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Expires: November 30, 2005
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-2948
D.L. Babson Tax Free Income Fund, Inc.
(Exact name of registrant as specified in charter)
100 South Fifth Street, Suite 2300, Minneapolis, MN 55402
(Address of principal executive offices) (Zip code)
BISYS Fund Services, 3435 Stelzer Road, Columbus, OH 43219
(Name and address of agent for service)
Registrant's telephone number, including area code: 614-470-8000
Date of fiscal year end: June 30, 2003
Date of reporting period: June 30, 2003
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
Include a copy of the report transmitted to stockholders pursuant to Rule
30e-1 under the Act (17 CFR 270.30e-1).
Babson Funds
Annual Report
June 30, 2003
EQUITIES
Enterprise Fund
Enterprise Fund II
Growth Fund
Shadow Stock Fund
Value Fund
International Fund
FIXED INCOME
Bond Trust
Money Market Fund
Tax-Free Income Fund
BABSON FUNDS
JONES & BABSON, INC. DISTRIBUTORS
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TABLE OF CONTENTS
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Message to Our Shareholders 1
Babson Enterprise Fund 2
Babson Enterprise Fund II 5
Babson Growth Fund 8
Shadow Stock Fund 10
Babson Value Fund 15
Babson-Stewart Ivory International Fund 18
Babson Bond Trust 22
Babson Bond Trust - Portfolio L 24
Babson Bond Trust - Portfolio S 29
Babson Money Market Fund 33
Babson Tax-Free Income Fund 36
Statements of Assets and Liabilities 40
Statements of Operations 42
Statements of Changes in Net Assets 44
Notes to Financial Statements 48
Financial Highlights 53
Report of PricewaterhouseCoopers LLP, Independent Auditors 59
Notice to Shareholders 60
Supplemental Information 62
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MESSAGE TO OUR SHAREHOLDERS
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The twelve-month period ended June 30, 2003 has been a volatile time for
investors in the US equity and fixed income markets. Weakness in the US economy
and global political uncertainty contributed to a decline in many of the major
stock market indices during the first nine months of our fiscal year.
Conversely, many bond market indices rose during the same period as investors
looked for quality and safety in US fixed income portfolios. For the final three
months of our fiscal year, however, the equity markets began to show positive
growth, and all major market indices rose during the period.
Your fund's performance has reflected this market volatility. All of the Babson
equity funds declined for the twelve-month period and under-performed their
benchmarks for the same period. However, for the three-month and six-month
periods ended June 30, 2003, all these funds not only showed positive returns,
but the Babson Shadow Stock fund also outperformed its benchmark for the six
months ended June 30, 2003. On the fixed income side, the Babson Tax-Free Income
Fund and the Babson Bond Trust Short both all beat their benchmarks for the same
six-month period.
In this report to our shareholders, you will find detailed information on the
portfolio holdings and results of you fund holdings. For current performance
information, please visit our website at www.babsonfunds.com, or call us at
1-800-422-2766 for answers to your fund questions. We appreciate your confidence
and are dedicated to continuing to earn you business.
/s/ Jennifer Lammers
Jennifer Lammers
President, Babson Funds, J&B Funds
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June 30, 2003 1
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BABSON ENTERPRISE FUND
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The semi-annual period was really a tale of two markets. During the beginning of
the period, equity performance rotated around war with Iraq and featured an
atmosphere of uncertainty that affected all market components. With the war in
Iraq over, however, the second quarter of 2003 saw equity markets surge.
Performance for small companies led the way during this period as evidenced by
the Russell 2000 Index's return of 23.40% for the quarter. This represented the
largest quarterly gain for the Russell 2000 Index since the first quarter of
1991.
For the semi-annual period ended June 30, 2003, the Babson Enterprise Fund
returned 16.30% versus a return of 16.49% for the Fund's benchmark, the Russell
2000 Value Index. Underperformance for the period was driven primarily by market
dynamics that favored those areas associated with high beta and high valuations.
This worked against the Fund's strategy of investing in high quality companies
with attractive valuations and earnings characteristics. Areas of difficult
stock selection for the Fund were the consumer discretionary, technology and
materials and processing sectors. Areas that were favorable for the Fund include
the health care and financial services sectors.
FUND COMPOSITION
TOP TEN EQUITY HOLDINGS: % OF TOTAL
- ------------------------------------------
Matrix Service Co. 3.86%
Penwest Pharmaceutical Co. 2.55
NN, Inc. 2.40
EDO Corp. 2.23
Quixote Corp. 2.22
Mid-Atlantic Realty Trust 2.14
Keith (The) Cos., Inc. 2.11
Cuno, Inc. 2.10
Lasalle Hotel Properties 2.08
Kaneb Services, LLC 2.08
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Total 23.77%
Total Securities in Portfolio 67
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As of June 30, 2003, schedule of investments. Subject to change.
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BABSON ENTERPRISE FUND VERSUS RUSSELL 2000
Babson
Enterprise Fund Russell 2000 Index
Time Period Monthly Returns Plot Points Monthly Returns Plot Points
06/30/93 10,000.00 10,000.00
07/31/93 0.62% 10,062.00 1.38% 10,138.00
08/31/93 1.48% 10,210.92 4.32% 10,575.96
09/30/93 3.04% 10,521.33 2.82% 10,874.20
10/31/93 2.00% 10,731.76 2.58% 11,154.76
11/30/93 -0.58% 10,669.51 -3.26% 10,791.11
12/31/93 2.89% 10,977.86 3.42% 11,160.17
01/31/94 1.51% 11,143.63 3.13% 11,509.48
02/28/94 0.30% 11,177.06 -0.36% 11,468.05
03/31/94 -3.99% 10,731.09 -5.27% 10,863.68
04/30/94 2.11% 10,957.52 0.59% 10,927.78
05/31/94 -0.91% 10,857.81 -1.12% 10,805.39
06/30/94 -1.84% 10,658.02 -3.37% 10,441.25
07/31/94 1.93% 10,863.72 1.64% 10,612.48
08/31/94 2.14% 11,096.21 5.57% 11,203.60
09/30/94 1.20% 11,229.36 -0.34% 11,165.50
10/31/94 2.84% 11,548.27 -0.40% 11,120.84
11/30/94 -4.20% 11,063.25 -4.04% 10,671.56
12/31/94 1.65% 11,245.79 2.68% 10,957.56
01/31/95 -1.12% 11,119.84 -1.26% 10,819.49
02/28/95 2.60% 11,408.95 4.16% 11,269.58
03/31/95 2.02% 11,639.41 1.71% 11,462.29
04/30/95 1.21% 11,780.25 2.22% 11,716.76
05/31/95 1.64% 11,973.45 1.72% 11,918.29
06/30/95 2.73% 12,300.32 5.19% 12,536.84
07/31/95 1.99% 12,545.10 5.76% 13,258.97
08/31/95 2.07% 12,804.78 2.07% 13,533.43
09/30/95 0.12% 12,820.15 1.79% 13,775.68
10/31/95 -2.49% 12,500.93 -4.47% 13,159.90
11/30/95 3.03% 12,879.70 4.20% 13,712.62
12/31/95 1.66% 13,093.51 2.64% 14,074.63
01/31/96 -1.15% 12,942.93 -0.11% 14,059.15
02/29/96 3.94% 13,452.88 3.12% 14,497.79
03/31/96 3.73% 13,954.68 2.04% 14,793.55
04/30/96 4.31% 14,556.12 5.35% 15,585.00
05/31/96 5.40% 15,342.15 3.94% 16,199.05
06/30/96 -0.33% 15,291.52 -4.11% 15,533.27
07/31/96 -6.45% 14,305.22 -8.73% 14,177.22
08/31/96 1.81% 14,564.14 5.81% 15,000.91
09/30/96 0.63% 14,655.90 3.91% 15,587.45
10/31/96 1.48% 14,872.81 -1.54% 15,347.40
11/30/96 4.05% 15,475.15 4.12% 15,979.72
12/31/96 2.60% 15,877.51 2.62% 16,398.39
01/31/97 3.92% 16,499.91 2.00% 16,726.35
02/28/97 1.00% 16,664.91 -2.43% 16,319.90
03/31/97 -1.81% 16,363.27 -4.72% 15,549.60
04/30/97 -2.68% 15,924.74 0.28% 15,593.14
05/31/97 7.27% 17,082.46 11.13% 17,328.66
06/30/97 8.60% 18,551.56 4.29% 18,072.06
07/31/97 3.73% 19,243.53 4.65% 18,912.41
08/31/97 4.25% 20,061.38 2.29% 19,345.50
09/30/97 6.31% 21,327.25 7.32% 20,761.59
10/31/97 -2.15% 20,868.72 -4.39% 19,850.16
11/30/97 -1.03% 20,653.77 -0.65% 19,721.13
12/31/97 1.79% 21,023.47 1.75% 20,066.25
01/31/98 -3.42% 20,304.47 -1.58% 19,749.21
02/28/98 4.08% 21,132.89 7.39% 21,208.67
03/31/98 4.29% 22,039.49 4.12% 22,082.47
04/30/98 2.06% 22,493.50 0.55% 22,203.92
05/31/98 -3.83% 21,632.00 -5.39% 21,007.13
06/30/98 0.26% 21,688.25 0.21% 21,051.25
07/31/98 -6.42% 20,295.86 -8.10% 19,346.10
08/31/98 -14.48% 17,357.02 -19.42% 15,589.08
09/30/98 -0.06% 17,346.61 7.83% 16,809.71
10/31/98 2.17% 17,723.03 4.08% 17,495.55
11/30/98 3.68% 18,375.23 5.24% 18,412.31
12/31/98 1.43% 18,638.00 6.19% 19,552.04
01/31/99 -1.82% 18,298.79 1.33% 19,812.08
02/28/99 -9.21% 16,613.47 -8.10% 18,207.30
03/31/99 -2.60% 16,181.52 1.56% 18,491.33
04/30/99 8.08% 17,488.99 8.96% 20,148.16
05/31/99 5.31% 18,417.65 1.46% 20,442.32
06/30/99 4.47% 19,240.92 4.52% 21,366.31
07/31/99 -1.36% 18,979.25 -2.74% 20,780.88
08/31/99 -8.20% 17,422.95 -3.70% 20,011.98
09/30/99 -1.80% 17,109.33 0.02% 20,015.99
10/31/99 -4.51% 16,337.70 0.40% 20,096.05
11/30/99 6.08% 17,331.04 5.97% 21,295.78
12/31/99 -0.26% 17,285.97 11.32% 23,706.47
01/31/00 4.54% 18,070.76 -1.61% 23,324.79
02/29/00 5.69% 19,098.98 16.51% 27,175.71
03/31/00 0.37% 19,169.65 -6.59% 25,384.84
04/30/00 -3.28% 18,540.89 -6.02% 23,856.67
05/31/00 -3.08% 17,969.83 -5.83% 22,465.82
06/30/00 10.10% 19,784.78 8.72% 24,424.84
07/31/00 1.09% 20,000.43 -3.22% 23,638.36
08/31/00 4.08% 20,816.45 7.63% 25,441.97
09/30/00 -3.65% 20,056.65 -2.94% 24,693.98
10/31/00 -8.28% 18,395.96 -4.46% 23,592.63
11/30/00 0.31% 18,452.99 -10.26% 21,172.02
12/31/00 5.35% 19,440.22 8.59% 22,990.70
01/31/01 3.37% 20,095.36 5.21% 24,188.51
02/28/01 0.93% 20,282.24 -6.56% 22,601.75
03/31/01 -0.38% 20,205.17 -4.89% 21,496.52
04/30/01 6.87% 21,593.27 7.82% 23,177.55
05/31/01 9.46% 23,635.99 2.46% 23,747.72
06/30/01 0.53% 23,761.26 3.45% 24,567.01
07/31/01 1.51% 24,120.06 -5.41% 23,237.94
08/31/01 -2.00% 23,637.65 -3.23% 22,487.35
09/30/01 -6.00% 22,219.40 -13.46% 19,460.56
10/31/01 3.16% 22,921.53 5.85% 20,599.00
11/30/01 3.40% 23,700.86 7.74% 22,193.36
12/31/01 6.24% 25,179.79 6.17% 23,562.69
01/31/02 3.36% 26,025.83 -1.04% 23,317.64
02/28/02 3.37% 26,902.91 -2.74% 22,678.74
03/31/02 9.44% 29,442.54 8.04% 24,502.11
04/30/02 3.04% 30,337.59 0.91% 24,725.08
05/31/02 -3.95% 29,139.26 -4.44% 23,627.28
06/30/02 -1.48% 28,708.00 -4.96% 22,455.37
07/31/02 -15.07% 24,381.70 -15.10% 19,064.61
08/31/02 -3.27% 23,584.42 -0.26% 19,015.04
09/30/02 -2.84% 22,914.62 -7.18% 17,649.76
10/31/02 1.46% 23,249.18 3.21% 18,216.32
11/30/02 5.29% 24,479.06 8.92% 19,841.21
12/31/02 -0.65% 24,319.94 -5.57% 18,736.06
01/31/03 -3.15% 23,553.87 -2.77% 18,217.07
02/28/03 -0.07% 23,537.38 -3.02% 17,666.91
03/31/03 1.15% 23,808.06 1.29% 17,894.82
04/30/03 8.52% 25,836.50 9.48% 19,591.25
05/31/03 5.62% 27,288.52 10.73% 21,693.39
06/30/03 3.65% 28,284.55 1.81% 22,086.04
Six month 16.30% 17.88%
One Year -1.48% -1.64%
Three Year 12.65% -3.30%
Five Years 5.45% 0.96%
Ten Years 10.95% 8.24%
Babson Enterprise Fund's average annual compounded total returns for one, five
and ten year periods as of June 30, 2003 were -1.48%, 5.45% and 10.96%,
respectively. Performance data contained in this report is for past periods
only. Past performance is not predictive of future performance. Investment
return and share value will fluctuate, and redemption value may be more or less
than original cost.
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June 30, 2003 2
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SCHEDULE OF INVESTMENTS
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JUNE 30, 2003
BABSON ENTERPRISE FUND
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SHARES COMPANY MARKET VALUE
- --------------------------------------------------------------------------
COMMON STOCKS - 93.43%
BASIC MATERIALS - 10.92%
424,300 Encore Wire Corp.* $ 4,030,850
640,400 Intertape Polymer Group, Inc.* 3,810,380
103,700 New England Business Service, Inc. 3,111,000
394,700 NN, Inc. 4,996,902
370,450 Penford Corp. 4,137,927
411,200 Universal Stainless &
Alloy Products, Inc.* 2,701,584
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22,788,643
=============
BUSINESS SERVICES - 5.63%
221,400 ABM Industries, Inc. 3,409,560
41,800 Integrated Electrical Services, Inc.* 303,050
441,150 Keith (The) Cos., Inc.* 4,407,089
392,400 Remedytemp, Inc. Cl. A* 3,621,852
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11,741,551
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CAPITAL GOODS - 11.06%
121,100 Cuno, Inc.* 4,374,132
83,700 ESCO Technologies, Inc.* 3,682,800
119,100 Lindsay Manufacturing Co. 2,765,502
343,350 LSI Industries, Inc. 3,811,185
180,910 Quixote Corp. 4,618,632
196,300 Terex Corp.* 3,831,776
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23,084,027
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CONSUMER CYCLICAL - 4.74%
183,500 Advanced Marketing Services, Inc. 2,385,500
66,323 Bassett Furniture Industries, Inc. 880,769
188,000 Movado Group, Inc. 4,089,000
88,000 Ultimate Electronics, Inc.* 1,128,160
156,100 Whitehall Jewellers, Inc.* 1,415,827
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9,899,256
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CONSUMER STAPLES - 2.29%
23,500 J & J Snack Foods Corp.* 743,305
143,500 United Natural Foods, Inc.* 4,038,090
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4,781,395
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ENERGY - 9.71%
234,100 Gulf Island Fabrication, Inc.* 3,960,972
148,666 Kaneb Services, LLC 4,339,561
468,800 Matrix Service Co.* 8,053,984
131,600 Tetra Technologies, Inc.* 3,901,940
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20,256,457
=============
FINANCIAL - 23.62%
207,400 Allegiant Bancorp, Inc. 4,199,850
50,000 ASTA Funding, Inc.* 1,200,000
53,600 Bank of the Ozarks, Inc. 2,077,536
56,400 Boston Private Financial Holdings, Inc. 1,188,912
118,961 Capital Corp. of the West* 3,016,851
63,100 Cobiz, Inc. 854,374
24,670 Cooperative Bankshares, Inc. 481,854
386,600 Gold Banc Corporation, Inc. 4,063,166
155,898 Hanmi Financial Corp. 2,723,538
96,600 Hawthorne Financial Corp.* 3,348,156
293,900 Lasalle Hotel Properties 4,343,842
73,600 Mercantile Bank Corp. 2,102,016
100,000 Metrocorp Bancshares, Inc. 1,210,000
212,700 Mid-Atlantic Realty Trust 4,453,938
119,000 Northrim Bancorp, Inc. 2,157,470
40,000 Resource Bancshares Corp. 1,369,600
122,306 Sterling Financial Corp.* 2,979,374
80,000 Taylor Capital Group, Inc. 1,659,200
184,500 UMPQUA Holdings Corp. 3,503,655
154,400 Wilshire State Bank* 2,373,128
-------------
49,306,460
=============
(Continued on next page.
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JUNE 30, 2003 3
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SCHEDULE OF INVESTMENTS
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JUNE 30, 2003
BABSON ENTERPRISE FUND (Continued)
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SHARES COMPANY MARKET VALUE
- ---------------------------------------------------------------------------
HEALTHCARE - 5.49%
94,700 Landauer, Inc. $ 3,961,301
218,175 Penwest Pharmaceutical Co.* 5,316,925
76,050 Young Innovations, Inc.* 2,167,425
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11,445,651
=============
MEDIA & ENTERTAINMENT - 2.12%
748,700 Regent Communications, Inc.* 4,417,330
=============
TECHNOLOGY - 14.35%
209,500 Allied Defense Group, Inc.* 3,865,275
262,200 EDO Corp. 4,640,940
282,500 Ennis Business Forms, Inc. 4,110,375
388,200 Fargo Electronics, Inc.* 3,777,186
222,300 Herley Industries, Inc.* 3,774,654
273,300 Spectrum Control, Inc.* 1,535,946
130,500 Trimble Navigation Ltd.* 2,992,365
853,400 Tyler Technologies, Inc.* 3,626,950
200,400 Zygo Corp.* 1,603,200
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29,926,891
=============
TRANSPORTATION & SERVICES - 1.69%
308,700 Airnet Systems, Inc.* 1,250,235
46,500 Old Dominion Freight Line* 1,005,330
100,400 SCS Transportation, Inc.* 1,268,052
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3,523,617
=============
UTILITIES - 1.81%
95,500 Central Vermont Public Service Co. 1,867,025
78,800 Unitil Corp. 1,899,080
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3,766,105
=============
TOTAL COMMON STOCKS 194,937,383
=============
(Cost $161,500,331)
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PRIN. AMT./
SHARES DESCRIPTION MARKET VALUE
- ---------------------------------------------------------------------------
INVESTMENT COMPANIES - 3.96%
8,270,037 Wells Fargo Prime Investment
Money Market $ 8,270,037
=============
(Cost $8,270,037)
U.S. GOVERNMENT SPONSORED AND
AGENCY OBLIGATIONS - 2.51%
$ 5,230,000 Federal Home Loan Bank
0.95%, 07/01/03 5,229,927
=============
(Cost $5,229,725)
TOTAL INVESTMENTS - 99.90% 208,437,347
(Cost $175,000,093)
Other assets less liabilities - 0.10% 213,761
-------------
TOTAL NET ASSETS - 100.00% $ 208,651,108
=============
For federal income tax purposes, the identified cost of investments owned at
June 30, 2003 was $175,633,708.
Net unrealized appreciation for federal income tax purposes was $32,803,639,
which is comprised of unrealized appreciation of $52,491,314 and unrealized
depreciation of ($19,687,675).
*Non-income producing security
See accompanying Notes to Financial Statements.
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JUNE 30, 2003 4
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BABSON ENTERPRISE FUND II
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The semi-annual period was really a tale of two markets. During the beginning of
the period, equity performance rotated around war with Iraq and featured an
atmosphere of uncertainty that affected all market components. With the war in
Iraq over, however, the second quarter of 2003 saw equity markets surge.
Performance for small companies led the way during this period as evidenced by
the Russell 2000 Index's return of 23.40% for the quarter. This represented the
largest quarterly gain for the Russell 2000 Index since the first quarter of
1991.
For the semi-annual period ended June 30, 2003, the Babson Enterprise II Fund
returned 11.96% versus a return of 17.89% for the Fund's benchmark, the Russell
2000 Index. Underperformance for the period was driven primarily by market
dynamics that favored those areas associated with high beta and high valuations.
This worked against the Fund's strategy of investing in high quality companies
with attractive valuations and earnings characteristics. Areas of difficult
stock selection for the Fund were the consumer discretionary, technology and
producer durables sectors. Areas that were favorable for the Fund include the
financial services and materials and processing sectors.
FUND COMPOSITION
==================================================
TOP TEN EQUITY HOLDINGS: % OF TOTAL
- --------------------------------------------------
PolyMedica Corp. 3.99%
Cuno, Inc. 3.59
Respironics, Inc. 3.46
Harman International Industries, Inc. 3.45
La-Z-Boy, Inc. 3.43
Carlisle Cos., Inc. 3.16
New York Community Bancorp, Inc. 3.14
UCBH Holdings, Inc. 3.00
Alberto-Culver Co., Cl. A 2.81
Mohawk Industries, Inc. 2.70
----------
Total 32.73%
Total Securities in Portfolio 75
- --------------------------------------------------
As of June 30, 2003, schedule of investments. Subject to change.
- --------------------------------------------------
BABSON ENTERPRISE FUND II VERSUS S&P 500 AND RUSSELL 2000
Babson
Enterprise Fund II S&P 500 Index Russell 2000 Index
Time Period Monthly Returns Plot Points Monthly Returns Plot Points Monthly Returns Plot Points
06/30/93 10,000.00 10,000.00 10,000.00
07/31/93 -2.18% 9,782.00 -0.40% 9,960.00 1.38% 10,138.00
08/31/93 4.85% 10,256.43 3.79% 10,337.48 4.32% 10,575.96
09/30/93 3.69% 10,634.89 -0.77% 10,257.89 2.82% 10,874.20
10/31/93 2.95% 10,948.62 2.07% 10,470.22 2.58% 11,154.76
11/30/93 -0.99% 10,840.23 -0.95% 10,370.76 -3.26% 10,791.11
12/31/93 5.99% 11,489.56 1.21% 10,496.24 3.42% 11,160.17
01/31/94 2.10% 11,730.84 3.40% 10,853.11 3.13% 11,509.48
02/28/94 1.17% 11,868.09 -2.71% 10,559.00 -0.36% 11,468.05
03/31/94 -5.45% 11,221.28 -4.36% 10,098.62 -5.27% 10,863.68
04/30/94 -0.70% 11,142.73 1.28% 10,227.89 0.59% 10,927.78
05/31/94 -1.05% 11,025.73 1.64% 10,395.62 -1.12% 10,805.39
06/30/94 -1.95% 10,810.73 -2.45% 10,140.93 -3.37% 10,441.25
07/31/94 1.09% 10,928.56 3.28% 10,473.55 1.64% 10,612.48
08/31/94 2.99% 11,255.33 4.10% 10,902.97 5.57% 11,203.60
09/30/94 -1.51% 11,085.37 -2.45% 10,635.85 -0.34% 11,165.50
10/31/94 -0.94% 10,981.17 2.25% 10,875.15 -0.40% 11,120.84
11/30/94 -3.57% 10,589.14 -3.64% 10,479.30 -4.04% 10,671.56
12/31/94 0.49% 10,641.03 1.48% 10,634.39 2.68% 10,957.56
01/31/95 -1.17% 10,516.53 2.59% 10,909.82 -1.26% 10,819.49
02/28/95 4.44% 10,983.46 3.90% 11,335.30 4.16% 11,269.58
03/31/95 0.90% 11,082.32 2.95% 11,669.70 1.71% 11,462.29
04/30/95 2.61% 11,371.56 2.95% 12,013.95 2.22% 11,716.76
05/31/95 0.52% 11,430.70 4.00% 12,494.51 1.72% 11,918.29
06/30/95 2.24% 11,686.74 2.32% 12,784.38 5.19% 12,536.84
07/31/95 3.54% 12,100.45 3.32% 13,208.82 5.76% 13,258.97
08/31/95 0.81% 12,198.47 0.25% 13,241.85 2.07% 13,533.43
09/30/95 0.11% 12,211.89 4.22% 13,800.65 1.79% 13,775.68
10/31/95 -5.22% 11,574.43 -0.36% 13,750.97 -4.47% 13,159.90
11/30/95 8.97% 12,612.65 4.39% 14,354.64 4.20% 13,712.62
12/31/95 1.13% 12,755.17 1.93% 14,631.68 2.64% 14,074.63
01/31/96 3.64% 13,219.46 3.40% 15,129.16 -0.11% 14,059.15
02/29/96 5.35% 13,926.70 0.93% 15,269.86 3.12% 14,497.79
03/31/96 3.48% 14,411.35 0.96% 15,416.45 2.04% 14,793.55
04/30/96 2.74% 14,806.22 1.47% 15,643.07 5.35% 15,585.00
05/31/96 3.56% 15,333.33 2.58% 16,046.66 3.94% 16,199.05
06/30/96 -2.76% 14,910.13 0.38% 16,107.64 -4.11% 15,533.27
07/31/96 -5.25% 14,127.34 -4.42% 15,395.68 -8.73% 14,177.22
08/31/96 3.68% 14,647.23 2.11% 15,720.53 5.81% 15,000.91
09/30/96 3.08% 15,098.37 5.63% 16,605.60 3.91% 15,587.45
10/31/96 -0.60% 15,007.78 2.76% 17,063.91 -1.54% 15,347.40
11/30/96 5.08% 15,770.17 7.56% 18,353.94 4.12% 15,979.72
12/31/96 3.22% 16,277.97 -1.98% 17,990.54 2.62% 16,398.39
01/31/97 0.74% 16,398.43 6.25% 19,114.94 2.00% 16,726.35
02/28/97 0.54% 16,486.98 0.78% 19,264.04 -2.43% 16,319.90
03/31/97 -0.44% 16,414.44 -4.11% 18,472.29 -4.72% 15,549.60
04/30/97 0.97% 16,573.66 5.97% 19,575.08 0.28% 15,593.14
05/31/97 8.34% 17,955.90 6.09% 20,767.21 11.13% 17,328.66
06/30/97 5.34% 18,914.74 4.48% 21,697.58 4.29% 18,072.06
07/31/97 7.06% 20,250.12 7.96% 23,424.71 4.65% 18,912.41
08/31/97 1.50% 20,553.88 -5.60% 22,112.92 2.29% 19,345.50
09/30/97 5.48% 21,680.23 5.48% 23,324.71 7.32% 20,761.59
10/31/97 -2.54% 21,129.55 -3.34% 22,545.66 -4.39% 19,850.16
11/30/97 0.98% 21,336.62 4.63% 23,589.53 -0.65% 19,721.13
12/31/97 1.67% 21,692.94 1.72% 23,995.27 1.75% 20,066.25
01/31/98 -4.76% 20,660.36 1.11% 24,261.62 -1.58% 19,749.21
02/28/98 7.48% 22,205.75 7.21% 26,010.88 7.39% 21,208.67
03/31/98 6.61% 23,673.55 5.12% 27,342.64 4.12% 22,082.47
04/30/98 1.14% 23,943.43 1.01% 27,618.80 0.55% 22,203.92
05/31/98 -3.55% 23,093.44 -1.72% 27,143.75 -5.39% 21,007.13
06/30/98 -3.16% 22,363.69 4.06% 28,245.79 0.21% 21,051.25
07/31/98 -5.98% 21,026.34 -1.06% 27,946.38 -8.10% 19,346.10
08/31/98 -17.75% 17,294.16 -14.46% 23,905.34 -19.42% 15,589.08
09/30/98 5.12% 18,179.62 6.41% 25,437.67 7.83% 16,809.71
10/31/98 4.68% 19,030.43 8.13% 27,505.75 4.08% 17,495.55
11/30/98 5.84% 20,141.81 6.06% 29,172.60 5.24% 18,412.31
12/31/98 3.05% 20,756.13 5.76% 30,852.94 6.19% 19,552.04
01/31/99 -6.21% 19,467.18 4.18% 32,142.59 1.33% 19,812.08
02/28/99 -6.10% 18,279.68 -3.11% 31,142.96 -8.10% 18,207.30
03/31/99 4.15% 19,038.29 4.00% 32,388.68 1.56% 18,491.33
04/30/99 5.42% 20,070.16 3.87% 33,642.12 8.96% 20,148.16
05/31/99 3.82% 20,836.84 -2.36% 32,848.17 1.46% 20,442.32
06/30/99 7.32% 22,362.10 5.55% 34,671.24 4.52% 21,366.31
07/31/99 -0.82% 22,178.73 -3.12% 33,589.50 -2.74% 20,780.88
08/31/99 -3.17% 21,475.66 -0.50% 33,421.55 -3.70% 20,011.98
09/30/99 -3.19% 20,790.59 -2.74% 32,505.80 0.02% 20,015.99
10/31/99 -2.90% 20,187.66 6.33% 34,563.42 0.40% 20,096.05
11/30/99 5.61% 21,320.19 2.03% 35,265.05 5.97% 21,295.78
12/31/99 3.34% 22,032.29 5.89% 37,342.17 11.32% 23,706.47
01/31/00 -6.74% 20,547.31 -5.02% 35,467.59 -1.61% 23,324.79
02/29/00 0.00% 20,547.31 -1.89% 34,797.25 16.51% 27,175.71
03/31/00 10.68% 22,741.76 9.78% 38,200.42 -6.59% 25,384.84
04/30/00 -1.77% 22,339.23 -3.01% 37,050.59 -6.02% 23,856.67
05/31/00 -0.63% 22,198.50 -2.05% 36,291.05 -5.83% 22,465.82
06/30/00 6.40% 23,619.20 2.46% 37,183.81 8.72% 24,424.84
07/31/00 4.37% 24,651.36 -1.56% 36,603.74 -3.22% 23,638.36
08/31/00 4.19% 25,684.25 6.21% 38,876.84 7.63% 25,441.97
09/30/00 -3.62% 24,754.48 -5.28% 36,824.14 -2.94% 24,693.98
10/31/00 -0.23% 24,697.54 -0.42% 36,669.48 -4.46% 23,592.63
11/30/00 -5.05% 23,450.32 -7.88% 33,779.92 -10.26% 21,172.02
12/31/00 9.55% 25,689.82 0.49% 33,945.45 8.59% 22,990.70
01/31/01 0.82% 25,900.48 3.55% 35,150.51 5.21% 24,188.51
02/28/01 -2.94% 25,139.01 -9.12% 31,944.78 -6.56% 22,601.75
03/31/01 -2.35% 24,548.24 -6.34% 29,919.48 -4.89% 21,496.52
04/30/01 6.29% 26,092.32 7.77% 32,244.23 7.82% 23,177.55
05/31/01 2.19% 26,663.75 0.67% 32,460.26 2.46% 23,747.72
06/30/01 2.35% 27,290.34 -2.43% 31,671.48 3.45% 24,567.01
07/31/01 -0.76% 27,082.94 -0.98% 31,361.10 -5.41% 23,237.94
08/31/01 -6.77% 25,249.42 -6.26% 29,397.89 -3.23% 22,487.35
09/30/01 -7.26% 23,416.31 -8.07% 27,025.48 -13.46% 19,460.56
10/31/01 2.89% 24,093.05 1.91% 27,541.67 5.85% 20,599.00
11/30/01 4.67% 25,218.19 7.67% 29,654.12 7.74% 22,193.36
12/31/01 4.67% 26,395.88 0.88% 29,915.07 6.17% 23,562.69
01/31/02 1.42% 26,770.70 -1.46% 29,478.31 -1.04% 23,317.64
02/28/02 0.04% 26,781.41 -1.93% 28,909.38 -2.74% 22,678.74
03/31/02 7.72% 28,848.94 3.76% 29,996.37 8.04% 24,502.11
04/30/02 4.94% 30,274.07 -6.06% 28,178.59 0.91% 24,725.08
05/31/02 -2.76% 29,438.51 -0.74% 27,970.07 -4.44% 23,627.28
06/30/02 -4.59% 28,087.28 -7.12% 25,978.60 -4.96% 22,455.37
07/31/02 -12.41% 24,601.65 -7.80% 23,952.27 -15.10% 19,064.61
08/31/02 -1.56% 24,217.86 0.66% 24,110.36 -0.26% 19,015.04
09/30/02 -6.07% 22,747.84 -10.87% 21,489.56 -7.18% 17,649.76
10/31/02 2.55% 23,327.91 8.80% 23,380.64 3.21% 18,216.32
11/30/02 5.50% 24,610.94 5.89% 24,757.76 8.92% 19,841.21
12/31/02 -3.43% 23,766.79 -5.87% 23,304.48 -5.57% 18,736.06
01/31/03 -2.26% 23,229.66 -2.62% 22,693.90 -2.77% 18,217.07
02/28/03 -3.11% 22,507.22 -1.50% 22,353.50 -3.02% 17,666.91
03/31/03 -0.34% 22,430.69 0.97% 22,570.32 1.29% 17,894.82
04/30/03 8.80% 24,404.59 8.24% 24,430.12 9.48% 19,591.25
05/31/03 5.80% 25,820.06 5.27% 25,717.59 10.73% 21,693.39
06/30/03 3.07% 26,612.74 1.28% 26,046.77 1.81% 22,086.04
Six month 11.97% 11.77% 17.88%
One Year -5.25% 0.26% -1.64%
Three Year 4.06% -11.19% -3.30%
Five Years 3.54% -1.61% 0.96%
Ten Years 10.28% 10.04% 8.24%
Babson Enterprise Fund II's average annual compounded total returns for one,
five and ten year periods as of June 30, 2003 were -5.22%, 3.54% and 10.28%,
respectively. Performance data contained in this report is for past periods
only. Past performance is not predictive of future performance. Investment
return and share value will fluctuate, and redemption value may be more or less
than original cost.
