File No. 33-82366
File No. 811-08690
As filed with the Securities and Exchange Commission
on January 19, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 /X/
POST-EFFECTIVE AMENDMENT NO.1 /X/
AND/OR
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 3 /X/
THE DLB FUND GROUP
(Exact Name of Registrant as Specified in Charter)
One Memorial Drive, Cambridge, Massachusetts 02142
(Address of Principal Executive Office)
(617)225-3800
(Registrant's Telephone Number, Including Area Code)
Ronald E. Gwozdz with a copy to:
David L. Babson & Co., Inc Gregory D. Sheehan, Esq.
One Memorial Drive Ropes & Gray
Cambridge, Massachusetts 02142 One International Place
(Name and Address of Agent for Service) Boston, Massachusetts 02110
It is proposed that this filing become effective (check appropriate box):
_ Immediately upon filing pursuant _ on (date) pursuant to paragraph (b)
to paragraph (b)
_ 60 days after filing pursuant X on April 1, 1995 pursuant to
to paragraph (a)(1) paragraph (a)(1)
_ 75 days after filing pursuant _ on (date) pursuant to paragraph
to paragraph (a)(2) (a)(2) of rule 485.
If appropriate, check the following box:
_ This post-effective amendment designates a new effective date for a
previously-filed, post-effective amendment.
Pursuant to Rule 24f-2(a) under the Investment Company Act of 1940,
the Registrant has previously declared the registration under the Securities
Act of 1933 of an indefinite number of its shares of beneficial interest.
Registrant will file a Rule 24f-2 Notice with respect to Registrant's fiscal
year ended December 31, 1995 on or about February 28, 1996.
<PAGE>
THE DLB FUND GROUP
CROSS REFERENCE SHEET
FORM N-1A
Part A: Information Required in Prospectus
N-1A Location in the
Item Registration Statement
No Item by Prospectus Heading
1. Cover Page Cover Page
2. Synopsis "Shareholder Transaction and Fund Expenses"
3. Condensed Financial "Financial Highlights"
Information
4. General Description "Organization and Capitalization of the
of the Registrant Trust," "Investment Objectives and Policies
and Associated Risks" and Cover Page
5. Management of the Fund "Management of the Trust"
5A. Management's Discussion Not Applicable
of Fund Performance
6. Capital Stock and Other "Distributions," "Taxes" and
Securities "Shareholder Inquiries"
7. Purchase of Securities "Purchase of Shares" and "Determination of
Being Offered Net Asset Value"
8. Redemption or Repurchase "Redemption of Shares" and "Determination of
Net Asset Value"
9 Pending Legal Proceedings Not Applicable
<PAGE>
Part B: Information Required in
Statement of Additional Information ("SAI")
N-lA Location in the
Item Registration Statement
No. Item by SAI Heading
10. Cover Page Cover Page
11. Table of Contents "Table of Contents"
12. General Information and Not Applicable
History
13. Investment Objective and "Investment Objectives and Policies and
Policies Associated Risks," "Investment Restrictions,"
and "Additional Investment Practices of the
Fixed Income Fund"
14. Management of the "Management of the Trust"
Registrant
15. Control Persons and "Description of the Trust
Principal Holders of and Ownership of Shares"
Securities
16. Investment Advisory and "Investment Advisory and Other Services"
Other Services
17. Brokerage Allocation "Portfolio Transactions"
18. Capital Stock and Other "Description of the Trust" and "Ownership of
Securities Shares"
19. Purchase, Redemption and "Purchase of Shares" and "Redemption of
Pricing of Securities Shares" in Prospectus and
Being Offered "Determination of Net Asset Value"
20. Tax Status "Income Dividends, Distributions and
Tax Status"
21. Underwriters Not Applicable
22. Calculation of Performance "Performance Information"
Data
23. Financial Statements "Report of Independent Auditors and
Financial Statements"
<PAGE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
<PAGE>
PROSPECTUS
THE DLB FUND GROUP
One Memorial Drive
Cambridge, Massachusetts 02142
(617) 225-3800
April 1, 1996
The DLB Fund Group (the "Trust") is an open-end management investment
company offering four non-diversified portfolios with different investment
objectives and strategies. (Such portfolios are each referred to as a "Fund,"
and, collectively, as the "Funds"). The Funds are intended primarily to serve as
investment vehicles for institutional investors. Each Fund's investment manager
is David L. Babson & Co., Inc.
(the "Manager").
The DLB FIXED INCOME FUND (the "Fixed Income Fund") seeks to achieve a
high level of current income consistent with preservation of capital through
investment in a portfolio of fixed income securities.
The DLB GLOBAL SMALL Capitalization Fund (the "Global Small Cap Fund")
seeks long-term capital appreciation through investment primarily in equity
securities of smaller foreign and domestic companies.
The DLB VALUE FUND (the "Value Fund") seeks long-term capital
appreciation primarily through investment in a portfolio of common stocks of
established companies.
The DLB MID CAPITALIZATION FUND (the "Mid Cap Fund") seeks long-term
capital appreciation primarily through investment in a portfolio of common
stocks of small to medium-size companies.
Shares of each Fund are sold to investors by the Trust. The minimum
initial investment in a Fund is $100,000, and the minimum for each subsequent
investment is $10,000.
This Prospectus concisely describes the information which investors
ought to know before investing in any of the Funds. Please read this Prospectus
carefully and keep it for further reference.
A Statement of Additional Information dated April 1, 1996 is available
at no charge by writing to David L. Babson & Co., Inc., Marketing Department,
Attention: Maureen A. Madden, One Memorial Drive, Cambridge, Massachusetts,
02142 or by telephoning (617) 225-3800. The Statement, which contains more
detailed information about all of the Funds, has been filed with the Securities
and Exchange Commission and is incorporated by reference in this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
SHAREHOLDER TRANSACTION AND FUND EXPENSES 3
FINANCIAL HIGHLIGHTS 8
INVESTMENT OBJECTIVES AND POLICIES AND ASSOCIATED RISKS 12
PURCHASE OF SHARES 18
REDEMPTION OF SHARES 20
DETERMINATION OF NET ASSET VALUE 21
DISTRIBUTIONS 21
TAXES 22
MANAGEMENT OF THE TRUST 23
PERFORMANCE INFORMATION 24
ORGANIZATION AND CAPITALIZATION OF THE TRUST 25
SHAREHOLDER INQUIRIES 25
<PAGE>
SHAREHOLDER TRANSACTION AND FUND EXPENSES
1. FIXED INCOME FUND
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load on Purchases..................................................................None
Maximum Sales Load on Reinvested Dividends.......................................................None
Deferred Sales Load..............................................................................None
Purchase Premium.................................................................................None
Redemption Fees..................................................................................None
Exchange Fee.....................................................................................None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management Fees (after fee waiver) (a)................................................... .20%
12b-1 Fees(b)............................................................................ 0
Other Expenses........................................................................... .35%
Total Fund Operating Expenses(a)......................................................... .55%
</TABLE>
EXAMPLE:
You would pay the following Years
expenses on a $1,000 investment,
assuming a 5% annual return 1 3
with or without redemption at
the end of each period: $6.00 $18.00
- ---------------
(a) The Manager has agreed with the Fund to reduce its management fee and
to bear certain expenses until further notice to the extent that the
Fund's total annual expenses, other than brokerage commissions and
transfer taxes, would otherwise exceed .55% of the Fund's average daily
net assets. Therefore, so long as the Manager agrees to reduce its fee
and to bear certain expenses, total annual expenses, other than
brokerage commissions and transfer taxes, of the Fund will not exceed
.55%. Absent such agreement by the Manager to waive its fee and bear
certain expenses, management fees would be .40%, and total Fund
operating expenses would be .75%.
(b) The Fund has adopted a distribution and services plan pursuant to Rule
12b-1 that permits payments by the Fund at an annual rate of up to .50%
of the Fund's average net assets, but the Trustees do not currently
intend to implement such plan during the Fund's current fiscal year.
See "Purchase of Shares --12b-1 Plans."
<PAGE>
2. GLOBAL SMALL CAP FUND
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load on Purchases..................................................................None
Maximum Sales Load on Reinvested Dividends.......................................................None
Deferred Sales Load..............................................................................None
Purchase Premium.................................................................................None
Redemption Fees..................................................................................None
Exchange Fee.....................................................................................None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management Fees (after fee waiver)(a)................................................... .80%
12b-1 Fees(b)........................................................................... 0
Other Expenses.......................................................................... .70%
Total Fund Operating Expenses(a)........................................................ 1.50%
</TABLE>
EXAMPLE:
You would pay the following Years
expenses on a $1,000 investment,
assuming a 5% annual return 1 3
with or without redemption at
the end of each period: $16.00 $48.00
- ---------------
(a) The Manager has agreed with the Fund to reduce its management fee and
to bear certain expenses until further notice to the extent that the
Fund's total annual expenses, other than brokerage commissions and
transfer taxes, would otherwise exceed 1.50% of the Fund's average
daily net assets. Therefore, so long as the Manager agrees to reduce
its fee and to bear certain expenses, total annual expenses, other than
brokerage commissions and transfer taxes, of the Fund will not exceed
1.50%. Absent such agreement by the Manager to waive its fee and bear
certain expenses, management fees would be 1.00%, and total Fund
operating expenses would be 1.70%. The management fees paid by the Fund
are higher than the management fees paid by most other investment
companies, although not necessarily higher than other investment
companies investing in a global portfolio of small capitalization
stocks.
(b) The Fund has adopted a distribution and services plan pursuant to Rule
12b-1 that permits payments by the Fund at an annual rate of up to .50%
of the Fund's average net assets, but the Trustees do not currently
intend to implement such plan during the Fund's current fiscal year.
See "Purchase of Shares --12b-1 Plans."
<PAGE>
3. VALUE FUND
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load on Purchases..................................................................None
Maximum Sales Load on Reinvested Dividends.......................................................None
Deferred Sales Load..............................................................................None
Purchase Premium.................................................................................None
Redemption Fees..................................................................................None
Exchange Fee.....................................................................................None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management Fees (after fee waiver)(a).................................................... .35%
12b-1 Fees(b)............................................................................ 0
Other Expenses........................................................................... .45%
Total Fund Operating Expenses(a)......................................................... .80%
</TABLE>
EXAMPLE:
You would pay the following Years
expenses on a $1,000 investment,
assuming a 5% annual return 1 3
with or without redemption at
the end of each period: $9.00 $26.00
- ---------------
(a) The Manager has agreed with the Fund to reduce its management fee and
to bear certain expenses until further notice to the extent that the
Fund's total annual expenses, other than brokerage commissions and
transfer taxes, would otherwise exceed .80% of the Fund's average daily
net assets. Therefore, so long as the Manager agrees to reduce its fee
and to bear certain expenses, total annual expenses, other than
brokerage commissions and transfer taxes, of the Fund will not exceed
.80%. Absent such agreement by the Manager to waive its fee and bear
certain expenses, management fees would be .55%, and total Fund
operating expenses would be 1.00%.
(b) The Fund has adopted a distribution and services plan pursuant to Rule
12b-1 that permits payments by the Fund at an annual rate of up to .50%
of the Fund's average net assets, but the Trustees do not currently
intend to implement such plan during the Fund's current fiscal year.
See "Purchase of Shares --12b-1 Plans."
<PAGE>
4. MID CAP FUND
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load on Purchases..................................................................None
Maximum Sales Load on Reinvested Dividends.......................................................None
Deferred Sales Load..............................................................................None
Purchase Premium.................................................................................None
Redemption Fees..................................................................................None
Exchange Fee.....................................................................................None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management Fees (after fee waiver)(a)................................................... .30%
12b-1 Fees(b)........................................................................... 0
Other Expenses.......................................................................... .60%
Total Fund Operating Expenses(a)........................................................ .90%
</TABLE>
EXAMPLE:
You would pay the following Years
expenses on a $1,000 investment,
assuming a 5% annual return 1 3
with or without redemption at
the end of each period: $10.00 $29.00
- ---------------
(a) The Manager has agreed with the Fund to reduce its management fee and
to bear certain expenses until further notice to the extent that the
Fund's total annual expenses, other than brokerage commissions and
transfer taxes, would otherwise exceed .90% of the Fund's average daily
net assets. Therefore, so long as the Manager agrees to reduce its fee
and to bear certain expenses, total annual expenses, other than
brokerage commissions and transfer taxes, of the Fund will not exceed
.90%. Absent such agreement by the Manager to waive its fee and bear
certain expenses, management fees would be .60%, and total Fund
operating expenses would be 1.20%.
(b) The Fund has adopted a distribution and services plan pursuant to Rule
12b-1 that permits payments by the Fund at an annual rate of up to .50%
of the Fund's average net assets, but the Trustees do not currently
intend to implement such plan during the Fund's current fiscal year.
See "Purchase of Shares --12b-1 Plans."
<PAGE>
The purpose of the foregoing tables is to assist an investor in
understanding the various costs and expenses of each of the Funds that are borne
by holders of Fund shares. THE FIVE PERCENT ANNUAL RETURN AND ESTIMATED EXPENSES
USED IN CALCULATING THE EXAMPLES ARE NOT REPRESENTATIONS OF FUTURE PERFORMANCE
OR EXPENSES; SUBJECT TO THE MANAGER'S AGREEMENT TO WAIVE ITS FEE AND BEAR
CERTAIN EXPENSES FOR EACH FUND AS DESCRIBED IN THE FOREGOING TABLES, ACTUAL
PERFORMANCE AND/OR EXPENSES MAY BE MORE OR LESS THAN SHOWN.
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables present unaudited per share financial information
for each of the Funds.
1. FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
PERIOD FROM JULY 25, 1995 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
<TABLE>
<S> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $10.00
Income from investment operations:
Net investment income 0.28
Net realized and unrealized gain on investments 0.37
Total from investment operations 0.65
Less distributions declared to shareholders:
From net investment income (0.28)
From net realized gain on investments (0.11)
Total distributions declared to shareholders (0.39)
Net asset value - end of period $10.26
Total return 14.75%*
Ratios and Supplemental Data:
Ratio of expenses to average net assets 0.55%*
Ratio of net investment income to average net assets 6.24%*
Portfolio turnover 42%
Net assets at end of period (000 omitted) $5,325
The Manager has agreed with the Fund to reduce its management fee and bear
certain expenses, such that expenses do not exceed 0.55% of average daily
net assets on an annualized basis. If the fee and expenses had been
incurred by the Fund and had expenses been limited to that required by
state securities law, the net investment income per share and ratios would
have been:
Net investment income $0.20
Ratios (to average net assets)
Expenses 2.50%*
Net investment income 4.30%*
*Annualized
</TABLE>
See notes to financial statements.
<PAGE>
2. GLOBAL SMALL CAP FUND
FINANCIAL HIGHLIGHTS
PERIOD FROM JULY 19, 1995
(COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995
<TABLE>
<S> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $10.00
Income from investment operations:
Net investment income 0.07
Net realized and unrealized gain on investments 0.34
Total from investment operations 0.41
Less distributions declared to shareholders:
From net investment income (0.07)
In excess of net investment income (0.01)
Total distributions declared to shareholders (0.08)
Net asset value - end of period $10.33
Total return 8.96%*
Ratios and Supplemental Data:
Ratio of expenses to average net assets 1.50%*
Ratio of net investment income to average net assets 1.46%*
Portfolio turnover 5%
Net assets at end of period (000 omitted) $10,509
The manager has agreed with the Fund to reduce its investment management
fee and bear certain expenses, such that expenses do not exceed 1.50% of
average daily net assets on an annualized basis. If the fee and expenses
had been incurred by the Fund, and had expenses been limited to that
required by state securities law, net investment income per share would
have been:
Net investment loss $0.02
Ratios (to average net assets):
Expenses 2.50%*
Net investment income 0.42%*
*Annualized
</TABLE>
See notes to financial statements.
<PAGE>
3. VALUE FUND
FINANCIAL HIGHLIGHTS - UNAUDITED
PERIOD FROM JULY 25, 1995 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
<TABLE>
<S> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $10.00
Income from investment operations:
Net investment income 0.09
Net realized and unrealized gain (loss) on investments 0.73
Total from investment operations 0.82
Less distributions declared to shareholders:
From net investment income (0.09)
From net realized gain on investments (0.15)
Total distributions declared to shareholders (0.24)
Net asset value - end of period $10.58
Total return 18.64%*
Ratios and Supplemental Data:
Ratio of expenses to average net assets 0.80%*
Ratio of net investment income to average net assets 2.02%*
Portfolio turnover 7%
Net assets at end of period (000 omitted) $10,818
The manager has agreed with the Fund to reduce its management fee and bear
certain expenses, such that expenses do not exceed 0.80% of average daily
net assets on an annualized basis. If the fee and expenses had been
incurred by the Fund and had expenses been limited to that permitted by
state securities law, the net investment income per share and ratios would
have been:
Net investment income $0.02
Ratios (to average net assets)
Expenses 2.43%*
Net investment income 0.40%*
*Annualized
</TABLE>
See notes to financial statements.
<PAGE>
4. MID CAP FUND
FINANCIAL HIGHLIGHTS - UNAUDITED
PERIOD FROM JULY 25, 1995 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
<TABLE>
<S> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $10.00
Income from investment operations:
Net investment income 0.08
Net realized and unrealized gain on investments 0.84
Total from investment operations 0.92
Less distributions declared to shareholders:
From net investment income (0.08)
From net realized gain on investments (0.09)
Total distributions declared to shareholders (0.17)
Net asset value - end of period $10.75
Total return 21.17%*
Ratios and Supplemental Data:
Ratio of expenses to average net assets 0.90%*
Ratio of net investment income to average net assets 1.90%*
Portfolio turnover 6%
Net assets at end of period (000 omitted) $10,929
The manager has agreed with the Fund to reduce its management fee and bear
certain expenses, such that expenses do not exceed 0.90% of average daily
net assets on an annualized basis. If the fee and expenses had been
incurred by the Fund, and had expenses been limited to that permitted by
state securities law, the net investment income per share and ratios would
have been:
Net investment income 0.01
Ratios (to average net assets)
Expenses 2.50%*
Net investment income 0.30%
*Annualized
</TABLE>
See notes to financial statements.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES AND ASSOCIATED RISKS
FIXED INCOME FUND
The Fixed Income Fund's investment objective is to achieve a high level of
current income consistent with preservation of capital through investment in a
portfolio of fixed income securities.
The Manager will pursue the Fixed Income Fund's objective by investing the
Fund's assets primarily in publicly traded domestic fixed income securities,
including U.S. Treasury and agency obligations, mortgage-backed and asset-backed
securities and corporate debt securities. The Fund will also invest in other
fixed income markets, such as corporate private placements, directly-placed
mortgage obligations and foreign currency denominated bonds. Substantially all
(but no less than 65%) of the Fund's total assets will at all times be invested
in fixed income securities. Pending investment and reinvestment in fixed income
securities, the Manager may invest the Fund's assets in money market
instruments. Allocations are made among a wide array of market sectors, such as
U.S. Treasury and agency obligations, corporate securities, mortgages and
mortgage-backed securities, private placement securities and non-U.S. dollar
denominated securities, based on the relative attractiveness of such sectors.
Following these sector allocations, the Manager will purchase those securities
deemed attractively valued in the desired sectors. The Fund may invest in any
fixed income security, including preferred stocks.
PORTFOLIO DURATION AND MATURITY. The Fund's portfolio will generally have
an average dollar weighted portfolio maturity of five to twelve years and a
duration of no less than three years and no more than ten years (excluding
short-term investments). The duration of a fixed income security is the weighted
average maturity, expressed in years, of the present value of all future cash
flows, including coupon payments and principal repayments. The Fund's portfolio
may include securities with maturities and durations outside of these ranges
when consistent with its investment objective.
