Babson Capital Funds Trust

ASSET DERIVATIVES

STATEMENT OF ASSETS
AND LIABILITIES
LOCATION

FOREIGN EXCHANGE
CONTRACTS RISK

Forward Foreign Currency Exchange Contracts

Unrealized appreciation on open forward foreign currency exchange contracts

N-CSRS 1 d656173dncsrs.htm BABSON CAPITAL FUNDS TRUST Babson Capital Funds Trust

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(s): 811-22845

BABSON CAPITAL FUNDS TRUST

(Exact Name of Registrant as Specified in Charter)

550 South Tryon Street

Suite 3300

Charlotte, NC 28202

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (704) 805-7200

Janice M. Bishop

Vice President, Secretary and Chief Legal Officer

c/o Babson Capital Management LLC

Independence Wharf

470 Atlantic Avenue, Boston MA 02210

(Name and Address of Agent for Service)

Date of fiscal year end: June 30

Date of reporting period: December 31, 2013

Item 1. Reports to Stockholders.

The Report to Stockholders is attached hereto.

BABSON CAPITAL FUNDS TRUST

Semi-Annual Report

December 31, 2013

Babson Capital Funds Trust 2013 Semi-Annual Report

Dear Shareholder,

We are pleased to provide our inaugural semi-annual Shareholder Letter for the Babson Capital Funds Trust (“the Funds”), which launched on September 16, 2013. As investment adviser to the Funds, we bring one of the industry’s longest track records in managing global high yield assets. Operating with research, portfolio management and trading integrated across the United States and Europe has enabled us to create Funds that offer a truly global approach and capable of uncovering the most attractive opportunities up and down the capital structure and across industries and geographies.

Looking back, as we entered 2013, investors in the U.S. were worried about an impending “fiscal cliff” of automatic tax hikes and spending cuts that threatened to push the economy back toward recession. Exiting 2013, investors were much more upbeat about the prospects for the U.S. economy, as the consensus view seemed to be that any surprises would be to the upside. In between, several events marked 2013 as a year where investment performance was dominated by risk assets.

During the past year, we moved beyond the five-year anniversary of some major events, like the collapse of Lehman and announcement of TARP, which came to symbolize the financial crisis and set the stage for the current environment. The massive intervention of major global central banks since the crisis seems to have calmed the markets to the point that systemic risk concerns have abated sharply. Developed market central banks in the U.S., Europe, United Kingdom and Japan continue to keep benchmark interest rates near historic lows and supply the financial markets with ample liquidity. The European Central Bank was particularly effective during 2013 as government bond yields in peripheral Euro area countries rallied sharply, indicating contagion risk was abating in that region.

In addition to continued accommodative monetary policy conditions, the economic environment in developed markets improved during 2013. Stronger macroeconomic fundamentals helped position the U.S. as the furthest along in the global recovery process and enabled the Euro area to finally pull out of its long recession. Fourth quarter economic data in the U.S. have generally been positive, which renewed hope that despite fiscal drag, a partial government shutdown and policy uncertainty the economy can still grow. In Europe, some early growth signs emerged, including manufacturing indictors that point toward continued expansion, yet the Euro area economy remains fragile. So, while 2013 ushered in some signs of optimism in advanced economies there are still economic challenges, including high unemployment rates and elevated levels of government debt, that warrant caution.

The ongoing accommodative monetary policy has provided a favorable backdrop to credit markets. In particular, the corporate sector continues to benefit from stronger balance sheets, record profit margins and high cash balances. Although there were periods of increased uncertainty and market volatility in 2013, riskier asset classes generally outperformed lower-risk investments. Higher interest rates resulted in poor performance for most fixed income assets, but high yield assets generated positive returns as investors turned to this segment of the credit markets in the current low-rate environment.

At Babson Capital, we take a long-term view, focusing on total returns and risk-adjusted relative value opportunities. Our process seeks to provide a differentiated approach and results for our clients. On the following pages of this report, you will find details of each Fund’s investment performance and a discussion of the circumstances that influenced performance. We appreciate your continued partnership and look forward to helping you achieve your investment objectives.

Sincerely,

LOGO

Anthony Sciacca

President and Chief Executive Officer

Babson Capital Funds Trust

Cautionary Notice: Certain statements contained in this report may be “forward looking” statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date in which they are made and which reflect management’s current estimates, projections, expectations or beliefs, and which are subject to risks and uncertainties that may cause actual results to differ materially. These statements are subject to change at any time based upon economic, market or other conditions and may not be relied upon as investment advice or an indication of the Trust’s trading intent. References to specific securities are not recommendations of such securities, and may not be representative of the Fund’s current or future investments. We undertake no obligation to publicly update forward looking statements, whether as a result of new information, future events, or otherwise.

Babson Global Floating Rate Fund 2013 Semi-Annual Report

Investment Objective

The investment objective of the Babson Global Floating Rate Fund (“Global Floating Rate Fund” or the “Fund”) is to seek a high level of current income. Preservation of capital is a secondary goal.

Portfolio Management Commentary

How did the Fund perform?

The Fund reported a total rate of return for the fourth quarter of +1.70%. Furthermore, the Fund returned +1.60% since the Fund’s inception date of September 16, 2013.

What factors influenced performance of the Fund?

The initial ramping of the portfolio influenced the performance of the Fund during this period. In addition, many of the loans experienced longer than anticipated settlement times, which affected the Fund’s ability to generate current income. By the beginning of 2014, we expect most of the loans to be settled and generating attractive income streams for our investors.

Describe recent portfolio activity.

During the period, the Fund continued to ramp the initial capital funding by constructing a well-diversified portfolio across issuers, countries and industries. As of December 31, 2013, the portfolio had a geographical weighting of 57.1% in U.S. and 42.9% in non-U.S. issuers.

The majority of the Fund’s holdings were purchased in the U.S. new issue market with an Original Issue Discount. The Fund also made secondary purchases in the European market to take advantage of opportunities that we believe offer attractive yields and the potential for capital appreciation.

Describe portfolio positioning at period end.

On a traded basis, the Fund ended the year with an 87.6% weighting to senior secured loans. The remaining balance of the portfolio was invested in senior secured bonds (12.4%). Of the senior secured bonds, 9.4% are floating rate notes primarily issued by European companies, increasing the total floating rate exposure of the portfolio to 97.0%.

From an industry perspective, the Fund remains well-diversified across a number of industries (as determined by Moody’s), with higher concentrations in Finance (11.7%), Healthcare, Education and Childcare (10.9%), and Diversified/Conglomerate Service (9.0%) as of year-end.

As of December 31, 2013, the Fund had the following Moody’s credit quality breakdown: 5.9% in Ba assets, 70.6% in single-B credits and a small exposure to Caa and below at 4.1%. Approximately (19.4%) of the Fund’s assets are not publicly rated, primarily consisting of European issuers that we believe are of a comparable quality to other assets in the portfolio.

The Fund remains overweight to European assets relative to the weighting of the global loan market as we believe the Western European loan market offers higher return potential than the U.S. loan market for similar fundamental credit risk. The U.S. loan primary market continues to experience high levels of issuance, which allowed the manager to be selective when investing in this segment of the market. While the secondary market has rallied appreciably in Europe, ongoing bank de-levering is continuing to provide discounted investment opportunities that we believe are attractive.

Describe market and portfolio outlook.

As we enter 2014, overall monetary policy continues to be very accommodative (despite the Fed’s modest reduction in its QE program) with indications of a generally improving economic environment. Senior secured loan spreads in the U.S. and Europe are beginning the year at attractive levels based on historical standards. Additionally, high yield corporate credit fundamentals should remain favorable, in our opinion, and we believe the global loan market will generate attractive risk-adjusted performance for its investors.

Babson Global Floating Rate Fund 2013 Semi-Annual Report

PORTFOLIO COMPOSITION (% OF ASSETS*)

LOGO

COUNTRY COMPOSITION (% OF ASSETS*)

LOGO

*	Percentage of assets are expressed by market value excluding cash and accrued income, and may vary over time. The percentages shown above represent a percentage of the assets as of December 31, 2013.

Babson Global Credit Income Opportunities Fund Semi-Annual Report

Investment Objective

The investment objective of the Babson Global Credit Income Opportunities Fund (“Global Credit Income Opportunities Fund” or the “Fund”) is to seek an absolute return, primarily through current income and secondarily through capital appreciation.

Portfolio Management Commentary

How did the Fund perform?

The Fund reported a total rate of return for the fourth quarter of +3.40%. In addition, the Fund returned +3.30% since the Fund’s inception date of September 16, 2013.

What factors influenced performance of the Fund?

The initial ramping of the portfolio influenced the performance of the Fund during this period. In addition, many of the loans experienced longer than anticipated settlement times, which affected the ability of the Fund to generate current income. By the beginning of 2014, we expect most of the loans to be settled and generating attractive income streams for our investors.

Describe recent portfolio activity.

During the period, the Fund continued to ramp the initial capital funding by constructing a diversified portfolio across assets classes, issuers, countries and industries. As of December 31, 2013, the portfolio had an asset class weighting of 57.0% in high yield bonds and 43.0% in senior secured loans. From a geographical weighting perspective, the portfolio had a weighting of 56.0% in U.S. and 44.0% in non-U.S. issuers.

The majority of the Fund’s holdings were purchased in the U.S. new issue senior secured loan and high yield bond markets. For issuers in the European market, the Fund made many secondary purchases to take advantage of opportunities that we believe offer attractive yields and the potential for capital appreciation.

Describe portfolio positioning at period end.

The Fund ended the year with a higher percentage of assets in global high yield bonds (57.0%) than global senior secured loans (43.0%). At this point in time, we believe that global high yield bonds are more attractive than global senior secured loans from a relative value perspective. Additionally, a significant portion of the portfolio (69.2%) is senior secured in nature and is intended to provide the portfolio with added protection against principal loss in the event that default rates increase.

From an industry perspective, the Fund remains well-diversified across a number of industries (as determined by Moody’s), with higher concentrations in Retail Stores (9.8%), Oil and Gas (8.1%), and Broadcasting and Entertainment (7.9%) as of year-end.

As of December 31, 2013, the Fund had the following Moody’s credit quality breakdown: 0.3% in Baa assets, 12.7% in Ba assets, 63.4% in single-B credits, and a small exposure to Caa and below at 3.7%. A portion of the assets are not publicly rated (19.9%) and primarily consist of European issuers that we believe are of a comparable quality to other assets in the portfolio.

We believe the Western European loan market offers higher return potential than the U.S. market for similar fundamental credit risk. The U.S. primary market continues to experience high levels of issuance, which allowed the manager to be selective when investing in this segment of the market. While the secondary market has rallied appreciably in Europe, ongoing bank de-levering is continuing to provide discounted investment opportunities that we believe are attractive.

Babson Global Credit Income Opportunities Fund Semi-Annual Report

Describe market and portfolio outlook.

As we enter into 2014, overall monetary policy continues to be very accommodative (despite the Fed’s modest reduction in its QE program) with indications of a generally improving economic environment. We believe that corporate fundamentals, including low leverage levels, strong liquidity and earnings growth will remain stable into 2014 in both the U.S. and European markets. Against that backdrop, we expect fundamentals to remain favorable with default rates below historical averages. If these trends continue, we believe the Fund is well positioned to take advantage of attractive relative value opportunities across the high yield market on a global basis and offer attractive risk-adjusted performance to its investors.

Babson Global Credit Income Opportunities Fund 2013 Semi-Annual Report

PORTFOLIO COMPOSITION (% OF ASSETS*)

LOGO

COUNTRY COMPOSITION (% OF ASSETS*)

LOGO

*	Percentage of assets are expressed by market value excluding cash and accrued income, and may vary over time. The percentages shown above represent a percentage of the assets as of December 31, 2013.

Babson Capital Funds Trust 2013 Semi-Annual Report

SHAREHOLDER EXPENSES (UNAUDITED)

As a shareholder of Babson Global Floating Rate Fund or Babson Global Credit Income Opportunities Fund, you incur ongoing expenses, such as management fees, shareholder service fees, distribution fees and other fund expenses. The following table is intended to help you understand your ongoing expenses (in dollars and cents) of investing in the Funds and to compare these expenses with the ongoing expenses of investing in other funds.

The table is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from September 16, 2013, commencement of operations, to December 31, 2013.

Actual Expenses

The first line in the table below provides information about the actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for the Fund under the heading entitled “Operating Expenses Incurred” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line in the table below provides information about the hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account value and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Babson Global Floating Rate Fund


	EXPENSE RATIO			BEGINNING AMOUNT		ENDING VALUE		AVERAGE VALUE		OPERATING EXPENSE INCURRED*
Class A
Actual		1.05	%		1,000.00		1,016.00		1,008.00		3.07
Hypothetical		1.05	%		1,000.00		1,011.50		1,005.75		3.07

Class C
Actual		1.80	%		1,000.00		1,013.00		1,006.50		5.26
Hypothetical		1.80	%		1,000.00		1,009.30		1,004.65		5.25

Class I
Actual		0.75	%		1,000.00		1,016.00		1,008.00		2.20
Hypothetical		0.75	%		1,000.00		1,012.30		1,006.15		2.19

Class Y
Actual		0.75	%		1,000.00		1,016.00		1,008.00		2.20
Hypothetical		0.75	%		1,000.00		1,012.30		1,006.15		2.19

*	For each Class of the Fund, net expenses are equal to the annualized expense ratio for such class multiplied by the average account value over the period, multiplied by 106/365.

