owned
at June 30, 2000 was $439,466,930.
Net unrealized appreciation for federal income tax purposes was
$81,958,824, which is comprised of unrealized appreciation of $141,787,560
and unrealized depreciation of $59,828,736.
See accompanying Notes to Financial Statements.
Babson-Stewart Ivory International Fund
The Fund was slightly behind the benchmarks for the six months ended June
30, 2000 with a total return (price change and reinvested distributions) of
-4.61% vs. the unmanaged Morgan Stanley Capital International (MSCI) EAFE
at -3.95%.
The Fund underperformed against local indices in Europe and Japan, mainly
reflecting the sell-off in some of the high growth companies which had
previously dominated the markets, notably in the telecom, media and
technology sectors. This was particularly noticeable in the March-May
period, with some recovery appearing in June, as fears concerning higher
interest rates began to recede, and investors took advantage of lower price
levels to return to selected stocks.
Investment Results - Total Return
Periods Ended 6/30/00
Second Quarter Previous Twelve
2000 Months
Babson-Stewart Ivory Intl Fund -6.80% 22.64%
MSCI EAFE* Index** -3.90% 17.44%
MSCI World Index** -3.47% 12.53%
S&P 500 Index** -2.66% 7.25%
Lipper International Funds
(avg. funds 703 and
653, respectively) -4.70% 23.63%
*Europe, Australia, Far East
**unmanaged
The Fund's best performers this period were in financials, (Promise, DePfa,
Nomura), and several stock-specific, non sector-related gains (Buhrmann,
Capita, China Mobile). The Fund's underperformers were primarily consumer
or technology driven. The Fund increased its commitment in Japan, Korea,
Belgium, Denmark, Germany, Luxembourg, Switzerland, Brazil and Mexico, with
reductions in Australia, China/HK, Singapore, UK, France, Italy, the
Netherlands, Spain, Sweden and Hungary.
Although there are indications that economic growth in the UK is slowing,
continental European economies continue to show recovery, with rising
productivity and business confidence in Germany, and better than expected
first quarter growth in Italy and France, led by rising exports. The recent
recovery in the Euro has restored some confidence in the single currency.
Inflation in the Euro zone does look to be on a rising trend, although the
pressures in the core countries are much less than in Ireland and Spain.
In Japan, business sentiment has recovered and industrial production
remains strong, but consumer demand remains weak. Further deregulation and
restructuring looks inevitable, as the potential for sustained fiscal
stimulation has become limited with public debt now representing 130% of GDP.
Elsewhere in the Pacific, U.S. congressional approval for permanent normal
trade relations with China is clearly an important milestone, paving the
way for China's entry into the World Trade Organization. The consequent
growing confidence among trading partners may have contributed to the
sharp rise in exports from China and Hong Kong. Consumer expenditure has
picked up in Singapore and Thailand as economic recovery gathers momentum,
but the region, with some economies now growing at 7 to 8%, remains
vulnerable to any slowdown in technology orders from the U.S.
The outlook for international investment remains encouraging. The improved
economic environment looks set to sustain company earnings growth, with returns
from European equity portfolios boosted by further recovery in the currency.
The Fund's growth bias has been a positive for shareholders over recent
years, but not in the last six months. We anticipate more stable markets to
follow the recent shakeout in the tech sectors, with the direction of
interest rates playing a crucial role in international equity investment
returns. As investors regain confidence in a low inflationary environment,
and believe that further rises in interest rates will be relatively
restrained, our growth bias will return to being of benefit.
Portfolio additions for the six month period:
Brazil - Tele Norte Leste ADRs (telecoms)
Denmark - ISS (industrial cleaning, building maintenance)
Germany - Fantastic* (broadcasting software)
Schering (pharmaceuticals)
SCM Microsystems (computer hardware design)
Japan - Daihatsu Motor (autos)
Marui (department stores)
NEC (integrated electronics)
Omron (industrial controls)
TDK (electronic components)
Korea - SK (holding company)
Luxembourg - SES Astra (satellite broadcasting)
Mexico - Telefonos de Mexico ADRs (telecoms)
Netherlands - Philips (electronics)
Switzerland - ABB (engineering)
Vontobel (investment banking)
UK - AstraZeneca (chemicals)
Sage (accounting software)
The following positions were liquidated from the portfolio:
Australia - Brambles (transportation services)
Brazil - Cemig (electric utility)
France - L'Oreal (cosmetics)
Sanofi (pharmaceuticals)
Germany - Fantastic* (broadcasting software)
Porsche (autos)
Hong Kong - Cheung Kong (property, investments)
CLP Holdings (electric utility)
Shaw Brothers (TV, media)
Hungary - Gedeon Richter (pharmaceuticals)
Japan - Bridgestone (tire & rubber)
Ito-Yokado (supermarkets)
Matsushita Communication (telecom equipment)
Sanwa Bank (banking)
Netherlands - Aegon (insurance)
Getronics (IT services)
Spain - Banco Popular (banking)
Mapfre Vida Seguro (insurance)
Sweden - Atlas-Copco (engineering)
UK - Glaxo-Wellcome (pharmaceuticals)
Kingfisher (retailer)
*bought and sold within the same period
CHART - babson-stewart ivory international fund
versus Morgan Stanley Capital International EAFE Index
Babson-Stewart Ivory International Fund's average annual
compounded total returns for one, five and ten year periods
as of June 30, 2000, were 22.64%, 12.06% and 9.34%,
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.
Fund Diversification
Percent
Of Total
Basic Materials 0.8%
Capital Goods 6.7%
Consumer Cyclical 18.2%
Health Care 12.1%
Energy 4.9%
Financial 18.9%
Media & Entertainment 2.3%
Miscellaneous 2.9%
Technology 28.0%
Utilities 1.3%
Cash & Equivalents 3.9%
As of June 30, 2000, schedule of investments. Subject to change.
Schedule of Investments
June 30, 2000
BABSON-STEWART IVORY INTERNATIONAL FUND
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 96.05%
AUSTRALIA - 1.49%
75,000 Broken Hill Proprietary
(Resources) $ 885,862
30,000 Lend Lease
(Real estate) 382,297
1,268,159
BELGIUM - 1.00%
20,000 Colruyt
(Food retailer) 847,392
BRAZIL - 1.02%
36,767 Tele Norte Leste
(Telecoms) 868,620
FINLAND - 1.44%
24,000 Nokia
(Telecom equipment) 1,224,690
FRANCE - 7.22%
8,666 AXA-UAP
(Insurance, financial services) 1,365,117
8,000 Banque Nationale de Paris
(Banking) 769,870
9,000 Lafarge
(Building materials, cement) 699,414
5,900 Pinault-Printemps-Redoute
(Specialty retailing) 1,310,737
13,000 Total
(Oil major) 1,993,224
6,138,362
DENMARK - 1.16%
13,000 ISS*
(Cleaning and maintenance services) 989,675
GERMANY - 4.91%
10,000 DePfa
(Mortgage banking) 1,003,390
6,500 Fresenius
(Pharmaceuticals, medical equipment) 1,501,744
20,000 Schering
(Pharmaceuticals) 1,095,996
10,000 SCM Microsystems*
(Computer hardware design) 577,594
4,178,724
HONG KONG - 4.82%
165,000 Asia Satellite
(Satellite operator) 564,075
140,000 China Mobile*
(Telecom utility) 1,234,687
990,000 HK & China Gas
(Gas utility) 1,117,568
1,450,000 Swire Pacific Cl. B
(Trading, airlines, real estate) 1,181,130
4,097,460
IRELAND - 1.06%
70,000 Kerry Group
(Food manufacturer) 902,942
ITALY - 2.65%
100,000 BIPOP-CARIRE
(Banking) 786,673
120,000 Luxottica
(Eyeglass frames) 1,462,500
2,249,173
JAPAN - 26.58%
41,100 Credit Saison
(Credit card services) 952,886
200,000 Daihatsu Motor
(Specialty vehicles) 1,298,714
93,000 Fuji Bank
(Banking) 706,451
35,000 Fuji Photo
(Film) 1,431,601
38,000 Hosiden
(Electronic components) 1,611,611
19,000 Hoya
(Opto-electronics) 1,701,145
79,000 Japan Airport Terminal
(Airport operator) 700,617
33,000 Marui
(Department stores) 631,356
40,000 NEC
(Integrated electronics) 1,255,360
65,000 Nippon Comsys
(Telecoms engineering) 1,381,415
53,000 Nomura
(Securities house) 1,296,216
45 NTT Mobile Communication
(Cellular telecommunications) 1,217,191
45,000 Omron
(Industrial controls) 1,221,432
15,300 Promise
(Consumer lending) 1,208,369
14,000 Secom
(Security services) 1,022,572
11,700 Sony
(Consumer electronics) 1,091,655
16,000 Takeda
(Pharmaceuticals, chemicals) 1,049,526
10,000 TDK
(Electronic components) 1,436,313
41,000 Terumo
(Medical equipment) 1,387,211
22,601,641
KOREA - 1.01%
25,000 SK
(Holding company) 458,510
LUXEMBOURG - 1.28%
6,500 SES Astra
(Satellite broadcasting) 1,092,177
MEXICO - 1.01%
15,000 Telefonos de Mexico
(Telecom) 856,875
NETHERLANDS - 6.38%
40,000 Buhrmann
(Office products supplier) 1,143,731
20,000 ING Groep
(Financial services) 1,351,856
20,000 KPN
(Postal and telecom services) 894,554
18,000 Philips
(Integrated electronics) 848,920
23,000 VNU
(Publishing) 1,187,934
5,426,995
PORTUGAL - 1.52%
115,000 Portugal Telecom
(Telecom utility) 1,291,137
SINGAPORE - 0.57%
125,680 Overseas Union Bank
(Banking) 487,583
SPAIN - 2.60%
66,666 BBVA
(Banking) 996,061
56,405 Telefonica*
(Telephone utility) 1,211,622
2,207,683
SWEDEN - 5.18%
80,000 L.M. Ericsson
(Telecom equipment) 1,582,766
15,000 Modern Times*
(Broadcasting, media) 714,286
150,000 Nordic Baltic Holding
(Banking) 1,130,952
46,000 Securitas
(Security/cleaning services) 975,283
4,403,287
SWITZERLAND - 4.00%
10,000 ABB
(Engineering and machinery) 1,196,898
700 Novartis
(Pharmaceuticals and chemicals) 1,108,809
500 Vontobel
(Banking) 1,097,284
3,402,991
UNITED KINGDOM - 19.62%
18,000 AstraZeneca
(Pharmaceuticals) 840,224
84,000 Bank of Scotland
(Banking) 798,826
121,000 BBA Group
(Engineering) 792,758
55,000 Capita Group
(Facilities management) 1,345,675
209,000 Cattles
(Consumer loans) 774,783
97,000 Electrocomponents
(Electronics) 990,702
22,000 Energis*
(Telecoms) 824,881
80,000 Hays
(Business services) 446,062
76,000 Lloyds TSB
(Banking) 717,572
48,000 Logica
(Computer software) 1,135,914
350,000 Morrison Supermarkets
(Supermarkets) 746,715
70,000 Sage
(Accounting software services) 566,656
148,000 Shell
(Oil major) 1,235,022
228,000 Spirent
(Electric components) 1,533,466
74,000 SSL International
(Healthcare and sporting goods) 800,581
70,000 SmithKline Beecham
(Pharmaceuticals) 916,182
550,000 Vodafone AirTouch
(Cellular telephone network) 2,221,987
16,688,006
TOTAL COMMON STOCKS 81,682,082
(Cost $58,341,372)
FACE
AMOUNT DESCRIPTION MARKET VALUE
REPURCHASE AGREEMENT - 1.03%
$ 878,000 State Street Bank,
2.00%, due July 3, 2000
(Collateralized by U.S.
Treasury Bonds, 10.75%,
due May 15, 2003 with
a value of $899,000) 878,000
(Cost $878,000)
TOTAL INVESTMENTS - 97.08% 82,560,082
(Cost $59,219,372)
Other assets less liabilities - 2.92% 2,481,616
TOTAL NET ASSETS - 100.00% $ 85,041,698
For federal income tax purposes, the identified cost of investments owned
at June 30, 2000 was $60,040,365.
Net unrealized appreciation for federal income tax purposes
was $22,519,717, which is comprised of unrealized
appreciation of $25,418,689 and unrealized depreciation of $2,898,972.
*Non-income producing security
See accompanying Notes to Financial Statements.
Babson Bond Trust
We finished the six month period ended June 30, 2000 with
positive total returns (price change and reinvested
distributions) in both Portfolios. In the current
environment of an aggressive Federal Reserve, slowing
economy and widening credit spreads, Portfolio L returned
3.16%, and Portfolio S 2.94%, each slightly lagging their
benchmarks of the Lehman Brothers Aggregate Bond Index and
the Lehman Brothers Intermediate Gov't./Corp. Index, 3.99%
and 3.22%, respectively.
Positive total returns were driven by coupon income plus
modest price appreciation, primarily on 5-year and longer
maturity securities where yields fell between 15 to 60 basis
points. Offsetting falling yields, however, was a widening
of credit and quality spreads (an increase in the yield gap
between different quality bonds) on corporate and mortgage
backed securities. As a result, corporate and mortgage bonds
underperformed Treasuries of similar maturities through mid-
May (as bond yields increase, prices decline), and then
recovered a bit near the end of the period. Some longer
maturity corporate holdings underperformed as the yields
between 10- and 30-year bonds became steeply inverted, and
the shorter bonds carried much higher yields than the longer
issues. Generally, however, the Portfolios were unaffected
by the inversion of the yield curve.
The Put Bonds (longer maturity bonds giving investors an
option to sell the bonds back to the issuer early) in our
Portfolios did well in the current "inversion environment".
These included IBM and Suntrust. Hellenic Republic also did
well on the news that Greece is officially headed for EMU
(European Economic and Monetary Union) entrance in 2001. Our
media/telecom holdings (Worldcom, Time Warner,
Telecommunications Inc.) underperformed amid heavy supply in
this sector. American Stores underperformed due to credit
concerns related to the consolidation in the industry.
We continue to be overweighted in corporate and mortgage
backed securities, collecting the added yield available from
these sectors. We feel that spreads are at historically
attractive levels, and are willing to increase exposure at
these prices. Credit spreads may be choppy in the near-term
as negative earnings surprises, due to slower growth, drag
down credit quality. However, this added exposure to higher
yielding corporate and mortgage securities should result in
better long-term returns as the environment for these
sectors improves. We are also starting to look more closely
at the new issue market which has become very active of
late. Many of these new bonds are being priced at more attractive
levels than their counterparts in the secondary market.
It appears that the U.S. economy is indeed showing signs of
slowing, but the real question is "how much"? The Fed has
tightened monetary policy six times and, most recently, has
indicated that inflation remains a concern. Thus, the
possibility of additional modest rate hikes exists, though
we sense that the Fed is getting close to the end of this
tightening cycle. The markets will likely be range-bound for
the summer as bond investors await further evidence on the
pace of growth and a clear inflationary outlook. Bond Trust
is normally duration neutral, and does not actively
anticipate or "time" interest rate moves. Our investment
objective is to bring expertise to the Portfolios with our
credit work, issue selection and sector rotation rather than
positioning based on unpredictable interest rate forecasts.
