BABSON
Tax-Free
Income
FUND
Annual Report
June 30, 1996
JONES & BABSON
MUTUAL FUNDS
MESSAGE
To Our Shareholders
For the fiscal year ended June 30, 1996, total investment returns
(price change and reinvested distributions) for Babson Tax-Free
Income Fund were 5.60% for Portfolio L and 4.25% for Portfolio S.
Portfolio MM's price remained at $1.00 and provided a return of
3.15% for the same period. Some income from the fund may be
subject to the federal Alternative Minimum Tax as well as state
and local taxes.
The rise in interest rates that commenced at the outset of 1996
continued through the second-half of the fiscal year. The upward
direction that rates took came in response to the considerable
momentum the economy has gained since the doldrums of the winter
months. The economy is currently growing well above its long-term
productive capacity of 2% to 2.5%, and this is raising
inflationary concerns.
Since the beginning of spring, employment growth has been stronger
than expected and this has heightened concerns over rising wage
pressures in an environment of relatively full employment.
Inflationary fears were also fueled by the rise in commodity
prices, particularly energy; however, by fiscal year-end commodity
indices had receded from their highs. The two most common measures
to track inflation, the consumer price and producer price indices,
are at lower than expected levels.
Municipal bonds performed better than their taxable counterparts
during the second half of the fiscal year. The relative strength
in the municipal market has been driven by fading concerns over an
overhaul of the federal tax system that might have negatively
affected the valuation of tax-free securities and more recently,
favorable supply/demand dynamics.
It is estimated that over $73 billion in calls, maturities and
coupon payments will have been paid to investors during the June
30 fiscal year and during July, 1996. This sizable volume of calls
can be largely traced to bonds issued in 1986, a year that saw
significant new issue volume due to fears of restrictions
emanating from the Tax Reform Act of 1986. Additionally, interest
rates were then considerably higher than today. Since many
municipal bonds have ten year call provisions, these bonds are now
being pre-refunded or called. It has been expected that a
meaningful portion of these proceeds would be reinvested in the
tax-free marketplace, hence adding support to prices. Accordingly,
many investors have been purchasing municipals prior to actually
collecting redemption proceeds in the hopes of obtaining more
favorable pricing.
The amount of new issuance of municipal securities year-to-date
has risen 29% in comparison to the same period in 1995. However,
the 1996 data still shows a modest level of supply which will not
kill expectations for a slight decline in the outstanding supply
of municipal securities this year.
As of June 30, 1996, the average maturities of Portfolio L, S and
MM were 14 years, 5 years and 46 days, respectively. The Fund's
three portfolios offer shareholders the opportunity to invest in
the types of securities which closely meet their individual
requirements. They also make it possible to exchange assets among
different portfolios without cost, as investment objectives and
the market environment change.
We continue the policy of owning high quality issues in sectors of
the market that we believe offer the best value at a particular
time. This favorably balances risk and return for shareholders.
Sincerely,
/s/Larry D. Armel
Larry D. Armel
President
Tables indicating Tax Information, Quality Ratings and Indices
Comparisons of D.L. Babson Tax-Free Income Fund are shown below:
Tax Information
During the past fiscal year, the following percentages of total
regular income dividends declared are exempt-interest dividends
for federal income tax purposes:
Portfolio L - Longer Term 98.74%
Portfolio S - Shorter Term 99.99%
Portfolio MM - Money Market 99.97%
Quality Ratings
Portfolio Portfolio Portfolio
L S MM
Aaa 58% 53% 84%
Aa 21 13 16
A 15 21 0
Lower 6 13 0
TOTAL 100% 100% 100%
Source: Moody's
GRAPH - D.L. Babson Tax-Free Income Fund Portfolios L & S versus
Lipper General Municipal Bond Funds & Lipper Short Term Municipal
Bond Funds
Average annual compounded total returns for one, five and ten
year periods ended June 30, 1996, were 5.60%, 7.03% and 7.20%
for Portfolio L and 4.25%, 5.29% and 5.82% for Portfolio S,
respectively. Performance data contained in this report is
for past periods only. Past performance is not predictive of
future performance. Investment return and share value will
fluctuate, and redemption value may be more or less than
original cost.