- --------------------------------------------------------------------------------
JUNE 30, 2003 5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON ENTERPRISE FUND II
- --------------------------------------------------------------------
SHARES COMPANY MARKET VALUE
- --------------------------------------------------------------------
COMMON STOCKS - 99.44%
BASIC MATERIALS - 11.66%
53,900 ElkCorp $ 1,212,750
11,000 Georgia Gulf Corp. 217,800
139,600 Interface, Inc., Cl. A 647,744
131,700 Intertape Polymer Group, Inc.* 783,615
25,887 Mohawk Industries, Inc.* 1,437,505
27,800 New England Business Service, Inc. 834,000
50,800 Spartech Corp. 1,077,468
------------
6,210,882
============
CAPITAL GOODS - 10.97%
26,700 A.O. Smith Corp. 751,605
52,900 Cuno, Inc.* 1,910,748
37,900 Gardner Denver, Inc.* 775,434
27,000 Herman Miller, Inc. 545,670
28,900 Lindsay Manufacturing Co. 671,058
17,100 Roper Industries, Inc. 636,120
68,891 Surebeam Corp.* 182,561
10,000 Tennant Co. 367,500
------------
5,840,696
============
CONSUMER CYCLICAL - 18.08%
26,300 ADVO, Inc.* 1,167,720
23,750 Ann Taylor Stores Corp.* 687,563
34,100 BJ's Wholesale Club, Inc.* 513,546
95,700 Enesco Group, Inc.* 708,180
58,600 Huffy Corp.* 410,200
81,600 La-Z-Boy, Inc. 1,826,208
46,800 Movado Group, Inc. 1,017,900
18,200 Red Robin Gourmet Burgers, Inc.* 345,072
24,000 SCP Pool Corp.* 825,600
83,700 Stein Mart, Inc.* 501,363
79,800 Stride Rite Corp. 794,808
26,900 Too, Inc.* 544,725
22,400 Ultimate Electronics, Inc.* 287,168
------------
9,630,053
============
CONSUMER STAPLES - 2.80%
30,000 Alberto-Culver Co., Cl. A 1,493,400
============
DIVERSIFIED - 3.16%
39,900 Carlisle Cos., Inc. 1,682,184
============
ENERGY - 1.70%
111,600 Newpark Resources, Inc.* 611,568
14,100 Prima Energy Corp.* 294,408
------------
905,976
============
FINANCIAL - 21.27%
6,600 BancFirst Corp. 342,276
18,400 Banner Corp. 377,016
82,408 Cash America International, Inc. 1,089,434
16,284 Commerce Bancorp, Inc. 604,136
13,800 Delphi Financial Group, Inc., Cl. A 645,840
7,200 East-West Bancorp, Inc. 260,208
22,500 First Niagara Financial Group, Inc. 314,100
18,144 FNB Corp. 549,037
46,000 Gold Banc Corporation, Inc. 483,460
21,000 Hub International Ltd. 359,100
57,378 New York Community Bancorp, Inc. 1,669,126
6,600 Platinum Underwriters Holdings Ltd. 179,124
7,900 Prentiss Properties Trust 236,921
9,500 ProAssurance Corp.* 256,405
16,500 Republic Bancshares, Inc. 412,665
26,400 Scottish Annuity & Life Holdings Ltd. 533,544
15,700 SL Green Realty Corp. 547,773
55,600 UCBH Holdings, Inc. 1,594,608
5,400 United Fire & Casualty Co. 175,446
41,450 W Holding Co., Inc. 701,334
------------
11,331,553
============
- --------------------------------------------------------------------------------
JUNE 30, 2003 6
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON ENTERPRISE FUND II (Continued)
- --------------------------------------------------------------------
SHARES COMPANY MARKET VALUE
- --------------------------------------------------------------------
HEALTHCARE - 10.40%
8,400 ICU Medical, Inc.* $ 261,660
46,400 PolyMedica Corp. 2,124,656
167,475 PSS World Medical, Inc.* 962,981
49,100 Respironics, Inc.* 1,842,232
25,600 Serologicals Corp.* 348,928
------------
5,540,457
============
MEDIA & ENTERTAINMENT - 1.35%
35,800 Salem Communications Corp., Cl. A* 716,394
============
TECHNOLOGY - 9.74%
92,800 Aeroflex, Inc.* 718,272
15,800 Benchmark Electronics, Inc.* 486,008
51,900 Computer Network Technologies Corp.* 420,390
42,200 Cubic Corp. 937,684
27,300 MKS Instruments, Inc.* 493,311
39,000 PAXAR Corp.* 429,000
43,500 Skyworks Solutions, Inc.* 294,495
23,200 Technitrol, Inc.* 349,160
72,000 Titan Corp.* 740,880
39,800 Zygo Corp.* 318,400
------------
5,187,600
============
TRANSPORTATION & SERVICES - 5.24%
65,500 Collins & Aikman Corp.* 193,225
23,200 Harman International Industries, Inc. 1,836,048
54,500 Wabtec Corp. 758,095
------------
2,787,368
============
UTILITIES - 3.07%
6,200 Black Hills Corp. 190,340
25,700 Energen Corp. 855,810
14,700 WPS Resources Corp. 590,940
------------
1,637,090
============
TOTAL COMMON STOCKS 52,963,653
============
(Cost $41,136,040)
- --------------------------------------------------------------------
SHARES DESCRIPTION MARKET VALUE
- --------------------------------------------------------------------
INVESTMENT COMPANIES - 0.48%
253,879 Wells Fargo Prime Investment
Money Market $ 253,879
============
(Cost $253,879)
TOTAL INVESTMENTS - 99.92% 53,217,532
(Cost $41,389,919)
Other assets less liabilities - 0.08% 43,715
------------
TOTAL NET ASSETS - 100.00% $ 53,261,247
============
For federal income tax purposes, the identified cost of investments owned at
June 30, 2003 was $41,391,819.
Net unrealized appreciation for federal income tax purposes was $11,825,713,
which is comprised of unrealized appreciation of $15,262,606 and unrealized
depreciation of ($3,436,893).
*Non-income producing security
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BABSON GROWTH FUND
- --------------------------------------------------------------------------------
The semi-annual period was really a tale of two markets. During the beginning of
the period, equity performance rotated around war with Iraq and featured an
atmosphere of uncertainty that affected all market components. With the war in
Iraq over, however, the second quarter of 2003 saw equity markets surge.
Performance for small companies led the way during this period as evidenced by
the Russell 2000 Index's return of 23.40% for the quarter. This represented the
largest quarterly gain for the Russell 2000 Index since the first quarter of
1991.
For the semi-annual period ended June 30, 2003, the Babson Growth Fund returned
5.35% versus a return of 11.75% for the Fund's benchmark, the S&P 500 Index.
While equity market performance was strong during the period, it was led by the
areas of the market that to date have exhibited the weakest fundamentals and
highest risk profiles. This worked against the Fund's strategy of seeking
companies with sustainable, long-term growth potential. The Fund was also hurt
during the period by a market that favored small cap stocks significantly over
large cap stocks. On a relative basis, the Fund experienced weak stock selection
in the consumer discretionary, financial services and utilities sectors. On a
positive note, however, the Fund realized highly favorable results in the
technology sector, an area that has challenged investors for some time.
FUND COMPOSITION
===============================================
Top Ten Equity Holdings: % of Total
- -----------------------------------------------
Microsoft Corp. 4.50%
American International Group, Inc. 4.46
Amgen, Inc. 4.19
Viacom, Inc., Cl. A 4.09
Berkshire Hathaway, Inc., Cl. B 3.96
Pfizer, Inc. 3.93
Freddie Mac 3.89
Clear Channel Communications, Inc. 3.69
Wal-Mart Stores, Inc. 3.59
Fiserv, Inc. 3.43
----------
Total 39.73%
Total Securities in Portfolio 41
- -----------------------------------------------
As of June 30, 2003, schedule of investments. Subject to change.
- ----------------------------------------------------------------
BABSON GROWTH FUND VERSUS S&P 500 AND RUSSELL 1000 GROWTH
Babson
Growth Fund S&P 500 Index Russell 1000 Growth Index
Time Period Monthly Returns Plot Points Monthly Returns Plot Points Monthly Returns Plot Points
06/30/93 10,000.00 10,000.00 10,000.00
07/31/93 -0.41% 9,959.00 -0.40% 9,960.00 -1.79% 9,821.00
08/31/93 4.41% 10,398.19 3.79% 10,337.48 4.10% 10,223.66
09/30/93 0.39% 10,438.74 -0.77% 10,257.89 -0.75% 10,146.98
10/31/93 1.64% 10,609.94 2.07% 10,470.22 2.78% 10,429.07
11/30/93 -0.38% 10,569.62 -0.95% 10,370.76 -0.66% 10,360.24
12/31/93 1.49% 10,727.11 1.21% 10,496.24 1.73% 10,539.47
01/31/94 2.83% 11,030.69 3.40% 10,853.11 2.31% 10,782.93
02/28/94 -2.38% 10,768.16 -2.71% 10,559.00 -1.82% 10,586.68
03/31/94 -3.50% 10,391.27 -4.36% 10,098.62 -4.83% 10,075.35
04/30/94 0.79% 10,473.36 1.28% 10,227.89 0.47% 10,122.70
05/31/94 1.02% 10,580.19 1.64% 10,395.62 1.51% 10,275.55
06/30/94 -1.88% 10,381.28 -2.45% 10,140.93 -2.95% 9,972.42
07/31/94 2.80% 10,671.96 3.28% 10,473.55 3.42% 10,313.48
08/31/94 2.97% 10,988.92 4.10% 10,902.97 5.57% 10,887.94
09/30/94 -2.97% 10,662.55 -2.45% 10,635.85 -1.37% 10,738.78
10/31/94 0.91% 10,759.57 2.25% 10,875.15 2.36% 10,992.21
11/30/94 -3.36% 10,398.05 -3.64% 10,479.30 -3.20% 10,640.46
12/31/94 2.58% 10,666.32 1.48% 10,634.39 1.68% 10,819.22
01/31/95 1.67% 10,844.45 2.59% 10,909.82 2.13% 11,049.67
02/28/95 3.12% 11,182.80 3.90% 11,335.30 4.19% 11,512.65
03/31/95 3.67% 11,593.21 2.95% 11,669.70 2.92% 11,848.82
04/30/95 0.92% 11,699.86 2.95% 12,013.95 2.19% 12,108.31
05/31/95 4.57% 12,234.55 4.00% 12,494.51 3.49% 12,530.89
06/30/95 2.01% 12,480.46 2.32% 12,784.38 3.86% 13,014.58
07/31/95 3.65% 12,936.00 3.32% 13,208.82 4.16% 13,555.99
08/31/95 0.07% 12,945.05 0.25% 13,241.85 0.11% 13,570.90
09/30/95 3.80% 13,436.97 4.22% 13,800.65 4.61% 14,196.52
10/31/95 -0.55% 13,363.06 -0.36% 13,750.97 0.07% 14,206.46
11/30/95 3.96% 13,892.24 4.39% 14,354.64 3.89% 14,759.09
12/31/95 0.91% 14,018.66 1.93% 14,631.68 0.57% 14,843.21
01/31/96 2.66% 14,391.55 3.40% 15,129.16 3.35% 15,340.46
02/29/96 1.13% 14,554.18 0.93% 15,269.86 1.83% 15,621.19
03/31/96 0.53% 14,631.32 0.96% 15,416.45 0.13% 15,641.50
04/30/96 1.24% 14,812.74 1.47% 15,643.07 2.63% 16,052.87
05/31/96 2.84% 15,233.43 2.58% 16,046.66 3.49% 16,613.12
06/30/96 0.76% 15,349.20 0.38% 16,107.64 0.14% 16,636.38
07/31/96 -4.16% 14,710.67 -4.42% 15,395.68 -5.86% 15,661.48
08/31/96 1.66% 14,954.87 2.11% 15,720.53 2.58% 16,065.55
09/30/96 5.77% 15,817.77 5.63% 16,605.60 7.28% 17,235.12
10/31/96 2.69% 16,243.27 2.76% 17,063.91 0.60% 17,338.53
11/30/96 6.82% 17,351.06 7.56% 18,353.94 7.51% 18,640.66
12/31/96 -1.59% 17,075.17 -1.98% 17,990.54 -1.96% 18,275.30
01/31/97 6.74% 18,226.04 6.25% 19,114.94 7.01% 19,556.40
02/28/97 -0.06% 18,215.11 0.78% 19,264.04 -0.68% 19,423.41
03/31/97 -5.35% 17,240.60 -4.11% 18,472.29 -5.41% 18,372.61
04/30/97 5.52% 18,192.28 5.97% 19,575.08 6.64% 19,592.55
05/31/97 6.45% 19,365.68 6.09% 20,767.21 7.22% 21,007.13
06/30/97 3.12% 19,969.89 4.48% 21,697.58 4.00% 21,847.42
07/31/97 8.54% 21,675.32 7.96% 23,424.71 8.84% 23,778.73
08/31/97 -4.92% 20,608.89 -5.60% 22,112.92 -5.85% 22,387.67
09/30/97 4.25% 21,484.77 5.48% 23,324.71 4.92% 23,489.15
10/31/97 -2.66% 20,913.28 -3.34% 22,545.66 -3.70% 22,620.05
11/30/97 3.54% 21,653.61 4.63% 23,589.53 4.25% 23,581.40
12/31/97 0.93% 21,854.98 1.72% 23,995.27 1.12% 23,845.51
01/31/98 2.93% 22,495.33 1.11% 24,261.62 2.99% 24,558.49
02/28/98 7.74% 24,236.47 7.21% 26,010.88 7.52% 26,405.29
03/31/98 1.60% 24,624.26 5.12% 27,342.64 3.99% 27,458.86
04/30/98 3.63% 25,518.12 1.01% 27,618.80 1.38% 27,837.79
05/31/98 -4.03% 24,489.74 -1.72% 27,143.75 -2.84% 27,047.20
06/30/98 3.34% 25,307.70 4.06% 28,245.79 6.13% 28,705.19
07/31/98 0.05% 25,320.35 -1.06% 27,946.38 -0.66% 28,515.74
08/31/98 -15.69% 21,347.59 -14.46% 23,905.34 -15.01% 24,235.53
09/30/98 7.25% 22,895.29 6.41% 25,437.67 7.68% 26,096.82
10/31/98 7.72% 24,662.80 8.13% 27,505.75 8.04% 28,195.00
11/30/98 7.81% 26,588.97 6.06% 29,172.60 7.61% 30,340.64
12/31/98 8.70% 28,902.21 5.76% 30,852.94 9.02% 33,077.36
01/31/99 0.10% 28,931.11 4.18% 32,142.59 5.87% 35,019.01
02/28/99 -5.47% 27,348.58 -3.11% 31,142.96 -4.57% 33,418.64
03/31/99 5.17% 28,762.50 4.00% 32,388.68 5.27% 35,179.80
04/30/99 0.93% 29,029.99 3.87% 33,642.12 0.13% 35,225.53
05/31/99 -3.04% 28,147.48 -2.36% 32,848.17 -3.07% 34,144.11
06/30/99 5.24% 29,622.41 5.55% 34,671.24 7.00% 36,534.20
07/31/99 -1.85% 29,074.39 -3.12% 33,589.50 -3.18% 35,372.41
08/31/99 -1.73% 28,571.41 -0.50% 33,421.55 1.63% 35,948.98
09/30/99 -3.47% 27,579.98 -2.74% 32,505.80 -2.10% 35,194.05
10/31/99 5.58% 29,118.94 6.33% 34,563.42 7.55% 37,851.20
11/30/99 2.85% 29,948.83 2.03% 35,265.05 5.39% 39,891.38
12/31/99 8.64% 32,536.41 5.89% 37,342.17 10.40% 44,040.09
01/31/00 -3.91% 31,264.24 -5.02% 35,467.59 -4.69% 41,974.61
02/29/00 11.71% 34,925.28 -1.89% 34,797.25 4.89% 44,027.16
03/31/00 7.92% 37,691.36 9.78% 38,200.42 7.16% 47,179.51
04/30/00 -5.17% 35,742.72 -3.01% 37,050.59 -4.76% 44,933.76
05/31/00 -7.47% 33,072.73 -2.05% 36,291.05 -5.04% 42,669.10
06/30/00 8.10% 35,751.63 2.46% 37,183.81 7.58% 45,903.42
07/31/00 -3.31% 34,568.25 -1.56% 36,603.74 -4.17% 43,989.25
08/31/00 8.87% 37,634.45 6.21% 38,876.84 9.05% 47,970.27
09/30/00 -5.14% 35,700.04 -5.28% 36,824.14 -9.46% 43,432.29
10/31/00 -3.84% 34,329.16 -0.42% 36,669.48 -4.73% 41,377.94
11/30/00 -12.13% 30,165.03 -7.88% 33,779.92 -14.74% 35,278.83
12/31/00 -0.61% 29,981.03 0.49% 33,945.45 -3.16% 34,164.02
01/31/01 4.71% 31,393.13 3.55% 35,150.51 6.91% 36,524.75
02/28/01 -14.23% 26,925.89 -9.12% 31,944.78 -16.98% 30,322.85
03/31/01 -8.76% 24,567.18 -6.34% 29,919.48 -10.88% 27,023.72
04/30/01 10.81% 27,222.89 7.77% 32,244.23 12.65% 30,442.23
05/31/01 -2.24% 26,613.10 0.67% 32,460.26 -1.47% 29,994.73
06/30/01 -0.95% 26,360.28 -2.43% 31,671.48 -2.32% 29,298.85
07/31/01 -3.20% 25,516.75 -0.98% 31,361.10 -2.50% 28,566.38
08/31/01 -8.67% 23,304.45 -6.26% 29,397.89 -8.18% 26,229.65
09/30/01 -10.04% 20,964.68 -8.07% 27,025.48 -9.98% 23,611.93
10/31/01 4.02% 21,807.46 1.91% 27,541.67 5.25% 24,851.55
11/30/01 7.34% 23,408.13 7.67% 29,654.12 9.61% 27,239.79
12/31/01 1.86% 23,843.52 0.88% 29,915.07 -0.19% 27,188.03
01/31/02 -0.09% 23,822.06 -1.46% 29,478.31 -1.77% 26,706.80
02/28/02 -4.52% 22,745.30 -1.93% 28,909.38 -4.15% 25,598.47
03/31/02 4.92% 23,864.37 3.76% 29,996.37 3.46% 26,484.18
04/30/02 -7.76% 22,012.50 -6.06% 28,178.59 -8.16% 24,323.07
05/31/02 -1.57% 21,666.90 -0.74% 27,970.07 -2.42% 23,734.45
06/30/02 -8.65% 19,792.71 -7.12% 25,978.60 -9.25% 21,539.02
07/31/02 -9.47% 17,918.34 -7.80% 23,952.27 -5.50% 20,354.37
08/31/02 -0.24% 17,875.34 0.66% 24,110.36 0.30% 20,415.43
09/30/02 -10.00% 16,087.80 -10.87% 21,489.56 -10.37% 18,298.35
10/31/02 10.58% 17,789.89 8.80% 23,380.64 9.17% 19,976.31
11/30/02 4.24% 18,544.19 5.89% 24,757.76 5.43% 21,061.02
12/31/02 -4.30% 17,746.79 -5.87% 23,304.48 -6.91% 19,605.71
01/31/03 -3.52% 17,122.10 -2.62% 22,693.90 -2.43% 19,129.29
02/28/03 -1.38% 16,885.81 -1.50% 22,353.50 -0.46% 19,041.29
03/31/03 0.38% 16,949.98 0.97% 22,570.32 1.86% 19,395.46
04/30/03 7.50% 18,221.23 8.24% 24,430.12 7.39% 20,828.79
05/31/03 3.55% 18,868.08 5.27% 25,717.59 4.99% 21,868.14
06/30/03 -0.90% 18,698.27 1.28% 26,046.77 1.38% 22,169.92
Six month 5.36% 11.77% 13.08%
One Year -5.53% 0.26% 2.93%
Three Year -19.43% -11.19% -21.54%
Five Years -5.87% -1.61% -5.03%
Ten Years 6.45% 10.04% 8.28%
Babson Growth Fund's average annual compounded total returns for one, five and
ten year periods as of June 30, 2003 were -5.54%, -5.88% and 6.46%,
respectively. Performance data contained in this report is for past periods
only. Past performance is not predictive of future performance. Investment
return and share value will fluctuate, and redemption value may be more or less
than original cost.
- --------------------------------------------------------------------------------
JUNE 30, 2003 8
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON GROWTH FUND
- --------------------------------------------------------------------------------
SHARES COMPANY MARKET VALUE
- -----------------------------------------------------------------
COMMON STOCKS - 99.05%
CAPITAL GOODS - 8.50%
74,200 Air Products & Chemical, Inc. $ 3,086,720
115,100 General Electric Co. 3,301,068
116,600 Lockheed Martin Corp. 5,546,662
104,800 Parker-Hannifin Corp. 4,400,552
-------------
16,335,002
=============
CONSUMER CYCLICAL - 12.57%
165,800 Clear Channel Communications, Inc.* 7,028,262
14,200 New York Times Co., Cl. A 646,100
178,100 Viacom, Inc., Cl. A* 7,782,970
127,400 Wal-Mart Stores, Inc. 6,837,558
61,400 Walgreen Co. 1,848,140
-------------
24,143,030
=============
CONSUMER STAPLES - 7.91%
74,100 Anheuser Busch Companies, Inc. 3,782,805
118,100 Gillette Co. 3,762,666
89,600 PepsiCo, Inc. 3,987,200
41,200 Procter & Gamble Co. 3,674,216
-------------
15,206,887
=============
ENERGY - 6.42%
109,000 BP Amoco PLC ADR 4,580,180
167,774 Exxon Mobil Corp. 6,024,764
37,000 Royal Dutch Petroleum Co. ADR 1,724,940
-------------
12,329,884
=============
FINANCIAL - 20.83%
131,700 American Express Co. 5,506,377
153,918 American International Group, Inc. 8,493,195
3,100 Berkshire Hathaway, Inc., Cl. B* 7,533,000
121,166 Citigroup, Inc. 5,185,905
48,400 Fifth Third Bancorp 2,775,256
145,800 Freddie Mac 7,402,266
61,900 Wells Fargo & Co. 3,119,760
-------------
40,015,759
=============
HEALTHCARE - 18.03%
120,100 Amgen, Inc.* 7,979,444
97,500 Johnson & Johnson, Inc. 5,040,750
127,100 Medtronic, Inc. 6,096,987
23,500 Merck & Co., Inc. 1,422,925
219,100 Pfizer, Inc. 7,482,265
43,500 Stryker Corp. 3,017,595
79,200 Wyeth 3,607,560
-------------
34,647,526
=============
TECHNOLOGY - 22.05%
118,200 Analog Devices, Inc.* 4,115,724
167,900 Automatic Data Processing, Inc. 5,685,094
183,050 Fiserv, Inc.* 6,518,411
150,700 Linear Technology Corp. 4,854,047
141,900 Maxim Integrated Products, Inc. 4,851,561
90,200 Microchip Technology, Inc. 2,221,626
334,500 Microsoft Corp. 8,566,545
66,600 Molex, Inc. 1,797,534
86,100 Symantec Corp.* 3,776,346
-------------
42,386,888
=============
TELECOMMUNICATION SERVICES - 0.27%
22,200 BCE, Inc. 513,042
=============
UTILITIES - 2.47%
241,100 Vodafone Group PLC ADR 4,737,615
=============
TOTAL COMMON STOCKS 190,315,633
=============
TOTAL INVESTMENTS - 99.05% 190,315,633
(Cost $152,260,912)
Other assets less liabilities - 0.95% 1,829,903
-------------
Total Net Assets - 100.00% $ 192,145,536
=============
For federal income tax purposes, the identified cost of investments owned at
June 30, 2003 was $155,878,164.
Net unrealized appreciation for federal income tax purposes was $34,437,469,
which is comprised of unrealized appreciation of $44,235,316 and unrealized
depreciation of ($9,797,847).
*Non-income producing security
ADR American Depositary Receipt
- --------------------------------------------------------------------------------
JUNE 30, 2003 9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHADOW STOCK FUND
- --------------------------------------------------------------------------------
The semi-annual period was really a tale of two markets. During the beginning of
the period, equity performance rotated around war with Iraq and featured an
atmosphere of uncertainty that affected all market components. With the war in
Iraq over, however, the second quarter of 2003 saw equity markets surge.
Performance for small companies led the way during this period as evidenced by
the Russell 2000 Index's return of 23.40% for the quarter. This represented the
largest quarterly gain for the Russell 2000 Index since the first quarter of
1991.
For the semi-annual period ended June 30, 2003, the Babson Shadow Stock Fund
returned 17.27%, outperforming its benchmark, the Russell 2000 Value Index,
which returned 16.49% for the same time period. The period featured a
performance pattern that rewarded the smallest of small cap stocks and this
played very much to the favor of the Fund's investment strategy, which
emphasizes stocks of this nature. The Fund's prescribed methodology of
overweighting consumer discretionary and technology stocks and underweighting
financial services stocks also worked well, as each of these weightings added
relative value during the period. On a stock selection basis, the Fund's most
favorable relative results were realized in the financial services and other
energy categories. With respect to areas of weakness, the Fund's technology and
utilities holdings underperformed the benchmark's holdings in these areas.
FUND COMPOSITION
===============================================
TOP TEN EQUITY HOLDINGS: % OF TOTAL
- -----------------------------------------------
CompuCredit Corp. 1.45%
M/I Schottenstein Homes, Inc. 1.43
Nam Tai Electronics, Inc. 1.43
Meritage Corp. 1.39
Stewart Information Services Corp. 1.36
CSK Auto Corp. 1.33
Imagistics International, Inc. 1.26
Finish (The) Line, Inc., Cl. A 1.21
URS Corp. 1.20
Isle of Capris Casinos, Inc. 1.17
-----------
Total 13.23%
Total Securities in Portfolio 274
- -----------------------------------------------
As of June 30, 2003, schedule of investments. Subject to change.
- ----------------------------------------------------------------
SHADOW STOCK FUND VERSUS RUSSELL 2000 AND RUSSELL 2000 VALUE
Babson
Shadow Stock Fund Russell 2000 Index Russell 2000 Value Index
Time Period Monthly Returns Plot Points Monthly Returns Plot Points Monthly Returns Plot Points
06/30/93 10,000.00 10,000.00 10,000.00
07/31/93 2.23% 10,223.00 1.38% 10,138.00 1.72% 10,172.00
08/31/93 2.85% 10,514.36 4.32% 10,575.96 3.91% 10,569.73
09/30/93 2.12% 10,737.26 2.82% 10,874.20 2.40% 10,823.40
10/31/93 2.08% 10,960.59 2.58% 11,154.76 2.29% 11,071.25
11/30/93 -0.78% 10,875.10 -3.26% 10,791.11 -2.54% 10,790.04
12/31/93 1.67% 11,056.72 3.42% 11,160.17 2.94% 11,107.27
01/31/94 2.84% 11,370.73 3.13% 11,509.48 3.56% 11,502.69
02/28/94 -0.32% 11,334.34 -0.36% 11,468.05 -0.29% 11,469.33
03/31/94 -3.33% 10,956.91 -5.27% 10,863.68 -4.47% 10,956.65
04/30/94 -0.82% 10,867.06 0.59% 10,927.78 0.98% 11,064.03
05/31/94 -1.16% 10,741.00 -1.12% 10,805.39 -0.14% 11,048.54
06/30/94 -2.91% 10,428.44 -3.37% 10,441.25 -2.60% 10,761.28
07/31/94 0.10% 10,438.87 1.64% 10,612.48 1.85% 10,960.36
08/31/94 2.38% 10,687.31 5.57% 11,203.60 3.93% 11,391.10
09/30/94 2.12% 10,913.88 -0.34% 11,165.50 -1.06% 11,270.36
10/31/94 -0.30% 10,881.14 -0.40% 11,120.84 -1.83% 11,064.11
11/30/94 -1.59% 10,708.13 -4.04% 10,671.56 -4.04% 10,617.12
12/31/94 -1.21% 10,578.56 2.68% 10,957.56 3.00% 10,935.63
01/31/95 1.47% 10,734.07 -1.26% 10,819.49 -0.48% 10,883.14
02/28/95 3.42% 11,101.17 4.16% 11,269.58 3.70% 11,285.82
03/31/95 0.70% 11,178.88 1.71% 11,462.29 0.49% 11,341.12
04/30/95 2.29% 11,434.88 2.22% 11,716.76 2.97% 11,677.95
05/31/95 2.53% 11,724.18 1.72% 11,918.29 2.14% 11,927.86
06/30/95 3.32% 12,113.42 5.19% 12,536.84 3.42% 12,335.79
07/31/95 2.56% 12,423.53 5.76% 13,258.97 3.65% 12,786.05
08/31/95 1.57% 12,618.58 2.07% 13,533.43 2.97% 13,165.79
09/30/95 2.18% 12,893.66 1.79% 13,775.68 1.49% 13,361.96
10/31/95 -2.32% 12,594.53 -4.47% 13,159.90 -3.99% 12,828.82
11/30/95 2.19% 12,870.35 4.20% 13,712.62 3.97% 13,338.13
12/31/95 1.62% 13,078.85 2.64% 14,074.63 3.10% 13,751.61
01/31/96 0.46% 13,139.01 -0.11% 14,059.15 0.66% 13,842.37
02/29/96 2.65% 13,487.20 3.12% 14,497.79 1.57% 14,059.69
03/31/96 2.67% 13,847.30 2.04% 14,793.55 2.10% 14,354.95
04/30/96 1.56% 14,063.32 5.35% 15,585.00 2.73% 14,746.84
05/31/96 3.67% 14,579.45 3.94% 16,199.05 2.53% 15,119.93
06/30/96 -2.69% 14,187.26 -4.11% 15,533.27 -1.18% 14,941.52
07/31/96 -4.77% 13,510.53 -8.73% 14,177.22 -5.32% 14,146.63
08/31/96 4.64% 14,137.41 5.81% 15,000.91 4.34% 14,760.59
09/30/96 1.15% 14,299.99 3.91% 15,587.45 2.73% 15,163.56
10/31/96 2.37% 14,638.90 -1.54% 15,347.40 1.16% 15,339.45
11/30/96 4.71% 15,328.40 4.12% 15,979.72 5.38% 16,164.72
12/31/96 3.56% 15,874.09 2.62% 16,398.39 3.25% 16,690.07
01/31/97 2.05% 16,199.51 2.00% 16,726.35 1.46% 16,933.74
02/28/97 -1.01% 16,035.89 -2.43% 16,319.90 0.95% 17,094.61
03/31/97 -3.05% 15,546.80 -4.72% 15,549.60 -2.68% 16,636.48
04/30/97 -1.05% 15,383.56 0.28% 15,593.14 1.47% 16,881.03
05/31/97 7.94% 16,605.01 11.13% 17,328.66 7.96% 18,224.77
06/30/97 5.62% 17,538.21 4.29% 18,072.06 5.06% 19,146.94
07/31/97 4.77% 18,374.78 4.65% 18,912.41 4.20% 19,951.11
08/31/97 4.48% 19,197.97 2.29% 19,345.50 1.59% 20,268.33
09/30/97 6.76% 20,495.76 7.32% 20,761.59 6.65% 21,616.18
10/31/97 -2.65% 19,952.62 -4.39% 19,850.16 -2.72% 21,028.22
11/30/97 -0.42% 19,868.82 -0.65% 19,721.13 1.10% 21,259.53
12/31/97 1.95% 20,256.26 1.75% 20,066.25 3.39% 21,980.22
01/31/98 -1.10% 20,033.44 -1.58% 19,749.21 -1.81% 21,582.38
02/28/98 4.62% 20,958.99 7.39% 21,208.67 6.05% 22,888.12
03/31/98 3.35% 21,661.11 4.12% 22,082.47 4.06% 23,817.37
04/30/98 1.69% 22,027.19 0.55% 22,203.92 0.49% 23,934.08
05/31/98 -2.10% 21,564.61 -5.39% 21,007.13 -3.54% 23,086.81
06/30/98 -0.79% 21,394.25 0.21% 21,051.25 -0.57% 22,955.22
07/31/98 -3.63% 20,617.64 -8.10% 19,346.10 -7.83% 21,157.82
08/31/98 -12.62% 18,015.70 -19.42% 15,589.08 -15.66% 17,844.51
09/30/98 1.88% 18,354.39 7.83% 16,809.71 5.65% 18,852.72
10/31/98 0.44% 18,435.15 4.08% 17,495.55 2.97% 19,412.65
11/30/98 5.78% 19,500.70 5.24% 18,412.31 2.71% 19,938.73
12/31/98 2.31% 19,951.17 6.19% 19,552.04 3.14% 20,564.81
01/31/99 -2.07% 19,538.18 1.33% 19,812.08 -2.27% 20,097.99
02/28/99 -4.67% 18,625.75 -8.10% 18,207.30 -6.83% 18,725.30
03/31/99 -4.06% 17,869.54 1.56% 18,491.33 -0.83% 18,569.88
04/30/99 8.85% 19,451.00 8.96% 20,148.16 9.13% 20,265.31
05/31/99 2.21% 19,880.86 1.46% 20,442.32 3.07% 20,887.45
06/30/99 7.31% 21,334.15 4.52% 21,366.31 3.62% 21,643.58
07/31/99 -1.24% 21,069.61 -2.74% 20,780.88 -2.37% 21,130.62
08/31/99 -2.35% 20,574.47 -3.70% 20,011.98 -3.66% 20,357.24
09/30/99 -3.53% 19,848.20 0.02% 20,015.99 -2.00% 19,950.10
10/31/99 -1.07% 19,635.82 0.40% 20,096.05 -2.00% 19,551.10
11/30/99 4.68% 20,554.78 5.97% 21,295.78 0.52% 19,652.76
12/31/99 1.79% 20,922.71 11.32% 23,706.47 3.07% 20,256.10
01/31/00 0.61% 21,050.34 -1.61% 23,324.79 -2.62% 19,725.39
02/29/00 8.15% 22,765.94 16.51% 27,175.71 6.11% 20,930.61
03/31/00 0.32% 22,838.79 -6.59% 25,384.84 0.47% 21,028.99
04/30/00 -2.16% 22,345.47 -6.02% 23,856.67 0.59% 21,153.06
05/31/00 -1.55% 21,999.12 -5.83% 22,465.82 -1.53% 20,829.42
06/30/00 6.58% 23,446.66 8.72% 24,424.84 2.92% 21,437.63
07/31/00 -1.14% 23,179.37 -3.22% 23,638.36 3.33% 22,151.51
08/31/00 4.70% 24,268.80 7.63% 25,441.97 4.47% 23,141.68
09/30/00 0.55% 24,402.27 -2.94% 24,693.98 -0.57% 23,009.77
10/31/00 -2.51% 23,789.78 -4.46% 23,592.63 -0.36% 22,926.94
11/30/00 -4.50% 22,719.24 -10.26% 21,172.02 -2.04% 22,459.23
12/31/00 2.50% 23,287.22 8.59% 22,990.70 10.74% 24,871.35
01/31/01 7.25% 24,975.54 5.21% 24,188.51 2.76% 25,557.80
02/28/01 -2.14% 24,441.06 -6.56% 22,601.75 -0.14% 25,522.02
03/31/01 -1.10% 24,172.21 -4.89% 21,496.52 -1.60% 25,113.66
04/30/01 3.24% 24,955.39 7.82% 23,177.55 4.63% 26,276.43
05/31/01 8.17% 26,994.25 2.46% 23,747.72 2.57% 26,951.73
06/30/01 1.47% 27,391.06 3.45% 24,567.01 4.02% 28,035.19
07/31/01 -1.13% 27,081.54 -5.41% 23,237.94 -2.24% 27,407.20
08/31/01 0.46% 27,206.12 -3.23% 22,487.35 -0.35% 27,311.28
09/30/01 -8.45% 24,907.20 -13.46% 19,460.56 -11.04% 24,296.11
10/31/01 2.41% 25,507.47 5.85% 20,599.00 2.61% 24,930.24
11/30/01 5.19% 26,831.30 7.74% 22,193.36 7.19% 26,722.73
12/31/01 6.44% 28,559.24 6.17% 23,562.69 6.12% 28,358.16
01/31/02 1.99% 29,127.57 -1.04% 23,317.64 1.33% 28,735.32
02/28/02 -1.23% 28,769.30 -2.74% 22,678.74 0.61% 28,910.61
03/31/02 6.67% 30,688.21 8.04% 24,502.11 7.49% 31,076.01
04/30/02 5.15% 32,268.65 0.91% 24,725.08 3.52% 32,169.89
05/31/02 -2.61% 31,426.44 -4.44% 23,627.28 -3.31% 31,105.06
06/30/02 -2.01% 30,794.77 -4.96% 22,455.37 -2.21% 30,417.64
07/31/02 -14.32% 26,384.96 -15.10% 19,064.61 -14.86% 25,897.58
08/31/02 -1.04% 26,110.56 -0.26% 19,015.04 -0.44% 25,783.63
09/30/02 -6.95% 24,295.87 -7.18% 17,649.76 -7.14% 23,942.68
10/31/02 -1.04% 24,043.20 3.21% 18,216.32 1.50% 24,301.82
11/30/02 6.49% 25,603.60 8.92% 19,841.21 7.98% 26,241.10
12/31/02 -2.11% 25,063.36 -5.57% 18,736.06 -4.27% 25,120.61
01/31/03 -2.61% 24,409.21 -2.77% 18,217.07 -2.82% 24,412.21
02/28/03 -4.68% 23,266.86 -3.02% 17,666.91 -3.36% 23,591.96
03/31/03 0.64% 23,415.77 1.29% 17,894.82 1.07% 23,844.39
04/30/03 7.94% 25,274.98 9.48% 19,591.25 9.50% 26,109.61
05/31/03 10.45% 27,916.21 10.73% 21,693.39 10.21% 28,775.40
06/30/03 5.28% 29,390.19 1.81% 22,086.04 1.69% 29,261.70
Six month 17.26% 17.88% 16.48%
One Year -4.56% -1.64% -3.80%
Three Year 7.82% -3.30% 10.93%
Five Years 6.55% 0.96% 4.97%
Ten Years 11.38% 8.24% 11.33%
Shadow Stock Fund's average annual compounded total returns for one, five and
ten year periods as of June 30, 2003 were -4.55%, 6.57% and 11.39%,
respectively. Performance data contained in this report is for past periods
only. Past performance is not predictive of future performance. Investment
return and share value will fluctuate, and redemption value may be more or less
than original cost.