Portfolio Long
Buys:
Continental Airlines, 7.256%/2020 - securitized issue, cheap
on new supply
Continental Airlines, 8.048%/2020 - securitized issue, cheap
on new supply
GMAC, 7.75%/2010 - large, liquid new issue, add to
corporates
Green Tree, 7.25%/2005 - cheap odd lot offering
GTE, 7.51%/2009 - solid credit, cheap on sector supply and
event risk
Tosco, 7.25%/2007 - strong company/industry fundamentals,
add to corporates
Wal-Mart, 6.875%/2009 - large, liquid new issue, add to
corporates
Worldcom, 8.00%/2006 - large, liquid new issue, add to
corporates
Sells:
Associates Corp., 5.80%/2004 - reduce exposure to finance sector
Ford Capital, 10.125%/2000
GMAC, 6.85%/2004 - swap to new issue GMAC
Green Tree, 7.25%/2005 - sold into strong market bid
Lockheed Martin, 7.95%/2005 - credit concerns
NJ Economic Dev. Auth. MBIA, 7.425%/2029 - reduce exposure
to long maturity bonds as yield curve inverted
Philip Morris, 7.20%/2007 - credit concerns
SunTrust Banks, 6.00%/2026 - reduce exposure to finance sector
United Air Lines, 7.27%/2013 - credit concerns
Worldcom, 7.75%/2007 - swap to new issue Worldcom
Portfolio Short
Buys:
Continental Airlines, 7.256%/2020 - securitized issue, cheap
on new supply
Continental Airlines, 8.048%/2020 - securitized issue, cheap
on new supply
GMAC, 7.75%/2010 - large, liquid new issue, add to corporates
GTE, 7.51%/2009 - solid credit, cheap on sector supply and event risk
Ontario Province, 5.50%/2008
Tosco, 7.25%/2007 - strong company/industry fundamentals, add to corporates
Wal-Mart, 6.875%/2009 - large liquid new issue, add to corporates
Worldcom, 8.00%/2006 - large liquid new issue, add to corporates
Sells:
Ford Motor Credit, 7.375%/2009
GMAC, 6.85%/2004 - swap to new issue GMAC
Lockheed Martin, 7.95%/2005 - credit concerns
Ontario Province, 5.50%/2008
Philip Morris, 7.20%/2007 - credit concerns
Service Corp. Intl., 6.375%/2000
United Airlines, 7.27%/2013 - credit concerns
Worldcom, 7.75%/2007 - swap to new issue Worldcom
Currently, the average maturity is 6.2 years for Portfolio S
and 8.9 years for Portfolio L, after taking into
consideration bonds trading to their call dates and average
life assumptions for mortgage and asset-backed securities.
Quality Ratings
Portfolio L
Aaa 50.8%
Aa 5.4%
A 20.7%
Baa 23.1%
Total 100.0%
Source: Moody's
CHART - Babson Bond Trust - Portfolio L
versus Lehman Brothers Aggregate Bond Index
Average annual compounded total returns for one, five and
ten year periods ended June 30, 2000, were 3.54%, 5.40% and
7.22%. 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.
Quality Ratings
Portfolio S
Aaa 56.2%
Aa 7.2%
A 15.9%
Baa 20.7%
Total 100.0%
Source: Moody's
CHART - Babson Bond Trust - Portfolio S
versus Lehman Brothers Intermediate Gov't./Corp. Index
Average annual compounded total returns for one, five and
ten year periods ended June 30, 2000, were 3.55%, 5.52% and
6.82%. 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.
Schedule of Investments
June 30, 2000
Babson Bond Trust - Portfolio L
Principal
Description Amount Market Value
CORPORATE BONDS - 50.03%
BANKS AND FINANCE - 10.89%
American Stores Co., 8.00%, due June 1, 2026 $ 1,650,000 $ 1,597,068
Associates Corporation North America,
5.80%, due April 20, 2004 2,500,000 2,341,600
GMAC, 7.75%, due January 19, 2010 2,415,000 2,400,872
Hellenic Republic, 6.95%, due March 4, 2008 1,300,000 1,263,964
Southern Investments UK PLC,
6.375%, due November 15, 2001 1,300,000 1,274,299
SunTrust Banks, Inc., 6.00%, due February 15, 2026 2,200,000 2,016,938
11,365,000 10,894,741
COMMUNICATIONS - 7.77%
A T & T Capital Corp., 6.875%, due January 16, 2001 1,265,000 1,260,927
BellSouth Savings & Employee Stock Ownership Trust,
9.19%, due July 1, 2003 684,022 708,333
GTE Corp., 7.51%, due April 1, 2009 1,000,000 984,740
Tele Communications, Inc.,
8.75%, due February 15, 2023 1,000,000 1,019,510
Time Warner Entertainment Company LP,
8.375%, due March 15, 2023 1,000,000 1,012,330
Time Warner, Inc., 9.15%, due February 1, 2023 1,350,000 1,465,749
WorldCom, Inc., 8.00%, due May 15, 2006 1,300,000 1,322,386
7,599,022 7,773,975
DIVERSIFIED - 5.66%
Continental Airlines, 7.256%, due March 15, 2020 793,642 737,349
Continental Airlines, 8.048%, due November 1, 2020 800,000 801,560
International Business Machines Corp.,
6.22%, due August 1, 2027 1,500,000 1,454,820
Lucent Technologies, Inc., 6.90%, due July 15, 2001 1,700,000 1,698,402
Wal-Mart Stores, 6.875%, due August 10, 2009 1,000,000 976,870
5,793,642 5,669,001
INDUSTRIALS - 12.30%
Airgas, Inc., 7.14%, due March 8, 2004 1,650,000 1,617,924
Cardinal Health, Inc., 6.00%, due January 15, 2006 1,835,000 1,676,585
Comdisco, Inc., 6.375%, due November 30, 2001 3,675,000 3,555,893
Georgia-Pacific Corp., 9.625%, due March 15, 2022 1,500,000 1,572,435
Oslo Seismic Services, Inc., 8.28%, due June 1, 2011 1,844,575 1,845,626
Petroleum Geo-Services A/S, 7.50%, due March 31, 2007 1,500,000 1,439,865
Tosco Corp., 7.25%, due January 1, 2007 625,000 606,731
12,629,575 12,315,059
TRANSPORTATION - 2.46%
CSX Corp., 9.50%, due August 1, 2000 680,000 681,061
JB Hunt Transport Services, Inc.,
6.25%, due November 17, 2000 1,785,000 1,779,520
2,465,000 2,460,581
U.S. DOLLAR DENOMINATED CANADIAN SECURITIES - 7.32%
Canadian National Railway Co.,
7.00%, due March 15, 2004 1,950,000 1,897,877
Newfoundland Province of Canada,
7.32%, due October 13, 2023 1,950,000 1,833,605
Ontario Province of Canada,
5.50%, due October 1, 2008 1,000,000 896,720
Quebec Province of Canada,
7.50%, due September 15, 2029 2,750,000 2,701,628
7,650,000 7,329,830
UTILITIES - 3.63%
Consolidated Edison Company NY, Inc.,
6.15%, due July 1, 2008 2,000,000 1,814,860
Illinois Power Special Purpose Trust, Cl. A-6,
5.54%, due June 25, 2009 2,000,000 1,820,620
4,000,000 3,635,480
TOTAL CORPORATE BONDS 51,502,239 50,078,667
(Cost $52,265,808)
ASSET-BACKED BONDS - 5.61%
California Infrastructure & Economic Development
Bank Special Purpose Trust
6.22%, due March 25, 2004 1,000,000 987,500
6.42%, due September 25, 2008 2,500,000 2,428,525
Comed Transitional Funding Trust,
5.63%, due June 25, 2009 1,400,000 1,290,464
MBNA Master Credit Card Trust II,
5.90%, due August 15, 2011 1,000,000 914,150
TOTAL ASSET-BACKED BONDS 5,900,000 5,620,639
(Cost $5,884,867)
COMMERCIAL MORTGAGE-BACKED BONDS - 6.35%
DLJ Commercial Mortgage Corp.,
6.11%, due December 10, 2007 2,186,710 2,089,313
JP Morgan Commercial Mortgage Financial Corp.,
6.507%, due October 15, 2035 1,500,000 1,411,740
Nomura Asset Securities Corp.,
6.59%, due March 17, 2028 3,000,000 2,854,410
TOTAL COMMERCIAL MORTGAGE-BACKED BONDS 6,686,710 6,355,463
(Cost $6,744,635)
U.S. GOVERNMENTAL AGENCY, U.S. GOVERNMENT SECURITIES AND
GOVERNMENT SPONSORED ENTERPRISES - 35.66%
U.S. GOVERNMENTAL AGENCY - 9.70%
*Government National Mortgage Association
7.50%, due March 15, 2007 80,231 79,704
7.50%, due July 15, 2007 118,690 117,910
8.00%, due October 15, 2007 195,217 197,413
8.00%, due November 15, 2009 2,387,115 2,427,385
9.50%, due April 15, 2016 19,572 20,361
9.50%, due January 15, 2019 56,779 59,068
8.00%, due May 15, 2022 257,022 259,914
7.00%, due March 15, 2024 2,867,195 2,790,125
8.00%, due December 15, 2026 3,452,518 3,491,359
Small Business Administration guaranteed development
participation certificates
9.80%, due July 1, 2008 102,705 107,787
10.05%, due August 1, 2008 55,149 56,652
10.05%, due April 1, 2009 104,357 108,208
9,696,550 9,715,886
U.S. GOVERNMENT SECURITIES - 12.87%
U.S. Treasury Bonds
7.25%, due August 15, 2004 2,350,000 2,429,689
5.875%, due November 15, 2005 550,000 540,545
6.125%, due August 15, 2029 2,200,000 2,222,000
U.S. Treasury Notes
5.625%, due February 15, 2006 1,000,000 970,160
6.50%, due October 15, 2006 1,815,000 1,836,834
8.125%, due May 15, 2021 4,000,000 4,880,640
11,915,000 12,879,868
*GOVERNMENT SPONSORED ENTERPRISES - 13.09%
Federal Home Loan Mortgage Corporation
7.75%, due April 1, 2008 135,711 136,559
7.75%, due November 1, 2008 26,810 26,977
8.00%, due August 1, 2009 21,435 21,776
8.25%, due October 1, 2010 252,012 257,838
9.00%, due June 1, 2016 77,494 80,375
8.00%, due October 1, 2018 122,094 124,039
9.00%, due October 1, 2018 57,098 58,846
7.50%, due February 1, 2021 947,683 935,837
6.00%, due November 1, 2028 5,992,267 5,494,130
7.50%, due February 1, 2030 1,483,732 1,465,186
Federal National Mortgage Association
7.125%, due February 15, 2005 300,000 301,329
7.00%, due December 1, 2007 293,832 283,730
8.25%, due January 1, 2009 117,278 118,634
8.00%, due February 1, 2009 139,535 140,188
8.50%, due July 1, 2013 27,709 28,229
9.50%, due June 25, 2018 100,423 105,316
9.25%, due October 1, 2020 65,652 67,867
6.50%, due March 1, 2029 1,176,279 1,109,372
7.50%, due September 1, 2029 2,383,610 2,350,073
13,720,654 13,106,301
TOTAL U.S. GOVERNMENTAL AGENCY, U.S. GOVERNMENT SECURITIES
AND GOVERNMENT SPONSORED ENTERPRISES 35,332,204 35,702,055
(Cost $36,222,321)
REPURCHASE AGREEMENT - 0.77%
UMB Bank, n.a., 5.90%, due July 3, 2000
(Collateralized by U.S. Treasury Bonds,
11.875%, due November 15, 2003
with a value of $794,162) 770,000 770,000
(Cost $770,000)
TOTAL INVESTMENTS - 98.42% 98,526,824
(Cost $101,887,631)
Other assets less liabilities - 1.58% 1,580,759
TOTAL NET ASSETS - 100.00% $ 100,107,583
For federal income tax purposes, the identified cost of investments owned
at June 30, 2000 was $103,552,346.
Net unrealized depreciation for federal income tax purposes was $5,025,522,
which is comprised of unrealized appreciation of $457,449 and unrealized
depreciation of $5,482,971.
*Mortgage-backed securities
See accompanying Notes to Financial Statements.