STATEMENT OF NET ASSETS
June 30, 1996
PORTFOLIO L - LONGER TERM
<TABLE>
<CAPTION>
PRINCIPAL MARKET
STATE/TERRITORY DESCRIPTION AMOUNT COST VALUE
</CAPTION>
<S> <C> <C> <C> <C>
ALABAMA
Birmingham Jefferson Civic Center
Auth Special Tax (MBIA Ins),
5.00%, due September 1, 2007 $ 500,000 $ 508,489 $ 480,000
ARIZONA
Maricopa Cnty Unified School Dist
#48 (Scottsdale),
9.25%, due July 1, 2007 500,000 581,506 666,875
ARKANSAS
Arkansas GO, Series B,
0.00%, due June 1, 2010 1,000,000 442,141 443,750
CALIFORNIA
California Health Fac Auth Rev (Kaiser
Permanente Medical) (Call 10/1/01
@ 101),
5.45%, due October 1, 2013 250,000 250,000 237,500
Santa Monica-Malibu Unified School Dist GO
(Public School Fac Reconstruction)
Series A
(Call 8/1/01 @ 102),
6.90%, due August 1, 2012 500,000 548,535 540,000
Santa Rosa Water Rev Ref (FGIC Ins) Series B
(Call 9/1/02 @ 101.5), O.I.D.,
6.00%, due September 1, 2015 500,000 486,069 516,875
Southern Califorina Public Power Auth Project
Rev Ref,
Series A (Call 7/1/03 @ 102; Optional
Put 7/1/05 @ 100), O.I.D.,
5.00%, due July 1, 2015 1,000,000 932,254 885,000
Univ of California Multiple Purpose Rev
(MBIA Ins) Series D (Call 9/1/02
@ 102),
5.50%, due September 1, 2003 500,000 501,607 516,250
COLORADO
Adams Cnty School Dist #12 Thornton Rev Ref
(FGIC Ins) (Call 12/15/03 @ 100),
O.I.D.,
6.20%, due December 15, 2010 500,000 516,185 521,250
Denver City & Cnty School Dist #1 GO, Series A
(Call 12/1/04 @ 101), O.I.D.,
5.125%, due December 1, 2012 500,000 491,934 466,250
DIST OF COLUMBIA
Dist of Columbia GO, Series A,
5.75%, due June 1, 2003 500,000 494,335 481,250
FLORIDA
Dade Cnty Special Obligation
(AMBAC Ins Cabs) (Call 10/1/08
@ 30.8464),
0.00%, due October 1, 2027 1,000,000 135,500 135,500
Palm Beach Cnty Airport Sys Rev Ref
(MBIA Ins) (Call 10/1/01 @ 102),
7.75%, due October 1, 2010 500,000 544,695 573,125
Sarasota Cnty School Board Financing Corp
Lease Rev
(MBIA Ins) (Pre-refunded 7/1/00 @ 101),
O.I.D.,
7.25%, due July 1, 2010 500,000 517,487 551,875
St. John's Cnty School Board Certificates of
Participation (MBIA Ins),
4.80%, due July 1, 2003 500,000 497,222 496,875
ILLINOIS
Chicago GO (AMBAC Ins) Series B,
5.125%, due January 1, 2022 1,000,000 936,239 895,000
Lake Cnty Community Unit School
Dist #60 Waukegan (FSA Ins),
6.10%, due December 1, 2001 500,000 536,494 536,250
INDIANA
Indiana Bond Bank Special Program,
Series 94 A-1 (Call 8/1/04 @ 102),
5.60%, due August 1, 2015 500,000 465,275 464,375
Indiana State Office Bldg Commission Capital
Complex Rev (MBIA Ins), Series A,
7.40%, due July 1, 2015 500,000 520,348 588,750
KANSAS
Johnson Cnty Water Dist #1 Rev Ref
(Call 12/1/96 @ 101),
7.25%, due December 1, 2002 500,000 508,357 511,895
LOUISIANA
St. Tammany Parish Hosp Service Dist #2 Rev
(Slidell Memorial Hosp & Medical
Center)
(Connie Lee Ins) (Call 10/1/04 @ 102),
O.I.D.,
6.125%, due October 1, 2011 500,000 490,732 505,625
MASSACHUSETTS
Massachusetts Health & Ed Fac Auth Rev
(Winchester Hosp) Series C
(Pre-refunded 7/1/01 @ 102), O.I.D.,
7.55%, due July 1, 2011 500,000 495,631 568,125
Massachusetts Health & Ed Fac Auth Rev
(Winchester Hosp) (Connie Lee Ins)
Series D
(Call 7/1/04 @ 102), O.I.D.,
5.75%, due July 1, 2014 500,000 483,625 483,750
Massachusetts Housing Finance Agy Projects,
Series A (Call 4/1/03 @ 102),
6.375%, due April 1, 2021 975,000 975,000 976,219
MICHIGAN
Milan Area Schools GO (Call 5/1/04 @ 101),
O.I.D.,
5.00%, due May 1, 2013 500,000 472,827 466,250
Spring Lake Public Schools,
4.875%, due May 1, 2009 500,000 494,140 465,625
NEVADA
Clark Cnty School Dist GO (MBIA Ins)
(Call 3/1/01 @ 101),
6.75%, due March 1, 2007 500,000 542,396 538,750
NEW JERSEY
New Jersey Economic Dev Auth Public
Schools Rev
(Small Project Loan Program)
(Call 8/15/03 @ 102),
5.20%, due August 15, 2008 250,000 229,273 248,125
New Jersey Turnpike Auth Rev,
10.375%, due January 1, 2003 200,000 200,000 238,500
NEW YORK
Battery Park City Auth Rev Ref, Series A
(Call 11/1/03 @ 102), O.I.D.,
5.00%, due November 1, 2004 1,000,000 943,343 977,500
New York City Municipal Water Financing Auth
Water & Sewer Sys Rev (FSA Ins)
Series A (Call 6/15/01 @ 101),
6.80%, due June 15, 2004 1,000,000 1,018,482 1,088,750
New York Dormitory Auth Rev (State Univ Ed Fac)
Series B (Call 5/15/04 @ 102; Optional
Put 5/15/06 @ 100), O.I.D.,
6.10%, due May 15, 2008 1,000,000 986,720 1,006,250
New York Environmental Fac Corp PCR
(State Water-Revolving Fund) Series B
(Call 9/15/02 @ 102),
6.65%, due September 15, 2013 500,000 500,000 541,875