Babson Capital Funds Trust 2013 Semi-Annual Report

Babson Global Credit Income Opportunities Fund


	EXPENSE RATIO			BEGINNING AMOUNT		ENDING VALUE		AVERAGE VALUE		OPERATING EXPENSE INCURRED*
Class A
Actual		1.20	%		1,000.00		1,033.00		1,016.50		3.54
Hypothetical		1.20	%		1,000.00		1,011.00		1,005.50		3.50

Class C
Actual		1.95	%		1,000.00		1,030.00		1,015.00		5.75
Hypothetical		1.95	%		1,000.00		1,008.90		1,004.45		5.69

Class I
Actual		0.95	%		1,000.00		1,033.00		1,016.50		2.80
Hypothetical		0.95	%		1,000.00		1,011.80		1,005.90		2.78

Class Y
Actual		0.95	%		1,000.00		1,033.00		1,016.50		2.80
Hypothetical		0.95	%		1,000.00		1,011.80		1,005.90		2.78

*	For each Class of the Fund, net expenses are equal to the annualized expense ratio for such class multiplied by the average account value over the period, multiplied by 106/365.

Babson Capital Funds Trust 2013 Semi-Annual Report

BABSON CAPITAL FUNDS TRUST

FINANCIAL REPORT


Statement of Assets and Liabilities		10

Statement of Operations		12

Statement of Cash Flows		13

Statements of Changes in Net Assets		15

Selected Financial Highlights		16

Schedule of Investments		24-37

Notes to Financial Statements		38-48

Babson Capital Funds Trust 2013 Semi-Annual Report

STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2013 (Unaudited)


	BABSON GLOBAL FLOATING RATE FUND			BABSON GLOBAL CREDIT INCOME OPPORTUNITIES FUND

Assets
Investments, at fair value (cost $63,064,726 and $50,064,601, respectively)	$	63,907,465		$	51,457,132
Cash		5,476			13,655
Foreign currency, at value (cost $1,509,616 and $1,949,841, respectively)		1,529,268			1,969,544
Receivable for investments sold		7,094,975			4,823,113
Interest receivable		216,743			642,236
Receivable from adviser (see Note 3)		36,437			12,975
Foreign tax reclaims receivable		—			2,366
Unrealized appreciation on forward foreign currency exchange contracts		5,740			—
Unrealized appreciation on unfunded loan commitments		208			—
Prepaid expenses		550			550

Total assets		72,796,862			58,921,571


Liabilities
Payable for investments purchased		14,579,085			6,913,125
Distribution fees payable		280			284
Unrealized depreciation on forward foreign currency exchange contracts		161,104			164,073
Accrued expenses and other liabilities		119,344			119,381
Total liabilities		14,859,813			7,196,863

Total net assets	$	57,937,049		$	51,724,708


Composition of net assets
Shares of beneficial interest outstanding (par value $0.00001 per share), unlimited number of shares authorized	$	570		$	501
Additional paid-in capital		57,049,430			50,049,532
Undistributed net investment income		388,262			585,431
Accumulated net realized loss		(124,654	)		(74,640	)
Net unrealized appreciation		623,441			1,163,884

Total net assets	$	57,937,049		$	51,724,708


Class A
Net assets applicable to outstanding shares	$	914,006		$	929,490

Shares of beneficial interest outstanding		90,000			90,003

Net asset value per share outstanding	$	10.16		$	10.33

Maximum offering price per share outstanding (Net asset value plus sales charge of 3.00% and 3.75%, respectively)	$	10.47		$	10.73


Class C
Net assets applicable to outstanding shares	$	101,335		$	103,048

Shares of beneficial interest outstanding		10,000			10,000

Net asset value per share outstanding	$	10.13		$	10.30

See accompanying Notes to Financial Statements

Babson Capital Funds Trust 2013 Semi-Annual Report

STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)

December 31, 2013 (Unaudited)


	BABSON GLOBAL FLOATING RATE FUND		BABSON GLOBAL CREDIT INCOME OPPORTUNITIES FUND

Class I
Net assets applicable to outstanding shares	$	32,018,738	$	25,371,923

Shares of beneficial interest outstanding		3,150,134		2,455,000

Net asset value per share outstanding	$	10.16	$	10.33


Class Y
Net assets applicable to outstanding shares	$	24,902,970	$	25,320,247

Shares of beneficial interest outstanding		2,450,000		2,450,000

Net asset value per share outstanding	$	10.16	$	10.33

See accompanying Notes to Financial Statements

Babson Capital Funds Trust 2013 Semi-Annual Report

STATEMENTS OF OPERATIONS

Period from September 16, 2013 through December 31, 2013* (Unaudited)


	BABSON GLOBAL FLOATING RATE FUND			BABSON GLOBAL CREDIT INCOME OPPORTUNITIES FUND

Investment Income
Interest income	$	506,042		$	726,685

Total investment income		506,042			726,685


Operating Expenses
Advisory fees		101,126			110,758
12b-1 distribution and servicing plan — Class A		658			664
12b-1 distribution and servicing plan — Class C		292			295
Professional fees		42,659			42,659
Administrator fees		33,241			33,241
Custody fees		24,930			24,930
Directors’ fees		17,240			17,242
Transfer agent fees		16,765			16,765
Printing and mailing expenses		5,540			5,540
Shareholder servicing expenses		4,847			4,847
Registration fees		2,379			2,379
Other operating expenses		5,666			5,667

Total operating expenses		255,343			264,987
Reimbursement of expenses		(137,563	)		(123,733	)

Net operating expenses		117,780			141,254


Net investment income		388,262			585,431


Realized and Unrealized Gains (Losses) on Investments
Net realized gain on investments		179,104			261,138
Net realized loss on forward foreign currency exchange contracts		(141,665	)		(214,418	)
Net realized loss on foreign currency and translation		(162,093	)		(121,360	)

Net realized loss on investments		(124,654	)		(74,640	)

Net change in unrealized appreciation on investments		842,947			1,392,531
Net change in unrealized depreciation on forward foreign currency exchange contracts		(155,364	)		(164,073	)
Net change in unrealized depreciation on foreign currency and translation		(64,142	)		(64,574	)

Net change in unrealized appreciation on investments		623,441			1,163,884

Net realized and unrealized gains on investments		498,787			1,089,244

Net increase in net assets resulting from operations	$	887,049		$	1,674,675

*	Funds commenced operations on September 16, 2013.

See accompanying Notes to Financial Statements

Babson Global Floating Rate Fund 2013 Semi-Annual Report

STATEMENT OF CASH FLOWS

for the period ended December 31, 2013 (Unaudited)



Cash flows used in operating activities:
Net increase in net assets resulting from operations	$	887,049
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
Purchases of long-term investments		(71,521,683	)
Proceeds from sales of long-term investments		15,685,810
Amortization and (accretion) of discount and premium, net		(7,834	)
Changes in operating assets and liabilities:
Increase in restricted cash		(7,041,707	)
Increase in receivable for investments sold		(7,094,975	)
Increase in interest receivable		(216,743	)
Increase in receivable from Adviser		(36,437	)
Increase in other assets		(758	)
Increase in receivable for open forward foreign currency contracts		(5,740	)
Increase in payable for investments purchased		14,579,085
Increase in distributions payable		280
Increase in payable for open forward foreign currency contracts		161,104
Increase in accrued expenses		119,344
Net change in unrealized (appreciation) depreciation on investments		(842,947	)
Net realized gain from investments		(179,104	)

Net cash used in operating activities		(55,515,256	)

Cash flows from financing activities:
Proceeds from shares sold		57,050,000

Net cash from financing activities		57,050,000

Net increase in cash: ⁽¹⁾		1,534,744
Cash at beginning of period		–

Cash at end of period	$	1,534,744

(1)	Balance includes foreign currency of $1,529,268.

See accompanying Notes to Financial Statements

Babson Global Credit Income Opportunities Fund 2013 Semi-Annual Report

STATEMENT OF CASH FLOWS (CONTINUED)

for the period ended December 31, 2013 (Unaudited)



Cash flows used in operating activities:
Net increase in net assets resulting from operations	$	1,674,675
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
Purchases of long-term investments		(66,278,173	)
Proceeds from sales of long-term investments		17,094,680
Amortization (accretion) of discount and premium, net		19,046
Increase in restricted cash		(639,016	)
Increase in receivable for investments sold		(4,823,113	)
Increase in dividends and interest receivable		(642,236	)
Increase in manager receivable		(12,975	)
Increase in receivable from Adviser		(2,366	)
Increase in other assets		(550	)
Increase in payable for investments purchased		6,913,125
Increase in distributions payable		284
Increase in payable for open forward foreign currency contracts		164,073
Increase in accrued expenses		119,381
Net change in unrealized (appreciation) depreciation on investments		(1,392,531	)
Net realized gain from investments		(261,138	)

Net cash provided by operating activities		(48,066,834	)

Cash flows from financing activities:
Proceeds from shares sold		50,050,033

Net cash from financing activities		50,050,033

Net increase in cash: ⁽¹⁾		1,983,199
Cash at beginning of period		–

Cash at end of period	$	1,983,199

(1)	Balance includes foreign currency of $1,969,544.

See accompanying Notes to Financial Statements

Babson Capital Funds Trust 2013 Semi-Annual Report

STATEMENTS OF CHANGES IN NET ASSETS

(Unaudited)


	BABSON GLOBAL FLOATING RATE FUND			BABSON GLOBAL CREDIT INCOME OPPORTUNITIES FUND
	PERIOD FROM SEPTEMBER 16, 2013 THROUGH DECEMBER 31, 2013 ⁽¹⁾			PERIOD FROM SEPTEMBER 16, 2013 THROUGH DECEMBER 31, 2013 ⁽¹⁾

Operations
Net investment income	$	388,262		$	585,431
Net realized loss on investments		(124,654	)		(74,640	)
Net change in unrealized appreciation on investments		623,441			1,163,884

Net increase in net assets resulting from operations		887,049			1,674,675


Capital Share Transactions
Net proceeds from sale of shares
Class A		900,000			900,033

Class C		100,000			100,000

Class I		31,550,000			24,550,000

Class Y		24,500,000			24,500,000

Net increase in net assets capital stock transactions		57,050,000			50,050,033

Total increase in net assets		57,937,049			51,724,708


Net Assets
Beginning of period		–			–

End of period (includes undistributed net investment income of $388,262 and $585,431, respectively)	$	57,937,049		$	51,724,708

(1)

Fund commenced operations on September 16, 2013.

See accompanying Notes to Financial Statements

Babson Global Floating Rate Fund 2013 Semi-Annual Report

FINANCIAL HIGHLIGHTS (UNAUDITED)


	CLASS A
	PERIOD FROM SEPTEMBER 16, 2013 THROUGH DECEMBER 31, 2013 ⁽¹⁾

Per Common Share Data
Net asset value, beginning of period	$	10.00
Income from investment operations:
Net investment income⁽²⁾		0.06
Net realized and unrealized gain on investments		0.10

Total increase from investment operations		0.16

Net asset value, at end of period	$	10.16

Total investment return⁽³⁾⁽⁴⁾		1.60	%


Supplemental Data and Ratios
Net assets, end of period (000’s)	$	914
Ratio of total expenses (before reductions and reimbursements) to average net assets⁽⁵⁾⁽⁶⁾		3.37	%
Ratio of net expenses to average net assets⁽⁵⁾		1.05	%
Ratio of net investment income to average net assets⁽⁵⁾		2.11	%
Portfolio turnover rate⁽⁴⁾		32.47	%

(1)

Fund commenced operations on September 16, 2013.

(2)

Calculated using average shares outstanding.

(3)

Total investment return calculation does not consider the effects of sales loads and assumes the reinvestment of dividends at actual prices pursuant to the Fund’s dividend reinvestment plan.

(4)

Not annualized.

(5)

Annualized for periods less than one full year.

(6)

The Adviser has agreed to waive and/or reimburse fees and/or expenses so that, on an annualized basis, such expenses incurred will not exceed 1.05% as a percentage of average daily net assets.

See accompanying Notes to Financial Statements

Babson Global Floating Rate Fund 2013 Semi-Annual Report

FINANCIAL HIGHLIGHTS (UNAUDITED) (CONTINUED)


	CLASS C
	PERIOD FROM SEPTEMBER 16, 2013 THROUGH DECEMBER 31, 2013 ⁽¹⁾

Per Common Share Data
Net asset value, beginning of period	$	10.00
Income from investment operations:
Net investment income⁽²⁾		0.04
Net realized and unrealized gain on investments		0.09

Total increase from investment operations		0.13

Net asset value, at end of period	$	10.13

Total investment return⁽³⁾⁽⁴⁾		1.30	%


Supplemental Data and Ratios
Net assets, end of period (000’s)	$	101
Ratio of total expenses (before reductions and reimbursements) to average net assets⁽⁵⁾⁽⁶⁾		16.88	%
Ratio of net expenses to average net assets⁽⁵⁾		1.80	%
Ratio of net investment income to average net assets⁽⁵⁾		1.35	%
Portfolio turnover rate⁽⁴⁾		32.47	%

(1)

Fund commenced operations on September 16, 2013.

(2)

Calculated using average shares outstanding.

(3)

Total investment return calculation does not consider the effects of sales loads and assumes the reinvestment of dividends at actual prices pursuant to the Fund’s dividend reinvestment plan.

(4)

Not annualized.

(5)

Annualized for periods less than one full year.

(6)

The Adviser has agreed to waive and/or reimburse fees and/or expenses so that, on an annualized basis, such expenses incurred will not exceed 1.80% as a percentage of average daily net assets.