Schedule of Investments
June 30, 2000
Babson Bond Trust - Portfolio S
Principal
Description Amount Market Value
CORPORATE BONDS - 43.73%
BANKS AND FINANCE - 8.96%
Associates Corporation North America,
5.80%, due April 20, 2004 $ 750,000 $ 702,480
GMAC, 7.75%, due January 19, 2010 700,000 695,905
Hellenic Republic, 6.95%, due March 4, 2008 375,000 364,605
Southern Investments UK PLC,
6.375%, due November 15, 2001 300,000
294,069
SunTrust Banks, Inc., 6.00%, due February 15, 2026 700,000 641,753
2,825,000 2,698,812
COMMUNICATIONS - 6.71%
A T & T Capital Corp., 6.875%, due January 16, 2001 350,000 348,873
BellSouth Savings & Employee Stock Ownership Trust,
9.19%, due July 1, 2003 495,995 513,623
GTE Corp., 7.51%, due April 1, 2009 300,000 295,422
Time Warner Entertainment Company LP,
8.375%, due March 15, 2023 300,000 303,699
WorldCom, Inc., 8.00%, due May 15, 2006 550,000 559,471
1,995,995 2,021,088
DIVERSIFIED - 5.15%
Continental Airlines, 7.256%, due March 15, 2020 233,132 216,596
Continental Airlines, 8.048%, due November 1, 2020 235,000 235,458
International Business Machines Corp.,
6.22%, due August 1, 2027 400,000 387,952
Lucent Technologies, Inc., 6.90%, due July 15, 2001 375,000 374,648
Wal-Mart Stores, 6.875%, due August 10, 2009 345,000 337,020
1,588,132 1,551,674
INDUSTRIALS - 12.14%
Airgas, Inc., 7.14%, due March 8, 2004 550,000 539,308
Comdisco, Inc., 6.375%, due November 30, 2001 1,000,000 967,590
Ford Motor Credit Company,
7.375%, due October 28, 2009 700,000 677,089
Georgia-Pacific Corp., 9.125%, due July 1, 2022 375,000 360,968
Oslo Seismic Services, Inc., 8.28%, due June 1, 2011 461,144 461,406
Petroleum Geo-Services A/S, 7.50%, due March 31, 2007 500,000 479,955
Tosco Corp., 7.25% , due January 1, 2007 175,000 169,885
3,761,144 3,656,201
TRANSPORTATION - 3.14%
Burlington Northern Santa Fe Corp.,
6.05%, due March 15, 2001 400,000 395,912
JB Hunt Transport Services, Inc.,
6.25%, due November 17, 2000 350,000 348,926
Wisconsin Central Transportation Corp.,
6.625%, due April 15, 2008 225,000 199,847
975,000 944,685
U.S. DOLLAR DENOMINATED CANADIAN SECURITIES - 6.43%
Canadian National Railway Co.,
7.00%, due March 15, 2004 500,000 486,635
Ontario Province of Canada,
5.50%, due October 1, 2008 1,150,000 1,031,228
Quebec Province of Canada,
7.50%, due September 15, 2029 425,000 417,524
2,075,000 1,935,387
UTILITIES - 1.20%
Consolidated Edison Company NY, Inc.,
6.15%, due July 1, 2008 400,000 362,972
TOTAL CORPORATE BONDS 13,620,271 13,170,819
(Cost $13,660,334)
ASSET-BACKED BONDS - 7.26%
California Infrastructure & Economic Development Bank
Special Purpose Trust
6.22%, due March 25, 2004 300,000 296,250
6.42%, due September 25, 2008 150,000 145,712
Comed Transitional Funding Trust,
5.63%, due June 25, 2009 1,100,000 1,013,936
MBNA Master Credit Card Trust II,
5.90%, due August 15, 2011 800,000 731,320
TOTAL ASSET-BACKED BONDS 2,350,000 2,187,218
(Cost $2,307,460)
COMMERCIAL MORTGAGE-BACKED BONDS - 5.53%
DLJ Commercial Mortgage Corp.,
6.11%, due December 10, 2007 699,745 668,578
JP Morgan Commercial Mortgage Financial Corp.,
6.507%, due October 15, 2035 250,000 235,290
Nomura Asset Securities Corp.,
6.59%, due March 17, 2028 800,000 761,176
TOTAL COMMERCIAL MORTGAGE-BACKED BONDS 1,749,745 1,665,044
(Cost $1,763,705)
U.S. GOVERNMENTAL AGENCY, U.S. GOVERNMENT SECURITIES AND
GOVERNMENT SPONSORED ENTERPRISES - 42.40%
U.S. GOVERNMENTAL AGENCY - 6.89%
*Government National Mortgage Association
8.00%, due October 15, 2007 14,153 14,312
8.00%, due November 15, 2009 428,382 435,609
7.50%, due October 15, 2011 258,515 259,888
7.50%, due November 15, 2011 310,408 312,056
9.50%, due September 15, 2019 13,288 13,823
8.00%, due December 15, 2022 169,295 171,199
7.00%, due May 15, 2024 535,376 520,985
8.00%, due November 15, 2026 325,662 329,326
Small Business Administration guaranteed development participation
certificates
9.80%, due July 1, 2008 17,117 17,964
2,072,196 2,075,162
U.S. GOVERNMENT SECURITIES - 7.37%
U.S. Treasury Bonds
11.125%, due August 15, 2003 700,000 791,875
7.25%, due August 15, 2004 250,000 258,478
5.875%, due November 15, 2005 175,000 171,992
U.S. Treasury Notes
5.625%, due February 15, 2006 450,000 436,572
6.50%, due October 15, 2006 555,000 561,677
2,130,000 2,220,594
*GOVERNMENT SPONSORED ENTERPRISES - 28.14%
Federal Home Loan Mortgage Corporation
8.25%, due July 1, 2008 13,593 13,724
8.00%, due January 1, 2012 358,184 362,214
9.00%, due June 1, 2016 62,591 64,918
8.00%, due May 1, 2017 39,917 40,553
9.00%, due May 15, 2021 77,046 79,140
6.00%, due November 1, 2028 1,843,774 1,690,501
7.50%, due February 1, 2030 741,862 732,589
Federal National Mortgage Association
5.625%, due March 15, 2001 3,425,000 3,397,360
7.125%, due February 15, 2005 400,000 52,693
8.25%, due January 1, 2009 12,217 12,358
9.25%, due October 1, 2020 34,554 35,720
6.50%, due March 1, 2029 941,023 887,498
7.50%, due September 1, 2029 715,084 705,022
8,719,414 8,476,062
TOTAL U.S. GOVERNMENTAL AGENCY, U.S. GOVERNMENT SECURITIES
AND GOVERNMENT SPONSORED ENTERPRISES 12,921,610 12,771,818
(Cost $13,078,733)
TOTAL INVESTMENTS - 98.92% 29,794,899
(Cost $30,810,232)
Other assets less liabilities - 1.08% 324,944
TOTAL NET ASSETS - 100.00% $ 30,119,843
For federal income tax purposes, the identified cost of investments owned
at June 30, 2000 was $31,249,072.
Net unrealized depreciation for federal income tax purposes was $1,454,173,
which is comprised of unrealized appreciation of $65,995 and unrealized
depreciation of $1,520,168.
*Mortgage-backed securities
See accompanying Notes to Financial Statements.
Babson Money Market Fund
The U.S. economy continued to surge ahead as first quarter Gross Domestic
Product (GDP) grew by 5.5%. Forecasted expectations for the second
quarter GDP center around 4.0%. The Fed, still acting preemptively toward
an increase in inflation, saw fit to tighten three times during the first
half of 2000. Both the Fed Funds rate and the discount rate were raised by
a total of 100 basis points (1.00%). These Fed actions, coupled with the
Treasury buyback of almost $19 billion of long Treasury bonds, caused the
Treasury yield curve to invert, with yields increasing out to the two-
year area and declining beyond this maturity. The first half ended with
short-term yields up 10-55 basis points (bp) while yields in the
intermediate and long-end declined by 16-58 bp versus the end of 1999.
Y2K came and passed with dire projections of cataclysmic events greatly
overshadowed by business as usual. Attractive early 2000 holdings
purchased last year matured with no problems and allowed the Portfolios to
recognize additional value due to Y2K market dislocations. Average
maturities were shortened in the first quarter by 5 to 10 days in
anticipation of continued Fed tightening. We lengthened our average
maturities by approximately 15 to 20 days during the second quarter,
taking advantage of the increased yield levels present as a result of the
Fed tightening which took place in February, March and May. The average
maturities are now closely aligned with the portfolio benchmarks of
slightly over 50 days.
Oil prices rose near 50% during the first half of 2000, after having
already doubled during 1999. This surge in prices coupled with a slight
uptick in the core Consumer Price Index (CPI) caused fixed income market
participants to worry about beginning inflation. Outside of the energy
sector, this inflation never materially increased. Tight labor markets, as
evidenced by Initial Jobless Claims under 300,000 and strong Non-farm
Payroll growth, helped to fuel the wage-push inflation debate.
Looking to the second half, market participants appear divided on future
Federal Open Market Committee (FOMC) actions as recent economic statistics
have identified a mixed economic environment. This has led economists to
forecast either continued Fed tightening or an end to Fed tightening.
Despite not increasing rates at their end of June meeting, it is probably
still too premature to dismiss the Fed from at least one more tightening
before the end of 2000.
We remain committed in our money market investing to focus on quality and
liquidity since the rewards for riskier strategies are meager. This has
been our policy at the Babson Money Market Fund, and we feel that it will
continue to benefit our shareholders.
The seven-day yield for Babson Money Market Fund's Prime Portfolio was
5.87% and the Federal Portfolio was 5.60%, as of June 30, 2000. Both of
these yields are up substantially from year-end due mainly to the
tightening actions of the FOMC.
An investment in this Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although
the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
Schedule of Investments
June 30, 2000
BABSON MONEY MARKET FUND - PRIME
Principal
Description Amount Market Value
SHORT-TERM CORPORATE NOTES - 95.22%
Alcoa, Incorporated, 6.70%, due September 28, 2000 $ 1,600,000 $ 1,573,498
Anheuser-Busch Companies, Incorporated,
6.15%, due September 25, 2000 1,900,000 1,872,086
BellSouth Telephone, 6.48%, due July 21, 2000 1,600,000 1,594,240
Bemis Company, 6.60%, due August 1, 2000 1,500,000 1,491,475
Bestfoods, 6.50%, due July 14, 2000 1,600,000 1,596,244
Caterpillar Financial Services,
6.01%, due July 25, 2000 2,000,000 1,991,987
Coca-Cola Company, 6.11%, due August 4, 2000 1,900,000 1,889,036
Donnelley & Sons, 6.62%, due July 28, 2000 1,400,000 1,393,049
Duke Energy Corporation, 6.52%, due July 31, 2000 1,600,000 1,591,307
Eastman Kodak Company, 6.35%, due July 24, 2000 1,900,000 1,892,292
Ford Motor Credit Company, 6.53%, due October 2, 2000 1,000,000 983,131
Fortune Brands, Incorporated,
6.59%, due October 2, 2000 600,000 589,785
Gannett Company, 6.50%, due July 10, 2000 1,900,000 1,896,912
General Electric Capital Company,
6.65%, due September 8, 2000 805,000 794,740
General Electric Capital Company,
6.60%, due February 23, 2001 155,000 148,265
General Electric Capital Company,
6.82%, due February 23, 2001 500,000 477,551
General Mills, Incorporated, 6.48%, due July 17, 2000 1,510,000 1,505,651
General Motors Acceptance Corporation,
6.19%, due September 29, 2000 1,900,000 1,870,597
Heinz (H.J.) Company, 6.51%, due July 5, 2000 1,900,000 1,898,626
Hershey Foods, 6.52%, due August 31, 2000 1,365,000 1,349,920
Honeywell International, 6.54%, due August 9, 2000 1,515,000 1,504,266
John Deere Capital, 6.65%, due September 6, 2000 1,465,000 1,446,869
Minnesota Mining & Manufacturing Company,
6.53%, due August 29, 2000 1,315,000 1,300,927
Motorola, Incorporated, 6.57%, due September 27, 2000 100,000 98,394
Motorola, Incorporated, 6.59%, due September 27, 2000 1,220,000 1,200,347
Sherwin-Williams Company, 6.55%, due July 3, 2000 1,600,000 1,599,418
Walt Disney Company, 6.49%, due October 31, 2000 1,200,000 1,173,607
TOTAL SHORT-TERM CORPORATE NOTES 37,050,000 36,724,220
(Cost $36,724,220)
GOVERNMENT SPONSORED ENTERPRISES - 4.92%
Federal Home Loan Mortgage Corporation Discount Notes,
6.48%, due October 12, 2000 1,935,000 1,899,125
(Cost $1,899,125)
TOTAL INVESTMENTS - 100.14% 38,623,345
(Cost $38,623,345)
Other assets less liabilities - (0.14%) (53,555)
TOTAL NET ASSETS - 100.00% $ 38,569,790
The identified cost of investments owned at June 30, 2000, was the same for
financial statement and federal income tax purposes.
See accompanying Notes to Financial Statements.
Schedule of Investments
June 30, 2000
BABSON MONEY MARKET FUND - FEDERAL
Principal
Description Amount Market Value
GOVERNMENT SPONSORED ENTERPRISES - 99.48%
Federal Home Loan Mortgage Corporation Discount Notes
6.42%, due July 5, 2000 $ 1,000,000 $ 999,287
6.455%, due August 2, 2000 900,000 894,836
6.02%, due September 8, 2000 600,000 593,077
6.49%, due September 15, 2000 1,000,000 986,299
6.14%, due September 22, 2000 800,000 788,675
Federal National Mortgage Association Discount Notes
6.40%, due July 24, 2000 955,000 951,095
6.42%, due August 8, 2000 950,000 943,562
6.52%, due August 17, 2000 896,000 888,373
6.47%, due September 7, 2000 1,000,000 987,779
6.51%, due September 21, 2000 470,000 463,031
6.14%, due September 28, 2000 500,000 492,410
6.50%, due October 2, 2000 200,000 196,642
TOTAL GOVERNMENT SPONSORED ENTERPRISES 9,271,000 9,185,066
(Cost $9,185,066)
TOTAL INVESTMENTS - 99.48% 9,185,066
(Cost $9,185,066)
Other assets less liabilities - 0.52% 47,613
TOTAL NET ASSETS - 100.00% $ 9,232,679
The identified cost of investments owned at June 30, 2000,
was the same for financial statement and federal income tax purposes.
See accompanying Notes to Financial Statements.
Babson Tax-Free Income Fund
The municipal market, which was battered by huge mutual fund
redemptions and tax-loss selling during 1999, rebounded in
the first quarter of 2000. Then market yields rose sharply
(as bond prices declined) in April as reports of strong U.S.
growth and inflationary pressures led to perceptions that
the Federal Reserve would have to continue raising rates
substantially to slow domestic growth to a more sustainable,
non-inflationary level. However, market sentiment turned
again in May as reports of lower retail, auto and home sales
indicated that earlier rate hikes were slowing the economy,
and this led the way for a powerful market rally during May
and June. These favorable market conditions provided a boost
to Fund performance, with Portfolio L returning (price
change and reinvested distributions) 3.87% and Portfolio S
returning 1.56% for the six months ended June 30, 2000.
Portfolio MM's price remained at $1.00 and provided a return
of 1.64% for the same period. The average maturities of
Portfolio L, S and MM were 14 years, 4 years and 8 days, respectively.
Average annual compounded total returns for one, five and
ten year periods as of June 30, 2000, were 2.18%, 4.97% and
6.21% for Portfolio L, 2.43% 3.72% and 4.86% for Portfolio S
and 3.08%, 3.00% and 3.06% for Portfolio MM, respectively.
In contrast to the Treasury market, where short-term rates
are higher than long-term rates, the municipal yield curve
is positively sloped with yields ranging from 4.35% for one
year to 5.75% for 30 years. Our portfolios have benefited
from a large concentration in General Obligation and Tax-
Backed bonds, which continue to exhibit strong credit
fundamentals as a result of the strong domestic economy.
We continue to add value by looking for undervalued
situations and taking advantage of supply and demand
imbalances in various sectors of the market, keeping our
emphasis on high quality issues.
Looking forward, market consensus is that the Fed is near
the end of its tightening cycle. If this proves to be true,
it bodes well for the municipal market which has seen an
increase in demand from individual investors due to the
increase in interest rates over the past year.
Quality Ratings
Portfolio Portfolio Portfolio
L S MM
Aaa 56% 60% 89%
Aa 31 24 11
A 10 9 0
Lower 3 7 0
Total 100% 100% 100%
Source: Moody's
CHART - Babson Tax-Free Income Fund
PORTFOLIOS L & S versus LIPPER GENERAL MUNICIPAL BOND FUNDS
AND LIPPER SHORT TERM MUNICIPAL BOND FUNDS
Average annual compounded total returns for one, five and
ten year periods ended June 30, 2000, were 2.18%, 4.97% and
6.21% for Portfolio L and 2.43%, 3.72% and 4.86% for
Portfolio S, 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.
