DELOITTE &
TOUCHE LLP
DLB FIXED INCOME FUND
FINANCIAL STATEMENTS FOR THE
PERIOD FROM JULY 25, 1995
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
AND INDEPENDENT AUDITORS' REPORT
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
<PAGE>
DLB FIXED INCOME FUND
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS FOR THE PERIOD FROM JULY 25, 1995
(COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995:
Portfolio of Investments 2-3
Statement of Assets and Liabilities 4
Statement of Operations 5
Statement of Changes in Net Assets 6
Financial Highlights 7
Notes to Financial Statements 8-9
<PAGE>
DELOITTE &
TOUCHE LLP
125 Summer Street Telephone: (617) 261-8000
Boston, Massachusetts 02110-1617 Facsimile: (617) 261-8111
INDEPENDENT AUDITORS' REPORT
To the Trustees of The DLB Fund Group and
Shareholders of DLB Fixed Income Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of DLB Fixed Income Fund (a separate series of The
DLB Fund Group) as of December 31, 1995, and the related statements of
operations and changes in net assets, and the financial highlights for the
period from July 25, 1995 (commencement of operations) to December 31, 1995.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights 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 financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned at December 31, 1995 by
correspondence with the custodian. 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 provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of DLB Fixed Income
Fund at December 31, 1995, the results of its operations, the changes in its net
assets, and its financial highlights for the period from July 25, 1995
(commencement of operations) to December 31, 1995 in conformity with generally
accepted accounting principles.
/s/Deloitte & Touche LLP
February 1, 1996
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
<PAGE>
DLB FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BONDS - 93.3%
S&P/MOODY'S
BOND RATING PRINCIPAL
(UNAUDITED) ISSUER AMOUNT VALUE
<S> <C> <C> <C>
U.S. GOVERNMENT BONDS - 27.3%
AAA U.S. Treasury, 7.25s, 1996 $150,000 $152,531
AAA U.S. Treasury, 8.50s, 1997 400,000 417,124
AAA U.S. Treasury, 6.25s, 2000 100,000 103,453
AAA U.S. Treasury, 7.50s, 1999 75,000 80,519
AAA U.S. Treasury, 6.375s, 2000 100,000 103,109
AAA U.S. Treasury, 10.375s, 2012 250,000 345,625
AAA U.S. Treasury, 8.125s, 2021 200,000 253,125
1,455,486
U.S. Federal Agency Bonds - 1.9%
Federal Home Loan Banks, 7.26s, 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
1,312,326
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, 10.125s, 2000 100,000 117,282
594,365
</TABLE>
-2-
<PAGE>
DLB FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BONDS - 93.3%
S&P/MOODY'S
BOND RATING PRINCIPAL
(UNAUDITED) ISSUER AMOUNT VALUE
<S> <C> <C> <C>
INDUSTRIAL - 10.7%
A3 Ryder Mtn, 8.45s, 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
233,057
Total Bonds (Identified cost, $4,834,859) 4,967,851
REPURCHASE AGREEMENT, 5.2%,
Bank of New York, dated 12/29/95, due
1/2/96 (Secured by $281,000 U.S. Treasury
Notes, due 9/30/97, Market Value, $287,365) 277,440
Total Investments
(Identified cost, $5,112,299) 5,245,291
Other Assets, Less Liabilities - 1.5% 79,848
NET ASSETS - 100% $ 5,325,139
</TABLE>
See notes to financial statements.
-3-
<PAGE>
DLB FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (identified cost, $5,112,299) $5,245,291
Interest receivable 80,415
Total assets 5,325,706
LIABILITIES - Accrued expenses and other liabilities 567
NET ASSETS $5,325,139
NET ASSETS CONSIST OF:
Paid-in capital $5,192,147
Unrealized appreciation on investments 132,992
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.
-4-
<PAGE>
DLB FIXED INCOME FUND
STATEMENT OF OPERATIONS
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
Trustees' fees 5,438
Other 6
Total expenses 81,886
Reduction of expenses by investment manager (68,707)
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.
-5-
<PAGE>
DLB FIXED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
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 (139,227)
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 $ 5,325,139
</TABLE>
See notes to financial statements.