PORTFOLIO QUALITY. The Fund may invest in any security that is rated
investment grade at the time of purchase (i.e., at least Baa as determined by
Moody's Investors Service, Inc. ("Moody's") or BBB as determined by Standard &
Poor's ("S&P")), or in any unrated security that the Manager determines to be of
comparable quality. Securities rated Baa by Moody's or BBB by S&P and comparable
unrated securities have speculative characteristics, and changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments on such obligations than in the case of
higher-rated securities. In the event that any security held by the Fund ceases
to be of investment grade quality, the Fund will not be obligated to dispose of
such security and may continue to hold the obligation if, in the opinion of the
Manager, such investment is considered appropriate under the circumstances.
However, if more than 5% of the Fund's net assets are below investment grade
quality, the Manager will dispose of such securities as are necessary to reduce
such holdings to below 5%. The values of fixed income securities generally vary
inversely to changes in prevailing interest rates. Investments in lower quality
fixed income securities generally provide greater income than investments in
higher-rated securities but are subject to greater market fluctuations and risks
of loss of income and principal than are higher-rated securities. Fluctuations
in the value of portfolio securities will not affect interest income on existing
portfolio securities but will be reflected in the Fund's net asset value.
MORTGAGE-BACKED AND OTHER ASSET-BACKED SECURITIES. The Fund may invest in
mortgage-backed and other asset-backed securities issued by the U.S. Government
and its agencies and instrumentalities and by
<PAGE>
non-governmental issuers. Interest and principal payments (including
prepayments) on the mortgages underlying mortgage-backed securities are passed
through to the holders of the mortgage-backed security. Prepayments occur when
the mortgagor on an individual mortgage prepays the remaining principal before
the mortgage's scheduled maturity date. As a result of the pass-through of
prepayments of principal on the underlying securities, mortgage-backed
securities are often subject to more rapid prepayment of principal than their
stated maturity would indicate. Because the prepayment characteristics of the
underlying mortgages vary, there can be no certainty as to the predicted yield
or average life of a particular issue of pass-through certificates. Prepayments
are important because of their effect on the yield and price of the securities.
During periods of declining interest rates, such prepayments can be expected to
accelerate and the Fund would be required to reinvest the proceeds at the lower
interest rates then available. In addition, prepayments of mortgages which
underlie securities purchased at a premium could result in capital losses
because the premium may not have been fully amortized at the time the obligation
was prepaid. As a result of these principal payment features, the values of
mortgage-backed securities generally fall when interest rates rise, but their
potential for capital appreciation in periods of falling interest rates is
limited because of the prepayment feature. The mortgage-backed securities
purchased by the Fund may include adjustable rate instruments. See "Adjustable
Rate Securities" below.
The Fund may also invest in asset-backed securities such as securities
backed by pools of automobile loans, educational loans and credit card
receivables, both secured and unsecured. These assets are generally held by a
trust and payments of principal and interest or interest only are passed through
to certificate holders.
Underlying automobile sales contracts, educational loans, or credit card
receivables are subject to prepayment, which may reduce the overall return to
certificate holders. Nevertheless, principal repayment rates tend not to vary
much with interest rates and the short-term nature of the underlying car loans
or other receivables tends to dampen the impact of any change in the prepayment
level. Certificate holders may also experience delays in payment on the
certificates if the full amounts due on underlying sales contracts or
receivables are not realized by the trust because of unanticipated legal or
administrative costs of enforcing the contracts or because of depreciation or
damage to the collateral (usually automobiles) securing certain contracts, or
other factors. If consistent with its investment objective and policies, the
Fund may invest in other asset-backed securities that may be developed in the
future.
In addition to the risks described above, mortgage-backed and asset-backed
securities of non-governmental issuers involve risk of loss of principal if the
obligors of the underlying obligations default in payment of the obligations.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). The Fund may invest in CMOs.
A CMO is a security backed by a portfolio of mortgages or mortgage-backed
securities held under an indenture. The issuer's obligation to make interest and
principal payments is secured by the underlying portfolio of mortgages or
mortgage-backed securities. CMOs are issued in multiple classes or series which
have different maturities representing interests in some or all of the interest
or principal on the underlying collateral or a combination thereof. CMOs of
different classes are generally retired in sequence as the underlying mortgage
loans in the mortgage pool are repaid. In the event of sufficient early
prepayments on such mortgages, the class or series of CMO first to mature
generally will be retired prior to its stated maturity. Thus, the early
retirement of a particular class or series of CMO held by the Fund would have
the same effect as the prepayment of mortgages underlying a mortgage-backed
pass-through security. CMOs also include securities ("Residuals") representing
the interest in any excess cash flow and/or the
<PAGE>
value of any collateral remaining after the issuer has applied cash flow from
the underlying mortgages or mortgage-backed securities to the payment of
principal of, and interest on, all other CMOs and the administrative expenses of
the issuer. Residuals have value only to the extent income from such underlying
mortgages or mortgage-backed securities exceeds the amounts necessary to satisfy
the issuer's debt obligations represented by all other outstanding CMOs.
ADJUSTABLE RATE SECURITIES. The Fund may invest in adjustable rate
securities which are securities that have interest rates that are reset at
periodic intervals, usually by reference to some interest rate index or market
interest rate. They may be U.S. Government securities or securities of other
issuers. Some adjustable rate securities are backed by pools of mortgage loans.
Although the rate adjustment feature may act as a buffer to reduce sharp changes
in the value of adjustable rate securities, these securities are still subject
to changes in value based on changes in market interest rates or changes in the
issuer's creditworthiness. Because the interest rate is reset only periodically,
changes in the interest rates on adjustable rate securities may lag changes in
prevailing market interest rates. Also, some adjustable rate securities (or the
underlying mortgages) are subject to caps or floors that limit the maximum
change in interest rate during a specified period or over the life of the
security. Because of the resetting of interest rates, adjustable rate securities
are less likely than non-adjustable rate securities of comparable quality and
maturity to increase significantly in value when market interest rates fall. The
Fund's investments in adjustable rate securities will not be included for
purposes of determining compliance with the Fund's policy of investing at least
65% of its total assets in fixed income securities discussed above.
OTHER INVESTMENT POLICIES. The Fund may also invest a limited portion of
its assets (in all cases less than 5%) in IO/PO strips, zero coupon securities,
indexed securities, loans and other direct debt instruments, reverse repurchase
agreements and dollar roll agreements. See the Statement of Additional
Information for a description of each of these investment practices and the
related risks.
See "Investment Objectives And Policies--General."
GLOBAL SMALL CAP FUND
The investment objective of the Global Small Cap Fund is to seek long-term
capital appreciation through investment primarily in equity securities of
foreign and domestic companies with market capitalizations at the time of
investment by the Fund of up to $1.5 billion. Such companies are referred to
herein as "small capitalization companies." Current income is only an incidental
consideration in selecting investments for the Fund. The Fund is designed for
investors seeking above-average capital growth potential through a global
portfolio of common stocks.
It is expected that substantially all (but no less than 65%) of the Fund's
total assets will at all times be invested in common stocks of small
capitalization companies. Such companies may present greater opportunities for
capital appreciation because of high potential earnings growth, but may also
involve greater risk. Small capitalization companies tend to be smaller than
other companies and may be dependent upon a single proprietary product or market
niche. They may have limited product lines, markets or financial resources or
may depend on a limited management group. Typically, small capitalization
companies have fewer securities outstanding, which may be less liquid than
securities of larger companies. Their common stock and other securities may
trade less frequently and in limited volume. The securities of small
capitalization companies are generally more sensitive to purchase and sale
transactions; therefore, the prices of such securities tend to be more volatile
than the securities of larger companies. As a result,
<PAGE>
the securities of small capitalization companies may change in value more than
those of larger, more established companies.
In seeking capital appreciation, the Fund follows a global investment
strategy of investing primarily in common stocks traded in securities markets
located in a number of foreign countries and in the United States. The Fund
normally expects to invest approximately 40% to 60% of its assets outside the
United States and the remaining 60% to 40% of its assets inside the United
States. The weighting of the Fund's portfolio between foreign and domestic
investments will depend upon prevailing conditions in foreign and domestic
markets. Under certain market conditions, the Fund may invest more than 60% of
its assets either outside or inside the United States. In addition, the Fund
will always invest at least 65% of its assets in at least three different
countries, one of which will be the United States. The Fund may hold a portion
of its assets in cash or money market instruments.
Consistent with the above policies, the Fund may at times invest more than
25% of its assets in the securities of issuers located in a single country. At
such times, the Fund's performance will be directly affected by political,
economic, market and exchange rate conditions in such countries. When the Fund
invests a substantial portion of its assets in a single country it is at greater
risk to adverse changes in any of these factors with respect to such country
than a Fund which does not invest as heavily in the country.
The Fund may invest up to 15% of its assets in stocks traded in the
securities markets of newly industrializing countries in Asia, Latin America,
the Middle East, Southern Europe, Eastern Europe and Africa. Investment in such
countries involves a greater degree of risk than investment in industrialized
countries, as discussed below. In order to gain such exposure to certain foreign
countries which prohibit or impose restrictions on direct investment, the Fund
may (subject to any applicable regulatory requirements) invest in foreign and
domestic investment companies and other pooled investment vehicles that invest
primarily or exclusively in such countries. The Fund's investment through such
vehicles will generally involve the payment of indirect expenses (including
advisory fees) which the Fund does not incur when investing directly.
The Manager believes that the securities markets of many nations move
relatively independently of one another because business cycles and other
economic or political events that influence one country's securities markets may
have little effect on securities markets in other countries. By investing in a
global portfolio, the Fund attempts to reduce the risks associated with
investing in the economy of only one country. The countries that the Manager or
Babson-Stewart Ivory International, the Fund's sub-adviser (the "Sub-Adviser"),
believes offer attractive opportunities for investment may change from time to
time. The Fund will invest only in exchange traded securities and securities
traded through established over-the-counter trading systems which the Manager or
the Sub-Adviser believes provide comparable liquidity to exchange traded
securities.
Foreign investments can involve risks, however, that may not be present in
domestic securities. Because foreign securities are normally denominated and
traded in foreign currencies, the value of the assets of the Fund may be
affected favorably or unfavorably by changes in currency rates and exchange
control regulations. There may be less information publicly available about a
foreign company than about a U.S. company, and foreign companies are not
generally subject to accounting, auditing and financial reporting standards and
practices comparable to those in the United States. The securities of some
foreign companies are less liquid and at times more volatile than securities of
comparable U.S. companies. Foreign brokerage commissions and other fees are also
generally higher than in the United States. Foreign
<PAGE>
settlement procedures and trade regulations may involve certain risks (such as
delay in payment or delivery of securities or in the recovery of the Fund's
assets held abroad) and expenses not present in the settlement of domestic
investments.
In addition, with respect to certain foreign countries, there is a
possibility of expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial instability and
diplomatic developments which could affect the value of investments in those
countries. In certain countries, legal remedies available to investors may be
more limited than those available with respect to investments in the United
States or other countries. The laws of some foreign countries may limit the
Fund's ability to invest in securities of certain issues located in those
countries. Finally, special tax considerations apply to foreign securities.
See "Investment Objectives and Policies--General."
VALUE FUND
The Value Fund's investment objective is to seek long-term capital
appreciation primarily through investment in a portfolio of common stocks of
established companies. Strong consideration is given to common stocks whose
current prices do not adequately reflect, in the opinion of the Manager, the
true value of the underlying company in relation to earnings, dividends and/or
assets.
The Fund will ordinarily invest in the securities of companies which are
listed on national securities exchanges or on the National Association of
Securities Dealers Automated Quotation System. The Manager will select which
issues to invest in based on its assessment of whether the issue is likely to
provide favorable capital appreciation over the long-term.
The Fund's investments may be made in companies which are currently of
below average quality but which, in the opinion of the Manager, are undervalued
by the market and offer attractive opportunities for long-term capital
appreciation. Such companies involve a greater degree of investment risk than
companies of average or above average quality, including the risk of a total
loss in the event of insolvency or bankruptcy. Investment quality is evaluated
using fundamental analysis emphasizing an issuer's historic financial
performance, balance sheet strength, management capability and competitive
position. Various valuation parameters are examined to determine the
attractiveness of individual securities.
See "Investment Objectives And Policies--General."
MID CAP FUND
The investment objective of the Mid Cap Fund is to seek long-term capital
appreciation primarily through investment in small to medium-size companies.
Such companies are referred to herein as "mid capitalization companies," which
for these purposes means companies with a market capitalization at the time of
investment by the Fund of between $400 million and $2 billion. Current income is
only an incidental consideration. Strong consideration is given to common stocks
of mid capitalization companies whose current prices do not adequately reflect,
in the opinion of the Manager, the ongoing business value of the underlying
company.
<PAGE>
The Mid Cap Fund invests primarily in common stocks. The Fund expects that
substantially all (but no less than 65%) of its total assets will be invested in
the common stock of mid capitalization companies. Such companies may present
greater opportunities for capital appreciation because of high potential
earnings growth, but may also involve greater risk. Mid capitalization companies
tend to be smaller than other companies and may be dependent upon a single
proprietary product or market niche. They may have limited product lines,
markets or financial resources or may depend on a limited management group.
Typically, mid capitalization companies have fewer securities outstanding and
are less liquid than securities of larger companies. Their common stock and
other securities may trade less frequently and in limited volume. The securities
of mid capitalization companies are generally more sensitive to purchase and
sale transactions; therefore, the prices of such securities tend to be more
volatile than the securities of larger companies. As a result, the securities of
mid capitalization companies may change in value more than those of larger, more
established companies. Because the Fund does not expect to invest in long or
short-term fixed income securities for temporary defensive purposes, the Fund
will generally stay fully invested in equity securities.
See "Investment Objectives and Policies--General."
GENERAL
ILLIQUID SECURITIES. Each of the Funds may purchase "illiquid securities,"
which are securities that are not readily marketable, including securities whose
disposition is restricted by contract or under Federal securities laws, so long
as no more than 15% of a Fund's net assets would be invested in such illiquid
securities. A Fund may not be able to dispose of such securities in a timely
fashion and for a fair price, which could result in losses to the Fund. In
addition, illiquid securities are generally more difficult to value.
PORTFOLIO TURNOVER. Although portfolio turnover is not a limiting factor
with respect to investment decisions for the Funds, the Funds expect to
experience relatively low portfolio turnover rates. It is not anticipated that
under normal circumstances the annual portfolio turnover rate of any Fund will
exceed 100%. However, in any particular year, market conditions may result in
greater rates than are currently anticipated. Portfolio turnover involves
brokerage commissions and other transaction costs, which will be borne directly
by the relevant Fund, and could involve realization of capital gains that would
be taxable when distributed to shareholders of the relevant Fund. The tax
consequences of portfolio transactions may be a secondary consideration for
tax-exempt investors.
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements with
banks and broker- dealers. Under repurchase agreements a Fund acquires a
security (usually an obligation of a Government under which the transaction is
initiated or in whose currency the agreement is denominated) for cash and
obtains a simultaneous commitment from the seller to repurchase the security at
an agreed on price and date. The resale price exceeds the acquisition price and
reflects an agreed-upon market rate unrelated to the coupon rate on the
purchased security. Such transactions afford an opportunity for a Fund to earn a
return on temporarily available cash at no market risk, although there is a risk
that the seller may default on its obligation to pay the agreed-upon sum on the
redelivery date. Such a default may subject a Fund to expenses, delays and risks
of loss. Repurchase agreements entered into with foreign brokers, dealers and
banks involve additional risks similar to those of investing in foreign
securities. For a discussion of these risks, see "Global Small Cap Fund," above.
<PAGE>
FIRM COMMITMENTS. Each Fund may enter into firm commitment agreements with
banks or broker- dealers for the purchase of securities at an agreed-upon price
on a specified future date. A Fund will only enter into firm commitment
arrangements with banks and broker-dealers which the Manager determines present
minimal credit risks. A Fund will maintain in a segregated account with its
custodian cash, U.S. Government Securities or other liquid high grade debt
obligations in an amount equal to the Fund's obligations under firm commitment
agreements.
LOANS OF PORTFOLIO SECURITIES. Each Fund may make secured loans of
portfolio securities on up to 100% of the Fund's total assets. The risks in
lending portfolio securities, as with other extensions of credit, consist of
possible delay in recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially. However, such loans will be
made only to broker-dealers that are believed by the Manager to be of relatively
high credit standing. Securities loans are made to broker-dealers pursuant to
agreements requiring that loans be continuously secured by collateral in cash or
U.S. Government securities at least equal at all times to the market value of
the securities lent. The borrower pays to the lending Fund an amount equal to
any dividends or interest received on the securities lent. The Fund may invest
the cash collateral received in interest-bearing, short-term securities or
receive a fee from the borrower. Although voting rights or rights to consent
with respect to the loaned securities pass to the borrower, the Fund retains the
right to call the loans at any time on reasonable notice, and it will do so in
order that the securities may be voted by the Fund if the holders of such
securities are asked to vote upon or consent to matters materially affecting the
investment. The Fund may also call such loans in order to sell the securities
involved. The Fund pays various fees in connection with such loans including
shipping fees and reasonable custodian and placement fees approved by the
Trustees of the Trust or persons acting pursuant to their direction.
RISKS OF NON-DIVERSIFICATION. The Funds are "non-diversified" funds and as
such are not required to meet any diversification requirements under the
Investment Company Act of 1940. As a non-diversified fund, each Fund may invest
a relatively high percentage of its assets in the securities of relatively few
issuers, rather than invest in the securities of a large number of issuers
merely to satisfy diversification requirements. Investment in the securities of
a limited number of issuers may increase the risk of loss to a Fund should there
be a decline in the market value of any one portfolio security. Investment in a
non-diversified fund may therefore entail greater risks than investment in a
"diversified" fund.
CHANGES TO INVESTMENT OBJECTIVES. The investment objectives and policies of
each Fund may be changed by the Trustees without shareholder approval. Any such
change may result in a Fund having investment objectives and policies different
from the objectives and policies which a shareholder considered appropriate at
the time of such shareholder's investment in such Fund. Shareholders of the
Trust will be notified of any changes in the Funds' investment objectives or
policies through a revised prospectus or other written communication.
PURCHASE OF SHARES
Shares of each Fund may be purchased directly from the Trust on any day
when the New York Stock Exchange is open for business (a "business day"). The
minimum for an initial investment in a Fund is $100,000, and the minimum for
each subsequent investment is $10,000. The purchase price of a share of each
Fund is the net asset value next determined after a purchase order is received
in good order.
<PAGE>
Shares of each Fund may be purchased either (i) in exchange for common
stocks on deposit at The Depository Trust Company ("DTC") or appropriate fixed
income securities, subject to the determination by the Manager that the
securities to be exchanged are acceptable, (ii) in cash (i.e., by wire transfer)
or (iii) by a combination of such securities and cash. In all cases, the Manager
reserves the right to reject any particular investment. Securities accepted by
the Manager in exchange for Fund shares will be valued as set forth under
"Determination of Net Asset Value" (generally the last quoted sale price) as of
the time of the next determination of net asset value after such acceptance. All
dividends, interest, subscription or other rights which are reflected in the
market price of accepted securities at the time of valuation become the property
of the relevant Fund and must be delivered to the Trust upon receipt by the
investor from the issuer. A gain or loss for federal income tax purposes may be
realized by investors subject to Federal income taxation upon the exchange,
depending upon the investor's basis in the securities tendered.
The Manager will not approve the acceptance of securities in exchange for
Fund shares unless (1) the Manager, in its sole discretion, believes the
securities are appropriate investments for the Fund; (2) the investor represents
and agrees that all securities offered to the Fund are not subject to any
restrictions upon their sale by the Fund under the Securities Act of 1933, or
otherwise; and (3) the securities may be acquired under the investment
restrictions applicable to the relevant Fund. Investors interested in purchases
through exchange should telephone the Manager at (617) 225-3800, Attn: Maureen
A. Madden.
Investors should call the offices of the Trust before attempting to place
an order for Trust shares. The Trust reserves the right at any time to reject an
order.