Schedule of Investments
June 30, 2000
Babson Tax-Free Income Fund - Portfolio L
Principal
Description Amount Market Value
ALABAMA
Jefferson County Sewer, 5.00%, due February 1, 2033 $1,000,000 $ 868,750
Arizona
Maricopa County Unified School District #48,
9.25%, due July 1, 2007 500,000 625,625
ARKANSAS
Arkansas, Series B, 0.00%, due June 1, 2010 1,000,000 595,000
CALIFORNIA
Santa Rosa Water, Series B, 6.00%, due September 1, 2015 500,000 541,875
University of California, Series D,
5.75%, due July 1, 2013 1,000,000 1,038,750
COLORADO
Adams County School District #12,
6.20%, due December 15, 2010 500,000 518,125
CONNECTICUT
Bridgeport, Series A, 6.00%, due July 15, 2014 1,000,000 1,056,250
DISTRICT OF COLUMBIA
District of Columbia, Series A, 5.75%, due June 1, 2003 245,000 251,431
District of Columbia, Series A, 5.75%, due June 1, 2003 255,000 261,694
FLORIDA
Dade County, 0.00%, due October 1, 2027 1,000,000 200,000
Miami-Dade County, Series A, 0.00%, due October 1, 2015 500,000 205,000
Palm Beach County Airport, 7.75%, due October 1, 2010 500,000 528,750
Tampa (Catholic Health Care East),
4.875%, due November 15, 2023 500,000 431,875
ILLINOIS
Chicago, Series B, 5.125%, due January 1, 2022 1,000,000 922,500
Lake County School District,
5.00%, due December 15, 2014 1,000,000 942,500
Metro Pier & Expo Tax Authority,
5.375%, due December 15, 2017 1,000,000 960,000
INDIANA
Indiana Bond Bank Special Program, Series 94 A-1,
5.60%, due August 1, 2015 500,000 503,125
KANSAS
Johnson County Unified School District #229, Series A,
4.90%, due October 1, 2011 1,000,000 975,000
LOUISIANA
St. Tammany Parish Hospital Service District #2
(Slidell Memorial Hospital & Medical Center),
6.125%, due October 1, 2011 500,000 525,625
MASSACHUSETTS
Framingham, 6.00%, due March 1, 2015 500,000 524,375
Foxborough, 6.00%, due June 1, 2014 1,000,000 1,052,500
Massachusetts Health & Education, Series D,
5.75%, due July 1, 2014 500,000 506,250
Massachusetts Housing Finance Agency Projects, Series A,
6.375%, due April 1, 2021 975,000 987,188
Massachusetts State Consolidated Loan,
5.25%, due August 1, 2018 1,000,000 958,750
MICHIGAN
Hartland, 6.00%, due May 1, 2020 1,000,000 1,026,250
Jackson Public Schools, 6.00%, due May 1, 2013 1,000,000 1,058,750
NEVADA
Clark County School District, Series A,
6.75%, due March 1, 2007 500,000 510,805
NEW HAMPSHIRE
New Hampshire Higher Education & Health Facility
(Franklin Pierce Law Center), 5.50%, due July 1, 2018 500,000 458,125
NEW JERSEY
New Jersey Turnpike, 10.375%, due January 1, 2003 90,000 97,200
OHIO
Ohio Public Facitilites, 5.125%, due June 1, 2011 1,000,000 1,002,500
RHODE ISLAND
Rhode Island Depositors Economic Protection Corp., Series B,
5.80%, due August 1, 2009 500,000 526,875
Rhode Island Industrial Facility Corp.,
9.125%, due October 1, 2000 20,000 20,221
TENNESSEE
Metro Nashville Airport, 4.55%, due October 1, 2012 600,000 600,000
TEXAS
San Antonio Electric & Gas, 5.75%, due February 1, 2011 295,000 299,425
San Antonio Electric & Gas, 5.75%, due February 1, 2011 205,000 210,381
WASHINGTON
Tacoma Conservation System Project
(Tacoma Public Utilities),
6.50%, due January 1, 2012 500,000 525,625
Seattle Water System, 5.75%, due July 1, 2023 1,000,000 976,250
WYOMING
Lincoln County, 4.45%, due November 1, 2014 600,000 600,000
TOTAL INVESTMENTS - 98.87% 23,893,345
(Cost $23,865,704)
Other assets less liabilities - 1.13% 272,779
TOTAL NET ASSETS - 100.00% $ 24,166,124
The identified cost of investments owned at June 30, 2000, was the same for
financial statement and federal income tax purposes.
Net unrealized appreciation for federal income tax purposes was $27,641,
which is comprised of unrealized appreciation
of $416,414 and unrealized depreciation of $388,773.
See accompanying Notes to Financial Statements.
Schedule of Investments
June 30, 2000
Babson Tax-Free Income Fund - Portfolio S
Principal
Description Amount Market Value
ARIZONA
Arizona Water Infrastructure,
5.50%, due October 1, 2010 $ 500,000 $ 517,500
Chandler, 6.90%, due July 1, 2005 1,000,000 1,029,755
Maricopa County Unified School District #93,
6.40%, due July 1, 2005 500,000 530,000
COLORADO
Jefferson County School District #R-001, Series A,
6.00%, due December 15, 2006 500,000 531,250
DISTRICT OF COLUMBIA
District of Columbia, Series A, 5.75%, due June 1, 2003 245,000 251,431
District of Columbia, Series A, 5.75%, due June 1, 2003 255,000 261,694
HAWAII
Hawaii State, 5.50%, due September 1, 2006 500,000 514,375
ILLINOIS
Chicago Public Building, 5.375%, due February 1, 2005 250,000 255,000
Du Page & Will Counties Community School District #204,
7.25%, due December 30, 2004 500,000 546,875
INDIANA
Kokomo-Center School Building Corp.,
6.75%, due July 15, 2007 250,000 277,500
MASSACHUSETTS
Massachusetts Health & Education
(Milford-Whitinsville Regional),
Series C, 4.75%, due July 15, 2003 500,000 476,250
Massachusetts Housing Finance Agency Projects,
Series A, 5.35%, due April 1, 2003 500,000 506,250
Massachusetts State Consolidated Loan,
5.75%, due February 1, 2007 500,000 523,125
MICHIGAN
Utica Community Schools, 5.375%, due May 1, 2005 500,000 511,875
MISSOURI
Sikeston Electric, 5.80%, due June 1, 2002 500,000 510,625
NEVADA
Washoe County Hospital, Series A,
5.25%, due June 1, 2001 500,000 503,480
Washoe County (Reno Sparks Bowling Facility), Series A,
5.40%, due July 1, 2006 500,000 510,625
NEW YORK
Battery Park City, 6.00%, due November 1, 2003 500,000 518,125
Long Island Power, 4.45%, due May 1, 2033 500,000 500,000
New York City Transit, 5.50%, due November 1, 2007 500,000 518,125
New York Medical Care Finance Agency, Series F,
6.00%, due August 15, 2002 500,000 511,875
New York Medical Care Finance Agency, Series A,
5.40%, due August 15, 2004 185,000 185,899
New York State Thruway Authority Highway,
5.50%, due April 1, 2005 500,000 514,375
OHIO
Columbus City School District,
6.65%, due December 1, 2012 500,000 531,875
Ohio State Building Authority,
4.00%, due October 1, 2004 250,000 240,000
TENNESSEE
Metro Nashville, 4.55%, due October 1, 2012 100,000 100,000
Tennessee Housing Development Agency, Series A,
4.95%, due July 1, 2000 490,000 490,000
TEXAS
Houston, Series C, 5.90%, due March 1, 2003 140,000 142,800
Houston, Series C, 5.90%, due March 1, 2003 360,000 366,750
McKinney Independent School,
5.25%, due February 15, 2006 500,000 508,125
WASHINGTON
Washington Public Power Supply System Nuclear Project #2,
Series B, 5.10%, due July 1, 2004 500,000 503,750
WISCONSIN
Milwaukee Metropolitan Sewer District, Series A,
6.00%, due October 1, 2007 500,000 531,875
WYOMING
Lincoln County, 4.45%, due November 1, 2014 400,000 400,000
TOTAL INVESTMENTS - 98.51% 14,821,184
(Cost $14,883,038)
Other assets less liabilities - 1.49% 223,423
TOTAL NET ASSETS - 100.00% $ 15,044,607
For federal income tax purposes, the identified cost of investments owned
at June 30, 2000 was $15,041,459.
Net unrealized depreciation for federal income tax purposes was $220,275,
which is comprised of unrealized appreciation
of $64,395 and unrealized depreciation of $284,670.
See accompanying Notes to Financial Statements.See accompanying Notes to
Financial Statements.
Schedule of Investments
June 30, 2000
Babson Tax-Free Income Fund - Portfolio MM
Principal
Description Amount Market Value
CONNECTICUT
Connecticut, 3.38%, due November 15, 2001 $ 200,000 $ 200,000
FLORIDA
Dade County (Florida Power & Light),
4.60%, due June 1, 2021* 200,000 200,000
GEORGIA
Burke County Development Authority,
4.60%, due July 1, 2024* 200,000 200,000
De Kalb Private Hospital Authority
(Egleston Childrens Hospital),
Series A, 4.75%, due March 1, 2024* 300,000 300,000
ILLINOIS
Illinois Health Facilties
(Rush-Presbyterian, St. Lukes), Series B,
4.80%, due November 15, 2023* 200,000 200,000
INDIANA
Indiana University, 4.35%, due August 1, 2000 100,000 100,046
St. Joseph County Education Facilities
(University of Notre Dame),
4.70%, due March 1, 2033* 300,000 300,000
LOUISIANA
St. Charles Parish, 4.50%, due October 1, 2022* 200,000 200,000
Louisiana Offshore Terminal Authority,
4.45%, due September 1, 2006* 300,000 300,000
MICHIGAN
Michigan Municipal Bond Authority,
4.25%, due August 25, 2000 125,000 125,113
MISSOURI
Missouri Health & Education Facilities Authority,
4.60%, due September 1, 2030* 200,000 200,000
NEW MEXICO
Albuquerque Airport, Series 95,
4.70%, due July 1, 2014* 300,000 300,000
Hurley (British Petroleum), 4.55%, due December 1, 2015* 100,000 100,000
NEW YORK
Long Island Power, 4.45%, due May 1, 2033* 200,000 200,000
NORTH CAROLINA
Charlotte Airport, Series 93 A, 4.70%, due July 1, 2016* 300,000 300,000
Raleigh Durham Airport Authority,
4.60%, due November 1, 2015* 200,000 200,000
Winston-Salem Water & Sewer System,
4.75%, due June 1, 2014* 200,000 200,000
RHODE ISLAND
Rhode Island Correction Facility,
4.75%, due June 1, 2018* 300,000 300,000
TEXAS
Lone Star Airport Improvement Authority, Series B-4,
4.55%, due December 1, 2014* 100,000 100,000
Texas State Tax & Revenue Anticipation Notes,
4.50%, due August 31, 2000 200,000 200,265
UTAH
Salt Lake City, 4.55%, due February 1, 2008* 100,000 100,000
VIRGINIA
Fairfax County (Inova Health), Series 88 D,
4.90%, due October 1, 2025* 100,000 100,000
WASHINGTON
Seattle Municipal Light & Power,
4.95%, due November 1, 2018* 100,000 100,000
Washington Health Care, 4.45%, due October 1, 2005* 200,000 200,000
Washington, Series 96 B, 4.75%, due June 1, 2020* 200,000 200,000
Washington Public Power Supply System Nuclear
Project #1, Series 1A-1, 4.90%, due July 1, 2017* 100,000 100,000
WISCONSIN
Sheboygan (Wisconsin Power & Light Co),
4.60%, due August 1, 2014* 300,000 300,000
WYOMING
Lincoln County, Series D, 4.55%, due August 1, 2015* 200,000 200,000
Sublette County, 4.55%, due November 1, 2014* 100,000 100,000
Unita County, 4.40%, due December 1, 2022* 200,000 200,000
TOTAL INVESTMENTS - 96.51% 5,825,424
(Cost $5,825,424)
Other assets less liabilities - 3.49% 210,514
TOTAL NET ASSETS - 100.00% $ 6,035,938
The identified cost of investments owned at June 30, 2000, was the same for
financial statement and federal income tax purposes.
*Variable rate security. Stated rate is the rate effective as of June 30, 2000.
See accompanying Notes to Financial Statements.See accompanying Notes to
Financial Statements.
Statements of Assets and Liabilities
June 30, 2000
(in thousands except per share data)
Babson Babson
Enterprise Enterprise
Fund Fund II
ASSETS:
Investments at cost $ 104,720 $ 45,234
Investments at value $ 111,877 $ 57,739
Cash denominated in foreign
currencies (cost $1,148) - -
Cash - 404
Receivables:
Investments sold 316 486
Dividends 84 43
Interest - -
Fund shares sold - 1,176
Foreign tax - -
Other - -
Prepaid registration fees - -
Total assets 112,277 59,848
LIABILITIES AND NET ASSETS:
Cash overdraft 637 -
Payables:
Management fees 104 58
Registration fees - -
Dividends - -
Investments purchased 142 32
Fund share redemptions - -
Foreign tax withholding - -
Other - -
Total liabilities 883 90
NET ASSETS $ 111,394 $ 59,758
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 100,198 $ 44,616
Accumulated undistributed net investment income 133 49
Accumulated undistributed net realized gain (loss)
from investment transactions and
foreign currency transactions 3,906 2,588
Net unrealized appreciation (depreciation)
of investments and translation of assets
and liabilities in foreign currencies 7,157 12,505
NET ASSETS APPLICABLE TO
OUTSTANDING SHARES $ 111,394 $ 59,758
Capital shares, $1.00 par value
Authorized 20,000 10,000
Outstanding 8,060 2,374
NET ASSET VALUE PER SHARE $ 13.82 $ 25.18
See accompanying Notes to Financial Statements.
Statements of Assets and Liabilities
June 30, 2000
(in thousands except per share data)
Babson
Growth Shadow
Fund Stock Fund
ASSETS:
Investments at cost $ 346,264 $ 38,038
Investments at value $ 524,470 $ 43,744
Cash denominated in foreign
currencies (cost $1,148) - -
Cash 435 16
Receivables:
Investments sold - -
Dividends 98 46
Interest 3 1
Fund shares sold - 1,667
Foreign tax - -
Other - -
Prepaid registration fees - -
Total assets 525,006 45,474
LIABILITIES AND NET ASSETS:
Cash overdraft - -
Payables:
Management fees 329 34
Registration fees - -
Dividends - -
Investments purchased - -
Fund share redemptions - -
Foreign tax withholding - -
Other - -
Total liabilities 329 34
NET ASSETS $ 524,677 $ 45,440
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 283,698 $ 37,184
Accumulated undistributed net investment income - 189
Accumulated undistributed net realized gain (loss)
from investment transactions and
foreign currency transactions 62,773 2,361
Net unrealized appreciation (depreciation)
of investments and translation of assets
and liabilities in foreign currencies 178,206 5,706
NET ASSETS APPLICABLE TO
OUTSTANDING SHARES $ 524,677 $ 45,440
Capital shares, $1.00 par value
Authorized 100,000 10,000
Outstanding 25,141 3,706
NET ASSET VALUE PER SHARE $ 20.87 $ 12.26
See accompanying Notes to Financial Statements.
Statements of Assets and Liabilities
June 30, 2000
(in thousands except per share data)
Babson
Value
Fund
ASSETS:
Investments at cost $ 432,393
Investments at value $ 521,426
Cash denominated in foreign
currencies (cost $1,148) -
Cash -
Receivables:
Investments sold 12,546
Dividends 212
Interest 2
Fund shares sold 85
Foreign tax -
Other -
Prepaid registration fees -
Total assets 534,271
LIABILITIES AND NET ASSETS:
Cash overdraft 345
Payables:
Management fees 437
Registration fees -
Dividends -
Investments purchased 5,020
Fund share redemptions -
Foreign tax withholding -
Other -
Total liabilities 5,802
NET ASSETS $ 528,469
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 434,171
Accumulated undistributed net investment income 3,531
Accumulated undistributed net realized gain (loss)
from investment transactions and
foreign currency transactions 1,734
Net unrealized appreciation (depreciation)
of investments and translation of assets
and liabilities in foreign currencies 89,033
NET ASSETS APPLICABLE TO
OUTSTANDING SHARES $ 528,469
Capital shares, $1.00 par value
Authorized 50,000
Outstanding 13,634
NET ASSET VALUE PER SHARE $ 38.76
See accompanying Notes to Financial Statements.