New York Medical Care Fac Finance Agy Rev Ref
(Mental Health Services) (FSA Ins)
Series F
(Call 2/15/04 @ 102), O.I.D.,
4.90%, due February 15, 2006 1,000,000 993,522 966,250
RHODE ISLAND
Rhode Island Depositors Economic Protection
Corp
Special Obligation (MBIA Ins)
Series B, O.I.D.,
5.80%, due August 1, 2009 500,000 527,995 511,250
Rhode Island Depositors Economic Protection
Corp
Special Obligation (MBIA Ins) Series A
(Pre-refunded 8/1/01 @ 102),
7.50%, due August 1, 2014 500,000 514,058 568,125
Rhode Island Industrial Fac Corp PCR
(Inge Co) (SBA Gtd) (Call 8/1/96
@ 100.50),
9.125%, due October 1, 2000 100,000 88,681 101,220
TEXAS
Harris Cnty Toll Road Ref (FGIC Ins)
(Call 8/15/04 @ 102; Optional
Put 8/15/06 @ 100), O.I.D.,
5.00%, due August 15, 2016 500,000 437,816 452,500
Hays Consolidated Independent School Dist
(PSF Gtd) (Call 9/1/06 @ 100), O.I.D.,
4.50%, due September 1, 2010 500,000 479,688 437,500
Houston Hotel Occupancy Tax Receipts Rev
(FGIC Ins) Series A (Pre-refunded
7/1/01 @ 100),
7.00%, due July 1, 2009 500,000 526,406 548,125
Lewisville Independent School Dist (PSF Gtd)
(Call 8/15/07 @ 100), O.I.D.,
5.50%, due August 15, 2017 500,000 470,250 476,250
Texas Public Finance Auth Bldg Rev
(AMBAC Ins) Series A (Call 2/1/05
@ 100),
6.00%, due February 1, 2008 500,000 498,068 516,250
UTAH
Intermountain Power Agy Supply Rev Ref,
Series D (Call 7/1/97 @ 102),
8.625%, due July 1, 2021 500,000 523,185 531,935
VIRGINIA
Danville Industrial Dev Auth Hosp Rev
(Danville Regional Medical Center)
(FGIC Ins)
(Call 10/1/04 @ 101), O.I.D.,
6.375%, due October 1, 2014 500,000 495,368 523,125
Fairfax Cnty Industrial Dev Auth Rev
(Inova Health Sys),
5.50%, due August 15, 2009 500,000 493,105 493,750
Fairfax Cnty Water Auth Rev (Call 4/1/04
@ 102), O.I.D.,
5.00%, due April 1, 2016 500,000 477,305 452,500
WASHINGTON
Washington GO, Series B & AT-7,
6.25%, due June 1, 2010 500,000 523,800 532,500
Washington Public Power Supply Sys Nuclear
Project #2
Rev Ref, Series 94 A (Call 7/1/04
@ 102), O.I.D.,
5.375%, due July 1, 2011 500,000 493,641 463,125
WISCONSIN
Wisconsin Public Power Inc Sys Rev (MBIA Ins)
(Call 7/1/06 @ 102),
5.90%, due July 1, 2011 500,000 495,194 502,500
TOTAL INVESTMENTS - 98.98% $ 26,284,923 26,690,894
Other assets less liabilities - 1.02% 275,527
TOTAL NET ASSETS - 100.00%
(equivalent to $8.74 per share; 50,000,000 shares of
$0.10 par value capital shares authorized; 3,084,868
shares outstanding) $ 26,966,421
</TABLE>
For federal income tax purposes, the identified cost of investments
owned at June 30, 1996 was $26,284,923.
Net unrealized appreciation for federal income tax purposes was
$405,971, which is comprised of unrealized appreciation of
$764,512 and unrealized depreciation of $358,541.
See accompanying Notes to Financial Statements.
STATEMENT OF NET ASSETS
June 30, 1996
PORTFOLIO S - SHORTER TERM
<TABLE>
<CAPTION>
PRINCIPAL MARKET
STATE/TERRITORY DESCRIPTION AMOUNT COST VALUE
</CAPTION>
<S> <C> <C> <C> <C>
ALABAMA
Birmingham Jefferson Civic Center
Auth Special Tax (MBIA Ins),
5.50%, due September 1, 2005 $ 500,000 $ 533,101 $ 510,000
ARIZONA
Chandler GO,
6.90%, due July 1, 2005 1,000,000 1,101,354 1,093,750
Lake Havasu City Municipal Property Corp Fac Rev
(AMBAC Ins) Series A (Call 9/19/96 @ 101),
6.30%, due June 1, 1999 500,000 500,000 508,530
CALIFORNIA
California GO,
6.10%, due February 1, 2002 500,000 541,391 530,625
Los Angeles Cnty Metropolitan Transportation Auth
Sales Tax Rev Ref (MBIA Ins),
5.50%, due July 1, 2006 500,000 500,648 509,375
San Diego Cnty Regional Transportation Commission
Sales Tax Rev (FGIC Ins) Series A,
6.00%, due April 1, 2004 500,000 527,765 531,250
DIST OF COLUMBIA
Dist of Columbia GO, Series A,
5.75%, due June 1, 2003 500,000 494,335 481,250
Washington D.C. Metropolitan Area Transportation
Auth Gross Rev Ref (FGIC Ins), O.I.D.,
4.70%, due July 1, 2003 500,000 497,071 488,750
FLORIDA
Florida Sunshine Skyway Rev Ref,
6.00%, due July 1, 1996 500,000 499,998 500,000
GUAM
Guam Gov't Limited Obligation Hwy (FSA Ins)
Series A,
5.75%, due May 1, 2001 500,000 494,845 527,500
Guam Power Auth Rev, Series A,
5.00%, due October 1, 2002 500,000 498,730 485,625
ILLINOIS
Illinois Finance Auth Industrial Dev Rev
(Citizens Utility Co)
(Mandatory Redemption 8/1/97 @ 100),
7.10%, due August 1, 2025 250,000 250,000 256,405
Illinois GO (Call 12/1/96 @ 102),
5.90%, due December 1, 1998 500,000 508,779 512,800
Illinois State Toll Hwy Auth Priority Ref Ref,
Series A, O.I.D.,
