BABSON
TAX-FREE
INCOME
FUND
Annual Report
June 30, 1997
JONES & BABSON
MUTUAL FUNDS
MESSAGE
TO OUR SHAREHOLDERS
For the fiscal year ended June 30, 1997, total investment returns (price
change and reinvested distributions) for Babson Tax-Free Income Fund were 7.7%
for Portfolio L and 5.2% for Portfolio S. Portfolio MM's price remained at
$1.00 and provided a return of 3.0% 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.
Prior to ending the fiscal year on a strong note thanks to a late spring
rally, interest rates seesawed during the preceding twelve months.
Following the Federal Reserve's move to raise rates in late March, investors
grew nervous about additional tightening of monetary policy. However, these
fears dissipated in May when it became clear that the economy's growth rate
was slowing from the earlier quarter's torrid pace. The market was also buoyed
by a continuation of favorable inflation reports and strong investor demand.
May inflation numbers showed that year-over-year growth in the Consumer Price
Index fell from 3.2% in December to 2.2% just six months later.
In addition to the favorable inflation climate, the U.S. bond market has
benefited from political uncertainty in Europe, which in turn has led to a
preference for dollar denominated securities by foreign investors. There is
growing skepticism about the likelihood of the European Monetary Union (EMU)
succeeding as it is currently structured. Presently, it is scheduled to go
into effect January of 1999. Many of the countries seeking admittance to the
EMU are faced with sluggish economies and high unemployment rates. It is
becoming politically difficult for them to take further austerity measures in
order to meet the strict fiscal and economic standards now required to gain
entry. Although foreign investors do not typically purchase tax-free municipal
securities, the pricing of municipal does track taxable alternatives.
Municipal bonds have outperformed their taxable counterparts over the past
fiscal year. A combination of modest new issuance coupled with steady demand
from property/casualty insurers and individual investors has been beneficial
to the tax-free marketplace. Additionally, fading concerns that legislators
would press for radical tax reform, such as a flat or consumption-based tax,
has provided a positive backdrop. Either one of those options would, most
probably, have caused the attractiveness of tax-free securities to suffer.
Credit quality spreads remain narrow, as they have been for some time.
Investors continue to place a greater emphasis on reaching for yield than on
distinguishing between higher and lower quality credits. The generally good
fiscal health of regional economies has supported this strategy. Even the ten
largest cities, many of which have suffered over the last several years, are
experiencing improving fortunes. For the first time in ten years, Standard &
Poor's now rates them all at BBB or higher.
As of June 30, 1997, the average maturities of Portfolio L, S and MM were 13
years, 4.5 years and 50 days, respectively. The Fund's three portfolios offer
shareholders the opportunity to invest in the types of securities which best
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 98.78%
Portfolio S - Shorter Term 99.61%
Portfolio MM - Money Market 99.89%
Quality Ratings
Portfolio Portfolio Portfolio
L S MM
Aaa 57% 56% 85%
Aa 22 9 15
A 13 18 0
Lower 8 17 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 componded returns for one, five and ten year periods ended
June 30, 1997, were 7.69%, 6.03% and 7.49% for Portfolio L and 5.18%,
4.57% and 5.64% 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,
redemption value may be more or less than original cost.