Statements of Assets and Liabilities
June 30, 2000
(in thousands except per share data)
Babson-
Stewart Ivory
International Fund
ASSETS:
Investments at cost $ 59,220
Investments at value $ 82,560
Cash denominated in foreign
currencies (cost $1,148) 1,141
Cash 1
Receivables:
Investments sold 130
Dividends 125
Interest -
Fund shares sold 1,476
Foreign tax 83
Other -
Prepaid registration fees -
Total assets 85,516
LIABILITIES AND NET ASSETS:
Cash overdraft -
Payables:
Management fees 88
Registration fees -
Dividends -
Investments purchased 55
Fund share redemptions 304
Foreign tax withholding 20
Other 7
Total liabilities 474
NET ASSETS $ 85,042
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 58,551
Accumulated undistributed net investment income -
Accumulated undistributed net realized gain (loss)
from investment transactions and
foreign currency transactions 3,158
Net unrealized appreciation (depreciation)
of investments and translation of assets
and liabilities in foreign currencies 23,333
NET ASSETS APPLICABLE TO
OUTSTANDING SHARES $ 85,042
Capital shares, $1.00 par value
Authorized 10,000
Outstanding 3,605
NET ASSET VALUE PER SHARE $ 23.59
See accompanying Notes to Financial Statements.
Statements of Assets and Liabilities
June 30, 2000
(in thousands except per share data)
Babson Babson
Bond Trust Bond Trust
Portfolio L Portfolio S
ASSETS:
Investments at cost $ 101,888 $ 30,810
Investments at value $ 98,527 $ 29,795
Cash denominated in foreign
currencies (cost $1,148) - -
Cash 695 36
Receivables:
Investments sold - -
Dividends - -
Interest 1,465 461
Fund shares sold - -
Foreign tax - -
Other - -
Prepaid registration fees 2 -
Total assets 100,689 30,292
LIABILITIES AND NET ASSETS:
Cash overdraft - -
Payables:
Management fees 77 16
Registration fees - -
Dividends 504 156
Investments purchased - -
Fund share redemptions - -
Foreign tax withholding - -
Other - -
Total liabilities 581 172
NET ASSETS $ 100,108 $ 30,120
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 108,545 $ 33,677
Accumulated undistributed net investment income 1 -
Accumulated undistributed net realized gain (loss)
from investment transactions and
foreign currency transactions (5,077) (2,542)
Net unrealized appreciation (depreciation)
of investments and translation of assets
and liabilities in foreign currencies (3,361) (1,015)
NET ASSETS APPLICABLE TO
OUTSTANDING SHARES $ 100,108 $ 30,120
Capital shares, $1.00 par value
Authorized Unlimited Unlimited
Outstanding 67,612 3,222
NET ASSET VALUE PER SHARE $ 1.48 $ 9.35
See accompanying Notes to Financial Statements.
Statements of Assets and Liabilities
June 30, 2000
(in thousands except per share data)
Babson Babson
Money Market Money Market
Fund Fund
Prime Federal
Portfolio Portfolio
ASSETS:
Investments at cost $ 38,623 $ 9,185
Investments at value $ 38,623 $ 9,185
Cash denominated in foreign
currencies (cost $1,148) - -
Cash 129 82
Receivables:
Investments sold - -
Dividends - -
Interest - -
Fund shares sold 1 -
Foreign tax - -
Other - -
Prepaid registration fees 26 12
Total assets 38,779 9,279
LIABILITIES AND NET ASSETS:
Cash overdraft - -
Payables:
Management fees 28 6
Registration fees - -
Dividends 181 40
Investments purchased - -
Fund share redemptions - -
Foreign tax withholding - -
Other - -
Total liabilities 209 46
NET ASSETS $ 38,570 $ 9,233
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 38,578 $ 9,233
Accumulated undistributed net investment income - -
Accumulated undistributed net realized gain (loss)
from investment transactions and
foreign currency transactions (8) -
Net unrealized appreciation (depreciation)
of investments and translation of assets
and liabilities in foreign currencies - -
NET ASSETS APPLICABLE TO
OUTSTANDING SHARES $ 38,570 $ 9,233
Capital shares, $1.00 par value
Authorized 1,000,000 1,000,000
Outstanding 38,576 9,231
NET ASSET VALUE PER SHARE $ 1.00 $ 1.00
See accompanying Notes to Financial Statements.
Statements of Assets and Liabilities
June 30, 2000
(in thousands except per share data)
Babson Babson
Tax-Free Tax-Free
Income Fund Income Fund
Portfolio L Portfolio S
ASSETS:
Investments at cost $ 23,865 $ 14,883
Investments at value $ 23,893 $ 14,821
Cash denominated in foreign
currencies (cost $1,148) - -
Cash - 56
Receivables:
Investments sold - -
Dividends - -
Interest 397 228
Fund shares sold - -
Foreign tax - -
Other - -
Prepaid registration fees - -
Total assets 24,290 15,105
LIABILITIES AND NET ASSETS:
Cash overdraft 19 -
Payables:
Management fees 18 12
Registration fees - 1
Dividends 87 47
Investments purchased - -
Fund share redemptions - -
Foreign tax withholding - -
Other - -
Total liabilities 124 60
NET ASSETS $ 24,166 $ 15,045
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 24,038 $ 15,296
Accumulated undistributed net investment income - -
Accumulated undistributed net realized gain (loss)
from investment transactions and
foreign currency transactions 100 (189)
Net unrealized appreciation (depreciation)
of investments and translation of assets
and liabilities in foreign currencies 28 (62)
NET ASSETS APPLICABLE TO
OUTSTANDING SHARES $ 24,166 $ 15,045
Capital shares, $1.00 par value
Authorized 50,000 50,000
Outstanding 2,805 1,453
NET ASSET VALUE PER SHARE $ 8.62 $ 10.35
See accompanying Notes to Financial Statements.
Statements of Assets and Liabilities
June 30, 2000
(in thousands except per share data)
Babson
Tax-Free
Income Fund
Portfolio MM
ASSETS:
Investments at cost $ 5,825
Investments at value $ 5,825
Cash denominated in foreign
currencies (cost $1,148) -
Cash -
Receivables:
Investments sold 200
Dividends -
Interest 42
Fund shares sold -
Foreign tax -
Other -
Prepaid registration fees -
Total assets 6,067
LIABILITIES AND NET ASSETS:
Cash overdraft 7
Payables:
Management fees 3
Registration fees 2
Dividends 19
Investments purchased -
Fund share redemptions -
Foreign tax withholding -
Other -
Total liabilities 31
NET ASSETS $ 6,036
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 6,039
Accumulated undistributed net investment income -
Accumulated undistributed net realized gain (loss)
from investment transactions and
foreign currency transactions (3)
Net unrealized appreciation (depreciation)
of investments and translation of assets
and liabilities in foreign currencies -
NET ASSETS APPLICABLE TO
OUTSTANDING SHARES $ 6,036
Capital shares, $1.00 par value
Authorized 100,000
Outstanding 6,033
NET ASSET VALUE PER SHARE $ 1.00
See accompanying Notes to Financial Statements.
Statements of Operations
For The Year Ended June 30, 2000
(in thousands)
Babson Babson
Enterprise Enterprise
Fund Fund II
INVESTMENT INCOME:
Dividends $ 1,464 $ 809
Interest 134 37
Foreign tax withheld (5) -
1,593 846
EXPENSES:
Management fees 1,392 775
Registration fees 21 19
Custody and pricing service fees - -
Total expenses before voluntary reduction
of management fees 1,413 794
Less: voluntary reduction of management fees - -
Net expenses 1,413 794
Net investment income (loss) 180 52
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investment transactions 6,096 4,848
Foreign currency transactions - -
Net unrealized appreciation (depreciation)
during the period on:
Investments (6,709) (3,212)
Translation of assets and liabilities
in foreign currencies - -
Net gain (loss) on investments
and foreign currency (613) 1,636
Net increase (decrease) in net assets
resulting from operations $ (433) $ 1,688
See accompanying Notes to Financial Statements.
Statements of Operations
For The Year Ended June 30, 2000
(in thousands)
Babson
Growth Shadow
Fund Stock Fund
INVESTMENT INCOME:
Dividends $ 2,364 $ 628
Interest 608 103
Foreign tax withheld (7) (1)
2,965 730
EXPENSES:
Management fees 3,815 423
Registration fees 41 29
Custody and pricing service fees - -
Total expenses before voluntary reduction
of management fees 3,856 452
Less: voluntary reduction of management fees - -
Net expenses 3,856 452
Net investment income (loss) (891) 278
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investment transactions 120,434 6,855
Foreign currency transactions - -
Net unrealized appreciation (depreciation)
during the period on:
Investments (26,343) (3,545)
Translation of assets and liabilities
in foreign currencies - -
Net gain (loss) on investments
and foreign currency 94,091 3,310
Net increase (decrease) in net assets
resulting from operations $ 93,200 $ 3,588
See accompanying Notes to Financial Statements.
Statements of Operations
For The Year Ended June 30, 2000
(in thousands)
Babson
Value
Fund
INVESTMENT INCOME:
Dividends $ 27,193
Interest 1,017
Foreign tax withheld (228)
27,982
EXPENSES:
Management fees 7,928
Registration fees 59
Custody and pricing service fees -
Total expenses before voluntary reduction
of management fees 7,987
Less: voluntary reduction of management fees -
Net expenses 7,987
Net investment income (loss) 19,995
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investment transactions 101,306
Foreign currency transactions -
Net unrealized appreciation (depreciation)
during the period on:
Investments (302,610)
Translation of assets and liabilities
in foreign currencies -
Net gain (loss) on investments
and foreign currency (201,304)
Net increase (decrease) in net assets
resulting from operations $ (181,309)
See accompanying Notes to Financial Statements.
Statements of Operations
For The Year Ended June 30, 2000
(in thousands)
Babson-
Stewart Ivory
International Fund
INVESTMENT INCOME:
Dividends $ 1,113
Interest 75
Foreign tax withheld (149)
1,039
EXPENSES:
Management fees 838
Registration fees 27
Custody and pricing service fees 230
Total expenses before voluntary reduction
of management fees 1,095
Less: voluntary reduction of management fees -
Net expenses 1,095
Net investment income (loss) (56)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investment transactions 16,361
Foreign currency transactions (1,050)
Net unrealized appreciation (depreciation)
during the period on:
Investments 4,000
Translation of assets and liabilities
in foreign currencies (7)
Net gain (loss) on investments
and foreign currency 19,304
Net increase (decrease) in net assets
resulting from operations $ 19,248
See accompanying Notes to Financial Statements.
Statements of Operations
For The Year Ended June 30, 2000
(in thousands)
Babson Babson
Bond Trust Bond Trust
Portfolio L Portfolio S
INVESTMENT INCOME:
Dividends $ - $ -
Interest 7,766 2,263
Foreign tax withheld - -
7,766 2,263
EXPENSES:
Management fees 1,039 317
Registration fees 27 9
Custody and pricing service fees - -
Total expenses before voluntary reduction
of management fees 1,066 326
Less: voluntary reduction of management fees - (100)
Net expenses 1,066 226
Net investment income (loss) 6,700 2,037
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investment transactions (1,769) (554)
Foreign currency transactions - -
Net unrealized appreciation (depreciation)
during the period on:
Investments (1,256) (375)
Translation of assets and liabilities
in foreign currencies - -
Net gain (loss) on investments
and foreign currency (3,025) (929)
Net increase (decrease) in net assets
resulting from operations $ 3,675 $ 1,108
See accompanying Notes to Financial Statements.
Statements of Operations
For The Year Ended June 30, 2000
(in thousands)
Babson Babson
Money Market Money Market
Fund Fund
Prime Federal
Portfolio Portfolio
INVESTMENT INCOME:
Dividends $ - $ -
Interest 2,305 580
Foreign tax withheld - -
2,305 580
EXPENSES:
Management fees 342 89
Registration fees 13 4
Custody and pricing service fees - -
Total expenses before voluntary reduction
of management fees 355 93
Less: voluntary reduction of management fees - -
Net expenses 355 93
Net investment income (loss) 1,950 487
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investment transactions (1) -
Foreign currency transactions - -
Net unrealized appreciation (depreciation)
during the period on:
Investments - -
Translation of assets and liabilities
in foreign currencies - -
Net gain (loss) on investments
and foreign currency (1) -
Net increase (decrease) in net assets
resulting from operations $ 1,949 $ 487
See accompanying Notes to Financial Statements.
Statements of Operations
For The Year Ended June 30, 2000
(in thousands)
Babson Babson
Tax-Free Tax-Free
Income Fund Income Fund
Portfolio L Portfolio S
INVESTMENT INCOME:
Dividends $ - $ -
Interest 1,357 816
Foreign tax withheld - -
1,357 816
EXPENSES:
Management fees 233 161
Registration fees 15 12
Custody and pricing service fees - -
Total expenses before voluntary reduction
of management fees 248 173
Less: voluntary reduction of management fees - -
Net expenses 248 173
Net investment income (loss) 1,109 643
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investment transactions 173 (189)
Foreign currency transactions - -
Net unrealized appreciation (depreciation)
during the period on:
Investments (825) (58)
Translation of assets and liabilities
in foreign currencies - -
Net gain (loss) on investments
and foreign currency (652) (247)
Net increase (decrease) in net assets
resulting from operations $ 457 $ 396
See accompanying Notes to Financial Statements.
Statements of Operations
For The Year Ended June 30, 2000
(in thousands)
Babson
Tax-Free
Income Fund
Portfolio MM
INVESTMENT INCOME:
Dividends $ -
Interest 308
Foreign tax withheld -
308
EXPENSES:
Management fees 43
Registration fees 8
Custody and pricing service fees -
Total expenses before voluntary reduction
of management fees 51
Less: voluntary reduction of management fees -
Net expenses 51
Net investment income (loss) 257
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investment transactions (3)
Foreign currency transactions -
Net unrealized appreciation (depreciation)
during the period on:
Investments -
Translation of assets and liabilities
in foreign currencies -
Net gain (loss) on investments
and foreign currency (3)
Net increase (decrease) in net assets
resulting from operations $ 254
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
For The Year(S) Ended June 30, Execpt As Indicated
(in thousands)
BABSON ENTERPRISE FUND
2000 1999(1) 1998(2)
OPERATIONS:
Net investment income (loss) $ 180 $ 287 $ 602
Net realized gain from investment
and foreign currency transactions 6,096 11,805 28,111
Net unrealized appreciation (depreciation)
on investments and translation of assets
and liabilities in foreign currencies during
the period (6,709) (6,426) (51,434)
Net increase (decrease) in net assets
resulting from operations (433) 5,666 (22,721)
Net equalization included in the price
of shares issued and redeemed - - (78)
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (302) (531) (607)
Net realized gain from
investment transactions (9,490) (26,217) (24,566)
Total distributions to shareholders (9,792) (26,748) (25,173)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 11,541 3,937 7,033
Reinvested distributions 9,158 25,039 23,501
20,699 28,976 30,534
Shares repurchased (54,459) (31,806) (19,465)
Net increase (decrease) from
capital share transactions (33,760) (2,830) 11,069
Net increase (decrease) in net assets (43,985) (23,912) (36,903)
NET ASSETS:
Beginning of period 155,379 179,291 216,194
End of period $111,394 $ 155,379 $179,291
Accumulated undistributed net investment
income (loss) at end of period $ 133 $ 287 $ 643
Fund share transactions:
Shares sold 900 287 389
Reinvested distributions 785 1,817 1,279
1,685 2,104 1,668
Shares repurchased (4,181) (2,329) (1,074)
Net increase (decrease) in fund shares (2,496) (225) 594
(1) For the seven month period ended June 30, 1999.