3.50%, due January 1, 2005 500,000 445,260 440,625
INDIANA
Indianapolis Line of Credit Public Improvement
Bond Bank, Series D,
5.70%, due February 1, 2000 250,000 247,090 256,563
MASSACHUSETTS
Massachusetts Health & Ed Fac Auth Rev
(Winchester Hosp) (Connie Lee Ins)
Series D,
5.10%, due July 1, 2001 500,000 498,937 503,125
Massachusetts Housing Finance Agy Projects
(AMBAC Ins) Series A,
5.35%, due April 1, 2003 500,000 500,000 515,000
Massachusetts Municipal Wholesale Electric Co
Power Supply Sys Rev, Series D,
5.70%, due July 1, 2001 500,000 491,455 514,375
Massachusetts Water Resources Auth, Series 90 A,
7.00%, due April 1, 1999 500,000 496,620 531,250
MINNESOTA
Minneapolis & St. Paul Housing & Redevelopment
Auth Health Care Sys Rev (Healthspan)
(AMBAC Ins) Series A,
4.50%, due November 15, 2001 500,000 501,904 490,625
St. Cloud Hosp Fac Rev (AMBAC Ins) Series 96 A,
4.00%, due July 1, 1998 500,000 501,406 496,875
MISSOURI
Jackson Cnty Industrial Dev Auth Health Care
Corp Rev
(St. Joseph Health Center) (MBIA Ins),
4.60%, due July 1, 2001 500,000 498,324 493,750
Sikeston Electric Rev Ref (MBIA Ins),
5.80%, due June 1, 2002 500,000 494,380 525,000
NEVADA
Clark Cnty School Dist, 7.20%, due March 1, 1998 500,000 502,205 522,500
NEW HAMPSHIRE
New Hampshire GO Capital Improvement
(College Savings Bond Program), O.I.D.,
0.00%, due August 1, 1996 500,000 497,180 498,195
NEW JERSEY
New Jersey GO, Series C,
6.50%, due January 15, 2004 500,000 527,201 530,000
New Jersey Turnpike Auth Rev (AMBAC Ins) Series A,
5.70%, due January 1, 2001 500,000 518,894 518,125
NEW MEXICO
Albuquerque Hosp Rev Ref (MBIA Ins)
Series A, O.I.D.,
5.60%, due August 1, 1999 500,000 498,688 515,000
Las Cruces School Dist (MBIA Ins),
6.125%, due August 1, 2000 500,000 497,835 526,250
NEW YORK
Battery Park City Auth Rev Ref,
6.00%, due November 1, 2003 500,000 528,650 527,500
New York Medical Care Fac Finance Agy Rev Ref
(Mental Health Services) Series F,
6.00%, due August 15, 2002 500,000 522,323 520,000
New York Medical Care Fac Finance Agy Rev
(Surgical Hosp) (FHA Ins) Series A,
5.40%, due August 15, 2004 500,000 500,000 511,875
New York Thruway Auth Service Contract
Rev (MBIA Ins),
5.375%, due April 1, 2004 500,000 497,745 513,125
NORTH CAROLINA
North Carolina Eastern Municipal Power
Agy Sys Rev Ref, Series 93 B,
5.375%, due January 1, 2001 500,000 496,005 498,750
OHIO
Columbus City School Dist
(FGIC Ins) (Pre-refunded 12/1/02 @ 102),
6.65%, due December 1, 2012 500,000 561,455 558,125
Ohio Special Obligation (AMBAC Ins) Series A,
5.55%, due June 1, 2000 500,000 500,000 519,375
PENNSYLVANIA
Pennsylvania State Univ GO, E.T.M.,
6.75%, due July 1, 1999 500,000 529,128 531,250
PUERTO RICO
Puerto Rico Commonwealth Hwy & Transportation
Auth Rev Ref, Series V,
6.10%, due July 1, 2001 250,000 248,285 263,437
Puerto Rico Electric Power Auth Rev Ref, Series Q,
5.30%, due July 1, 1998 500,000 497,525 510,625
RHODE ISLAND
Rhode Island Depositors Economic Protection Corp
Special Obligation (FSA Ins) Series A,
5.60%, due August 1, 1998 500,000 498,675 511,250
SOUTH CAROLINA
South Carolina GO, O.I.D.,
4.20%, due April 1, 2002 500,000 466,063 488,750
SOUTH DAKOTA
South Dakota Housing Dev Auth
(Home Ownership Mortgage) Series C,
4.70%, due May 1, 1999 500,000 500,641 501,250
TENNESSEE
Tennessee Housing Dev Agy Mortgage Finance,
Series A,
4.95%, due July 1, 2000 500,000 501,743 499,375
TEXAS
Round Rock GO (FGIC Ins) (Call 8/1/97 @ 100),
6.40%, due August 1, 1998 500,000 511,048 510,705
San Antonio Water Rev (AMBAC Ins)
(Pre-refunded 5/1/00 @ 49.8), O.I.D.,
0.00%, due May 1, 2010 1,250,000 525,620 517,188
VIRGINIA
Stafford Cnty Certificates of Participation
(AMBAC Ins),
4.15%, due November 1, 2000 500,000 497,178 483,125
WASHINGTON
Washington Public Power Supply Sys Nuclear
Project #2 Rev Ref (MBIA Ins) Series B,
5.10%, due July 1, 2004 500,000 501,564 497,500
WISCONSIN
Madison GO, Series B,
5.60%, due November 1, 2000 300,000 315,596 312,000
Milwaukee Cnty GO, Series A,
5.35%, due September 1, 2001 500,000 511,257 511,250
Milwaukee Metropolitan Sewer Dist GO, Series A,
7.00%, due September 1, 2000 500,000 531,878 542,500
TOTAL INVESTMENTS - 99.50% $ 24,907,775 25,142,073
Other assets less liabilities - 0.50% 126,424
TOTAL NET ASSETS - 100.00%
(equivalent to $10.69 per share; 50,000,000 shares of
$0.10 par value capital shares authorized; 2,363,237
shares outstanding) $ 25,268,497
</TABLE>
For federal income tax purposes, the identified cost of investments
owned at June 30, 1996 was $24,907,775.