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 10
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
SHADOW STOCK FUND
- ----------------------------------------------------------------------
SHARES COMPANY MARKET VALUE
- ----------------------------------------------------------------------
COMMON STOCKS - 98.98%
BASIC MATERIALS - 3.73%
21,151 Aceto Corp. $ 393,409
40,000 AMCOL International Corp. 320,000
17,200 American Pacific Corp.* 128,656
10,999 American Vanguard Corp. 202,382
36,800 Encore Wire Corp.* 349,600
16,600 Fibermark, Inc.* 77,688
34,000 Gibraltar Steel Corp. 696,319
15,800 Northwest Pipe Co.* 224,202
26,700 Roanoke Electric Steel Corp. 199,983
42,000 RTI International Metals, Inc.* 454,860
15,000 Universal Stainless &
Alloy Products, Inc.* 98,550
2,200 Vulcan International Corp. 78,650
37,000 Wolverine Tube, Inc.* 211,640
-------------
3,435,939
=============
CAPITAL GOODS - 14.76%
7,300 American Biltrite, Inc. 51,830
50,000 Anaren, Inc.* 468,500
7,500 Badger Meter, Inc. 193,125
4,480 Baltek Corp.* 67,648
14,000 BTU International, Inc.* 26,040
50,000 Buckeye Technologies, Inc.* 340,000
39,000 Building Materials Holding Corp. 577,590
22,000 Candela Corp.* 253,440
27,800 Cascade Corp. 483,720
1,800 Chicago Rivet & Machine Co. 47,268
32,000 CIRCOR International, Inc. 570,560
30,000 CompX International, Inc. 167,400
12,700 CPAC, Inc. 74,092
25,000 Ducommun, Inc.* 352,500
7,800 Eastern (The) Co. 113,880
7,315 Ecology and Environment, Inc., Cl. A 63,641
41 Eimo Corp. ADR* 35,670
13,600 Gehl Co.* 138,720
3,150 Graham Corp. 27,090
26,000 Gundle/SLT Environmental, Inc.* 354,120
21,750 Hardinge, Inc. 176,175
22,000 Keith (The) Cos., Inc.* 219,780
9,807 Knape & Vogt Manufacturing Co. 101,502
20,000 Ladish Co., Inc.* 132,400
30,000 LSI Industries, Inc. 333,000
30,800 M/I Schottenstein Homes, Inc. 1,314,544
26,000 Meritage Corp.* 1,280,760
21,300 Mestek, Inc.* 383,400
14,112 Met-Pro Corp. 203,777
32,000 Mobile Mini, Inc.* 522,560
10,562 Mod-Pac Corp.* 70,237
9,300 Nobility Homes, Inc.* 91,419
9,000 Noland Co. 320,490
26,000 Octel Corp. 361,400
5,000 P & F Industries, Inc., Cl. A* 33,500
4,600 Quipp, Inc.* 50,140
29,000 Robbins & Myers, Inc. 536,500
70,000 Semitool, Inc.* 345,100
10,300 Summa Industries, Inc.* 74,057
29,000 Technical Olympic USA, Inc.* 685,270
57,000 URS Corp.* 1,109,220
27,000 William Lyon Homes, Inc.* 859,950
-------------
13,612,015
=============
CONSUMER CYCLICAL - 24.37%
12,800 Ag Services of America, Inc.* 76,032
2,800 Allen Organ Co., Cl. B 113,680
21,800 Ambassadors International, Inc.* 261,818
25,000 AMERCO* 178,000
60,000 Applica, Inc.* 510,000
40,000 Ashworth, Inc.* 283,600
12,127 Bowl America, Inc., Cl. A 142,492
25,000 Brookstone, Inc.* 506,250
37,000 Buca, Inc.* 208,680
40,000 Charlotte Russe Holding, Inc.* 412,800
41,000 Cole National Corp., Cl. A* 513,320
34,000 Consolidated Graphics, Inc.* 777,920
85,000 CSK Auto Corp.* 1,228,249
32,000 Cutter & Buck, Inc.* 162,880
39,000 Department 56, Inc.* 597,870
9,500 Duckwall-ALCO Stores, Inc.* 103,085
13,860 Edelbrock Corp. 143,451
25,000 Electro Rent Corp.* 269,500
53,000 Elizabeth Arden, Inc.* 698,010
2,656 Federal Screw Works 96,413
50,000 Finish (The) Line, Inc., Cl. A* 1,110,500
20,000 Finlay Enterprises, Inc.* 331,000
43,000 Friedman's, Inc., Cl. A 488,910
2,250 FRMO Corp.* 788
13,000 Garden Fresh Restaurant Corp.* 117,000
24,000 Gart Sports Co.* 680,640
90,000 Goody's Family Clothing, Inc. 778,500
34,000 II-VI, Inc.* 784,720
45,000 Imagistics International, Inc.* 1,160,999
65,000 Isle of Capri Casinos, Inc.* 1,074,450
Continued on next page.
- --------------------------------------------------------------------------------
JUNE 30, 2003 11
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
SHADOW STOCK FUND (Continued)
- ----------------------------------------------------------------------
SHARES COMPANY MARKET VALUE
- ----------------------------------------------------------------------
CONSUMER CYCLICAL (Continued)
58,000 JAKKS Pacific, Inc.* $ 770,820
7,600 Liberty Homes, Inc., Cl. A 36,556
38,000 Marinemax, Inc.* 532,000
36,750 Maxwell Shoe Co., Inc., Cl. A* 529,200
19,800 Michael Baker Corp.* 211,860
20,000 Midas, Inc.* 242,400
15,000 Monro Muffler Brake, Inc.* 423,900
19,400 Movado Group, Inc. 421,950
22,000 National R.V. Holdings, Inc.* 113,960
16,500 Perry Ellis International, Inc.* 322,080
69,000 Pinnacle Entertainment, Inc.* 469,200
43,400 Quaker Fabric Corp. 286,440
35,550 Rex Stores Corp.* 430,511
11,300 S & K Famous Brands, Inc.* 169,500
55,000 Source Interlink Co., Inc.* 417,450
12,000 Sport Chalet, Inc.* 88,200
95,000 Stein Mart, Inc.* 569,050
22,000 Steinway Musical Instruments, Inc.* 338,800
40,000 Syms Corp.* 257,200
38,600 Tarrant Apparel Group* 112,712
15,000 Tropical Sportswear International Corp.* 108,750
30,000 Ultimate Electronics, Inc.* 384,600
39,000 Vans, Inc.* 350,220
7,800 Weyco Group, Inc. 358,878
33,000 Whitehall Jewellers, Inc.* 299,310
9,000 Williams Industries, Inc.* 33,030
52,000 Wilsons, The Leather Experts, Inc.* 374,920
-------------
22,465,054
=============
CONSUMER STAPLES - 5.46%
65,000 Audiovox Corp* 727,350
18,000 Benihana, Inc., Cl. A* 237,600
9,300 Cagle's, Inc., Cl. A* 44,175
26,000 Chalone (The) Wine Group Ltd.* 202,020
39,400 Dave & Buster's, Inc.* 429,460
1,700 Foodarama Supermarkets, Inc.* 42,500
3,200 Genesee Corp., Cl. B 15,792
52,000 Ingles Markets, Inc., Cl. A 525,200
17,425 Marsh Supermarkets, Inc., Cl. A 216,419
28,125 Marsh Supermarkets, Inc., Cl. B 340,313
50,000 Prime Hospitality Corp.* 335,500
35,050 Sanderson Farms, Inc. 984,904
52,000 Spartan Stores, Inc.* 139,880
36,000 Standard Commercial Corp. 612,000
23,000 Water Pik Technologies, Inc.* 178,710
-------------
5,031,823
=============
DIVERSIFIED - 2.45%
18,400 Andersons (The), Inc. 225,400
21,125 Astronics Corp.* 68,551
9,000 Childtime Learning Centers, Inc.* 22,590
32,000 Cornell Corrections, Inc.* 484,480
14,800 Exponet, Inc.* 229,400
1,900 IShares Russell 2000 Value Index Fund 245,100
4,500 McRae Industries, Inc., Cl. A 27,810
35,000 NCE Petrofund 342,300
24,000 New Horizons Worldwide, Inc.* 102,720
14,300 Nobel Learning Communities, Inc.* 52,481
2,700 Scope Industries 210,600
13,800 SL Industries, Inc.* 92,115
12,000 Sun Hydraulics Corp. 86,400
7,700 United States Lime & Minerals, Inc. 26,180
3,350 VSE Corp. 40,200
-------------
2,256,327
=============
ENERGY - 1.87%
29,000 Callon Petroleum Corp.* 206,480
21,000 Giant Industries, Inc.* 125,160
30,000 Petroleum Development Corp.* 275,700
32,000 Resource America, Inc., Cl. A 331,200
35,200 RPC, Inc. 387,200
40,000 Semco Energy, Inc. 232,800
22,000 Torch Energy Royalty Trust 168,960
-------------
1,727,500
=============
FINANCIAL - 14.02%
23,000 America's Car-Mart, Inc.* 420,440
8,349 American Business Financial
Services, Inc. 53,609
31,000 American Home Mortgage
Holdings, Inc. 606,980
10,500 Bancinsurance Corp.* 62,055
7,300 Brantley Capital Corp.* 61,612
29,000 California First National Bancorp 275,210
110,000 CompuCredit Corp.* 1,336,500
15,452 Cotton States Life Insurance Co. 155,756
28,000 Danielson Holding Corp.* 44,800
7,000 Donegal Group, Inc. , Cl. B 87,780
14,000 Donegal Group, Inc., Cl. A 189,280
33,000 DVI, Inc.* 154,110
20,000 EMC Insurance Group, Inc. 371,000
23,725 First Albany Cos., Inc. 294,902
22,000 First Cash Financial Services, Inc.* 312,620
Continued on next page.
- --------------------------------------------------------------------------------
JUNE 30, 2003 12
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
SHADOW STOCK FUND (Continued)
- ----------------------------------------------------------------------
SHARES COMPANY MARKET VALUE
- ----------------------------------------------------------------------
30,000 Insignia Financial Group, Inc.* $ 333,300
5,300 Investors Title Co. 151,262
13,000 Matrix Bankcorp, Inc.* 133,120
18,000 Maxcor Financial Group, Inc.* 181,800
9,000 Mego Financial Corp.* 2,160
5,000 Merchants Group, Inc. 102,250
86,000 MFA Mortgage Investments, Inc. 863,440
2,250 MFC Development Corp.* 3,161
34,800 Midland (The) Co. 772,908
3,900 National Security Group, Inc. 54,600
6,000 National Western Life
Insurance Co., Cl. A* 662,580
15,400 Navigators (The) Group, Inc.* 459,228
55,000 Penn Treaty American Corp.* 96,250
24,750 Penn-America Group, Inc. 278,438
50,000 PMA Capital Corp. Cl. A 628,500
28,500 PXRE Group Ltd. 564,300
33,100 Sizeler Property Investors, Inc. 339,275
45,000 Stewart Information Services Corp.* 1,253,250
38,000 SWS Group, Inc. 765,700
32,000 TALX Corp. 722,880
10,000 Trover Solutions, Inc.* 57,900
4,600 Ziegler (The) Cos., Inc. 70,150
-------------
12,923,106
=============
HEALTHCARE - 3.04%
17,000 Allou Health Care, Inc. Cl. A* 17
31,000 D & K Healthcare Resources, Inc. 500,340
40,000 DJ Orthopedics, Inc.* 438,400
25,000 Healthcare Services Group, Inc.* 353,250
6,100 Kewaunee Scientific Corp. 57,889
20,000 Matria Healthcare, Inc.* 353,000
95,000 Nabi Biopharmaceuticals* 651,700
46,000 Prime Medical Services, Inc.* 216,200
50,000 Res-Care, Inc.* 228,500
-------------
2,799,296
=============
TECHNOLOGY - 15.60%
8,600 Ault, Inc.* 18,318
42,300 Bell Microproducts, Inc.* 180,621
19,900 Ceradyne, Inc.* 372,727
68,000 Computer Network Technologies Corp.* 550,800
2,967 Del Global Technologies Corp. Warrants 2,448
26,617 Del Global Technologies Corp.* 73,197
18,300 Diodes, Inc.* 350,628
43,400 EDO Corp. 768,180
42,000 Ennis Business Forms, Inc. 611,100
17,000 ePlus, Inc.* 181,050
50,000 ESS Technology, Inc.* 487,500
20,000 GTSI Corp.* 174,000
22,000 Inforte Corp.* 173,360
30,000 Integrated Electrical Services, Inc.* 217,500
65,000 MCSI, Inc.* 2,275
40,000 Methode Electronics, Inc. 430,000
60,000 Microsemi Corp.* 960,000
41,000 Modtech Holdings, Inc.* 376,790
31,000 Nam Tai Electronics, Inc. 1,314,399
42,000 Nu Horizons Electronics Corp.* 252,000
67,000 NYFIX, Inc.* 425,450
8,000 Opticnet, Inc.* 80
61,000 PC Connection, Inc.* 414,800
20,000 PDI, Inc.* 203,200
32,000 Peak International Ltd.* 142,368
23,800 Penn Engineering & Manufacturing
Corp. (Non-Voting) 324,870
6,400 Penn Engineering & Manufacturing
Corp. Cl. A (Voting) 77,696
56,000 Pericom Semiconductor Corp.* 520,800
37,000 Plato Learning, Inc.* 212,750
25,000 Pomeroy Computer Resources, Inc.* 276,500
27,000 Powell Industries, Inc.* 395,280
17,000 Richardson Electronics Ltd. 137,700
22,000 Rofin -Sinar Technologies, Inc.* 309,320
43,000 Roxio, Inc.* 287,670
32,000 SBS Technologies, Inc.* 314,592
59,000 Stoneridge, Inc.* 805,350
30,000 Sypris Solutions, Inc. 309,900
40,000 Tier Technologies, Inc.* 310,000
30,000 Trikon Technologies, Inc.* 108,600
104,000 Ulticom, Inc.* 988,000
8,760 Video Display Corp.* 57,720
82,000 Zomax, Inc.* 268,140
-------------
14,387,679
=============
TELECOMMUNICATION SERVICES - 0.81%
10,000 Communication Systems, Inc. 78,700
64,000 Lightbridge, Inc.* 560,640
25,000 TTI Team Telecom International Ltd.* 110,000
-------------
749,340
=============
Continued on next page.
- --------------------------------------------------------------------------------
JUNE 30, 2003 13
- --------------------------------------------------------------------------------
TRANSPORTATION & SERVICES - 6.49%
34,000 Covenant Transport, Inc. Cl. A* $ 578,000
12,000 International Shipholding Corp.* 129,600
38,000 Knightsbridge Tankers Ltd. 359,518
20,000 Maritrans, Inc. 293,000
9,000 Marten Transport Ltd.* 242,100
50,000 Mesaba Holdings, Inc.* 308,500
36,900 Navigant International, Inc.* 476,010
23,000 Nordic American Tanker Shipping Ltd. 326,600
23,250 Old Dominion Freight Line* 502,665
26,100 P.A.M. Transportation Services, Inc.* 655,632
10,600 Petroleum Helicopters, Inc.* 334,430
78,000 RailAmerica, Inc.* 659,100
35,000 Stelmar Shipping Ltd.* 586,600
20,200 Transport Corp. of America, Inc.* 112,110
25,000 U.S. Xpress Enterprises, Inc. Cl. A* 266,500
17,000 USA Truck, Inc.* 153,000
-------------
5,983,365
=============
UTILITIES - 6.38%
30,000 American States Water Co. 819,001
4,554 California Water Service Group 128,058
26,900 Cascade Natural Gas Corp. 513,790
12,700 Chesapeake Utilities Corp. 287,020
19,500 Connecticut Water Service, Inc. 498,225
4,000 Delta Natural Gas Co., Inc. 93,960
9,000 EnergySouth, Inc. 295,200
8,000 Florida Public Utilities Co. 130,800
13,500 Green Mountain Power Corp. 270,000
3,900 Maine Public Service Co. 126,789
18,300 Middlesex Water Co. 450,912
35,000 NUI Corp. 543,200
4,500 RGC Resources, Inc. 105,030
4,800 SJW Corp. 409,200
17,200 South Jersey Industries, Inc. 633,820
21,551 Southwest Water Co. 301,067
11,476 Unitil Corp. 276,572
-------------
5,882,644
=============
TOTAL COMMON STOCKS 91,254,088
=============
(Cost $77,310,655)
- ----------------------------------------------------------------------
SHARES DESCRIPTION MARKET VALUE
- ----------------------------------------------------------------------
INVESTMENT COMPANIES - 0.94%
870,533 Wells Fargo Prime Investment
Money Market $ 870,533
=============
(Cost $870,533)
TOTAL INVESTMENTS - 99.92% 92,124,621
=============
(Cost $78,181,188)
Other assets less liabilities - 0.08% 77,714
-------------
TOTAL NET ASSETS - 100.00% $ 92,202,335
=============
For federal income tax purposes, the identified cost of investments owned at
June 30, 2003 was $78,323,180.
Net unrealized appreciation for federal income tax purposes was $13,801,441,
which is comprised of unrealized appreciation of $25,139,608 and unrealized
depreciation of ($11,338,167).
*Non-income producing security
ADR American Depositary Receipt
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 14
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BABSON VALUE FUND
- --------------------------------------------------------------------------------
The semi-annual period was really a tale of two markets. During the beginning of
the period, equity performance rotated around war with Iraq and featured an
atmosphere of uncertainty that affected all market components. With the war in
Iraq over, however, the second quarter of 2003 saw equity markets surge.
Performance for small companies led the way during this period as evidenced by
the Russell 2000 Index's return of 23.40% for the quarter. This represented the
largest quarterly gain for the Russell 2000 Index since the first quarter of
1991.
For the semi-annual period ended June 30, 2003, the Babson Value Fund returned
8.54% versus a return of 11.57% for the Fund's benchmark, the Russell 1000 Value
Index. While equity market performance was strong during the period, it was led
by the areas of the market that to date have exhibited the weakest fundamentals
and highest risk profiles. This worked against the Fund's strategy and resulted
in relative underperformance. On a stock selection basis, the Fund was hurt by
results in the financial services and producer durables sectors, where a couple
of the Fund's larger holdings had disappointing results. Areas of relative
strength for the Fund were the health care and utilities sectors.
FUND COMPOSITION
===============================================
Top Ten equity Holdings: % of Total
- -----------------------------------------------
Citigroup, Inc. 3.88%
McDonald's Corp. 3.62
Rockwell Collins, Inc. 3.30
Exxon Mobil Corp. 3.24
Weyerhaeuser Co. 3.18
American International Group, Inc. 3.05
Pfizer, Inc. 3.02
Verizon Communications, Inc. 3.02
Wells Fargo & Co. 2.84
Bank of America Corp. 2.81
-----------
Total 31.96%
- -----------------------------------------------
Total Securities in Portfolio 48
<FN>
- ----------------------------------------------------------------
As of June 30, 2003, schedule of investments. Subject to change.
</FN>
- --------------------------------------------------------------------------------
BABSON VALUE FUND VERSUS S&P 500, S&P BARRA LARGE CAP VALUE AND RUSSELL 1000
VALUE
Babson
Value Fund S&P 500 Index
Time Period Monthly Returns Plot Points Monthly Returns Plot Points
06/30/93 10,000.00 10,000.00
07/31/93 2.01% 10,201.00 -0.40% 9,960.00
08/31/93 3.60% 10,568.24 3.79% 10,337.48
09/30/93 2.25% 10,806.02 -0.77% 10,257.89
10/31/93 2.61% 11,088.06 2.07% 10,470.22
11/30/93 0.63% 11,157.91 -0.95% 10,370.76
12/31/93 3.55% 11,554.02 1.21% 10,496.24
01/31/94 4.68% 12,094.75 3.40% 10,853.11
02/28/94 -1.86% 11,869.78 -2.71% 10,559.00
03/31/94 -3.03% 11,510.13 -4.36% 10,098.62
04/30/94 1.44% 11,675.88 1.28% 10,227.89
05/31/94 2.40% 11,956.10 1.64% 10,395.62
06/30/94 -2.54% 11,652.41 -2.45% 10,140.93
07/31/94 2.34% 11,925.08 3.28% 10,473.55
08/31/94 3.48% 12,340.07 4.10% 10,902.97
09/30/94 -2.39% 12,045.14 -2.45% 10,635.85
10/31/94 0.31% 12,082.48 2.25% 10,875.15
11/30/94 -3.49% 11,660.81 -3.64% 10,479.30
12/31/94 1.56% 11,842.71 1.48% 10,634.39
01/31/95 2.62% 12,152.99 2.59% 10,909.82
02/28/95 4.17% 12,659.77 3.90% 11,335.30
03/31/95 2.58% 12,986.39 2.95% 11,669.70
04/30/95 2.63% 13,327.94 2.95% 12,013.95
05/31/95 2.99% 13,726.44 4.00% 12,494.51
06/30/95 1.89% 13,985.87 2.32% 12,784.38
07/31/95 4.86% 14,665.59 3.32% 13,208.82
08/31/95 -0.16% 14,642.12 0.25% 13,241.85
09/30/95 3.33% 15,129.70 4.22% 13,800.65
10/31/95 -2.34% 14,775.67 -0.36% 13,750.97
11/30/95 4.23% 15,400.68 4.39% 14,354.64
12/31/95 1.29% 15,599.35 1.93% 14,631.68
01/31/96 1.99% 15,909.77 3.40% 15,129.16
02/29/96 2.41% 16,293.20 0.93% 15,269.86
03/31/96 2.82% 16,752.67 0.96% 15,416.45
04/30/96 1.30% 16,970.45 1.47% 15,643.07
05/31/96 2.48% 17,391.32 2.58% 16,046.66
06/30/96 -0.65% 17,278.28 0.38% 16,107.64
07/31/96 -3.39% 16,692.54 -4.42% 15,395.68
08/31/96 3.24% 17,233.38 2.11% 15,720.53
09/30/96 2.88% 17,729.70 5.63% 16,605.60
10/31/96 0.95% 17,898.14 2.76% 17,063.91
11/30/96 7.48% 19,236.92 7.56% 18,353.94
12/31/96 -0.47% 19,146.50 -1.98% 17,990.54
01/31/97 4.27% 19,964.06 6.25% 19,114.94
02/28/97 1.42% 20,247.55 0.78% 19,264.04
03/31/97 -3.62% 19,514.59 -4.11% 18,472.29
04/30/97 1.96% 19,897.07 5.97% 19,575.08
05/31/97 6.14% 21,118.75 6.09% 20,767.21
06/30/97 3.71% 21,902.26 4.48% 21,697.58
07/31/97 8.87% 23,844.99 7.96% 23,424.71
08/31/97 -2.78% 23,182.10 -5.60% 22,112.92
09/30/97 5.57% 24,473.34 5.48% 23,324.71
10/31/97 -4.41% 23,394.07 -3.34% 22,545.66
11/30/97 4.35% 24,411.71 4.63% 23,589.53
12/31/97 -0.77% 24,223.74 1.72% 23,995.27
01/31/98 0.26% 24,286.72 1.11% 24,261.62
02/28/98 7.68% 26,151.94 7.21% 26,010.88
03/31/98 5.19% 27,509.23 5.12% 27,342.64
04/30/98 2.10% 28,086.92 1.01% 27,618.80
05/31/98 -3.42% 27,126.35 -1.72% 27,143.75
06/30/98 0.99% 27,394.90 4.06% 28,245.79
07/31/98 -6.42% 25,636.14 -1.06% 27,946.38
08/31/98 -16.02% 21,529.23 -14.46% 23,905.34
09/30/98 4.62% 22,523.89 6.41% 25,437.67
10/31/98 8.81% 24,508.24 8.13% 27,505.75
11/30/98 3.45% 25,353.77 6.06% 29,172.60
12/31/98 1.34% 25,693.51 5.76% 30,852.94
01/31/99 -2.11% 25,151.38 4.18% 32,142.59
02/28/99 0.04% 25,161.44 -3.11% 31,142.96
03/31/99 1.85% 25,626.93 4.00% 32,388.68
04/30/99 12.56% 28,845.67 3.87% 33,642.12
05/31/99 -1.23% 28,490.87 -2.36% 32,848.17
06/30/99 1.56% 28,935.33 5.55% 34,671.24
07/31/99 -3.17% 28,018.08 -3.12% 33,589.50
08/31/99 -2.98% 27,183.14 -0.50% 33,421.55
09/30/99 -5.96% 25,563.02 -2.74% 32,505.80
10/31/99 4.03% 26,593.21 6.33% 34,563.42
11/30/99 -2.21% 26,005.50 2.03% 35,265.05
12/31/99 -0.13% 25,971.70 5.89% 37,342.17
01/31/00 -6.87% 24,187.44 -5.02% 35,467.59
02/29/00 -11.31% 21,451.84 -1.89% 34,797.25
03/31/00 14.15% 24,487.28 9.78% 38,200.42
04/30/00 -0.05% 24,475.03 -3.01% 37,050.59
05/31/00 3.21% 25,260.68 -2.05% 36,291.05
06/30/00 -3.71% 24,323.51 2.46% 37,183.81
07/31/00 2.89% 25,026.46 -1.56% 36,603.74
08/31/00 5.14% 26,312.82 6.21% 38,876.84
09/30/00 -0.92% 26,070.74 -5.28% 36,824.14
10/31/00 3.52% 26,988.43 -0.42% 36,669.48
11/30/00 0.12% 27,020.82 -7.88% 33,779.92
12/31/00 4.82% 28,323.22 0.49% 33,945.45
01/31/01 -0.63% 28,144.78 3.55% 35,150.51
02/28/01 0.47% 28,277.06 -9.12% 31,944.78
03/31/01 -2.65% 27,527.72 -6.34% 29,919.48
04/30/01 5.73% 29,105.06 7.77% 32,244.23
05/31/01 1.26% 29,471.78 0.67% 32,460.26
06/30/01 -0.72% 29,259.59 -2.43% 31,671.48
07/31/01 -0.46% 29,124.99 -0.98% 31,361.10
08/31/01 -1.88% 28,577.44 -6.26% 29,397.89
09/30/01 -9.49% 25,865.44 -8.07% 27,025.48
10/31/01 -0.30% 25,787.85 1.91% 27,541.67
11/30/01 3.66% 26,731.68 7.67% 29,654.12
12/31/01 2.60% 27,426.71 0.88% 29,915.07
01/31/02 1.77% 27,912.16 -1.46% 29,478.31
02/28/02 1.86% 28,431.33 -1.93% 28,909.38
03/31/02 5.44% 29,977.99 3.76% 29,996.37
04/30/02 -0.95% 29,693.20 -6.06% 28,178.59
05/31/02 0.82% 29,936.68 -0.74% 27,970.07
06/30/02 -5.23% 28,371.00 -7.12% 25,978.60
07/31/02 -7.40% 26,271.54 -7.80% 23,952.27
08/31/02 -0.71% 26,085.01 0.66% 24,110.36
09/30/02 -9.91% 23,499.99 -10.87% 21,489.56
10/31/02 0.54% 23,626.89 8.80% 23,380.64
11/30/02 2.02% 24,104.15 5.89% 24,757.76
12/31/02 -2.70% 23,453.34 -5.87% 23,304.48
01/31/03 -3.18% 22,707.52 -2.62% 22,693.90
02/28/03 -3.60% 21,890.05 -1.50% 22,353.50
03/31/03 0.41% 21,979.80 0.97% 22,570.32
04/30/03 8.45% 23,837.10 8.24% 24,430.12
05/31/03 5.10% 25,052.79 5.27% 25,717.59
06/30/03 1.60% 25,453.63 1.28% 26,046.77
Six month 8.53% 11.77%
One Year -10.28% 0.26%
Three Year 1.53% -11.19%
Five Years -1.46% -1.61%
Ten Years 9.79% 10.04%
[TABLE CONTINUES BELOW]
S&P Barra
Large Cap Value Index Russell 1000 Value Index
Time Period Monthly Returns Plot Points Monthly Returns Plot Points
06/30/93 10,000.00 10,000.00
07/31/93 1.24% 10,124.00 1.12% 10,112.00
08/31/93 3.92% 10,520.86 3.61% 10,477.04
09/30/93 -0.04% 10,516.65 0.16% 10,493.81
10/31/93 0.54% 10,573.44 -0.07% 10,486.46
11/30/93 -1.79% 10,384.18 -2.06% 10,270.44
12/31/93 1.70% 10,560.71 1.90% 10,465.58
01/31/94 4.66% 11,052.84 3.78% 10,861.18
02/28/94 -3.62% 10,652.73 -3.42% 10,489.72
03/31/94 -4.11% 10,214.90 -3.72% 10,099.51
04/30/94 2.11% 10,430.43 1.92% 10,293.42
05/31/94 1.65% 10,602.53 1.15% 10,411.79
06/30/94 -2.77% 10,308.84 -2.40% 10,161.91
07/31/94 3.38% 10,657.28 3.11% 10,477.94
08/31/94 2.83% 10,958.88 2.87% 10,778.66
09/30/94 -3.52% 10,573.13 -3.32% 10,420.81
10/31/94 2.18% 10,803.63 1.39% 10,565.66
11/30/94 -4.05% 10,366.08 -4.04% 10,138.81
12/31/94 1.23% 10,493.58 1.15% 10,255.40
01/31/95 2.71% 10,777.96 3.08% 10,571.27
02/28/95 3.88% 11,196.14 3.95% 10,988.83
03/31/95 2.76% 11,505.16 2.19% 11,229.49
04/30/95 3.29% 11,883.68 3.16% 11,584.34
05/31/95 4.45% 12,412.50 4.21% 12,072.04
06/30/95 0.76% 12,506.83 1.35% 12,235.01
07/31/95 3.45% 12,938.32 3.48% 12,660.79
08/31/95 0.85% 13,048.30 1.41% 12,839.31
09/30/95 3.48% 13,502.38 3.62% 13,304.09
10/31/95 -1.56% 13,291.74 -0.99% 13,172.38
11/30/95 5.24% 13,988.23 5.07% 13,840.22
12/31/95 2.77% 14,375.70 2.51% 14,187.61
01/31/96 2.99% 14,805.53 3.12% 14,630.27
02/29/96 0.94% 14,944.71 0.76% 14,741.46
03/31/96 2.34% 15,294.41 1.70% 14,992.06
04/30/96 1.02% 15,450.42 0.38% 15,049.03
05/31/96 1.51% 15,683.72 1.25% 15,237.14
06/30/96 -0.48% 15,608.43 0.08% 15,249.33
07/31/96 -4.22% 14,949.76 -3.78% 14,672.91
08/31/96 2.76% 15,362.37 2.86% 15,092.55
09/30/96 4.28% 16,019.88 3.98% 15,693.24
10/31/96 3.39% 16,562.96 3.87% 16,300.57
11/30/96 7.65% 17,830.02 7.25% 17,482.36
12/31/96 -1.64% 17,537.61 -1.28% 17,258.58
01/31/97 4.61% 18,346.09 4.85% 18,095.62
02/28/97 0.73% 18,480.02 1.47% 18,361.63
03/31/97 -3.42% 17,848.00 -3.60% 17,700.61
04/30/97 3.75% 18,517.30 4.20% 18,444.04
05/31/97 6.27% 19,678.34 5.59% 19,475.06
06/30/97 3.82% 20,430.05 4.29% 20,310.54
07/31/97 8.00% 22,064.45 7.52% 21,837.89
08/31/97 -4.52% 21,067.14 -3.56% 21,060.46
09/30/97 5.86% 22,301.68 6.04% 22,332.51
10/31/97 -3.67% 21,483.20 -2.79% 21,709.44
11/30/97 3.81% 22,301.71 4.42% 22,668.99
12/31/97 2.22% 22,796.81 2.92% 23,330.93
01/31/98 -1.23% 22,516.41 -1.42% 22,999.63
02/28/98 7.50% 24,205.14 6.73% 24,547.50
03/31/98 5.07% 25,432.34 6.12% 26,049.81
04/30/98 1.18% 25,732.44 0.67% 26,224.34
05/31/98 -1.41% 25,369.62 -1.48% 25,836.22
06/30/98 0.76% 25,562.43 1.28% 26,166.93
07/31/98 -2.17% 25,007.72 -1.76% 25,706.39
08/31/98 -16.08% 20,986.48 -14.88% 21,881.28
09/30/98 6.08% 22,262.46 5.74% 23,137.26
10/31/98 7.83% 24,005.61 7.75% 24,930.40
11/30/98 5.21% 25,256.30 4.66% 26,092.16
12/31/98 3.51% 26,142.80 3.40% 26,979.29
01/31/99 2.02% 26,670.88 0.80% 27,195.13
02/28/99 -2.15% 26,097.46 -1.41% 26,811.68
03/31/99 3.03% 26,888.21 2.07% 27,366.68
04/30/99 8.62% 29,205.97 9.34% 29,922.72
05/31/99 -1.77% 28,689.03 -1.10% 29,593.57
06/30/99 3.84% 29,790.69 2.90% 30,451.79
07/31/99 -3.08% 28,873.13 -2.93% 29,559.55
08/31/99 -2.53% 28,142.64 -3.71% 28,462.89
09/30/99 -3.91% 27,042.27 -3.50% 27,466.69
10/31/99 5.64% 28,567.45 5.76% 29,048.77
11/30/99 -0.59% 28,398.90 -0.78% 28,822.19
12/31/99 3.76% 29,466.70 0.48% 28,960.54
01/31/00 -3.18% 28,529.66 -3.26% 28,016.42
02/29/00 -6.25% 26,746.56 -7.43% 25,934.80
03/31/00 10.43% 29,536.22 12.20% 29,098.85
04/30/00 -0.67% 29,338.33 -1.16% 28,761.30
05/31/00 0.31% 29,429.28 1.05% 29,063.30
06/30/00 -3.95% 28,266.82 -4.57% 27,735.10
07/31/00 2.00% 28,832.16 1.25% 28,081.79
08/31/00 6.71% 30,766.80 5.56% 29,643.14
09/30/00 -0.02% 30,760.64 0.92% 29,915.86
10/31/00 1.87% 31,335.87 2.46% 30,651.79
11/30/00 -5.12% 29,731.47 -3.71% 29,514.61
12/31/00 5.15% 31,262.64 5.01% 30,993.29
01/31/01 4.22% 32,581.92 0.39% 31,114.16
02/28/01 -6.63% 30,421.74 -2.78% 30,249.19
03/31/01 -3.95% 29,220.08 -3.53% 29,181.39
04/30/01 6.78% 31,201.21 4.90% 30,611.28
05/31/01 1.05% 31,528.82 2.25% 31,300.03
06/30/01 -3.24% 30,507.28 -2.22% 30,605.17
07/31/01 -1.73% 29,979.51 -0.21% 30,540.90
08/31/01 -5.78% 28,246.69 -4.01% 29,316.21
09/30/01 -9.50% 25,563.26 -7.04% 27,252.35
10/31/01 0.00% 25,563.26 -0.86% 27,017.98
11/30/01 6.35% 27,186.52 5.81% 28,587.73
12/31/01 1.52% 27,599.76 2.36% 29,262.40
01/31/02 -2.74% 26,843.53 -0.77% 29,037.08
02/28/02 -0.90% 26,601.93 0.16% 29,083.53
03/31/02 5.12% 27,963.95 4.73% 30,459.19
04/30/02 -5.01% 26,562.96 -3.43% 29,414.44
05/31/02 0.40% 26,669.21 0.50% 29,561.51
06/30/02 -6.31% 24,986.38 -5.74% 27,864.68
07/31/02 -10.81% 22,285.36 -9.30% 25,273.26
08/31/02 0.69% 22,439.12 0.76% 25,465.34
09/30/02 -11.43% 19,874.33 -11.12% 22,633.59
10/31/02 8.31% 21,525.89 7.41% 24,310.74
11/30/02 7.03% 23,039.16 6.30% 25,842.32
12/31/02 -5.20% 21,841.12 -4.34% 24,720.76
01/31/03 -2.74% 21,242.68 -2.42% 24,122.52
02/28/03 -2.72% 20,664.88 -2.67% 23,478.45
03/31/03 -0.13% 20,638.01 0.17% 23,518.36
04/30/03 9.89% 22,679.11 8.80% 25,587.98
05/31/03 7.36% 24,348.29 6.46% 27,240.96
06/30/03 0.73% 24,526.04 1.25% 27,581.47
12.29% 11.57%
-1.84% -1.02%
-4.62% -0.18%
-0.82% 1.06%
9.38% 10.67%
Babson Value Fund's average annual compounded total returns for one, five and
ten year periods as of June 30, 2003 were -10.26%, -1.45% and 9.80%,
respectively. Performance data contained in this report is for past periods
only. Past performance is not predictive of future performance. Investment
return and share value will fluctuate, and redemption value may be more or less
than original cost.