(2) For the fiscal year ended November 30, 1998.
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
For The Year(S) Ended June 30, EXCEPT AS INDICATED
(in thousands)
BABSON ENTERPRISE FUND II
2000 1999(1) 1998(2)
OPERATIONS:
Net investment income (loss) $ 52 $ 48 $ 340
Net realized gain from investment
and foreign currency transactions 4,848 1,859 4,678
Net unrealized appreciation (depreciation)
on investments and translation of assets
and liabilities in foreign currencies during
the period (3,212) 5,370 (10,623)
Net increase (decrease) in net assets
resulting from operations 1,688 7,277 (5,605)
Net equalization included in the price
of shares issued and redeemed - - 72
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (51) (174) (154)
Net realized gain from
investment transactions (1,565) (3,718) (6,554)
Total distributions to shareholders (1,616) (3,892) (6,708)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 15,774 10,618 41,623
Reinvested distributions 1,540 3,737 6,442
17,314 14,355 48,065
Shares repurchased (34,937) (23,385) (34,570)
Net increase (decrease) from
capital share transactions (17,623) (9,030) 13,495
Net increase (decrease) in net assets (17,551) (5,645) 1,254
NET ASSETS:
Beginning of period 77,309 82,954 81,700
End of period $ 59,758 $ 77,309 $ 82,954
Accumulated undistributed net investment
income (loss) at end of period $ 49 $ 48 $ 480
Fund share transactions:
Shares sold 657 481 1,679
Reinvested distributions 67 174 265
724 655 1,944
Shares repurchased (1,508) (1,072) (1,428)
Net increase (decrease) in fund shares (784) (417) 516
(1) For the seven month period ended June 30, 1999.
(2) For the fiscal year ended November 30, 1998.
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
For The Year(S) Ended June 30, EXCEPT AS INDICATED
(in thousands)
BABSON GROWTH FUND
2000 1999
OPERATIONS:
Net investment income (loss) $ (891) $ 407
Net realized gain from investment
and foreign currency transactions 120,434 78,657
Net unrealized appreciation (depreciation)
on investments and translation of assets
and liabilities in foreign currencies during
the period (26,343) (2,914)
Net increase (decrease) in net assets
resulting from operations 93,200 76,150
Net equalization included in the price
of shares issued and redeemed - -
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income - (435)
Net realized gain from
investment transactions (71,496) (89,064)
Total distributions to shareholders (71,496) (89,499)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 39,862 68,166
Reinvested distributions 65,989 82,101
105,851 150,267
Shares repurchased (93,219) (97,578)
Net increase (decrease) from
capital share transactions 12,632 52,689
Net increase (decrease) in net assets 34,336 39,340
NET ASSETS:
Beginning of period 490,341 451,001
End of period $524,677 $ 490,341
Accumulated undistributed net investment
income (loss) at end of period $ - $ -
Fund share transactions:
Shares sold 1,883 3,360
Reinvested distributions 3,228 4,205
5,111 7,565
Shares repurchased (4,478) (4,770)
Net increase (decrease) in fund shares 633 2,795
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
For The Year(S) Ended June 30, EXCEPT AS INDICATED
(in thousands)
SHADOW STOCK FUND
2000 1999
OPERATIONS:
Net investment income (loss) $ 278 $ 454
Net realized gain from investment
and foreign currency transactions 6,855 3,419
Net unrealized appreciation (depreciation)
on investments and translation of assets
and liabilities in foreign currencies during
the period (3,545) (4,111)
Net increase (decrease) in net assets
resulting from operations 3,588 (238)
Net equalization included in the price
of shares issued and redeemed - -
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (239) (283)
Net realized gain from
investment transactions (2,894) (3,971)
Total distributions to shareholders (3,133) (4,254)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 13,546 16,595
Reinvested distributions 2,856 3,827
16,402 20,422
Shares repurchased (21,690) (17,176)
Net increase (decrease) from
capital share transactions (5,288) 3,246
Net increase (decrease) in net assets (4,833) (1,246)
NET ASSETS:
Beginning of period 50,273 51,519
End of period $ 45,440 $ 50,273
Accumulated undistributed net investment
income (loss) at end of period $ 189 $ 191
Fund share transactions:
Shares sold 1,125 1,433
Reinvested distributions 245 340
1,370 1,773
Shares repurchased (1,832) (1,497)
Net increase (decrease) in fund shares (462) 276
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
For The Year(S) Ended June 30, EXCEPT AS INDICATED
(in thousands)
BABSON VALUE FUND
2000 1999(1) 1998(2)
OPERATIONS:
Net investment income (loss) $ 19,995 $ 7,964 $ 19,814
Net realized gain from investment
and foreign currency transactions 101,306 68,640 75,274
Net unrealized appreciation (depreciation)
on investments and translation of assets
and liabilities in foreign currencies during
the period (302,610) 84,680 (55,316)
Net increase (decrease) in net assets
resulting from operations (181,309) 161,284 39,772
Net equalization included in the price
of shares issued and redeemed - - 1,006
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (15,955) (11,954) (17,864)
Net realized gain from
investment transactions (55,228) (60,876) (43,880)
Total distributions to shareholders (71,183) (72,830) (61,744)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 169,055 183,659 513,526
Reinvested distributions 64,186 59,332 49,896
233,241 242,991 563,422
Shares repurchased (696,210) (581,111) (468,037)
Net increase (decrease) from
capital share transactions (462,969) (338,120) 95,385
Net increase (decrease) in net assets (715,461) (249,666) 74,419
NET ASSETS:
Beginning of period 1,243,930 1,493,596 1,419,177
End of period $ 528,469 $1,243,930 $1,493,596
Accumulated undistributed net investment
income (loss) at end of period $ 3,531 $ 450 $ 17,971
Fund share transactions:
Shares sold 3,900 3,842 10,705
Reinvested distributions 1,558 1,320 1,109
5,458 5,162 11,814
Shares repurchased (16,043) (12,441) (10,053)
Net increase (decrease) in fund shares (10,585) (7,279) 1,761
(1) For the seven month period ended June 30, 1999.
(2) For the fiscal year ended November 30, 1998.
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
For The Year(S) Ended June 30, EXCEPT AS INDICATED
(in thousands)
BABSON-STEWART IVORY
INTERNATIONAL FUND
2000 1999
OPERATIONS:
Net investment income (loss) $ (56) $ 220
Net realized gain from investment
and foreign currency transactions 15,311 9,117
Net unrealized appreciation (depreciation)
on investments and translation of assets
and liabilities in foreign currencies during
the period 3,993 (4,719)
Net increase (decrease) in net assets
resulting from operations 19,248 4,618
Net equalization included in the price
of shares issued and redeemed - -
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income - (196)
Net realized gain from
investment transactions (1,142) (4,016)
Total distributions to shareholders (1,142) (4,212)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 147,627 141,384
Reinvested distributions 965 3,579
148,592 144,963
Shares repurchased (170,266) (161,163)
Net increase (decrease) from
capital share transactions (21,674) (16,200)
Net increase (decrease) in net assets (3,568) (15,794)
NET ASSETS:
Beginning of period 88,610 104,404
End of period $ 85,042 $ 88,610
Accumulated undistributed net investment
income (loss) at end of period $ - $ (488)
Fund share transactions:
Shares sold 6,550 7,620
Reinvested distributions 42 194
6,592 7,814
Shares repurchased (7,536) (8,579)
Net increase (decrease) in fund shares (944) (765)
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
For The Year(S) Ended June 30, EXCEPT AS INDICATED
(in thousands)
BABSON BOND TRUST - PORTFOLIO L
2000 1999(1) 1998(2)
OPERATIONS:
Net investment income $ 6,700 $ 4,188 $ 7,650
Net realized gain (loss) from
investment transactions (1,769) 97 2,150
Net unrealized appreciation (depreciation)
on investments during the period (1,256) (5,777) 394
Net increase (decrease) in net assets
resulting from operations 3,675 (1,492) 10,194
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (6,699) (4,188) (7,650)
Net realized gain from
investment transactions - - -
Total distributions to shareholders (6,699) (4,188) (7,650)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 15,693 20,367 23,231
Reinvested distributions 5,585 2,940 6,273
21,278 23,307 29,504
Shares repurchased (38,210) (25,749) (36,335)
Net increase (decrease) from
capital share transactions (16,932) (2,442) (6,831)
Net increase (decrease) in net assets (19,956) (8,122) (4,287)
NET ASSETS:
Beginning of period 120,064 128,186 132,473
End of period $100,108 $ 120,064 $128,186
Accumulated undistributed net investment
income at end of period $ 1 $ - $ 260
Fund share transactions:
Shares sold 10,244 12,849 14,688
Reinvested distributions 3,756 1,880 3,973
14,424 14,729 18,661
Shares repurchased (25,743) (16,326) (23,027)
Net increase (decrease) in fund shares (11,743) (1,597) (4,366)
(1) For the seven month period ended June 30, 1999.
(2) For the fiscal year ended November 30, 1998.
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
For The Year(S) Ended June 30, EXCEPT AS INDICATED
(in thousands)
BABSON BOND TRUST - PORTFOLIO S
2000 1999(1) 1998(2)
OPERATIONS:
Net investment income $ 2,037 $ 1,279 $ 2,297
Net realized gain (loss) from
investment transactions (554) 156 337
Net unrealized appreciation (depreciation)
on investments during the period (375) (1,355) 155
Net increase (decrease) in net assets
resulting from operations 1,108 80 2,789
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (2,037) (1,279) (2,297)
Net realized gain from
investment transactions - - -
Total distributions to shareholders (2,037) (1,279) (2,297)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 2,623 6,269 6,842
Reinvested distributions 1,786 943 2,008
4,409 7,212 8,850
Shares repurchased (10,454) (7,377) (11,448)
Net increase (decrease) from
capital share transactions (6,045) (165) (2,598)
Net increase (decrease) in net assets (6,974) (1,364) (2,106)
NET ASSETS:
Beginning of period 37,094 38,458 40,564
End of period $ 30,120 $ 37,094 $ 38,458
Accumulated undistributed net investment
income at end of period $ - $ - $ -
Fund share transactions:
Shares sold 279 638 692
Reinvested distributions 190 96 203
469 734 895
Shares repurchased (1,111) (751) (1,161)
Net increase (decrease) in fund shares (642) (17) (266)
(1) For the seven month period ended June 30, 1999.
(2) For the fiscal year ended November 30, 1998.
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
For The Year(S) Ended June 30, EXCEPT AS INDICATED
(in thousands)
BABSON MONEY MARKET FUND
PRIME PORTFOLIO
2000 1999
OPERATIONS:
Net investment income $ 1,950 $ 1,670
Net realized gain (loss) from
investment transactions (1) -
Net unrealized appreciation (depreciation)
on investments during the period - -
Net increase (decrease) in net assets
resulting from operations 1,949 1,670
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (1,950) (1,670)
Net realized gain from
investment transactions - -
Total distributions to shareholders (1,950) (1,670)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 44,146 41,648
Reinvested distributions 1,810 1,563
45,956 43,211
Shares repurchased (46,461) (40,853)
Net increase (decrease) from
capital share transactions (505) 2,358
Net increase (decrease) in net assets (505) 2,358
NET ASSETS:
Beginning of period 39,076 36,718
End of period $ 38,570 $ 39,076
Accumulated undistributed net investment
income at end of period $ - $ -
Fund share transactions:
Shares sold 44,146 41,657
Reinvested distributions 1,810 1,563
45,956 43,220
Shares repurchased (46,461) (40,843)
Net increase (decrease) in fund shares (505) 2,377
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
For The Year(S) Ended June 30, EXCEPT AS INDICATED
(in thousands)
BABSON MONEY MARKET FUND
FEDERAL PORTFOLIO
2000 1999
OPERATIONS:
Net investment income $ 487 $ 588
Net realized gain (loss) from
investment transactions - -
Net unrealized appreciation (depreciation)
on investments during the period - -
Net increase (decrease) in net assets
resulting from operations 487 588
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (487) (588)
Net realized gain from
investment transactions - -
Total distributions to shareholders (487) (588)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 5,120 13,595
Reinvested distributions 465 566
5,585 14,161
Shares repurchased (9,805) (13,014)
Net increase (decrease) from
capital share transactions (4,220) 1,147
Net increase (decrease) in net assets (4,220) 1,147
NET ASSETS:
Beginning of period 13,453 12,306
End of period $ 9,233 $ 13,453
Accumulated undistributed net investment
income at end of period $ - $ -
Fund share transactions:
Shares sold 5,120 13,594
Reinvested distributions 465 566
5,585 14,160
Shares repurchased (9,805) (12,997)
Net increase (decrease) in fund shares (4,220) 1,163
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
For The Year(S) Ended June 30, EXCEPT AS INDICATED
(in thousands)
BABSON TAX-FREE INCOME FUND
PORTFOLIO L
2000 1999
OPERATIONS:
Net investment income $ 1,109 $ 1,166
Net realized gain (loss) from
investment transactions 173 157
Net unrealized appreciation (depreciation)
on investments during the period (825) (827)
Net increase (decrease) in net assets
resulting from operations 457 496
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (1,109) (1,166)
Net realized gain from
investment transactions (229) (221)
Total distributions to shareholders (1,338) (1,387)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 2,837 1,283
Reinvested distributions 783 757
3,620 2,040
Shares repurchased (4,475) (2,541)
Net increase (decrease) from
capital share transactions (855) (501)
Net increase (decrease) in net assets (1,736) (1,392)
NET ASSETS:
Beginning of period 25,902 27,294
End of period $ 24,166 $ 25,902
Accumulated undistributed net investment
income at end of period $ - $ -
Fund share transactions:
Shares sold 330 131
Reinvested distributions 91 83
421 214
Shares repurchased (522) (269)
Net increase (decrease) in fund shares (101) (55)
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
For The Year(S) Ended June 30, EXCEPT AS INDICATED
(in thousands)
BABSON TAX-FREE INCOME FUND
PORTFOLIO S
2000 1999
OPERATIONS:
Net investment income $ 643 $ 790
Net realized gain (loss) from
investment transactions (189) 107
Net unrealized appreciation (depreciation)
on investments during the period (58) (472)
Net increase (decrease) in net assets
resulting from operations 396 425
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (643) (790)
Net realized gain from
investment transactions (100) (51)
Total distributions to shareholders (743) (841)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 806 737
Reinvested distributions 517 574
1,323 1,311
Shares repurchased (4,881) (3,290)
Net increase (decrease) from
capital share transactions (3,558) (1,979)
Net increase (decrease) in net assets (3,905) (2,395)
NET ASSETS:
Beginning of period 18,950 21,345
End of period $ 15,045 $ 18,950
Accumulated undistributed net investment
income at end of period $ - $ 1
Fund share transactions:
Shares sold 78 65
Reinvested distributions 49 53
127 118
Shares repurchased (469) (302)
Net increase (decrease) in fund shares (342) (184)
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
For The Year(S) Ended June 30, EXCEPT AS INDICATED
(in thousands)
BABSON TAX-FREE INCOME FUND
PORTFOLIO MM
2000 1999
OPERATIONS:
Net investment income $ 257 $ 310
Net realized gain (loss) from
investment transactions (3) -
Net unrealized appreciation (depreciation)
on investments during the period - -
Net increase (decrease) in net assets
resulting from operations 254 310
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (257) (310)
Net realized gain from
investment transactions - -
Total distributions to shareholders (257) (310)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 4,444 10,230
Reinvested distributions 231 277
4,675 10,507
Shares repurchased (9,129) (10,283)
Net increase (decrease) from
capital share transactions (4,454) 224
Net increase (decrease) in net assets (4,457) 224
NET ASSETS:
Beginning of period 10,493 10,269
End of period $ 6,036 $ 10,493
Accumulated undistributed net investment
income at end of period $ - $ -
Fund share transactions:
Shares sold 4,444 10,230
Reinvested distributions 231 277
4,675 10,507
Shares repurchased (9,129) (10,283)
Net increase (decrease) in fund shares (4,454) 224
See accompanying Notes to Financial Statements.