STATEMENT OF NET ASSETS
June 30, 1997
PORTFOLIO L - LONGER TERM
<TABLE>
<CAPTION>
PRINCIPAL MARKET
STATE/TERRITORY DESCRIPTION AMOUNT COST VALUE
</CAPTION>
<S> <C> <C> <C>
ARIZONA
Maricopa Cnty Unified School Dist #48
(Scottsdale),
9.25%, due July 1, 2007 $ 500,000 $ 574,097 $ 670,625
ARKANSAS
Arkansas GO, Series B,
0.00%, due June 1, 2010 1,000,000 469,029 503,750
CALIFORNIA
California Health Fac Auth Rev (Kaiser
Permanente Medical) (Call 10/1/01 @ 101),
5.45%, due October 1, 2013 250,000 250,000 248,750
Santa Rosa Water Rev Ref (FGIC Ins) Series B
(Call 9/1/02 @ 101.5), O.I.D.,
6.00%, due September 1, 2015 500,000 486,454 537,500
Univ of California Multiple Purpose Rev
(MBIA Ins) Series D (Call 7/01/06 @ 101),
5.75%, due July 1, 2013 1,000,000 988,687 1,028,750
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 500,000 514,017 533,125
Denver City & Cnty School Dist #1 GO, Series A
(Call 12/1/04 @ 101), O.I.D.,
5.125%, due December 1, 2012 500,000 492,251 483,125
DIST OF COLUMBIA
Dist of Columbia GO, Series A,
5.75%, due June 1, 2003 500,000 494,335 507,500
FLORIDA
Dade Cnty Special Obligation
(AMBAC Ins Cabs) (Call 10/1/08 @ 30.8464),
0.00%, due October 1, 2027 1,000,000 144,485 157,500
Palm Beach Cnty Airport Sys Rev Ref
(MBIA Ins) (Call 10/1/01 @ 102),
7.75%, due October 1, 2010 500,000 538,092 566,250
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 500,000 514,366 544,375
ILLINOIS
Chicago GO (AMBAC Ins) Series B,
5.125%, due January 1, 2022 1,000,000 938,736 942,500
Lake Cnty Community Unit School
Dist #60 Waukegan (FSA Ins),
6.10%, due December 1, 2001 500,000 529,770 536,250
INDIANA
Indiana Bond Bank Special Program,
Series 94 A-1 (Call 8/1/04 @ 102),
5.60%, due August 1, 2015 500,000 470,801 482,500
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 500,000 491,107 523,750
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 500,000 495,792 564,375
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 500,000 484,145 503,750
Massachusetts Housing Finance Agy Projects,
Series A (Call 4/1/03 @ 102),
6.375%, due April 1, 2021 975,000 975,000 1,014,000
MICHIGAN
Michigan State Hospital Finance Auth Rev
(Mercy Health Services) Series Q
(Call 8/15/06 @ 101),
5.375%, due August 15, 2026 500,000 476,721 480,625
Milan Area Schools GO
(Call 5/1/04 @ 101), O.I.D.,
5.00%, due May 1, 2013 500,000 473,844 480,625
Spring Lake Public Schools GO,
4.875%, due May 1, 2009 500,000 494,596 483,125
NEVADA
Clark Cnty School Dist GO (MBIA Ins)
Series A (Call 3/1/01 @ 101),
6.75%, due March 1, 2007 500,000 538,425 538,750
Nevada GO (Nautral Resources) Series C,
5.375%, due May 15, 2017 500,000 488,078 497,500
NEW HAMPSHIRE
New Hampshire Higher Ed & Health Fac Auth
(AMBAC Ins) (Call 10/01/06 @ 102),
5.70%, due October 1, 2010 500,000 497,707 515,000
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 250,000 232,883 253,750
New Jersey Turnpike Auth Rev,
10.375%, due January 1, 2003 155,000 155,000 183,675
NEW YORK
Battery Park City Auth Rev Ref, Series A
(Call 11/1/03 @ 102), O.I.D.,
5.00%, due November 1, 2004 1,000,000 944,009 1,008,750
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 1,016,770 1,087,500
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 1,000,000 986,972 1,048,750
New York Environmental Fac Corp PCR
(State Water-Revolving Fund) Series B
(Call 9/15/02 @ 102),
6.65%, due September 15, 2013 500,000 500,000 546,250
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 1,000,000 993,979 995,000
PENNSYLVANIA
Philadelphia School Dist Rev Ref, Series A,
5.00%, due April 1, 2003 500,000 506,188 506,250
RHODE ISLAND
Rhode Island Depositors Economic Protection Corp
Special Obligation (MBIA Ins)
Series B, O.I.D.,
5.80%, due August 1, 2009 500,000 525,856 531,875
Rhode Island Depositors Economic Protection Corp
Special Obligation (MBIA Ins) Series A
(Pre-refunded 8/1/01 @ 102),
7.50%, due August 1, 2014 500,000 513,262 564,375
Rhode Island Industrial Fac Corp PCR
(Inge Co) (SBA Gtd) (Call 8/20/97 @ 100),
9.125%, due October 1, 2000 75,000 63,681 75,994