-6-
<PAGE>
DLB 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 income 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 $ 0.19
Ratios (to average net assets):
Expenses 2.50%*
Net investment income 4.33%*
* Annualized.
</TABLE>
See notes to financial statements.
-7-
<PAGE>
DLB FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. BUSINESS AND ORGANIZATION
DLB Fixed Income 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 - 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
statement 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 undistributed net realized gains. During the period ended
December 31, 1995, $67 and $249 were reclassified from accumulated
undistributed net realized gain on investments` and paid-in capital,
respectively, to accumulated undistributed net investment income, due to
differences between book and tax accounting for mortgage-backed securities
and foreign currency transactions. This change had no effect on the net
assets or net asset value per share.
-8-
<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, $59,796 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:
PURCHASES SALES
U.S. Government securities $4,526,414 $2,061,524
Investments (non-U.S. government securities) $2,503,365 $ 177,303
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 $5,112,299
Gross unrealized appreciation $ 137,028
Gross unrealized depreciation (4,036)
Net unrealized appreciation $ 132,992
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:
SHARES AMOUNT
Shares sold 500,000 $5,000,000
Shares issued to shareholders in reinvestment of 18,788 192,386
distributions
Net increase 518,788 $5,192,386
* * * * * *
-9-
<PAGE>
DELOITTE &
TOUCHE LLP
DLB GLOBAL SMALL CAPITALIZATION FUND
FINANCIAL STATEMENTS FOR THE PERIOD
FROM JULY 19, 1995 (COMMENCEMENT
OF OPERATIONS) TO DECEMBER 31, 1995
AND INDEPENDENT AUDITORS' REPORT
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS 1
FINANCIAL STATEMENTS FOR THE PERIOD FROM JULY 19, 1995
(COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995:
Portfolio of Investments 2-6
Statement of Assets and Liabilities 7
Statement of Operations 8
Statement of Changes in Net Assets 9
Financial Highlights 10
Notes to Financial Statements 11-13
<PAGE>
DELOITTE &
TOUCHE LLP
125 Summer Street Telephone: (617) 261-8000
Boston, Massachusetts 02110-1617 Facsimile: (617) 261-8111
INDEPENDENT AUDITORS' REPORT
To the Trustees of the DLB Fund Group and Shareholders of
DLB Global Small Capitalization Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of DLB Global Small Capitalization Fund (a
separate series of The DLB Fund Group) as of December 31, 1995, and the related
statements of operations, changes in net assets, and the financial highlights
for the period from July 19, 1995 (commencement of operations) to December 31,
1995. These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights 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 financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned at December 31, 1995 by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of DLB Global Small
Capitalization Fund at December 31, 1995, the results of its operations, the
changes in its net assets, and its financial highlights for the period from July
19, 1995 (commencement of operations) to December 31, 1995 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
February 1, 1996
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON AND PREFERRED STOCKS - 98.1%
ISSUER SHARES VALUE
<S> <C> <C>
CHEMICALS SPECIALTY - 1.9%
Calgon Carbon 9,200 $110,400
M.A. Hanna Co. 3,200 89,600
200,000
METALS AND MINING - 0.9%
Martin Marietta Materials 4,500 92,813
PAPER/FOREST PRODUCTS - 0.7%
Albany International Corp. Class 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. Class 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 AND 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
</TABLE>
-2-
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON AND PREFERRED STOCKS (CONTINUED)