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES:
The Babson Enterprise Fund, Babson Enterprise Fund II, David L. Babson
Growth Fund, Shadow Stock Fund, Babson Value Fund, Babson-Stewart Ivory
International Fund, D.L. Babson Bond Trust, D.L. Babson Money Market Fund
and D.L. Babson Tax-Free Income Fund (collectively referred to herein as
the "Funds") are registered under the Investment Company Act of 1940, as
amended, as no-load open-end, diversified management investment companies.
The D.L. Babson Bond Trust (comprising of Portfolio L and S), D.L. Babson
Money Market Fund (comprising of Prime and Federal Portfolios) and
D.L. Babson Tax-Free Income Fund (comprising of Portfolio L, S and MM)
are of a series type. The Funds are required to account for the assets
of each Series separately and to allocate general liabilities of a Fund
to each Series based upon the net asset value of each Series. The following
is a summary of significant accounting policies consistently followed
by the Funds in preparation of their financial statements.
A. Investment Valuation - Securities are valued at the latest sales price
for securities traded on a principal exchange (U.S. or foreign) and on the
NASDAQ National Market. Securities traded on over-the-counter markets and
listed securities for which no sales are reported are valued at the mean
between the last reported bid and asked prices. When market quotations are
not readily available, securities are valued at fair value as determined in
good faith by the Board of Directors. Short-term securities maturing within
60 days are valued at amortized cost, which approximates market value.
Foreign securities are converted to U.S. dollars using exchange rates in
London last quoted by a major bank. If such quotations are not available as
of 4:00 P.M. (Eastern Time), the rate of exchange will be determined in
good faith by the Board of Directors.
B. Investment Transactions and Investment Income - Security transactions
are accounted for on the date the securities are purchased or sold. Dividend
income less foreign taxes withheld (if any) is recorded on the ex-
dividend date. Interest income is recognized on the accrual basis and
includes accretion of market discounts. Premiums on debt securities are
not amortized, except for D.L. Babson Tax-Free Income Fund which amortizes
premiums. Realized gains and losses from investment transactions and unrealized
appreciation and depreciation of investments are reported on the identified cost
basis.
C. Foreign Currency Translation - All assets and liabilities expressed in
foreign currencies are converted into U.S. dollars based on exchange rates
last quoted by a major bank in London at the end of the period. The cost of
portfolio securities is translated at the rates of exchange prevailing when
acquired. Dividend income is translated at the rate of exchange on the ex-
dividend date. The effects of changes in foreign currency exchange rates on
investments in securities are included in net realized and unrealized gain
(loss) on investments in the Statement of Operations.
D. Forward Foreign Currency Contracts - The Babson-Stewart Ivory
International Fund may enter into forward foreign currency contracts as a
way of managing foreign exchange rate risk. The portfolio may enter into
these contracts to fix the U.S. dollar value of a security that it has
agreed to buy or sell for the period between the date the trade was entered
into and the date the security is delivered and paid for. These contracts
may also be used to hedge the U.S. dollar value of securities owned which
are denominated in foreign currencies.
Forward foreign currency contracts are valued each day at the close of the
New York Stock Exchange at the forward rate, and are marked-to-market daily.
The change in market value is recorded as an unrealized gain or loss. When
the contract is closed, a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and closed is
recorded.
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of the securities, but it does
establish a rate of exchange that can be achieved in the future. Although
forward foreign currency contracts limit the risk of loss due to a decline
in the value of the hedged currency, they also limit a potential gain that
might result should the value of the currency increase. These contracts
involve market risk in excess of the amount reflected in the Statement of
Assets and Liabilities. The face or contract amount in U.S. dollars
reflects the total exposure the portfolio has in that particular currency
contract. In addition, there could be exposure to risks (limited to the
amount of unrealized gains) if the counterparties to the contracts are
unable to meet the terms of their contracts. There were no outstanding
forward foreign currency contracts at June 30, 2000.
E. Federal and State Taxes - The Funds complied with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
therefore, no provision for federal or state tax is required. At June 30,
2000, the D.L. Babson Money Market Prime Portfolio, D.L. Babson Bond Trust
Portfolio L, D.L. Babson Bond Trust Portfolio S and D.L. Babson Tax-Free
Income Portfolio MM had accumulated net realized losses on sales of
investments for federal income tax purposes of $7,943 (expiring $56 in
2001, $81 in 2002, $6,722 in 2003, $306 in 2005, $136 in 2006 and $642 in
2008), $3,412,471 (expiring $970,985 in 2002, $423,327 in 2003, $1,367,653
in 2004, $545,666 in 2005 and $104,840 in 2008) $2,103,711 (expiring
$579,476 in 2002, $388,485 in 2003, $577,562 in 2004, $442,862 in 2005 and
$115,326 in 2008) and $2,642 which expires in 2008, respectively, which are
available to offset future taxable gains.
For corporate shareholders, the following percentages of ordinary income
distributions qualify for the corporate dividends received deduction:
FUND PERCENTAGE
Enterprise 89%
Enterprise II 100%
Growth 16%
Shadow Stock 100%
Value 100%
Stewart Ivory International 1%
The following percentages of ordinary income distributions are exempt-
interest dividends for federal income tax purposes:
FUND PERCENTAGE
Tax-Free Income - Portfolio L 100%
Tax-Free Income - Portfolio S 100%
Tax-Free Income - Portfolio MM 100%
For federal income tax purposes, the Funds designate capital gain dividends
as follows:
FUND
Enterprise $ 11,139,677
Enterprise II 3,098,269
Growth 72,088,428
Shadow Stock 4,841,821
Value 102,851,458
Stewart Ivory International 9,500,000
Bond - Portfolio L -
Bond - Portfolio S -
Money Market - Prime -
Money Market - Federal -
Tax-Free Income - Portfolio L 227,695
Tax-Free Income - Portfolio S 100,115
Tax-Free Income - Portfolio MM -
F. Equalization - Prior to December 1, 1998, the Babson Enterprise Fund,
Babson Enterprise Fund II, David L. Babson Growth Fund, Shadow Stock Fund
and Babson Value Fund used equalization accounting, by which a portion of
the proceeds from sales and costs of redemption of fund shares is credited
or charged to undistributed net investment income so that income per share
available for distribution is not affected by the sales or redemption of
fund shares. As of December 1, 1998, these Funds discontinued using
equalization for financial reporting purposes. This change has no effect on
the Funds' net assets, net asset value per share or distributions to
shareholders. The cumulative effect of the discontinuance of equalization
accounting was to decrease undistributed net investment income and increase
paid-in-capital as of December 1, 1998 for the Babson Enterprise Fund,
Babson Enterprise Fund II, David L. Babson Growth Fund, Shadow Stock Fund,
Babson Value Fund by $111,919, $306,310, $4,345, $331 and $13,531,896,
respectively.
G. Distributions to Shareholders - Distributions to shareholders are
recorded on ex-dividend date. Distributions are determined in accordance
with federal tax regulations and may differ from those determined in
accordance with generally accepted accounting principles. These differences
are primarily due to losses deferred due to wash sales, post-October loss
deferrals, foreign currency transactions and the use of equalization for
income tax purposes and losses deferred.
H. Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the
amount reported in the financial statements and accompanying notes. Actual
results could differ from such estimates.
2. MANAGEMENT FEES:
Management fees are paid to Jones & Babson, Inc. in accordance with the
advisory agreement with the Funds. Management fees are paid for services
which include administration, and all other operating expenses of each Fund
except the cost of acquiring and disposing of portfolio securities, the
taxes, if any, imposed directly on each Fund and its shares and the cost
of qualifying a Fund's shares for sale in any jurisdiction. Certain
officers and/or directors of the Funds are also officers and/or directors
of Jones & Babson, Inc. Each of the Funds was subject to the following
management fees:
AVERAGE DAILY NET ANNUAL RATE
FUND ASSETS OF FUND PERCENTAGE
Enterprise and Up to $30 million 1.5%
Enterprise II Over $30 million 1.0%
Shadow Stock 1.0%
Growth Up to $250 million .85%
Over $250 million .70%
Value, Tax-Free Income
(Portfolio L and S), Bond
Trust (Portfolio L and S)
and Stewart Ivory
International .95%
Money Market
(Portfolio Prime and Federal) .85%
Tax-Free Income
(Portfolio MM) .50%
During the period from December 1, 1991 to March 31, 2001, fees for Bond
Trust (Portfolio S) have been voluntarily reduced to an annual rate of .65%
of average daily net assets of the portfolio.
3. INVESTMENT TRANSACTIONS:
Investment transactions for the year ended June 30, 2000 (excluding maturities
of short-term commercial notes and repurchase agreements) are as follows:
Babson Enterprise Fund:
Purchases $ 39,391,943
Proceeds from sales 76,473,050
Babson Enterprise Fund II:
Purchases $ 14,024,069
Proceeds from sales 36,900,565
Babson Growth Fund:
Purchases $306,011,905
Proceeds from sales 384,469,770
Shadow Stock Fund:
Purchases $ 7,325,350
Proceeds from sales 19,229,663
Babson Value Fund:
Purchases $146,667,975
Proceeds from sales 650,686,485
Babson-Stewart Ivory International Fund:
Purchases $ 39,844,729
Proceeds from sales 58,213,986
Babson Bond Trust - Portfolio L:
Purchases $ 28,291,256
Proceeds from sales 36,709,128
Babson Bond Trust - Portfolio S:
Purchases $ 11,577,281
Proceeds from sales 15,032,312
Babson Money Market Fund - Prime Portfolio:
Purchases $ -
Proceeds from sales -
Babson Money Market Fund - Federal Portfolio:
Purchases $ -
Proceeds from sales -
Babson Tax-Free Income Fund - Portfolio L:
Purchases $ 11,595,205
Proceeds from sales 13,659,880
Babson Tax-Free Income Fund - Portfolio S:
Purchases $ 4,388,618
Proceeds from sales 9,470,837
Babson Tax-Free Income Fund - Portfolio MM:
Purchases $ -
Proceeds from sales -
4. LINE OF CREDIT:
Babson Enterprise Fund, Babson Enterprise Fund II, Babson Growth Fund,
Shadow Stock Fund, Babson Value Fund and Babson-Stewart Ivory International
Fund share in a $45 million revolving credit facility for temporary or
emergency purposes, including the meeting of redemption requests that
otherwise might require the untimely disposition of securities. Any related
commitment fees are paid by Jones & Babson, Inc. There were no borrowings
under the line of credit for the year ended June 30, 2000.
Financial Highlights
Babson Enterprise Fund
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
Seven
Year Months
Ended Ended
June 30, June 30, Years Ended November 30,
2000 1999 1998 1997 1996 1995
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.72 $16.63 $21.22 $18.51 $17.35 $16.64
Income from investment operations:
Net investment income .03 .03 .04 .06 .06 .10
Net gains (losses) on securities
(both realized and unrealized) .18 .58 (2.15) 5.31 3.06 2.34
Total from investment operations .21 .61 (2.11) 5.37 3.12 2.44
Less distributions:
Dividends from net investment income (.04) (.05) (.06) - (.12) (.04)
Distributions from capital gains (1.07) (2.47) (2.42) (2.66) (1.84) (1.69)
Total distributions (1.11) (2.52) (2.48) (2.66) (1.96) (1.73)
Net asset value, end of period $13.82 $14.72 $16.63 $21.22 $18.51 $17.35
Total return* 2.84% 4.70% (11.05%) 33.49% 20.17% 16.42%
Ratios/Supplemental Data
Net assets, end of period (in millions) $ 111 $ 155 $ 179 $ 216 $ 202 $ 202
Ratio of expenses to average net assets** 1.14% 1.11% 1.09% 1.08% 1.08% 1.09%
Ratio of net investment income
to average net assets** .15% .32% .29% .30% .35% .67%
Portfolio turnover rate 32% 12% 22% 22% 24% 13%
</TABLE>
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
See accompanying Notes to Financial Statements.
Financial Highlights
Babson Enterprise Fund II
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
Seven
Year Months
Ended Ended
June 30, June 30, Years Ended November 30,
2000 1999 1998 1997 1996 1995
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $24.48 $23.20 $26.70 $22.75 $19.19 $16.22
Income from investment operations:
Net investment income .02 .03 .10 .08 .11 .05
Net gains (losses) on securities
(both realized and unrealized) 1.30 2.37 (1.50) 6.97 4.45 3.03
Total from investment operations 1.32 2.40 (1.40) 7.05 4.56 3.08
Less distributions:
Dividends from net investment income (.02) (.05) (.05) (.11) (.05) (.02)
Distributions from capital gains (.60) (1.07) (2.05) (2.99) (.95) (.09)
Total distributions (.62) (1.12) (2.10) (3.10) (1.00) (.11)
Net asset value, end of period $25.18 $24.48 $23.20 $26.70 $22.75 $19.19
Total return* 5.63% 11.03% (5.61%) 35.29% 25.04% 19.11%
Ratios/Supplemental Data
Net assets, end of period (in millions) $60 $77 $83 $82 $46 $40
Ratio of expenses to average net assets** 1.27% 1.23% 1.22% 1.28% 1.38% 1.45%
Ratio of net investment income
to average net assets** .08% .11% .40% .27% .55% .30%
Portfolio turnover rate 23% 14% 25% 25% 30% 15%
</TABLE>
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
See accompanying Notes to Financial Statements.