- --------------------------------------------------------------------------------
JUNE 30, 2003 15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
June 30, 2003
BABSON VALUE FUND
- ---------------------------------------------------------------------
SHARES COMPANY MARKET VALUE
- ---------------------------------------------------------------------
COMMON STOCKS - 98.70%
BASIC MATERIALS - 8.94%
224,700 Dow Chemical Co. $ 6,956,712
145,200 du Pont (E.I.) de Nemours & Co. 6,046,128
167,100 PPG Industries, Inc. 8,478,654
221,100 Weyerhaeuser Co. 11,939,400
--------------
33,420,894
==============
CAPITAL GOODS - 6.36%
162,172 Lockheed Martin Corp. 7,714,522
87,600 Parker-Hannifin Corp. 3,678,324
502,200 Rockwell Collins, Inc. 12,369,186
--------------
23,762,032
==============
CONSUMER CYCLICAL - 11.71%
193,800 (The) Walt Disney Co. 3,827,550
114,600 Gannett Co., Inc. 8,802,426
577,800 Limited Brands, Inc. 8,955,900
615,400 McDonald's Corp. 13,575,724
357,800 Waste Management, Inc. 8,619,402
--------------
43,781,002
==============
CONSUMER STAPLES - 8.24%
190,600 Diageo PLC ADR 8,340,656
276,100 H.J. Heinz Co. 9,105,778
222,100 Kellogg Co. 7,633,577
1,284,900 Rite Aid Corp.* 5,717,805
--------------
30,797,816
==============
ENERGY - 8.81%
53,655 Apache Corp. $ 3,490,794
207,032 BP Amoco PLC ADR 8,699,485
338,200 Exxon Mobil Corp. 12,144,762
184,300 Royal Dutch Petroleum Co. ADR 8,592,066
--------------
32,927,107
==============
FINANCIAL - 31.99%
83,900 AFLAC, Inc. 2,579,925
181,850 Allstate Corp. 6,482,953
221,200 American Express Co. 9,248,372
207,600 American International Group, Inc. 11,455,368
133,200 Bank of America Corp. 10,526,796
340,166 Citigroup, Inc. 14,559,104
65,500 Everest Re Group Ltd. 5,010,750
119,400 Fifth Third Bancorp 6,846,396
171,800 Freddie Mac 8,722,286
128,400 Morgan Stanley Dean Witter & Co. 5,489,100
152,600 National City Corp. 4,991,546
181,300 Radian Group, Inc. 6,644,645
219,500 SLM Corp. 8,597,815
61,800 Student Loan Corp. 7,786,800
211,230 Wells Fargo & Co. 10,645,992
--------------
119,587,848
==============
HEALTHCARE - 5.56%
347,100 Bristol-Myers Squibb Co. 9,423,765
332,200 Pfizer, Inc. 11,344,630
--------------
20,768,395
==============
- --------------------------------------------------------------------------------
JUNE 30, 2003 16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON VALUE FUND (Continued)
- ---------------------------------------------------------------------
SHARES COMPANY MARKET VALUE
- ---------------------------------------------------------------------
TECHNOLOGY - 6.22%
543,300 Apple Computer, Inc.* $ 10,387,896
124,700 Automatic Data Processing, Inc. 4,222,342
104,900 International Business Machines Corp. 8,654,250
--------------
23,264,488
==============
TELECOMMUNICATION SERVICES - 4.11%
174,200 BCE, Inc. 4,025,762
287,500 Verizon Communications, Inc. 11,341,875
--------------
15,367,637
==============
TRANSPORTATION & SERVICES - 2.28%
146,700 Union Pacific Corp. 8,511,534
==============
UTILITIES - 4.48%
175,600 Entergy Corp. 9,268,168
65,600 Exelon Corp. 3,923,536
78,400 NSTAR 3,571,120
--------------
16,762,824
==============
TOTAL COMMON STOCKS 368,951,577
==============
(Cost $266,405,374)
- ---------------------------------------------------------------------
SHARES DESCRIPTION MARKET VALUE
- ---------------------------------------------------------------------
INVESTMENT COMPANIES - 1.67%
64,556 Wells Fargo Government Institutional
Money Market $ 64,556
6,159,804 Wells Fargo Prime Investment
Money Market 6,159,804
--------------
TOTAL INVESTMENT COMPANIES 6,224,360
==============
(Cost $6,224,360)
TOTAL INVESTMENTS - 100.37% 375,175,937
(Cost $272,629,734)
Other assets less liabilities - (0.37%) (1,395,404)
--------------
TOTAL NET ASSETS - 100.00% $ 373,780,533
==============
<FN>
For federal income tax purposes, the identified cost of investments owned at
June 30, 2003 was $276,450,008.
Net unrealized appreciation for federal income tax purposes was $98,725,929,
which is comprised of unrealized appreciation of $101,618,082 and unrealized
depreciation of ($2,892,153).
*Non-income producing security
ADR American Depositary Receipt
</FN>
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 17
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BABSON-STEWART IVORY INTERNATIONAL FUND
- --------------------------------------------------------------------------------
Global sentiment continued to be led by the US throughout the period. The main
factors affecting the market were the pace of global economic growth, profit
warnings, and the threat of military action in Iraq.
At the beginning of the period global markets were awash with news of losses,
scandals and bankruptcies. The US telecommunications company, WorldCom became
the largest-ever corporate bankruptcy case when it filed for Chapter 11
bankruptcy protection after being investigated for overstating profits. Whilst
most of the bad news emerged from the US the markets of continental Europe faced
the largest down turn. A radical call by the Bank of Japan to buy bank shares,
in attempt to shake Japan out of its lethargy did not work much magic, as the
Nikkei declined again over the quarter ending September to levels last seen in
the mid-1980s. World stock markets continued to fall throughout the last quarter
of 2002 to post their third consecutive year of losses. Whilst the declines of
2002 were spread across the globe, the UK, Japan and particularly Germany
finished the year in deeply negative territory.
The New Year did not bring any immediate relief as the weakness of the consumer,
held back by high levels of debt, economic and political uncertainty and
plunging equity markets, became an increasing feature of many markets from the
UK to Korea. International markets continued to be dogged by uncertainty over
war in Iraq. The Dutch market was affected by accounting irregularities at Ahold
which raised concerns about other Dutch listed companies. The UK market slumped
to a near eight year low in mid-March, in part due to the solvency problems of
UK life assurance companies. The German market continued to be worst performer
in Europe as it was hit by very poor corporate results. This included Deutsche
Telecom, who posted the biggest loss in German corporate history.
- --------------------------------------------------------------------------------
JUNE 30, 2003 18
- --------------------------------------------------------------------------------
The Markets finally turned as the uncertainty over conflict in Iraq was resolved
by the start of US military action at the end of March 2003. Global equity
markets continued to rally through the end of the period under review. The rally
was sustained by the tendency of investors to discount any bad news, instead
responding to anything that could be construed as positive. Although Asia missed
out on the initial war rally as concerns over the SARS epidemic spread, these
markets began to catch up with the other global markets in May with
predominantly liquidity driven gains.
High levels of liquidity have appeared ready to chase any positive corporate or
economic news flow. However, market valuations now appear to be somewhat
stretched after recent gains. We should expect a pause here as investors are now
looking for positive news to confirm the sustainability of current levels from
the second quarter reporting season. Concern is also growing that the relative
weakness of the dollar will continue to dampen European economic growth.
FUND DIVERSIFICATION
===============================
% of total
- -------------------------------
Capital Goods 5.2%
Chemicals 1.5
Consumer Cyclical 4.7
Consumer Staples 8.4
Energy 9.0
Financial 20.9
Health Care 12.2
Multi-Media 4.5
Technology 7.4
Telecommunications 10.0
Transportation 6.7
Utilities 5.2
Cash & Equivalents 4.3
---------
Total 100.0%
- -------------------------------
<FN>
As of June 30, 2003, schedule of investments. Subject to change.
</FN>
BABSON-STEWART IVORY INTERNATIONAL FUND VERSUS MORGAN STANLEY CAPITAL
INTERNATIONAL EAFE INDEX
Babson-Stewart Ivory
International Fund MSCI EAFE Index
Time Period Monthly Returns Plot Points Monthly Returns Plot Points
06/30/93 10,000.00 10,000.00
07/31/93 2.43% 10,243.00 3.50% 10,350.00
08/31/93 5.24% 10,779.73 5.40% 10,908.90
09/30/93 1.20% 10,909.09 -2.25% 10,663.45
10/31/93 2.76% 11,210.18 3.08% 10,991.88
11/30/93 -3.07% 10,866.03 -8.74% 10,031.19
12/31/93 8.98% 11,841.80 7.22% 10,755.45
01/31/94 5.74% 12,521.52 8.45% 11,664.28
02/28/94 -0.29% 12,485.20 -0.28% 11,631.62
03/31/94 -5.04% 11,855.95 -4.31% 11,130.30
04/30/94 3.70% 12,294.62 4.24% 11,602.22
05/31/94 -0.83% 12,192.57 -0.57% 11,536.09
06/30/94 0.00% 12,192.57 1.41% 11,698.75
07/31/94 2.13% 12,452.28 0.96% 11,811.06
08/31/94 2.09% 12,712.53 2.37% 12,090.98
09/30/94 -1.75% 12,490.06 -3.15% 11,710.11
10/31/94 1.84% 12,719.88 3.33% 12,100.06
11/30/94 -4.91% 12,095.33 -4.81% 11,518.05
12/31/94 -0.80% 11,998.57 0.63% 11,590.61
01/31/95 -5.44% 11,345.85 -3.84% 11,145.53
02/28/95 0.48% 11,400.31 -0.29% 11,113.21
03/31/95 5.86% 12,068.36 6.24% 11,806.67
04/30/95 2.83% 12,409.90 3.76% 12,250.60
05/31/95 0.50% 12,471.95 -1.19% 12,104.82
06/30/95 0.24% 12,501.88 -1.75% 11,892.99
07/31/95 6.14% 13,269.50 6.23% 12,633.92
08/31/95 -1.65% 13,050.55 -3.81% 12,152.57
09/30/95 1.92% 13,301.12 1.95% 12,389.54
10/31/95 -0.12% 13,285.16 -2.69% 12,056.26
11/30/95 -0.83% 13,174.89 2.78% 12,391.43
12/31/95 2.58% 13,514.80 4.03% 12,890.80
01/31/96 1.72% 13,747.26 0.41% 12,943.66
02/29/96 1.23% 13,916.35 0.34% 12,987.66
03/31/96 2.42% 14,253.13 2.12% 13,263.00
04/30/96 3.21% 14,710.65 2.91% 13,648.96
05/31/96 0.11% 14,726.83 -1.84% 13,397.82
06/30/96 0.73% 14,834.34 0.56% 13,472.84
07/31/96 -3.27% 14,349.26 -2.92% 13,079.44
08/31/96 1.72% 14,596.06 0.22% 13,108.21
09/30/96 1.01% 14,743.48 2.66% 13,456.89
10/31/96 0.28% 14,784.77 -1.02% 13,319.63
11/30/96 3.73% 15,336.24 3.98% 13,849.75
12/31/96 -0.04% 15,330.10 -1.29% 13,671.09
01/31/97 -4.18% 14,689.30 -3.50% 13,192.60
02/28/97 0.96% 14,830.32 1.64% 13,408.96
03/31/97 -0.34% 14,779.90 0.36% 13,457.23
04/30/97 0.62% 14,871.53 0.53% 13,528.55
05/31/97 5.43% 15,679.06 6.51% 14,409.26
06/30/97 3.98% 16,303.09 5.51% 15,203.21
07/31/97 2.36% 16,687.84 1.62% 15,449.51
08/31/97 -6.95% 15,528.03 -7.47% 14,295.43
09/30/97 5.97% 16,455.06 5.60% 15,095.97
10/31/97 -6.80% 15,336.11 -7.69% 13,935.09
11/30/97 -0.05% 15,328.44 -1.02% 13,792.95
12/31/97 1.76% 15,598.23 0.87% 13,912.95
01/31/98 1.64% 15,854.04 4.57% 14,548.77
02/28/98 6.34% 16,859.18 6.42% 15,482.81
03/31/98 4.65% 17,643.13 3.08% 15,959.68
04/30/98 -0.55% 17,546.10 0.79% 16,085.76
05/31/98 -0.05% 17,537.32 -0.49% 16,006.94
06/30/98 -1.00% 17,361.95 0.76% 16,128.59
07/31/98 0.71% 17,485.22 1.01% 16,291.49
08/31/98 -11.77% 15,427.21 -12.39% 14,272.97
09/30/98 -1.83% 15,144.89 -3.07% 13,834.79
10/31/98 5.78% 16,020.27 10.42% 15,276.38
11/30/98 6.29% 17,027.94 5.12% 16,058.53
12/31/98 3.79% 17,673.30 3.94% 16,691.23
01/31/99 -0.68% 17,553.12 -0.30% 16,641.16
02/28/99 -3.48% 16,942.27 -2.38% 16,245.10
03/31/99 2.51% 17,367.52 4.17% 16,922.52
04/30/99 3.35% 17,949.34 4.05% 17,607.88
05/31/99 -3.14% 17,385.73 -5.15% 16,701.08
06/30/99 3.62% 18,015.09 3.90% 17,352.42
07/31/99 2.16% 18,404.22 2.97% 17,867.79
08/31/99 2.76% 18,912.17 0.37% 17,933.90
09/30/99 0.93% 19,088.06 1.01% 18,115.03
10/31/99 3.49% 19,754.23 3.75% 18,794.34
11/30/99 6.88% 21,113.32 3.47% 19,446.51
12/31/99 9.70% 23,161.31 8.98% 21,192.80
01/31/00 -6.27% 21,709.10 -6.35% 19,847.06
02/29/00 7.55% 23,348.14 2.69% 20,380.95
03/31/00 1.52% 23,703.03 3.88% 21,171.73
04/30/00 -5.37% 22,430.17 -5.26% 20,058.09
05/31/00 -3.17% 21,719.14 -2.44% 19,568.68
06/30/00 1.72% 22,092.71 3.91% 20,333.81
07/31/00 -2.84% 21,465.27 -4.19% 19,481.83
08/31/00 1.57% 21,802.28 0.87% 19,651.32
09/30/00 -3.05% 21,137.31 -4.87% 18,694.30
10/31/00 -4.65% 20,154.42 -2.36% 18,253.11
11/30/00 -5.58% 19,029.81 -3.75% 17,568.62
12/31/00 4.08% 19,806.22 3.55% 18,192.31
01/31/01 -1.21% 19,566.57 -0.05% 18,183.21
02/28/01 -8.51% 17,901.45 -7.50% 16,819.47
03/31/01 -10.21% 16,073.72 -6.67% 15,697.61
04/30/01 6.43% 17,107.26 6.95% 16,788.60
05/31/01 -5.20% 16,217.68 -3.53% 16,195.96
06/30/01 -5.96% 15,251.10 -4.09% 15,533.54
07/31/01 -2.45% 14,877.45 -1.82% 15,250.83
08/31/01 -5.15% 14,111.26 -2.53% 14,864.99
09/30/01 -9.43% 12,780.57 -10.13% 13,359.16
10/31/01 2.32% 13,077.08 2.56% 13,701.16
11/30/01 2.85% 13,449.78 3.69% 14,206.73
12/31/01 1.28% 13,621.93 0.59% 14,290.55
01/31/02 -5.20% 12,913.59 -5.31% 13,531.72
02/28/02 0.44% 12,970.41 0.70% 13,626.44
03/31/02 5.17% 13,640.98 5.41% 14,363.64
04/30/02 0.21% 13,669.63 0.66% 14,458.44
05/31/02 -0.42% 13,612.22 1.27% 14,642.06
06/30/02 -3.38% 13,152.12 -3.98% 14,059.30
07/31/02 -11.35% 11,659.36 -9.87% 12,671.65
08/31/02 -1.40% 11,496.13 -0.23% 12,642.51
09/30/02 -11.66% 10,155.68 -10.74% 11,284.70
10/31/02 6.31% 10,796.50 5.37% 11,890.69
11/30/02 4.52% 11,284.50 4.54% 12,430.53
12/31/02 -5.17% 10,701.10 -3.36% 12,012.86
01/31/03 -4.65% 10,203.49 -4.17% 11,511.92
02/28/03 -5.07% 9,686.18 -2.29% 11,248.30
03/31/03 -1.68% 9,523.45 -1.96% 11,027.83
04/30/03 9.25% 10,404.37 9.80% 12,108.56
05/31/03 6.53% 11,083.77 6.06% 12,842.34
06/30/03 2.08% 11,314.32 2.42% 13,153.13
Six month 5.73% 9.49%
One Year -13.97% -6.45%
Three Year -19.99% -13.52%
Five Years -8.20% -3.99%
Ten Years 1.24% 2.78%
Babson-Stewart Ivory International Fund's average annual compounded total
returns for one, five and ten year periods as of June 30, 2003 were -13.97%,
- -8.20% and 1.25%, respectively. Performance data contained in this report is for
past periods only. Past performance is not predictive of future performance.
Investment return and share value will fluctuate, and redemption value may be
more or less than original cost.
- --------------------------------------------------------------------------------
JUNE 30, 2003 19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON-STEWART IVORY INTERNATIONAL FUND
- ---------------------------------------------------------------
SHARES COMPANY MARKET VALUE
- ---------------------------------------------------------------
COMMON STOCKS - 95.73%
AUSTRALIA - 0.95%
Transportation & Services - 0.95%
36,995 Brambles Industries Ltd. $ 113,385
=============
BELGIUM - 1.14%
Consumer Staples - 1.14%
6,098 Interbrew SA 135,501
=============
FINLAND - 1.68%
Telecommunications - 1.68%
12,150 Nokia Oyj Cl. A 200,078
=============
FRANCE - 12.27%
Banking & Finance - 2.92%
4,549 BNP Paribas SA 231,155
6,122 Credit Agricole SA 116,350
Consumer Staples - 1.05%
1,397 Pernod-Ricard SA 124,650
Energy - 4.43%
3,482 Total SA Cl. B 526,211
Healthcare - 1.36%
2,951 Aventis SA 162,356
Transportation & Services - 1.22%
4,985 Autoroutes du Sud de la France ASF 145,689
Utilities - 1.29%
9,664 Suez SA 153,813
-------------
1,460,224
=============
GERMANY - 4.00%
Healthcare - 1.55%
3,800 Schering AG 185,458
Technology - 1.16%
1,176 SAP AG 137,747
Transportation & Services - 1.29%
364 Porsche AG 153,406
-------------
476,611
=============
HONG KONG - 6.38%
Consumer Cyclical - 1.16%
160,000 China Resources Enterprises Ltd. 138,494
Energy - 1.59%
128,000 CNOOC Ltd. 188,763
Multi-media - 1.11%
37,000 Television Broadcasts Ltd. 132,615
Telecommunications - 1.14%
82,000 Asia Satellite Telecommunications
Holdings Ltd. 135,122
Utilities - 1.38%
130,100 Hong Kong & China Gas Co. Ltd. 164,332
-------------
759,326
=============
IRELAND - 3.68%
Banking & Finance - 3.68%
14,871 Bank of Ireland 179,480
24,000 Irish Life & Permanent PLC 259,068
-------------
438,548
=============
ITALY - 2.73%
Banking & Finance - 1.78%
44,647 UniCredito Italiano S.p.A. 212,772
Healthcare - 0.95%
8,100 Luxottica Group S.p.A. 112,590
-------------
325,362
=============
JAPAN - 17.76%
Banking & Finance - 2.30%
17,000 Mitsui Fudosan Co., Ltd. 108,590
13,000 Nomura Holdings, Inc. 164,997
Chemicals - 1.53%
20,000 Kaneka Corp. 123,256
14,000 Sumitomo Bakelite Co., Ltd. 58,413
Consumer Cyclical - 2.13%
8,000 Bridgestone Corp. 108,599
5,000 Fuji Photo Film Co., Ltd. 144,493
Healthcare - 1.86%
6,000 Takeda Chemical Industries, Ltd. 221,362
Industrial Goods & Services - 1.60%
38,000 Mitsui & Co., Ltd. 190,514
Manufacturing - 0.99%
1,400 SMC Corp. 117,876
Multi-Media - 1.04%
1,040 Nippon Television Network Corp. 123,943
Office Automation & Equipment - 1.37%
10,000 Ricoh Co., Ltd. 163,398
Technology - 3.11%
4,000 Murata Manufacturing Co., Ltd. 157,235
1,300 Rohm Co., Ltd. 141,720
2,500 Sony Corp. 70,373
Transportation & Services - 1.83%
49 East Japan Railway Co. 217,914
-------------
2,112,683
=============
- --------------------------------------------------------------------------------
JUNE 30, 2003 20
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON-STEWART IVORY INTERNATIONAL FUND (Continued)
- ---------------------------------------------------------------
SHARES COMPANY MARKET VALUE
- ---------------------------------------------------------------
NETHERLANDS - 5.33%
Banking & Finance - 1.52%
10,386 ING Groep NV $ 180,452
Energy - 3.01%
7,718 Royal Dutch Petroleum Co. 358,241
Multi-Media - 0.80%
3,109 VNU NV 95,789
-------------
634,482
=============
PORTUGAL - 1.20%
Telecommunications - 1.20%
20,000 Portugal Telecom, SGPS, SA 143,314
=============
SOUTH KOREA - 4.34%
Banking & Finance - 0.98%
3,860 Kookmin Bank 116,333
Insurance - 0.77%
1,880 Samsung Fire & Marine
Insurance Co., Ltd. 91,442
Technology - 1.72%
690 Samsung Electronics Co., Ltd. 205,066
Telecommunications - 0.87%
5,500 SK Telecom Co., Ltd. 103,730
-------------
516,571
=============
SPAIN - 2.46%
Banking & Finance - 1.51%
3,562 Banco Popular Espanol SA 179,978
Telecommunications - 0.95%
9,740 Telefonica SA* 113,080
-------------
293,058
=============
SWEDEN - 0.65%
Consumer Cyclical - 0.65%
7,500 Securitas AB Cl. B 76,827
=============
SWITZERLAND - 8.49%
Consumer Cyclical - 0.74%
2,135 Adecco SA 87,950
Consumer Staples - 3.64%
2,100 Nestle SA 433,318
Healthcare - 3.13%
1,482 Novartis AG 58,643
4,000 Roche Holding AG 313,758
Insurance - 0.98%
2,525 Converium Holding AG 116,505
-------------
1,010,174
=============
UNITED KINGDOM - 22.67%
Banking & Finance - 4.47%
11,688 HSBC Holdings PLC 138,095
14,000 Royal Bank of Scotland Group PLC 392,735
Consumer Staples - 2.55%
83,996 Tesco PLC 303,894
Healthcare - 3.31%
5,500 AstraZeneca PLC 220,543
30,249 Smith & Nephew PLC 173,830
Manufacturing-Diversified - 1.24%
12,691 Smiths Group PLC 147,223
Multi-Media - 1.57%
20,000 Pearson PLC 186,797
Technology - 1.37%
74,956 Dixons Group PLC 163,269
Telecommunications - 4.16%
252,623 Vodafone Group PLC 493,985
Transportation & Services - 1.44%
45,282 easyJet PLC* 171,861
Utilities - 2.56%
105,000 Centrica PLC 304,515
-------------
2,696,747
=============
TOTAL COMMON STOCKS 11,392,891
=============
TOTAL INVESTMENTS - 95.73% 11,392,891
(Cost $10,985,635)
Other assets less liabilities - 4.27% 508,766
-------------
TOTAL NET ASSETS - 100.00% $ 11,901,657
=============
<FN>
For federal income tax purposes, the identified cost of investments owned at
June 30, 2003 was $11,028,855.
Net unrealized appreciation for federal income tax purposes was $364,036, which
is comprised of unrealized appreciation of $1,063,889 and unrealized
depreciation of ($699,853).
*Non-income producing security
</FN>
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 21
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BABSON BOND TRUST
- --------------------------------------------------------------------------------
OVERVIEW
In the initial months of 2003, geo-politics was the dominating concern, as an
impending war with Iraq loomed and finally came to fruition in early March.
Against this backdrop, economic indicators continued to remain weak, and there
were little signs of improvement. In a dramatic turnaround after the war in Iraq
ended, both the U.S. equity and bond markets post strong, positive returns, as a
wave of optimism boosted the markets. The Federal Reserve continued to stimulate
the economy by cutting short-term rates. It is clear that the economy, in
general, is improving, all be it at a slower rate than many hoped. Gross
Domestic Product (GDP) for the 1st quarter of 2003 was a stingy 1.4%. Labor
statistics continue to remain weak. Inflation remains under control, and while
there may be some concern about deflation, at this juncture we think it would be
short-lived if it did materialize.
Over the first half of 2003, we saw a continuation of the strong corporate bond
performance that has been in play since October 2002. Corporates, again,
outperformed treasuries and other asset classes. Corporate spreads tightened
towards more conventional levels.
PORTFOLIO
Over the six months through June, the Bond Trust Long Fund slightly
underperformed its benchmark, returning +3.65% net-of-fees, versus the Lehman
Brothers Aggregate Index return of +3.93%. Mortgages underperformed the overall
fixed income market. With interest rates falling, the duration of mortgages
lengthened dramatically as investors thought that mortgage pre-payment would
lessen. Our overweight position in corporate bonds added to performance, as
corporate continued to perform well. Lower-rated bonds posted strong performance
and our higher-than-benchmark exposure to triple-B rated bonds continues to
serve the Fund well. We continue to maintain an underweight position in
Treasuries.
QUALITY RATINGS
PORTFOLIO L
- -------------------------------
Aaa 70.8%
Aa 6.4
A 2.1
Baa 4.8
Ba 5.2
B 5.7
Not Rated 5.0
------------
Total 100.0%
<FN>
Source: Moody's
</FN>
BABSON BOND TRUST - PORTFOLIO L VERSUS LEHMAN BROTHERS U.S. INTERMEDIATE
AGGREGATE BOND INDEX
Babson Bond Trust -
Portfolio L LB Aggregrate Bond Index
Time Period Monthly Returns Plot Points Monthly Returns Plot Points
06/30/93 10,000.00 10,000.00
07/31/93 0.58% 10,058.00 0.57% 10,057.00
08/31/93 2.35% 10,294.36 1.75% 10,233.00
09/30/93 -0.04% 10,290.25 0.27% 10,260.63
10/31/93 0.56% 10,347.87 0.37% 10,298.59
11/30/93 -1.21% 10,222.66 -0.85% 10,211.05
12/31/93 1.21% 10,346.36 0.54% 10,266.19
01/31/94 1.17% 10,467.41 1.35% 10,404.79
02/28/94 -1.88% 10,270.62 -1.74% 10,223.74
03/31/94 -1.94% 10,071.37 -2.47% 9,971.22
04/30/94 -1.35% 9,935.41 -0.80% 9,891.45
05/31/94 -0.07% 9,928.45 -0.01% 9,890.46
06/30/94 -0.08% 9,920.51 -0.22% 9,868.70
07/31/94 1.92% 10,110.98 1.99% 10,065.09
08/31/94 -0.07% 10,103.91 0.12% 10,077.16
09/30/94 -0.75% 10,028.13 -1.47% 9,929.03
10/31/94 -0.74% 9,953.92 -0.09% 9,920.09
11/30/94 -0.06% 9,947.95 -0.22% 9,898.27
12/31/94 0.62% 10,009.62 0.69% 9,966.57
01/31/95 0.61% 10,070.68 1.98% 10,163.91
02/28/95 2.64% 10,336.55 2.38% 10,405.81
03/31/95 0.60% 10,398.57 0.61% 10,469.28
04/30/95 1.26% 10,529.59 1.40% 10,615.85
05/31/95 3.91% 10,941.30 3.87% 11,026.68
06/30/95 0.56% 11,002.57 0.73% 11,107.18
07/31/95 -0.07% 10,994.87 -0.22% 11,082.74
08/31/95 1.23% 11,130.10 1.21% 11,216.85
09/30/95 0.57% 11,193.54 0.97% 11,325.65
10/31/95 1.21% 11,328.99 1.30% 11,472.88
11/30/95 1.23% 11,468.33 1.50% 11,644.98
12/31/95 1.20% 11,605.95 1.40% 11,808.00
01/31/96 0.57% 11,672.11 0.66% 11,885.94
02/29/96 -1.95% 11,444.50 -1.74% 11,679.12
03/31/96 -0.69% 11,365.53 -0.70% 11,597.37
04/30/96 -0.08% 11,356.44 -0.56% 11,532.42
05/31/96 -0.08% 11,347.36 -0.20% 11,509.36
06/30/96 1.26% 11,490.33 1.34% 11,663.58
07/31/96 -0.08% 11,481.14 0.27% 11,695.08
08/31/96 -0.08% 11,471.96 -0.17% 11,675.19
09/30/96 1.26% 11,616.50 1.74% 11,878.34
10/31/96 2.58% 11,916.21 2.22% 12,142.04
11/30/96 1.21% 12,060.39 1.71% 12,349.67
12/31/96 -0.73% 11,972.35 -0.93% 12,234.82
01/31/97 0.55% 12,038.20 0.31% 12,272.75
02/28/97 -0.10% 12,026.16 0.25% 12,303.43
03/31/97 -0.78% 11,932.36 -1.11% 12,166.86
04/30/97 1.20% 12,075.55 1.50% 12,349.36
05/31/97 0.53% 12,139.55 0.95% 12,466.68
06/30/97 1.21% 12,286.44 1.19% 12,615.04
07/31/97 2.49% 12,592.37 2.70% 12,955.64
08/31/97 -0.78% 12,494.15 -0.85% 12,845.52
09/30/97 1.84% 12,724.04 1.48% 13,035.63
10/31/97 1.16% 12,871.64 1.45% 13,224.65
11/30/97 0.50% 12,936.00 0.46% 13,285.48
12/31/97 1.15% 13,084.76 1.01% 13,419.67
01/31/98 1.13% 13,232.62 1.28% 13,591.44
02/28/98 -0.13% 13,215.42 -0.08% 13,580.56
03/31/98 0.50% 13,281.49 0.34% 13,626.74
04/30/98 -0.10% 13,268.21 0.52% 13,697.60
05/31/98 1.78% 13,504.39 0.95% 13,827.72
06/30/98 0.49% 13,570.56 0.85% 13,945.26
07/31/98 -0.16% 13,548.84 0.21% 13,974.55
08/31/98 1.13% 13,701.95 1.63% 14,202.33
09/30/98 2.38% 14,028.05 2.34% 14,534.66
10/31/98 -0.77% 13,920.04 -0.53% 14,457.63
11/30/98 0.48% 13,986.85 0.57% 14,540.04
12/31/98 0.61% 14,072.17 0.30% 14,583.66
01/31/99 0.46% 14,136.90 0.71% 14,687.20
02/28/99 -1.49% 13,926.26 -1.75% 14,430.18
03/31/99 0.46% 13,990.33 0.55% 14,509.54
04/30/99 0.46% 14,054.68 0.32% 14,555.97
05/31/99 -0.81% 13,940.84 -0.88% 14,427.88
06/30/99 -0.83% 13,825.13 -0.32% 14,381.71
07/31/99 -0.17% 13,801.63 -0.42% 14,321.31
08/31/99 -0.83% 13,687.07 -0.05% 14,314.15
09/30/99 1.17% 13,847.21 1.16% 14,480.19
10/31/99 0.52% 13,919.22 0.37% 14,533.77
11/30/99 -0.16% 13,896.95 -0.01% 14,532.32
12/31/99 -0.14% 13,877.49 -0.48% 14,462.56
01/31/00 -0.81% 13,765.08 -0.33% 14,414.83
02/29/00 1.19% 13,928.89 1.21% 14,589.25
03/31/00 1.88% 14,190.75 1.32% 14,781.83
04/30/00 -0.83% 14,072.97 -0.29% 14,738.96
05/31/00 -0.16% 14,050.45 -0.05% 14,731.60
06/30/00 1.88% 14,314.60 2.08% 15,038.01
07/31/00 1.19% 14,484.94 0.91% 15,174.86
08/31/00 1.18% 14,655.87 1.45% 15,394.89
09/30/00 0.50% 14,729.14 0.63% 15,491.88
10/31/00 -0.15% 14,707.05 0.66% 15,594.13
11/30/00 1.85% 14,979.13 1.64% 15,849.87
12/31/00 1.84% 15,254.75 1.86% 16,144.68
01/31/01 2.46% 15,630.01 1.63% 16,407.84
02/28/01 0.46% 15,701.91 0.87% 16,550.59
03/31/01 0.49% 15,778.85 0.50% 16,633.34
04/30/01 -1.44% 15,551.64 -0.42% 16,563.48
05/31/01 0.50% 15,629.39 0.60% 16,662.86
06/30/01 1.14% 15,807.57 0.38% 16,726.18
07/31/01 2.43% 16,191.69 2.24% 17,100.84
08/31/01 0.47% 16,267.79 1.15% 17,297.50
09/30/01 1.07% 16,441.86 1.16% 17,498.16
10/31/01 1.71% 16,723.02 2.09% 17,863.87
11/30/01 -0.82% 16,585.89 -1.38% 17,617.35
12/31/01 -0.83% 16,448.22 -0.64% 17,504.59
01/31/02 0.44% 16,520.60 0.81% 17,646.38
02/28/02 0.42% 16,589.98 0.97% 17,817.55
03/31/02 -1.47% 16,346.11 -1.66% 17,521.78
04/30/02 1.10% 16,525.92 1.94% 17,861.70
05/31/02 1.11% 16,709.35 0.85% 18,013.53
06/30/02 -0.84% 16,569.00 0.87% 18,170.24
07/31/02 0.47% 16,646.87 1.21% 18,390.10
08/31/02 1.10% 16,829.99 1.69% 18,700.90
09/30/02 1.74% 17,122.83 1.62% 19,003.85
10/31/02 -0.85% 16,977.28 -0.46% 18,916.43
11/30/02 -0.23% 16,938.24 -0.03% 18,910.76
12/31/02 2.38% 17,341.37 2.07% 19,302.21
01/31/03 -0.23% 17,301.48 0.09% 19,319.58
02/28/03 1.68% 17,592.15 1.38% 19,586.19
03/31/03 -0.24% 17,549.92 -0.08% 19,570.53
04/30/03 1.01% 17,727.18 0.83% 19,732.96
05/31/03 1.66% 18,021.45 1.86% 20,099.99
06/30/03 -0.27% 17,972.79 -0.20% 20,059.79
Six month 3.64% 3.92%
One Year 8.47% 10.40%
Three Year 7.88% 10.08%
Five Years 5.78% 7.54%
Ten Years 6.03% 7.21%
Average annual compounded total returns for one, five and ten year periods as of
June 30, 2003 were 8.47%, 5.78% and 6.04%, respectively. Performance data
contained in this report is for past periods only. Past performance is not
predictive of future performance. Investment return and share value will
fluctuate, and redemption value may be more or less than original cost.