For purposes of calculating the purchase price of Trust shares, a purchase
order is received by the Trust on the day that it is "in good order" unless it
is rejected by the Trust. An order is "in good order" if the Trust has received
the consideration for Trust shares (cash or, in the case of in-kind investments,
securities). In the case of a cash investment the deadline for wiring federal
funds to the Trust is 2:00 p.m.; in the case of an investment in-kind the
investor's securities must be placed on deposit at DTC, and 4:00 p.m. is the
deadline for transferring those securities to the account designated by
Investors Bank & Trust Company. If the consideration is not received by the
Trust before the relevant deadline, the purchase order is not considered to be
in good order and the purchase order and consideration are required to be
resubmitted on the following business day, unless Investors Bank & Trust Company
can credit the consideration to the account for a specific Fund.
All federal funds must be transmitted to Investors Bank & Trust Company to
Account No. 777777722 for the account of the specific Fund.
"Federal funds" are monies credited to Investors Bank & Trust Company's
account with the Federal Reserve Bank of Boston.
Purchases will be made in full and fractional shares of each Fund
calculated to three decimal places. The Trust will send to shareholders written
confirmation (including a statement of shares owned) at the time of each
transaction.
12B-1 PLANS. The Trust has adopted a distribution and services Plan for
each Fund under Rule 12b-1 of the Investment Company Act of 1940 but the
Trustees do not intend to implement such Plans during the Trust's current fiscal
year. The purposes of each Plan if implemented would be to compensate and/or
reimburse investment dealers and other persons for services provided and
expenses incurred in promoting
<PAGE>
sales of shares, reducing redemptions or improving services provided to
shareholders by such dealers and other persons. Each Plan would permit payments
by a Fund for such purposes at an annual rate of up to .50% of the Fund's
average net assets, subject to the authority of the Trustees to reduce the
amount of payments or to suspend the Plan for such periods as they may
determine. Subject to these limitations, the amount of payments under each Plan
and the specific purposes for which they are made would be determined by the
Trustees. At present, the Trustees have no intention of implementing any Plan.
REDEMPTION OF SHARES
Shares of each Fund may be redeemed on any business day in cash or in kind.
The redemption price is the net asset value per share next determined after
receipt of the redemption request in good order. There is no redemption fee for
any of the Funds. Cash payments generally will be made by transfer of Federal
funds for payment into the investor's account the next business day following
the redemption request. Redemption requests should be sent to Investors Bank &
Trust Company. In order to help facilitate the timely payment of redemption
proceeds, it is recommended that investors telephone the Manager at (617)
225-38700, Attn: Maureen A. Madden, prior to submitting a request.
Payment on redemption will be made as promptly as possible and in any event
within seven days after the request for redemption is received by the Trust in
good order. A redemption request is in good order if it includes the correct
name in which shares are registered, the investor's account number and the
number of shares or the dollar amount of shares to be redeemed and if it is
signed correctly in accordance with the form of registration. Persons acting in
a fiduciary capacity, or on behalf of a corporation, partnership or trust must
specify, in full, the capacity in which they are acting. In-kind distributions,
as described below, will be transferred and delivered as directed by the
investor.
If the Manager determines, in its sole discretion, that it would be
detrimental to the best interests of the remaining shareholders of a Fund to
make payment wholly or partly in cash, the Fund may pay the redemption price in
whole or in part by a distribution in kind of securities held by the Fund in
lieu of cash. Securities used to redeem Fund shares in kind will be valued in
accordance with the relevant Fund's procedures for valuation described under
"Determination of Net Asset Value." Investors generally will incur brokerage
charges on the sale of any such securities so received in payment of
redemptions.
When opening an account with the Trust, shareholders will be required to
designate the account(s) to which funds or securities may be transferred upon
redemption. Designation of additional accounts and any change in the accounts
originally designated must be made in writing with the signature guaranteed by a
commercial bank, a member firm of a domestic securities exchange or one of
certain other financial institutions.
Each Fund may suspend the right of redemption and may postpone payment for
more than seven days when the New York Stock Exchange is closed for other than
weekends or holidays, or if permitted by the rules of the Securities and
Exchange Commission during periods when trading on the Exchange is restricted or
during an emergency which makes it impracticable for the Fund to dispose of its
securities or fairly to determine the value of the net assets of the Fund, or
during any other period permitted by the Securities and Exchange Commission for
the protection of investors.
<PAGE>
DETERMINATION OF NET ASSET VALUE
The net asset value of a share of each Fund is determined at 4:15 p.m. on
each day on which the New York Stock Exchange is open, Eastern time (other than
a day on which no shares of the Fund were tendered for redemption and no order
to purchase shares was accepted by the Fund, but at least as frequently as the
last business day of each month). The net asset value per share for a Fund is
determined by dividing the total value of the Fund's portfolio investments and
other assets, less any liabilities, by the total outstanding shares of the Fund.
Portfolio securities for which market quotations are available are valued at the
last quoted sale price, or, if there is no such reported sale, at the closing
bid price. Securities traded in the over-the-counter market are valued at the
most recent bid price as obtained from one or more dealers that make markets in
the securities. Portfolio securities that are traded both in the
over-the-counter market and on one or more stock exchanges are valued according
to the broadest and most representative market. Unlisted securities for which
market quotations are not readily available are valued at the most recent quoted
bid price. Other assets for which no quotations are readily available are valued
at fair value as determined in good faith in accordance with procedures adopted
by the Trustees of the Trust. Determination of fair value will be based upon
such factors as are deemed relevant under the circumstances, including the
financial condition and operating results of the issuer, recent third party
transactions (actual or proposed) relating to such securities and, in extreme
cases, the liquidation value of the issuer.
Because of time zone differences, foreign exchanges and securities markets
will usually be closed prior to the time of the closing of the New York Stock
Exchange and the value of foreign securities will be determined as of the
closing of such exchanges and securities markets. Events affecting the values of
such foreign securities, however, may occasionally occur between the closings of
such exchanges and securities markets and the time the Fund determines its net
asset value, which will not be reflected in the computation of such net asset
value. If an event materially affecting the value of such foreign securities
occurs during such period, then such securities will be valued at fair value as
determined in good faith in accordance with procedures adopted by the Trustees.
Because foreign securities are quoted in foreign currencies, fluctuations
in the value of such securities in relation to the U.S. dollar will affect the
net asset value of shares of the Fund even though there has not been any change
in the values of such securities measured in terms of the foreign currencies in
which they are denominated. The value of foreign securities is converted into
U.S. dollars at the rate of exchange prevailing at the time of determination of
net asset value.
DISTRIBUTIONS
Each Fund intends to pay out as dividends substantially all of its net
investment income (which comes from dividends and any interest it receives from
its investments and net short-term capital gains). Each Fund also intends to
distribute substantially all of its net long-term capital gains, if any, after
giving effect to any available capital loss carryover. Each Fund's present
policy is to declare and pay distributions of its dividends and interest at
least annually. Each Fund also intends to distribute net short-term capital
gains and net long-term capital gains at least annually.
<PAGE>
All dividends and/or distributions will be paid in shares of the relevant
Fund, at net asset value, unless the shareholder elects to receive cash.
Shareholders may make this election by marking the appropriate box on the
application form or by writing to Investors Bank & Trust Company.
TAXES
Each Fund is treated as a separate taxable entity for federal income tax
purposes. Each Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended. By
so qualifying, a Fund itself will not pay federal income tax on the income and
gain distributed annually to its shareholders. Distributions of ordinary income
and short-term capital gains, whether received in cash or reinvested shares,
will be taxable as ordinary income to shareholders subject to federal income
tax. Designated distributions of any long-term capital gains are taxable as
such, regardless of how long a shareholder may have owned shares in the Fund or
whether received in cash or reinvested shares. Any loss recognized on shares
held for six months or less will be treated as long-term capital loss to the
extent of any long-term capital gain distributions received by a shareholder
with respect to those shares. A distribution paid to shareholders in January
generally is deemed to have been received by shareholders on December 31 of the
preceding year, if the distribution was declared and payable to shareholders of
record on a date in October, November or December of that preceding year. The
Trust will provide federal tax information annually, including information about
dividends and distributions paid during the preceding year.
BACK-UP WITHHOLDING. The back-up withholding rules set forth below do not
apply to tax exempt entities that furnish the Trust with an appropriate
certification. For other shareholders, however, the Trust is generally required
to withhold and remit to the U.S. Treasury 31% of all distributions, whether
distributed in cash or reinvested in shares, and 31% of the proceeds of any
redemption paid or credited to the shareholder's account if an incorrect or no
taxpayer identification number has been provided, where appropriate
certification has not been provided for a foreign shareholder, or where the
Trust is notified that the shareholder has underreported income in the past (or
the shareholder fails to certify that he is not subject to such withholding).
Special withholding rules, described below, may apply to foreign shareholders.
The foregoing is a general summary of the federal income tax consequences
for shareholders who are U.S. citizens or residents or domestic corporations.
Shareholders should consult their own tax advisors about the tax consequences of
investments in a Fund in light of their particular tax situations. Shareholders
should also consult their own tax advisors about consequences under foreign,
state, local or other applicable tax laws.
WITHHOLDING ON DISTRIBUTIONS TO FOREIGN INVESTORS. Dividend distributions
(including in general distributions derived from short-term capital gains,
dividends and interest) are in general subject to a U.S. withholding tax of 30%
when paid to a non-resident alien individual, foreign estate or trust, a foreign
corporation, or a foreign partnership ("foreign shareholder"). Persons who are
residents in a country, such as the United Kingdom, that has an income tax
treaty with the United States may be eligible for a reduced withholding rate
(upon filing of appropriate forms), and are urged to consult their tax advisors
regarding the applicability and effect of such a treaty. Distributions of net
long-term capital gains to a foreign shareholder and any gain realized upon the
sale of Fund shares by such a shareholder will ordinarily not
<PAGE>
be subject to U.S. taxation, unless the recipient or seller is a nonresident
alien individual who is present in the United States for more than 182 days
during the taxable year. Foreign shareholders with respect to whom income from a
Fund is "effectively connected" with a U.S. trade or business carried on by such
shareholder, however, will in general be subject to U.S. federal income tax on
the income derived from the Fund at the graduated rates applicable to U.S.
citizens, residents or domestic corporations, whether such income is received in
cash or reinvested in shares, and may also be subject to a branch profits tax.
Again, foreign shareholders who are residents in a country with an income tax
treaty with the United States may obtain different tax results and are urged to
consult their tax advisors.
MANAGEMENT OF THE TRUST
Each Fund is advised and managed by David L. Babson & Co., Inc., One
Memorial Drive, Cambridge, Massachusetts 02142, which provides investment
advisory services to a substantial number of institutional and other investors,
including other registered investment companies. David L. Babson & Co., Inc. is
a wholly owned subsidiary of DLB Acquisition Corp., a holding company, which is
controlled by Mass Mutual Holding Company, a holding company and wholly-owned
subsidiary of Massachusetts Mutual Life Insurance Company, a mutual life
insurance company.
Under separate Management Contracts relating to each Fund, the Manager
selects and reviews each Fund's investments and provides executive and other
personnel for the management of the Trust. Pursuant to the Trust's Agreement and
Declaration of Trust, the Board of Trustees supervises the affairs of the Trust
as conducted by the Manager. In the event that the Manager ceases to be the
manager of any Fund, the right of the Fund or of the Trust to use the
identifying name "DLB" may be withdrawn.
The Manager has entered into a Sub-Advisory Agreement (the "Sub-Advisory
Agreement") with Babson-Stewart Ivory International (the "Sub-Adviser"), One
Memorial Drive, Cambridge, Massachusetts 02142, with respect to the management
of the international component of the Global Small Cap Fund's portfolio. The
Sub-Adviser also provides investment advisory services to a substantial number
of institutional and other investors, including other registered investment
companies. The Sub-Adviser is a general partnership owned 50% by the Manager and
50% by Stewart-Ivory & Company (International) Limited, an indirect wholly-owned
subsidiary of Stewart Ivory (Holdings) Ltd., which is controlled by James G.D.
Ferguson and John G.L. Wright.
Each of the Funds pays the Manager a monthly fee at the annual rate of the
relevant Fund's average daily net assets set forth below. In addition, the
Manager has agreed to waive its fee and to bear certain expenses until further
notice to the extent each of the Fund's annual expenses (including the
management fee but excluding brokerage commissions and transfer taxes) would
exceed the percentage of the Fund's average daily net assets set forth below.
<PAGE>
Management Fee Expense Limitation
(as a % of Average (as a % of Average
Name of Fund Daily Net Assets) Daily Net Assets)
Fixed Income Fund .40% .55%
Global Small Cap Fund 1.00* 1.50
Value Fund .55 .80
Mid Cap Fund .60 .90
* Under the Sub-Advisory Agreement, the Manager pays the Sub-Adviser a
monthly fee at the annual rate of .50% of the Global Small Cap Fund's
average daily net assets, although the Sub-Adviser has currently agreed
to waive a portion of its fee. Payments made to the Sub-Adviser by the
Manager will not affect the amounts payable by the Fund to the Manager
or the Fund's expense ratio. The management fees paid by the Fund are
higher than the management fees paid by most other investment
companies, although not necessarily higher than other investment
companies investing in a global portfolio of small capitalization
stocks.
Edward L. Martin is primarily responsible for the day-to-day management of
the portfolio of the Fixed Income Fund. Peter C. Schliemann is primarily
responsible for the day-to-day management of the portfolio of the Global Small
Cap Fund. Roland W. Whitridge is primarily responsible for the day-to-day
management of the Value Fund. Eugene Gardner is primarily responsible for the
day-to-day management of the Mid Cap Fund. Mr. Martin, Mr. Schliemann and Mr.
Whitridge have each been employed by the Manager in portfolio management for the
past five years. Mr. Gardner has been employed by the Manager since October,
1990. Prior to that time, he was employed by Gardner Investments.
PERFORMANCE INFORMATION
Yield (in the case of the Fixed Income Fund) and total return data may
from time to time be included in advertisements about each Fund. "Yield" for the
Fixed Income Fund is calculated by dividing the Fund's annualized net investment
income per share during a recent 30-day period by the maximum public offering
price per share on the last day of that period. "Total return" for the life of a
Fund through the most recent calendar quarter represents the average annual
compounded rate of return on an investment of $1,000 in the Fund at net asset
value. Quotations of yield or total return for any period when an expense
limitation was in effect will be greater than if the limitation had not been in
effect.
All data is based on a Fund's past investment results and does not
predict future performance. Investment performance, which will vary, is based on
many factors, including market conditions, the composition of a Fund's
portfolio, and a Fund's operating expenses. Investment performance also often
reflects the risks associated with a Fund's investment objectives and policies.
These factors should be considered when comparing a Fund's investment results to
those of other mutual funds and other investment vehicles.
<PAGE>
ORGANIZATION AND CAPITALIZATION OF THE TRUST
The Trust was established on August 1, 1994 as a business trust under
Massachusetts law. The Funds have not yet commenced operations. The Trust has an
unlimited number of authorized shares of beneficial interest which may, without
shareholder approval, be divided into an unlimited number of series of such
shares and which are presently divided into four series of shares, one for each
Fund. These shares are entitled to vote at any meeting of shareholders. The
Trust does not generally hold annual meetings of shareholders and will do so
only when required by law. Matters submitted to shareholder vote must be
approved by each Fund separately except (i) when required by the Investment
Company Act of 1940, shares shall be voted together as a single class and (ii)
when the Trustees have determined that the matter does not affect a Fund, then
only shareholders of the Fund affected shall be entitled to vote on the matter.
Shares are freely transferable, are entitled to dividends as declared by the
Trustees, and, in liquidation of the Trust, are entitled to receive the net
assets of their Fund, but not of any other Fund. Shareholders holding a majority
of the outstanding shares may remove Trustees from office by votes cast in
person or by proxy at a meeting of shareholders or by written consent.
Massachusetts Mutual Life Insurance Company currently owns more than 25% of the
outstanding shares of each Fund and therefore is deemed to "control" each Fund
within the meaning of the Investment Company Act of 1940.
Shareholders could, under certain circumstances, be held personally liable
for the obligations of the Trust. The risk of a shareholder incurring financial
loss on account of that liability, however, is considered remote because
liability may arise only in very limited circumstances.
SHAREHOLDER INQUIRIES
Shareholders may direct inquiries to the Trust c/o David L. Babson & Co.,
Inc., Marketing Department, Attn: Maureen A. Madden, One Memorial Drive,
Cambridge, Massachusetts 02142 (1-617-225-3800).
The Manager's discussion of the performance of each Fund in its most
recent fiscal year as well as a comparison of each Fund's performance over the
life of the Fund with that of a benchmark securities index selected by the
Manager will be included in the Trust's Annual Report for that fiscal year.
Copies of the Annual Report will be available upon request without charge.
<PAGE>
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
INDEPENDENT AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
CUSTODIAN
Investors Bank & Trust Company
89 South Street
P.O. Box 1537
Boston, MA 02205
TRANSFER AGENT
Investors Bank & Trust Company
89 South Street
P.O. Box 1537
Boston, MA 02205
<PAGE>
THE DLB FUND GROUP
STATEMENT OF ADDITIONAL INFORMATION
April 1, 1996
This Statement of Additional Information is not a prospectus. This Statement of
Additional Information relates to the Prospectus dated April 1, 1996, as amended
from time to time and should be read in conjunction therewith. A copy of the
Prospectus may be obtained free of charge by writing David L. Babson & Co., Inc.
Marketing Department, Attention: Maureen A. Madden, One Memorial Drive,
Cambridge, Massachusetts 02142 or by telephoning (617)225-3800.
<PAGE>
Table of Contents
Caption Page
INVESTMENT OBJECTIVES AND POLICIES AND ASSOCIATED RISKS 1
INVESTMENT RESTRICTIONS 1
INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS 4
MANAGEMENT OF THE TRUST 6
INVESTMENT ADVISORY AND OTHER SERVICES 7
ADDITIONAL INVESTMENT PRACTICES OF THE FIXED INCOME FUND 10
PORTFOLIO TRANSACTIONS 13
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES 16
INVESTMENT PERFORMANCE 19
DETERMINATION OF NET ASSET VALUE 20
EXPERTS 20
REPORT OF INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS 21
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES AND ASSOCIATED RISKS
The investment objectives and policies of each of the DLB Fixed Income
Fund (the "Fixed Income Fund"), the DLB Global Small Capitalization Fund (the
"Global Small Cap Fund"), the DLB Value Fund (the "Value Fund") and the DLB Mid
Capitalization Fund (the "Mid Cap Fund") (each, a "Fund," and collectively the
"Funds") of The DLB Fund Group (the "Trust") are set forth in the Trust's
Prospectus.
INVESTMENT RESTRICTIONS
Without a vote of the majority of the outstanding voting securities of
the relevant Fund, the Trust will not take any of the following actions with
respect to any Fund:
(1) Borrow money in excess of 10% of the value (taken at the
lower of cost or current value) of the Fund's total assets (not
including the amount borrowed) at the time the borrowing is made, and
then only from banks for temporary, extraordinary or emergency
purposes, except that the Fund may borrow through reverse repurchase
agreements or dollar rolls up to 33_% of the value of the Fund's total
assets. Such borrowings (other than borrowings relating to reverse
repurchase agreements and dollar rolls) will be repaid before any
investments are purchased.
(2) Underwrite securities issued by other persons except to
the extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under federal
securities laws.
(3) Purchase or sell real estate (including real estate
limited partnerships), although it may purchase securities of issuers
which deal in real estate, including securities of real estate
investment trusts, securities which represent interests in real estate
and securities which are secured by interests in real estate, and the
Fund may acquire and dispose of real estate or interests in real estate
acquired through the exercise of its rights as a holder of debt
obligations secured by real estate or interests therein or for use as
office space for the Fund.
(4) Make loans, except by purchase of debt obligations
(including nonpublicly traded debt obligations), by entering into
repurchase agreements or through the lending of the Fund's portfolio
securities. Loans of portfolio securities may be made with respect to
up to 100% of the Fund's assets in the case of each Fund.
<PAGE>
(5) Issue any senior security (as that term is defined in the
Investment Company Act of 1940 (the "1940 Act")), if such issuance is
specifically prohibited by the 1940 Act or the rules and regulations
promulgated thereunder. (The Funds have no intention of issuing senior
securities except as set forth in Restriction 1 above.)