Net unrealized appreciation for federal income tax purposes was
$234,298, which is comprised of unrealized appreciation of $375,734
and unrealized depreciation of $141,436.
See accompanying Notes to Financial Statements.
STATEMENT OF NET ASSETS
June 30, 1996
PORTFOLIO MM - MONEY MARKET
<TABLE>
<CAPTION>
PRINCIPAL MARKET
STATE DESCRIPTION AMOUNT COST VALUE
</CAPTION>
<S> <C> <C> <C> <C>
ALABAMA
Montgomery Industrial Dev Board PCR
(General Electric)
(Mandatory Redemption 7/30/96 @ 100),
3.60%, due September 15, 2006 $ 270,000 $ 270,000 $ 270,000
ALASKA
Alaska Housing Finance Corp,
Series C (SBPA: Swiss Bank Corp),
Fltg Rate, 3.50%, due June 1, 2026 300,000 300,000 300,000
Valdez Marine Terminal Rev
(Exxon Pipeline Co) Series 85,
Fltg Rate, 3.55%, due October 1, 2025 400,000 400,000 400,000
ARIZONA
Phoenix Civic Improvement Corp
Municipal Fac Excise Tax Rev (MBIA Ins),
4.90%, due July 1, 1996 100,000 100,004 100,004
COLORADO
Platt River Power Auth Electric Rev, Series S-1
(SBPA: Morgan Guaranty Trust Co)
(Mandatory Redemption 7/24/96 @ 100),
3.65%, due June 1, 2018 400,000 400,000 400,000
Univ of Colorado Enterprise Sys Rev, Series 96 A
(SBPA: Morgan Guaranty Trust Co),
Fltg Rate, 3.35%, due June 1, 2020 300,000 300,000 300,000
CONNECTICUT
Connecticut Special Assessment Unemployment
Compensation Adv Fund Rev (FGIC Ins)
Series C
(SBPA: FGIC SPI) (Optional Put 7/1/96
@ 100),
3.90%, due November 15, 2001 500,000 500,000 500,000
Connecticut Special Assessment Unemployment
Compensation Adv Fund Rev (FGIC Ins)
Series C
(SBPA: FGIC SPI) (Optional Put 7/1/97
@ 100),
3.90%, due November 15, 2001 300,000 300,000 300,000
FLORIDA
Dade Cnty Water & Sewer Sys Rev
(FGIC Ins) (SBPA: Commerzbank),
Fltg Rate, 3.30%, due October 5, 2022 400,000 400,000 400,000
Orlando Waste Water Sys Rev Ref, Series 90 A
(Line: Union Bank of Switzerland)
(Mandatory Redemption 8/16/96 @ 100),
3.45%, due October 1, 2015 500,000 500,000 500,000
GEORGIA
Burke Cnty Dev Auth PCR
(Georgia Power Co) 5th Series,
Fltg Rate, 3.60%, due July 1, 2024 100,000 100,000 100,000
De Kalb Private Hosp Auth Rev Anticipation
Certificates
(Egleston Childrens Hosp) Series A,
Fltg Rate, 3.30%, due March 1, 2024 300,000 300,000 300,000
HAWAII
Hawaii GO, Series CE,
4.20%, due June 1, 1997 115,000 115,204 115,204
KANSAS
Manhattan GO,
8.80%, due November 1, 1996 200,000 203,287 203,287
LOUISIANA
Louisiana Recovery Dist Sales Tax Rev
(MBIA Ins) (SBPA: Swiss Bank Corp),
Fltg Rate, 3.65%, due July 1, 1998 200,000 200,000 200,000
MINNESOTA
Minnesota GO,
6.50%, due August 1, 1996 100,000 100,266 100,266
Rochester Health Care Fac Rev
(Mayo Foundation/Mayo Medical Center)
Series 92 A (Mandatory Redemption
7/15/96 @ 100),
3.65%, due November 15, 2018 300,000 300,000 300,000
Univ of Minnesota Rev (Full Faith & Credit)
Series G
(Optional Put 8/1/96 @ 100),
3.25%, due October 1, 2007 200,000 200,000 200,000
NEW MEXICO
Albuquerque Airport Rev Ref (AMBAC Ins)
(SBPA: Canadian Imperial Bank of
Commerce) Series 95,
Fltg Rate, 3.30%, due July 1, 2014 300,000 300,000 300,000
OREGON
Clackamas Cnty Hosp Fac Auth Rev
(Kaiser Permanente) (Optional Put
10/1/96 @ 100),
3.40%, due April 1, 2014 200,000 200,000 200,000
PENNSYLVANIA
Pennsylvania Higher Ed Fac Auth Health
Services Rev,
Series B (Univ of Pennsylvania),
Fltg Rate, 3.25%, due January 1, 2024 200,000 200,000 200,000
TENNESSEE
Metropolitan Govt Nashville & Davidson Cnty
Health & Ed Fac Board Rev
(Vanderbilt Univ)
Series 85 A (Optional Put 1/15/97 @ 100),
3.50%, due January 15, 2013 200,000 200,000 200,000
TEXAS
Lone Star Airport Improvement Auth Inc Rev
(American Airlines) Series B-1
(LOC: Royal Bank of Canada),
Fltg Rate, 3.65%, due December 1, 2014 200,000 200,000 200,000
Lower Neches Valley Auth Industrial
Dev Corp PCR (Mobil Corp),
Fltg Rate, 3.40%, due February 1, 2004 300,000 300,000 300,000
North Central Health Fac Dev Corp Rev
(Presbyterian Medical Center) (MBIA Ins)
Series C (SBPA: NationsBank NC),
Fltg Rate, 3.65%, due December 1, 2015 300,000 300,000 300,000
Port Arthur Navigation Dist PCR (Texaco Inc),
Fltg Rate, 3.65%, due October 1, 2024 200,000 200,000 200,000
UTAH
Intermountain Power Agy Supply Rev, Series F
(Optional Put 9/15/96 @ 100)
(LOC: Swiss Bank Corp),
3.35%, due July 1, 2015 300,000 300,000 300,000
WASHINGTON
Seattle Municipal Light & Power Rev
(SBPA: Morgan Guaranty Trust Co),
Fltg Rate, 3.40%, due November 1, 2018 200,000 200,000 200,000
Washington GO, Series 96 B
(LOC: Landesbank Hessen),
Fltg Rate, 3.25%, due June 1, 2020 300,000 300,000 300,000
Washington Public Power Supply Sys Nuclear
Project #1 Rev Ref, Series 1A-1
(LOC: Bank of America),
Fltg Rate, 3.30%, due July 1, 2017 200,000 200,000 200,000
WISCONSIN
Sheboygan PCR (Wisconsin Power & Light Co),
Fltg Rate, 3.55%, due August 1, 2014 200,000 200,000 200,000
Wisconsin GO,
5.10%, due May 1, 1997 135,000 136,203 136,203
TOTAL INVESTMENTS - 102.41% $ 8,224,964 8,224,964
Other assets less liabilities - (2.41%) (193,707)
TOTAL NET ASSETS - 100.00%
(equivalent to $1.00 per share; 100,000,000 shares of