ISSUER SHARES VALUE
<S> <C> <C>
PRINTING AND 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%
Dean Foods Co. 3,600 99,000
FOOD RETAILERS - 1.1%
Vons Companies (*) 4,200 118,650
COSMETIC/TOILETRY - 0.8%
Alberto Culver Class A 2,600 79,300
TOBACCO - 1.7%
Dimon Inc. 5,600 98,700
Quilmes Industries 4,800 74,880
173,580
COAL GAS AND 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
</TABLE>
-3-
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON AND PREFERRED STOCKS (CONTINUED)
ISSUER SHARES VALUE
<S> <C> <C>
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 AND 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 KINGDOM
Alllied Colloids Group - Chemicals 44,900 92,711
Peter Black Holdings - Household Goods 19,000 79,643
N Brown Group - Retailers - General 20,000 83,214
Court Cavendish Group - Health Care 21,400 90,036
Devro International - Food Producers 26,000 102,527
Fairey Group - Electronic and Electrical Equipment 11,300 94,383
McBride - Household Goods (*) 28,100 84,196
Seton Healthcare Group - Health Care 13,000 79,721
Spirax-Sarco Engineering - Engineering 15,000 138,211
UniChem - Health Care 21,300 80,025
924,667
BELGIUM
Colruyt - Retailers - Food 126,428 123,616
FRANCE
Bioblock Scientific - Distributors 2,000 102,139
Brioch Pasquier - Food Producers 1,000 121,789
Guilbert - Distributors 1,200 141,234
SocieteManutan - Distributors 1,000 116,591
Spir Communication - Media 1,400 128,666
Virbac - Pharmaceuticals 1,000 122,812
733,231
</TABLE>
-4-
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON AND PREFERRED STOCKS (CONTINUED)
ISSUER SHARES VALUE
<S> <C> <C>
FOREIGN (CONTINUED)
GERMANY
Douglas Holdings - Retailers - General 3,250 114,960
Rhoen Klinikum - Health Care 1,200 119,958
Sto AG - Building Materials and Merchants (**) 100 50,332
285,250
ITALY
Gewiss - Electronic and Electrical Equipment 13,700 172,684
Industrie Natuzzi ADR - Household Goods 3,700 167,888
340,572
NETHERLANDS
Grolsch - Breweries 3,350 116,590
Nutricia Verenidge Bedrijuen - Food Producers 1,850 149,772
Wegener - Media 1,550 149,847
416,209
SWITZERLAND
Fotolabo - Other Services and Businesses 400 160,000
Phoenix Mecano - Engineering 300 150,782
310,782
NEW ZEALAND
Guinness Peat Group - Other Financial 155,000 81,021
JAPAN
Aim Services - Other Svcs. and Business 5,000 91,535
Amada Metrecs - Japan 9,000 143,840
Canon Aptex - Engineering 5,500 89,597
Daiwa Industries - Engineering 12,000 116,234
Disco - Electronic and Electrical Equipment 4,000 149,168
Fukuda Denshi - Health Care 5,000 134,153
Harada Industry - Electronic and Electrical Equip. 5,000 85,722
Maruko - Retailers - General (*) 1,500 101,850
Mitsui High Tech - Electronic and Electrical Equip. 5,000 130,763
Nihon Jumbo - Other Services and Businesses 4,300 150,358
Nissen - Retailers - General 5,730 134,314
Royal Ltd. - Retailers - General 4,000 133,670
SxL Corp. - Building and Construction 12,000 124,370
Xebio Co. - Retialers - General 4,000 141,418
1,726,992
</TABLE>
-5-
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON AND PREFERRED STOCKS (CONTINUED)
ISSUER SHARES VALUE
<S> <C> <C>
FOREIGN (CONTINUED)
HONG KONG
CDL Hotels - Leisure and Hotels 260,000 131,126
Chen Hsong Holdings - Engineering 90,000 47,135
Gold Peak - Electronic and Electrical Equipment 150,000 74,195
South China Morning Post - Media 200,000 122,204
374,660
INDONESIA
Multi Bintang D/R - Breweries 5,500 63,806
MALAYSIA
Perlis Plantations - Diversified Industrial 40,000 125,188
SINGAPORE
Tiger Medicals - Pharmaceuticals 50,000 83,038
Tibs Holdings - Transport 40,000 97,809
United Industrial Corp. - Property 71,000 69,745
250,592
THAILAND
Matichon (THB) F/R - Media 13,000 76,865
Saha Pathana Interholding L/R - Div. Industrial * 35,000 66,667
Thai Pineapple (TIPCO) L/R - Food Producers * 52,000 76,431
219,963
Total Common and Preferred Stocks 10,309,981
(Identified Cost $9,938,233)
REPURCHASE AGREEMENT - 1.9%
Bank of New York, dated 12/29/95, due 1/2/96 (Secured by $208,000 U.S.