(6) Invest 25% or more of the value of its total assets in
securities of issuers in any one industry. (Securities issued or
guaranteed as to principal or interest by the U.S. Government or its
agencies or instrumentalities are not considered to represent
industries.)
(7) Purchase or sell commodities or commodity contracts,
including futures contracts.
Notwithstanding the latitude permitted by Restrictions 1 and 3 above,
no Fund has any current intention in the coming year of (a) borrowing money
from banks or (b) investing in real estate investment trusts.
It is contrary to the present policy of all the Funds, which may be
changed by the Trustees without shareholder approval, to:
(a) Purchase securities on margin, except such short-term
credits as may be necessary for the clearance of purchases and sales of
securities.
(b) Make short sales of securities or maintain a short
position for the Fund's account unless at all times when a short
position is open the Fund owns an equal amount of such securities or
owns securities which, without payment of any further consideration,
are convertible into or exchangeable for securities of the same issue
as, and equal in amount to, the securities sold short. The Funds have
no current intention in the coming year of engaging in short sales or
maintaining a short position.
(c) Invest in securities of any issuer if officers and
Trustees of the Trust and officers and partners of the Manager who
beneficially own more than 1/2 of 1/% of the securities of that issuer
together beneficially own more than 5%.
(d) Invest in securities of other investment companies, except
by purchase in the open market involving only customary brokers'
commissions, or in connection with mergers, consolidations or
reorganizations. For purposes of this restriction, foreign banks or
their agents or subsidiaries are not considered investment companies.
(Under the 1940 Act no registered investment company may (a) invest
more than 10% of its total assets (taken at current value) in
securities of other investment companies, (b) own securities of any one
<PAGE>
investment company having a value in excess of 5% of its total assets
(taken at current value), or (c) own more than 3% of the outstanding
voting stock of any one investment company.)
(e) Invest in (a) securities which at the time of such
investment are not readily marketable, (b) securities the disposition
of which is restricted under federal securities laws, excluding
restricted securities that have been determined by the Trustees of the
Fund (or the person designated by them to make such determination) to
be readily marketable, and (c) repurchase agreements maturing in more
than seven days if, as a result, more than 15% of the Fund's net assets
(taken at current value) would then be invested in securities described
in (a), (b) and (c) above.
(f) Acquire more than 10% of the voting securities of any
issuer.
(g) Invest in warrants or rights (other than warrants or
rights acquired by the Fund as a part of a unit or attached to
securities at the time of purchase), except that the Fund may invest in
such warrants or rights so long as the aggregate value thereof (taken
at the lower of cost or market) does not exceed 5% of the value of the
Fund's total assets and so long as no more than 2% of its total assets
are invested in warrants that are not listed on the New York Stock
Exchange or the American Stock Exchange.
(h) Buy or sell oil, gas or other mineral leases, rights or
royalty contracts.
(i) Make investments for the purpose of gaining control of a
company's management.
Except as indicated above in Restriction No. 1, all percentage
limitations on investments set forth herein and in the Prospectus will apply
at the time of the making of an investment and shall not be considered
violated unless an excess or deficiency occurs or exists immediately after
and as a result of such investment.
The phrase "shareholder approval," as used in the Prospectus, and the
phrase "vote of a majority of the outstanding voting securities," as used
herein with respect to a Fund, means the affirmative vote of the lesser of
(1) more than 50% of the outstanding shares of that Fund, or (2) 67% or more
of the shares of that Fund present at a meeting if more than 50% of the
outstanding shares are represented at the meeting in person or by proxy.
<PAGE>
INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
Each Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). In order to so qualify, the Fund must, among other things, (a) derive
at least 90% of its gross income from dividends, interest, payments with respect
to certain securities loans, and gains from the sale of stock, securities and
foreign currencies, or other income (including but not limited to gains from
options, futures or firm commitments) derived with respect to its business of
investing in such stock, securities or currencies; (b) derive less than 30% of
its gross income from gains from the sale or other disposition of securities and
certain other assets (including certain foreign currency contracts) held for
less than three months; (c) distribute at least 90% of its dividend, interest
and certain other income (including, in general, short-term capital gains) each
year; and (d) diversify its holdings so that, at the end of each fiscal quarter
(i) at least 50% of the market value of the Fund's assets is represented by cash
items, U.S. Government securities, securities of other regulated investment
companies, and other securities, limited in respect of any one issuer to a value
not greater than 5% of the value of the Fund's total assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities (other than those of the U.S.
Government or other regulated investment companies) of any one issuer or of two
or more issuers which the Fund controls and which are engaged in the same,
similar or related trades or businesses. So long as a Fund qualifies for
treatment as a regulated investment company, the Fund will not be subject to
federal income tax on income paid to its shareholders in the form of dividends
or capital gain distributions.
The tax status of each Fund and the distributions which it may make are
summarized in the Prospectus under the heading "Taxes." Each Fund intends to pay
out substantially all of its ordinary income and net short-term capital gains,
and to distribute substantially all of its net capital gain, if any, after
giving effect to any available capital loss carry-over. Net capital gain is the
excess of net long-term capital gain over net short-term capital loss. It is the
policy of each Fund to make distributions sufficient to avoid the imposition of
a 4% excise tax on certain undistributed amounts. A shareholder may be limited
in its ability to recognize losses on the sale of Fund shares if the shareholder
subsequently invests in that Fund or another Fund.
Certain transactions entered into by a Fund, such as firm commitments
and hedging transactions, may accelerate income, defer losses, cause adjustments
in the holding periods of the Fund's securities and convert short-term capital
gains or losses into long-term capital gains or losses. Qualification segments
noted above may restrict the Fund's ability to engage in such transactions, and
such transactions may affect the amount, timing and character of distributions
to shareholders.
Investment by the Global Small Cap Fund in certain "passive foreign
investment companies" could subject the Fund to a U.S. federal income tax or
other charge on
<PAGE>
distributions received from or the sale of its investment in such a company,
which tax could not be eliminated by making distributions to Fund shareholders.
To avoid this treatment, the Fund may elect to mark to market annually all of
its stock in a passive foreign investment company. Alternatively, if the Fund
elects to treat a passive foreign investment company as a "qualified electing
fund," different rules would apply, although the Fund does not currently expect
to be in the position to make such elections.
In general, all dividends derived from ordinary income and short-term
capital gain are taxable to investors as ordinary income (subject to special
rules concerning the availability of the dividends-received deduction for
corporations) and long-term capital gain distributions are taxable to investors
as long-term capital gains, whether such dividends or distributions are received
in shares or cash. Tax exempt organizations or entities will generally not be
subject to federal income tax on dividends or distributions from a Fund, except
certain organizations or entities, including private foundations, social clubs,
and others, which may be subject to tax on dividends or capital gains. Each
organization or entity should review its own circumstances and the federal tax
treatment of its income.
The dividends-received deduction for corporations will generally apply
to a Fund's dividends paid from investment income to the extent derived from
dividends received by the Fund from domestic corporations that would be entitled
to such deduction in the hands of the Fund if it were a regular corporation.
Certain of the Funds which invest in foreign securities may be subject
to foreign withholding taxes on income and gains derived from foreign
investments. Such taxes would reduce the yield on the Fund's investments, but,
as discussed below, may be taken as either a deduction or a credit by U.S.
investors if the Fund makes the election described below.
If, at the end of the fiscal year, more than 50% of the total assets of
any Fund is represented by securities of foreign corporations, the Trust intends
to make an election with respect to the relevant Fund which allows shareholders
whose income from the Fund is subject to U.S. taxation at the graduated rates
applicable to U.S. citizens, residents or domestic corporations to claim a
foreign tax credit or deduction (but not both) on their U.S. income tax return.
In such case, the amount of foreign income taxes paid by the Fund would be
treated as additional income to Fund shareholders from non-U.S. sources and as
foreign taxes paid by Fund shareholders. Investors should consult their tax
advisors for further information relating to the foreign tax credit and
deduction, which are subject to certain restrictions and limitations.
Shareholders of any of the Funds whose income from the Fund is not subject to
U.S. taxation at the graduated rates applicable to U.S. citizens, residents or
domestic corporations may receive substantially different tax treatment of
distributions by the relevant Fund, and may be disadvantaged as a result of the
election described in this paragraph. Organizations that are exempt from U.S.
taxation will not be affected by the election described above.
<PAGE>
MANAGEMENT OF THE TRUST
The Trustees and officers of the Trust and their principal occupations
during the past five years are as follows:
Trustees
*Ronald E. Gwozdz has been the Senior Vice President of the Manager
since July 1991 and Managing Director of the Sub-Advisor since 1994, prior to
which he was Senior Vice President of Auburndale Management since January 1990,
and before that, President of Plymouth Funds for Fidelity Investments.
*Peter C. Thompson, Chairman of the Trustees, is the President, Chief
Executive Officer and a Director of the Manager and a Managing Director of
Babson-Stewart Ivory International.
Charles E. Hugel serves as a Director of Eaton Corporation and Pitney
Bowes, Inc. He is also Chairman of the Board of Trustees of Lafayette College.
Mr. Hugel is the former Chairman of Asee Brown Boveri Inc., the former Chairman,
President and Chief Executive Officer of Combustion Engineering, Inc. and a
former Executive Vice President of American Telephone and Telegraph Company.
Richard A. Nenneman is the former Editor-in-Chief of The Christian
Science Monitor and a former Senior Vice President of Girard Bank. He currently
serves as a member of the boards of various civic associations.
Richard J. Phelps is the Chief Executive Officer of Phelps Industries,
Inc. He currently serves as a director of Superior Pet, U.K.; Superior Pet
Australia; Bio-Comp, USA; MRI Corp., USA; Stockton Baseball Co., USA;
Susquehanna-Pfaltzgraff, USA; and Babson-Stewart Ivory International Fund, Inc.
*Peter C. Schliemann is the Executive Vice President and a Director of
the Manager. Mr. Schliemann is
the portfolio manager for the Global Small Cap Fund.
*Deemed to be an "interested person" of the Trust, as defined by the 1940 Act
Officers
Ronald E. Gwozdz, President.
Edson B. Olds IV, Treasurer and Clerk, is the Senior Vice President,
Treasurer, Clerk and a Director of the Manager.
<PAGE>
The mailing address of each of the officers and Trustees is c/o David
L. Babson & Co., Inc., One Memorial Drive, Cambridge, Massachusetts 02142. The
Trustees and officers of the Trust as a group do not own any shares of any Fund.
Except as stated above, the principal occupations of the officers and
Trustees for the last five years have been with the employers as shown above,
although in some cases they have held different positions with such employers.
Trustee Compensation Table
The Trust pays each Trustee a fee for his services. The Trustees
periodically review their fees to assure that such fees continue to be
appropriate in light of their responsibilities as well as in relation to fees
paid to Trustees of other mutual fund complexes. The estimated fees to be paid
to each Trustee by the Trust for the Trust's first full fiscal year are shown
below:
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits Estimated Annual from Registrant
Compensation Accrued as part Benefits upon and Fund Complex
Name of Trustee from Registrant* of Fund Expenses Retirement Paid to Trustees
<S> <C> <C> <C> <C>
Ronald E. Gwozdz $0 $0 $0 N/A
Charles E. Hugel 11,000 0 0 N/A
Richard A. Nenneman 11,000 0 0 N/A
Richard J. Phelps 11,000 0 0 N/A
Peter C. Schliemann 0 0 0 N/A
Peter C. Thompson 0 0 0 N/A
</TABLE>
- ---------------
*Reflects estimated amounts to be paid by the Trust for its first full fiscal
year. Includes an annual retainer and an attendance fee for each meeting
attended.
INVESTMENT ADVISORY AND OTHER SERVICES
Management Contracts
The Trust's investment manager, David L. Babson & Co., Inc. (the
"Manager"), One Memorial Drive, Cambridge, Massachusetts 02142, is a
wholly-owned subsidiary of DLB Acquisition Corp., a holding company, which is
owned by Mass Mutual Holding Company, a holding company and a wholly-owned
subsidiary of Massachusetts Mutual Life Insurance Company, a mutual life
insurance company. As disclosed in the Prospectus under the heading "Management
of the Trust," under separate Management Contracts (each a "Management
Contract") between the Trust and the Manager, subject to such policies as the
Trustees of the
<PAGE>
Trust may determine, the Manager will furnish continuously an investment program
for each Fund and will make investment decisions on behalf of the Fund and place
all orders for the purchase and sale of portfolio securities. The Manager has
entered into a Sub-Advisory Agreement with Babson-Stewart Ivory International
(the "Sub-Adviser") with respect to the management of the international
component of the Global Small Cap Fund's portfolio. Subject to the control of
the Trustees, the Manager also manages, supervises and conducts the other
affairs and business of the Trust, furnishes office space and equipment,
provides bookkeeping and certain clerical services and pays all salaries, fees
and expenses of officers and Trustees of the Trust who are affiliated with the
Manager. As indicated under "Portfolio Transactions," the Trust's portfolio
transactions may be placed with broker-dealers which furnish the Manager, at no
cost, certain research, statistical and quotation services of value to the
Manager in advising the Trust or its other clients.
As disclosed in the Prospectus, each of the Funds pays the Manager a
monthly fee at the annual rate of the relevant Fund's average daily net assets
set forth therein. In addition, the Manager has agreed to waive its fee and to
bear certain expenses until further notice to the extent each of the Fund's
annual expenses (including the management fee but excluding brokerage
commissions and transfer taxes) would exceed the percentage of the Fund's
average daily net assets set forth in the Prospectus. The Sub-Adviser has also
agreed to waive a portion of its fee. In addition, the Manager's compensation
under the Management Contract is subject to reduction to the extent that in any
year the expenses of the relevant Fund exceed the limits on investment company
expenses imposed by any statute or regulatory authority of any jurisdiction in
which shares of such Fund are qualified for offer and sale. The term "expenses"
is defined in the statutes or regulations of such jurisdictions, and, generally
speaking, excludes brokerage commissions, taxes, interest and extraordinary
expenses. No Fund is currently subject to any state imposed limit on expenses.
The Funds incurred the following fees during the periods indicated:
1. FIXED INCOME FUND
Management
Fiscal Year Management Fee Paid Fee Waived
1995 $4,484.33 $4,484.33
<PAGE>
2. GLOBAL SMALL CAP FUND
Management
Fiscal Year Management Fee Paid Fee Waived
1995 $17,527.22* $4,393.06
3. VALUE FUND
Management
Fiscal Year Management Fee Paid Fee Waived
1995 $15,823.23 $9,041.84
4. MID CAP FUND
Management
Fiscal Year Management Fee Paid Fee Waived
1995 $13,311.40 $13,311.40
Each Management Contract provides that the Manager shall not be subject
to any liability in connection with the performance of its services thereunder
in the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.
Each Management Contract was approved by the Trustees of the Trust
(including the Trustees who are not "interested persons" of the Manager) and by
the relevant Fund's sole shareholder in connection with the organization of the
Trust and the establishment of the Funds. Each Management Contract will continue
in effect indefinitely from the date of its execution so long as its continuance
is approved at least annually by (i) vote, cast in person at a meeting called
for that purpose, of a majority (or one, if there is only one) of those Trustees
who are not "interested persons" of the Manager or the Trust, and by (ii) the
majority vote of either the full Board of Trustees or the vote of a majority of
the outstanding shares of the relevant Fund. Each Management Contract
automatically terminates on assignment and is terminable on not more than 60
days' notice by the Trust to the Manager. In addition, each Management Contract
may be terminated on not more than 60 days' written notice by the Manager to the
Trust.
Custodial Arrangements. Investors Bank & Trust Company ("IBT"), One
Lincoln Plaza, Boston, Massachusetts 02205 serves as the Trust's custodian on
behalf of the Funds. As such, IBT holds in safekeeping certificated securities
and cash belonging to a Fund and, in such capacity, is the registered owner of
securities in book-entry form belonging to a Fund.
- -------------
* Under the Sub-Advisory Agreement, the Manager paid the Sub-Advisor a
fee of $8,786.11. The Sub-Advisor waived a portion of its fee in an amount equal
to $2,196.53.
<PAGE>
Upon instruction, IBT receives and delivers cash and securities of a Fund in
connection with Fund transactions and collects all dividends and other
distributions made with respect to Fund portfolio securities. IBT also maintains
certain accounts and records of the Trust and calculates the total net asset
value, total net income and net asset value per share of each Fund on a daily
basis.
ADDITIONAL INVESTMENT PRACTICES OF THE FIXED INCOME FUND
In addition to the investment practices described in detail in the
Prospectus under the heading "Investment Objectives and Policies - Fixed Income
Fund," the Fixed Income Fund may also engage, to a limited extent, in the
following investment practices, which are identified in the Prospectus and more
fully described below. The Fund currently intends to invest less than 5% of its
net assets in each of these instruments in the coming year.
Strips and Residuals. The Fund may also invest in certificates
representing undivided interests in payments of interest-only or principal-only
("IO/PO Strips") on some other fixed income security (including asset-backed
securities). IO/PO Strips and Residuals (as defined in the Prospectus) tend to
be more volatile than other types of securities. IO Strips and Residuals also
involve the additional risk of loss of a substantial portion of or the entire
value of the investment if the underlying securities are prepaid. In addition,
if a CMO (as defined in the Prospectus) bears interest at an adjustable rate,
the cash flows on the related Residual will also be extremely sensitive to the
level of the index upon which the rate adjustments are based.
Zero Coupon Securities. The Fund may invest in "zero coupon" fixed
income securities. The Fund is required to accrue interest income on these
securities at a fixed rate based on the initial purchase price and the length to
maturity, but these securities do not pay interest in cash on a current basis.
The Fund is required to distribute the income on these securities to its
shareholders as the income accrues, even though the Fund is not receiving the
income in cash on a current basis. Thus, the Fund may have to sell other
investments to obtain cash to make income distributions. The market value of
zero coupon securities is often more volatile than that of non-zero coupon fixed
income securities of comparable quality and maturity.
Indexed Securities. The Fund may purchase securities the redemption
values and/or the coupons of which are indexed to the prices of other
securities, securities indices, precious metals or other commodities, or other
financial indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is determined by
reference to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price of
gold, resulting in a security whose price tends to rise and fall together with
gold prices.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they are
indexed, and may also be
<PAGE>
influenced by interest rate changes in the U.S. and abroad. At the same time,
indexed securities are subject to the credit risks associated with the issuer of
the security, and their values may decline substantially if the issuer's
creditworthiness deteriorates. Recent issuers of indexed securities have
included banks, corporations, and certain U.S. government agencies.
Indexed securities in which the Fund may invest include so-called
"inverse floating obligations" or "residual interest bonds" on which the
interest rates typically decline as short-term market interest rates increase
and increase as short-term market rates decline. Such securities have the effect
of providing a degree of investment leverage because they will generally
increase or decrease in value in response to changes in market interest rates at
a rate which is a multiple of the rate at which fixed-rate long-term securities
increase or decrease in response to such changes. As a result, the market values
of such securities will generally be more volatile than the market values of
fixed rate securities.
Loans and Other Direct Debt Instruments. The Fund may invest in direct
debt instruments which are interests in amounts owed by a corporate,
governmental, or other borrower to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments are subject to the
Fund's policies regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally recognized
rating agency and yield could be adversely affected. Loans that are fully
secured offer the Fund more protections than an unsecured loan in the event of
non-payment of scheduled interest of principal. However, there is no assurance
that the liquidation of collateral from a secured loan would satisfy the
borrower's obligation, or that the collateral can be liquidated. Indebtedness or
borrowers whose creditworthiness is poor involve substantially greater risks,
and may be highly speculative. Borrowers that are in bankruptcy or restructuring
may never pay off their indebtedness, or may pay only a small fraction of the
amount owed. Direct indebtedness of emerging countries will also involve a risk
that the governmental entities responsible for the repayment of the debt may be
unable, or unwilling, to pay interest and repay principal when due.
Investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional risks to
the Fund. For example, if a loan is foreclosed, a Fund could become part owner
of any collateral, and would bear the costs and liabilities associated with
owning and disposing of the collateral. In addition, it is conceivable that
under emerging legal theories of lender liability, a Fund could be held liable
as a co-lender. Direct debt instruments may also involve a risk of insolvency of
the lending bank or other intermediary. Direct debt instruments that are not in
the form of securities may offer less legal protection to a Fund in the event of
fraud or misrepresentation. In the absence of
<PAGE>
definitive regulatory guidance, the Fund might rely on the Manager's research in
an attempt to avoid situations where fraud or misrepresentation could adversely
affect the Fund.
A loan is often administered by a bank or other financial institution
that acts as agent for all holders. The agent administers the terms of the loan,
as specified in the loan agreement. Unless, under the terms of the loan or other
indebtedness, the Fund has direct recourse against the borrower, it may have to
rely on the agent to apply appropriate credit remedies against a borrower. If
assets held by the agent for the benefit of the Fund were determined to be
subject to the loan or loan participation and could suffer a loss of principal
or interest.
Direct indebtedness purchased by the Fund may include letters of
credit, revolving credit facilities, or other standby financing commitments
obligating the Fund to pay additional cash on demand. These commitments may have
the effect of requiring the Fund to increase its investment in a borrower at a
time when it would not otherwise have done so. The Fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
potential obligations under standby financing commitments.
Reverse Repurchase Agreements and Dollar Roll Agreements. The Fund may
enter into reverse repurchase agreements and dollar roll agreements with banks
and brokers to enhance return.
Reverse repurchase agreements involve sales by the Fund of portfolio
assets concurrently with an agreement by the Fund to repurchase the same assets
at a later date at a fixed price. During the reverse repurchase agreement
period, the Fund continues to receive principal and interest payments on these
securities and also has the opportunity to earn a return on the collateral
furnished by the counterparties to secure its obligation to redeliver the
securities.
Dollar rolls are transactions in which the Fund sells securities for
delivery in the current month and simultaneously contracts to repurchase
substantially similar (same type and coupon) securities on a specified future
date. During the roll period, the Fund forgoes principal and interest paid on
the securities. The Fund is compensated by the difference between the current
sales price and the forward price for the future purchase (often referred to as
the "drop") as well as by the interest earned on the cash proceeds of the
initial sale.
The Fund will establish segregated accounts with its custodian in which
it will maintain cash, U.S. Government securities or other liquid high grade
debt obligations equal in value to its obligations in respect of reverse
repurchase agreements and dollar rolls. Reverse repurchase agreements and dollar
rolls involve the risk that the market value of the securities retained by the
Fund may decline below the price of the securities the Fund has sold but is
obligated to repurchase under the agreement. In the event the buyer of
securities under a reverse repurchase agreement or dollar roll files for
bankruptcy or becomes insolvent, the
<PAGE>
Fund's use of the proceeds of the agreement may be restricted pending a
determination by the other party or its trustee or receiver, whether to enforce
the Fund's obligation to repurchase the securities. Reverse repurchase
agreements and dollar rolls are considered borrowings by the Fund for purposes
of the Fund's fundamental investment restriction with respect to borrowings.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for a Fund are made by the
Manager. Trustees of the Trust and officers of the Manager are generally
responsible for implementing or supervising these decisions, including
allocation of portfolio brokerage and principal business and the negotiation of
commissions and/or the price of the securities.
Each Fund, in purchasing and selling portfolio securities, will seek
the best available combination of execution and overall price (which shall
include the cost of the transaction) consistent with the circumstances that
exist at the time. Each Fund believes it is in its best interest and that of its
shareholders to have a stable and continuous relationship with a diverse group
of financially strong and technically qualified broker-dealers who will provide
quality executions at competitive rates. Broker-dealers meeting these
qualifications also will be selected for their demonstrated loyalty to the Fund,
when acting on its behalf, as well as for any research or other services
provided to the Fund. When buying securities in over-the-counter markets, a Fund
will select a broker who maintains a primary market for the security unless it
appears that a better combination of price and execution may be obtained
elsewhere. Each Fund normally will not pay a higher commission rate to
broker-dealers providing benefits or services to it than it would pay to
broker-dealers who do not provide it such benefits or services. However, the
Fund reserves the right to do so within the principles set out in Section 28(e)
of the Securities Exchange Act of 1934 when it appears that this would be in the
best interests of the shareholders.
The Fixed Income Fund does not intend to solicit competitive bids on
each transaction. The Fixed Income Fund expects that purchases and sales of
portfolio securities usually will be principal transactions from a principal
market maker for the securities, unless it appears that a better combination of
price and execution may be obtained elsewhere. Usually, there will be no
brokerage commission paid by the Fixed Income Fund for such purchases. Purchases
from underwriters of portfolio securities will include a commission or
concession paid by the issuer to the underwriter, and purchases from dealers
serving as market makers will include the spread between the bid and asked
price. In instances where securities are purchased on a commission basis the
Fixed Income Fund will seek competitive and reasonable commission rates based on
the circumstances of the trade involved and to the extent that they do not
detract from the quality of the execution.
No commitment is made to any broker or dealer with regard to placing of
orders for the purchase or sale of the Fund's portfolio securities, and no
specific formula is used in
<PAGE>
placing such business. Allocation is reviewed regularly by both the Board of
Trustees of the Trust and Manager.
Because the Funds do not market their shares through intermediary
brokers or dealers, it is not any Fund's practice to allocate brokerage or
principal business on the basis of sales of its shares that may be made through
such firms. Each Fund, however, may place portfolio orders with qualified
broker-dealers who recommend the Fund to other clients or who act as agent in
the purchase of the Fund's shares for their clients.
Research services furnished by broker-dealers may be useful to the
Manager and its investment counsel in serving other clients, as well as the
Fund. Conversely, a Fund may benefit from research services obtained by the
Manager or its investment counsel from the placement of portfolio brokerage of
other clients.
When it appears to be in the best interests of its shareholders, each
Fund may join with other clients of the Manager and its investment counsel in
acquiring or disposing of a portfolio holding. Securities acquired or proceeds
obtained will be equitably distributed between the Fund and other clients
participating in the transaction. In some instances, this investment procedure
may affect the price paid or received by the Fund or the size of the position
obtained by the Fund.
The following tables show brokerage commissions on portfolio
transactions paid by each Fund during the fiscal periods indicated.
1. FIXED INCOME FUND
Fiscal Year Brokerage Commissions
1995 $0
2. GLOBAL SMALL CAP FUND
Fiscal Year Brokerage Commissions
1995 $38,917
3. VALUE FUND
Fiscal Year Brokerage Commissions
1995 $16,731
<PAGE>
4. MID CAP FUND
Fiscal Year Brokerage Commissions
1995 $18,964
The following tables show transactions placed by each Fund with brokers and
dealers during the most recent fiscal year to recognize research, statistical
and quotation services that the Manager (and Sub-Advisor, in the case of the
Global Small Cap Fund) considered to be particularly useful to it and its
affiliates.
1. FIXED INCOME FUND
Dollar Value of Percent of Amount of
Those Transactions Total Transactions Commissions
$9,333,567 0% $ 0
2. GLOBAL SMALL CAP FUND
Dollar Value of Percent of Amount of
Those Transactions Total Transactions Commissions
$11,032,914 .004% $450
3. VALUE FUND
Dollar Value of Percent of Amount of
Those Transactions Total Transactions Commissions
$11,258,403 .004% $468
4. MID CAP FUND
Dollar Value of Percent of Amount of
Those Transactions Total Transactions Commissions
$10,931,322 .01% $1,140
<PAGE>
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES
The Trust is organized as a Massachusetts business trust under the laws
of Massachusetts by an Agreement and Declaration of Trust ("Declaration of
Trust") dated August 1, 1994. A copy of the Declaration of Trust is on file with
the Secretary of The Commonwealth of Massachusetts. The fiscal year for each
Fund ends on December 31.
Pursuant to the Declaration of Trust, the Trustees have currently
authorized the issuance of an unlimited number of full and fractional shares of
four series: the DLB Fixed Income Fund, the DLB Global Small Capitalization
Fund, the DLB Value Fund and the DLB Mid Capitalization Fund. Each share of each
Fund represents an equal proportionate interest in such Fund. Shares of the
Trust do not have any preemptive rights. Upon liquidation of a Fund,
shareholders of such Fund are entitled to share pro rata in the net assets of
the Fund available for distribution to shareholders.
The Declaration of Trust also permits the Trustees, without shareholder
approval, to subdivide any series of shares into various sub-series of shares
with such dividend preferences and other rights as the Trustees may designate.
While the Trustees have no current intention to exercise this power, it is
intended to allow them to provide for an equitable allocation of the impact of
any future regulatory requirements which might affect various classes of
shareholders differently. The Trustees may also, without shareholder approval,
establish one or more additional separate portfolios for investments in the
Trust or merge two or more existing portfolios. Shareholders' investments in
such a portfolio would be evidenced by a separate series of shares.
The Declaration of Trust provides for the perpetual existence of the
Trust. The Trust, however, may be terminated at any time by vote of at least
two-thirds of the outstanding shares of the Trust. While the Declaration of
Trust further provides that the Trustees may also terminate the Trust upon
written notice to the shareholders, the 1940 Act requires that the Trust receive
the authorization of a majority of its outstanding shares in order to change the
nature of its business so as to cease to be an investment company.
Voting Rights
As summarized in the Prospectus, shareholders are entitled to one vote
for each full share held (with fractional votes for fractional shares held) and
will vote (to the extent provided herein) in the election of Trustees and the
termination of the Trust and on other matters submitted to the vote of
shareholders. Shareholders vote by individual Fund on all matters except (i)
when required by the 1940 Act, shares shall be voted in the aggregate and not by
individual Fund, and (ii) when the Trustees have determined that the matter
affects only the interests of one or more Funds, then only shareholders of such
Funds shall be entitled to vote thereon. Shareholders of one Fund shall not be
entitled to vote on matters exclusively affecting another Fund, such matters
including, without limitation, the adoption of or change
<PAGE>
in the investment objectives, policies or restrictions of the other Fund and the
approval of the investment advisory contracts of the other Fund.
There will normally be no meetings of shareholders for the purpose of
electing Trustees except that in accordance with the 1940 Act (i) the Trust will
hold a shareholders' meeting for the election of Trustees at such time as less
than a majority of the Trustees holding office have been elected by
shareholders, and (ii) if, as a result of a vacancy in the Board of Trustees,
less than two-thirds of the Trustees holding office have been elected by the
shareholders, that vacancy may only be filled by a vote of the shareholders.
Upon written request by the holders of at least 1% of the outstanding shares
stating that such shareholders wish to communicate with the other shareholders
for the purpose of obtaining the signatures necessary to demand a meeting to
consider removal of a Trustee, the Trust has undertaken to provide a list of
shareholders or to disseminate appropriate materials (at the expense of the
requesting shareholders). In addition, shareholders of the Trust holding at
least 10% of the outstanding shares entitled to vote have the right to call a
meeting to elect or remove Trustees or to take other actions as provided in the
Declaration of Trust. Except as set forth above, the Trustees shall continue to
hold office and may appoint successor Trustees. Voting rights are not
cumulative.
No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust except (i)
to change the Trust's name or to cure technical problems in the Declaration of
Trust and (ii) to establish, designate or modify new and existing series or
sub-series of Trust shares or other provisions relating to Trust shares in
response to applicable laws or regulations.
Shareholder and Trustee Liability
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or executed by the Trust
or the Trustees. The Declaration of Trust provides for indemnification out of
all the property of the relevant Fund for all loss and expense of any
shareholder of that Fund held personally liable for the obligations of the
Trust. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is considered remote because it is limited to
circumstances in which the disclaimer is inoperative and the Fund of which he is
or was a shareholder would be unable to meet its obligations.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a Trustee against any liability to which the
Trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. The By-laws of the Trust provide for indemnification by the Trust
<PAGE>
of the Trustees and the officers of the Trust except with respect to any matter
as to which any such person did not act in good faith in the reasonable belief
that his action was in or not opposed to the best interests of the Trust. Such
person may not be indemnified against any liability to the Trust or the Trust
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
At December 31, 1995 the officers and trustees of the Trust did not own any
shares of any Fund, and, except as noted below, to the knowledge of the Trust no
person owned of record or beneficially 5% or more of the shares of any class of
the Trust.
1. FIXED INCOME FUND
Shareholder Name Percentage
and Address Owned
Massachusetts Mutual Life 100%
Insurance Company
1295 State Street
Springfield, MA 01111
2. GLOBAL SMALL CAP FUND
Shareholder Name Percentage
and Address Owned
Massachusetts Mutual Life 99%
Insurance Company
1295 State Street
Springfield, MA 01111
David L. Babson & Co., Inc. 1%
One Memorial Drive
Cambridge, MA 02142
3. VALUE FUND
Shareholder Name Percentage
and Address Owned
Massachusetts Mutual Life 100%
Insurance Company
1295 State Street
Springfield, MA 01111
<PAGE>
4. MID CAP FUND
Shareholder Name Percentage
and Address Owned
Massachusetts Mutual Life 100%
Insurance Company
1295 State Street
Springfield, MA 01111
INVESTMENT PERFORMANCE
Standard performance measure
(for periods commencing July 19, 1995 and ending December 31, 1995)
1. FIXED INCOME FUND
Total Return Yield
Life of class 6.46% 5.98%
2. GLOBAL SMALL CAP FUND
Total Return
Life of class 4.02%
3. VALUE FUND
Total Return
Life of class 8.19%
4. MID CAP FUND
Total Return
Life of class 9.68%
<PAGE>
Total return for the period that the Funds have been in operation is
determined by calculating the actual dollar amount of investment return on a
$1,000 investment in a Fund made at the beginning of the period, at net asset
value, and then calculating the annual compounded rate of return which would
produce that amount. Total return calculations assume reinvestment of all Fund
distributions at net asset value on their respective reinvestment dates.
Each Fund's yield is presented for a specified thirty-day period (the
"base period"). Yield is based on the amount determined by (i) calculating the
aggregate amount of dividends and interest earned by a Fund during the based
period less expenses for that period, and (ii) dividing that amount by the
product of (A) the average daily number of shares of a Fund outstanding during
the base period and entitled to receive dividends and (B) the net asset value on
the last day of the base period. The result is annualized on a compounding basis
to determine the yield. For this calculation, interest earned on debt
obligations held by a Fund is generally calculated using the yield to maturity
(or first expected call date) on such obligations based on their market values
(or, in the case of receivables-backed securities such as the Government
National Mortgage Association, based on cost). Dividends on equity securities
are accrued daily at their stated dividend rates. The amount of expenses used in
determining each Fund's yield includes, in addition to expenses actually accrued
by such Fund, an estimate of the amount of expenses that such Fund would have
incurred if brokerage commissions had not been used to reduce such expenses.
DETERMINATION OF NET ASSET VALUE
As indicated in the Prospectus, except on days during which no security
is tendered for redemption and no order to purchase or sell such security is
received by the relevant Fund, the net asset value of each Fund share is
determined at 4:15 p.m., Eastern time, on each day on which the New York Stock
Exchange is open for trading. The Trust expects that the days, other than
weekend days, that the New York Stock Exchange will not be open are Independence
Day, Labor Day, Election Day, Thanksgiving Day, Christmas Day, New Year's Day,
Washington's Birthday, Good Friday and Memorial Day.
EXPERTS
The statement of assets and liabilities of the Global Small Cap Fund as
of June 22, 1995 appearing in this Statement of Additional Information have been
audited by Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts
02110, the Trust's independent auditors, as set forth in their report thereon
appearing elsewhere herein, and is included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
<PAGE>
REPORT OF INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 22, 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash $100,000
Deferred organization expense 24,652
Total assets 124,652
LIABILITIES
Accrued expenses 24,652
Net assets for 10,000 shares beneficial interest outstanding $100,000
Net asset value, offering price and redemption price per share $ 10.00
</TABLE>
Notes:
ORGANIZATION
DLB Global Small Capitalization Fund (the "Fund") is a series of The DLB Fund
Group (the "Trust"). The Fund will register under the Investment Company Act of
1940, as amended, as an open-end non-diversified management investment company.
The Trust was established as a Massachusetts business trust. The Fund has had no
operations, other than those relating to organizational matters, including the
issuance of shares outstanding as shown on the statement of assets and
liabilities for cash on June 22, 1995 to David L. Babson and Company
Incorporated.
Costs incurred by the Trust in connection with its organization and registration
of shares have been deferred and will be amortized using the straight-line
method over a period of five years from the commencement of the public offering
of shares of the Fund. In the event that any of the initial shares of the Fund
are redeemed during the amortization period by any holder thereof, the
redemption proceeds will be reduced by any unamortized organizational expenses
of the Fund in the same proportion as the number of said shares of the Fund
being redeemed bears to the number of initial shares of the Fund that are
outstanding at the time of redemption.
INCOME TAXES
The Fund intends to comply with the requirement of the Internal Revenue Code
necessary to qualify as a regulated investment company and to make the requisite
distributions of taxable income to its shareholders which will be sufficient to
relieve it from all or substantially all federal income taxes.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Tothe Board of Trustees of The DLB Fund Group and Shareholders of DLB Global
Small Capitalization Fund:
We have audited the accompanying statement of assets and liabilities of DLB
Global Small Capitalization Fund (the "Fund") (a series of The DLB Fund Group
(the "Trust")) as of June 22, 1995. This financial statement is the
responsibility of the Fund's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. 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 audit of the statement of
assets and liabilities provides a reasonable basis for our opinion.
In our opinion, such statement of assets and liabilities presents fairly, in all
material respects, the financial position of the Fund at June 22, 1995 in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
June 23, 1995
<PAGE>
DLB FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES - UNAUDITED
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (identified cost, $5,112,299) $5,245,291
Receivable from investment manager 64,241
Interest receivable 80,415
Other assets 2,038
----------
Total assets 5,391,985
----------
LIABILITIES:
Payable to affiliate - management fee 2,599
Payable for Fund shares reacquired 64,247
----------
Total liabilities 66,846
----------
NET ASSETS $5,325,139
==========
NET ASSETS CONSIST OF:
Paid-in capital $5,192,396
Unrealized appreciation on investments 132,992
Accumulated undistributed net realized gain on investments 67
Accumulated distributions in excess of net investment income (316)
----------
Total $5,325,139
==========
SHARES OF BENEFICIAL INTEREST OUTSTANDING 518,789
==========
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE
(NET ASSETS / SHARES OF BENEFICIAL INTEREST OUTSTANDING) $10.26
==========
</TABLE>
See notes to financial statements.
<PAGE>
DLB FIXED INCOME FUND
STATEMENT OF OPERATIONS - UNAUDITED
PERIOD FROM JULY 25, 1995 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INTEREST INCOME $152,090
--------
EXPENSES:
Management fee 8,911
Custodian fee 23,894
Legal fees 23,846
Accounting and audit fees 19,791
Directors' fees 5,438
--------
Total expenses 81,880
Reduction of expenses by investment manager (68,701)
--------
Net expenses 13,179
--------
Net investment income 138,911
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain on investment transactions (identified cost basis) 53,226
Change in unrealized appreciation 132,992
--------
Net realized and unrealized gain on investments 186,218
--------
Increase in net assets from operations $325,129
========
</TABLE>
See notes to financial statements.
<PAGE>
DLB FIXED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS - UNAUDITED
PERIOD FROM JULY 25, 1995 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income
$ 138,911
Net realized gain on investments 53,226
Net unrealized gain on investments 132,992
----------
Increase in net assets from operations 325,129
----------
Distributions declared to shareholders:
From net investment income (138,911)
In excess of net investment income (316)
From net realized gain on investments (53,159)
----------
Total distributions declared to shareholders (192,386)
----------
Fund share (principal) transactions:
Net proceeds from sale of shares 5,000,000
Net asset value of shares issued to shareholders in reinvestment of distributions 192,386
----------
Increase in net assets from Fund share transactions 5,192,386
----------
Total increase in net assets 5,325,129
==========
NET ASSETS:
At beginning of period 10
----------
At end of period (including accumulated distributions in excess of net investment
income of $316)
$5,325,139
==========
</TABLE>
See notes to financial statements.