Financial Highlights
Babson Growth Fund
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
Years Ended June 30,
2000 1999 1998 1997 1996
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $20.01 $20.77 $17.80 $14.42 $13.43
Income from investment operations:
Net investment income (loss) (.04) .02 .06 .09 .12
Net gains (losses) on securities
(both realized and unrealized) 4.00 3.25 4.41 4.16 2.91
Total from investment operations 3.96 3.27 4.47 4.25 3.03
Less distributions:
Dividends from net investment income - (.02) (.06) (.09) (.13)
Distributions from capital gains (3.10) (4.01) (1.44) (.78) (1.91)
Total distributions (3.10) (4.03) (1.50) (.87) (2.04)
Net asset value, end of year $20.87 $20.01 $20.77 $17.80 $14.42
Total return 20.69% 17.04% 26.73% 30.10% 22.99%
Ratios/Supplemental Data
Net assets, end of year (in millions) $525 $490 $451 $365 $280
Ratio of expenses to average net assets .79% .79% .80% .83% .85%
Ratio of net investment income (loss)
to average net assets (.18%) .09% .30% .61% .82%
Portfolio turnover rate 62% 39% 35% 20% 33%
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Shadow Stock Fund
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
Years Ended June 30,
2000 1999 1998 1997 1996
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $12.06 $13.24 $12.57 $11.31 $10.55
Income from investment operations:
Net investment income .09 .11 .08 .12 .09
Net gains (losses) on securities
(both realized and unrealized) 1.04 (.24) 2.54 2.44 1.67
Total from investment operations 1.13 (.13) 2.62 2.56 1.76
Less distributions:
Dividends from net investment income (.07) (.07) (.10) (.09) (.10)
Distributions from capital gains (.86) (.98) (1.85) (1.21) (.90)
Total distributions (.93) (1.05) (1.95) (1.30) (1.00)
Net asset value, end of year $12.26 $12.06 $13.24 $12.57 $11.31
Total return 9.91% (.25%) 21.98% 23.63% 17.13%
Ratios/Supplemental Data
Net assets, end of year (in millions) $45 $50 $52 $41 $39
Ratio of expenses to average net assets 1.07% 1.10% 1.16% 1.13% 1.14%
Ratio of net investment income
to average net assets .66% .97% .56% 1.00% .79%
Portfolio turnover rate 18% 21% 43% 0% 25%
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Babson Value Fund
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
Seven
Year Months
Ended Ended
June 30, June 30, Years Ended November 30,
2000 1999 1998 1997 1996 1995
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $51.36 $47.42 $47.73 $38.65 $31.78 $25.19
Income from investment operations:
Net investment income 1.27 .45 .62 .51 .55 .59
Net gains (losses) on securities
(both realized and unrealized) (9.35) 5.90 1.09 9.65 7.20 7.20
Total from investment operations (8.08) 6.35 1.71 10.16 7.75 7.79
Less distributions:
Dividends from net investment income (.96) (.44) (.56) (.47) (.53) (.60)
Distributions from capital gains (3.56) (1.97) (1.46) (.61) (.35) (.60)
Total distributions (4.52) (2.41) (2.02) (1.08) (.88) (1.20)
Net asset value, end of period $38.76 $51.36 $47.42 $47.73 $38.65 $31.78
Total return* (15.93%) 14.14% 3.85% 26.89% 24.91% 32.07%
Ratios/Supplemental Data
Net assets, end of period (in millions) $ 528 $1,244 $1,494 $1,419 $ 764 $ 293
Ratio of expenses to average net assets** .96% .96% .98% .97% .96% .98%
Ratio of net investment income
to average net assets** 2.41% 1.05% 1.28% 1.22% 1.63% 2.12%
Portfolio turnover rate 18% 13% 42% 17% 11% 6%
</TABLE>
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
See accompanying Notes to Financial Statements.
Financial Highlights
Babson-Stewart Ivory International Fund
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
Years Ended June 30,
2000 1999 1998 1997 1996
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $19.48 $19.65 $19.53 $18.04 $15.96
Income from investment operations:
Net investment income (loss) (.04) .03 .08 .07 .07
Net gains (losses) on securities
(both realized and unrealized) 4.45 .66 1.07 1.70 2.85
Total from investment operations 4.41 .69 1.15 1.77 2.92
Less distributions:
Dividends from net investment income - (.04) (.07) (.05) (.08)
Distributions from capital gains (.30) (.82) (.96) (.23) (.65)
Distributions in excess of
realized capital gains - - - - (.11)
Total distributions (.30) (.86) (1.03) (.28) (.84)
Net asset value, end of year $23.59 $19.48 $19.65 $19.53 $18.04
Total return 22.64% 3.76% 6.48% 9.91% 18.66%
Ratios/Supplemental Data
Net assets, end of year (in millions) $85 $89 $104 $111 $80
Ratio of expenses to average net assets 1.24% 1.23% 1.16% 1.19% 1.26%
Ratio of net investment income (loss)
to average net assets (.06%) .24% .37% .47% .44%
Portfolio turnover rate 47% 51% 48% 40% 33%
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Babson Bond Trust - Portfolio L
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
Seven
Year Months
Ended Ended
June 30, June 30, Years Ended November 30,
2000 1999 1998 1997 1996 1995
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.52 $1.59 $1.56 $1.55 $1.58 $1.47
Income from investment operations:
Net investment income .09 .05 .09 .10 .11 .11
Net gains (losses) on securities
(both realized and unrealized) (.04) (.07) .03 .01 (.03) .11
Total from investment operations .05 (.02) .12 .11 .08 .22
Less distributions:
Dividends from net investment income (.09) (.05) (.09) (.10) (.11) (.11)
Distributions from capital gains - - - - - -
Total distributions (.09) (.05) (.09) (.10) (.11) (.11)
Net asset value, end of period $1.48 $1.52 $1.59 $1.56 $1.55 $1.58
Total return* 3.54% (1.16%) 8.13% 7.26% 5.17% 15.28%
Ratios/Supplemental Data
Net assets, end of period (in millions) $100 $121 $128 $132 $142 $ 161
Ratio of expenses to average net assets** .98% .97% .97% .97% .97% .97%
Ratio of net investment income
to average net assets** 6.14% 5.73% 5.93% 6.38% 6.96% 7.06%
Portfolio turnover rate 26% 38% 43% 59% 61% 50%
</TABLE>
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
See accompanying Notes to Financial Statements.
Financial Highlights
Babson Bond Trust - Portfolio S
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
Seven
Year Months
Ended Ended
June 30, June 30, Years Ended November 30,
2000 1999 1998 1997 1996 1995
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.60 $9.91 $9.78 $9.77 $9.90 $9.43
Income from investment operations:
Net investment income .58 .33 .58 .62 .69 .73
Net gains (losses) on securities
(both realized and unrealized) (.25) (.31) .13 .01 (.13) .47
Total from investment operations .33 .02 .71 .63 .56 1.20
Less distributions:
Dividends from net investment income (.58) (.33) (.58) (.62) (.69) (.73)
Distributions from capital gains - - - - - -
Total distributions (.58) (.33) (.58) (.62) (.69) (.73)
Net asset value, end of period $9.35 $9.60 $9.91 $9.78 $9.77 $9.90
Total return* 3.55% .15% 7.47% 6.70% 5.96% 13.10%
Ratios/Supplemental Data
Net assets, end of period (in millions) $ 30 $ 37 $ 38 $ 41 $ 34 $ 33
Ratio of expenses to average net assets** .68% .67% .67% .66% .66% .67%
Ratio of net investment income
to average net assets** 6.12% 5.75% 5.90% 6.42% 7.10% 7.47%
Ratio of expenses to average net
assets before voluntary reduction
of management fee ** .98% .97% .97% .97% .96% .97%
Portfolio turnover rate 35% 54% 60% 65% 48% 57%
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Babson Money Market Fund - Prime Portfolio
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
Years Ended June 30,
2000 1999 1998 1997 1996
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income .05 .04 .05 .05 .05
Less distributions:
Dividends from net investment income (.05) (.04) (.05) (.05) (.05)
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
Total return 4.97% 4.38% 4.82% 4.61% 4.83%
Ratios/Supplemental Data
Net assets, end of year (in millions) $39 $39 $37 $38 $36
Ratio of expenses to average net assets .88% .88% .91% .92% .92%
Ratio of net investment income
to average net assets 4.86% 4.30% 4.73% 4.58% 4.75%
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Babson Money Market Fund - Federal Portfolio
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
Years Ended June 30,
2000 1999 1998 1997 1996
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income .05 .04 .05 .04 .05
Less distributions:
Dividends from net investment income (.05) (.04) (.05) (.04) (.05)
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
Total return 4.85% 4.31% 4.75% 4.58% 4.77%
Ratios/Supplemental Data
Net assets, end of year (in millions) $9 $ 13 $ 12 $ 13 $ 10
Ratio of expenses to average net assets .89% .88% .91% .91% .91%
Ratio of net investment income
to average net assets 4.68% 4.23% 4.65% 4.51% 4.67%
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Babson Tax-Free Income Fund - Portfolio L
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
Years Ended June 30,
2000 1999 1998 1997 1996
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 8.91 $ 9.22 $ 8.96 $ 8.74 $ 8.67
Income from investment operations:
Net investment income .39 .40 .40 .42 .41
Net gains (losses) on securities
(both realized and unrealized) (.21) (.24) .28 .24 .07
Total from investment operations .18 .16 .68 .66 .48
Less distributions:
Dividends from net investment income (.39) (.40) (.40) (.42) (.41)
Distributions from capital gains (.08) (.07) (.02) (.02) -
Total distributions (.47) (.47) (.42) (.44) (.41)
Net asset value, end of year $ 8.62 $ 8.91 $9.22 $8.96 $8.74
Total return 2.18% 1.70% 7.82% 7.69% 5.60%
Ratios/Supplemental Data
Net assets, end of year (in millions) $24 $26 $27 $27 $27
Ratio of expenses to average net assets 1.01% 1.03% 1.06% 1.01% 1.01%
Ratio of net investment income
to average net assets 4.53% 4.36% 4.46% 4.71% 4.67%
Portfolio turnover rate 48% 9% 18% 21% 39%
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Babson Tax-Free Income Fund - Portfolio S
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
Years Ended June 30,
2000 1999 1998 1997 1996
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.56 $10.79 $10.74 $10.69 $10.71
Income from investment operations:
Net investment income .40 .42 .44 .44 .44
Net gains (losses) on securities
(both realized and unrealized) (.15) (.20) .08 .10 .01
Total from investment operations .25 .22 .52 .54 .45
Less distributions:
Dividends from net investment income (.40) (.42) (.44) (.44) (.44)
Distributions from capital gains (.06) (.03) (.03) (.05) (.03)
Total distributions (.46) (.45) (.47) (.49) (.47)
Net asset value, end of year $10.35 $10.56 $10.79 $10.74 $10.69
Total return 2.43% 1.96% 4.84% 5.18% 4.25%
Ratios/Supplemental Data
Net assets, end of year (in millions) $15 $19 $21 $23 $25
Ratio of expenses to average net assets 1.02% 1.01% 1.06% 1.01% 1.01%
Ratio of net investment income
to average net assets 3.80% 3.82% 4.00% 4.12% 4.13%
Portfolio turnover rate 27% 22% 21% 23% 41%
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Babson Tax-Free Income Fund - Portfolio M
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
Years Ended June 30,
2000 1999 1998 1997 1996
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income .03 .03 .03 .03 .03
Less distributions:
Dividends from net investment income (.03) (.03) (.03) (.03) (.03)
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
Total return 3.08% 2.70% 3.06% 3.03% 3.15%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 6 $ 10 $ 10 $9 $8
Ratio of expenses to average net assets 59% .55% .61% .58% .58%
Ratio of net investment income
to average net assets 2.98% 2.65% 3.06% 3.10% 3.15%
</TABLE>
See accompanying Notes to Financial Statements.
Report of Independent Auditors
The Board of Directors and Shareholders of Babson Enterprise Fund, Inc.,
Babson Enterprise Fund II, Inc., David L. Babson Growth Fund, Inc., Shadow
Stock Fund, Inc., Babson Value Fund, Inc., Babson-Stewart Ivory
International Fund, Inc., D.L. Babson Bond Trust, D.L. Babson Money Market
Fund, Inc., and D.L. Babson Tax-Free Income Fund, Inc.
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of Babson Enterprise Fund, Inc.,
Babson Enterprise Fund II, Inc., Babson Value Fund, Inc., and D.L. Babson
Bond Trust (comprised of Portfolio L and Portfolio S) as of June 30, 2000,
and the related statements of operations for the year then ended, and the
statements of changes in net assets and financial highlights for the
periods presented in the corresponding financial statements and financial
highlights, and we have also audited the accompanying statements of assets
and liabilities, including the schedules of investments, of David L.Babson
Growth Fund, Inc., Shadow Stock Fund, Inc., Babson-Stewart Ivory
International Fund, Inc., D.L. Babson Money Market Fund, Inc. (comprised of
Portfolio Prime and Portfolio Federal) and D.L. Babson Tax-Free Income
Fund, Inc. (comprised of Portfolio L, Portfolio S and Portfolio MM) as of
June 30, 2000, and the related statements of operations for the year then
ended, and the statements of changes in net assets and financial highlights
for each of the two years in the period then ended. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
highlights for each of the three years in the period ended June 30, 1998
for David L. Babson Growth Fund, Inc., Shadow Stock Fund, Inc., Babson-
Stewart Ivory International Fund, Inc., D.L. Babson Money Market Fund,
Inc., and D.L. Babson Tax-Free Income Fund, Inc. were audited by other
auditors whose report dated July 28, 1998, expressed an unqualified opinion.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements and
financial highlights. Our procedures included confirmation of investments
owned as of June 30, 2000, by correspondence with the custodian and
brokers. As to certain securities relating to uncompleted transactions, we
performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of the Funds and each of the related portfolios at June 30, 2000, the
results of their operations, changes in their net assets and the financial
highlights for the periods indicated above in conformity with accounting
principles generally accepted in the United States.
/s/Ernst & Young LLP
Kansas City, Missouri
July 28, 2000
This report has been prepared for the information of the Shareholders of
Babson Enterprise Fund, Inc., Babson Enterprise Fund II, Inc., David L.
Babson Growth Fund, Inc., Shadow Stock Fund, Inc., Babson Value Fund, Inc.,
Babson-Stewart Ivory International Fund, Inc., D.L. Babson Bond Trust, D.L.
Babson Money Market Fund, Inc., and D.L. Babson Tax-Free Income Fund, Inc.,
and is not to be construed as an offering of the shares of the Funds.
Shares of the Funds are offered only by the Prospectus, a copy of which may
be obtained from Jones & Babson, Inc.
Babson Funds
Jones & Babson Distributors
A Member of the Generali Group
P.O. Box 219757, Kansas City, MO 64121-9757
1-800-4-babson
(1-800-422-2766)
www.babsonfunds.com