See accompanying Notes to Financial Statements

Babson Global Floating Rate Fund 2013 Semi-Annual Report

FINANCIAL HIGHLIGHTS (UNAUDITED) (CONTINUED)


	CLASS I
	PERIOD FROM SEPTEMBER 16, 2013 THROUGH DECEMBER 31, 2013 ⁽¹⁾

Per Common Share Data
Net asset value, beginning of period	$	10.00
Income from investment operations:
Net investment income⁽²⁾		0.08
Net realized and unrealized gain on investments		0.08

Total increase from investment operations		0.16

Net asset value, at end of period	$	10.16

Total investment return⁽³⁾⁽⁴⁾		1.60	%


Supplemental Data and Ratios
Net assets, end of period (000’s)	$	32,019
Ratio of total expenses (before reductions and reimbursements) to average net assets⁽⁵⁾⁽⁶⁾		1.58	%
Ratio of net expenses to average net assets⁽⁵⁾		0.75	%
Ratio of net investment income to average net assets⁽⁵⁾		2.59	%
Portfolio turnover rate⁽⁴⁾		32.47	%

(1)

Fund commenced operations on September 16, 2013.

(2)

Calculated using average shares outstanding.

(3)

Total investment return calculation assumes the reinvestment of dividends at actual prices pursuant to the Fund’s dividend reinvestment plan.

(4)

Not annualized.

(5)

Annualized for periods less than one full year.

(6)

The Adviser has agreed to waive and/or reimburse fees and/or expenses so that, on an annualized basis, such expenses incurred will not exceed .75% as a percentage of average daily net assets.

See accompanying Notes to Financial Statements

Babson Global Floating Rate Fund 2013 Semi-Annual Report

FINANCIAL HIGHLIGHTS (UNAUDITED) (CONTINUED)


	CLASS Y
	PERIOD FROM SEPTEMBER 16, 2013 THROUGH DECEMBER 31, 2013 ⁽¹⁾

Per Common Share Data
Net asset value, beginning of period	$	10.00
Income from investment operations:
Net investment income⁽²⁾		0.07
Net realized and unrealized gain on investments		0.09

Total increase from investment operations		0.16

Net asset value, at end of period	$	10.16

Total investment return⁽³⁾⁽⁴⁾		1.60	%


Supplemental Data and Ratios
Net assets, end of period (000’s)	$	24,903
Ratio of total expenses (before reductions and reimbursements) to average net assets⁽⁵⁾⁽⁶⁾		1.59	%
Ratio of net expenses to average net assets⁽⁵⁾		0.75	%
Ratio of net investment income to average net assets⁽⁵⁾		2.41	%
Portfolio turnover rate⁽⁴⁾		32.47	%

(1)

Fund commenced operations on September 16, 2013.

(2)

Calculated using average shares outstanding.

(3)

Total investment return calculation assumes the reinvestment of dividends at actual prices pursuant to the Fund’s dividend reinvestment plan.

(4)

Not annualized.

(5)

Annualized for periods less than one full year.

(6)

The Adviser has agreed to waive and/or reimburse fees and/or expenses so that, on an annualized basis, such expenses incurred will not exceed .75% as a percentage of average daily net assets.

See accompanying Notes to Financial Statements

Babson Global Credit Income Opportunities Fund 2013 Semi-Annual Report

FINANCIAL HIGHLIGHTS (UNAUDITED) (CONTINUED)


	CLASS A
	PERIOD FROM SEPTEMBER 16, 2013 THROUGH DECEMBER 31, 2013⁽¹⁾

Per Common Share Data
Net asset value, beginning of period	$	10.00
Income from investment operations:
Net investment income⁽²⁾		0.11
Net realized and unrealized gain on investments		0.22

Total increase from investment operations		0.33

Net asset value, at end of period	$	10.33

Total investment return⁽³⁾⁽⁴⁾		3.30	%


Supplemental Data and Ratios
Net assets, end of period (000’s)	$	929
Ratio of total expenses (before reductions and reimbursements) to average net assets⁽⁵⁾⁽⁶⁾		3.50	%
Ratio of net expenses to average net assets⁽⁵⁾		1.20	%
Ratio of net investment income to average net assets⁽⁵⁾		3.72	%
Portfolio turnover rate⁽⁴⁾		36.01	%

(1)

Fund commenced operations on September 16, 2013.

(2)

Calculated using average shares outstanding.

(3)

Total investment return calculation does not consider the effects of sales loads and assumes the reinvestment of dividends at actual prices pursuant to the Fund’s dividend reinvestment plan.

(4)

Not annualized.

(5)

Annualized for periods less than one full year.

(6)

The Adviser has agreed to waive and/or reimburse fees and/or expenses so that, on an annualized basis, such expenses incurred will not exceed 1.20% as a percentage of average daily net assets.

See accompanying Notes to Financial Statements

Babson Global Credit Income Opportunities Fund 2013 Semi-Annual Report

FINANCIAL HIGHLIGHTS (UNAUDITED) (CONTINUED)


	CLASS C
	PERIOD FROM SEPTEMBER 16, 2013 THROUGH DECEMBER 31, 2013 ⁽¹⁾

Per Common Share Data
Net asset value, beginning of period	$	10.00
Income from investment operations:
Net investment income⁽²⁾		0.09
Net realized and unrealized gain on investments		0.21

Total increase from investment operations		0.30

Net asset value, at end of period	$	10.30

Total investment return ⁽³⁾⁽⁴⁾		3.00	%


Supplemental Data and Ratios
Net assets, end of period (000’s)	$	103
Ratio of total expenses (before reductions and reimbursements) to average net assets ⁽⁵⁾⁽⁶⁾		16.90	%
Ratio of net expenses to average net assets ⁽⁵⁾		1.95	%
Ratio of net investment income to average net assets ⁽⁵⁾		2.97	%
Portfolio turnover rate ⁽⁴⁾		36.01	%

(1)

Fund commenced operations on September 16, 2013.

(2)

Calculated using average shares outstanding.

(3)

Total investment return calculation does not consider the effects of sales loads and assumes the reinvestment of dividends at actual prices pursuant to the Fund’s dividend reinvestment plan.

(4)

Not annualized.

(5)

Annualized for periods less than one full year.

(6)

The Adviser has agreed to waive and/or reimburse fees and/or expenses so that, on an annualized basis, such expenses incurred will not exceed 1.95% as a percentage of average daily net assets.

See accompanying Notes to Financial Statements

Babson Global Credit Income Opportunities Fund 2013 Semi-Annual Report

FINANCIAL HIGHLIGHTS (UNAUDITED) (CONTINUED)


	CLASS I
	PERIOD FROM SEPTEMBER 16, 2013 THROUGH DECEMBER 31, 2013 ⁽¹⁾

Per Common Share Data
Net asset value, beginning of period	$	10.00
Income from investment operations:
Net investment income ⁽²⁾		0.12
Net realized and unrealized gain on investments		0.21

Total increase from investment operations		0.33

Net asset value, at end of period	$	10.33

Total investment return ⁽³⁾⁽⁴⁾		3.30	%


Supplemental Data and Ratios
Net assets, end of period (000’s)	$	25,372
Ratio of total expenses (before reductions and reimbursements) to average net assets ⁽⁵⁾⁽⁶⁾		1.73	%
Ratio of net expenses to average net assets ⁽⁵⁾		0.95	%
Ratio of net investment income to average net assets ⁽⁵⁾		3.97	%
Portfolio turnover rate ⁽⁴⁾		36.01	%

(1)

Fund commenced operations on September 16, 2013.

(2)

Calculated using average shares outstanding.

(3)

Total investment return calculation assumes the reinvestment of dividends at actual prices pursuant to the Fund’s dividend reinvestment plan.

(4)

Not annualized.

(5)

Annualized for periods less than one full year.

(6)

The Adviser has agreed to waive and/or reimburse fees and/or expenses so that, on an annualized basis, such expenses incurred will not exceed .95% as a percentage of average daily net assets.

See accompanying Notes to Financial Statements

Babson Global Credit Income Opportunities Fund 2013 Semi-Annual Report

FINANCIAL HIGHLIGHTS (UNAUDITED) (CONTINUED)


	CLASS Y
	PERIOD FROM SEPTEMBER 16, 2013 THROUGH DECEMBER 31, 2013 ⁽¹⁾

Per Common Share Data
Net asset value, beginning of period	$	10.00
Income from investment operations:
Net investment income ⁽²⁾		0.12
Net realized and unrealized gain on investments		0.21

Total increase from investment operations		0.33

Net asset value, at end of period	$	10.33

Total investment return ⁽³⁾⁽⁴⁾		3.30	%


Supplemental Data and Ratios
Net assets, end of period (000’s)	$	25,320
Ratio of total expenses (before reductions and reimbursements) to average net assets ⁽⁵⁾⁽⁶⁾		1.73	%
Ratio of net expenses to average net assets ⁽⁵⁾		0.95	%
Ratio of net investment income to average net assets ⁽⁵⁾		3.97	%
Portfolio turnover rate ⁽⁴⁾		36.01	%

(1)

Fund commenced operations on September 16, 2013.

(2)

Calculated using average shares outstanding.

(3)

Total investment return calculation assumes the reinvestment of dividends at actual prices pursuant to the Fund’s dividend reinvestment plan.

(4)

Not annualized.

(5)

Annualized for periods less than one full year.

(6)

The Adviser has agreed to waive and/or reimburse fees and/or expenses so that, on an annualized basis, such expenses incurred will not exceed .95% as a percentage of average daily net assets.

See accompanying Notes to Financial Statements

Babson Global Floating Rate Fund 2013 Semi-Annual Report

SCHEDULE OF INVESTMENTS (UNAUDITED)

December 31, 2013


	EFFECTIVE INTEREST RATE ‡			DUE DATE		PRINCIPAL		COST		FAIR VALUE
*Fixed Income — 98.2%:**

*Bank Loans — 86.0%§:**

*Aerospace and Defense — 0.9%:**
TransDigm Group, Inc.		3.75	%		2/28/2020		498,740	$	496,323	$	499,648


*Automobile — 1.1%:**
Autobahn Tank & Rast GmbH+		3.75			12/4/2018		250,000		336,266		343,639
Autobahn Tank & Rast GmbH+		4.00			12/4/2019		200,000		271,730		276,937

Total Automobile							450,000		607,996		620,576


*Beverage, Food and Tobacco — 3.4%:**
Acosta, Inc.		3.50			3/2/2018		400,526		402,644		402,628
AHT Cooling Systems GmbH+		4.75			9/30/2020		500,000		684,125		687,850
Del Monte Foods Co.		4.25			11/6/2020		250,000		248,750		251,250
Del Monte Foods Co.		8.25			4/11/2021		156,341		154,778		157,710
JBS USA Holdings, Inc.		3.75			9/18/2020		498,750		499,978		497,089

Total Beverage, Food and Tobacco							1,805,617		1,990,275		1,996,527


*Broadcasting and Entertainment — 7.2%:**
Cumulus Media Holdings, Inc.		4.25			12/23/2020		375,082		371,332		376,958
Learfield Communications, Inc.		5.00			10/9/2020		419,598		417,562		423,794
Learfield Communications, Inc.		8.75			10/9/2021		1,000,000		1,022,690		1,020,000
Nexstar Broadcasting, Inc.		3.75			10/1/2020		313,039		313,039		313,333
Tyrol Acquisitions 2 SAS+		3.25			1/29/2016		1,158,726		1,511,686		1,548,946
Univision Communications, Inc.		4.00			3/1/2020		497,494		496,280		499,360

Total Broadcasting and Entertainment							3,763,939		4,132,589		4,182,391


*Buildings and Real Estate — 2.9%:**
Monier Group Gmbh+		7.25			4/16/2015		500,000		659,163		683,262
Quikrete Holdings, Inc.		4.00			9/28/2020		997,500		992,666		1,001,051

Total Buildings and Real Estate							1,497,500		1,651,829		1,684,313


*Cargo Transport — 2.0%:**
CEVA Group PLC+		5.25			8/31/2016		500,000		659,357		668,934
Direct ChassisLink, Inc.		8.75			10/31/2019		500,000		492,590		492,500

Total Cargo Transport							1,000,000		1,151,947		1,161,434


*Chemicals, Plastics and Rubber — 4.7%:**
Chromaflo Technologies Corp.		4.50			12/2/2019		626,406		627,932		626,017
Flint Group SA		6.50			12/30/2016		1,000,000		992,822		997,500
Ineos US Finance LLC		4.00			5/4/2018		465,211		462,964		466,374
OCI Beaumont LLC		6.25			8/20/2019		138,388		137,702		139,772
Vantage Specialties, Inc.		5.00			2/10/2019		498,735		497,505		499,673

Total Chemicals, Plastics and Rubber							2,728,740		2,718,925		2,729,336


*Containers, Packaging and Glass — 4.3%:**
Ardagh Packaging Finance PLC		4.25			12/17/2019		74,019		73,649		74,389
Chesapeake Corp.+		6.00			9/30/2020		498,750		794,299		829,002
Coveris+		5.00			5/8/2019		500,000		686,624		691,936

See accompanying Notes to Financial Statements

Babson Global Floating Rate Fund 2013 Semi-Annual Report

SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)

December 31, 2013


	EFFECTIVE INTEREST RATE ‡			DUE DATE		PRINCIPAL		COST		FAIR VALUE
Bank Loans (Continued)

Containers, Packaging and Glass (Continued)
Coveris		5.25	%		5/8/2019		388,645	$	386,731	$	394,475
Multi Packaging Solutions, Inc.		4.25			8/15/2020		250,000		249,375		250,312
Multi Packaging Solutions, Inc.		4.25			9/30/2020		250,000		249,375		250,000