<PAGE>
DLB FIXED INCOME FUND
FINANCIAL HIGHLIGHTS - UNAUDITED
PERIOD FROM JULY 25, 1995 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $10.00
------
Income from investment operations:
Net investment income 0.28
Net realized and unrealized gain on investments 0.37
------
Total from investment operations 0.65
------
Less distributions declared to shareholders:
From net investment income (0.28)
From net realized gain on investments (0.11)
------
Total distributions declared to shareholders (0.39)
------
Net asset value - end of period $10.26
======
Total return 14.75%*
Ratios and Supplemental Data:
Ratio of expenses to average net assets 0.55%*
Ratio of net investment income to average net assets 6.24%*
Portfolio turnover 42%
Net assets at end of period (000 omitted) $5,325
The manager has agreed with the Fund to reduce its management fee and bear
certain expenses, such that expenses do not exceed 0.55% of average daily net
assets on an annualized basis. If the fee and expenses had been incurred by the
Fund, and had expenses been limited to that permitted by state securities law,
the net investment income per share and ratios would have been:
Net investment income $0.20
Ratios (to average net assets):
Expenses 2.50%*
Net investment income 4.30%*
* Annualized.
</TABLE>
See notes to financial statements.
<PAGE>
DLB FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
- --------------------------------------------------------------------------------
1. BUSINESS AND ORGANIZATION
DLB Fixed Income Fund (the "Fund") is a nondiversified series of The DLB
Fund Group (the "Trust").
The Trust is organized as a Massachusetts business trust and is registered
under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATIONS - Debt securities (other than short-term obligations
which mature in 60 days or less), including listed issues, are valued on
the basis of valuations furnished by dealers or by a pricing service with
consideration to factors such as institutional-size trading in similar
groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data, without exclusive
reliance upon exchange or over-the-counter prices. Short-term obligations,
which mature in 60 days or less, are valued at amortized cost, which
approximates market value. Securities for which there are no such
valuations are valued at fair value as determined in good faith by or at
the direction of the Trustees.
INVESTMENT TRANSACTIONS AND INCOME - Investment transactions are recorded
on the trade date. Interest income is recorded on the accrual basis. All
premium and original issue discount are amortized or accreted for
financial statements and tax reporting purposes as required by federal
income tax regulations.
TAX MATTERS AND DISTRIBUTIONS - The Fund's policy is to comply with the
provisions of the Internal Revenue Code ("Code") applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a
tax return annually using tax accounting methods required under provisions
of the Code which may differ from generally accepted accounting
principles, the basis on which these financial statements are prepared.
Accordingly, the amount of net investment income and net realized gain
reported on these financial statements may differ from that reported on
the Fund's tax return, and consequently, the character of distributions to
shareholders reported in the financial highlights may differ from that
reported to shareholders on Form 1099-DIV. Distributions to shareholders
are recorded on the ex-dividend date.
The Fund distinguishes between distributions on a tax basis and a
financial reporting basis and requires that only distributions in excess
of tax basis earnings and profits are reported in the financial statements
as a return of capital. Differences in the recognition or classification
of income between the financial statements and tax earnings and profits
which result in temporary over-distributions for financial statement
purposes, are classified as distributions in excess of net investment
income or accumulated net realized gains.
<PAGE>
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT MANAGER - The Fund has a management contract with David L.
Babson & Co. Inc. ("DLB") to provide overall investment advisory and
administrative services, and general office facilities. The management fee
is computed daily and paid monthly at an effective annual rate of 0.40% of
average daily net assets.
For the period ended December 31, 1995, the management fee amounted to
$8,911, all of which was waived by DLB and, additionally, $59,790 of Fund
expenses were borne by DLB.
The Fund pays no compensation directly to its Trustees who are officers of
the investment manager, or to officers of the Fund, all of whom receive
remuneration for their services to the Fund from DLB.
4. PORTFOLIO SECURITIES
Purchases and sales of investments, other than short-term obligations,
were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
U.S. Government securities $4,526,414 $2,061,524
========== ==========
Investments (non-U.S. government securities) $2,503,365 $154,798
========== ==========
</TABLE>
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Fund, as computed on a federal income tax basis,
are as follows:
<TABLE>
<S> <C>
Aggregate cost $5,112,299
==========
Gross unrealized appreciation $137,028
Gross unrealized depreciation (4,036)
----------
Net unrealized appreciation $ 132,992
==========
</TABLE>
5. SHARES OF BENEFICIAL INTEREST
The Trust's Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest
(without par value). Transactions in Fund shares during the period were as
follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
<S> <C> <C>
Shares sold 500,000 $5,000,000
Shares issued to shareholders in reinvestment of
distributions 18,788 192,386
------- ----------
Net increase 518,788 $5,192,386
======= ==========
</TABLE>
* * * * * *
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
STATEMENT OF ASSETS AND LIABILITIES - UNAUDITED
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments, at value (identified cost, $10,142,533) $ 10,514,281
Receivable for investments sold 81,885
Dividends and interest receivable 50,883
Receivable from investment manager 66,180
Other assets 3,007
-----
Total assets 10,716,236
----------
LIABILITIES:
Payable for investments purchased 104,880
Payable for Fund shares reacquired 66,180
Payable to affiliate - management fee 20,180
Accrued expenses and other liabilities 15,718
------
Total liabilities 206,958
-------
NET ASSETS $ 10,509,278
================
NET ASSETS CONSIST OF:
Paid-in capital $ 10,172,224
Unrealized appreciation on investments and translation of assets
and liabilities in foreign currency 371,931
Accumulated net realized loss on investments and foreign currency
transactions (28,897)
Accumulated distributions in excess of net investment income (5,980)
------
Total $ 10,509,278
================
SHARES OF BENEFICIAL INTEREST OUTSTANDING 1,017,012
=========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE (NET ASSETS / SHARES OF BENEFICIAL INTEREST
OUTSTANDING) $ 10.33
================
See notes to financial statements.
</TABLE>
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
STATEMENT OF OPERATIONS - UNAUDITED
PERIOD FROM JULY 19, 1995 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $10,439) $ 108,643
Interest 23,708
------
Total investment income 132,351
-------
EXPENSES:
Management fee 45,284
Custodian fee 35,040
Legal fees 31,092
Accounting and audit fees 25,804
Directors' fees 5,438
Total expenses 142,658
Reduction of expenses by investment manager (76,551)
-----------
Net expenses 66,107
------
Net investment income 66,244
------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) (identified cost basis):
Investment transactions (35,270)
Foreign currency transactions 6,373
-----
Net realized loss (28,897)
-------
Change in unrealized appreciation:
Investments 371,748
Translation of assets and liabilities in foreign currency 183
---
Net unrealized gain on investments 371,931
-------
Net realized and unrealized gain on investments and foreign
currency 343,034
-------
Increase in net assets from operations $ 409,278
==========
See notes to financial statements.
</TABLE>
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
STATEMENT OF CHANGES IN NET ASSETS - UNAUDITED
PERIOD FROM JULY 19, 1995 (COMMENCEMENT OF OPERATIONS) TO
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 66,244
Net realized loss on investments and foreign currency transactions (28,897)
Net unrealized gain on investments and foreign currency translation 371,931
-------
Increase in net assets from operations
Distributions declared to shareholders:
From net investment income (66,244)
In excess of net investment income (5,980)
------
Total distributions declared to shareholders (72,224)
-------
Fund share (principal) transactions:
Net proceeds from sale of shares 10,000,000
Net asset value of shares issued to shareholders in reinvestment
of distributions 72,224
------
Increase in net assets from Fund share transactions 10,072,224
----------
Total increase in net assets 10,409,278
NET ASSETS:
At beginning of period 100,000
-------
At end of period (including accumulated distribution in excess of
net investment income of $5,980) $ 10,509,278
=============
See notes to financial statements.
</TABLE>
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
FINANCIAL HIGHLIGHTS - UNAUDITED
PERIOD FROM JULY 19, 1995
(COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $ 10.00
-------
Income from investment operations:
Net investment income 0.07
Net realized and unrealized gain on investments 0.34
----
Total income from investment operations 0.41
----
Less distributions declared to shareholders:
From net investment income (0.07)
In excess of net investment income (0.01)
-----
Total distributions declared to shareholders (0.08)
-----
Net asset value - end of period $ 10.33
=======
Total return 8.96%*
Ratios and Supplemental Data:
Ratio of expenses to average net assets 1.50%*
Ratio of net investment income to average net assets 1.46%*
Portfolio turnover 5%
Net assets at end of period (000 omitted) $10,509
</TABLE>
The manager has agreed with the Fund to reduce its investment management fee and
bear certain expenses, such that expenses do not exceed 1.50% of average daily
net assets on an annualized basis. If the fee and expenses had been incurred by
the Fund and had expenses been limited to that required by state securities law,
the net investment income per share and ratios would have been:
<TABLE>
<S> <C>
Net investment income $ 0.02
Ratios (to average net assets):
Expenses 2.50%*
Net investment income 0.42%*
* Annualized.
See notes to financial statements.
</TABLE>
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
- --------------------------------------------------------------------------------
1. BUSINESS AND ORGANIZATION
DLB Global Small Capitalization Fund (the "Fund") is a nondiversified
series of The DLB Fund Group (the "Trust").
The Trust is organized as a Massachusetts business trust and is registered
under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
2. SIGNIFICANT ACCOUNTING POLICIES
Investment Valuations - Equity securities listed on securities exchange or
reported through the NASDAQ system are valued at last sale prices.
Unlisted equity securities or listed equity securities for which last sale
prices are not available are valued at last quoted bid prices. Short-term
obligations, which mature in 60 days or less, are valued at amortized
cost, which approximates market value. Securities for which there are no
such quotations or valuations are valued at fair value as determined in
good faith by or at the direction of the Trustees.
Foreign Currency Translation - Investment valuations, other assets and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates.
Purchases and sales of foreign investments and income and expenses are
converted into U.S. dollars based upon currency exchange rates prevailing
on the respective dates of such transactions. Gains and losses
attributable to foreign currency exchange rates on sales of securities are
recorded for financial statement purposes as net realized gains and losses
on investments. Gains and losses attributable to foreign exchange rate
movements on income and expenses are recorded for financial statement
purposes as foreign currency transaction gains and losses. That portion of
both realized and unrealized gains and losses on investments that results
from fluctuations in foreign currency exchange rates is not separately
disclosed.
Forward Foreign Currency Exchange Contracts - The Fund may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date. Risks may
arise upon entering these contracts from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
The Fund will enter into forward contracts for hedging purposes only. For
hedging purposes, the Fund may enter into contracts to deliver or receive
foreign currency it will receive from or require for its normal investment
activities. It may also use contracts in a manner intended to protect
foreign currency-denominated securities from declines in value due to
unfavorable exchange rate movements. The forward foreign currency exchange
contracts are adjusted by the daily exchange rate of the underlying
currency, and any gains or losses are recorded for financial statement
purposes as unrealized until the contract settlement date.
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investment Transactions and Income - Investment transactions are recorded
on the trade date. Dividend income is recorded on the ex-dividend date for
dividends received in cash. Dividend payments received in additional
securities are recorded on the ex-dividend date in an amount equal to the
value of the security on such date.
Interest income is recorded on the accrual basis.
Tax Matters and Distributions - The Fund's policy is to comply with the
provisions of the Internal Revenue Code ( the "Code") applicable to
regulated investment companies and to distribute to shareholders all of
its taxable income, including any net realized gain on investments.
Accordingly, no provision for federal income or excise tax is provided.
The Fund files a tax return annually using tax accounting methods required
under provisions of the Code which may differ from generally accepted
accounting principles, the basis on which these financial statements are
prepared. Accordingly, the amount of net investment income and net
realized gain reported on these financial statements may differ from that
reported on the Fund's tax return, and consequently, the character of
distributions to shareholders reported in the financial highlights may
differ from that reported to shareholders on Form 1099-DIV. Foreign taxes
have been provided for on interest and dividend income earned on foreign
investments in accordance with the applicable country's tax rates and to
the extent unrecoverable are recorded as a reduction of investment income.
Distributions to shareholders are recorded on the ex-dividend date.
The Fund distinguishes between distributions on a tax basis and a
financial reporting basis and requires that only distributions in excess
of tax basis earnings and profits are reported in the financial statements
as a return of capital. Differences in the recognition or classification
of income between the financial statements and tax earnings and profits
which result in temporary over-distributions for financial statement
purposes, are classified as distributions in excess of net investment
income or accumulated net realized gains.
3. TRANSACTIONS WITH AFFILIATES
Investment Manager - The Fund has a management contract with David L.
Babson & Co., Inc. ("DLB") to provide overall investment advisory and
administrative services, and general office facilities. The management fee
is computed daily and paid monthly at an effective annual rate of 1.00% of
average daily net assets.
For the period ended December 31, 1995, the management fee amounted to
$45,284, all of which was waived by DLB and, additionally, $31,267 of Fund
expenses were borne by DLB.
The Fund pays no compensation directly to its Trustees who are officers of
the investment manager, or to officers of the Fund, all of whom receive
remuneration for their services to the Fund from DLB.
<PAGE>
4. PORTFOLIO SECURITIES
Purchases and sales of investments, other than short-term obligations,
aggregated $10,490,197 and $516,694, respectively.
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Fund, as computed on a federal income tax basis,
are as follows:
Aggregate cost $10,142,533
===========
Gross unrealized appreciation $ 862,978
Gross unrealized depreciation (491,230)
--------
Net unrealized appreciation $ 371,748
===========
5. SHARES OF BENEFICIAL INTEREST
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares during the period were as follows:
Shares Amount
Shares sold 1,000,000 $ 10,000,000
Shares issued to shareholders in reinvestment
of distributions 7,012 72,224
----- ------
Net increase 1,007,012 $ 10,072,224
========= =============
* * * * * *
<PAGE>
DLB VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES - UNAUDITED
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (identified cost, $10,286,866) $10,865,639
Interest and dividends receivable 16,870
Receivable from investment manager 63,938
-----------
Total assets 10,946,447
-----------
LIABILITIES:
Payable for investments purchased 45,744
Payable for Fund shares reacquired 63,938
Payable to affiliate - management fee 9,199
Accrued expenses and other liabilities 9,988
-----------
Total liabilities 128,869
-----------
NET ASSETS $10,817,578
===========
NET ASSETS CONSIST OF:
Paid-in capital $10,238,563
Unrealized appreciation on investments 578,773
Accumulated undistributed net investment income 242
-----------
Total $10,817,578
===========
SHARES OF BENEFICIAL INTEREST OUTSTANDING 1,022,591
===========
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE
(NET ASSETS / SHARES OF BENEFICIAL INTEREST OUTSTANDING) $10.58
===========
</TABLE>
See notes to financial statements.
<PAGE>
DLB VALUE FUND
STATEMENT OF OPERATIONS - UNAUDITED
PERIOD FROM JULY 25, 1995 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
Dividends (net of foreign tax withheld of $1,932) $111,574
Interest 16,211
-----------
Total investment income 127,785
-----------
EXPENSES:
Management fee 24,862
Custodian fees 28,213
Accounting and audit fees 22,263
Directors' fee 5,438
Legal fees 28,867
Other 120
-----------
Total expenses 109,763
Reduction of expenses by investment manager (73,080)
-----------
Net expenses 36,683
-----------
Net investment income 91,102
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain on investments (identified cost basis) 147,693
Change in unrealized appreciation 578,773
-----------
Net unrealized gain on investments 726,466
-----------
Increase in net assets from operations $817,568
===========
</TABLE>
See notes to financial statements.
<PAGE>
DLB VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS - UNAUDITED
PERIOD FROM JULY 25, 1995 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 91,102
Net realized gain on investments 147,693
Net unrealized gain on investments 578,773
-----------
Increase in net assets from operations 817,568
-----------
Distributions declared to shareholders:
From net investment income (90,860)
From net realized gain on investments (147,693)
-----------
Total distributions declared to shareholders (238,553)
-----------
Fund share (principal) transactions:
Net proceeds from sale of shares 10,000,000
Net asset value of shares issued to shareholders in reinvestment of distributions 238,553
-----------
Increase in net assets from Fund share transactions 10,238,553
-----------
Total increase in net assets 10,817,568
NET ASSETS:
At beginning of period 10
-----------
At end of period (including accumulated undistributed net investment income of
$242) $10,817,578
===========
</TABLE>
See notes to financial statements.
<PAGE>
DLB VALUE FUND
FINANCIAL HIGHLIGHTS - UNAUDITED
PERIOD FROM JULY 25, 1995 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Per share data (for a share outstanding throughout the period): $10.00
-------
Net asset value - beginning of period Income from investment operations:
Net investment income 0.09
Net realized and unrealized gain on investments 0.73
-------
Total from investment operations 0.82
-------
Less distributions declared to shareholders:
From net investment income (0.09)
From net realized gain on investments (0.15)
-------
Total distributions declared to shareholders (0.24)
-------
Net asset value - end of period $10.58
=======
Total return 18.64%*
Ratios and Supplemental Data:
Ratio of expenses to average net assets 0.80%*
Ratio of net investment income to average net assets 2.02%*
Portfolio turnover 7%
Net assets at end of period (000 omitted)
$10,818
The manager has agreed with the Fund to reduce its management fee and bear
certain expenses, such that expenses do not exceed 0.80% of average daily net
assets on an annualized basis. If the fee and expenses had been incurred by the
Fund and had expenses been limited to that permitted by State Securities Law,
the net investment income per share and ratios would have been:
$0.02
Net investment income
Ratios (to average net assets):
Expenses 2.43%
Net investment income 0.40%
* Annualized.
</TABLE>
See notes to financial statements.
<PAGE>
DLB VALUE FUND
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
- --------------------------------------------------------------------------------
1. BUSINESS AND ORGANIZATION
DLB Value Fund (the "Fund") is a nondiversified series of The DLB Fund
Group (the "Trust").
The Trust is organized as a Massachusetts business trust, and is
registered under the Investment Company Act of 1940, as amended as an
open-end management investment company.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATIONS - Equity securities listed on securities exchange or
reported through the NASDAQ system are valued at last sale prices.
Unlisted equity securities or listed equity securities for which last sale
prices are not available are valued at last quoted bid prices. Short-term
obligations, which mature in 60 days or less, are valued at amortized
cost, which approximates market value. Securities for which there are no
such quotations or valuations are valued at fair value as determined in
good faith by or at the direction of the Trustees.
INVESTMENT TRANSACTIONS AND INCOME - Investment transactions are recorded
on the trade date. Dividend income is recorded on the ex-dividend date for
dividends received in cash. Dividend payments received in additional
securities are recorded on the ex-dividend date in an amount equal to the
value of the security on such date. Interest income is recorded on the
accrual basis.
TAX MATTERS AND DISTRIBUTIONS - The Fund's policy is to comply with the
provisions of the Internal Revenue Code ("Code") applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a
tax return annually using tax accounting methods required under provisions
of the Code which may differ from generally accepted accounting
principles, the basis on which these financial statements are prepared.
Accordingly, the amount of net investment income and net realized gain
reported on these financial statements may differ from that reported on
the Fund's tax return, and consequently, the character of distributions to
shareholders reported in the financial highlights may differ from that
reported to shareholders on Form 1099-DIV. Distributions to shareholders
are recorded on the ex-dividend date.
The Fund distinguishes between distributions on a tax basis and a
financial reporting basis and requires that only distributions in excess
of tax basis earnings and profits are reported in the financial statements
as a return of capital. Differences in the recognition or classification
of income between the financial statements and tax earnings and profits
which result in temporary over-distributions for financial statement
purposes, are classified as distributions in excess of net investment
income or accumulated net realized gains.
<PAGE>
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT MANAGER - The Fund has a management agreement with David L.
Babson & Co., Inc. ("DLB") to provide overall investment advisory and
administrative services, and general office facilities. The management fee
is computed daily and paid monthly at an annual rate of 0.55% of average
daily net assets.
For the period ended December 31, 1995, the management fee amounted to
$24,862, all of which was waived by DLB and, additionally, $48,218 of Fund
expenses were borne by DLB.