Treasury Notes, due 9/30/97, Market Value $212,712) 204,300
Total Investments
(Identified cost $10,142,533) 10,514,281
Other Assets, Less Liabilities - 0% (5,003)
NET ASSETS - 100% $ 10,509,278
(*) Non-income producing securities
(**) Preferred Stock
</TABLE>
See notes to financial statements.
-6-
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (identified cost, $10,142,533) $ 10,514,281
Receivable for investments sold 81,885
Dividends and interest receivable 53,890
Total assets 10,650,056
LIABILITIES:
Payable for investments purchased 104,880
Accrued expenses and other liabilities 35,898
Total liabilities 140,778
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 (35,270)
Accumulated undistributed net investment income 393
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
</TABLE>
See notes to financial statements.
-7-
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
STATEMENT OF OPERATIONS
PERIOD FROM JULY 19, 1995 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<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
Trustees' 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 and foreign currency 371,931
Net realized and unrealized gain on investments and foreign currency 343,034
Increase in net assets from operations $ 409,278
</TABLE>
See notes to financial statements.
-8-
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
STATEMENT OF CHANGES IN NET ASSETS
PERIOD FROM JULY 19, 1995 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<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 409,278
Distributions declared to shareholders from net investment income (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 undistributed net investment
income of $393) $ 10,509,278
</TABLE>
See notes to financial statements.
-9-
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION 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
Net investment income 0.07
Net realized and unrealized gain on investments 0.33
Total income from investment operations 0.40
Less distributions declared to shareholders from net investment income (0.07)
Net asset value - end of period $ 10.33
Total return 8.96%
Ratios and Supplemental Data:
Ratio of expenses to average net assets 1.46%
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,
the net investment income per share and ratios would have been:
Net investment income $ 0.02
Ratios (to average net assets):
Expenses 2.50%*
Net investment income 0.42%*
* Annualized.
</TABLE>
See notes to financial statements.
-10-
<PAGE>
DLB GLOBAL SMALL CAPITALIZATION FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. BUSINESS AND ORGANIZATION
DLB Global Small 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 exchanges
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. 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.
-11-
<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.
During the period ended December 31, 1995, $6,373 was reclassified from
accumulated undistributed net realized gain on investments to accumulated
undistributed net investment income, due to differences between book and
tax accounting for foreign currency transactions. This change had no
effect on net assets or net asset value per share.
At December 31, 1995, the Fund, for federal income tax purposes, had a
capital loss carryforward of $35,270 which may be applied against any net
taxable realized gains of each succeeding year until the earlier of its
utilization or expiration on December 31, 2003.
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.
DLB has entered into a sub-advisory agreement with Babson-Stewart Ivory
International ("BSI") with respect to the management of the international
component of the Fund's portfolio. Under the sub-advisory agreement, DLB
pays BSI a monthly fee at the annual rate of 0.50% of average daily net
assets.
-12-
<PAGE>
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
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.