Total Containers, Packaging and Glass							1,961,414		2,440,053		2,490,114


*Diversified/Conglomerate Manufacturing — 3.3%:**
Filtration Group Corp.		4.50			11/21/2020		366,960		365,139		370,402
Information Resources, Inc.		4.75			9/30/2020		159,038		158,266		159,702
Quality Home Brands Holdings		7.75			5/25/2018		263,673		261,036		263,673
Rexnord LLC		4.00			8/20/2020		928,707		923,225		930,639
ValleyCrest Co. LLC		5.50			6/13/2019		166,249	$	167,266	$	166,872

Total Diversified/Conglomerate Manufacturing							1,884,627		1,874,932		1,891,288


*Diversified/Conglomerate Service — 8.8%:**
Aquilex Holdings LLC		5.25			12/31/2020		200,142		199,642		200,643
Brickman Group Holdings, Inc		7.75			12/5/2020		82,405		81,993		84,131
Brickman Group Holdings, Inc.		4.00			12/18/2018		234,904		233,729		235,785
EIG Investors Corp.		5.00			11/9/2019		601,532		604,198		604,167
Garda World Security Corp.		4.00			11/8/2020		138,843		138,161		138,973
Infor (US), Inc.		3.75			6/3/2020		997,483		994,950		994,990
Northgate Information Solutions+		4.25			3/6/2018		500,000		666,798		672,373
Northgate Information Solutions+		4.75			3/7/2018		500,000		666,798		672,373
Power Team Services LLC		8.25			11/6/2020		500,000		495,051		490,000
Protection One, Inc.		4.25			3/21/2019		125,387		125,230		125,355
Sabre, Inc.		4.50			2/19/2019		498,750		498,750		499,373
Triple Point Technology, Inc.		5.25			7/10/2020		446,151		405,151		397,074

Total Diversified/Conglomerate Service							4,825,597		5,110,451		5,115,237


*Ecological — 0.8%:**
ADS Waste Holdings, Inc.		4.25			10/9/2019		477,986		477,986		480,108


*Electronics — 0.7%:**
Kronos, Inc.		4.50			10/30/2019		90,985		90,084		91,725
Kronos, Inc.		9.75			4/30/2020		115,144		113,035		118,886
Magic Newco LLC		5.00			12/12/2018		96,598		96,598		97,202
Omnitracs, Inc.		4.75			11/25/2020		73,464		73,101		73,464

Total Electronics							376,191		372,818		381,277


*Farming and Agriculture — 0.3%:**
Dole Food Co., Inc.		4.50			11/1/2018		152,301		151,560		152,808


*Finance — 9.3%:**
Confie Seguros Holdings II Co.		5.75			11/9/2018		456,866		454,685		456,866
Confie Seguros Holdings II Co.		10.25			5/8/2019		297,015		297,015		297,945
Evertec Group LLC		3.50			4/17/2020		178,238		172,998		173,336
First Data Corp.		4.25			3/23/2018		500,000		497,014		500,345
Nuveen Investments, Inc.		4.25			5/13/2017		500,000		495,320		497,605
Nuveen Investments, Inc.		6.50			2/28/2019		500,000		490,284		494,000

See accompanying Notes to Financial Statements

Babson Global Floating Rate Fund 2013 Semi-Annual Report

SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)

December 31, 2013


	EFFECTIVE INTEREST RATE ‡			DUE DATE		PRINCIPAL		COST		FAIR VALUE
Bank Loans (Continued)

Finance (Continued)
P2 Newco Acquisition, Inc.		5.50	%		10/22/2020		484,694	$	479,958	$	485,905
P2 Newco Acquisition, Inc.		9.50			10/22/2021		500,000		495,100		500,000
SAM Finance Lux Sarl+		4.25			11/11/2020		500,000		806,318		825,905
SAM Finance Lux Sarl		4.25			12/17/2020		500,000		497,500		500,625
Ship US Bidco, Inc.		4.50			11/30/2019		376,772		373,049		378,750
TransUnion LLC		4.25			2/10/2019		185,118		185,118		185,998
VFH Parent LLC		5.75			11/6/2019		120,000		120,742		120,700

Total Finance							5,098,703		5,365,101		5,417,980


*Healthcare, Education and Childcare — 9.4%:**
Aenova Holding GmbH+		5.25			9/27/2019		600,000		798,667		827,071
Britax US Holdings, Inc.		4.50			10/15/2020		439,636		437,492		440,551
Envision Healthcare Corp.		4.00			5/25/2018		497,448		497,448		498,482
Heartland Dental Care, Inc.		5.50			12/21/2018		392,016		390,076		392,996
PRA Holdings, Inc.		5.00			9/23/2020		864,029		855,690		865,100
Sheridan Holdings, Inc.		8.25			12/31/2021		66,570		66,238		66,945
TriZetto Group, Inc. (The)		4.75			5/2/2018		872,129		818,100		861,777
Tunstall Group Holdings Ltd.+		5.25			10/16/2020		500,000		791,606		827,387
Vitalia Holdco Sarl+		5.25			7/27/2018		500,000		666,096		682,347

Total Healthcare, Education and Childcare							4,731,828		5,321,413		5,462,656


*Home and Office Furnishings, Housewares, and Durable Consumer Products — 0.9%:**
Leslie’s Poolmart, Inc.		4.25			10/16/2019		548,269		547,767		549,985


*Hotels, Motels, Inns and Gaming — 3.5%:**
Gala Group Ltd.+		5.25			5/25/2018		500,000		800,200		834,773
Hilton Worldwide Finance LLC		3.75			10/25/2020		789,474		785,621		795,395
Marina District Finance Co.		6.75			8/15/2018		379,384		375,590		380,571

Total Hotels, Motels, Inns and Gaming							1,668,858		1,961,411		2,010,739


*Insurance — 2.9%:**
AmWINS Group LLC		5.00			9/6/2019		153,772		153,395		154,541
Asurion LLC		4.50			5/24/2019		497,488		495,051		497,114
Hub International Ltd.		4.75			10/2/2020		997,500		992,673		1,008,722

Total Insurance							1,648,760		1,641,119		1,660,377


*Leisure, Amusement, Entertainment — 0.3%:**
Town Sports International, Inc.		4.50			11/15/2020		181,325		180,433		182,458


*Machinery Non-Agriculture, Non-Construction, Non-Electronic — 1.9%:**
Gardner Denver, Inc.		4.25			7/30/2020		498,750		498,750		498,690
Intelligrated, Inc.		4.50			7/30/2018		121,417		121,118		121,645
Silver II US Holdings LLC		4.00			12/13/2019		489,987		489,987		490,497

Total Machinery Non-Agriculture, Non-Construction, Non-Electronic							1,110,154		1,109,855		1,110,832

See accompanying Notes to Financial Statements

Babson Global Floating Rate Fund 2013 Semi-Annual Report

SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)

December 31, 2013


	EFFECTIVE INTEREST RATE ‡			DUE DATE		PRINCIPAL		COST		FAIR VALUE
Bank Loans (Continued)

*Mining, Steel, Iron and Non-Precious Metals — 2.4%:**
H.C. Starck GmbH+		4.75	%		12/30/2014		250,000	$	339,625	$	341,346
H.C. Starck GmbH+		4.75			12/30/2015		250,000		339,625		343,065
Metal Services LLC		6.00			6/30/2017		106,886		106,887		107,581
Murray Energy Corp.		5.25			12/5/2019		397,701		395,731		401,431
TMS International Corp.		4.50			10/16/2020		216,723		215,669		218,257

Total Mining, Steel, Iron and Non-Precious Metals							1,221,310		1,397,537		1,411,680


*Oil and Gas — 1.8%:**
Energy Transfer Equity LP		3.25			12/2/2019		154,464		154,082		153,846
Equipower Resources Holdings LLC		4.25			12/31/2019		108,598		108,326		108,870
Quicksilver Resources, Inc.		7.00			6/21/2019		500,000		489,657		494,375
Western Refining, Inc.		4.25			11/12/2020		285,542		285,542		288,754

Total Oil and Gas							1,048,604		1,037,607		1,045,845


*Personal and Non-Durable Consumer Products Mfg. Only — 1.7%:**
Pacific Industrial Services US Finco LLC		5.00			10/2/2018		997,500		992,707		1,010,388


*Personal, Food and Miscellaneous — 0.3%:**
Redtop Acquisitions Ltd.		8.25			5/31/2021		158,761		156,792		160,746


Printing and Publishing — 2.6%:
Emap B2B+		5.15			10/31/2017		500,000		771,086		790,716
Springer Science and Business Media GmbH		5.00			8/14/2020		498,750		496,292		500,411
SuperMedia, Inc.		11.60			12/30/2016		262,567		195,192		195,573

Total Printing and Publishing							1,261,317		1,462,570		1,486,700


*Retail Stores — 3.8%:**
Advantage Sales and Marketing, Inc.		4.25			12/18/2017		120,554		119,951		120,885
BJ’s Wholesale Club, Inc.		4.50			9/26/2019		136,343		135,674		137,042
FleetPride Corp.		5.25			11/19/2019		748,111		732,846		738,296
Hudson’s Bay Co.		4.75			11/4/2020		795,317		787,956		807,549
Hudson’s Bay Co.		8.25			11/4/2021		107,296		106,243		110,783
Smart and Final Stores LLC		4.75			11/15/2019		279,018		278,321		278,321

Total Retail Stores							2,186,639		2,160,991		2,192,876


*Telecommunications — 3.2%:**
Altice Financing SA		4.75			7/15/2019		265,625		268,438		266,953
CDS Holdco III B.V.+		5.00			8/31/2020		500,000		672,180		690,003
Com Hem Communications AB+		5.25			3/29/2018		5,000,000		763,990		757,947
Syniverse Holdings, Inc.		4.00			4/23/2019		113,184		113,184		113,290

Total Telecommunications							5,878,809		1,817,792		1,828,193


*Utilities — 1.6%:**
Dynegy Holdings, Inc.		4.00			4/23/2020		598,353		596,297		600,596
EFS Cogen Holdings I, Inc.		3.75			12/17/2020		304,340		301,312		306,242

Total Utilities							902,693		897,609		906,838


Total Bank Loans							50,066,182		49,228,388		49,823,350

See accompanying Notes to Financial Statements

Babson Global Floating Rate Fund 2013 Semi-Annual Report

SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)

December 31, 2013


	EFFECTIVE INTEREST RATE ‡			DUE DATE		PRINCIPAL		COST		FAIR VALUE
*Corporate Bonds — 12.2%:**

*Beverage, Food and Tobacco — 0.6%:**
Albain Bidco Norway AS+		6.67	%#		11/1/2020		1,000,000	$	166,715	$	165,697
Findus Bondco SA+		9.13			7/1/2018		100,000		141,728		151,327

Total Beverage, Food and Tobacco							1,100,000		308,443		317,024


*Broadcasting and Entertainment — 0.3%:**
CET 21 Spol Sro+		9.00			11/1/2017		100,000		142,601		143,417


*Finance — 2.2%:**
Equiniti Newco 2 PLC+		6.28	#		12/15/2018		750,000		1,215,109		1,257,487


*Healthcare, Education and Childcare — 1.3%:**
Care UK Health & Social Care PLC+		9.75			8/1/2017		100,000		165,314		175,117
Unilabs Subholding AB+		7.48	#		7/15/2018		400,000		551,836		558,534

Total Healthcare, Education and Childcare							500,000		717,150		733,651


*Insurance — 2.4%:**
Galaxy Bidco Ltd.+		5.52	#		11/15/2019		100,000		160,874		166,539
Hastings Insurance Group Finance PLC+		6.58	#		10/21/2019		150,000		237,540		248,082
Hastings Insurance Group Finance PLC+		8.00			10/21/2020		100,000		159,915		170,563
Towergate Finance PLC+		6.01	#		2/15/2018		500,000		796,763		823,835

Total Insurance							850,000		1,355,092		1,409,019


*Leisure, Amusement, Entertainment — 2.9%:**
Travelex Financing PLC+		6.51	#		8/1/2018		700,000		1,119,681		1,159,165
Travelex Financing PLC+		8.00			8/1/2018		100,000		158,219		171,391
Vougeot Bidco PLC+		5.48	#		7/15/2020		250,000		338,833		349,943

Total Leisure, Amusement, Entertainment							1,050,000		1,616,733		1,680,499


Machinery Non-Agriculture, Non-Construction, Non-Electronic — 0.2%:
Channel Link Enterprises Finance PLC+		3.64	#		6/30/2050		100,000		128,221		131,379


Personal Transportation — 0.8%:
Bond Mission Critical Services PLC+		6.26	#		5/1/2019		300,000		476,494		476,913


*Personal, Food and Miscellaneous — 0.2%:**
TeamSystem Holding SpA+		7.38			5/15/2020		100,000		132,409		141,697


*Retail Stores — 1.0%:**
Brighthouse Group PLC+		7.88			5/15/2018		150,000		245,222		255,844
New Look Bondco I PLC+		8.75			5/14/2018		200,000		325,175		349,654

Total Retail Stores							350,000		570,397		605,498


*Telecommunications — 0.3%:**
Manutencoop Facility Management SpA+		8.50			8/1/2020		100,000		131,982		145,824

Total Corporate Bonds							5,300,000		6,794,631		7,042,408


Total Fixed Income							55,366,182		56,023,019		56,865,758

See accompanying Notes to Financial Statements

Babson Global Floating Rate Fund 2013 Semi-Annual Report

SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)

December 31, 2013


	EFFECTIVE INTEREST RATE ‡			DUE DATE		PRINCIPAL		COST		FAIR VALUE
*Short-Term Investment — 12.1%:**

*Bank Deposit — 12.1%:**
State Street Bank & Trust Co. Euro Time Deposit		0.01	%		1/2/2014		7,041,707	$	7,041,707	$	7,041,707

Total Investments							62,407,889		63,064,726		63,907,465


Other assets and liabilities — (10.3%)											(5,970,416	)

Net Assets — 100.0%										$	57,937,049

‡	The effective interest rates are based on settled commitment amount.