The Fund pays no compensation directly to its Trustees who are officers of
the investment manager, or to officers of the Fund, all of whom receive
remuneration for their services to the Fund from DLB.
4. PORTFOLIO SECURITIES
Purchases and sales of investments, other than short-term obligations
aggregated $10,538,734 and $719,669, respectively.
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Fund, as computed on a federal income tax basis,
are as follows:
<TABLE>
<S> <C>
Aggregate cost $10,286,866
===========
Gross unrealized appreciation $1,113,361
Gross unrealized depreciation (534,588)
-----------
Net unrealized appreciation $578,773
===========
</TABLE>
<PAGE>
5. SHARES OF BENEFICIAL INTEREST
The Trust's Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest
(without par value). Transactions in Fund shares during the period were as
follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
<S> <C> <C>
Shares sold 1,000,000 $10,000,000
Shares issued to shareholders in reinvestment
of distributions 22,590 238,553
---------- -----------
Net increase 1,022,590 $10,238,553
========== ===========
</TABLE>
* * * * * *
<PAGE>
DLB MID CAPITALIZATION FUND
STATEMENT OF ASSETS AND LIABILITIES - UNAUDITED
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (identified cost, $10,240,520) $10,992,195
Dividends and interest receivable 22,888
Receivable from investment manager 62,900
-----------
Total assets 11,077,983
-----------
LIABILITIES:
Payable for investments purchased 62,493
Payable for Fund shares reacquired 62,900
Payable to affiliate - management fee 7,678
Accrued expenses and other liabilities 16,038
-----------
Total liabilities 149,109
-----------
NET ASSETS $10,928,874
===========
NET ASSETS CONSIST OF:
Paid-in capital $10,176,849
Unrealized appreciation on investments 751,675
Accumulated undistributed net investment income 350
-----------
Total $10,928,874
===========
SHARES OF BENEFICIAL INTEREST OUTSTANDING 1,016,544
===========
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE
(NET ASSETS / SHARES OF BENEFICIAL INTEREST OUTSTANDING) $10.75
===========
</TABLE>
See notes to financial statements.
<PAGE>
DLB MID CAPITALIZATION FUND
STATEMENT OF OPERATIONS - UNAUDITED
PERIOD FROM JULY 25, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
Dividends $ 96,748
Interest 27,489
--------
Total investment income 124,237
--------
EXPENSES:
Management fee 26,445
Custodian fee 28,634
Accounting and auditing fees 24,368
Legal fees 31,594
Directors fees 5,438
--------
Total expenses 116,479
Reduction of expenses by investment manager (76,123)
--------
Net expenses 40,356
--------
Net investment income 83,881
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain (identified cost basis) 93,308
Change in unrealized appreciation 751,675
--------
Net realized and unrealized gain on investments 844,983
--------
Increase in net assets from operations $928,864
========
</TABLE>
See notes to financial statements.
<PAGE>
DLB MID CAPITALIZATION FUND
STATEMENT OF CHANGES IN NET ASSETS - UNAUDITED
PERIOD FROM JULY 25, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 83,881
Net realized gain on investments 93,308
Net unrealized gain on investments 751,675
-----------
Increase in net assets from operations 928,864
-----------
Distributions declared to shareholders:
From net investment income (83,531)
From net realized gain on investments (93,308)
-----------
Total distributions declared to shareholders (176,839)
-----------
Fund share (principal) transactions:
Net proceeds from sale of shares 10,000,000
Net asset value of shares issued to shareholders in reinvestment of distributions 176,839
-----------
Increase in net assets from Fund share transactions 10,176,839
-----------
Total increase in net assets 10,928,864
NET ASSETS:
At beginning of period 10
-----------
At end of period (including accumulated undistributed net investment income of $350) $10,928,874
===========
</TABLE>
See notes to financial statements.
<PAGE>
DLB MID CAPITALIZATION FUND
FINANCIAL HIGHLIGHTS - UNAUDITED
PERIOD FROM JULY 25, 1995 (COMMENCEMENT OF OPERATIONS) TO
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Per share data (for a share outstanding throughout the period):
Net asset value - beginning of period $10.00
-------
Income from investment operations -
Net investment income 0.08
Net realized and unrealized gain on investments 0.84
-------
Total income from investment operations 0.92
-------
Less distributions declared to shareholders:
From net investment income (0.08)
From net realized gain on investments (0.09)
-------
Total distributions declared to shareholders (0.17)
-------
Net asset value - end of period $10.75
=======
Total return 21.17%*
=======
Ratios and Supplemental Data:
Ratio of expenses to average net assets 0.90%*
Ratio of net investment income to average net assets 1.90%*
Portfolio turnover 6%
Net assets at end of period (000 omitted) $10,929
The manager has agreed with the Fund to reduce its management fee and bear
certain expenses, such that expenses do not exceed 0.90% of average daily net
assets on an annualized basis. If the fee and expenses had been incurred by
the Fund and had expenses been limited to that permitted by State Securities
Law, the net investment income per share and ratios would have been:
Net investment income $0.01
Ratios (to average net assets):
Expenses 2.50%*
Net investment income 0.30%*
*Annualized.
</TABLE>
See notes to financial statements.
<PAGE>
DLB MID CAPITALIZATION FUND
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
- --------------------------------------------------------------------------------
1. BUSINESS AND ORGANIZATION
DLB Mid Capitalization Fund (the "Fund") is a non-diversified series of
The DLB Fund Group (the "Trust").
The Trust is organized as a Massachusetts business trust and is registered
under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATIONS - Equity securities listed on securities exchange or
reported through the NASDAQ system are valued at last sale prices.
Unlisted equity securities or listed equity securities for which last sale
prices are not available are valued at last quoted bid prices. Short-term
obligations, which mature in 60 days or less, are valued at amortized
cost, which approximates market value. Securities for which there are no
such quotations or valuations are valued at fair value as determined in
good faith by or at the direction of the Trustees.
INVESTMENT TRANSACTIONS AND INCOME - Investment transactions are recorded
on the trade date. Dividend income is recorded on the ex-dividend date for
dividends received in cash. Dividend payments received in additional
securities are recorded on the ex-dividend date in an amount equal to the
value of the security on such date. Interest income is recorded on the
accrual basis.
TAX MATTERS AND DISTRIBUTIONS - The Fund's policy is to comply with the
provisions of the Internal Revenue Code ("Code") applicable to regulated
investment companies and to distribute to shareholders all of its taxable
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is provided. The Fund files a
tax return annually using tax accounting methods required under provisions
of the Code which may differ from generally accepted accounting
principles, the basis on which these financial statements are prepared.
Accordingly, the amount of net investment income and net realized gain
reported on these financial statements may differ from that reported on
the Fund's tax return, and consequently, the character of distributions to
shareholders reported in the financial highlights may differ from that
reported to shareholders on Form 1099-DIV. Distributions to shareholders
are recorded on the ex-dividend date.
The Fund distinguishes between distributions on a tax basis and a
financial reporting basis and requires that only distributions in excess
of tax basis earnings and profits are reported in the financial statements
as a return of capital. Differences in the recognition or classification
of income between the financial statements and tax earnings and profits
which result in temporary over-distributions for financial statement
purposes, are classified as distributions in excess of net investment
income or accumulated net realized gains.
<PAGE>
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT MANAGER - The Fund has a management contract with David L.
Babson & Co., Inc. ("DLB") to provide overall investment advisory and
administrative services, and general office facilities. The management fee
is computed daily and paid monthly at an effective annual rate of 0.60% of
average daily net assets.
For the period ended December 31, 1995, the management fee amounted to
$26,445, of which all was waived by DLB and, additionally, $49,678 of Fund
expenses were borne by DLB.
The Fund pays no compensation directly to its Trustees who are officers of
the investment manager, or to officers of the Fund, all of whom receive
remuneration for their services to the Fund from DLB.
4. PORTFOLIO SECURITIES
Purchases and sales of investments, other than short-term obligations,
aggregated $10,398,892 and $532,430, respectively.
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Fund, as computed on a federal income tax basis,
are as follows:
<TABLE>
<S> <C>
Aggregate cost $10,240,520
===========
Gross unrealized appreciation $1,290,834
Gross unrealized depreciation (539,159)
-----------
Net unrealized appreciation $751,675
===========
</TABLE>
5. SHARES OF BENEFICIAL INTEREST
The Trust's Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest
(without par value). Transactions in Fund shares during the period were as
follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
<S> <C> <C>
Shares sold 1,000,000 $10,000,000
Shares issued to shareholders in reinvestment
of distributions 16,543 176,839
--------- -----------
Net increase 1,016,543 $10,176,839
========= ===========
</TABLE>
* * * * * *
<PAGE>
DLB Fixed Income Fund
Portfolio of Investments - December 31, 1995 Unaudited
<TABLE>
<CAPTION>
Bonds - 93.3%
S&P
Bond Rating Principal
UnauditIssuer Amount Value
<C> <S> <C> <C>
U.S. Gov't Bonds - 27.3%
AAA US Treasury, 7.25s, 1996 $150,000 $152,531
AAA US Treasury, 8.50s, 1997 400,000 417,124
AAA US Treasury, 6.25s, 2000 100,000 103,453
AAA US Treasury, 7.50s, 1999 75,000 80,519
AAA US Treasury, 6.375s, 2000 100,000 103,109
AAA US Treasury, 10.375s, 2012 250,000 345,625
AAA US Treasury, 8.125s, 2021 200,000 253,125
US Fed'l Agency Bonds - 1.9%
Federal Home Loan Banks, 7.26, 1999 $100,000 $102,984
Mortgages - 24.7%
BAA3 Green Tree Financial 6.9s, 2004 $33,499 $33,467
AAA Green Tree Financial 7.25s, 2005 81,024 81,985
AAA FHLMC Gold G00143 72,507 74,440
AAA GNMA 7.5s, 2023 480,709 494,938
AAA GNMA 7.5s, 2025 509,175 523,496
AAA Green Tree 7.05s,2025 100,000 104,000
International Bonds - 13.1%
BAA2 Canadian National Railroad, 7s, 2004 $100,000 $103,611
AA3 Province of Ontario, 7s, 2005 125,000 133,008
AA2 British Columbia Hydro& Pwr, 15.5s,2011 200,000 229,398
AA3 Province of Ontario,15.75s, 2012 100,000 116,822
AAA Hydro Quebec, 8.4s 2022 100,000 115,621
$698,460
Financial - 11.2%
BAA2 Comdisco, 9.75s 1997 $250,000 $259,863
A3 GMAC , 8.4s, 1999 200,000 217,220
A1 Ford Capital BV, 10.125, 2000 100,000 117,282
$594,365
Industrial - 10.7%
A3 Ryder Mtn, 8.45, 1999 $100,000 $108,954
A2 Sears Roebuck, 6.5s, 2000 100,000 102,303
A3 Cardinal Health Inc., 6.5s, 2004 100,000 101,345
A1 Raytheon, 6.5s, 2005 100,000 103,408
BAA3 Telecommunication Inc., 7.25s, 2005 100,000 101,337
BAA3 Time Warner Ent., 8.375s, 2023 50,000 53,826
$571,173
Transportation - 4.4
A3 CSX Corp., 9.50s, 2000 $100,000 $113,897
A3 CSX Corp. Deb, 9s, 2006 100,000 119,160
<PAGE>
$233,057
Total Bonds
(Identified Cost $4,834,859)
Repurchase Agreement 5.2% 277,440
Repurchase Agreement at value
Total Investments
(Identified cost $5,112,299)
Other Assets, Less Liabilities - 1.5% 79,848
Net Assets - 100% $5,325,139
</TABLE>
<PAGE>
DLB Global Small Capitalization Fund
Portfolio of Investments December 31, 1995 Unaudited
<TABLE>
<CAPTION>
Common Stocks - 98.1%
Issuer Shares Value
<S> <C> <C>
Chemicals Specialty - 1.4%
Calgon Carbon 9,200 $110,400
M.A. Hanna Co. 3,200 89,600
$149,847
Metals & Mining - 0.9%
Martin Marietta Materials 4,500 $92,813
Paper/Forest Products - 0.7%
Albany International Corp Cl A 4,100 $74,313
Aerospace - 1.3%
E G & G 5,600 $135,800
Construction - 1.0%
Southdown Inc. 5,300 $103,350
Environmental - 1.0%
Safety-Kleen 6,900 $107,812
Machinery/Equipment - 2.7%
BW/IP Inc. Cl A 5,800 $95,700
Harsco Corp. 2,000 116,250
Trinity Industries 2,400 75,600
$287,550
Apparel - Textile 1.8%
National Service Industries 3,700 $119,788
Stride Rite 9,300 69,750
189,538
Auto Parts Manufacturers - 3.2%
Armor All Products 6,800 $123,250
Arvin Industries 3,400 56,100
Bandag Inc Class A 1,100 58,300
Standard Products 5,800 102,225
$339,875
Furniture & Appliances - 2.2%
Herman Miller 4,500 $135,000
LA-Z-BOY Chair 3,200 98,800
$233,800
Recreation - 0.8%
King World Productions 2,100 $81,638
Printing & Publishing - 4.6%
CCH Inc., Class B 5,100 $281,138
Central Newspapers A 3,300 103,538
Lee Enterprises 4,200 96,600
$481,276
Retail - Speciality - 0.8%
Fingerhut Companies 5,700 $79,088
Wholesalers - 1.0%
Waban Inc. 5,600 $105,000
Food Producers - 0.9%
<PAGE>
Dean Foods Co. 3,600 $99,000
Food Retaiilers - 1.1%
Vons Companies 4,200 $118,650
Cosmetic/Toiletry - 1.0%
Alberto Culver Cl A 2,600 $79,300
Tobacco - 1.7%
Dimon Inc. 5,600 $98,700
Quilmes Industries 4,800 $78,880
$177,580
Coal Gas & Pipe - 2.3%
Cabot Oil & Gas Corp. 6,600 $96,525
Nabors Industries 13,000 144,625
241,150
Oil - Domestic - 0.8%
Quaker State Corp. 7,000 $88,375
Banks - 2.8%
First Commercial Corp. 3,317 $109,461
First Security Corp. 2,900 111,650
Firstier Financial 1,700 74,800
$295,911
Insurance Companies - 1.8%
Gallagher, AJ & Co. 2,300 $85,675
Hartford Steam Boiler Ins. 2,100 105,000
$190,675
Electronic/Instrument - 1.3%
Intergraph Corp 4,100 $64,575
Scitex 5,300 72,213
$136,788
Telecommunications - 0.7%
Octel Communications 2,400 $77,400
Trucking & Shipping - 2.1%
Alexander & Baldwin 3,400 $78,200
Hunt JB Transport 4,500 75,375
Overseas Shipholding 3,700 70,300
$223,875
Natural Gas - 0.9%
Equitable Resources 3,100 $96,875
Foreign - 57%
United Kingdon
Alllied Colloids Group 44,900 $92,711
Peter Black Holdings 19,000 79,643
N Brown Group 20,000 83,214
Court Cavendish Group 21,400 90,036
Devro International 26,000 102,527
Fairey Group 11,300 94,383
McBride 28,100 84,196
Seton Healthcare Group 13,000 79,721
Spirax-Sarco Engineering 15,000 138,211
UniChem 21,300 80,025
$924,667
<PAGE>
Belgium
Colruyt 126,428 $123,616
France
Bioblock Scientific 2,000 $102,139
Brioch Pasquier 1,000 121,789
Guilbert 1,200 141,234
SocieteManutan 1,000 116,672
Spir Communication 1,400 128,666
Virbac 1,000 122,812
$733,312
Germany
Douglas Holdings 3,250 $114,960
Rhoen Klinikum 1,200 119,958
Sto AG 100 50,332
$285,250
Italy
Gewiss 13,700 $172,684
Industrie Natuzzi ADR 3,700 167,888
$340,572
Netherlands
Grolsch 3,350 $116,590
Nutricia Verenidge Bedrijuen 1,850 149,772
Wegener 1,550 149,847
$416,209
Switzerland
Fotolabo 400 $160,000
Phoenix Mecano 300 150,782
$310,782
New Zealand
Guiness Peat Group 155,000 $81,021
Japan
Aim Services 5,000 $91,535
Amada Metrecs 9,000 143,840
Canon Aptex 5,500 89,597
Daiwa Industries 12,000 116,234
Disco 4,000 149,168
Fukuda Denshi 5,000 134,153
Harada Industry 5,000 85,722
Maruko 1,500 101,850
Mitsui High-Tech 5,000 130,763
Nihon Jumbo 4,300 150,358
Nissen 5,730 134,314
Royal Ltd. 4,000 133,670
SxL Corp. 12,000 124,370
Xebio Co. 4,000 141,418
Hong Kong
CDL Hotels 260,000 $131,126
Chen Hsong Holdings 90,000 47,135
Gold Peak 150,000 74,195
South China Morning Post 200,000 122,204
$374,660
<PAGE>
Indonesia
Multi Bintang D/R 5,500 $63,806
Malaysia
Perlis Plantations 40,000 $125,188
Singapore
Tiger Medicals 50,000 $83,038
Tibs Holdings 40,000 97,809
United Industrial Corp. 71,000 69,745
$250,592
Thailand
Matichon (THB) F/R 13,000 $76,865
Saha Pathana Interholding L/R 35,000 66,667
Thai Pineapple (TIPCO) L/R 52,000 76,350
$219,882
Total Common Stocks
(Identified Cost $99,938,233)
Repurchase Agreement 1.9% 204,300
Repurchase Agreement at value
Total Investments
(Identified cost $10,142,533)
Other Assets, Less Liabilities - 0% (5,003)
Net Assets - 100% $10,509,278
</TABLE>
<PAGE>
DLB VALUE FUND
PORTFOLIO OF INVESTMENTS December 31, 1995 Unaudited
<TABLE>
<CAPTION>
Common Stocks - 97.4
Issuer Shares Value
<S> <C> <C>
Chemicals - 2.3%
Dupont 3,500 $244,562
Paper/Forest Products - 6.7%
Potlatch Corp. 6,000 $240,000
Weyerhaeuser 6,000 259,500
Willamette Ind. 4,000 225,000
$724,500
Aerospace - 5.0%
Boeing 3,500 $274,312
Lockheed Martin Corp. 3,400 268,600
$542,912
Environmental - 2.2%
Safety-Kleen 15,500 $242,187
Apparel - Textile - 2.6%
Reebok International 10,100 $285,325
Recreation - 1.8%
Huffy Corp. 19,000 $192,375
Printing & Publishing - 2.1%
Harcourt General 5,500 $230,312
Retail Discount - 2.2%
K MART 32,200 $233,450
Retail - General - 4.7%
Penny JC 5,000 $238,125
Sears Roebuck & Co. 7,000 273,000
$511,125
Food Producers - 2.5%
Grand Metropolitan ADR 9,500 $273,125
Drugs - 2.1%
Lilly, Eli & Co. 3,982 $223,988
Medical Supplies & Services - 3.9%
Guidant Corp. 3,521 $148,762
Tenet Healthcare Corp. 13,300 275,975
$424,737
Oil - Domestic - 2.0%
Atlantic Richfield 2,000 $221,500
Oil - International - 2.6%
Royal Dutch Pete NY Reg N Gldr 2,000 $282,250
Banks - 9.8%
Chase Manhattan 4,500 $272,812
First Bank System 5,500 272,938
First Interstate Bancorp 1,800 245,700
National City Corp. 8,000 265,000
Financial Services - 12.2%
American Express 6,500 $268,938
<PAGE>
Salomon Inc. 7,000 248,500
Student Loan Corp. 8,200 278,800
Student Loan Marketing 4,300 283,262
Transamerica 3,300 240,488
Insurance Companies - 7.4%
Aetna Life & Casualty 4,000 $277,000
Allstate Corp. 6,400 263,200
General RE Corp. 1,700 263,500
$803,700
Diversified - 2.0%
Hanson PLC Sponsored ADR 14,000 $213,500
Professional Services - 4.7%
ABM Industries Inc. 10,000 $277,500
PHH Corp. 5,000 233,750
$511,250
ComputerRelated - 4.3%
Apple Computer 6,700 $213,563
International Business Machines 2,700 247,725
$461,288
Computer Software - 2.5%
Shared Med Sys Corp. 5,000 $271,875
Office Equipment - 4.6%
Wallace Computer 4,100 $223,963
Xerox 2,000 274,000
497,963
Airlines - 2.2%
KLM Royal Dutch Air 6,658 $234,695
Trucking & Shipping - 2.3%
Overseas Shipholding 13,400 $254,600
Electrical Power - 2.7%
Texas Utilities 7,000 $287,875
Total Common Stocks
(Identified Cost $9,966,759)
Repurchase Agreement 3% 320,107
Repurchase Agreement at value
Total Investments
(Identified cost $10,286,866)
Other Assets, Less Liabilities (48,061)
Net Assets - 100% $10,817,578
</TABLE>
<PAGE>
DLB MID CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS - December 31, 1995 Unaudited
<TABLE>
<CAPTION>
Common Stocks - 98.0%
Issuer Shares Value
<S> <C> <C>
Chemicals Specialty - 4.6%
Calgon Carbon 22,900 $274,800
M. A. Hanna 8,100 226,800
$501,600
Metals & Mining - 2.2%
Martin Marietta Materials 11,400 $235,125
Paper/Forest Products - 1.7%
Albany International Corp. Cl A 10,300 $186,688
Aerospace - 3.1%
E G & G 14,000 $339,500
Construction - 2.4%
Southdown 13,200 $257,400
Environmental - 2.5%
Safety-Kleen 17,300 $270,312
Machinery/Equipment - 6.6%
BW/IP Inc., Class A 14,500 $239,250
Harsco Corp. 5,100 296,438
Trinity Industries 6,000 189,000
$724,688
Apparel - Textile - 4.4%
National Service Industries 9,300 $301,088
Stride Rite 23,400 175,500
$476,588
Auto Parts Manufacturers - 8.3%
Armor All Products 17,000 $308,125
Arvin Industries 8,600 141,900
Bandag Inc., Class A 2,600 201,400
Standard Products 14,500 255,563
$906,988
Furniture & Appliances - 5.4%
Herman Miller 11,300 $339,000
LA-Z-BOY Chair 8,000 247,000
$586,000
Recreation - 1.9%
King World Productions 5,400 $209,925
Printing & Publishing - 10.9%
CCH Inc., Class B 12,800 $705,600
Central Newspapers A 8,200 257,275
Lee Enterprises 10,200 234,600
Retail - Specialty - 1.8%
Fingerhut Companies 14,200 $197,025
Wholesalers - 2.4%
Waban Inc. 14,100 $264,375
Food Producers - 2.3%
<PAGE>
Dean Foods Co. 9,000 $247,500
Food Retailers - 2.7%
Vons Companies 10,600 $299,450
Cosmetic Toiletry - 1.8%
Alberto Culver, Class A 6,500 $198,250
Tobacco - 2.2%
'Dimon Inc. 13,800 $243,225
Coal Gas & Pipe - 5.5%
Cabot Oil & Gas Corp. 16,500 $241,313
Nabors Industries 32,300 359,337
$600,650
Oil - Domestic - 2.0%
Quaker State Corp. 17,700 $223,461
Banks - 6.6%
First Commercial Corp. 8,239 $271,890
First Security Corp. 7,000 269,500
Firstier Financial 4,100 180,400
$721,790
Insurance Companies - 4.3%
Gallagher 5,700 $212,325
'Hartford Steam Boiler Ins. 5,200 260,000
$472,325
Electronic/Instrument - 3.1%
Intergraph Corp. 10,100 $159,075
Scitex 13,400 182,575
$341,650
Telecommunications - 1.8%
Octel Communications 6,000 $193,500
Trucking & Shipping - 5.2%
Alexander & Baldwin 8,700 $200,100
Hunt JB Transport 11,300 189,275
Overseas Shipholding 9,300 176,700
$566,075
Natural Gas - 2.3%
Equitable Resources 8,000 $250,000
Total Common Stocks
(Identified Cost $9,959,890)
Repurchase Agreement 2.6% $280,630
Repurchase Agreement at value
Total Investments
(identified cost $10,240,520)
Other Assets, Less Liabilities (0.6%) (63,321)
Net Assets - 100% $10,928,874
</TABLE>
<PAGE>
THE DLB FUND GROUP
FORM N-1A
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Index to Financial Statements and Supporting Schedules:
(1) Financial Statements:
Financial highlights for Fixed Income Fund(unaudited) (a).