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
* * * * * *
-13-
<PAGE>
DELOITTE &
TOUCHE LLP
DLB VALUE FUND
FINANCIAL STATEMENTS FOR THE
PERIOD FROM JULY 25, 1995
COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1995 AND
INDEPENDENT AUDITORS' REPORT
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
<PAGE>
DLB VALUE FUND
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS 1
FINANCIAL STATEMENTS FOR THE PERIOD FROM JULY 25, 1995
(COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995:
Portfolio of Investments 2-4
Statement of Assets and Liabilities 5
Statement of Operations 6
Statement of Changes in Net Assets 7
Financial Highlights 8
Notes to Financial Statements 9-10
<PAGE>
DELOITTE &
TOUCHE LLP
125 Summer Street Telephone: (617) 261-8000
Boston, Massachusetts 02110-1617 Facsimile: (617) 261-8111
INDEPENDENT AUDITORS' REPORT
To the Trustees of the DLB Fund Group and Shareholders of
DLB Value Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of DLB Value Fund (a separate series of The DLB
Fund Group) as of December 31, 1995, and the related statements of operations
and changes in net assets, and the financial highlights for the period from July
25, 1995 (commencement of operations) to December 31, 1995. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights 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 financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned at December 31, 1995 by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of DLB Value Fund at
December 31, 1995, the results of its operations, the changes in its net assets,
and its financial highlights for the period from July 25, 1995 (commencement of
operations) to December 31, 1995 in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
February 1, 1996
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
<PAGE>
DLB VALUE FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<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 AND 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
</TABLE>
-2-
<PAGE>
DLB VALUE FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - 97.4% (CONTINUED)
ISSUER SHARES VALUE
<S> <C> <C>
MEDICAL SUPPLIES AND 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
1,056,450
FINANCIAL SERVICES - 12.2%
American Express 6,500 268,938
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
1,319,988
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
</TABLE>
-3-
<PAGE>
DLB VALUE FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - 97.4% (CONTINUED)
ISSUER SHARES VALUE
<S> <C> <C>
DIVERSIFIED - 2.0%
Hanson PLC Sponsored ADR 14,000 213,500
PROFESSIONAL SERVICES - 4.7%
ABM 10,000 277,500
PHH Corp. 5,000 233,750
511,250
COMPUTER RELATED - 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 AND 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) 10,545,532
REPURCHASE AGREEMENT - 3%
Bank of New York, dated 12/29/95, due
1/2/96 (Secured by $324,000 U. S. Treasury
Notes, due 9/30/97, Market Value $331,340) 320,107
Total Investments (Identified cost $10,286,866) 10,865,639
Other Assets, Less Liabilities (0.4%) (48,061)
NET ASSETS - 100% $10,817,578
</TABLE>
See notes to financial statements.
-4-
<PAGE>
DLB VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (identified cost, $10,286,866) $ 10,865,639
Interest and dividends receivable 16,870
Total assets 10,882,509
LIABILITIES:
Payable for investments purchased 45,744
Accrued expenses and other liabilities 19,187
Total liabilities 64,931
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.
-5-
<PAGE>
DLB VALUE FUND
STATEMENT OF OPERATIONS
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 fee 28,213
Accounting and audit fees 22,263
Trustees' fees 5,438
Legal fees 28,867
Other 121
Total expenses 109,764
Reduction of expenses by investment manager (73,081)
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 realized and unrealized gain on investments 726,466
Increase in net assets from operations $ 817,568
</TABLE>
See notes to financial statements.
-6-
<PAGE>
DLB VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
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 10.00
At end of period (including accumulated undistributed net investment income of
$242) $ 10,817,578
</TABLE>
See notes to financial statements.
-7-
<PAGE>
DLB VALUE 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 0.09
Net realized and unrealized gain on investments 0.73
Total income 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, 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.
-8-
<PAGE>
DLB VALUE FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. BUSINESS AND ORGANIZATION
DLB Value 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 exchanges
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.
-9-
<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, $48,219 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:
Aggregate cost $ 10,286,866
Gross unrealized appreciation $ 1,113,361
Gross unrealized depreciation (534,588)
Net unrealized appreciation $ 578,773
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:
SHARES AMOUNT
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
* * * * * *
-10-
<PAGE>
DELOITTE &
TOUCHE LLP
DLB MID CAPITALIZATION FUND
FINANCIAL STATEMENTS FOR THE PERIOD
FROM JULY 25, 1995 (COMMENCEMENT
OF OPERATIONS) TO DECEMBER 31, 1995
AND INDEPENDENT AUDITORS' REPORT
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
<PAGE>