*	Calculated as a percentage of net assets applicable to common shareholders.

+	Foreign security.

Distributions of investments by country of issue (excluding temporary cash investments) as a percentage of total investments in securities, is as follows:


US	United States	57.1%
UK	United Kingdom	20.4%
DE	Germany	6.7%
FR	France	3.9%
ES	Spain	2.3%
SE	Sweden	2.3%
AU	Australia	1.8%
NL	Netherlands	1.2%
AT	Austria	1.2%
Other (Individually less than 1%)		3.1%

Total		100.0%

^	Security acquired in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may only be resold in transactions exempt from registration, normally to qualified institutional buyers.

Bank loans are exempt from registration under the Securities Act of 1933, as amended, but contain certain restrictions on resale and cannot be sold publicly. These loans pay interest at rates which adjust periodically. The interest rates shown for bank loans are the current interest rates at December 31, 2013. Bank loans are also subject to mandatory and/or optional prepayment which cannot be predicted. As a result, the remaining maturity may be substantially less than the stated maturity shown. See accompanying Notes to the Financial Statement (2G) for additional information on bank loans.

#	Variable rate security. The interest rate shown is the rate in effect at December 31, 2013.

A summary of outstanding financial instruments at December 31, 2013 is as follows:

Forward Foreign Currency Exchange Contracts to Buy


EXPIRATION DATE	COUNTERPARTY	LOCAL CURRENCY			VALUE IN USD		IN EXCHANGE FOR USD		NET UNREALIZED APPRECIATION
01/14/14	State Street Bank & Trust Co.		GBP	218,769		362,244		356,641	$	5,603
01/14/14	State Street Bank & Trust Co.		SEK	72,875		11,328		11,191		137

Net unrealized appreciation on forward foreign exchange contracts to buy									$	5,740

See accompanying Notes to Financial Statements

Babson Global Floating Rate Fund 2013 Semi-Annual Report

SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)

December 31, 2013

Forward Foreign Currency Exchange Contracts to Sell


EXPIRATION DATE	COUNTERPARTY	LOCAL CURRENCY			VALUE IN USD		IN EXCHANGE FOR USD		NET UNREALIZED DEPRECIATION
01/14/14	State Street Bank & Trust Co.		EUR	4,562,818		6,277,033		6,253,677	$	(23,356	)
01/14/14	State Street Bank & Trust Co.		GBP	6,205,658		10,275,510		10,140,410		(135,100	)
01/14/14	State Street Bank & Trust Co.		NOK	1,008,015		166,125		163,477		(2,648	)

Net unrealized depreciation on forward foreign exchange contracts to sell									$	(161,104	)

Currency Legend


EUR	–	Euro
GBP	–	British Pound Sterling
NOK	–	Norwegian Krona
SEK	–	Swedish Krona

See accompanying Notes to Financial Statements

Babson Global Credit Income Opportunities Fund 2013 Semi-Annual Report

SCHEDULE OF INVESTMENTS (UNAUDITED)

December 31, 2013


	EFFECTIVE INTEREST RATE ‡			DUE DATE		PRINCIPAL		COST		FAIR VALUE
*Fixed Income — 98.3%:**

*Bank Loans — 42.2%§:**

*Beverage, Food and Tobacco — 1.7%:**
Acosta, Inc.		3.50	%		3/2/2018		200,263	$	201,322	$	201,314
AHT Cooling Systems GmbH+		4.75			11/19/2020		500,000		684,124		687,850

Total Beverage, Food and Tobacco							700,263		885,446		889,164


*Broadcasting and Entertainment — 3.2%:**
Cumulus Media Holdings, Inc.		4.25			12/23/2020		187,542		185,666		188,479
Learfield Communications, Inc.		5.00			10/9/2020		209,799		208,588		211,897
Tyrol Acquisitions 2 SAS+		3.25			1/29/2016		926,980		1,209,350		1,239,157

Total Broadcasting and Entertainment							1,324,321		1,603,604		1,639,533


*Buildings and Real Estate — 1.3%:**
Monier Group Gmbh+		7.25			2/28/2018		500,000		658,804		683,262


*Cargo Transport — 0.9%:**
Direct ChassisLink, Inc.		8.75			10/31/2019		500,000		492,590		492,500


*Chemicals, Plastics and Rubber — 2.1%:**
Chromaflo Technologies Corp.		4.50			12/2/2019		75,054		74,868		75,007
Flint Group SA		6.50			12/30/2016		1,000,000		993,201		997,500

Total Chemicals, Plastics and Rubber							1,075,054		1,068,069		1,072,507


*Containers, Packaging and Glass — 3.8%:**
Chesapeake Corp.+		6.00			9/30/2020		498,750		794,298		829,002
Coveris+		5.00			5/8/2019		500,000		686,624		691,935
Coveris		5.25			5/8/2019		64,774		64,455		65,746
Multi Packaging Solutions, Inc.		4.25			8/15/2020		184,512		184,051		184,743
Multi Packaging Solutions, Inc.		4.25			9/30/2020		184,512		184,051		184,512

Total Containers, Packaging and Glass							1,432,548		1,913,479		1,955,938


*Diversified/Conglomerate Manufacturing — 1.9%:**
Filtration Group Corp.		4.50			11/20/2020		91,740		91,287		92,601
Information Resources, Inc.		4.75			9/30/2020		79,519		79,133		79,851
Quality Home Brands Holdings		7.75			5/25/2018		131,836		130,518		131,836
ValleyCrest Co. LLC		5.50			6/13/2019		166,249		167,266		166,872
Wilsonart LLC		4.00			10/31/2019		498,741		494,227		494,691

Total Diversified/Conglomerate Manufacturing							968,085		962,431		965,851


*Diversified/Conglomerate Service — 2.3%:**
Aquilex Holdings LLC		5.25			12/31/2020		100,071		99,821		100,321
Brickman Group Holdings, Inc.		4.00			12/18/2020		117,452		116,865		117,892
Protection One, Inc.		4.25			3/21/2019		62,693		62,615		62,678
Sabre, Inc.		4.50			2/19/2019		498,750		498,588		499,374
Triple Point Technology, Inc.		5.25			7/10/2020		446,151		405,151		397,074

Total Diversified/Conglomerate Service							1,225,117		1,183,040		1,177,339

See accompanying Notes to Financial Statements

Babson Global Credit Income Opportunities Fund 2013 Semi-Annual Report

SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)

December 31, 2013


	EFFECTIVE INTEREST RATE ‡			DUE DATE		PRINCIPAL		COST		FAIR VALUE
Bank Loans (Continued)

*Electronics — 1.3%:**
Dell, Inc.+		4.00	%		4/29/2020		500,000	$	669,803	$	691,145


*Finance — 3.4%:**
Confie Seguros Holdings II Co.		5.75			11/9/2018		228,433		227,343		228,433
Confie Seguros Holdings II Co.		10.25			5/8/2019		148,508		148,508		148,972
First Data Corp.		4.25			3/23/2018		500,000		497,014		500,345
Nuveen Investments, Inc.		4.25			5/13/2017		500,000		495,320		497,605
P2 Newco Acquisition, Inc.		9.50			10/22/2021		103,373		102,360		103,373
SAM Finance Lux Sarl		4.25			12/17/2020		191,456		190,499		191,696
TransUnion LLC		4.25			2/10/2019		92,559		92,559		92,999

Total Finance							1,764,329		1,753,603		1,763,423


*Healthcare, Education and Childcare — 4.7%:**
Aenova Holding GmbH+		5.25			9/27/2019		600,000		798,642		827,071
Britax US Holdings, Inc.		4.50			10/15/2020		219,818		218,746		220,275
Heartland Dental Care, Inc.		5.50			12/21/2018		98,004		97,519		98,249
PRA Holdings, Inc.		5.00			9/23/2020		432,015		427,845		432,550
TriZetto Group, Inc. (The)		4.75			5/2/2018		872,129		817,742		861,777

Total Healthcare, Education and Childcare							2,221,966		2,360,494		2,439,922


*Home and Office Furnishings, Housewares, and Durable Consumer Products — 0.3%:**
Leslie’s Poolmart, Inc.		4.25			10/16/2019		137,067		137,067		137,496


*Hotels, Motels, Inns and Gaming — 0.2%:**
Marina District Finance Co.		6.75			8/15/2018		94,846		93,898		95,143


*Insurance — 2.2%:**
AmWINS Group LLC		5.00			9/6/2019		76,886		76,697		77,271
Asurion LLC		4.50			5/24/2019		497,487		495,051		497,114
Hub International Ltd.		4.75			10/2/2020		573,721		570,945		580,175

Total Insurance							1,148,094		1,142,693		1,154,560


*Leisure, Amusement, Entertainment — 0.2%:**
Town Sports International, Inc.		4.50			11/15/2020		90,663		90,217		91,229


*Machinery Non-Agriculture, Non-Construction, Non-Electronic — 1.0%:**
Gardner Denver, Inc.		4.25			7/30/2020		498,750		498,750		498,690


*Mining, Steel, Iron and Non-Precious Metals — 0.4%:**
Murray Energy Corp.		5.25			12/5/2019		99,425		98,933		100,358
TMS International Corp.		4.50			10/16/2020		108,362		107,834		109,128

Total Mining, Steel, Iron and Non-Precious Metals							207,787		206,767		209,486


*Oil and Gas — 0.8%:**
Fieldwood Energy LLC		8.38			9/30/2020		324,231		314,629		330,716
Western Refining, Inc.		4.25			11/12/2020		71,385		71,386		72,188

Total Oil and Gas							395,616		386,015		402,904

See accompanying Notes to Financial Statements

Babson Global Credit Income Opportunities Fund 2013 Semi-Annual Report

SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)

December 31, 2013


	EFFECTIVE INTEREST RATE ‡			DUE DATE		PRINCIPAL		COST		FAIR VALUE
Bank Loans (Continued)

*Personal and Non-Durable Consumer Products Mfg. Only — 1.0%:**
Pacific Industrial Services US Finco LLC		5.00	%		10/2/2018		498,750	$	496,353	$	505,194


*Printing and Publishing — 1.9%:**
Emap B2B+		5.15			10/31/2017		500,000		771,086		790,716
SuperMedia, Inc.		11.60			12/30/2016		262,567		195,253		195,573

Total Printing and Publishing							762,567		966,339		986,289


*Retail Stores — 5.6%:**
Advantage Sales and Marketing, Inc.		4.25			12/18/2017		60,277		59,975		60,443
Alliance Boots Holdings Ltd.+		3.75			7/10/2017		1,000,000		1,593,642		1,652,853
BJ’s Wholesale Club, Inc.		4.50			9/26/2019		311,715		311,981		313,314
FleetPride Corp.		5.25			11/19/2019		221,662		218,920		218,754
Hudson’s Bay Co.		4.75			11/4/2020		500,000		495,092		507,690
Smart and Final Stores LLC		4.75			11/15/2019		139,509		139,160		139,160

Total Retail Stores							2,233,163		2,818,770		2,892,214


*Telecommunications — 1.9%:**
Altice Financing SA		4.75			7/15/2019		265,625		268,437		266,953
CDS Holdco III B.V.+		5.00			9/30/2020		500,000		672,180		690,003
Syniverse Holdings, Inc.		4.00			4/23/2019		56,592		56,592		56,645

Total Telecommunications							822,217		997,209		1,013,601


*Utilities — 0.1%:**
EFS Cogen Holdings I, Inc.		3.75			12/17/2020		76,085		75,248		76,561

Total Bank Loans							19,177,288		21,460,689		21,833,951


*Corporate Bonds — 56.1%:**

*Aerospace and Defense — 3.2%:**
AAR Corp.^		7.25			1/15/2022		500,000		523,256		535,000
Aguila 3 SA+		7.88			1/31/2018		250,000		288,438		297,427
DAE Aviation Holdings, Inc.^		11.25			8/1/2015		750,000		754,087		751,875
GenCorp, Inc.		7.13			3/15/2021		60,000		62,907		64,200

Total Aerospace and Defense							1,560,000		1,628,688		1,648,502


*Automobile — 4.5%:**
Allied Specialty Vehicles, Inc.^		8.50			11/1/2019		500,000		497,160		511,250
Cooper-Standard Holding, Inc. PIK^		7.38			4/1/2018		500,000		504,727		502,500
Deutsche Raststaetten Gruppe IV GmbH		6.75			12/30/2020		100,000		135,605		144,105
International Automotive Components Group SA^		9.13			6/1/2018		619,000		640,512		645,307
JB Poindexter & Co., Inc.^		9.00			4/1/2022		500,000		528,091		533,750

Total Automobile							2,219,000		2,306,095		2,336,912


*Beverage, Food and Tobacco — 0.7%:**
Albain Bidco Norway AS		6.75			11/1/2020		100,000		135,285		139,920
Findus Bondco SA+		9.13			7/1/2018		150,000		212,590		226,990

Total Beverage, Food and Tobacco							250,000		347,875		366,910

See accompanying Notes to Financial Statements

Babson Global Credit Income Opportunities Fund 2013 Semi-Annual Report

SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)

December 31, 2013


	EFFECTIVE INTEREST RATE ‡			DUE DATE		PRINCIPAL		COST		FAIR VALUE
Corporate Bonds (Continued)