- --------------------------------------------------------------------------------
JUNE 30, 2003 22
- --------------------------------------------------------------------------------
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BABSON BOND TRUST
- --------------------------------------------------------------------------------
OVERVIEW
In the initial months of 2003, geo-politics was the dominating concern, as an
impending war with Iraq loomed and finally came to fruition in early March.
Against this backdrop, economic indicators continued to remain weak, and there
were little signs of improvement. In a dramatic turnaround after the war in Iraq
ended, both the U.S. equity and bond markets post strong, positive returns, as a
wave of optimism boosted the markets. The Federal Reserve continued to stimulate
the economy by cutting short-term rates. It is clear that the economy, in
general, is improving, all be it at a slower rate than many hoped. Gross
Domestic Product (GDP) for the 1st quarter of 2003 was a stingy 1.4%. Labor
statistics continue to remain weak. Inflation remains under control, and while
there may be some concern about deflation, at this juncture we think it would be
short-lived if it did materialize.
Over the first half of 2003, we saw a continuation of the strong corporate bond
performance that has been in play since October 2002. Corporates, again,
outperformed treasuries and other asset classes. Corporate spreads tightened
towards more conventional levels.
PORTFOLIO
Over the six months through June, the Bond Trust Short Fund outperformed its
benchmark, returning +3.52% net-of-fees, versus the Lehman Brothers Intermediate
Aggregate Index return of +3.19%. Our overweight position in corporate bonds
added to performance. Corporate America has begun to take advantage of low rates
to refinance their debt and put their balance sheets in order. In general,
companies are using this lower-rate environment to refinance and pay down
existing debt. In such a difficult economic environment, companies are applying
a strong balance-sheet discipline. This trend has helped Corporate bonds to
outperform Treasuries since October 2002, and to improve investor sentiment
toward Corporates. Lower-rated bonds continued to post strong performance and
our higher-than-benchmark exposure to triple-B rated bonds continues to serve
the Fund well. We continue to maintain an underweight position in Treasuries.
QUALITY RATINGS
===============================
PORTFOLIO S
- -------------------------------
Aaa 73.2%
Aa 5.2
A 3.0
Baa 4.0
Ba 4.8
B 4.5
Not Rated 5.3
------------
Total 100.0%
- -------------------------------
<FN>
Source: Moody's
</FN>
BABSON BOND TRUST - PORTFOLIO S VERSUS LEHMAN BROTHERS U.S. INTERMEDIATE
AGGREGATE BOND INDEX
Babson Bond Trust -
Portfolio S LB U.S. Intermediate Aggregrate Bond Index
Time Period Monthly Returns Plot Points Monthly Returns Plot Points
06/30/93 10,000.00 10,000.00
07/31/93 0.37% 10,037.00 0.24% 10,024.00
08/31/93 1.50% 10,187.56 1.59% 10,183.38
09/30/93 0.53% 10,241.55 0.41% 10,225.13
10/31/93 0.46% 10,288.66 0.27% 10,252.74
11/30/93 -0.79% 10,207.38 -0.56% 10,195.33
12/31/93 0.57% 10,265.56 0.46% 10,242.22
01/31/94 1.06% 10,374.38 1.11% 10,355.91
02/28/94 -1.48% 10,220.84 -1.48% 10,202.65
03/31/94 -1.60% 10,057.30 -1.65% 10,034.30
04/30/94 -0.72% 9,984.89 -0.68% 9,966.07
05/31/94 -0.13% 9,971.91 0.07% 9,973.04
06/30/94 0.19% 9,990.86 -0.01% 9,972.05
07/31/94 1.23% 10,113.74 1.44% 10,115.65
08/31/94 0.28% 10,142.06 0.31% 10,147.00
09/30/94 -0.65% 10,076.14 -0.92% 10,053.65
10/31/94 -0.24% 10,051.96 -0.01% 10,052.65
11/30/94 -0.54% 9,997.68 -0.45% 10,007.41
12/31/94 0.54% 10,051.66 0.35% 10,042.43
01/31/95 1.39% 10,191.38 1.68% 10,211.15
02/28/95 1.89% 10,384.00 2.07% 10,422.52
03/31/95 0.72% 10,458.76 0.57% 10,481.93
04/30/95 1.03% 10,566.49 1.24% 10,611.90
05/31/95 2.48% 10,828.54 3.02% 10,932.38
06/30/95 0.60% 10,893.51 0.67% 11,005.63
07/31/95 0.10% 10,904.40 0.01% 11,006.73
08/31/95 0.85% 10,997.09 0.91% 11,106.89
09/30/95 0.75% 11,079.57 0.72% 11,186.86
10/31/95 0.92% 11,181.50 1.11% 11,311.03
11/30/95 1.12% 11,306.73 1.31% 11,459.21
12/31/95 0.99% 11,418.67 1.05% 11,579.53
01/31/96 0.71% 11,499.74 0.86% 11,679.12
02/29/96 -0.81% 11,406.59 -1.17% 11,542.47
03/31/96 -0.32% 11,370.09 -0.51% 11,483.60
04/30/96 -0.11% 11,357.59 -0.35% 11,443.41
05/31/96 -0.16% 11,339.41 -0.08% 11,434.26
06/30/96 1.01% 11,453.94 1.06% 11,555.46
07/31/96 0.18% 11,474.56 0.30% 11,590.12
08/31/96 0.08% 11,483.74 0.08% 11,599.40
09/30/96 1.44% 11,649.10 1.39% 11,760.63
10/31/96 1.54% 11,828.50 1.77% 11,968.79
11/30/96 1.27% 11,978.72 1.32% 12,126.78
12/31/96 -0.48% 11,921.22 -0.64% 12,049.17
01/31/97 0.34% 11,961.76 0.39% 12,096.16
02/28/97 0.24% 11,990.46 0.19% 12,119.14
03/31/97 -0.51% 11,929.31 -0.69% 12,035.52
04/30/97 1.06% 12,055.76 1.18% 12,177.54
05/31/97 0.63% 12,131.72 0.83% 12,278.61
06/30/97 1.05% 12,259.10 0.91% 12,390.35
07/31/97 2.09% 12,515.31 2.03% 12,641.87
08/31/97 -0.50% 12,452.74 -0.50% 12,578.66
09/30/97 1.16% 12,597.19 1.16% 12,724.58
10/31/97 1.25% 12,754.65 1.11% 12,865.82
11/30/97 0.21% 12,781.44 0.22% 12,894.12
12/31/97 0.93% 12,900.31 0.80% 12,997.28
01/31/98 1.22% 13,057.69 1.31% 13,167.54
02/28/98 0.09% 13,069.44 -0.08% 13,157.01
03/31/98 0.29% 13,107.34 0.32% 13,199.11
04/30/98 0.22% 13,136.18 0.50% 13,265.11
05/31/98 0.87% 13,250.46 0.73% 13,361.94
06/30/98 0.58% 13,327.32 0.64% 13,447.46
07/31/98 0.28% 13,364.63 0.35% 13,494.52
08/31/98 0.88% 13,482.24 1.57% 13,706.39
09/30/98 1.71% 13,712.79 2.51% 14,050.42
10/31/98 -0.11% 13,697.70 -0.10% 14,036.37
11/30/98 0.28% 13,736.06 -0.01% 14,034.96
12/31/98 0.38% 13,788.25 0.40% 14,091.10
01/31/99 0.88% 13,909.59 0.55% 14,168.60
02/28/99 -1.15% 13,749.63 -1.47% 13,960.33
03/31/99 0.78% 13,856.88 0.75% 14,065.03
04/30/99 0.27% 13,894.29 0.31% 14,108.63
05/31/99 -0.74% 13,791.47 -0.77% 13,999.99
06/30/99 -0.25% 13,757.00 0.07% 14,009.79
07/31/99 -0.34% 13,710.22 -0.09% 13,997.18
08/31/99 -0.13% 13,692.40 0.08% 14,008.38
09/30/99 1.23% 13,860.81 0.93% 14,138.66
10/31/99 0.09% 13,873.29 0.26% 14,175.42
11/30/99 0.19% 13,899.65 0.12% 14,192.43
12/31/99 -0.43% 13,839.88 -0.33% 14,145.60
01/31/00 -0.43% 13,780.37 -0.37% 14,093.26
02/29/00 0.83% 13,894.75 0.82% 14,208.82
03/31/00 1.16% 14,055.92 1.04% 14,356.59
04/30/00 -0.34% 14,008.13 -0.23% 14,323.57
05/31/00 -0.22% 13,977.32 0.16% 14,346.49
06/30/00 1.93% 14,247.08 1.76% 14,598.99
07/31/00 0.64% 14,338.26 0.76% 14,709.94
08/31/00 1.28% 14,521.79 1.18% 14,883.52
09/30/00 0.94% 14,658.29 0.91% 15,018.96
10/31/00 -0.11% 14,642.17 0.46% 15,088.05
11/30/00 1.80% 14,905.73 1.36% 15,293.24
12/31/00 1.79% 15,172.54 1.84% 15,574.64
01/31/01 1.76% 15,439.58 1.64% 15,830.06
02/28/01 0.69% 15,546.11 0.95% 15,980.45
03/31/01 0.61% 15,640.94 0.77% 16,103.50
04/30/01 -1.04% 15,478.28 -0.26% 16,061.63
05/31/01 0.61% 15,572.69 0.56% 16,151.57
06/30/01 0.51% 15,652.12 0.37% 16,211.34
07/31/01 2.16% 15,990.20 2.08% 16,548.53
08/31/01 0.90% 16,134.11 1.00% 16,714.02
09/30/01 0.85% 16,271.25 1.46% 16,958.04
10/31/01 1.47% 16,510.44 1.66% 17,239.54
11/30/01 -0.35% 16,452.65 -1.00% 17,067.15
12/31/01 -1.15% 16,263.45 -0.55% 16,973.28
01/31/02 0.37% 16,323.62 0.52% 17,061.54
02/28/02 0.96% 16,480.33 0.79% 17,196.33
03/31/02 -1.37% 16,254.55 -1.52% 16,934.94
04/30/02 0.78% 16,381.33 1.65% 17,214.37
05/31/02 0.99% 16,543.51 1.00% 17,386.51
06/30/02 -0.47% 16,465.76 0.86% 17,536.04
07/31/02 0.89% 16,612.30 1.18% 17,742.96
08/31/02 0.55% 16,703.67 1.49% 18,007.33
09/30/02 1.58% 16,967.59 1.79% 18,329.66
10/31/02 -0.49% 16,884.45 -0.39% 18,258.18
11/30/02 0.10% 16,901.33 -0.09% 18,241.75
12/31/02 1.67% 17,183.58 2.18% 18,639.42
01/31/03 0.12% 17,204.20 -0.01% 18,637.55
02/28/03 1.02% 17,379.69 1.41% 18,900.34
03/31/03 0.20% 17,414.44 0.10% 18,919.24
04/30/03 0.78% 17,550.28 0.76% 19,063.03
05/31/03 1.22% 17,764.39 2.01% 19,446.19
06/30/03 0.15% 17,791.04 -0.07% 19,432.58
Six month 3.54% 4.26%
One Year 8.05% 10.82%
Three Year 7.69% 10.00%
Five Years 5.94% 7.64%
Ten Years 5.93% 6.87%
Average annual compounded total returns for one, five and ten year periods as of
June 30, 2003 were 8.05%, 5.94% and 5.93%, respectively. Performance data
contained in this report is for past periods only. Past performance is not
predictive of future performance. Investment return and share value will
fluctuate, and redemption value may be more or less than original cost.
- --------------------------------------------------------------------------------
JUNE 30, 2003 23
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SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON BOND TRUST - PORTFOLIO L
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION MARKET VALUE
- --------------------------------------------------------------------------------
U.S. GOVERNMENT SPONSORED
AND AGENCY OBLIGATIONS - 46.45%
*Federal Home Loan Mortgage Corporation - 8.78%
$ 33,845 7.75%, 04/01/08 $ 36,051
11,591 7.75%, 11/01/08 12,237
4,569 8.00%, 08/01/09 4,767
35,531 8.25%, 10/01/10 37,535
28,267 9.00%, 06/01/16 31,452
61,440 8.00%, 10/01/18 66,794
14,143 9.00%, 10/01/18 15,399
140,777 7.50%, 02/01/21 150,748
2,449,889 6.00%, 11/01/28 2,544,327
250,000 7.00%, 08/15/29 275,688
204,454 7.50%, 02/01/30, Pool C55867 217,353
508,381 7.50%, 02/01/30, Pool C00921 542,851
345,142 7.50%, 01/01/31 366,917
668,974 6.50%, 06/01/31 696,354
286,992 6.50%, 08/01/32, Pool C69600 298,748
634,750 6.50%, 08/01/32, Pool C01444 660,729
1,497,998 6.00%, 04/01/33 1,553,646
-------------
7,511,596
=============
*Federal National Conventional Loan - 13.35%
85,497 7.00%, 12/01/07 88,049
34,133 8.25%, 01/01/09 36,120
32,306 8.00%, 02/01/09 34,588
10,028 8.50%, 07/01/13 10,932
581,799 5.50%, 03/01/17, Pool 637059 604,558
101,304 5.50%, 03/01/17, Pool 633116 105,267
322,527 5.50%, 03/01/17, Pool 630317 335,144
27,770 5.50%, 04/01/17 28,857
393,412 5.50%, 06/01/17 408,802
1,849,816 5.50%, 09/01/17 1,922,179
855,975 5.50%, 02/01/18 889,460
11,869 9.25%, 10/01/20 13,162
382,010 6.50%, 03/01/29 398,909
464,954 7.50%, 09/01/29 494,708
89,570 7.00%, 10/01/29 94,400
2,992 7.00%, 01/01/30 3,152
3,752 7.00%, 02/01/30, Pool 528731 3,953
111,659 7.00%, 02/01/30, Pool 527759 117,654
28,009 7.00%, 02/01/30, Pool 519217 29,513
172,914 7.00%, 02/01/30, Pool 502368 182,199
182,197 6.50%, 05/01/31 190,057
893,579 6.50%, 10/01/31 932,128
381,357 5.50%, 01/01/32 394,936
249,434 6.50%, 04/01/32 260,196
377,655 6.50%, 08/01/32, Pool 254448 393,948
652,043 6.50%, 08/01/32, Pool 254406 680,176
493,436 5.50%, 03/01/33 511,034
649,205 5.00%, 04/01/33 660,820
49,943 5.00%, 05/01/33 50,836
1,496,037 5.50%, 06/01/33 1,549,392
-------------
11,425,129
=============
*Federal National Mortgage Association - 0.43%
284,080 6.42%, 11/01/08 325,546
34,766 9.50%, 06/25/18 38,933
-------------
364,479
=============
*Government National Mortgage Association - 14.64%
14,273 7.50%, 03/15/07, Pool 16497 14,990
9,928 7.50%, 03/15/07, Pool 16308 10,427
50,387 7.50%, 07/15/07 52,921
69,775 8.00%, 10/15/07 74,549
887,738 8.00%, 11/15/09 958,976
9,611 9.50%, 04/15/16 10,825
20,762 9.50%, 01/15/19 23,425
50,542 8.00%, 05/15/22 55,132
25,284 6.50%, 08/15/23 26,719
25,430 6.50%, 11/15/23 26,873
24,427 6.50%, 12/15/23 25,813
39,479 6.50%, 02/15/24 41,692
378,221 6.50%, 03/15/24 399,427
1,192,171 7.00%, 03/15/24 1,267,641
441,274 6.50%, 06/15/24 466,016
973,310 8.00%, 12/15/26 1,055,425
689,421 6.00%, 02/15/29 723,882
614,802 7.00%, 12/15/29 650,257
166,440 6.50%, 05/15/31 174,999
156,325 6.50%, 08/15/31 164,204
224,762 6.50%, 10/15/31 236,090
17,109 6.00%, 11/15/31 17,948
296,114 6.50%, 11/15/31, Pool 568184 311,039
213,131 6.50%, 11/15/31, Pool 571281 223,873
546,335 6.00%, 01/15/32 573,133
306,915 7.00%, 07/15/32 324,264
1,311,881 6.50%, 09/15/32 1,377,925
999,901 6.00%, 01/15/33 1,049,716
892,791 5.50%, 03/15/33 931,850
500,000 6.00%, 03/15/33 524,531
699,045 5.50%, 05/15/33 729,629
-------------
12,524,191
=============
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JUNE 30, 2003 24
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SCHEDULE OF INVESTMENTS
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June 30, 2003
BABSON BOND TRUST - PORTFOLIO L (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION MARKET VALUE
- --------------------------------------------------------------------------------
Small Business Administration - 0.07%
$ 28,563 9.80%, 07/01/08 $ 30,709
7,680 10.05%, 08/01/08 8,294
22,228 10.05%, 04/01/09 24,215
-------------
63,218
=============
U.S. Treasury Bonds - 9.10%
1,000,000 7.875%, 02/15/21 1,427,969
2,650,000 8.125%, 05/15/21 3,870,762
1,200,000 6.25%, 08/15/23 1,470,282
350,000 6.125%, 11/15/27 426,153
480,000 6.125%, 08/15/29 586,669
-------------
7,781,835
=============
U.S. Treasury Notes - 0.08%
60,000 4.375%, 08/15/12 64,352
-------------
TOTAL U.S. GOVERNMENT SPONSORED
AND AGENCY OBLIGATIONS 39,734,800
=============
(Cost $37,966,996)
CORPORATE BONDS - 40.13%
BANKS & FINANCE - 13.80%
175,000 Bank of America Corp.,
5.25%, 02/01/07 192,446
310,000 Bank of America Corp.,
7.40%, 01/15/11 381,439
285,000 Boeing Capital Corp.,
7.10%, 09/27/05 314,523
325,000 Capital Auto Receivables Asset Trust,
2.27%, 01/17/06 329,473
100,000 Capital One Financial Corp.,
4.875%, 05/15/08 102,161
200,000 CIT Group, Inc.,
4.125%, 02/21/06 207,133
225,000 CIT Group, Inc.,
7.375%, 04/02/07 257,112
165,000 Citigroup, Inc.,
4.875%, 05/07/15 170,076
445,000 Countrywide Home Loans, Inc.,
5.50%, 02/01/07 487,590
530,000 Ford Credit Auto Owner Trust,
4.14%, 12/15/05 542,068
180,000 Ford Motor Co.,
6.375%, 02/01/29 145,945
280,000 Ford Motor Co.,
7.45%, 07/16/31 257,210
500,000 Ford Motor Credit Co.,
7.60%, 08/01/05 537,103
100,000 Franklin Resources, Inc.,
3.70%, 04/15/08 102,444
666,901 GE Capital Commercial Mortgage Corp.,
5.03%, 12/10/35 709,737
600,000 General Electric Capital Corp.,
5.875%, 02/15/12 672,314
500,000 General Motors Acceptance Corp.,
7.75%, 01/19/10 538,804
150,000 General Motors Acceptance Corp.,
8.375%, 07/15/33 147,900
75,000 Household Finance Corp.,
6.375%, 11/27/12 85,589
150,000 HSBC Holdings PLC,
5.25%, 12/12/12 160,277
210,000 John Deere Capital Corp.,
5.125%, 10/19/06 228,182
500,000 Kimco Realty Corp.,
7.86%, 11/01/07 594,713
225,000 Kreditanstalt fur Wiederaufbau,
3.375%, 01/23/08 232,535
500,000 MBNA Master Credit Card Trust II,
5.90%, 08/15/11 573,919
315,000 Merrill Lynch & Co., Inc.,
2.47%, 03/10/06 318,135
407,087 MMCA Automobile Trust,
4.15%, 05/15/06 409,488
1,200,000 National City Auto Receivable Trust,
4.04%, 07/15/06 1,223,940
100,000 New Valley Corp.,
4.69%, 01/15/22 104,230
375,000 Textron Financial Corp.,
5.95%, 03/15/04 385,283
265,000 The Bear Stearns Companies, Inc.,
3.00%, 03/30/06 272,029
200,000 The Goldman Sachs Group, Inc.,
4.125%, 01/15/08 210,388
350,000 Vanderbilt Mortgage & Finance, Inc.,
4.23%, 02/07/15 361,861
500,000 Wells Fargo & Co.,
5.125%, 02/15/07 547,443
-----------
11,803,490
===========
Continued on next page.
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JUNE 30, 2003 25
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SCHEDULE OF INVESTMENTS
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JUNE 30, 2003
BABSON BOND TRUST - PORTFOLIO L (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION MARKET VALUE
- --------------------------------------------------------------------------------
COMMUNICATIONS - 5.84%
$ 85,000 AOL Time Warner, Inc.,
7.625%, 04/15/31 $ 98,467
110,000 AOL Time Warner, Inc.,
7.70%, 05/01/32 128,906
123,690 BellSouth Savings & Employee
Stock Ownership Trust,
9.19%, 07/01/03 123,690
265,000 British Telecom PLC,
8.875%, 12/15/30 362,956
225,000 Clear Channel Communications, Inc.,
4.25%, 05/15/09 228,165
505,000 Comcast Cable Communications, Inc.,
6.375%, 01/30/06 551,473
540,000 Cox Communications, Inc.,
7.75%, 11/01/10 661,487
85,000 France Telecom SA,
10.00%, 03/01/31 118,034
150,000 Sprint Corp.,
6.90%, 05/01/19 157,576
575,000 Telefonica S.A.,
7.35%, 09/15/05 642,371
510,000 United Technologies Corp.,
6.35%, 03/01/11 592,249
280,000 Verizon Global Funding Corp.,
7.375%, 09/01/12 342,227
275,000 Verizon Global Funding Corp.,
7.75%, 12/01/30 349,636
200,000 Vodafone Group PLC,
5.375%, 01/30/15 214,155
250,000 WorldCom, Inc.,
0.00%, 05/15/04(d) 74,375
1,165,000 WorldCom, Inc.,
0.00%, 05/15/31(d) 346,588
------------
4,992,355
============
DIVERSIFIED - 13.99%
400,000 Albertson's, Inc.,
7.50%, 02/15/11 467,999
290,000 Amerada Hess Corp.,
7.125%, 03/15/33 331,171
500,000 Anheuser-Busch Companies, Inc.,
6.00%, 04/15/11 573,766
300,000 Apache Corp.,
6.25%, 04/15/12 349,920
150,000 Aramark Corp.,
8.15%, 05/01/05 164,403
290,000 AutoZone, Inc.,
5.875%, 10/15/12 320,312
200,000 Brascan Corp.,
8.125%, 12/15/08 237,418
500,000 Cardinal Health, Inc.,
6.75%, 02/15/11 594,294
250,000 Cendant Corp.,
7.375%, 01/15/13 295,000
722,470 Continental Airlines, Inc.,
8.05%, 11/01/20 716,491
400,000 Daimler Chrysler N.A. Holding Corp.,
6.90%, 09/01/04 419,390
650,000 Daimler Chrysler N.A. Holding Corp.,
4.05%, 06/04/08 644,415
70,000 Electronic & Data Systems, Inc.,
7.125%, 10/15/09 75,365
495,000 Enterprise Products Partners LP,
7.50%, 02/01/11 594,211
450,000 Fred Meyer, Inc.,
7.45%, 03/01/08 524,858
500,000 Gannett Co., Inc.,
4.95%, 04/01/05 528,729
190,000 GATX Capital Corp.,
6.875%, 12/15/06 191,654
410,000 Hershey Foods Corp.,
7.20%, 08/15/27 509,145
325,000 Humana, Inc.,
7.25%, 08/01/06 361,102
145,000 International Game Technology,
8.375%, 05/15/09 178,142
250,000 Kinder Morgan, Inc.,
7.125%, 03/15/12 299,682
100,000 Newell Rubbermaid, Inc.,
4.00%, 05/01/10 102,048
450,000 Norfolk Southern Corp.,
7.25%, 02/15/31 539,170
550,000 Safeway, Inc.,
6.05%, 11/15/03 558,311
500,000 Scholastic Corp.,
5.75%, 01/15/07 547,147
225,000 SUPERVALU, Inc.,
7.50%, 05/15/12 256,966
625,000 Tosco Corp.,
7.25%, 01/01/07 715,162
500,000 Tyco International Ltd.,
6.375%, 02/15/06 523,750
325,000 Visteon Corp.,
8.25%, 08/01/10 353,625
------------
11,973,646
============
Continued on next page.
- --------------------------------------------------------------------------------
JUNE 30, 2003 26
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON BOND TRUST - PORTFOLIO L (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION MARKET VALUE
- --------------------------------------------------------------------------------
ENERGY - 0.42%
$300,000 Conoco, Inc.,
6.95%, 04/15/29 $ 362,132
============
FINANCIAL - 0.29%
220,000 Jefferies Group, Inc.,
7.50%, 08/15/07 246,112
============
INDUSTRIALS - 2.32%
450,000 Avery Dennison Corp.,
6.76%, 04/15/05 488,580
100,000 Avery Dennison Corp.,
6.00%, 01/15/33 106,876
450,000 Dominion Resources, Inc.,
7.82%, 09/15/04 482,525
150,000 Dominion Resources, Inc.,
5.70%, 09/17/12 164,977
350,000 Ingersoll-Rand Co., Ltd.,
5.80%, 06/01/04 364,163
275,000 Lockheed Martin Corp.,
8.50%, 12/01/29 374,949
------------
1,982,070
============
TECHNOLOGY - 0.14%
115,000 Tyco International Group SA Ltd.,
6.375%, 10/15/11 121,900
============
UTILITIES - 3.33%
445,000 Canadian National Railway Co.,
6.375%, 10/15/11 518,863
300,000 Consolidated Edison, Inc.,
6.15%, 07/01/08 341,790
225,000 Consolidated Natural Gas Co.,
6.25%, 11/01/11 258,788
230,000 Florida Power & Light Co.,
5.85%, 02/01/33 247,299
50,000 General Electric Co.,
5.00%, 02/01/13 52,914
450,000 Keyspan Gas East Corp.,
6.90%, 01/15/08 519,212
325,000 MidAmerican Energy Holdings Co.,
5.125%, 01/15/13 345,001
375,000 National Rural Utilities Co.,
8.00%, 03/01/32 485,207
75,000 ProLogis Trust,
7.00%, 10/01/03 76,118
------------
2,845,192
============
TOTAL CORPORATE BONDS 34,326,897
============
(Cost $32,461,394)
Continued on next page.
- --------------------------------------------------------------------------------
JUNE 30, 2003 27
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
June 30, 2003
BABSON BOND TRUST - PORTFOLIO L (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION MARKET VALUE
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE-BACKED
BONDS - 8.12%
BANKS & FINANCE - 8.12%
$ 560,000 Chase Commercial Mortgage
Securities Corp.,
7.60%, 03/18/06 $ 617,811
380,000 Conseco Finance Corp.,
6.21%, 07/01/32 389,606
1,250,000 Credit Suisse First Boston Mortgage
Securities Corp.,
6.52%, 01/17/35 1,339,823
500,000 GMAC Mortgage Loan Trust,
6.75%, 11/25/31 514,804
195,164 GSR Mortgage Loan Trust,
6.50%, 09/25/32 199,105
1,500,000 JP Morgan Commercial Mortgage
Financial Corp.,
6.51%, 10/15/35 1,730,005
329,759 Master Asset Securitization Trust,
6.50%, 10/25/32 338,442
134,546 New Century Home Equity Loan Trust,
6.70%, 10/25/28 140,334
678,586 Oakwood Mortgage Investments,
5.92%, 09/15/17 624,723
238,683 Residential Funding Mortgage
Securities I, Inc.,
6.75%, 05/25/28 239,072
451,108 Residential Accredit Loans, Inc.,
8.00%, 07/25/30 458,237
319,740 Vendee Mortgage Trust,
7.75%, 05/15/22 352,202
------------
TOTAL COMMERCIAL
MORTGAGE-BACKED BONDS 6,944,164
============
(Cost $6,687,972)
- --------------------------------------------------------------------------------
PRIN. AMT./
SHARES DESCRIPTION MARKET VALUE
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 4.07%
62,479 Wells Fargo Government Institutional
Money Market $ 62,479
3,418,497 Wells Fargo Prime Investment
Money Market 3,418,497
------------
TOTAL INVESTMENT COMPANIES 3,480,976
============
(Cost $3,480,976)
MUNICIPAL BOND - TAXABLE - 0.50%
$ 435,000 Illinois State,
5.10%, 06/01/33 427,766
------------
(Cost $435,000)
FOREIGN GOVERNMENT BOND - 0.19%
150,000 Republic of Chile,
5.50%, 01/15/13 159,075
------------
(Cost $148,686)
TOTAL INVESTMENTS - 99.46% 85,073,678
(Cost $81,181,024)
Other assets less liabilities - 0.54% 460,338
------------
TOTAL NET ASSETS - 100.00% $ 85,534,016
============
<FN>
For federal income tax purposes, the identified cost of investments owned at
June 30, 2003 was $81,548,053.
Net unrealized appreciation for federal income tax purposes was $3,525,625,
which is comprised of unrealized appreciation of $5,077,441 and unrealized
depreciation of ($1,551,816).
*Mortgage-backed securities
(d)Defaulted security
</FN>
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 28
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
June 30, 2003
BABSON BOND TRUST - PORTFOLIO S
- -----------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION MARKET VALUE
- -----------------------------------------------------------------------------
U.S. GOVERNMENT SPONSORED
AND AGENCY OBLIGATIONS - 51.14%
*Federal Home Loan Mortgage Corporation - 7.41%
$ 314 8.25%, 07/01/08 $ 320
107,717 8.00%, 01/01/12 116,486
22,831 9.00%, 06/01/16 25,404
15,737 8.00%, 05/01/17 16,973
16,017 9.00%, 05/15/21 16,404
753,812 6.00%, 11/01/28 782,869
102,227 7.50%, 02/01/30, Pool C55867 108,677
508,381 7.50%, 02/01/30, Pool C00921 542,851
85,900 7.00%, 09/01/31 90,103
157,838 5.50%, 11/01/31 163,105
259,129 6.50%, 08/01/32, Pool C69600 269,743
90,678 6.50%, 08/01/32, Pool G01444 94,390
149,800 6.00%, 04/01/33 155,365
-------------
2,382,690
=============
*Federal National Conventional Loan - 19.27%
15,878 7.00%, 12/01/07 16,352
3,556 8.25%, 01/01/09 3,763
49,706 5.50%, 03/01/17, Pool 627487 51,650
108,745 5.50%, 03/01/17, Pool 626582 112,999
324,379 5.50%, 05/01/17 337,069
684,932 5.50%, 11/01/17 711,501
340,777 5.00%, 03/01/18 352,548
6,247 9.25%, 10/01/20 6,927
305,608 6.50%, 03/01/29 319,128
5,774 6.50%, 06/01/29 6,030
139,486 7.50%, 09/01/29 148,413
115,427 7.00%, 12/01/29 121,651
2,701 7.00%, 02/01/30 2,847
109,318 6.50%, 05/01/31 114,034
381,504 6.50%, 09/01/31 397,962
357,432 6.50%, 10/01/31 372,851
121,877 5.50%, 01/01/32 126,216
205,111 6.50%, 01/01/32 213,960
83,144 6.50%, 04/01/32 86,732
135,956 6.50%, 08/01/32, Pool 254448 141,821
489,033 6.50%, 08/01/32, Pool 254406 510,132
256,234 6.00%, 11/01/32 266,462
468,764 5.50%, 03/01/33 485,482
502,075 6.00%, 03/01/33 522,114
497,487 5.50%, 05/01/33 515,229
249,340 5.50%, 06/01/33 258,233
-------------
6,202,106
=============
*Federal National Mortgage Association - 2.98%
475,000 6.625%, 10/15/07 557,344
350,000 5.75%, 02/15/08 399,750
-------------
957,094
=============
*Government National Mortgage Association - 16.01%
5,059 8.00%, 10/15/07 5,405
159,310 8.00%, 11/15/09 172,094
92,098 7.50%, 10/15/11, Pool 433263 99,470
9,285 7.50%, 10/15/11, Pool 433258 10,028
102,958 7.50%, 11/15/11 111,199
1,244 9.50%, 09/15/19 1,403
50,363 8.00%, 12/15/22 54,938
168,275 6.50%, 09/15/23 177,823
106,790 6.50%, 12/15/23 112,850
164,253 7.00%, 05/15/24 174,651
103,179 8.00%, 11/15/26 111,883
571,909 7.00%, 12/15/29 604,891
18,402 6.00%, 05/15/31 19,305
27,740 6.50%, 05/15/31 29,166
186,711 6.50%, 07/15/31 196,122
26,909 6.50%, 08/15/31 28,265
29,267 6.50%, 11/15/31 30,742
196,989 6.00%, 02/15/32 206,652
92,731 6.50%, 04/15/32 97,399
367,427 6.00%, 06/15/32 385,449
87,689 7.00%, 07/15/32 92,646
237,874 6.00%, 08/15/32 249,542
342,435 6.50%, 09/15/32 359,674
47,526 6.00%, 01/15/33 49,894
297,597 5.50%, 03/15/33 310,616
546,641 6.00%, 03/15/33 573,462
498,727 5.50%, 04/15/33 520,546
149,726 6.00%, 04/15/33 157,072
199,727 5.50%, 05/15/33 208,465
-------------
5,151,652
=============
Small Business Administration - 0.02%
4,760 9.80%, 07/01/08 5,118
=============
U.S. Treasury Notes - 5.45%
50,000 3.00%, 11/15/07 51,590
450,000 5.50%, 02/15/08 512,877
450,000 5.75%, 08/15/10 526,869
590,000 5.00%, 02/15/11 662,437
-------------
1,753,773
=============
TOTAL U.S. GOVERNMENT SPONSORED
AND AGENCY OBLIGATIONS 16,452,433
=============
(Cost $15,981,991)
- --------------------------------------------------------------------------------
JUNE 30, 2003 29
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON BOND TRUST - PORTFOLIO S (Continued)
- -----------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION MARKET VALUE
- -----------------------------------------------------------------------------
CORPORATE BONDS - 38.20%
BANKS & FINANCE - 14.78%
$ 55,000 Bank of America Corp.,
5.25%, 02/01/07 $ 60,483
100,000 Bank of America Corp.,
7.40%, 01/15/11 123,045
80,000 Boeing Capital Corp.,
7.10%, 09/27/05 88,287
115,000 Capital Auto Receivables Asset Trust,
2.27%, 01/17/06 116,583
35,000 Capital One Financial Corp.,
4.875%, 05/15/08 35,756
100,000 CIT Group, Inc.,
4.125%, 02/21/06 103,566
70,000 CIT Group, Inc.,
7.375%, 04/02/07 79,990
60,000 Citigroup, Inc.,
4.875%, 05/07/15 61,846
140,000 Countrywide Home Loans, Inc.,
5.50%, 02/01/07 153,399
175,000 Ford Credit Auto Owner Trust,
4.14%, 12/15/05 178,985
125,000 Ford Credit Auto Owner Trust,
2.20%, 07/17/06 126,646
200,000 Ford Motor Credit Co.,
7.875%, 06/15/10 214,609
75,000 Ford Motor Credit Co.,
7.25%, 10/25/11 77,225
40,000 Franklin Resources, Inc.,
3.70%, 04/15/08 40,978
225,079 GE Capital Commercial Mortgage Corp.,
5.03%, 12/10/35 239,537
80,000 General Electric Capital Corp.,
5.875%, 02/15/12 89,642
200,000 General Motors Acceptance Corp.,
7.75%, 01/19/10 215,521
125,000 General Motors Acceptance Corp.,
7.125%, 07/15/13 124,333
165,000 Household Finance Corp.,
6.375%, 10/15/11 187,923
40,000 Household Finance Corp.,
6.375%, 11/27/12 45,647
55,000 HSBC Holdings PLC,
5.25%, 12/12/12 58,768
80,000 John Deere Capital Corp.,
5.125%, 10/19/06 86,926
150,000 Kimco Realty Corp.,
7.86%, 11/01/07 178,414
100,000 Kreditanstalt fur Wiederaufbau,
3.375%, 01/23/08 103,349
150,000 MBNA Master Credit Card Trust II,
5.90%, 08/15/11 172,176
110,000 Merrill Lynch & Co., Inc.,
2.47%, 03/10/06 111,095
125,258 MMCA Automobile Trust,
4.15%, 05/15/06 125,996
160,000 MMCA Automobile Trust,
2.97%, 03/15/07 161,745
450,000 National City Auto Receivable Trust,
4.04%, 07/15/06 458,978
160,000 National Rural Utilities
Cooperative Finance Corp.,
7.25%, 03/01/12 191,898
125,000 Textron Financial Corp.,
5.95%, 03/15/04 128,428
50,000 The Bear Stearns Companies, Inc.,
3.00%, 03/30/06 51,326
75,000 The Goldman Sachs Group, Inc.,
4.125%, 01/15/08 78,895
200,000 Vanderbilt Mortgage & Finance, Inc.,
4.23%, 02/07/15 206,778
100,000 Verizon Global Funding Corp.,
4.00%, 01/15/08 104,532
160,000 Wells Fargo & Co.,
5.125%, 02/15/07 175,182
-------------
4,758,487
=============
COMMUNICATIONS - 5.90%
65,000 AOL Time Warner, Inc.,
5.625%, 05/01/05 69,042
75,000 AOL Time Warner, Inc.,
6.875%, 05/01/12 85,795
89,690 BellSouth Savings & Employee
Stock Ownership Trust,
9.19%, 07/01/03 89,690
100,000 BT Group PLC,
8.375%, 12/15/10 126,688
75,000 Clear Channel Communications, Inc.,
4.25%, 05/15/09 76,055
155,000 Comcast Cable Communications, Inc.,
6.375%, 01/30/06 169,264
150,000 Cox Communications, Inc.,
7.75%, 11/01/10 183,746
50,000 France Telecom,
9.25%, 03/01/11 63,038
85,000 SBC Communications, Inc.,
7.00%, 08/15/05 94,591
70,000 Sprint Capital Corp.,
7.125%, 01/30/06 76,664
- --------------------------------------------------------------------------------
JUNE 30, 2003 30
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON BOND TRUST - PORTFOLIO S (Continued)
- -----------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION MARKET VALUE
- -----------------------------------------------------------------------------
COMMUNICATIONS (Continued)
$ 150,000 Telefonica S.A.,
7.35%, 09/15/05 $ 167,575
170,000 United Technologies Corp.,
6.35%, 03/01/11 197,416
225,000 Verizon Virginia, Inc.,
4.625%, 03/15/13 231,638
75,000 Vodafone Group PLC,
5.375%, 01/30/15 80,308
70,000 WorldCom, Inc.,
0.00%, 05/15/04 (d) 20,825
550,000 WorldCom, Inc.,
0.00%, 05/15/06 (d) 163,625
-------------
1,895,960
=============
DIVERSIFIED - 11.04%
155,000 Anheuser-Busch Companies, Inc.,
6.00%, 04/15/11 177,867
100,000 Apache Corp.,
6.25%, 04/15/12 116,640
50,000 Aramark Corp.,
8.15%, 05/01/05 54,801
125,000 AutoZone, Inc.,
5.875%, 10/15/12 138,065
60,000 Brascan Corp.,
8.125%, 12/15/08 71,226
95,000 Cendant Corp.,
7.375%, 01/15/13 112,100
212,226 Continental Airlines, Inc.,
8.05%, 11/01/20 210,469
125,000 Daimler Chrysler N.A. Holding Corp.,
6.90%, 09/01/04 131,059
200,000 Daimler Chrysler N.A. Holding Corp.,
4.05%, 06/04/08 198,281
30,000 Electronic & Data Systems, Inc.,
7.125%, 10/15/09 32,299
155,000 Eli Lilly & Co.,
5.50%, 07/15/06 171,278
155,000 Enterprise Products Partners LP,
7.50%, 02/01/11 186,066
150,000 Fred Meyer, Inc.,
7.45%, 03/01/08 174,953
175,000 Gannett Co., Inc.,
4.95%, 04/01/05 185,055
70,000 GATX Capital Corp.,
6.875%, 12/15/06 70,609
100,000 Humana, Inc.,
7.25%, 08/01/06 111,108
55,000 International Game Technology,
8.375%, 05/15/09 67,571
75,000 Kinder Morgan, Inc.,
7.125%, 03/15/12 89,905
155,000 Masco Corp.,
6.75%, 03/15/06 172,508
35,000 Newell Rubbermaid, Inc.,
4.00%, 05/01/10 35,717
150,000 Safeway, Inc.,
6.05%, 11/15/03 152,267
150,000 Scholastic Corp.,
5.75%, 01/15/07 164,144
70,000 SUPERVALU, Inc.,
7.50%, 05/15/12 79,945
175,000 Tosco Corp.,
7.25%, 01/01/07 200,246
150,000 Tyco International Ltd.,
6.375%, 02/15/06 157,125
15,000 Tyson Foods,
8.25%, 10/01/11 17,788
150,000 United American Healthcare Corp.,
5.20%, 07/17/07 163,497
100,000 Visteon Corp.,
8.25%, 08/01/10 108,808
-------------
3,551,397
=============
FINANCIAL - 0.28%
80,000 Jefferies Group, Inc.,
7.50%, 08/15/07 89,495
=============
INDUSTRIALS - 3.31%
150,000 Avery Dennison Corp.,
6.76%, 04/15/05 162,860
175,000 Conoco, Inc.,
6.35%, 04/15/09 204,798
150,000 Dominion Resources, Inc.,
7.82%, 09/15/04 160,842
50,000 Dominion Resources, Inc.,
5.70%, 09/17/12 54,992
155,000 Duke Energy Field Services LLC,
7.875%, 08/16/10 186,869
140,000 Ecolab, Inc.,
6.875%, 02/01/11 164,639
125,000 Ingersoll-Rand Co., Ltd.,
5.80%, 06/01/04 130,058
-------------
1,065,058
=============
Continued on next page.