DLB MID CAPITALIZATION FUND - UNAUDITED
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS 1
FINANCIAL STATEMENTS FOR THE PERIOD FROM JULY 25, 1995
(COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995:
Portfolio of Investments 2-4
Statement of Assets and Liabilities 5
Statement of Operations 6
Statement of Changes in Net Assets 7
Financial Highlights 8
Notes to Financial Statements 9-10
<PAGE>
DELOITTE &
TOUCHE LLP
125 Summer Street Telephone: (617) 261-8000
Boston, Massachusetts 02110-1617 Facsimile: (617) 261-8111
INDEPENDENT AUDITORS' REPORT
To the Trustees of the DLB Fund Group and
Shareholders of DLB Mid Capitalization Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of DLB Mid Capitalization Fund (a separate series
of The DLB Fund Group) as of December 31, 1995, and the related statements of
operations and changes in net assets, and the financial highlights for the
period from July 25, 1995 (commencement of operations) to December 31, 1995.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights 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 financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned at December 31, 1995 by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of DLB Mid
Capitalization Fund at December 31, 1995, the results of its operations, the
changes in its net assets, and its financial highlights for the period from July
25, 1995 (commencement of operations) to December 31, 1995 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
February 1, 1996
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
<PAGE>
DLB MID CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<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 AND MINING - 2.2%
Martin Marietta Materials 11,400 235,125
PAPER/FOREST PRODUCTS - 1.7%
Albany International Corp. Class 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 AND 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
</TABLE>
-2-
<PAGE>
DLB MID CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - 98.0% (CONTINUED)
ISSUER SHARES VALUE
<S> <C> <C>
PRINTING AND PUBLISHING - 11.0%
CCH Inc., Class B 12,800 705,600
Central Newspapers A 8,200 257,275
Lee Enterprises 10,200 234,600
1,197,475
RETAIL - SPECIALTY - 1.8%
Fingerhut Companies 14,200 197,025
WHOLESALERS - 2.4%
Waban Inc. 14,100 264,375
FOOD PRODUCERS - 2.3%
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 AND PIPE - 5.5%
Cabot Oil & Gas Corp. 16,500 241,310
Nabors Industries 32,300 359,337
600,647
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
</TABLE>
-3-
<PAGE>
DLB MID CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - 98.0% (CONTINUED)
ISSUER SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS - 1.8%
Octel Communications 6,000 193,500
TRUCKING AND SHIPPING - 5.2%
Alexander & Baldwin 8,700 200,100
Hunt JB Transport 11,300 189,275
Overseas Shipholding 9,300 176,700
NATURAL GAS - 2.3%
Equitable Resources 8,000 250,000
Total common stocks (Identified cost $9,959,887) 10,711,562
REPURCHASE AGREEMENT - 2.6%
Bank of New York, dated 12/29/95, due 1/2/96 (secured by $284,000
U.S. Treasury Notes, due 9/30/97, market value $290,433) 280,633
Total investments (Identified cost $10,240,520) 10,992,195
Other Assets, Less Liabilities - (0.6%) (63,321)
NET ASSETS - 100% $10,928,874
(*) Non-income producing security
</TABLE>
See notes to financial statements.
-4-
<PAGE>
DLB MID CAPITALIZATION FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (identified cost, $10,240,520) $ 10,992,195
Dividends and interest receivable 22,888
Total assets 11,015,083
LIABILITIES:
Payable for investments purchased 62,493
Accrued expenses and other liabilities 23,716
Total liabilities 86,209
NET ASSETS $ 10,928,874
NET ASSETS CONSIST OF:
Paid-in capital $ 10,176,967
Unrealized appreciation on investments 751,675
Accumulated undistributed net investment income 232
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.
-5-
<PAGE>
DLB MID CAPITALIZATION FUND
STATEMENT OF OPERATIONS
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 audit fees 24,368
Legal fees 31,594
Trustees' 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.
-6-
<PAGE>
DLB MID CAPITALIZATION FUND
STATEMENT OF CHANGES IN NET ASSETS
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 $232) $ 10,928,874
</TABLE>
See notes to financial statements.
-7-
<PAGE>
DLB MID CAPITALIZATION 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 0.08
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) $ 10,929.00
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 0.32%*
*Annualized.
</TABLE>
See notes to financial statements.
-8-
<PAGE>
DLB MID CAPITALIZATION FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 exchanges
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 undistributed 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. During the period ended December
31, 1995, $118 was reclassified from accumulated undistributed net
investment income to paid-in capital, due to differences between book and
tax accounting for foreign currency transactions. This change had no
effect on the net assets or net asset value per share.
-9-
<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:
Aggregate cost $ 10,240,520
Gross unrealized appreciation $ 1,290,834
Gross unrealized depreciation (539,159)
Net unrealized appreciation $ 751,675
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:
SHARES AMOUNT
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
* * * * * *
-10-