*Broadcasting and Entertainment — 4.6%:**
Arqiva Broadcast Finance PLC+		9.50	%		3/31/2020		350,000	$	595,711	$	643,337
CET 21 Spol Sro+		9.00			11/1/2017		200,000		285,201		286,833
Nexstar Broadcasting, Inc.^		6.88			11/15/2020		750,000		751,822		802,500
RCN Telecom Services LLC/RCN Capital Corp.^		8.50			8/15/2020		500,000		497,576		505,000
Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH		6.25			1/15/2029		100,000		133,825		135,850

Total Broadcasting and Entertainment							1,900,000		2,264,135		2,373,520


*Buildings and Real Estate — 1.8%:**
Astaldi SpA		7.13			12/1/2020		100,000		135,745		146,340
US Concrete, Inc.^		8.50			12/1/2018		230,000		230,000		235,175
William Lyon Homes, Inc.		8.50			11/15/2020		500,000		531,524		541,250

Total Buildings and Real Estate							830,000		897,269		922,765


*Cargo Transport — 2.1%:**
Kenan Advantage Group, Inc. (The)^		8.38			12/15/2018		500,000		524,836		526,250
Moto Finance PLC		10.25			3/15/2017		300,000		525,292		536,528

Total Cargo Transport							800,000		1,050,128		1,062,778


*Chemicals, Plastics and Rubber — 2.4%:**
Ciech Group Financing AB+		9.50			11/30/2019		200,000		297,594		313,687
Huntsman International LLC		5.13			4/15/2021		200,000		275,810		276,185
Pinnacle Operating Corp.^		9.00			11/15/2020		600,000		618,957		636,750

Total Chemicals, Plastics and Rubber							1,000,000		1,192,361		1,226,622


*Containers, Packaging and Glass — 1.8%:**
GCS Holdco Finance I SA		6.50			11/15/2018		100,000		133,495		141,525
Mustang Merger Corp.^		8.50			8/15/2021		750,000		745,433		810,000

Total Containers, Packaging and Glass							850,000		878,928		951,525


*Diversified/Conglomerate Manufacturing — 0.6%:**
CTP Transportation Products LLC/CTP Finance, Inc.^		8.25			12/15/2019		290,000		290,000		302,325


*Diversified/Conglomerate Service — 1.2%:**
ADT Corp. (The)^		6.25			10/15/2021		500,000		500,000		525,000
Safway Group Holding LLC/Safway Finance Corp.^		7.00			5/15/2018		95,000		95,899		100,225

Total Diversified/Conglomerate Service							595,000		595,899		625,225


*Farming and Agriculture — 1.0%:**
Chiquita Brands International, Inc./Chiquita Brands LLC^		7.88			2/1/2021		500,000		533,935		541,250

See accompanying Notes to Financial Statements

Babson Global Credit Income Opportunities Fund 2013 Semi-Annual Report

SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)

December 31, 2013


	EFFECTIVE INTEREST RATE ‡			DUE DATE		PRINCIPAL		COST		FAIR VALUE
Corporate Bonds (Continued)

*Finance — 1.4%:**
Nuveen Investments, Inc.		5.50	%		9/15/2015		280,000	$	269,411	$	281,400
TMF Group Holding BV+		9.88			12/1/2019		300,000		423,975		446,461

Total Finance							580,000		693,386		727,861


*Healthcare, Education and Childcare — 2.7%:**
Care UK Health & Social Care PLC+		9.75			8/1/2017		300,000		496,746		525,350
Elli Finance UK PLC+		8.75			6/15/2019		100,000		175,966		183,397
Priory Group No. 3 PLC+		8.88			2/15/2019		400,000		632,962		682,251

Total Healthcare, Education and Childcare							800,000		1,305,674		1,390,998


*Hotels, Motels, Inns and Gaming — 0.3%:**
NH Hoteles SA+		6.88			11/15/2019		100,000		135,775		145,136


*Insurance — 5.0%:**
Audatex North America, Inc.^		6.00			6/15/2021		420,000		427,228		439,950
Audatex North America, Inc.^		6.13			11/1/2023		700,000		700,000		721,000
Galaxy Bidco Ltd.+		6.38			11/15/2020		100,000		161,665		166,340
Galaxy Finco Ltd.+		7.88			11/15/2021		100,000		161,665		165,222
Hastings Insurance Group Finance PLC+		8.00			10/21/2020		100,000		159,915		170,563
Towergate Finance PLC+		8.50			2/15/2018		350,000		590,628		612,909
WellCare Health Plans, Inc.		5.75			11/15/2020		320,000		320,000		327,200

Total Insurance							2,090,000		2,521,101		2,603,184


*Leisure, Amusement, Entertainment — 2.4%:**
Travelex Financing PLC+		8.00			8/1/2018		200,000		316,773		342,782
Vougeot Bidco PLC+		7.88			7/15/2020		500,000		851,915		887,589

Total Leisure, Amusement, Entertainment							700,000		1,168,688		1,230,371


*Machinery Non-Agriculture, Non-Construction, Non-Electronic — 2.0%:**
Channel Link Enterprises Finance PLC+		3.64	#		6/30/2050		100,000		128,221		131,379
KraussMaffei Group GmbH+		8.75			12/15/2020		100,000		145,901		153,391
Xerium Technologies, Inc.		8.88			6/15/2018		720,000		744,551		756,000

Total Machinery Non-Agriculture, Non-Construction, Non-Electronic							920,000		1,018,673		1,040,770


*Mining, Steel, Iron and Non-Precious Metals — 1.3%:**
ALBA Group PLC & Co. KG+		8.00			5/15/2018		250,000		334,000		351,491
Arch Coal, Inc.^		8.00			1/15/2019		305,000		305,000		304,238

Total Mining, Steel, Iron and Non-Precious Metals							555,000		639,000		655,729


*Oil and Gas — 7.2%:**
Halcon Resources Corp.^		9.75			7/15/2020		365,000		374,997		380,056
Linn Energy LLC/Linn Energy Finance Corp.		8.63			4/15/2020		500,000		521,307		540,000
Magnum Hunter Resources Corp.		9.75			5/15/2020		500,000		520,565		540,000
Midstates Petroleum Co., Inc./Midstates Petroleum Co. LLC		9.25			6/1/2021		500,000		497,566		522,500

See accompanying Notes to Financial Statements

Babson Global Credit Income Opportunities Fund 2013 Semi-Annual Report

SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)

December 31, 2013


	EFFECTIVE INTEREST RATE ‡			DUE DATE		PRINCIPAL		COST		FAIR VALUE
Corporate Bonds (Continued)

Oil and Gas (Continued)
Millennium Offshore Services Superholdings LLC^		9.50	%		2/15/2018		500,000	$	525,058	$	520,000
Niska Gas Storage US LLC/Niska Gas Storage Canada ULC		8.88			3/15/2018		378,000		391,554		393,120
Ocean Rig UDW, Inc.+^		9.50			4/27/2016		500,000		528,078		530,625
Shelf Drilling Holdings Ltd.^		8.63			11/1/2018		285,000		302,111		307,800

Total Oil and Gas							3,528,000		3,661,236		3,734,101


*Personal, Food and Miscellaneous — 1.9%:**
Brakes Capital+		7.13			12/15/2018		100,000		161,700		165,181
Cerved Group SpA+		8.00			1/15/2021		300,000		406,633		436,441
TeamSystem Holding SpA+		7.38			5/15/2020		250,000		331,023		354,242

Total Personal, Food and Miscellaneous							650,000		899,356		955,864


*Retail Stores — 4.1%:**
Brighthouse Group PLC+		7.88			5/15/2018		300,000		490,444		511,689
House of Fraser Funding PLC+		8.88			8/15/2018		200,000		349,001		361,825
New Look Bondco I PLC+		8.75			5/14/2018		450,000		732,955		786,721
Pendragon PLC+		6.88			5/1/2020		100,000		172,812		174,289
Takko Luxembourg 2 S.C.A.+		9.88			4/15/2019		200,000		256,288		269,499

Total Retail Stores							1,250,000		2,001,500		2,104,023


*Telecommunications — 3.9%:**
Manutencoop Facility Management SpA+		8.50			8/1/2020		200,000		263,521		291,648
T-Mobile USA, Inc.		6.46			4/28/2019		470,000		479,092		499,375
T-Mobile USA, Inc.		6.73			4/28/2022		300,000		297,056		312,750
T-Mobile USA, Inc.		6.84			4/28/2023		90,000		88,228		93,375
Telenet Finance V Luxembourg SCA+		6.75			8/15/2024		200,000		276,697		292,543
UPC Holding BV+		6.75			3/15/2023		200,000		213,033		228,978
Wind Acquisition Finance SA^		11.75			7/15/2017		300,000		317,567		319,125

Total Telecommunications							1,760,000		1,935,194		2,037,794


Total Corporate Bonds							23,727,000		27,964,896		28,984,165


Total Fixed Income							42,904,288		49,425,585		50,818,116


*Short-Term Investment — 1.2%:**

*Bank Deposit — 1.2%:**
State Street Bank & Trust Co. Euro Time Deposit		0.01			1/2/2014		639,016		639,016		639,016

Total Investments							43,543,304		50,064,601		51,457,132


Other assets and liabilities — 0.5%											267,576

Net Assets — 100.0%										$	51,724,708

See accompanying Notes to Financial Statements

Babson Global Credit Income Opportunities Fund 2013 Semi-Annual Report

SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)

December 31, 2013

PIK	Payment-in-kind

‡	The effective interest rates are based on settled commitment amount.

*	Calculated as a percentage of net assets applicable to common shareholders.

+	Foreign security.

Distributions of investments by country of issue (excluding temporary cash investments) as a percentage of total investments in securities, is as follows:


US	United States	56.0%
UK	United Kingdom	20.0%
DE	Germany	7.0%
NL	Netherlands	2.7%
FR	France	2.4%
IT	Italy	2.4%
AE	United Arab Emirates	1.6%
AT	Austria	1.4%
LU	Luxembourg	1.4%
AU	Australia	1.0%
Other (Individually less than 1%)		4.1%

Total		100.0%

^	Security acquired in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may only be resold in transactions exempt from registration, normally to qualified institutional buyers.

#	Variable rate security. The interest rate shown is the rate in effect at December 31, 2013.

A summary of outstanding financial instruments at December 31, 2013 is as follows:

Forward Foreign Currency Exchange Contracts to Buy


EXPIRATION DATE	COUNTERPARTY	LOCAL CURRENCY			VALUE IN USD		IN EXCHANGE FOR USD		NET UNREALIZED DEPRECIATION
01/14/14	State Street Bank & Trust Co.		CHF	470,407		527,368		527,300	$	(68	)
01/14/14	State Street Bank & Trust Co.		EUR	6,072,657		8,354,106		8,318,133		(35,973	)
01/14/14	State Street Bank & Trust Co.		GBP	5,971,930		9,888,496		9,760,464		(128,032	)

Net unrealized depreciation on forward foreign exchange contracts to sell									$	(164,073	)

Currency Legend


CHF	–	Swiss Franc
EUR	–	Euro
GBP	–	British Pound Sterling

See accompanying Notes to Financial Statements

Babson Capital Funds Trust 2013 Semi-Annual Report

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

December 31, 2013

1.	Organization

Babson Capital Funds Trust (the “Trust”) was organized as a business trust under the laws of the Commonwealth of Massachusetts on May 3, 2013 and commenced operations on September 16, 2013. The Trust is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a non-diversified, open-end management investment company. The Trust currently consists of two funds (separately, a “Fund” and collectively, the “Funds”): Babson Global Floating Rate Fund (“Global Floating Rate Fund”) and Babson Global Credit Income Opportunities Fund (“Global Credit Income Opportunities Fund”).

Babson Capital Management LLC (the “Adviser”), a wholly-owned indirect subsidiary of Massachusetts Mutual Life Insurance Company, is a registered investment adviser under the Investment Advisers Act of 1940, as amended, and serves as investment adviser to the Funds.

Babson Capital Global Advisor Limited (“Sub-Adviser”), an indirect wholly-owned subsidiary of the Adviser, will serve as a sub-adviser with respect to the Funds’ European investments.

The primary investment objective of the Global Floating Rate Fund is to seek a high level of current income. The Fund seeks preservation of capital as a secondary investment objective. The primary investment objective of the Global Credit Income Opportunities Fund is to seek an absolute return, primarily through current income and secondarily through capital appreciation.

There can be no assurance that the Funds will achieve their investment objectives. The Funds will seek to take advantage of inefficiencies between geographies, primarily the North American and European high yield bond, loan and other debt markets. Under normal market conditions, the Global Floating Rate Fund will invest at least 80% of its net assets in income-producing floating rate debt securities, consisting of floating rate loans, bonds and notes, issued primarily by North American and Western European companies that are, at the time of purchase, rated below investment grade (below Baa3 by Moody’s Investors Service, Inc. (“Moody’s”) or below BBB- by either Standard & Poor’s Rating Services, a division of the McGraw-Hill Company, Inc. (“S&P”) or Fitch, Inc. (“Fitch”)) or unrated but judged by the Adviser or Sub-Adviser to be of comparable quality. Under normal market conditions, the Global Credit Income Opportunities Fund will invest at least 80% of its net assets in debt instruments, consisting of loans, bonds and notes, based in U.S. and non-U.S. markets, as well as over-the-

counter and exchange-traded derivatives. Investments may be issued or guaranteed by governments and their agencies, corporations, financial institutions and supranational organizations that the Funds believe have the potential to provide a high total return over time. A significant portion of the Funds’ investments in debt instruments will be denominated in a currency other than the U.S. dollar. Although the investments in non-U.S. dollar denominated assets may be on a currency hedged or unhedged basis, the Funds expect that, under current market conditions, it will seek to hedge substantially all of its exposure to foreign currencies.