$0.10 par value capital shares authorized; 8,025,245
shares outstanding) $ 8,031,257
</TABLE>
For federal income tax purposes, the identified cost of
investments owned at June 30, 1996 was $8,224,964.
Line (Line of Credit)
LOC (Letter of Credit)
SBPA (Stand by Purchase Agreement)
See accompanying Notes to Financial Statements.
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1996
<TABLE>
<CAPTION>
PORTFOLIO L PORTFOLIO S PORTFOLIO MM
</CAPTION>
<S> <C> <C> <C>
ASSETS:
Investment securities, at market value
(identified cost of $26,284,923,
$24,907,775 and $8,224,964, respectively) $ 26,690,894 $ 25,142,073 $ 8,224,964
Cash - - 356,143
Interest receivable 497,416 440,464 51,450
Total assets 27,188,310 25,582,537 8,632,557
LIABILITIES AND NET ASSETS:
Cash overdraft 82,289 313,740 -
Payable for investments purchased 135,500 - 300,000
Payable to shareholders 4,100 300 301,300
Total liabilities 221,889 314,040 601,300
NET ASSETS $ 26,966,421 $ 25,268,497 $ 8,031,257
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 26,483,203 $ 25,009,087 $ 8,026,642
Accumulated undistributed net realized gain on investments 77,247 25,112 4,615
Net unrealized appreciation in value of investments 405,971 234,298 -
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 26,966,421 $ 25,268,497 $ 8,031,257
Capital shares, $0.10 par value
Authorized 50,000,000 50,000,000 100,000,000
Outstanding 3,084,868 2,363,237 8,025,245
NET ASSET VALUE PER SHARE $ 8.74 $ 10.69 $ 1.00
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Year Ended June 30, 1996
<TABLE>
<CAPTION>
PORTFOLIO L PORTFOLIO S PORTFOLIO MM
</CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Income:
Interest $ 1,608,297 $ 1,396,244 $ 421,008
Expenses:
Management fees (Note 3) 269,792 258,325 57,561
Registration fees and other expenses 15,611 15,597 7,793
285,403 273,922 65,354
Net investment income 1,322,894 1,122,322 355,654
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (Note 1):
Realized gain from investment transactions
(excluding repurchase agreements):
Proceeds from sales of investments 12,040,780 15,124,041 44,837,800
Cost of investments sold 11,428,186 14,970,577 44,837,800
Net realized gain from investment
transactions 612,594 153,464 -
Unrealized appreciation on investments:
Beginning of year 758,117 332,614 -
End of year 405,971 234,298 -
Decrease in net unrealized appreciation
on investments (352,146) (98,316) -
Net gain on investments 260,448 55,148 -
Increase in net assets resulting from
operations $ 1,583,342 $ 1,177,470 $ 355,654
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
For The Two Years Ended June 30, 1996
<TABLE>
<CAPTION>
PORTFOLIO L PORTFOLIO S PORTFOLIO MM
</CAPTION>
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,404,025 $ 1,223,840 $ 435,006
Net realized gain (loss) from investment transactions (574,833) (12,967) -
Increase in net unrealized appreciation on investments 1,082,370 250,783 -
Net increase in net assets resulting from operations 1,911,562 1,461,656 435,006
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,404,025) (1,223,840) (435,006)
Net realized gain from investment transactions (65,946) (15,040) (1,592)
Total distributions to shareholders (1,469,971) (1,238,880) (436,598)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold, 295,147(L), 308,389(S),
29,790,951(MM) 2,494,554 3,278,080 29,790,961
Net asset value of shares issued for reinvestment
of distributions,
102,570(L), 75,054(S), 387,363(MM) 865,434 795,502 387,363
3,359,988 4,073,582 30,178,324
Cost of shares redeemed, 626,791(L), 428,910(S),
29,354,669(MM) (5,282,957) (4,528,824) (29,354,677)
Net increase (decrease) from capital
share transactions (1,922,969) (455,242) 823,647
Total increase (decrease) in net assets (1,481,378) (232,466) 822,055
NET ASSETS - June 30, 1994 29,537,358 28,592,106 14,896,238
NET ASSETS - June 30, 1995 $ 28,055,980 $ 28,359,640 $ 15,718,293
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,322,894 $ 1,122,322 $ 355,654
Net realized gain from investment transactions 612,594 153,464 -
Decrease in net unrealized appreciation on investments (352,146) (98,316) -
Net increase in net assets resulting
from operations 1,583,342 1,177,470 355,654
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,322,894) (1,122,322) (355,654)
Net realized gain from investment transactions - (66,705) -
Total distributions to shareholders (1,322,894) (1,189,027) (355,654)
DECREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold, 1,160,619(L), 100,122(S),
17,559,563(MM) 10,320,589 1,082,966 17,563,829
Net asset value of shares issued for reinvestment
of distributions, 86,053(L), 66,672(S),
285,903(MM) 761,701 720,344 285,903
11,082,290 1,803,310 17,849,732
Cost of shares redeemed, 1,399,237(L), 450,798(S),
25,532,521(MM) (12,432,297) (4,882,896) (25,536,768)
Net decrease from capital share transactions (1,350,007) (3,079,586) (7,687,036)
Total decrease in net assets (1,089,559) (3,091,143) (7,687,036)
NET ASSETS - June 30, 1995 28,055,980 28,359,640 15,718,293
NET ASSETS - June 30, 1996 $ 26,966,421 $ 25,268,497 $ 8,031,257