- --------------------------------------------------------------------------------
JUNE 30, 2003 31
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON BOND TRUST - PORTFOLIO S (Continued)
- -----------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION MARKET VALUE
- -----------------------------------------------------------------------------
TECHNOLOGY - 0.15%
45,000 Tyco International Group SA Ltd.,
6.375%, 10/15/11 $ 47,700
=============
UTILITIES - 2.74%
145,000 Canadian National Railway Co.,
6.375%, 10/15/11 169,067
100,000 Consolidated Edison, Inc.,
6.15%, 07/01/08 113,930
70,000 Consolidated Natural Gas Co.,
6.25%, 11/01/11 80,512
100,000 General Electric Co.,
5.00%, 02/01/13 105,827
140,000 Keyspan Gas East Corp.,
6.90%, 01/15/08 161,533
125,000 MidAmerican Energy Holdings Co.,
5.125%, 01/15/13 132,693
25,000 ProLogis Trust,
7.00%, 10/01/03 25,373
90,000 ProLogis Trust,
6.55%, 03/01/04 92,866
-------------
881,801
=============
TOTAL CORPORATE BONDS 12,289,898
=============
(Cost $11,820,072)
COMMERCIAL MORTGAGE-BACKED BONDS - 5.05%
BANKS & FINANCE - 5.05%
180,000 Chase Commercial Mortgage
Securities Corp.,
7.60%, 03/18/06 198,582
110,000 Conseco Finance Corp.,
6.21%, 07/01/32 112,781
400,000 Credit Suisse First Boston
Mortgage Securities Corp.,
6.52%, 01/17/35 428,743
61,631 GSR Mortgage Loan Trust,
6.50%, 09/25/32 62,875
- -----------------------------------------------------------------------------
PRN. AMT./
SHARES DESCRIPTION MARKET VALUE
- -----------------------------------------------------------------------------
$ 250,000 JP Morgan Commercial
Mortgage Financial Corp.,
6.51%, 10/15/35 $ 288,334
164,879 Master Asset Securitization Trust,
6.50%, 10/25/32 169,221
53,819 New Century Home Equity Loan Trust,
6.70%, 10/25/28 56,134
215,045 Oakwood Mortgage Investments,
5.92%, 09/15/17 197,976
99,230 Vendee Mortgage Trust,
7.75%, 05/15/22 109,304
-------------
TOTAL COMMERCIAL MORTGAGE-BACKED BONDS 1,623,950
=============
(Cost $1,567,154)
INVESTMENT COMPANIES - 4.32%
102,700 Wells Fargo Government Institutional
Money Market 102,700
1,285,533 Wells Fargo Prime Investment
Money Market 1,285,533
-------------
TOTAL INVESTMENT COMPANIES 1,388,233
=============
(Cost $1,388,233)
FOREIGN GOVERNMENT BONDS - 0.72%
150,000 Hellenic Republic,
6.95%, 03/04/08 177,098
50,000 Republic of Chile,
5.50%, 01/15/13 53,025
-------------
TOTAL FOREIGN GOVERNMENT BONDS 230,123
=============
(Cost $201,347)
TOTAL INVESTMENTS - 99.43% 31,984,637
(Cost $30,958,797)
Other assets less liabilities - 0.57% 182,374
-------------
TOTAL NET ASSETS - 100.00% $ 32,167,011
=============
<FN>
For federal income tax purposes, the identified cost of investments owned at
June 30, 2003 was $31,189,736.
Net unrealized appreciation for federal income tax purposes was $794,901, which
is comprised of unrealized appreciation of $1,536,950 and unrealized
depreciation of ($742,049).
*Mortgage-backed securities
(d)Defaulted security
</FN>
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 32
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BABSON MONEY MARKET FUND
- --------------------------------------------------------------------------------
Geo-politics was the dominating concern in the initial months of 2003, as an
impending war with Iraq loomed and finally came to fruition in early March. This
backdrop of war muddied the economic waters, leading many to question whether
the war was causing the weakness in the economy or something else. Against this
backdrop, Treasuries rallied through the end of February/beginning of March and
then substantially lost ground after the outbreak of war. By the end of the
March they had made no gains from December levels, despite the early rally.
In a dramatic turnaround, the 2nd quarter of 2003 witnessed both the U.S. equity
and bond markets post strong, positive returns. As the fighting in Iraq drew to
a swift close in April, a wave of optimism boosted the markets. The Federal
Reserve continued to stimulate the economy by cutting short-term rates by an
additional 25 basis points in June, the 13th rate cut since January 2001.
Short-term interest rates now stand at their lowest levels since 1958. It is
clear that the economy, in general, is improving, all be it at a slower rate
than many anticipated or hoped. Gross Domestic Product (GDP) for the 1st quarter
of 2003 was a stingy 1.4%. Labor statistics continue to remain weak, with
unemployment levels continuing to increase. Inflation remains under control, and
while there may be some concern about deflation, at this juncture we think it
would be short-lived if it did materialize.
For the six months through the end of June, the Fund returned 0.17% (net of
fees), underperforming the Merrill Lynch 91 Day T-Bill index, which returned
+0.64%. We continue to maintain a shorter duration than that of benchmark. The
Fund is primarily invested in Treasury bills, with the balance of our exposure
in Commercial Paper and Agency Discount notes.
- --------------------------------------------------------------------------------
JUNE 30, 2003 33
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON MONEY MARKET FUND
- ---------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION MARKET VALUE
- ---------------------------------------------------------------------------
U.S. GOVERNMENT SPONSORED
AND AGENCY OBLIGATIONS - 62.38%
Federal Farm Credit Bank Discount Notes - 8.83%
$ 425,000 1.280%, 07/25/03 $ 424,637
385,000 1.280%, 07/29/03 384,617
800,000 0.850%, 10/07/03 798,149
850,000 1.180%, 12/15/03 845,348
390,000 1.250%, 02/27/04 386,736
--------------
2,839,487
==============
Federal Home Loan Bank Discount Notes - 12.17%
500,000 1.150%, 07/02/03 499,984
380,000 0.920%, 07/09/03 379,922
880,000 1.150%, 08/15/03 878,736
565,000 1.360%, 08/22/03 563,890
725,000 1.140%, 08/27/03 723,691
870,000 1.150%, 08/28/03 868,388
--------------
3,914,611
==============
Federal National Mortgage Association Discount Notes - 1.24%
400,000 1.710%, 07/25/03 399,544
==============
U.S. Treasury Bills - 40.14%
700,000 1.155%, 07/10/03 699,798
1,635,000 1.096%, 07/17/03 1,634,203
1,025,000 1.055%, 07/24/03 1,024,309
1,985,000 1.155%, 07/31/03 1,983,091
965,000 1.105%, 08/07/03 963,904
875,000 1.075%, 08/21/03 873,667
790,000 1.130%, 09/04/03 788,388
825,000 0.945%, 09/11/03 823,441
1,075,000 1.055%, 09/18/03 1,072,511
745,000 0.990%, 09/25/03 743,238
750,000 1.143%, 10/23/03 747,287
630,000 0.790%, 11/06/03 628,230
925,000 0.795%, 12/18/03 921,527
--------------
12,903,594
==============
TOTAL U.S. GOVERNMENT SPONSORED
AND AGENCY OBLIGATIONS 20,057,236
==============
(Cost $20,057,236)
SHORT-TERM CORPORATE NOTES - 37.63%
BEVERAGES - 4.66%
735,000 Anheuser Busch Companies, Inc.,
0.960%, 07/22/03 734,588
765,000 Coca-Cola Co.,
0.920%, 09/19/03 763,436
--------------
1,498,024
==============
CONGLOMERATES - 1.86%
600,000 General Electric Co.,
1.010%, 08/29/03 599,007
==============
CONSUMER PRODUCTS - 1.96%
630,000 Clorox Co.,
1.010%, 08/05/03 629,381
==============
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 34
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON MONEY MARKET FUND (Continued)
- ---------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION MARKET VALUE
- ---------------------------------------------------------------------------
FINANCIAL - 8.53%
500,000 CIT Group, Inc.,
1.250%, 07/21/03 $ 499,653
800,000 Household Finance Corp.,
1.180%, 08/20/03 798,689
650,000 PACCAR Financial Corp.,
1.180%, 07/03/03 649,957
800,000 Toyota Motor Credit Corp.,
1.170%, 08/08/03 799,012
--------------
2,747,311
==============
FOOD - 3.87%
630,000 Nestle Capital Corp.,
1.180%, 07/18/03 629,649
615,000 Unilever Capital Corp.,
0.970%, 07/30/03 614,519
--------------
1,244,168
==============
INSURANCE - 2.49%
800,000 Marsh & Mclennan Co.,
0.860%, 08/18/03 799,083
==============
PHARMACEUTICALS - 3.98%
450,000 Johnson and Johnson,
0.950%, 10/15/03 448,741
830,000 Pfizer, Inc.,
1.070%, 07/29/03 829,310
--------------
1,278,051
==============
PUBLISHING & PRINTING - 7.72%
895,000 Dow Jones & Co., Inc.,
1.210%, 08/13/03 $ 893,707
800,000 Gannett Co.,
1.040%, 07/11/03 799,769
790,000 McGraw-Hill Co, Inc.,
1.160%, 08/26/03 788,574
--------------
2,482,050
==============
UTILITIES - 2.56%
825,000 South Carolina E&G,
1.125%, 07/28/03 824,304
==============
TOTAL SHORT-TERM CORPORATE NOTES 12,101,379
==============
(Cost $12,101,379)
TOTAL INVESTMENTS - 100.01% 32,158,615
(Cost $32,158,615)
Other assets less liabilities - (0.01%) (4,513)
--------------
TOTAL NET ASSETS - 100.00% $32,154,102
==============
<FN>
The identified cost of investments owned at June 30, 2003 was the same for financial
statement and federal income tax purposes.
</FN>
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 35
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BABSON TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
Geo-politics was the dominating concern in the initial months of 2003, as an
impending war with Iraq loomed and finally came to fruition in early March. This
backdrop of war muddied the economic waters, leading many to question whether
the war was causing the weakness in the economy or something else. In a dramatic
turnaround, the 2nd quarter of 2003 witnessed both the U.S. equity and bond
markets post strong, positive returns. As the fighting in Iraq drew to a swift
close in April, a wave of optimism boosted the markets. The Federal Reserve
continued to stimulate the economy by cutting short-term rates by an additional
25 basis points in June, the 13th rate cut since January 2001. Short-term
interest rates now stand at their lowest levels since 1958. It is clear that the
economy, in general, is improving, all be it at a slower rate than many
anticipated or hoped. Gross Domestic Product (GDP) for the 1st quarter of 2003
was a stingy 1.4%. Labor statistics continue to remain weak, with unemployment
levels continuing to increase. Inflation remains under control, and while there
may be some concern about deflation, at this juncture we think it would be
short-lived if it did materialize.
Issuance in the municipal market hit a record $198 billion in the first six
months of 2003. Budgetary stress, combined with historically low interest rates,
led issuers to raise funds in the tax-exempt marketplace. Many investors, wary
of riskier asset classes, reallocated funds to municipals bonds, and there was
sufficient demand to absorb this record-breaking supply. For the six months
through the end of June, the Babson Tax-Free Income Fund returned +4.05%
(net-of-fees), outperforming the Lehman Municipal Bond index, which returned
+3.81% for the same period. The fund's high quality bias contributed to
outperformance year-to-date, as quality spreads have widened for lower quality
issuers. The fund avoided exposure to the volatile airline and tobacco
industries and focused on general obligation and essential purpose revenue
bonds. The fund generally has less exposure to longer-term maturities than its
benchmark, which should position the portfolio well in an increasing interest
rate
environment.
QUALITY RATINGS
- -------------------------------------
Aaa 65.5%
Aa 23.0
A 10.1
Ba 1.4
------
Total 100.0%
- -------------------------------------
<FN>
Source: Moody's
</FN>
BABSON TAX-FREE INCOME FUND VERSUS LIPPER GENERAL MUNICIPAL BOND (LGMB) FUNDS
Babson Tax Free Income Lehman Brothers
Plot Points Muni Bond (Index)
06/30/93 10,000.00 10,000
12/31/93 10,452.12 10,483
06/30/94 9,826.92 10,017
12/31/94 9,677.90 9,941
06/30/95 10,533.84 10,901
12/31/95 11,268.05 11,677
06/30/96 11,125.73 11,624
12/31/96 11,637.09 12,195
06/30/97 11,981.57 12,586
12/31/97 12,652.80 13,317
06/30/98 12,918.98 13,675
12/31/98 13,338.07 14,180
06/30/99 13,139.88 14,053
12/31/99 12,924.96 13,887
06/30/00 13,425.72 14,511
12/31/00 14,294.13 15,511
06/30/01 14,621.79 15,961
12/31/01 14,815.17 16,300
06/30/02 15,518.03 17,055
12/31/02 16,226.33 17,864
06/30/03 16,884.84 18,545
Six month 3.52% 2.57%
One Year 7.81% 8.73%
Three Year 7.74% 8.52%
Five Years 5.18% 6.28%
Ten Years 5.58% 6.37%
Average annual compounded total return for one, five and ten year periods as of
June 30, 2003 were 8.82%, 5.50% and 5.37%, respectively. Performance data
contained in this report is for past periods only. Past performance is not
predictive of future performance. Investment return and share value will
fluctuate, and redemption value may be more or less than original cost.
- --------------------------------------------------------------------------------
JUNE 30, 2003 36
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON TAX-FREE INCOME FUND
- ------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION MARKET VALUE
- ------------------------------------------------------------------------
MUNICIPAL BONDS - 101.46%
ALABAMA - 2.79%
$ 525,000 Jefferson County Sewer,
5.00%, 02/01/09* $ 600,448
475,000 Jefferson County Sewer,
5.00%, 02/01/33 487,022
--------------
1,087,470
==============
ARIZONA - 3.23%
500,000 Maricopa County Unified School District,
6.40%, 07/01/05 549,625
500,100 Maricopa County Unified School District,
9.25%, 07/01/07 711,592
--------------
1,261,217
==============
ARKANSAS - 2.05%
1,000,000 Arkansas State College Savings, Series B,
0.00%, 06/01/10 799,180
==============
CALIFORNIA - 4.25%
1,000,000 Long Beach California Unified
School District,
5.00%, 08/01/24 1,047,530
500,000 Santa Rosa Waste Water Project, Series B,
6.00%, 09/01/15 611,225
--------------
1,658,755
==============
COLORADO - 4.35%
500,000 Jefferson County School District, Series A,
6.00%, 12/15/06 572,825
1,000,000 Weld County School District,
5.50%, 12/01/19 1,125,210
--------------
1,698,035
==============
CONNECTICUT - 3.11%
1,000,000 Bridgeport, Series A,
6.00%, 07/15/10* 1,215,510
==============
FLORIDA - 2.73%
1,000,000 Miami-Dade County Special Obligation,
0.00%, 10/01/08* 271,210
500,000 Miami-Dade County Special Obligation,
Series A,
0.00%, 10/01/15 282,715
500,000 Tampa Health Systems
(Catholic Health Care East),
4.875%, 11/15/23 510,810
--------------
1,064,735
==============
ILLINOIS - 10.00%
1,000,000 Chicago, Series B,
5.125%, 01/01/22 1,107,210
500,000 Du Page & Will Counties Community
School District #204,
7.25%, 12/30/04 544,430
1,000,000 Metropolitian Pier & Exposition
Authority Expansion Project, Series C,
5.375%, 12/15/17 1,103,810
1,000,000 University of Illinois Certificates,
5.50%, 08/15/13 1,148,590
--------------
3,904,040
==============
INDIANA - 2.10%
500,000 Indiana Bond Bank Special Program,
Series 94 A-1,
5.60%, 08/01/15 523,085
250,000 Kokomo Center School Building Corp.,
6.75%, 07/15/07 296,490
--------------
819,575
==============
LOUISIANA - 1.37%
500,000 St. Tammany Parish Hospital
Service District #2 (Slidell Memorial
Hospital & Medical Center),
6.125%, 10/01/11 536,580
==============
Continued on next page.
- --------------------------------------------------------------------------------
JUNE 30, 2003 37
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON TAX-FREE INCOME FUND (Continued)
- ------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION MARKET VALUE
- ------------------------------------------------------------------------
MASSACHUSETTS - 13.20%
1,000,000 Foxborough Stadium Project,
6.00%, 06/01/14 $ 1,187,899
500,000 Framingham County,
6.00%, 03/01/15 592,705
500,000 Massachusetts State Consolidated Loan,
5.75%, 02/01/07, Series A 564,235
1,000,000 Massachusetts State Consolidated Loan,
5.375%, 01/01/17 1,115,260
1,000,000 Massachusetts State Health & Education
Facilities Authorization
(Partners Healthcare), Series C,
5.75%, 07/01/12 1,165,580
500,000 Massachusetts State Health & Education
Facilities Authorization
(Winchester Hospital), Series D,
5.75%, 07/01/14 528,635
--------------
5,154,314
==============
MICHIGAN - 13.11%
1,000,000 Hartland School District Construction,
6.00%, 05/01/10* 1,201,700
1,430,000 Howell Public Schools,
5.25%, 05/01/15 1,597,911
1,000,000 Jackson Public Schools,
6.00%, 05/01/13 1,181,220
1,000,000 Michigan State Building Authority,
5.375%, 10/15/16 1,136,430
--------------
5,117,261
==============
MINNESOTA - 2.82%
810,000 Minneapolis 110 Housing Grant Project,
Variable Rate Note,
0.85%, 09/01/08 810,000
290,000 Minneapolis Gateway Project, Series B,
Variable Rate Note,
0.90%, 12/01/27 290,000
--------------
1,100,000
==============
NEVADA - 1.37%
500,000 Washoe County (Reno Sparks Bowling
Facility), Series A,
5.40%, 07/01/06 536,435
==============
NEW HAMPSHIRE - 1.36%
500,000 New Hampshire Higher Education
& Health Facility (Franklin Pierce
Law Center),
5.50%, 07/01/18 529,365
==============
NEW YORK - 2.94%
785,000 New York City Transitional Finance
Prefunded Future, Series B,
5.50%, 02/01/16 892,475
215,000 New York City Transitional Finance
Prefunded Future, Series B,
5.50%, 02/01/11* 254,506
--------------
1,146,981
==============
- --------------------------------------------------------------------------------
JUNE 30, 2003 38
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2003
BABSON TAX-FREE INCOME FUND (Continued)
- ------------------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION MARKET VALUE
- ------------------------------------------------------------------------
OHIO - 8.66%
1,000,000 Cincinnati Waterworks System,
5.00%, 12/01/16 $ 1,090,570
1,000,000 Cleveland Waterworks,
5.375%, 01/01/15 1,141,480
1,000,000 State Public Facilities Commission
(Mental Health Facilities), Series 2A,
5.125%, 06/01/10* 1,149,210
--------------
3,381,260
==============
RHODE ISLAND - 1.52%
500,000 Rhode Island Depositors Economic
Protection Corp. Series B,
5.80%, 08/01/09 594,040
==============
TEXAS - 10.48%
1,000,000 Frisco Independent School Distict,
6.50%, 08/15/15 1,217,740
1,000,000 Plano Independent School District,
5.375%, 02/15/16 1,120,110
1,000,000 San Antonio Electric & Gas,
5.375%, 02/01/15 1,165,790
500,000 San Antonio Electric & Gas, Series A,
5.75%, 02/01/10* 590,015
--------------
4,093,655
==============
WASHINGTON - 8.53%
1,000,000 Seattle Municipal Light & Power,
5.625%, 12/01/16 $ 1,141,130
1,000,000 Seattle Water Systems,
5.75%, 07/01/23 1,131,160
500,000 Tacoma Conservation System Project
(Tacoma Public Utilities),
6.50%, 01/01/05* 538,820
500,000 Washington Public Power Supply Systems
(Nuclear Project #2), Series B,
5.10%, 07/01/04 521,000
--------------
3,332,110
==============
WISCONSIN - 1.49%
500,000 Milwaukee Metropolitan Sewer District,
Series A,
6.00%, 10/01/07 581,865
==============
TOTAL MUNICIPAL BONDS 39,612,383
==============
TOTAL INVESTMENTS - 101.46% 39,612,383
(Cost $35,899,799)
Other assets less liabilities - (1.46%) (567,839)
--------------
TOTAL NET ASSETS - 100.00% $39,044,544
==============
<FN>
The identified cost of investments owned at June 30, 2003 was the same for federal
income tax and financial statement purposes.
Net unrealized appreciation for federal income tax purposes was $3,712,584, which is
comprised of unrealized appreciation of $3,745,823 and unrealized depreciation of
($33,239).
*Security is prerefunded or escrowed to maturity. The maturity date shown is the date
of the prerefunded call.