Each Fund has four classes of shares: Class A, C, I, and Y, each with different expenses and dividends. A front-end sales charge is normally added to the net asset value (“NAV”) for Class A shares. There is no front-end sales charge in the case of Class C, I, and Y shares. There may be a contingent deferred sales charge (“CDSC”) in certain cases as follows: Class A shares purchased without an initial sales charge and redeemed within the first year of purchase (subject to certain exceptions as set forth in each Fund’s prospectus) and Class C shares redeemed within the first year of purchase.

2.	Significant Accounting Policies

The following is a summary of significant accounting policies followed consistently by the Funds in the preparation of their financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Valuation of Investments

The Funds’ investments in fixed income securities are generally valued using the prices provided directly by independent third party services or provided directly from one or more broker dealers or market makers, each in accordance with the valuation policies and procedures approved by the Funds’ Board of Trustees (the “Board”).

The pricing services may use valuation models or matrix pricing, which consider yield or prices with respect to comparable bond quotations from bond dealers or by reference to other securities that are considered comparable in such characteristics as credit rating, interest rates and maturity date to determine the current value. The Funds’ investments in bank loans are normally valued at the bid quotation obtained from dealers in loans by an independent pricing service in accordance with the Funds’ valuation policies and procedures approved by the Board.

Babson Capital Funds Trust 2013 Semi-Annual Report

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

December 31, 2013

The Board has determined that it is in the best interest of the Funds and their shareholders to delegate the Board’s responsibility to a Valuation Committee, made up of officers of the Trust and employees of the Adviser, for: (1) determining whether market quotations are readily available for investments held by the Fund; and (2) determining the fair value of investments held by the Fund for which market quotations are not readily available or are deemed not reliable by the Adviser. In certain cases, authorized pricing service vendors may not provide prices for a security held by the Funds, or the price provided by such pricing service vendor is deemed unreliable by the Adviser. In such cases, the Funds may use market maker quotations provided by an established market maker for that security (i.e., broker quotes) to value the security if the Adviser has experience obtaining quotations from the market maker and the Adviser determines that quotations obtained from the market maker in the past have generally been reliable (or, if the Adviser has no such experience with respect to a market maker, it determines based on other information available to it that quotations to be obtained by it from the market maker are reasonably likely to be reliable). In any such case, the Adviser will review any market quotations so obtained in light of other information in its possession for their general reliability.

Bank loans in which the Funds may invest have similar risks to lower-rated fixed income securities. Changes in the financial condition of the borrower or economic conditions or other circumstances may reduce the capacity of the borrower to make principal and interest payments on such instruments and may lead to defaults. Senior secured bank loans are supported by collateral; however, the value of the collateral may be insufficient to cover the amount owed to the Funds. By relying on a third party to administer a loan, the Funds are subject to the risk that the third party will fail to perform its obligations. The loans in which the Funds will invest are largely floating rate instruments; therefore, the interest rate risk generally is lower than for fixed-rate debt obligations. However, from the perspective of the borrower, an increase in interest rates may adversely affect the borrower’s financial condition. Due to the unique and customized nature of loan agreements evidencing loans and the private syndication thereof, loans are not as easily purchased or sold as publicly traded securities. Although the range of investors in loans has broadened in recent years, there can be no assurance that future levels of supply and demand in loan trading will provide the degree of liquidity which currently exists in the market. In addition, the terms of the loans may restrict their transferability without borrower consent. These factors may have an

adverse effect on the market price and the Funds’ ability to dispose of particular portfolio investments. A less liquid secondary market also may make it more difficult for the Funds to obtain precise valuations of the high yield loans in its portfolio.

Fair value is defined as the price that the Funds would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. A three-tier hierarchy is utilized to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. For example, market participants would consider the risk inherent in a particular valuation technique used to measure fair value, such as a pricing model, and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.

Level 1 – quoted prices in active markets for identical securities

Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments)

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3.

Babson Capital Funds Trust 2013 Semi-Annual Report

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

December 31, 2013

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy

within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The following is a summary of the inputs used as of December 31, 2013 in valuing the Funds’ investments:

Global Floating Rate Fund


DESCRIPTION	LEVEL 1		LEVEL 2			LEVEL 3		TOTAL INVESTMENTS

Assets:*
Fixed Income:
Bank Loans	$	–	$	49,330,850		$	492,500	$	49,823,350
Corporate Bonds		–		7,042,408			–		7,042,408

Total Fixed Income		–		56,373,258			492,500		56,865,758

Short-Term Investment:
Bank Deposit		–		7,041,707			–		7,041,707

Total Short-Term Investment		–		7,041,707			–		7,041,707

Derivative Securities:
Forward Foreign Currency Exchange Contracts		–		5,740			–		5,740

Total Derivative Securities		–		5,740			–		5,740


Total Investments		–		63,420,705			492,500		63,913,205


Liabilities:*
Derivative Securities:
Forward Foreign Currency Exchange Contracts		–		(161,104	)		–		(161,104	)

Total Derivative Securities		–		(161,104	)		–		(161,104	)


Total Investments	$	–	$	63,259,601		$	492,500	$	63,752,101

There were no transfers between levels during the period ended December 31, 2013.

The following is a reconciliation of investments with unobservable inputs (Level 3) that were used in determining fair value:


INVESTMENTS IN SECURITIES	BALANCE AS OF SEPTEMBER 16, 2013*		REALIZED GAIN (LOSS)		CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)			NET TRANSFERS IN (OUT) OF LEVEL 3		ACCRUED PREMIUMS/ DISCOUNTS		NET PURCHASES & SALES		BALANCE AS OF DECEMBER 31, 2013		CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) FROM INVESTMENTS HELD AT DECEMBER 31, 2013

Fixed Income
Bank Loans	$	–	$	–	$	(90	)	$	–	$	90	$	492,500	$	492,500	$	(90	)

Total	$	–	$	–	$	(90	)	$	–	$	90	$	492,500	$	492,500	$	(90	)

Fund commenced operations on September 16, 2013.

Babson Capital Funds Trust 2013 Semi-Annual Report

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

December 31, 2013

Global Credit Income Opportunities Fund


DESCRIPTION	LEVEL 1		LEVEL 2			LEVEL 3		TOTAL INVESTMENTS

Assets:*
Fixed Income:
Bank Loans	$	–	$	21,341,451		$	492,500	$	21,833,951
Corporate Bonds		–		28,984,165			–		28,984,165

Total Fixed Income		–		50,325,616			492,500		50,818,116

Short-Term Investment:
Bank Deposit		–		639,016			–		639,016

Total Short-Term Investment		–		639,016			–		639,016

Total Investments		–		50,964,632			492,500		51,457,132


Liabilities:*
Derivative Securities:
Forward Foreign Currency Exchange Contracts		–		(164,073	)		–		(164,073	)

Total Derivative Securities		–		(164,073	)		–		(164,073	)


Total Investments	$	–	$	50,800,559		$	492,500	$	51,293,059

There were no transfers between levels during the period ended December 31, 2013.

The following is a reconciliation of investments with unobservable inputs (Level 3) that were used in determining fair value:


INVESTMENTS IN SECURITIES	BALANCE AS OF SEPTEMBER 16, 2013*		REALIZED GAIN (LOSS)		CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)			NET TRANSFERS IN (OUT) OF LEVEL 3		ACCRUED PREMIUMS/ DISCOUNTS		NET PURCHASES & SALES		BALANCE AS OF DECEMBER 31, 2013		CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) FROM INVESTMENTS HELD AT DECEMBER 31, 2013

Fixed Income
Bank Loans	$	–	$	–	$	(90	)	$	–	$	90	$	492,500	$	492,500	$	(90	)

Total	$	–	$	–	$	(90	)	$	–	$	90	$	492,500	$	492,500	$	(90	)

Fund commenced operations on September 16, 2013.

Cash and Cash Equivalents

Cash and cash equivalents consist principally of short-term investments that are readily convertible into cash and have original maturities of three months or less. At December 31, 2013, all cash and cash equivalents are held by the custodian.

Investment Transactions, Related Investment Income and Expenses

Investment transactions are accounted for on a trade date basis. Interest income is recorded on the accrual basis, including the amortization of premiums and accretion of discounts on bonds held using the yield-to-maturity method.

Realized gains and losses on investment transactions and unrealized appreciation and depreciation of investments are

Babson Capital Funds Trust 2013 Semi-Annual Report

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

December 31, 2013

reported for financial statement and Federal income tax purposes on the identified cost method.

Expenses are recorded on the accrual basis as incurred.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Federal Income Taxation

The Funds have elected to be taxed as a Regulated Investment Company (“RIC”) under sub-chapter M of the U.S. Internal Revenue Code of 1986, as amended, and intends to maintain this qualification and to distribute substantially all of their net taxable income to its shareholders. As of December 31, 2013, the Funds had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Funds file a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three from the date of filings.

Dividends and Distributions

The Funds declare and pay dividends monthly from net investment income. To the extent that these distributions exceed net investment income, they may be classified as return of capital. The Funds also pay a distribution at least annually from its net realized capital gains, if any. Dividends and distributions are recorded on the ex-dividend date. All common shares have equal dividend and other distribution rights. A notice disclosing the source(s) of a distribution will be provided if payment is made from any source other than net investment income. Any such notice would be provided only for informational purposes in order to comply with the requirements of Section 19(a) of the 1940 Act and not for tax reporting purposes. The tax composition of the Funds’ distributions for each calendar year is reported on Internal Revenue Service Form 1099-DIV.

Dividends from net investment income and distributions from realized gains from investment transactions have been determined in accordance with Federal income tax regulations and may differ from net investment income and realized gains recorded by the Funds for financial reporting

purposes. These differences, which could be temporary or permanent in nature may result in reclassification of distributions; however, net investment income, net realized gains and losses, and net assets are not affected.

Bank Loans

The Funds may invest in bank loans, which usually take the form of loan participations and assignments. Loan participations and assignments are agreements to make money available to U.S. or foreign corporations, partnerships or other business entities (the “Borrower”) in a specified amount, at a specified rate and within a specified time. A loan is typically originated, negotiated and structured by a U.S. or foreign bank, insurance company or other financial institution (the “Agent”) for a group of loan investors (“Loan Investors”). The Agent typically administers and enforces the loan on behalf of the other Loan Investors in the syndicate and may hold any collateral on behalf of the Loan Investors. Such loan participations and assignments are typically senior, secured and collateralized in nature. The Funds record an investment when the Borrower withdraws money and records interest as earned. These loans pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or London InterBank Offered Rate (“LIBOR”).

The loans in which the Funds invest may be subject to some restrictions on resale. For example, the Funds may be contractually obligated to receive approval from the Agent and/or Borrower prior to the sale of these investments. The Funds generally have no right to enforce compliance with the terms of the loan agreement with the Borrower. As a result, the Funds assume the credit risk of the Borrower, the selling participant and any other persons interpositioned between the Funds and the Borrower (“Intermediate Participants”). In the event that the Borrower, selling participant or Intermediate Participants become insolvent or enter into bankruptcy, the Funds may incur certain costs and delays in realizing payment or may suffer a loss of principal and/or interest.

Unfunded commitments represent the remaining obligation of the Funds to the Borrower. At any point in time, up to the maturity date of the issue, the Borrower may demand the unfunded portion. Until demanded by the Borrower, unfunded commitments are not recognized as an asset on the Statements of Assets and Liabilities. Unrealized appreciation/depreciation on unfunded commitments presented on the Statements of Assets and Liabilities represents mark to market of the unfunded portion of the

Babson Capital Funds Trust 2013 Semi-Annual Report

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

December 31, 2013

Funds’ bank loans. As of December 31, 2013, the Global Floating Rate Fund had one unfunded loan commitment which amounted to $35,518 of par and had cost and fair value of $35,343 and $35,551, respectively.

Derivative Instruments

The following is a description of the derivative instruments that the Funds utilize as part of their investment strategy, including the primary underlying risk exposures related to the instrument.

Forward Foreign Currency Exchange Contracts – The Funds are subject to foreign currency exchange rate risk in the normal course of pursuing their investment objectives. The Funds may use forward currency exchange contracts to hedge against changes in the value of foreign currencies. The Funds may enter into forward currency exchange contracts obligating the Funds to deliver or receive a currency at a specified future date. Forward contracts are valued daily and unrealized appreciation or depreciation is recorded daily as the difference between the contract exchange rate and the closing forward rate applied to the face amount of the contract. A realized gain or loss is recorded at the time the forward contract expires. Credit risk may arise as a result of the failure of the counterparty to comply with the terms of the contract. The Funds consider the creditworthiness of each counterparty to a contract in evaluating potential credit risk quarterly. The Funds are also subject to credit risk with respect to the counterparties to derivative contracts that are not cleared through a central counterparty but instead are traded over-the-counter between two counterparties. If a counterparty to an over-the-counter derivative becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Funds may experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. The Funds may obtain only a limited recovery or may obtain no recovery in such circumstances. The counterparty risk for cleared derivatives is generally lower than for uncleared over-the-counter derivative transactions since generally a clearing organization becomes substituted for each counterparty to a cleared derivative contract and, in effect, guarantees the party’s performance under the contract as each party to a trade looks only to the clearing house for performance of financial obligations. However, there can be no assurance that the clearing house, or its members, will satisfy its obligations to the Funds. In addition, in the event of a bankruptcy of a clearing house, the Funds could experience a loss of the funds deposited with such clearing house as

margin and of any profits on its open positions. The counterparty risk to the Funds is limited to the net unrealized gain, in any, on the contract.