</TABLE>
See accompanying Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940,
as amended, as a diversified open-end management investment
company. Its shares are currently issued in three series with each
series, in effect, representing a separate Fund. The financial
statements have been prepared in conformity with generally
accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial
statements. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of
its financial statements.
Investments - Securities held in the short-term and long-term
portfolios are valued at the market value on the last business day
of the period as determined by an independent pricing service.
Short-term notes and the money market portfolio are valued at
amortized cost which approximates market value. Investment
transactions are recorded on the trade date. Investment income and
dividends to shareholders are recorded daily and dividends are
distributed monthly. Realized gains and losses from investment
transactions and unrealized appreciation and depreciation of
investments are reported on the identified cost basis.
Federal and State Taxes - The Fund's policy is to comply with
the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no provision for
federal or state tax is required.
2. PURCHASES AND SALES OF SECURITIES:
The aggregate amounts of security transactions during the year
ended June 30, 1996 (excluding repurchase agreements), were as
follows:
Portfolio L
Purchases $ 10,822,935
Proceeds from sales 12,040,780
Portfolio S
Purchases $ 11,178,225
Proceeds from sales 15,124,041
Portfolio MM
Purchases $ 37,000,359
Proceeds from sales 44,837,800
3. MANAGEMENT FEES:
Management fees, which include all normal expenses of the Fund
other than taxes, fees and other charges of governmental agencies
for qualifying the Fund's shares for sale, special legal fees,
interest and brokerage commissions, are paid to Jones & Babson,
Inc., an affiliated company. These fees are based on average daily
net assets of the portfolios at the annual rate of .95 of one
percent of net assets of Portfolio L and Portfolio S and .50 of
one percent of net assets of Portfolio MM. Certain officers and/or
directors of the Fund are also officers and/or directors of Jones
& Babson, Inc.
FINANCIAL HIGHLIGHTS
The following table sets forth information as to capital and
income changes for a share outstanding for each of the five
years in the period ended June 30, 1996:
<TABLE>
<CAPTION>
PORTFOLIO L 1996 1995 1994 1993 1992
</CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $8.67 $8.52 $9.49 $9.04 $8.74
Income from investment operations:
Net investment income 0.41 0.42 0.43 0.46 0.52
Net gains (or losses) on securities (both realized
and unrealized) 0.07 0.17 (0.56) 0.57 0.57
Total from investment operations 0.48 0.59 (0.13) 1.03 1.09
Less distributions:
Dividends from net investment income (0.41) (0.42) (0.43) (0.46) (0.52)
Distributions from capital gains - (0.02) (0.41) (0.12) (0.27)
Total distributions (0.41) (0.44) (0.84) (0.58) (0.79)
Net asset value, end of year $8.74 $8.67 $8.52 $9.49 $9.04
Total return 6% 7% (2%) 12% 13%
Ratios/Supplemental Data
Net assets, end of year (in millions) $27 $28 $30 $34 $30
Ratio of expenses to average net assets 1.01% 1.02% 1.02% 1.00% 0.99%
Ratio of net investment income to average net assets 4.67% 4.98% 4.73% 5.03% 5.73%
Portfolio turnover rate 39% 34% 53% 126% 128%
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO S 1996 1995 1994 1993 1992
</CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.71 $10.62 $11.05 $10.78 $10.54
Income from investment operations:
Net investment income 0.44 0.45 0.46 0.50 0.55
Net gains (or losses) on securities (both realized
and unrealized) 0.01 0.10 (0.37) 0.29 0.36
Total from investment operations 0.45 0.55 0.09 0.79 0.91
Less distributions:
Dividends from net investment income (0.44) (0.45) (0.46) (0.50) (0.55)
Distributions from capital gains (0.03) (0.01) (0.06) (0.02) (0.12)
Total distributions (0.47) (0.46) (0.52) (0.52) (0.67)
Net asset value, end of year $10.69 $10.71 $10.62 $11.05 $10.78
Total return 4% 5% 1% 8% 9%
Ratios/Supplemental Data
Net assets, end of year (in millions) $25 $28 $29 $26 $22
Ratio of expenses to average net assets 1.01% 1.01% 1.02% 1.00% 1.00%
Ratio of net investment income to average net assets 4.13% 4.28% 4.22% 4.58% 5.14%
Portfolio turnover rate 41% 34% 21% 47% 81%
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO MM 1996 1995 1994 1993 1992
</CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income 0.03 0.03 0.02 0.02 0.03
Less distributions:
Dividends from net investment income (0.03) (0.03) (0.02) (0.02) (0.03)
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
Total return 3% 3% 2% 2% 3%
Ratios/Supplemental Data
Net assets, end of year (in millions) $8 $16 $15 $9 $10
Ratio of expenses to average net assets 0.58% 0.59% 0.57% 0.56% 0.55%
Ratio of net investment income to average net assets 3.15% 3.07% 1.99% 2.18% 3.40%
</TABLE>
See accompanying Notes to Financial Statements.
REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
D.L. Babson Tax-Free Income Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the statement of net assets, of D.L. Babson
Tax-Free Income Fund, Inc. (a Maryland corporation, comprising,
respectively, Portfolio L, Portfolio S and Portfolio MM), as of
June 30, 1996, and the related statement of operations for the
year then ended, the statements of changes in net assets for each
of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements and the financial highlights. Our procedures included
confirmation of securities owned as of June 30, 1996, by
correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement and the financial highlights presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of each of the respective portfolios
constituting the D.L. Babson Tax-Free Income Fund, Inc. as of June
30, 1996, the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the
period then ended, and the financial highlights for each of the
five years in the period then ended in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Kansas City, Missouri
July 26, 1996
This report has been prepared for the information of the
Shareholders of the D.L. Babson Tax-Free Income Fund, Inc., and is
not to be construed as an offering of the shares of the Fund.
Shares of this Fund and of the other Babson Funds are offered only
by the Prospectus, a copy of which may be obtained from Jones &
Babson, Inc.
EQUITIES
Growth Fund
Enterprise Fund*
Enterprise Fund II
Value Fund
Shadow Stock Fund
International Fund
FIXED INCOME
Bond Trust
Money Market Fund
Tax-Free Income Fund
*Closed to new investors.
JONES & BABSON
MUTUAL FUNDS
2440 Pershing Road
Kansas City, MO 64108-2518
816-471-5200
1-800-4-BABSON
(1-800-422-2766)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
D. L. Babson Tax-Free Income Fund, Inc. - Portfolio L
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 26284923
<INVESTMENTS-AT-VALUE> 26690894
<RECEIVABLES> 497416
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27188310
<PAYABLE-FOR-SECURITIES> 135500
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 86389
<TOTAL-LIABILITIES> 221889
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26483203
<SHARES-COMMON-STOCK> 3084868
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 77247
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 405971
<NET-ASSETS> 26966421
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1608297
<OTHER-INCOME> 0
<EXPENSES-NET> 285403
<NET-INVESTMENT-INCOME> 1322894
<REALIZED-GAINS-CURRENT> 612594
<APPREC-INCREASE-CURRENT> (352146)
<NET-CHANGE-FROM-OPS> 1583342
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1322894
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1160619
<NUMBER-OF-SHARES-REDEEMED> 1399237
<SHARES-REINVESTED> 86053
<NET-CHANGE-IN-ASSETS> (1089559)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 269792
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<GROSS-EXPENSE> 285403
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 8.67
<PER-SHARE-NII> .41
<PER-SHARE-GAIN-APPREC> .07
<PER-SHARE-DIVIDEND> .41
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.74
<EXPENSE-RATIO> 1.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
D. L. Babson Tax-Free Income Fund, Inc. - Portfolio S
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 24907775
<INVESTMENTS-AT-VALUE> 25142073
<RECEIVABLES> 440464
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25582537
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 314040
<TOTAL-LIABILITIES> 25268497
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25009087
<SHARES-COMMON-STOCK> 2363237
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 25112
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 234298
<NET-ASSETS> 25268497
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1396244
<OTHER-INCOME> 0
<EXPENSES-NET> 273922
<NET-INVESTMENT-INCOME> 1122322
<REALIZED-GAINS-CURRENT> 153464
<APPREC-INCREASE-CURRENT> (98316)
<NET-CHANGE-FROM-OPS> 1177470
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1122322
<DISTRIBUTIONS-OF-GAINS> 66705
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 100122
<NUMBER-OF-SHARES-REDEEMED> 450798
<SHARES-REINVESTED> 66672
<NET-CHANGE-IN-ASSETS> (3091143)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 258325
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 273922
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.71
<PER-SHARE-NII> .44
<PER-SHARE-GAIN-APPREC> .01
<PER-SHARE-DIVIDEND> .44
<PER-SHARE-DISTRIBUTIONS> .03
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.69
<EXPENSE-RATIO> 1.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
D. L. Babson Tax-Free Income Fund, Inc. - Porfolio M
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 8224964
<INVESTMENTS-AT-VALUE> 8224964
<RECEIVABLES> 51450
<ASSETS-OTHER> 356143
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8632557
<PAYABLE-FOR-SECURITIES> 300000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 301300
<TOTAL-LIABILITIES> 601300
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8026642
<SHARES-COMMON-STOCK> 8025245
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4615
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 8031257
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 421008
<OTHER-INCOME> 0
<EXPENSES-NET> 65354
<NET-INVESTMENT-INCOME> 355654
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 355654
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 355654
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17559563
<NUMBER-OF-SHARES-REDEEMED> 25532521
<SHARES-REINVESTED> 285903
<NET-CHANGE-IN-ASSETS> (7687036)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 57561
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 65354
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