Financial highlights for Global Small Cap Fund (unaudited) (a).
Financial highlights for Value Fund (unaudited) (a).
Financial highlights for Mid Cap Fund (unaudited) (a).
Statementof Assets and Liabilities for Global Small Cap Fund as of
June 22, 1995 and accompanying notes (b).
Statement of Assets and Liabilities for Fixed Income Fund as of
December 31, 1995 (unaudited) (b).
Statement of Operations for Fixed Income Fund as of December 31,
1995(unaudited) (b).
Statement of Changes in Net Assets for Fixed Income Fund as of
December 31, 1995 (unaudited) (b).
Notes to financial statements for Fixed Income Fund (b).
Statement of Assets and Liabilities for Global Small Cap Fund as of
December 31, 1995 (unaudited)(b).
Statement of Operations for Global Small Cap Fund as of December 31,
1995 (unaudited) (b).
Statement of Changes in Net Assets for Small Cap Fund as of December 31,
1995 (unaudited) (b).
Notes to financial statements for Global Small Cap Fund (b).
Statement of Assets and Liabilities for Value Fund as of December 31,
1995 (unaudited) (b).
Statement of Operations for Value Fund as of December 31,
1995 (unaudited) (b).
Statement of Changes in Net Assets for Value Fund as of December 31,
1995 (unaudited) (b).
Notes to financial statements for Value Fund (b).
Statement of Assets and Liabilities for Mid Cap Fund as of December 31,
1995 (unaudited) (b).
<PAGE>
Statement of Operations for Mid Cap Fund as of December 31, 1995
(unaudited) (b).
Statement of Changes in Net Assets for Mid Cap Fund as of December 31,
1995 (unaudited) (b).
Notes to Financial Statements for Mid Cap Fund (b).
(2) Supporting Schedules:
Schedule I - Portfolio of investments owned as of December 31, 1995,
for Fixed Income Fund (b).
- Portfolio of investments owned as of December 31, 1995 for
Global Small Cap Fund (b).
- Portfolio of investments owned as of December 31, 1995 for
Value Fund (b).
- Portfolio of investments owned as of December 31, 1995 for
Mid Cap Fund (b).
Schedules II through IX omitted because the required matter is not present.
(a) Included in Part A.
(b) Included in Part B.
(b) Exhibits:
(1) Agreement and Declaration of Trust
(2) By-Laws*
(3) Not Applicable
(4) Not Applicable
(5) Forms of Management Contracts**
(a) Management Contract between the Trust and
David L. Babson & Co., Inc. (the "Manager")
on behalf of the Fixed Income Fund
(b) Management Contract between the Trust and
the Manager on behalf of the Global Small
Cap Fund
- -----------------
* Incorporated by reference to Registrant's initial Registration Statement
on Form N-1A (File No. 33-82366) filed on August 3, 1994.
** Incorporated by reference to Registrant's Pre-Effective Admendment No.1
filed on October 12, 1994.
<PAGE>
(c) Sub-Advisory Agreement between the Manager
and Babson-Stewart Ivory International (the
"Sub-Adviser") on behalf of the Global
Small Cap Fund
(d) Management Contract between the Trust and
the Manager on behalf of the Value Fund
(e) Management Contract between the Trust an
the Manager on behalf of the Mid Cap Fund
(6) Not Applicable
(7) Not Applicable
(8) Form of Custodian Agreement between the Trust and Inves-
tors Bank & Trust Company ("IBT")*
(9) Form of Transfer Agency Agreement between the Trust
and IBT*
(10) Opinion and Consent of Ropes & Gray***
(11) Consent of Deloitte & Touche LLP
(12) Not Applicable
(13) Letter of Understanding relating to initial capital***
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Financial Data Schedules for the:
(a) Fixed Income Fund
(b) Global Small Cap Fund
(c) Value Fund
(d) Mid Cap Fund
(18) Not Applicable
Powers of Attorney**
- -------------
*** Incorporated by reference to Registrant's Pre-Effective Amendment No. 2
filed on June 30, 1995.
Item 25. Persons Controlled by or under Common Control with
Registrant.
As of December 31, 1995, in excess of 99% of the outstanding shares of
beneficial interest of the Fixed Income Fund, Value Fund and Mid Cap Fund were
held by Massachusetts Mutual Life Insurance Company ("Mass Mutual"), and 99% and
1% of the shares of the Global Small Cap Fund were held by Mass Mutual and David
L. Babson & Co., Inc., respectively.
Item 26. Number of Holders of Securities.
<PAGE>
<TABLE>
<CAPTION>
Number of Record Holders
as of the date of this
Title of Class Registration Statement
<S> <C>
Shares of Beneficial Interest of Fixed Income Fund 2
Shares of Beneficial Interest of Global Small Cap Fund 2
Shares of Beneficial Interest of Value Fund 2
Shares of Beneficial Interest of Mid Cap Fund 2
</TABLE>
Item 27. Indemnification.
Article VIII, Sections 1, 2 and 3 of Registrant's Agreement and
Declaration of Trust provides as follows with respect to indemnification of the
Trustees and officers of Registrant against liabilities which may be incurred by
them in such capacities:
Section 1. Trustees, Officers, Etc. The Trust shall indemnify each of
its Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise) (hereinafter referred to
as a "Covered Person") against all liabilities and expenses, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of being or having
been such a Covered Person except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in any such action, suit or
other proceeding to be liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office. Expenses,
including counsel fees so incurred by any such Covered Person (but excluding
amounts paid in satisfaction of judgments, in compromise or as fines or
penalties), shall be paid from time to time by Trust in advance of the final
disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person to repay amounts so paid to
the Trust if it is ultimately determined that indemnification of such expenses
is not authorized under this Article, provided, however, that either (a) such
Covered Person shall have provided appropriate security for such undertaking,
(b) the Trust shall be insured against losses arising from any such advance
payments or (c) either a majority of the disinterested Trustees acting on the
matter (provided that a majority of the disinterested Trustees then in office
act on the matter), or independent legal counsel in a written opinion, shall
have determined, based upon a review of readily available facts (as opposed to a
full trial type inquiry) that there is reason to believe that such Covered
Person will be found entitled to indemnification under this Article.
<PAGE>
Section 2. Compromise Payment. As to any matter disposed of (whether by
a compromise payment, pursuant to a consent decree or otherwise) without an
adjudication by a court, or by any other body before which the proceeding was
brought, that such Covered Person is liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office, indemnification
shall be provided if (a) approved, after notice that it involves such
indemnification, by at least a majority of the disinterested Trustees acting on
the matter (provided that a majority of the disinterested Trustees then in
office act on the matter) upon a determination, based upon a review of readily
available facts (as opposed to a full trial type inquiry) that such Covered
Person is not liable to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office, or (b) there has been obtained an
opinion in writing of independent legal counsel, based upon a review of readily
available facts (as opposed to a full trial type inquiry) to the effect that
such indemnification would not protect such Person against any liability to the
Trust to which he would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office. Any approval pursuant to this Section shall not
prevent the recovery from any Covered Person of any amount paid to such Covered
Person in accordance with this Section as indemnification if such Covered Person
is subsequently adjudicated by a court of competent jurisdiction to have been
liable to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Section 3. Indemnification Not Exclusive. The right of indemnification
hereby provided shall not be exclusive of or affect any other rights to which
such Covered Person may be entitled. As used in this Article VIII, the term
"Covered Person" shall include such person's heirs, executors and administrators
and a "disinterested Trustee" is a Trustee who is not an "interested person" of
the Trust as defined in Section 2(a)(19) of the 1940 Act (or who has been
exempted from being an "interested person" by any rule, regulation or order of
the Commission), and against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the Trust, other than
Trustees or officers, and other persons may be entitled by contract or otherwise
under law, nor the power of the Trust to purchase and maintain liability
insurance on behalf of any such person; provided, however, that the Trust shall
not purchase or maintain any such liability insurance in contravention of
applicable law, including without limitation the 1940 Act.
Item 28. Business and Other Connections of Adviser.
No director or officer of David L. Babson & Co., Inc., the Registrant's
investment adviser, has been engaged for his own account or in the capacity of
director, officer,
<PAGE>
employee, partner or trustee in any other business, profession, vocation
or employment of a substantial nature.
Item 29. Principal Underwriters -- Not Applicable.
Item 30. Location of Accounts and Records.
The accounts, books or other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder
will be kept by the Registrant, the Manager and the Sub-Adviser at their
respective principal business offices at One Memorial Drive, Cambridge,
Massachusetts 02142 and by the Registrant's Custodian and Transfer Agent at its
principal business office at 89 South Street, Boston, Massachusetts 02205.
Item 31. Management Services.
There are no management-related service contracts not discussed in Part A or
Part B.
Item 32. Undertakings.
The Registrant hereby undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual report to
shareholders containing the information required by Item 5A of Form N-1A omitted
from the Prospectus, upon request and without charge.
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust of The DLB Fund Group is on
file with the Secretary of The Commonwealth of Massachusetts and notice is
hereby given that this instrument is executed on behalf of the Registrant by an
officer of the Registrant as an officer and not individually and the obligations
of or arising out of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets and property of
the relevant series of the Registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant has duly caused
this Post-Effective Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Cambridge, The Commonwealth of
Massachusetts, on the 12th day of January, 1996.
THE DLB FUND GROUP
By: /s/ Ronald E. Gwozdz
Ronald E. Gwozdz
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment of The DLB Fund Group has been signed below by the
following persons in the capacities and on the dates indicated.
* Trustee; Chairman January 12, 1996
Peter C. Thompson
* Trustee; Principal Executive January 12, 1996
Ronald E. Gwozdz Officer; and President
* Treasurer; Principal Financial January 12, 1996
Edson B. Olds IV Officer and Principal
Accounting Officer
* Trustee January 12, 1996
Charles E. Hugel
* Trustee January 12, 1996
Richard A. Nenneman
* Trustee January 12, 1996
Peter S. Schliemann
Trustee January 12, 1996
Richard J. Phelps
*By /s/ Ronald E. Gwozdz
Ronald E. Gwozdz
Attorney-In-Fact
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
11 Consent of Deloitte & Touche LLP
17(a) Financial Data Schedule for Fixed Income Fund
17(b) Financial Data Schedule for Global Small Cap Fund
17(c) Financial Data Schedule for Value Fund
17(d) Financial Data Schedule for Mid Cap Fund
EXHIBIT 11
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 1 to the Registration
Statement No. 33-82366 of The DLB Fund Group of our report dated June 23, 1995,
relating to DLB Global Small Capitalization Fund and to the reference to us
under the heading "Experts" both appearing in the Statement of Additional
Information which is part of such Registration Statement.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
January 17, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
EXHIBIT 17(a)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF DLB FIXED INCOME FUND AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER>001
<NAME> DLB FIXED INCOME FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 5,112,299
<INVESTMENTS-AT-VALUE> 5,245,291
<RECEIVABLES> 144,650
<ASSETS-OTHER> 2,038
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,391,985
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (66,846)
<TOTAL-LIABILITIES> 66,846
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (5,192,396)
<SHARES-COMMON-STOCK> 518,789
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 316
<ACCUMULATED-NET-GAINS> (67)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (132,992)
<NET-ASSETS> (5,325,139)
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> (152,090)
<OTHER-INCOME> 0
<EXPENSES-NET> 13,179
<NET-INVESTMENT-INCOME> 138,911
<REALIZED-GAINS-CURRENT> (53,226)
<APPREC-INCREASE-CURRENT> (132,992)
<NET-CHANGE-FROM-OPS> 325,129
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 139,227
<DISTRIBUTIONS-OF-GAINS> 53,159
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 500,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 18,788
<NET-CHANGE-IN-ASSETS> (5,325,129)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,911
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 81,880
<AVERAGE-NET-ASSETS> 5,082,266
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> 0.37
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.39)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.26
<EXPENSE-RATIO> 0.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
EXHIBIT 17(b)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF DLB GLOBAL SMALL CAPITALIZATION FUND AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER>002
<NAME> DLB GLOBAL SMALL CAPITALIZATION FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 10,142,533
<INVESTMENTS-AT-VALUE> 10,514,281
<RECEIVABLES> 198,948
<ASSETS-OTHER> 3,007
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,716,236
<PAYABLE-FOR-SECURITIES> (104,880)
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (102,078)
<TOTAL-LIABILITIES> 206,958
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (10,172,224)
<SHARES-COMMON-STOCK> 1,017,012
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (66,244)
<OVERDISTRIBUTION-NII> 5,980
<ACCUMULATED-NET-GAINS> 28,897
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (371,931)
<NET-ASSETS> 10,509,278
<DIVIDEND-INCOME> (119,082)
<INTEREST-INCOME> (23,708)
<OTHER-INCOME> 10,439
<EXPENSES-NET> 66,107
<NET-INVESTMENT-INCOME> 66,244
<REALIZED-GAINS-CURRENT> 28,897
<APPREC-INCREASE-CURRENT> (371,931)
<NET-CHANGE-FROM-OPS> 409,278
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 66,244
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,010,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 7,012
<NET-CHANGE-IN-ASSETS> (10,509,278)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 45,284
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 142,658
<AVERAGE-NET-ASSETS> 9,956,998
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 0.34
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.08)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.33
<EXPENSE-RATIO> 1.47
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
EXHIBIT 17(c)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF DLB VALUE FUND AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER>003
<NAME> DLB VALUE FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 10,286,866
<INVESTMENTS-AT-VALUE> 10,865,639
<RECEIVABLES> 80,802
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,946,447
<PAYABLE-FOR-SECURITIES> (45,744)
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (83,125)
<TOTAL-LIABILITIES> 128,869
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (10,238,563)
<SHARES-COMMON-STOCK> 1,022,591
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (242)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (578,773)
<NET-ASSETS> (10,817,578)
<DIVIDEND-INCOME> (111,574)
<INTEREST-INCOME> (16,211)
<OTHER-INCOME> 0
<EXPENSES-NET> 36,683
<NET-INVESTMENT-INCOME> 91,102
<REALIZED-GAINS-CURRENT> (147,693)
<APPREC-INCREASE-CURRENT> (578,773)
<NET-CHANGE-FROM-OPS> 817,568
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 90,860
<DISTRIBUTIONS-OF-GAINS> 147,693
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,000,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 22,590
<NET-CHANGE-IN-ASSETS> (10,817,578)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 24,862
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 109,763
<AVERAGE-NET-ASSETS> 10,312,183
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 0.73
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.24)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.58
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
EXHIBIT 17(d)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF DLB MID CAPITALIZATION FUND AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER>004
<NAME> DLB MID CAPITALIZATION FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 10,240,402
<INVESTMENTS-AT-VALUE> 10,992,195
<RECEIVABLES> 85,782
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11,077,983
<PAYABLE-FOR-SECURITIES> (62,493)
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (86,616)
<TOTAL-LIABILITIES> 149,109
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (10,176,849)
<SHARES-COMMON-STOCK> 1,016,544
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (350)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (751,675)
<NET-ASSETS> (10,928,874)
<DIVIDEND-INCOME> (96,748)
<INTEREST-INCOME> (27,489)
<OTHER-INCOME> 0
<EXPENSES-NET> 40,356
<NET-INVESTMENT-INCOME> 83,881
<REALIZED-GAINS-CURRENT> (93,308)
<APPREC-INCREASE-CURRENT> (751,675)
<NET-CHANGE-FROM-OPS> 928,864
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 83,531
<DISTRIBUTIONS-OF-GAINS> 93,308
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,000,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 16,543
<NET-CHANGE-IN-ASSETS> (10,928,864)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 26,445
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 116,479
<AVERAGE-NET-ASSETS> 10,054,454
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> 0.84
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.17)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.75
<EXPENSE-RATIO> 0.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