The use of forward currency exchange contracts does not eliminate fluctuations in the underlying prices of the Funds’ investment securities; however, it does establish a rate of exchange that can be achieved in the future. The use of forward currency exchange contracts involves the risk that anticipated currency movements will not be accurately predicted. A forward currency exchange contract would limit the risk of loss due to a decline in the value of a particular currency; however, it would also limit any potential gain that might result should the value of the currency increase instead of decrease. These contracts may involve market risk in excess of the amount of receivable or payable reflected on the Statement of Assets and Liabilities.

During the period from September 16, 2013 through December 31, 2013, the Funds’ direct investment in derivatives consisted of forward foreign currency exchange contracts.

The following is a summary of the fair value of derivative instruments held directly by the Funds as of December 31, 2013:

Fair values of derivative instruments on the Statement of Assets and Liabilities as of December 31, 2013:

Global Floating Rate Fund

Babson Capital Funds Trust 2013 Semi-Annual Report

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

December 31, 2013

Global Credit Income Opportunities Fund

The effect of derivative instruments on the Statement of Operations for the period September 16, 2013 through December 31, 2013:

Amount of Realized Gain/(Loss) on Derivatives:

Global Floating Rate Fund


	FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Derivatives
Forward Foreign Currency Exchange Contracts	$	(141,665	)

Total	$	(141,665	)

Global Credit Income Opportunities Fund


	FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Derivatives
Forward Foreign Currency Exchange Contracts	$	(214,418	)

Total	$	(214,418	)

Change in Unrealized Appreciation/(Depreciation) on Derivatives:

Global Floating Rate Fund


	FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Derivatives
Forward Foreign Currency Exchange Contracts	$	(155,364	)

Total	$	(155,364	)

Global Credit Income Opportunities Fund


	FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Derivatives
Forward Foreign Currency Exchange Contracts	$	(164,073	)

Total	$	(164,073	)

Global Floating Rate Fund


NUMBER OF CONTRACTS, NOTIONAL AMOUNTS OR SHARES/UNITS	FOREIGN EXCHANGE CONTRACT RISK
Forward Foreign Currency Exchange Contracts⁽¹⁾	$	10,125,106

(1)

Volume of derivative activity is based on an average of month-end notional amounts outstanding during the period.

Global Credit Income Opportunities Fund


NUMBER OF CONTRACTS, NOTIONAL AMOUNTS OR SHARES/UNITS	FOREIGN EXCHANGE CONTRACT RISK
Forward Foreign Currency Exchange Contracts⁽¹⁾	$	13,291,619

(1)

Volume of derivative activity is based on an average of month-end notional amounts outstanding during the period.

Babson Capital Funds Trust 2013 Semi-Annual Report

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

December 31, 2013

Disclosures about Offsetting Assets and Liabilities

The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-11 “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). These disclosure requirements are intended to help better assess the effect or potential effect of offsetting arrangements on a fund’s financial position. In addition, FASB issued Accounting Standards Update No. 2013-01 “Clarifying the Scope of Offsetting Assets and Liabilities” (“ASU 2013-01”), specifying which transactions are subject to disclosures about offsetting.

The following tables illustrate gross and net information about recognized assets eligible for offset in the Statement of Assets and Liabilities; and disclose such amounts subject to an enforceable master netting agreement or similar agreement, by counterparty. A master netting agreement is an agreement between two counterparties who have multiple contracts with each other that provides for the net settlement of all contracts, as well as cash collateral, through a single payment in the event of default on or termination of any one contract:

Global Floating Rate Fund


DESCRIPTION	GROSS AMOUNTS OF RECOGNIZED ASSETS		GROSS AMOUNTS OFFSET IN THE STATEMENTS OF ASSETS AND LIABILITIES		NET AMOUNTS OF ASSETS PRESENTED IN THE STATEMENTS OF ASSETS AND LIABILITIES
Forward Foreign Currency Exchange Contracts	$	5,740	$	–	$	5,740

Total	$	5,740	$	–	$	5,740


			GROSS AMOUNTS NOT OFFSET IN THE STATEMENTS OF ASSETS AND LIABILITIES
COUNTERPARTY	NET AMOUNTS OF ASSETS PRESENTED IN THE STATEMENTS OF ASSETS AND LIABILITIES		FINANCIAL INSTRUMENT COLLATERAL^(a)		CASH COLLATERAL RECEIVED^(a)		NET AMOUNT^(b)
State Street Bank & Trust Co.	$	5,740	$	–	$	–	$	5,740

Total	$	5,740	$	–	$	–	$	5,740

(a)

Collateral disclosed is limited to an amount not to exceed 100% of the net amount of assets presented in the Statements of Assets and Liabilities, for each respective counterparty.

(b)

Net Amount represents the amount that is subject to loss in the event of a counterparty failure as of December 31, 2013.


DESCRIPTION	GROSS AMOUNTS OF RECOGNIZED LIABILITIES		GROSS AMOUNTS OFFSET IN THE STATEMENT OF ASSETS AND LIABILITIES		NET AMOUNTS OF LIABILITIES PRESENTED IN THE STATEMENTS OF ASSETS AND LIABILITIES
Forward Foreign Currency Exchange Contracts	$	161,104	$	–	$	161,104

Total	$	161,104	$	–	$	161,104

Babson Capital Funds Trust 2013 Semi-Annual Report

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

December 31, 2013


			GROSS AMOUNTS NOT OFFSET IN THE STATEMENTS OF ASSETS AND LIABILITIES
COUNTERPARTY	NET AMOUNTS OF ASSETS PRESENTED IN THE STATEMENTS OF ASSETS AND LIABILITIES		FINANCIAL INSTRUMENT COLLATERAL^(a)		CASH COLLATERAL RECEIVED ^(a)		NET AMOUNT^(b)
State Street Bank & Trust Co.	$	161,104	$	–	$	–	$	161,104

Total	$	161,104	$	–	$	–	$	161,104

(a)

Collateral disclosed is limited to an amount not to exceed 100% of the net amount of assets presented in the Statements of Assets and Liabilities, for each respective counterparty.

(b)

Net Amount represents the amount that is subject to loss in the event of a counterparty failure as of December 31, 2013.

Global Credit Income Opportunities Fund


DESCRIPTION	GROSS AMOUNTS OF RECOGNIZED LIABILITIES		GROSS AMOUNTS OFFSET IN THE STATEMENTS OF ASSETS AND LIABILITIES		NET AMOUNTS OF LIABILITIES PRESENTED IN THE STATEMENTS OF ASSETS AND LIABILITIES
Forward Foreign Currency Exchange Contracts	$	164,073	$	–	$	164,073

Total	$	164,073	$	–	$	164,073


			GROSS AMOUNTS NOT OFFSET IN THE STATEMENTS OF ASSETS AND LIABILITIES
COUNTERPARTY	NET AMOUNTS OF ASSETS PRESENTED IN THE STATEMENTS OF ASSETS AND LIABILITIES		FINANCIAL INSTRUMENT COLLATERAL^(a)		CASH COLLATERAL RECEIVED^(a)		NET AMOUNT^(b)
State Street Bank & Trust Co.	$	164,073	$	–	$	–	$	164,073

Total	$	164,073	$	–	$	–	$	164,073

(a)

Collateral disclosed is limited to an amount not to exceed 100% of the net amount of assets presented in the Statements of Assets and Liabilities, for each respective counterparty.

(b)

Net Amount represents the amount that is subject to loss in the event of a counterparty failure as of December 31, 2013.

Foreign Securities

Investing in securities of foreign companies and foreign governments involves special risks and considerations not typically associated with investing in U.S. companies and the U.S. government. These risks include valuation of currencies and adverse political and economic developments. Moreover, securities of many foreign companies, foreign governments, and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. companies and the U.S. government.

Foreign Currency Translation

The books and records of the Funds are maintained in U.S. dollars. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Funds do not isolate changes in the exchange rate of investment securities from the fluctuations

Babson Capital Funds Trust 2013 Semi-Annual Report

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

December 31, 2013

arising from changes in the market prices of securities. However, for Federal income tax purposes, the Funds do isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gain or loss from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences.

Counterparty Risk

The Funds seek to manage counterparty credit risk by entering into agreements only with counterparties the Adviser believes have the financial resources to honor their obligations. The Adviser monitors the financial stability of the Funds’ counterparties.

3.	Advisory Fee

The Funds have entered into an Investment Management Agreement (the “Agreement”) with the Adviser. Pursuant to the Agreement, the Global Floating Rate Fund agrees to pay the Adviser a fee payable at the end of each calendar month, at an annual rate of 0.65% of the Fund’s average daily net assets during such month. The Global Credit Income Opportunities Fund agrees to pay the Adviser a fee payable at the end of each calendar month, at an annual rate of 0.75% of the Fund’s average daily net assets during such month.

The Adviser has contractually agreed to waive and/or reimburse a portion of its fees and/or reimburse expenses (excluding 12b-1 fees, interest expenses, taxes, fees incurred in acquiring and disposing of securities and extraordinary expenses) such that total net annual operating expenses for each class do not exceed the following rates:


	CLASS A			CLASS C			CLASS I			CLASS Y
Global Floating Rate Fund		1.05	%		1.80	%		0.75	%		0.75	%
Global Credit Income Opportunities Fund		1.20	%		1.95	%		0.95	%		0.95	%

Pursuant to the expense waiver/reimbursement agreement, the Adviser is entitled to be reimbursed for any fees the Adviser waives and Fund expenses that the Adviser reimburses for a period of three years following such fee waivers and expense reimbursements, to the extent that such reimbursement of the Adviser by a Fund will not cause the Fund to exceed any applicable expense limitation that is in place for the Fund.

The contractual management fee waiver and expense reimbursement agreements between the Funds and the Adviser may be terminated only upon the approval of the Funds’ Board of Trustees.

Subject to the supervision of the Adviser and the Board, the Sub-Adviser manages the investment and reinvestment of a portion of the assets of the Funds, as allocated from time to time to the Sub-Adviser. The Adviser (not the Funds) will pay a portion of the fees it receives to the Sub-Adviser in return for its services.

4.	Administrator, Custody, and Transfer Agent Fees

The Funds have engaged State Street Bank and Trust (“SSB”) to serve as the Funds’ administrator, custodian, fund accountant, and transfer agent. For each of these services, the Funds have agreed to pay SSB a fee payable at the end of each calendar month pursuant to fee agreements between SSB and the Funds. For the period ended December 31, 2013, the aggregate effective fee for these services was at an annual rate of 0.48% and 0.51% of Global Floating Rate Fund and Global Credit Income Opportunities Fund’s average daily managed assets, respectively.

5.	Income Taxes

It is the Funds’ intention to qualify as a RIC under subchapter M of the Internal Revenue Code and distribute all of its taxable income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The cost basis of investments for Federal income tax purposes at December 31, 2013 for the Global Floating Rate Fund and the Global Credit Income Opportunities Fund was as follows:

Global Floating Rate Fund


Cost of investments	$	63,064,726
Gross unrealized appreciation		872,776
Gross unrealized depreciation		(30,037	)

Net unrealized appreciation	$	842,739

Global Credit Income Opportunities Fund


Cost of investments	$	50,066,227
Gross unrealized appreciation		1,411,443
Gross unrealized depreciation		(20,538	)

Net unrealized appreciation	$	1,390,905

Babson Capital Funds Trust 2013 Semi-Annual Report

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

December 31, 2013

6.	Investment Transactions

Purchases and sales of securities (excluding short-term debt securities) for the period from September 16, 2013 through December 31, 2013 were as follows:


	PURCHASES		SALES
Global Floating Rate Fund	$	71,557,234	$	15,685,810
Global Credit Income Opportunities Fund		66,278,173		17,094,680

7.	Common Stock

Transactions in common stock for the period September 16, 2013 through December 31, 2013 were as follows:

Global Floating Rate Fund


Beginning shares	$	–
Shares sold		5,700,134
Shares sold through reinvestments of distributions		–
Shares redeemed		–

Shares at December 31, 2013	$	5,700,134

Global Credit Income Opportunities Fund


Beginning shares	$	–
Shares sold		5,005,003
Shares sold through reinvestments of distributions		–
Shares redeemed		–

Shares at December 31, 2013	$	5,005,003

Babson Capital Funds Trust

Item 2. Code of Ethics.

Not applicable to this semi-annual report.

Item 3. Audit Committee Financial Expert.

Not applicable to this semi-annual report.

Item 4. Principal Accountant Fees and Services.

Not applicable to this semi-annual report.

Item 5. Audit Committee of Listed Registrants.

Not applicable.

Item 6. Schedule of Investments.

(a)	The registrant’s Consolidated Schedule of Investments as of the close of the reporting period is included in the Report to Stockholders filed under item 1 of this form.

(b)	Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Investment Management Companies.

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to procedures by which the shareholders may recommend nominees to the registrant’s Board of Trustees.

Item 11. Controls and Procedures.

(a)

The registrant’s principal executive officer and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”), are effective as of a date within 90 days of the filing date of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits.


(a)(1)		Not applicable to this semi-annual report.

(a)(2)		Certifications pursuant to Rule 30a-2(a) are attached hereto.

(a)(3)		Not applicable.

(b)		Certification pursuant to Rule 30a-2(b) is 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)		Babson Capital Funds Trust

By: (Signature and Title)		/s/ Anthony J. Sciacca
		*Anthony J. Sciacca, President (Principal Executive Officer)*

Date March 7, 2014

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/ Anthony J. Sciacca
		*Anthony J. Sciacca, President (Principal Executive Officer)*

Date March 7, 2014



By: (Signature and Title)		/s/ Patrick Hoefling
		*Patrick Hoefling, Chief Financial Officer (Principal Financial Officer)*

Date March 7, 2014