</FN>
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 39
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
JUNE 30, 2003
(IN THOUSANDS EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------------------------------
Babson Babson Babson
Enterprise Enterprise Growth
Fund Fund II Growth Fund
- -------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at cost $ 175,000 $ 41,390 $ 152,261
----------------------------------------------
Investments, at value $ 208,437 $ 53,218 $ 190,316
Cash denominated in foreign currencies,
at value (cost $104 ) - - -
Cash 38 43 -
Receivables:
Investments sold 2,245 53 1,917
Interest and dividends 148 25 180
Fund shares sold 427 6 7
Expense reimbursement 117 40 89
Foreign tax - - -
----------------------------------------------
Total assets: 211,412 53,385 192,509
----------------------------------------------
LIABILITIES AND NET ASSETS:
Cash overdraft - - 115
Payables:
Management fees 211 64 165
Administration fees 17 4 16
Transfer agent fees 33 9 33
Custodian fees 3 1 3
Accounting fees 7 2 7
Directors'/Trustees' fees 5 1 5
Dividends - - -
Investments purchased 2,457 35 -
Other 28 8 19
----------------------------------------------
Total liabilities: 2,761 124 363
----------------------------------------------
NET ASSETS $ 208,651 $ 53,261 $ 192,146
==============================================
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 192,035 $ 43,719 $ 260,787
Accumulated undistributed net investment income (loss) 44 - 20
Accumulated undistributed net realized gain (loss)
on sale of investments and foreign
currency transactions (16,865) (2,286) (106,716)
Net unrealized appreciation (depreciation) in
value of investments and translation of assets
and liabilities in foreign currency 33,437 11,828 38,055
----------------------------------------------
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 208,651 $ 53,261 $ 192,146
==============================================
Capital shares, $1.00 par value except for $0.01
Money Market and $0.10 Tax-Free Income:
Authorized 40,000 10,000 100,000
==============================================
Outstanding 11,812 2,240 22,186
==============================================
NET ASSET VALUE PER SHARE $ 17.66 $ 23.78 $ 8.66
==============================================
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 40
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
June 30, 2003
(in thousands except per share data)
- -------------------------------------------------------------------------------------------------------------------
Babson
Stewart Ivory Babson
Shadow Babson International Bond Trust
Stock Fund Value Fund Fund Portfolio L
- -------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at cost $ 78,181 $ 272,630 $ 10,986 $ 81,181
-----------------------------------------------------------
Investments, at value $ 92,124 $ 375,176 $ 11,393 $ 85,074
Cash denominated in foreign currencies,
at value (cost $104 ) - - 103 -
Cash - 23 331 8
Receivables:
Investments sold - 1,497 181 688
Interest and dividends 83 362 12 848
Fund shares sold 86 74 100 -
Expense reimbursement 42 122 24 30
Foreign tax - - 48 -
-----------------------------------------------------------
Total assets: 92,335 377,254 12,192 86,648
-----------------------------------------------------------
LIABILITIES AND NET ASSETS:
Cash overdraft 7 - - -
Payables:
Management fees 85 337 11 79
Administration fees 7 31 1 7
Transfer agent fees 14 61 6 15
Custodian fees 1 5 33 1
Accounting fees 5 13 1 8
Directors'/Trustees' fees 2 9 - 2
Dividends - - - 308
Investments purchased - 2,983 232 682
Other 12 34 6 12
-----------------------------------------------------------
Total liabilities: 133 3,473 290 1,114
-----------------------------------------------------------
NET ASSETS $ 92,202 $ 373,781 $ 11,902 $ 85,534
===========================================================
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 83,038 $ 279,227 $ 21,740 $ 86,366
Accumulated undistributed net investment income (loss) 31 (2) - 111
Accumulated undistributed net realized gain (loss)
on sale of investments and foreign
currency transactions (4,810) (7,990) (10,250) (4,836)
Net unrealized appreciation (depreciation) in
value of investments and translation of assets
and liabilities in foreign currency 13,943 102,546 412 3,893
-----------------------------------------------------------
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 92,202 $ 373,781 $ 11,902 $ 85,534
===========================================================
Capital shares, $1.00 par value except for $0.01
Money Market and $0.10 Tax-Free Income:
Authorized 10,000 50,000 10,000 Unlimited
===========================================================
Outstanding 6,779 9,842 1,074 54,093
===========================================================
NET ASSET VALUE PER SHARE $ 13.60 $ 37.98 $ 11.08 $ 1.58
===========================================================
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
JUNE 30, 2003
(IN THOUSANDS EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------------------------------
Babson Babson Babson
Bond Trust Money Market Tax-Free
Portfolio S Fund Income Fund
- -------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at cost $ 30,959 $ 32,159 $ 35,899
----------------------------------------------
Investments, at value $ 31,985 $ 32,159 $ 39,612
Cash denominated in foreign currencies,
at value (cost $104 ) - - -
Cash - 5 45
Receivables:
Investments sold 135 - -
Interest and dividends 308 - 587
Fund shares sold - - -
Expense reimbursement 208 40 19
Foreign tax - - -
----------------------------------------------
Total assets: 32,636 32,204 40,263
----------------------------------------------
LIABILITIES AND NET ASSETS:
Cash overdraft - - -
Payables:
Management fees 211 27 36
Administration fees 3 3 3
Transfer agent fees 5 6 7
Custodian fees 1 1 1
Accounting fees 5 2 2
Directors'/Trustees' fees 1 1 1
Dividends 115 6 108
Investments purchased 124 - 1,055
Other 4 4 5
----------------------------------------------
Total liabilities: 469 50 1,218
----------------------------------------------
NET ASSETS $ 32,167 $ 32,154 $ 39,045
==============================================
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 33,077 $ 32,208 $ 35,246
Accumulated undistributed net investment income (loss) 42 - -
Accumulated undistributed net realized gain (loss)
on sale of investments and foreign
currency transactions (1,978) (54) 86
Net unrealized appreciation (depreciation) in
value of investments and translation of assets
and liabilities in foreign currency 1,026 - 3,713
----------------------------------------------
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 32,167 $ 32,154 $ 39,045
==============================================
Capital shares, $1.00 par value except for $0.01
Money Market and $0.10 Tax-Free Income:
Authorized Unlimited 2,000,000 100,000
==============================================
Outstanding 3,257 32,217 4,078
==============================================
NET ASSET VALUE PER SHARE $ 9.88 $ 1.00 $ 9.57
==============================================
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 41
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED JUNE 30, 2003
(IN THOUSANDS)
- --------------------------------------------------------------------------------------------
BABSON BABSON BABSON
ENTERPRISE ENTERPRISE GROWTH
FUND FUND II GROWTH FUND
- --------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 2,569 $ 560 $ 2,108
Interest 69 7 41
Foreign tax withheld - (1) (14)
-----------------------------------------
2,638 566 2,135
-----------------------------------------
EXPENSES:
Management fees 2,154 644 1,603
Administration fees 33 9 32
Registration fees 71 25 33
Transfer agent fees 33 9 33
Custodian fees 3 1 3
Accounting fees 7 2 7
Professional fees 7 2 7
Directors'/Trustees' fees 5 1 5
Other 8 2 8
-----------------------------------------
Total expenses before voluntary reduction
of management fees 2,321 695 1,731
Less: voluntary reduction of management fees 117 40 89
-----------------------------------------
Net expenses 2,204 655 1,642
-----------------------------------------
Net investment income (loss) 434 (89) 493
-----------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FOREIGN CURRENCY AND OPTIONS:
Realized gain (loss) from:
Investment transactions (16,021) (2,283) (37,354)
Foreign currency transactions - - -
Options transactions - - (1,640)
Change in net unrealized appreciation
(depreciation) from:
Investments (13,779) (1,397) 25,101
Translation of assets and liabilities
in foreign currencies - - -
-----------------------------------------
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions (29,800) (3,680) (13,893)
-----------------------------------------
Increase (decrease) in net assets
resulting from operations $ (29,366) $ (3,769) $ (13,400)
-----------------------------------------
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
June 30, 2003 42
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED JUNE 30, 2003
(in thousands)
BABSON
STEWART IVORY BABSON
SHADOW BABSON INTERNATIONAL BOND TRUST
STOCK FUND VALUE FUND FUND PORTFOLIO L
- -------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 1,149 $ 8,087 $ 341 $ 2
Interest 20 78 - 5,347
Foreign tax withheld (6) (136) (37) -
- -------------------------------------------------------------------------------------------------------------
1,163 8,029 304 5,349
- -------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fees 822 3,411 120 843
Administration fees 14 62 2 15
Registration fees 31 42 26 24
Transfer agent fees 14 61 6 15
Custodian fees 12 5 30 1
Accounting fees 5 13 1 8
Professional fees 3 14 - 4
Directors'/Trustees' fees 2 9 - 2
Other 4 16 1 4
- -------------------------------------------------------------------------------------------------------------
Total expenses before voluntary reduction
of management fees 907 3,633 186 916
Less: voluntary reduction of management fees 42 122 24 30
- -------------------------------------------------------------------------------------------------------------
Net expenses 865 3,511 162 886
- -------------------------------------------------------------------------------------------------------------
Net investment income (loss) 298 4,518 142 4,463
- -------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FOREIGN CURRENCY AND OPTIONS:
Realized gain (loss) from:
Investment transactions (4,610) (5,434) (3,943) (1,159)
Foreign currency transactions - - 622 -
Options transactions - - - -
Change in net unrealized appreciation
(depreciation) from:
Investments (850) (45,673) 658 3,818
Translation of assets and liabilities
in foreign currencies - - (2) -
- -------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions (5,460) (51,107) (2,665) 2,659
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
resulting from operations $ (5,162) $ (46,589) $ (2,523) $ 7,122
- -------------------------------------------------------------------------------------------------------------
Babson Babson Babson
Bond Trust Money Market Tax-Free
Portfolio S Fund Income Fund
- ----------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 1 $ - $ -
Interest 1,807 545 1,797
Foreign tax withheld - - -
- ----------------------------------------------------------------------------------------------
1,808 545 1,797
- ----------------------------------------------------------------------------------------------
EXPENSES:
Management fees 298 306 355
Administration fees 5 5 7
Registration fees 12 52 21
Transfer agent fees 5 6 7
Custodian fees 1 1 1
Accounting fees 5 2 3
Professional fees 2 1 2
Directors'/Trustees' fees 1 1 1
Other 1 1 1
- ----------------------------------------------------------------------------------------------
Total expenses before voluntary reduction
of management fees 330 375 398
Less: voluntary reduction of management fees 114 40 19
- ----------------------------------------------------------------------------------------------
Net expenses 216 335 379
- ----------------------------------------------------------------------------------------------
Net investment income (loss) 1,592 210 1,418
- ----------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FOREIGN CURRENCY AND OPTIONS:
Realized gain (loss) from:
Investment transactions (215) - 86
Foreign currency transactions - - -
Options transactions - - -
Change in net unrealized appreciation
(depreciation) from:
Investments 1,069 - 1,730
Translation of assets and liabilities
in foreign currencies - - -
- ----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions 854 - 1,816
- ----------------------------------------------------------------------------------------------
Increase (decrease) in net assets
resulting from operations $ 2,446 $ 210 $ 3,234
- ----------------------------------------------------------------------------------------------
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
June 30, 2003 43
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED JUNE 30, 2003
(in thousands)
- ----------------------------------------------------------------------------------------------------------------
Babson Enterprise Fund Babson Enterprise Fund II
2003 2002 2003 2002
- ----------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 434 $ 89 $ (89) $ (79)
Net realized gain (loss) from investments,
foreign currency transactions
and options transactions (16,021) 5,588 (2,283) 1,659
Change in net unrealized appreciation
(depreciation) on investments and
translation of assets and liabilities in
foreign currencies during the period (13,779) 26,507 (1,397) (195)
-------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (29,366) 32,184 (3,769) 1,385
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (390) (434) - (27)
Net realized gain from investment transactions (229) (2,483) (1,110) (2,831)
Return of capital - - - -
-------------------------------------------------------------
Total distributions to shareholders (619) (2,917) (1,110) (2,858)
CAPITAL SHARE TRANSACTIONS:
Shares sold 77,754 570,846 9,289 20,452
Reinvested distributions 529 2,699 1,044 2,702
-------------------------------------------------------------
78,283 573,545 10,333 23,154
Shares repurchased (209,998) (369,187) (13,613) (20,583)
-------------------------------------------------------------
Net increase (decrease) from
capital share transactions (131,715) 204,358 (3,280) 2,571
-------------------------------------------------------------
Net increase (decrease) in net assets (161,700) 233,625 (8,159) 1,098
NET ASSETS:
Beginning of period 370,351 136,726 61,420 60,322
-------------------------------------------------------------
End of period $ 208,651 $ 370,351 $ 53,261 $ 61,420
=============================================================
Undistributed net investment income (loss)
at end of period $ 44 $ - $ - $ -
=============================================================
Fund share transactions:
Shares sold 5,059 32,203 425 774
Reinvested distributions 30 178 44 109
-------------------------------------------------------------
5,089 32,381 469 883
Shares repurchased (13,870) (20,762) (626) (789)
-------------------------------------------------------------
Net increase (decrease)
in fund shares (8,781) 11,619 (157) 94
=============================================================
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
June 30, 2003 44
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE YEARS ENDED JUNE 30
(in thousands)
- -------------------------------------------------------------------------------------------------
Babson Growth Fund Shadow Stock Fund
2003 2002 2003 2002
- -------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 493 $ (84) $ 298 $ 181
Net realized gain (loss) from investments,
foreign currency transactions
and options transactions (38,994) (53,403) (4,610) 4,219
Change in net unrealized appreciation
(depreciation) on investments and
translation of assets and liabilities in
foreign currencies during the period 25,101 (26,817) (850) 3,074
- -------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (13,400) (80,304) (5,162) 7,474
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (473) - (297) (112)
Net realized gain from investment transactions - (6,394) (1,908) (1,029)
Return of capital - - - -
- -------------------------------------------------------------------------------------------------
Total distributions to shareholders (473) (6,394) (2,205) (1,141)
CAPITAL SHARE TRANSACTIONS:
Shares sold 19,171 16,082 41,993 76,189
Reinvested distributions 428 5,913 2,092 1,084
- -------------------------------------------------------------------------------------------------
19,599 21,995 44,085 77,273
Shares repurchased (39,642) (55,883) (40,828) (49,456)
- -------------------------------------------------------------------------------------------------
Net increase (decrease) from
capital share transactions (20,043) (33,888) 3,257 27,817
- -------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (33,916) (120,586) (4,110) 34,150
NET ASSETS:
Beginning of period 226,062 346,648 96,312 62,162
- -------------------------------------------------------------------------------------------------
End of period $ 192,146 $226,062 $ 92,202 $ 96,312
=================================================================================================
Undistributed net investment income (loss)
at end of period $ 20 $ - $ 31 $ 31
=================================================================================================
Fund share transactions:
Shares sold 2,343 1,469 3,453 5,330
Reinvested distributions 48 537 156 82
- -------------------------------------------------------------------------------------------------
2,391 2,006 3,609 5,412
Shares repurchased (4,795) (5,121) (3,427) (3,513)
- -------------------------------------------------------------------------------------------------
Net increase (decrease)
in fund shares (2,404) (3,115) 182 1,899
=================================================================================================
- ---------------------------------------------------------------------------------------------------
BABSON-STEWART IVORY
BABSON VALUE FUND INTERNATIONAL FUND
2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 4,518 $ 4,561 $ 142 $ (162)
Net realized gain (loss) from investments,
foreign currency transactions
and options transactions (5,434) 18,670 (3,321) (5,968)
Change in net unrealized appreciation
(depreciation) on investments and
translation of assets and liabilities in
foreign currencies during the period (45,673) (39,608) 656 504
------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (46,589) (16,377) (2,523) (5,626)
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (4,450) (771) (91) -
Net realized gain from investment transactions - (7,008) - -
Return of capital - (4,209) (676) -
------------------------------------------------
Total distributions to shareholders (4,450) (11,988) (767) -
CAPITAL SHARE TRANSACTIONS:
Shares sold 83,748 49,963 742 55,959
Reinvested distributions 4,271 11,465 708 -
------------------------------------------------
88,019 61,428 1,450 55,959
Shares repurchased (99,686) (92,393) (3,943) (83,736)
------------------------------------------------
Net increase (decrease) from
capital share transactions (11,667) (30,965) (2,493) (27,777)
------------------------------------------------
Net increase (decrease) in net assets (62,706) (59,330) (5,783) (33,403)
NET ASSETS:
Beginning of period 436,487 495,817 17,685 51,088
------------------------------------------------
End of period $373,781 $ 436,487 $ 11,902 $ 17,685
================================================
Undistributed net investment income (loss)
at end of period $ (2) $ (196) $ - $ (35)
================================================
Fund share transactions:
Shares sold 2,327 1,223 65 3,965
Reinvested distributions 119 207 62 -
------------------------------------------------
2,446 1,430 127 3,965
Shares repurchased (2,790) (2,159) (340) (5,885)
------------------------------------------------
Net increase (decrease)
in fund shares (344) (729) (213) (1,920)
================================================
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
June 30, 2003 45
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE YEARS ENDED JUNE 30
(in thousands)
- ---------------------------------------------------------------------------------------------------
Babson Bond Trust Babson Bond Trust
Portfolio L Portfolio S
2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 4,463 $ 5,094 $ 1,592 $ 1,667
Net realized gain (loss) from investments (1,159) (175) (215) (82)
Change in net unrealized appreciation
(depreciation) on investments 3,818 281 1,069 19
------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 7,122 5,200 2,446 1,604
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (4,463) (5,226) (1,592) (1,760)
Net realized gain from investment transactions - - - -
------------------------------------------------
Total distributions to shareholders (4,463) (5,226) (1,592) (1,760)
CAPITAL SHARE TRANSACTIONS:
Shares sold 10,988 6,785 7,866 9,794
Reinvested distributions 3,852 4,398 1,458 1,575
------------------------------------------------
14,840 11,183 9,324 11,369
Shares repurchased (23,521) (16,891) (8,919) (10,659)
------------------------------------------------
Net increase (decrease) from
capital share transactions (8,681) (5,708) 405 710
------------------------------------------------
Net increase (decrease) in net assets (6,022) (5,734) 1,259 554
NET ASSETS:
Beginning of period 91,556 97,290 30,908 30,354
------------------------------------------------
End of period $ 85,534 $ 91,556 $ 32,167 $ 30,908
================================================
Undistributed net investment income (loss)
at end of period $ 111 $ 1 $ 42 $ -
================================================
Fund share transactions:
Shares sold 7,110 4,351 811 1,003
Reinvested distributions 2,497 2,816 150 161
------------------------------------------------
9,607 7,167 961 1,164
Shares repurchased (15,177) (10,867) (919) (1,090)
------------------------------------------------
Net increase (decrease)
in fund shares (5,570) (3,700) 42 74
================================================
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
June 30, 2003 46
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE YEARS ENDED JUNE 30
(in thousands)
- --------------------------------------------------------------------------------------------
Babson Babson
Money Market Fund Tax-Free Income Fund
2003 2002 2003 2002
- --------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 210 $ 600 $ 1,418 $ 1,425
Net realized gain (loss) from investments - 32 86 115
Change in net unrealized appreciation
(depreciation) on investments - - 1,730 702
-----------------------------------------
Net increase (decrease) in net assets
resulting from operations 210 632 3,234 2,242
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (210) (600) (1,418) (1,425)
Net realized gain from investment transactions - - (56) -
-----------------------------------------
Total distributions to shareholders (210) (600) (1,474) (1,425)
CAPITAL SHARE TRANSACTIONS:
Shares sold 23,111 35,303 7,306 6,714
Reinvested distributions 224 661 900 855
-----------------------------------------
23,335 35,964 8,206 7,569
Shares repurchased (29,058) (37,918) (7,356) (6,807)
-----------------------------------------
Net increase (decrease) from
capital share transactions (5,723) (1,954) 850 762
-----------------------------------------
Net increase (decrease) in net assets (5,723) (1,922) 2,610 1,579
NET ASSETS:
Beginning of period 37,877 39,799 36,435 34,856
-----------------------------------------
End of period $ 32,154 $ 37,877 $39,045 $ 36,435
=========================================
Undistributed net investment income (loss)
at end of period $ - $ - $ - $ -
=========================================
Fund share transactions:
Shares sold 23,111 35,303 779 741
Reinvested distributions 224 661 96 95
-----------------------------------------
23,335 35,964 875 836
Shares repurchased (29,058) (37,917) (782) (743)
-----------------------------------------
Net increase (decrease)
in fund shares (5,723) (1,953) 93 93
=========================================
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
June 30, 2003 47
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES:
The Babson Enterprise Fund, Babson Enterprise Fund II, David L. Babson Growth
Fund, Shadow Stock Fund, Babson Value Fund, Babson-Stewart Ivory International
Fund, D.L. Babson Bond Trust, D.L. Babson Money Market Fund and D.L. Babson
Tax-Free Income Fund (collectively referred to herein as the "Funds") are
registered under the Investment Company Act of 1940, as amended, as no-load
open-end, diversified management investment companies. The D.L. Babson Bond
Trust (comprising of Portfolio L and S) is of a series type and has been
reorganized as a Delaware Business Trust according to the Delaware Business
Trust Act of 1988. The Fund accounts for the assets of each Series separately
and allocates general liabilities of a Fund to each Series based upon the
relative net assets of each Series. The following is a summary of significant
accounting policies consistently followed by the Funds in preparation of their
financial statements:
A. INVESTMENT VALUATION - Securities are valued at the latest sales price for
securities traded on a principal exchange (U.S. or foreign) and on the NASDAQ
National Market. Securities traded on over-the-counter markets and listed
securities for which no sales are reported are valued at the mean between the
last reported bid and asked prices. When market quotations are not readily
available, securities are valued at fair value as determined in good faith by
the Board of Directors. Short-term securities maturing within 60 days are valued
at amortized cost, which approximates market value. Foreign securities are
converted to U.S. dollars using exchange rates in London last quoted by a major
bank. If such quotations are not available as of 4:00 P.M. (Eastern Time), the
rate of exchange will be determined in good faith by the Board of
Directors/Trustees. Money Market instruments are valued at amortized cost which
approximates market value. The D.L. Babson Money Market Fund's use of amortized
cost is subject to the Fund's compliance with certain conditions as specified
under Rule 2a-7 of the 1940 Act.
B. INVESTMENT TRANSACTIONS AND INVESTMENT INCOME - Security transactions are
accounted for on the date the securities are purchased or sold. Dividend income
less foreign taxes withheld (if any) is recorded on the ex-dividend date.
Realized gains and losses from investment transactions and unrealized
appreciation and depreciation of investments are reported on the identified cost
basis. Interest income is recognized on the accrual basis. All
discounts/premiums are accreted/amortized for financial reporting purposes and
are included in interest income.
C. OPTIONS - Purchased options are recorded as investments and marked-to-market
daily to reflect the current market value of the option contract. If a purchased
option expires, a loss is realized in the amount of the cost of the option. If a
closing transaction is entered into, a gain or loss is realized, to the extent
that the proceeds from the sale are greater or less than the cost of the option.
If a put option is exercised, a gain or loss is realized from the sale of the
underlying security by adjusting the proceeds from such sale by the amount of
the premium originally paid. If a call option is exercised, the cost of the
security purchased upon exercise is increased by the premium originally paid.
D. FOREIGN CURRENCY TRANSLATION - All assets and liabilities expressed in
foreign currencies are converted into U.S. dollars based on exchange rates last
quoted by a major bank in London at the end of the period. The cost of portfolio
securities is translated at the rates of exchange prevailing when acquired.
Dividend income is translated at the rate of exchange on the ex-dividend date.
The effects of changes in foreign currency exchange rates on investments in
securities are included in net realized and unrealized gain (loss) on
investments in the Statement of Operations.
E. FORWARD FOREIGN CURRENCY CONTRACTS - The Babson-Stewart Ivory International
Fund may enter into forward foreign currency contracts as a way of managing
foreign exchange rate risk. The portfolio may enter into these contracts to fix
the U.S. dollar value of a security that it has agreed to buy or sell for the
period between the date the trade was entered into and the date the security is
delivered and paid for. These contracts may also be used to hedge the U.S.
dollar value of securities owned which are denominated in foreign currencies.
Forward foreign currency contracts are valued each day at the close of the New
York Stock Exchange at the forward rate, and are marked-to-market daily. The
change in market value is recorded as an unrealized gain or loss. When the
contract is closed, a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and closed is recorded.
- --------------------------------------------------------------------------------
June 30, 2003 48
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The use of forward foreign currency contracts does not eliminate fluctuations in
the underlying prices of the securities, but it does establish a rate of
exchange that can be achieved in the future. Although forward foreign currency
contracts limit the risk of loss due to a decline in the value of the hedged
currency, they also limit a potential gain that might result should the value of
the currency increase. These contracts involve market risk in excess of the
amount reflected in the Statement of Assets and Liabilities. The face or
contract amount in U.S. dollars reflects the total exposure the portfolio has in
that particular currency contract. In addition, there could be exposure to risks
(limited to the amount of unrealized gains) if the counterparties to the
contracts are unable to meet the terms of their contracts.
F. REPURCHASE AGREEMENTS - The Funds may enter into repurchase agreements with
member banks of the Federal Reserve or registered broker dealers whom the Funds'
investment advisor deems creditworthy under guidelines approved by the Funds'
Board of Directors/Trustees, subject to the seller's agreement to repurchase
such securities at a mutually agreed upon date and price. The repurchase price
generally equals the price paid by the Funds plus interest negotiated on the
basis of current short-term rates.
Securities pledged as collateral for repurchase agreements are held by the
custodian bank until the respective agreements mature. Provisions of the
repurchase agreements ensure that the market value of the collateral, including
accrued interest thereon, is sufficient in the event of default of the
counterparty. If the counterparty defaults and the value of the collateral
declines or if the counterparty enters an insolvency proceeding, realization of
the collateral by the Funds may be delayed or limited.
G. FEDERAL TAXES - No provision for federal income taxes has been made since the
Funds intend to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to distribute substantially all
taxable income and capital gains to shareholders on a timely basis. It is also
the intention of the Funds to distribute an amount sufficient to avoid
imposition of any federal excise tax.
As of June 30, 2003, the accumulated net realized loss on sales of investments
for federal income tax purposes which are available to offset future taxable
gains and the post-October capital losses that are deferred to the first day of
the next year are as follows:
CAPITAL LOSS POST-OCTOBER
FUND CARRYOVER EXPIRES LOSSES
- ----------------------------------------------------
Enterprise $ 16,231,051 2011 $ -
============= =============
Enterprise II $ 2,283,852 2011 $ -
============= =============
Growth $ 44,250,086 2010 $ 7,760,902
=============
51,087,562 2011
-------------
$ 95,337,648
=============
Shadow Stock $ 3,790,606 2011 $ 877,860
============= =============
Value $ 4,239,465 2011 $ -
============= =============
Stewart Ivory $ 101,277 2009 $ 1,897,849
=============
3,455,652 2010
4,752,636 2011
-------------
$ 8,309,565
=============
Bond - L $ 1,367,653 2004 $ 74,532
=============
545,666 2005
104,840 2009
1,268,050 2010
1,108,515 2011
-------------
$ 4,394,724
=============
Bond - S $ 577,562 2004 $ 144,139
=============
442,862 2005
115,326 2008
377,379 2009
90,261 2010
-------------
$ 1,603,390
=============
Money Market $ 306 2005 $ -
=============
136 2006
1,135 2008
45 2009
52,860 2010
-------------
$ 54,482
=============
H. DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders are recorded on
the ex-dividend date. Distributions are determined in accordance with federal
tax regulations and may differ from those determined in accordance with
accounting principles generally accepted in the United States of America. These
differences are primarily due to losses deferred due to wash sales, post-October
loss deferrals, foreign currency transactions and the use of equalization for
income tax purposes.
- --------------------------------------------------------------------------------
June 30, 2003 49
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The tax character of distributions paid during the fiscal years ended June 30,
2003 and 2002, were as follows:
2003
------------------------------------------------
CAPITAL RETURN
FUND ORDINARY GAIN OF CAPITAL TOTAL*
- ---------------------------------------------------------------
Enterprise $ 618,537 $ - $ - $ 618,537
Enterprise II 77,587 1,031,703 - 1,109,290
Growth 473,231 - - 473,231
Shadow Stock 1,300,235 905,101 - 2,205,336
Value 4,450,101 - - 4,450,101
Stewart Ivory 90,891 - 675,757 766,648
Bond - L 4,575,982 - - 4,575,982
Bond - S 1,620,792 - - 1,620,792
Money Market 231,443 - - 231,443
Tax-Free 1,427,702 56,360 - 1,484,062
2002
------------------------------------------------
CAPITAL RETURN
FUND ORDINARY GAIN OF CAPITAL TOTAL*
- ---------------------------------------------------------------
Enterprise $ 576,098 $8,090,098 $ - $ 8,666,196
Enterprise II 147,929 3,110,862 - 3,258,791
Growth 541,141 5,851,651 1,580 6,394,372
Shadow Stock 701,566 2,389,836 - 3,091,402
Value 5,147,714 2,631,602 4,208,996 11,988,312
Stewart Ivory - - - -
Bond - L 5,273,276 - - 5,273,276
Bond - S 1,771,482 - - 1,771,482
Money Market 679,058 - - 679,058
Tax-Free 1,427,713 - - 1,427,713
* Total distributions paid differ from the Statement of Changes in Net Assets
due primarily to the use of equalization debits for tax purposes and dividends
payable.
On the Statements of Assets and Liabilities the following adjustments were made
for permanent tax adjustments:
ACCUMULATED UNDISTRIBUTED
NET REALIZED NET INVESTMENT PAID IN
FUND GAIN (LOSS) INCOME CAPITAL
- ------------------------------------------------------------
Enterprise $ (228,580) $ 228,580 $ -
Enterprise II (77,587) 167,104 (89,517)
Shadow Stock (1,002,765) 1,002,765 -
Value - 125,743 (125,743)
Stewart Ivory 16,311 659,446 (675,757)
Bond - L 313,517 109,810 (423,327)
Bond - S 318,620 41,902 (360,522)
Money Market 6,578 - (6,578)
Tax-Free Income (429) 429 -
As of June 30, 2003, the components of accumulated earnings (deficit) on a tax
basis were as follows:
ENTERPRISE ENTERPRISE II GROWTH
- --------------------------------------------------------------------------------------------
Undistributed ordinary income $ 43,829 $ - $ 19,445
Undistributed long-term capital gains - - -
------------------------------------------------
Accumulated earnings 43,829 - 19,445
Accumulated capital and other losses** (16,231,051) (2,283,852) (103,098,550)
Unrealized appreciation (depreciation)*** 32,803,639 11,825,713 34,437,469
------------------------------------------------
Total accumulated earnings (deficit) $ 16,616,417 $ 9,541,861 $ (68,641,636)
================================================
SHADOW STOCK VALUE STEWART IVORY
- --------------------------------------------------------------------------------------------
Undistributed ordinary income $ 30,942 $ 67,334 $ -
Undistributed long-term capital gains - - -
------------------------------------------------
Accumulated earnings 30,942 67,334 -
Accumulated capital and other losses** (4,668,466) (4,239,465) (10,207,414)
Unrealized appreciation (depreciation)*** 13,801,441 98,725,929 369,147
------------------------------------------------
Total accumulated earnings (deficit) $ 9,163,917 $ 94,553,798 $ (9,838,267)
================================================
BOND - L BOND - S MONEY MARKET
- --------------------------------------------------------------------------------------------
Undistributed ordinary income $ 419,544 $ 156,825 $ 5,695
Undistributed long-term capital gains - - -
------------------------------------------------
Accumulated earnings 419,544 156,825 5,695
Distributions payable (308,475) (114,921) (5,930)
Accumulated capital and other losses** (4,469,256) (1,747,529) (54,482)
Unrealized appreciation (depreciation)*** 3,525,625 794,901 -
------------------------------------------------
Total accumulated earnings (deficit) $ (832,562) $ (910,724) $ (54,717)
================================================
- --------------------------------------------------------------------------------
June 30, 2003 50
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-FREE
- ----------------------------------------------------------
Undistributed tax-exempt income $ 107,830
Undistributed ordinary income -
Undistributed long-term capital gains 85,537
--------------
Accumulated earnings 193,367
Distributions payable (107,873)
Accumulated capital and other losses** -
Unrealized appreciation (depreciation)*** 3,712,584
--------------
Total accumulated earnings (deficit) $ 3,798,078
==============
** Certain Funds had net capital loss carryovers and deferred post-October
losses as identified elsewhere in the Notes.
*** The differences between book-basis and tax-basis unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of wash sale
losses and the differences between book and tax amortization of bond
premiums.
I. USE OF ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported amounts of
income and expenses during the reporting period. Actual results could differ
from those estimates.
2. MANAGEMENT FEES:
On May 1, 2003, RBC Dain Rauscher Corp. ("RBC Dain") purchased from Business
Men's Assurance Company of America ("BMA") all of the outstanding shares of
common stock of Jones & Babson, Inc. ("J&B"), the investment manager and
principal underwriter for the Funds. J&B, formerly a wholly-owned subsidiary of
BMA, is a wholly-owned subsidiary of RBC Dain. RBC Dain, a Minneapolis,
Minnesota-based holding company formed in 1973, provides investment advice and
services to individual investors in the western United States and investment
banking, research and sales services to corporate and governmental clients
nationwide and in Europe through its principal subsidiary, Dain Rauscher Inc.
("Dain Rauscher"). RBC Dain is a wholly-owned subsidiary of Royal Bank of
Canada, a Canadian chartered bank. Shares of Royal Bank of Canada are listed on
the Toronto Stock Exchange and on the New York Stock Exchange.
Management fees are paid to J&B in accordance with the advisory agreements with
the Funds. Management fees are accrued daily and paid monthly. Effective May 1,
2003, the fees charged are calculated based on the following annual rates of
average daily net assets:
AVERAGE DAILY NET ANNUAL RATE
FUND ASSETS OF FUND PERCENTAGE
- ----------------------------------------------------------
Enterprise Up to $30 million 1.40%
Over $30 million 0.90%
Enterprise II Up to $30 million 1.40%
Over $30 million 0.90%
Growth Up to $250 million 0.75%
Over $250 million 0.60%
Shadow Stock 0.90%
Value 0.85%
Stewart Ivory 0.85%
Bond Trust - Portfolio L 0.85%
Bond Trust - Portfolio S 0.85%
Money Market 0.75%
Tax-Free Income 0.85%
Prior to May 1, 2003, management fees were paid under previous management
agreements, which provided that the annual fees charged by J&B covered all
normal operating costs of the Funds except for certain minimal expenses borne by
the Funds. J&B and each Fund entered into new investment advisory agreements
effective May 1, 2003. The new investment advisory agreements provide that the
Funds directly pay for their own expenses (advisory and non-advisory) rather
than paying a single "unified" management fee to J&B.
In order to retain the same general economic effect of the old "unified" fee
structure, J&B and each Fund entered into an Administrative Services Agreement
under which J&B will provide fund administration, transfer agency, fund
accounting and other services in a manner similar to arrangements under the old
management agreement. Each Fund will pay J&B an annual fee of .10% of average
daily net assets under the Administrative Services Agreement. However, the
advisory fee under the new investment advisory agreement for each Fund has been
reduced from its previous level (see the Prospectus Supplement dated May 1, 2003
for more information) such that the combined advisory and administrative fees
are identical to the old management fees.
- --------------------------------------------------------------------------------
June 30, 2003 51
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Additionally, the Funds entered into an Expense Limitation Agreement ("the
Agreement") with J&B effective May 1, 2003. Under the terms of this agreement,
J&B has agreed to waive its management fee and, if necessary, to bear certain
operating expenses in order to limit the total annual operating expenses of the
Funds for at least the next two years. The limits imposed for each Fund are
calculated based on the total fees and expenses incurred for the year ended June
30, 2002.
The Agreement provides that J&B may delegate any or all of its rights, duties
and obligations under the Agreement to one or more sub-advisers.
The Agreement provides that J&B will not be liable for any loss suffered by the
Funds in the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties.
The Agreement may be terminated without penalty by vote of the
Directors/Trustees, as to any Fund by the shareholders of that Fund, or by J&B
on 60 days written notice. The Agreement also terminates without payment of any
penalty in the event of its assignment. In addition, the Agreement may be
materially amended only by a vote of the shareholders of the affected Fund(s),
and provides that it will continue in effect from year to year, after its
initial two-year term, only so long as such continuance is approved at least
annually with respect to each Fund by vote of either the Directors/Trustees or
the shareholders of the Fund, and, in either case, by a majority of the
Directors/Trustees who are not "interested persons" of J&B. In each of the
foregoing cases, the vote of the shareholders is the affirmative vote of a
"majority of the outstanding voting securities" as defined in the 1940 Act.
The Boards considered that the Agreement provides that no increase in fees and
expenses from the current levels can occur for at least two years. The Boards
considered that the new Investment Advisory Agreements, related Administrative
Services Agreement and Expense Limitation Agreement contain economic terms and
conditions no less favorable than those that have been in place and provide for
services of the same nature and quality as those that have been in place. The
Boards discussed the nature of the proposed contractual expense limitation
arrangements and the manner in which the arrangements could be continued,
modified or terminated.
Babson-Stewart Ivory International Fund utilizes the services of First State
Investments (UK) Limited as a sub-adviser.
For the year ended June 30, 2003, the annual expense limits, expressed as a
percentage of average net assets, were as follows:
ANNUAL RATE
FUND PERCENTAGE
- --------------------------------------
Enterprise 1.08%
Enterprise II 1.30%
Growth 0.85%
Shadow Stock 1.03%
Value 0.96%
Stewart Ivory 1.65%
Bond Trust - Portfolio L 0.98%
Bond Trust - Portfolio S 0.68%
Money Market 0.93%
Tax-Free Income 0.99%
3. INVESTMENT TRANSACTIONS:
Investment transactions for the year ended June 30, 2003, (excluding maturities
of short-term commercial notes and repurchase agreements) are as follows:
BABSON ENTERPRISE FUND:
Purchases $ 26,792,007
Proceeds from sales 157,354,989
BABSON ENTERPRISE FUND II:
Purchases $ 12,770,238
Proceeds from sales 16,128,583
BABSON GROWTH FUND:
Purchases $137,141,125
Proceeds from sales 155,121,797
SHADOW STOCK FUND:
Purchases $ 20,236,529
Proceeds from sales 14,533,547
BABSON VALUE FUND:
Purchases $288,176,297
Proceeds from sales 301,064,204
BABSON-STEWART IVORY INTERNATIONAL FUND:
Purchases $ 8,751,358
Proceeds from sales 12,947,087
BABSON BOND TRUST - PORTFOLIO L:
Purchases $ 43,032,883
Proceeds from sales 39,667,070
BABSON BOND TRUST - PORTFOLIO S:
Purchases $ 19,865,700
Proceeds from sales 13,879,009
BABSON TAX-FREE INCOME FUND:
Purchases $ 7,389,172
Proceeds from sales 5,665,472
- --------------------------------------------------------------------------------
June 30, 2003 52
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
==========================================================================================================================
BABSON ENTERPRISE FUND
==========================================================================================================================
SEVEN MONTHS
ENDED YEAR ENDED
Condensed data for a share of capital stock YEARS ENDED JUNE 30, JUNE 30, NOVEMBER 30
outstanding throughout each period. 2003 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.98 $ 15.24 $ 13.82 $ 14.72 $ 16.63 $ 21.22
-------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.04 0.02 0.03 0.03 0.03 0.04
Net gains (losses) on securities
(both realized and unrealized) (0.31) 3.08 2.46 0.18 0.58 (2.15)
-------------------------------------------------------------------
Total from investment operations (0.27) 3.10 2.49 0.21 0.61 (2.11)
-------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.03) (0.05) (0.02) (0.04) (0.05) (0.06)
Distributions from capital gains (0.02) (0.31) (1.05) (1.07) (2.47) (2.42)
-------------------------------------------------------------------
Total distributions: (0.05) (0.36) (1.07) (1.11) (2.52) (2.48)
-------------------------------------------------------------------
Net asset value, end of period $ 17.66 $ 17.98 $ 15.24 $ 13.82 $ 14.72 $ 16.63
===================================================================
Total return* (1.48%) 20.82% 20.08% 2.84% 4.70% (11.05%)
===================================================================
Ratios/Supplemental Data:
Net assets, end of period (in millions) $ 209 $ 370 $ 137 $ 111 $ 155 $ 179
Ratio of expenses to average net assets** 1.08% 1.08% 1.15% 1.14% 1.11% 1.09%
Ratio of expenses to average net assets before
fee waivers and expense reimbursements** 1.14% 1.08% 1.15% 1.14% 1.11% 1.09%
Ratio of net investment income
to average net assets** 0.21% 0.04% 0.25% 0.15% 0.32% 0.29%
Ratio of net investment income to average net assets
before fee waivers and expense reimbursements** 0.15% 0.04% 0.25% 0.15% 0.32% 0.29%
Portfolio turnover rate 13% 93% 55% 32% 12% 22%
==========================================================================================================================
BABSON ENTERPRISE FUND II
==========================================================================================================================
SEVEN MONTHS
ENDED YEAR ENDED
Condensed data for a share of capital stock YEARS ENDED JUNE 30, JUNE 30, NOVEMBER 30
outstanding throughout each period. 2003 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.62 $ 26.19 $ 25.18 $ 24.48 $ 23.20 $ 26.70
-------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.03) 0.04 0.02 0.03 0.10
Net gains (losses) on securities
(both realized and unrealized) (1.29) 0.73 3.63 1.30 2.37 (1.50)
-------------------------------------------------------------------
Total from investment operations (1.33) 0.70 3.67 1.32 2.40 (1.40)
-------------------------------------------------------------------
Less distributions:
Dividends from net investment income - (0.01) (0.03) (0.02) (0.05) (0.05)
Distributions from capital gains (0.51) (1.26) (2.63) (0.60) (1.07) (2.05)
-------------------------------------------------------------------
Total distributions: (0.51) (1.27) (2.66) (0.62) (1.12) (2.10)
-------------------------------------------------------------------
Net asset value, end of period $ 23.78 $ 25.62 $ 26.19 $ 25.18 $ 24.48 $ 23.20
-------------------------------------------------------------------
Total return* (5.22%) 2.91% 15.54% 5.63% 11.03% (5.61%)
-------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in millions) $ 53 $ 61 $ 60 $ 60 $ 77 $ 83
Ratio of expenses to average net assets** 1.30% 1.30% 1.30% 1.27% 1.23% 1.22%
Ratio of expenses to average net assets before
fee waivers and expense reimbursements** 1.38% 1.30% 1.30% 1.27% 1.23% 1.22%
Ratio of net investment income
to average net assets** (0.18%) (0.14%) 0.12% 0.08% 0.11% 0.40%
Ratio of net investment income to average net assets
before fee waivers and expense reimbursements** (0.26%) (0.14%) 0.12% 0.08% 0.11% 0.40%
Portfolio turnover rate 25% 37% 41% 23% 14% 25%
* Total return not annualized for periods less than one full year
** Annualized for periods less than one full year
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
June 30, 2003 53
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
========================================================================================================
BABSON GROWTH FUND
========================================================================================================
Condensed data for a share of capital stock YEARS ENDED JUNE 30,
outstanding throughout each period. 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.19 $ 12.51 $ 20.87 $ 20.01 $20.77
-------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.02 - (0.03) (0.04) 0.02
Net gains (losses) on securities
(both realized and unrealized) (0.53) (3.07) (5.22) 4.00 3.25
-------------------------------------------------
Total from investment operations (0.51) (3.07) (5.25) 3.96 3.27
-------------------------------------------------
Less distributions:
Dividends from net investment income (0.02) - - - (0.02)
Distributions from capital gains - (0.25) (3.11) (3.10) (4.01)
-------------------------------------------------
Total distributions: (0.02) (0.25) (3.11) (3.10) (4.03)
-------------------------------------------------
Net asset value, end of period $ 8.66 $ 9.19 $ 12.51 $ 20.87 $20.01
=================================================
Total return* (5.54%) (24.90%) (26.27%) 20.69% 17.04%
=================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) $ 192 $ 226 $ 347 $ 525 $ 490
Ratio of expenses to average net assets** 0.85% 0.85% 0.80% 0.79% 0.79%
Ratio of expenses to average net assets before
fee waivers and expense reimbursements** 0.90% 0.85% 0.80% 0.79% 0.79%
Ratio of net investment income
to average net assets** 0.26% (0.03%) (0.16%) (0.18%) 0.09%
Ratio of net investment income to average net assets
before fee waivers and expense reimbursements** 0.21% (0.03%) (0.16%) (0.18%) 0.09%
Portfolio turnover rate 71% 31% 64% 62% 39%
====================================================================================================
SHADOW STOCK FUND
====================================================================================================
Condensed data for a share of capital stock YEARS ENDED JUNE 30,
outstanding throughout each period. 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.60 $13.23 $12.26 $12.06 $ 13.24
---------------------------------------------
Income from investment operations:
Net investment income (loss) 0.05 0.03 0.13 0.09 0.11
Net gains (losses) on securities
(both realized and unrealized) (0.72) 1.58 1.74 1.04 (0.24)
---------------------------------------------
Total from investment operations (0.67) 1.61 1.87 1.13 (0.13)
---------------------------------------------
Less distributions:
Dividends from net investment income (0.04) (0.02) (0.13) (0.07) (0.07)
Distributions from capital gains (0.29) (0.22) (0.77) (0.86) (0.98)
---------------------------------------------
Total distributions: (0.33) (0.24) (0.90) (0.93) (1.05)
---------------------------------------------
Net asset value, end of period $ 13.60 $14.60 $13.23 $12.26 $ 12.06
=============================================
Total return* (4.55%) 12.44% 16.82% 9.91% (0.25%)
=============================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) $ 92 $ 96 $ 62 $ 45 $ 50
Ratio of expenses to average net assets** 1.03% 1.03% 1.03% 1.07% 1.10%
Ratio of expenses to average net assets before
fee waivers and expense reimbursements** 1.08% 1.03% 1.03% 1.07% 1.10%
Ratio of net investment income
to average net assets** 0.36% 0.26% 1.20% 0.66% 0.97%
Ratio of net investment income to average net assets
before fee waivers and expense reimbursements** 0.31% 0.26% 1.20% 0.66% 0.97%
Portfolio turnover rate 17% 34% 29% 18% 21%
* Total return not annualized for periods less than one full year
** Annualized for periods less than one full year
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
June 30, 2003 54
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHTLIGHTS
- -----------------------------------------------------------------------------------------------------------------------------
BABSON VALUE FUND
Seven Months Year Ended
Condensed data for a share of capital stock Years Ended June 30, Ended November 30
outstanding throughout each period. 2003 2002 2001 2000 June 30, 1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 42.85 $ 45.43 $ 38.76 $ 51.36 $ 47.42 $ 47.73
-------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.45 0.44 0.65 1.27 0.45 0.62
Net gains (losses) on securities
(both realized and unrealized) (4.88) (1.87) 7.12 (9.35) 5.90 1.09
-------------------------------------------------------------------------
Total from investment operations (4.43) (1.43) 7.77 (8.08) 6.35 1.71
-------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.44) (0.07) (0.90) (0.96) (0.44) (0.56)
Distributions from capital gains - (0.67) (0.20) (3.56) (1.97) (1.46)
Return of capital - (0.41) - - - -
-------------------------------------------------------------------------
Total distributions: (0.44) (1.15) (1.10) (4.52) (2.41) (2.02)
-------------------------------------------------------------------------
Net asset value, end of period $ 37.98 $ 42.85 $ 45.43 $ 38.76 $ 51.36 $ 47.42
=========================================================================
Total return* (10.26%) (3.02%) 20.30% (15.93%) 14.14% 3.85%
=========================================================================
Ratios/Supplemental Data:
Net assets, end of period (in millions) $ 374 $ 436 $ 496 $ 528 $ 1,244 $ 1,494
Ratio of expenses to average net assets** 0.96% 0.96% 0.96% 0.96% 0.96% 0.98%
Ratio of expenses to average net assets before
fee waivers and expense reimbursements** 0.99% 0.96% 0.96% 0.96% 0.96% 0.98%
Ratio of net investment income
to average net assets** 1.24% 1.02% 1.38% 2.41% 1.05% 1.28%
Ratio of net investment income to average net assets
before fee waivers and expense reimbursements** 1.21% 1.02% 1.38% 2.41% 1.05% 1.28%
Portfolio turnover rate 78% 25% 27% 18% 13% 42%
BABSON-STEWART IVORY INTERNATIONAL FUND
Condensed data for a share of capital stock Years Ended June 30,
outstanding throughout each period. 2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.74 $ 15.93 $ 23.59 $ 19.48 $ 19.65
----------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.18 (0.13) (0.03) (0.04) 0.03
Net gains (losses) on securities
(both realized and unrealized) (2.08) (2.06) (7.19) 4.45 0.66
----------------------------------------------------------
Total from investment operations (1.90) (2.19) (7.22) 4.41 0.69
----------------------------------------------------------
Less distributions:
Dividends from net investment income (0.09) - - - (0.04)
Distributions from capital gains - - (0.44) (0.30) (0.82)
Return of capital (0.67) - - - -
----------------------------------------------------------
Total distributions: (0.76) - (0.44) (0.30) (0.86)
----------------------------------------------------------
Net asset value, end of period $ 11.08 $ 13.74 $ 15.93 $ 23.59 $ 19.48
==========================================================
Total return* (13.97%) (13.72%) (30.97%) 22.64% 3.76%
----------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in millions) $ 12 $ 18 $ 51 $ 85 $ 89
Ratio of expenses to average net assets** 1.27% 1.65% 1.23% 1.24% 1.23%
Ratio of expenses to average net assets before
fee waivers and expense reimbursements** 1.46% 1.65% 1.23% 1.24% 1.23%
Ratio of net investment income
to average net assets** 1.11% (0.54%) (0.15%) (0.06%) 0.24%
Ratio of net investment income to average net assets
before fee waivers and expense reimbursements** 0.92% (0.54%) (0.15%) (0.06%) 0.24%
Portfolio turnover rate 69% 48% 49% 47% 51%
<FN>
* Total return not annualized for periods less than one full year
** Annualized for periods less than one full year
</FN>
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 55
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHTLIGHTS
- -----------------------------------------------------------------------------------------------------------------------------
BABSON BOND TRUST - PORTFOLIO L
Seven Months Year Ended
Condensed data for a share of capital stock Years Ended June 30, Ended November 30
outstanding throughout each period. 2003 2002(a) 2001 2000 June 30, 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.53 $ 1.54 $ 1.48 $ 1.52 $ 1.59 $ 1.56
----------------------------------------------------------------------
Income from investment operations:
Net investment income 0.08 0.08 0.09 0.09 0.05 0.09
Net gains (losses) on securities
(both realized and unrealized) 0.05 (0.01) 0.06 (0.04) (0.07) 0.03
----------------------------------------------------------------------
Total from investment operations 0.13 0.07 0.15 0.05 (0.02) 0.12
----------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.08) (0.08) (0.09) (0.09) (0.05) (0.09)
Distributions from capital gains - - - - - -
----------------------------------------------------------------------
Total distributions: (0.08) (0.08) (0.09) (0.09) (0.05) (0.09)
----------------------------------------------------------------------
Net asset value, end of period $ 1.58 $ 1.53 $ 1.54 $ 1.48 $ 1.52 $ 1.59
======================================================================
Total return* 8.47% 4.81% 10.45% 3.54% (1.16%) 8.13%
======================================================================
Ratios/Supplemental Data:
Net assets, end of period (in millions) $ 86 $ 92 $ 97 $ 100 $ 121 $ 128
Ratio of expenses to average net assets** 0.98% 0.98% 0.98% 0.98% 0.97% 0.97%
Ratio of expenses to average net assets before
fee waivers and expense reimbursements** 1.02% 0.98% 0.98% 0.98% 0.97% 0.97%
Ratio of net investment income
to average net assets** 4.95% 5.25% 5.98% 6.14% 5.73% 5.93%
Ratio of net investment income to average net assets
before fee waivers and expense reimbursements** 4.91% 5.25% 5.98% 6.14% 5.73% 5.93%
Portfolio turnover rate 44% 61% 38% 26% 38% 43%
<FN>
(a) As required, effective July 1, 2001, the Fund has adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium on debt securities. The effect of this change for the
year ended June 30, 2002 was to decrease net investment income per share by
less than 1/2 of a cent, increase net realized and unrealized gains and
losses per share by less than 1/2 of a cent, and decrease the ratio of net
investment income to average net assets from 5.37% to 5.25%. Per share,
ratios and supplemental data for periods prior to July 1, 2001 have not
been restated to reflect this change in presentation.
* Total return not annualized for periods less than one full year
** Annualized for periods less than one full year
</FN>
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 56
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHTLIGHTS
- -----------------------------------------------------------------------------------------------------------------------------
BABSON BOND TRUST - PORTFOLIO S
Seven Months Year Ended
Condensed data for a share of capital stock Years Ended June 30, Ended November 30
outstanding throughout each period. 2003 2002(a) 2001 2000 June 30, 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.61 $ 9.66 $ 9.35 $ 9.60 $ 9.91 $ 9.78
----------------------------------------------------------------------
Income from investment operations:
Net investment income 0.49 0.54 0.59 0.58 0.33 0.58
Net gains (losses) on securities
(both realized and unrealized) 0.27 (0.04) 0.31 (0.25) (0.31) 0.13
----------------------------------------------------------------------
Total from investment operations 0.76 0.50 0.90 0.33 0.02 0.71
----------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.49) (0.55) (0.59) (0.58) (0.33) (0.58)
Distributions from capital gains - - - - - -
----------------------------------------------------------------------
Total distributions: (0.49) (0.55) (0.59) (0.58) (0.33) (0.58)
----------------------------------------------------------------------
Net asset value, end of period $ 9.88 $ 9.61 $ 9.66 $ 9.35 $ 9.60 $ 9.91
======================================================================
Total return* 8.05% 5.21% 9.85% 3.55% 0.15% 7.47%
======================================================================
Ratios/Supplemental Data:
Net assets, end of period (in millions) $ 32 $ 31 $ 30 $ 30 $ 37 $ 38
Ratio of expenses to average net assets** 0.68% 0.68% 0.68% 0.68% 0.67% 0.67%
Ratio of expenses to average net assets before
fee waivers and expense reimbursements** 1.04% 0.98% 0.98% 0.98% 0.97% 0.97%
Ratio of net investment income
to average net assets** 4.98% 5.32% 6.16% 6.12% 5.75% 5.90%
Ratio of net investment income to average net assets
before fee waivers and expense reimbursements** 4.62% 5.02% 6.46% 6.42% 6.05% 6.20%
Portfolio turnover rate 43% 63% 39% 35% 54% 60%
<FN>
(a) As required, effective July 1, 2001, the Fund has adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium on debt securities. The effect of this change for the
year ended June 30, 2002 was to decrease net investment income per share by
less than 1/2 of a cent, increase net realized and unrealized gains and
losses per share by less than 1/2 of a cent, and decrease the ratio of net
investment income to average net assets from 5.37% to 5.25%. Per share,
ratios and supplemental data for periods prior to July 1, 2001 have not
been restated to reflect this change in presentation.
* Total return not annualized for periods less than one full year
** Annualized for periods less than one full year
</FN>
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 57
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
FINANCIAL HIGHTLIGHTS
- -----------------------------------------------------------------------------------------------------
BABSON MONEY MARKET FUND(a)
Condensed data for a share of capital stock Years Ended June 30,
outstanding throughout each period. 2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------------------------------------------
Income from investment operations:
Net investment income 0.01 0.02 0.05 0.05 0.04
Less distributions:
Dividends from net investment income (0.01) (0.02) (0.05) (0.05) (0.04)
----------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==============================================
Total return* 0.56% 1.55% 5.13% 4.97% 4.38%
==============================================
Ratios/Supplemental Data:
Net assets, end of period (in millions) $ 32 $ 38 $ 40 $ 39 $ 39
Ratio of expenses to average net assets** 0.91% 0.93% 0.90% 0.88% 0.88%
Ratio of expenses to average net assets before
fee waivers and expense reimbursements** 1.02% 0.93% 0.90% 0.88% 0.88%
Ratio of net investment income
to average net assets** 0.58% 1.56% 5.01% 4.86% 4.30%
Ratio of net investment income to average net assets
before fee waivers and expense reimbursements** 0.47% 1.56% 5.01% 4.86% 4.30%
<FN>
(a) The financial highlights for the Babson Money Market Fund as set forth
herein evaluate the historical financial highlights of the Prime Portfolio.
The assets of the Federal Portfolio were acquired by the Prime Portfolio on
October 31, 2000.
* Total return not annualized for periods less than one full year
** Annualized for periods less than one full year
</FN>
BABSON TAX-FREE INCOME FUND(B)
Condensed data for a share of capital stock Years Ended June 30,
outstanding throughout each period. 2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.14 $ 8.96 $ 8.62 $ 8.91 $ 9.22
----------------------------------------------
Income from investment operations:
Net investment income 0.35 0.36 0.37 0.39 0.40
Net gains (losses) on securities
(both realized and unrealized) 0.44 0.18 0.38 (0.21) (0.24)
----------------------------------------------
Total from investment operations 0.79 0.54 0.75 0.18 0.16
----------------------------------------------
Less distributions:
Dividends from net investment income (0.35) (0.36) (0.37) (0.39) (0.40)
Distributions from capital gains (0.01) - (0.04) (0.08) (0.07)
----------------------------------------------
Total distributions: (0.36) (0.36) (0.41) (0.47) (0.47)
----------------------------------------------
Net asset value, end of period $ 9.57 $ 9.14 $ 8.96 $ 8.62 $ 8.91
==============================================
Total return* 8.82% 6.12% 8.89% 2.18% 1.70%
==============================================
Ratios/Supplemental Data:
Net assets, end of period (in millions) $ 39 $ 36 $ 35 $ 24 $ 26
Ratio of expenses to average net assets** 0.99% 0.99% 1.00% 1.01% 1.03%
Ratio of expenses to average net assets before
fee waivers and expense reimbursements** 1.04% 0.99% 1.00% 1.01% 1.03%
Ratio of net investment income
to average net assets** 3.73% 3.96% 4.19% 4.53% 4.36%
Ratio of net investment income to average net assets
before fee waivers and expense reimbursements** 3.68% 3.96% 4.19% 4.53% 4.36%
Portfolio turnover rate 15% 12% 27% 48% 9%
<FN>
(a) The financial highlights for the Babson Money Market Fund as set forth
herein evaluate the historical financial highlights of the Prime Portfolio.
The assets of the Federal Portfolio were acquired by the Prime Portfolio on
October 31, 2000.
(b) The financial highlights for the Babson Tax-Free Income Fund as set forth
herein evaluate the historical financial highlights of the Portfolio L. The
assets of the Portfolio S were acquired by the Portfolio L on October 31,
2000.
* Total return not annualized for periods less than one full year
** Annualized for periods less than one full year
</FN>
See accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
JUNE 30, 2003 58
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of Babson Enterprise Fund, Inc.,
Babson Enterprise Fund II, Inc., David L. Babson Growth Fund, Inc., Shadow Stock
Fund, Inc., Babson Value Fund, Inc., Babson-Stewart Ivory International Fund,
Inc., D.L. Babson Money Market Fund, Inc., and D.L. Babson Tax-Free Income Fund,
Inc. and to the Board of Trustees and Shareholders of D.L. Babson Bond Trust:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Babson Enterprise Fund, Inc.,
Babson Enterprise Fund II, Inc., David L. Babson Growth Fund, Inc., Shadow Stock
Fund, Inc., Babson Value Fund, Inc., Babson-Stewart Ivory International Fund,
Inc., D.L. Babson Bond Trust (comprised of Portfolio L and Portfolio S), D.L.
Babson Money Market Fund, Inc., and D.L. Babson Tax-Free Income Fund, Inc.
(hereinafter collectively referred to as the "Funds") at June 30, 2003, and the
results of their operations, the changes in their net assets and the financial
highlights for the year then ended, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audit of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of securities at June 30,
2003 by correspondence with the custodian and brokers, provides a reasonable
basis for our opinion.
The financial statements of the Funds at June 30, 2002 and for the periods ended
at or prior thereto were audited by other independent accountants whose report
dated August 2, 2002 expressed an unqualified opinion on those statements.
PricewaterhouseCoopers LLP
Minneapolis, Minnesota
August 22, 2003
- --------------------------------------------------------------------------------
JUNE 30, 2003 59
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTICE TO SHAREHOLDERS
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS OF THE FUNDS
The management and affairs for the Funds are supervised by the
Directors/Trustees ("Directors") under the laws of each respective Fund's state
of registration. The Directors and executive officers of the Funds and their
principal occupations for the last five years are set forth below. Each may have
held other positions with the named companies during that period.
DIRECTORS
Name, Age and Address
T. Geron ("Jerry") Bell (61)
34 Kirby Puckett Place
Minneapolis, MN 55415
Position(s) Held with Funds
Director
Term of Office and Length of Time Served
Since 2003
Principal Occupation(s) During Past 5 Years
President of C.R.P. Sports (the parent company of the Minnesota Twins and of
Victory Sports) since November, 2002; prior thereto, President of the Minnesota
Twins Baseball Club Incorporated since 1987.
Number of Portfolios in Fund Complex(a) Overseen by Director
22
Other Directorships Held by Director
Director, Great Hall Investment Funds, Inc., a registered investment company
advised by an affiliate of RBC Dain Rauscher, Inc. that consists of five
separate portfolios.
- --------------------------------------------------------------------------------
Name, Age and Address
Sandra J. Hale (68)
60 South Sixth Street
Minneapolis, MN 55402
Position(s) Held with Funds
Director
Term of Office and Length of Time Served
Since 2003
Principal Occupation(s) During Past 5 Years
President of Enterprise Management, Int'l. since 1991.
Number of Portfolios in Fund Complex(a) Overseen by Director
22
Other Directorships Held by Director
Director, Great Hall Investment Funds, Inc., a registered investment company
advised by an affiliate of RBC Dain Rauscher, Inc. that consists of five
separate portfolios.
- --------------------------------------------------------------------------------
Name, Age and Address
Ronald James (52)
MJH 300, 1000 LaSalle
Minneapolis, MN 55403-2005
Position(s) Held with Funds
Director
Term of Office and Length of Time Served
Since 2003
Principal Occupation(s) During Past 5 Years
President and Chief Executive Officer, Center for Ethical Business Cultures
since 2000; President and Chief Executive Officer of the Human Resources Group,
a division of Ceridian Corporation from 1996
to 1998.
Number of Portfolios in Fund Complex(a) Overseen by Director
22
Other Directorships Held by Director
Director, Great Hall Investment Funds, Inc., a registered investment company
advised by an affiliate of RBC Dain Rauscher, Inc. that consists of five
separate portfolios.
- --------------------------------------------------------------------------------
Name, Age and Address
James T. Jensen (74)
60 South Sixth Street
Minneapolis, MN 55402
Position(s) Held with Funds
Director
Term of Office and Length of Time Served
Sixteen years of service as a Director
Principal Occupation(s) During Past 5 Years
Chief Executive Officer Jensen Associates, Inc. (consulting)
Number of Portfolios in Fund Complex(a) Overseen by Director
1*
Other Directorships Held by Director
None
- --------------------------------------------------------------------------------
Name, Age and Address
William H. Russell (79)
60 South Sixth Street
Minneapolis, MN 55402
Position(s) Held with Funds
Director
Term of Office and Length of Time Served
Eighten years of service as a Director
Principal Occupation(s) During Past 5 Years
Financial Consultant
Number of Portfolios in Fund Complex(a) Overseen by Director
19**
Other Directorships Held by Director
None
- --------------------------------------------------------------------------------
Name, Age and Address
H. David Rybolt (60)
60 South Sixth Street
Minneapolis, MN 55402
Position(s) Held with Funds
Director
Term of Office and Length of Time Served
Twelve years of service as a Director
Principal Occupation(s) During Past 5 Years
Consultant, HDR Associates (management consulting)
Number of Portfolios in Fund Complex(a) Overseen by Director
18***
Other Directorships Held by Director
None
- --------------------------------------------------------------------------------
Name, Age and Address
Jay H. Wein (70)
5305 Elmridge Circle
Excelsior, MN 55331
Position(s) Held with Funds
Director
Term of Office and Length of Time Served
Since 2003
Principal Occupation(s) During Past 5 Years
Independent investor and business consultant since 1989.
Number of Portfolios in Fund Complex(a) Overseen by Director
22
Other Directorships Held by Director
Director, Great Hall Investment Funds, Inc., a registered investment company
advised by an affiliate of RBC Dain Rauscher, Inc. that consists of five
separate portfolios.
- --------------------------------------------------------------------------------
(a) The term "Fund Complex" as used herein consists of the Babson Funds, the
J&B Funds and Investors Mark Series Fund, Inc. The J&B Funds consist of:
J&B Mid Cap Aggressive Growth Fund, Inc., J&B Small Cap Aggressive Growth
Fund, Inc. and J&B Small Cap International Fund, Inc. Investors Mark Series
Fund, Inc. consists of the following nine portfolios: Balanced, Global
Fixed Income, Growth & Income, Intermediate Fixed Income, Large Cap Value,
Large Cap Growth, Small Cap Equity, Mid Cap Equity and Money Market.
* Director, Babson-Stewart Ivory International Fund, Inc.
** Director, each Fund described in this Annual Report; also, Director,
Investors Mark Series Fund, Inc. ("Investors Mark Series Fund"), which
consists of the follow nine portfolios: Balanced, Global Fixed Income,
Growth & Income, Intermediate Fixed Income, Large Cap Value, Large Cap
Growth, Small Cap Equity, Mid Cap Equity, and Money Market.
*** Director, each Fund described in this Annual Report, except Babson-Stewart
Ivory International Fund, Inc.; also, Director, Investors Mark Series Fund,
Inc.
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JUNE 30, 2003 60
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTICE TO SHAREHOLDERS
- --------------------------------------------------------------------------------
OFFICERS OF THE FUNDS
Name, Age and Address
Martin A. Cramer (53)
60 South Sixth Street
Minneapolis, MN 55402
Position(s) Held with Funds
Vice President
Term of Office and Length of Time Served
One year term and eleven years of service
Principal Occupation(s) During Past 5 Years
Legal and Regulatory Affairs Vice President and Secretary, Jones & Babson, Inc.
(management company); Secretary, IMA (management company); Vice President and
Secretary, Buffalo Fund Complex; Assistant Vice President and Secretary, J&B
Funds; and, Secretary, Gold Bank Funds (two funds).
- --------------------------------------------------------------------------------
Name, Age and Address
Jennifer Lammers (42)
60 South Sixth Street
Minneapolis, MN 55402
Position(s) Held with Funds
President
Term of Office and Length of Time Served
One year term, since 2003
Principal Occupation(s) During Past 5 Years
Chief Financial Officer, Great Hall Funds, Inc. (management company); Compliance
Officer, Great Hall Funds, Inc.; Managing Director and Director of Finance,
Voyageur Asset Management; Vice President and Manager, Financial Reporting, RBC
Dain Rauscher.
- --------------------------------------------------------------------------------
Name, Age and Address
Laura Moret (49)
60 South Sixth Street
Minneapolis, MN 55402
Position(s) Held with Funds
Vice President and Secretary
Term of Office and Length of Time Served
One year term, since 2003
Principal Occupation(s) During Past 5 Years
Vice President and Senior Associate Counsel, RBC Dain Rauscher; Vice President
and Group Counsel, American Express Financial Advisors.
- --------------------------------------------------------------------------------
Name, Age and Address
Christopher J. Tomas (33)
60 South Sixth Street
Minneapolis, MN 55402
Position(s) Held with Funds
Chief Financial Officer, Treasurer and Principal Accounting Officer
Term of Office and Length of Time Served
One year term, since 2003
Principal Occupation(s) During Past 5 Years
Vice President and Finance Manager, RBC Dain Rauscher; Treasurer and Principal
Accounting Officer, Great Hall Funds, Inc.; Senior Financial Analyst, RBC Dain
Rauscher; Financial Analyst, RBC Dain Rauscher.
- --------------------------------------------------------------------------------
The Statement of Additional Information ("SAI") includes additional information
about the Fund Directors and is available upon request without charge by calling
1-800-422-2766, or writing Babson Funds, P.O. Box 219757, Kansas City, MO
64121-9757.
- --------------------------------------------------------------------------------
JUNE 30, 2003 61
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION
- --------------------------------------------------------------------------------
JUNE 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
On January 17, 2003 a Special Meeting of the shareholders of the David L. Babson
Trust (Portfolio L and Portfolio S) was held. The matters considered at the
meeting, together with the actual vote tabulations relating to such matters are
as follows:
Issue 1:
To approve an Agreement and Plan of Reorganization under which the Trust, a
Missouri common law trust ( the "Missouri Trust"), will transfer substantially
all of its assets and liabilities to a newly created Delaware statutory trust
called D.L. Babson Bond Trust (the "Delaware Trust"), in exchange for shares of
the Delaware Trust to be distributed to the Missouri Trust's shareholders:
Broker
For Against Abstain Non-Vote
---------- --------- ------- ---------
Portfolio L 29,605,869 2,739,284 981,680 4,052,364
Portfolio S 1,793,930 119,845 28,247 808,283
Issue 2:
To elect seven Trustees to hold office until their successors are duly elected
and qualified or until their earlier resignation or removal:
Broker
For Against Abstain Non-Vote
---------- --------- ------- --------
Portfolio L
T. Geron Bell 26,553,318 4,903,871 - -
Sandra J. Hale 26,562,015 4,895,174 - -
Ronald James 26,585,211 4,871,978 - -
Jay H. Wein 26,609,380 4,847,808 - -
H. David Rybolt 26,601,095 4,856,094 - -
William H. Russell 26,640,832 4,816,357 - -
Edward S. Ritter 26,701,703 4,755,486 - -
Portfolio S
T. Geron Bell 2,490,739 92,238 - -
Sandra J. Hale 2,490,635 92,341 - -
Ronald James 2,491,045 91,932 - -
Jay H. Wein 2,490,635 92,341 - -
H. David Rybolt 2,491,045 91,932 - -
William H. Russell 2,491,045 91,932 - -
Edward S. Ritter 2,491,045 91,932 - -
Issue 3:
To approve a New Investment Advisory Agreement between the Trust and Jones &
Babson, Inc.:
Broker
For Against Abstain Non-Vote
---------- --------- ------- --------
Portfolio L 28,875,873 1,714,026 867,289 -
Portfolio S 2,503,449 60,972 18,556 -
Issue 4:
To approve a New Investment Counsel Agreement between Jones & Babson, Inc. and
David L. Babson & Company Inc. for each portfolio.:
Broker
For Against Abstain Non-Vote
---------- --------- ------- --------
Portfolio L 28,890,560 1,721,934 844,694 -
Portfolio S 2,482,431 45,357 55,188 -
On January 17, 2003 a Special Meeting of the shareholders of the Babson
Enterprise Fund, Babson Enterprise Fund II, David L. Babson Growth Fund, Shadow
Stock Fund, Babson Value Fund, Babson-Stewart Ivory International Fund, David L.
Babson Money Market Fund and David L. Babson Tax-Free Income Fund was held. The
matters considered at the meeting, together with the actual vote tabulations
relating to such matters are as follows:
Issue 1:
To elect seven Trustees to hold office until their successors are duly elected
and qualified or until their earlier resignation or removal:
Broker
For Against Abstain Non-Vote
---------- --------- ------- --------
Babson Enterprise Fund
T. Geron Bell 8,244,941 342,899 - -
Sandra J. Hale 8,232,565 355,276 - -
Ronald James 8,243,427 344,414 - -
Jay H. Wein 8,229,469 358,371 - -
H. David Rybolt - - - -
William H. Russell - - - -
Stephen S. Soden - - - -
Babson Enterprise Fund II
T. Geron Bell 1,154,049 55,568 - -
Sandra J. Hale 1,152,126 57,492 - -
Ronald James 1,155,335 54,283 - -
Jay H. Wein 1,144,438 65,179 - -
H. David Rybolt 1,140,597 69,020 - -
William H. Russell 1,145,939 63,678 - -
Stephen S. Soden 1,120,092 89,525 - -
David L. Babson Growth Fund
T. Geron Bell 12,168,451 903,056 - -
Sandra J. Hale 12,222,050 849,457 - -
Ronald James 12,206,688 864,819 - -
Jay H. Wein 12,222,886 848,622 - -
H. David Rybolt - - - -
William H. Russell - - - -
Stephen S. Soden - - - -
- --------------------------------------------------------------------------------
JUNE 30, 2003 62
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Supplemental Information
- --------------------------------------------------------------------------------
JUNE 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
Broker
For Against Abstain Non-Vote
---------- --------- ------- --------
Shadow Stock Fund
T. Geron Bell 3,639,770 335,238 - -
Sandra J. Hale 3,637,795 337,213 - -
Ronald James 3,656,451 318,558 - -
Jay H. Wein 3,634,382 340,627 - -
H. David Rybolt - - - -
William H. Russell - - - -
Stephen S. Soden - - - -
Babson Value Fund
T. Geron Bell 4,920,627 246,451 - -
Sandra J. Hale 4,919,973 247,105 - -
Ronald James 4,923,288 243,790 - -
Jay H. Wein 4,915,029 252,050 - -
H. David Rybolt - - - -
William H. Russell - - - -
Stephen S. Soden - - - -
Babson-Stewart Ivory International Fund
T. Geron Bell 622,672 31,984 - -
Sandra J. Hale 622,353 32,304 - -
Ronald James 622,846 31,810 - -
Jay H. Wein 622,674 31,982 - -
H. David Rybolt - - - -
William H. Russell - - - -
Stephen S. Soden - - - -
David L. Babson Money Market Fund
T. Geron Bell 18,956,846 1,460,128 - -
Sandra J. Hale 18,952,605 1,464,370 - -
Ronald James 18,956,846 1,460,128 - -
Jay H. Wein 18,952,605 1,464,370 - -
H. David Rybolt - - - -
William H. Russell - - - -
Stephen S. Soden - - - -
David L. Babson Tax-Free Income Fund
T. Geron Bell 2,947,743 56,718 - -
Sandra J. Hale 2,948,663 55,798 - -
Ronald James 2,948,686 55,775 - -
Jay H. Wein 2,950,642 53,819 - -
H. David Rybolt - - - -
William H. Russell - - - -
Stephen S. Soden - - - -
Issue 2:
To approve a New Investment Advisory Agreement between each Fund and Jones &
Babson, Inc.:
Broker
For Against Abstain Non-Vote
---------- --------- ------- ---------
Babson Enterprise Fund 6,110,356 305,562 179,409 1,992,514
Babson Enterprise Fund II 834,503 48,546 44,621 281,947
David L. Babson Growth Fund 11,496,117 549,931 518,540 506,919
Shadow Stock Fund 2,887,398 169,785 235,790 682,035
Babson Value Fund 3,597,551 206,189 155,624 1,207,714
Babson-Stewart Ivory International Fund 513,005 12,390 21,849 107,412
David L. Babson Money Market Fund 17,516,360 1,935,861 959,205 5,548
David L. Babson Tax-Free Income Fund 2,796,459 68,254 34,435 105,313
Issue 3:
To approve a New Investment Counsel Agreement between Jones & Babson, Inc. and
David L. Babson & Company Inc. for each portfolio:
Broker
For Against Abstain Non-Vote
---------- --------- --------- ---------
Babson Enterprise Fund 6,098,890 304,419 192,019 1,992,514
Babson Enterprise Fund II 835,948 45,328 46,395 281,947
David L. Babson Growth Fund 11,386,093 524,550 653,944 506,919
Shadow Stock Fund 2,890,387 160,880 241,706 682,035
Babson Value Fund 3,588,731 204,177 166,456 1,207,714
Babson-Stewart Ivory International Fund 615,295 16,998 22,364 -
David L. Babson Money Market Fund 17,541,306 1,805,517 1,064,604 5,548
David L. Babson Tax-Free Income Fund 2,787,645 68,254 43,249 105,313
Continued on next page.
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JUNE 30, 2003 63
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION
- --------------------------------------------------------------------------------
(UNAUDITED)
CHANGE IN INDEPENDENT AUDITORS:
Upon the recommendation of the Board of Directors/Trustees at a Special Meeting
of Shareholders on March 28, 2003, PricewaterhouseCoopers LLP ("PwC") was named
as the independent auditors for the Funds' fiscal year ending June 30, 2003. At
the request of the Board of Directors/Trustees, Ernst & Young LLP ("E&Y"), which
had previously served as the Funds' independent auditors, ceased to provide this
service as of March 28, 2003. The audit reports of E&Y on the financial
statements as of and for the fiscal years ended June 30, 2001 and June 30, 2002
did not contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.
In connection with the audit of the fiscal years ended June 30, 2001 and June
30, 2002 and the subsequent interim period through March 28, 2003, there were no
disagreements with E&Y on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedures, which
disagreements if not resolved to the satisfaction of E&Y would have caused E&Y
to make reference to the subject matter of the disagreements in connection with
E&Y's opinions. Additionally, there were no disagreements with E&Y regarding any
of these matters, either those resolved to their satisfaction or those not
resolved to their satisfaction. None of the events listed in Item
304(a)(1)(v)(A) through (D) of Regulation S-K of the Securities and Exchange
Commission occurred during the fiscal years ended June 30, 2001 and June 30,
2002 or the subsequent interim period from July 1, 2002 through March 28, 2003.
During the fiscal years ended June 30, 2001 and June 30, 2002 and the subsequent
interim period from July 1, 2002 through March 28, 2003, there was no
consultation with PwC regarding: (1) application of accounting principles to
specified transactions, either completed or proposed, or the type of audit
opinion that might be rendered on the Funds' financial statements; or (2) any
matter that was the subject of a disagreement (as defined in paragraph
304(a)(1)(iv) of Regulation S-K) or a reportable event (as defined in paragraph
304(a)(1)(v) of Regulation S-K).
TAX INFORMATION:
Certain tax information for the Babson Funds is required to be provided to
shareholders based upon the Funds' income and distributions for the taxable year
ended June 30, 2003. The information and distributions reported in this letter
may differ from the information and taxable distributions reported to the
shareholders for the calendar year ending December 31, 2003. The information
necessary to complete your income tax returns for the calendar year ending
December 31, 2003 will be received under separate cover.
For corporate shareholders, the following percentages of ordinary income
distributions qualify for the corporate dividends received deduction:
FUND PERCENTAGE
- ----------------------- ----------
Enterprise 100%
Enterprise II 100%
Growth 100%
Shadow Stock 64%
Value 59%
Certain dividends paid by the Funds may be subject to a maximum tax rate of 15%
as provided for by the Jobs and Growth Tax Relief Act of 2003. The Funds intend
to designate the maximum amount allowable as taxed at a minimum rate of 15%. The
following amounts of ordinary income distributions are considered qualifying
dividends:
FUND PERCENTAGE
- ----------------------- ----------
Enterprise $279,786
Growth 338,676
Shadow Stock 98,717
The following percentages of ordinary income distributions are exempt-interest
dividends for federal income tax purposes:
FUND PERCENTAGE
- ----------------------- ----------
Tax-Free Income 100%
- --------------------------------------------------------------------------------
JUNE 30, 2003 64
- --------------------------------------------------------------------------------
This report has been prepared for the information of the Shareholders of Babson
Enterprise Fund, Inc., Babson Enterprise Fund II, Inc., David L. Babson Growth
Fund, Inc., Shadow Stock Fund, Inc., Babson Value Fund, Inc., Babson-Stewart
Ivory International Fund, Inc., D.L. Babson Bond Trust, D.L. Babson Money Market
Fund, Inc., and D.L. Babson Tax-Free Income Fund, Inc., and is not to be
construed as an offering of the shares of the Funds. Shares of the Funds are
offered only by the Prospectus, a copy of which may be obtained from Jones &
Babson, Inc.
Babson Funds
Jones & Babson, Inc. Distributors
P.O. Box 219757, Kansas City, MO 64121-9757
1-800-4-babson
(1-800-422-2766)
www.babsonfunds.com
BABSON FUNDS
P.O. Box 219757
Kansas City, MO 64121-9757
ITEM 11. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number
the exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit. NOT APPLICABLE -
ONLY EFFECTIVE FOR ANNUAL REPORTS AFTER JULY 15TH, 2003.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2 under
the Act (17 CFR 270.30a-2). CERTIFICATIONS PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002 ARE ATTACHED HERETO.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1
under the Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the registrant to 10 or more persons. NOT APPLICABLE.
[IF AN OPEN-END FUND OR IF THE CLOSED END FUND HAS NONE TO REPORT.]
(b) A separate or combined certification for each principal executive
officer and principal officer of the registrant as required by Rule 30a-2(b)
under the Act of 1940. CERTIFICATIONS PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002 ARE ATTACHED HERETO.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) D.L. Babson Tax Free Income Fund, Inc.
-------------------------------------------------------------------
By (Signature and Title) /s/ Jennifer Lammers
-------------------------------------------------------
Jennifer Lammers, President
Date 4/12/04
-------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Jennifer Lammers
-------------------------------------------------------
Jennifer Lammers, President
Date 4/12/04
-------
By (Signature and Title) /s/ Christopher Tomas
-------------------------------------------------------
Christopher Tomas, Treasurer
Date 4/12/04
-------