TEXAS
Harris Cnty Toll Road Ref (FGIC Ins)
(Call 8/15/04 @ 102), O.I.D.,
5.00%, due August 15, 2016 500,000 443,170 466,250
Hays Consolidated Independent School Dist
(PSF Gtd) (Call 9/1/06 @ 100), O.I.D.,
4.50%, due September 1, 2010 500,000 480,688 458,750
Houston Hotel Occupancy Tax Receipts Rev
(FGIC Ins) Series A
(Pre-refunded 7/1/01 @ 100),
7.00%, due July 1, 2009 500,000 521,132 546,250
San Antonio Electric & Gas Rev, O.I.D.,
5.75%, due February 1, 2011 500,000 503,749 510,625
Texas Public Finance Auth Bldg Rev
(AMBAC Ins) Series A (Call 2/1/05 @ 100),
6.00%, due February 1, 2008 500,000 498,294 529,375
UTAH
Intermountain Power Agy Supply Rev Ref,
Series D (Call 7/1/97 @ 102),
8.625%, due July 1, 2021 500,000 510,077 510,000
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 500,000 495,503 538,125
Fairfax Cnty Industrial Dev Auth Rev
(Inova Health System)
(Call 8/15/06 @ 102),
5.50%, due August 15, 2009 500,000 493,631 514,375
Virginia State Univ Commonwealth Rev
(Call 5/01/06 @ 102),
5.75%, due May 1, 2021 500,000 495,121 505,000
WASHINGTON
Tacoma Conservation Sys Project Rev
(Tacoma Public Utilities Light Div),
6.50%, due January 1, 2012 500,000 544,430 543,750
Washington GO, Series DD-13,
5.875%, due March 1, 2014 500,000 506,372 515,000
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 500,000 493,922 485,000
WISCONSIN
Wisconsin Public Power Inc Sys Rev
(MBIA Ins)
(Call 7/1/06 @ 102),
5.90%, due July 1, 2011 500,000 496,672 518,125
TOTAL INVESTMENTS - 98.32% $ 25,741,896 26,786,794
Other assets less liabilities - 1.68% 456,335
TOTAL NET ASSETS - 100.00%
(equivalent to $8.96 per share; 50,000,000 shares of $0.10 par value
capital shares authorized; 3,040,600 shares outstanding) $ 27,243,129
</TABLE>
For federal income tax purposes, the identified cost of investments owned
at June 30, 1997, was $25,741,896.
Net unrealized appreciation for federal income tax purposes was $1,044,898,
which is comprised of unrealized appreciation of $1,098,362 and unrealized
depreciation of $53,464.
See accompanying Notes to Financial Statements.
STATEMENT OF NET ASSETS
June 30, 1997
PORTFOLIO S - SHORTER TERM
<TABLE>
<CAPTION>
PRINCIPAL MARKET
STATE/TERRITORY DESCRIPTION AMOUNT COST VALUE
</CAPTION>
<S> <C> <C> <C>
ARIZONA
Chandler GO (Call 7/01/01 @ 101),
6.90%, due July 1, 2005 $ 1,000,000 $ 1,090,104 $ 1,093,750
Lake Havasu City Municipal Property Corp Fac Rev
(AMBAC Ins) Series A (Call 8/20/97 @ 100.5),
6.30%, due June 1, 1999 500,000 500,000 506,795
CALIFORNIA
Los Angeles Cnty Metropolitan Transportation Auth
Sales Tax Rev Ref (MBIA Ins),
5.50%, due July 1, 2006 500,000 500,583 528,125
DIST OF COLUMBIA
Dist of Columbia GO, Series A,
5.75%, due June 1, 2003 500,000 494,335 507,500
Washington D.C. Metropolitan Area Transportation
Auth Gross Rev Ref (FGIC Ins), O.I.D.,
4.70%, due July 1, 2003 500,000 497,490 500,625
GUAM
Guam Gov't Limited Obligation Hwy (FSA Ins)
Series A,
5.75%, due May 1, 2001 500,000 494,845 524,375
Guam Power Auth Rev, Series A,
5.00%, due October 1, 2002 500,000 498,931 495,000
ILLINOIS
Du Page & Will Cntys Community
School District #204,
7.25%, due December 30, 2004 500,000 569,453 571,875
Illinois Finance Auth Industrial Dev Rev
(Citizens Utility Co)
(Mandatory Redemption 8/1/97 @ 100),
7.10%, due August 1, 2025 250,000 250,000 250,535
Illinois GO (Call 8/15/97 @ 102),
5.90%, due December 1, 1998 500,000 509,999 513,125
Illinois State Toll Hwy Auth Priority Rev Ref,
Series A (Call 1/01/03 @ 100), O.I.D.,
3.50%, due January 1, 2005 500,000 450,540 454,375
INDIANA
Indianapolis Line of Credit Public Improvement
Bond Bank, Series D,
5.70%, due February 1, 2000 250,000 247,090 258,125
MASSACHUSETTS
Massachusetts Health & Ed Fac Auth Rev
(Winchester Hosp) (Connie Lee Ins) Series D,
5.10%, due July 1, 2001 500,000 499,149 508,750
Massachusetts Housing Finance Agy Projects
(AMBAC Ins) Series A,
5.35%, due April 1, 2003 500,000 500,000 516,875
Massachusetts Municipal Wholesale Electric Co
Power Supply Sys Rev, Series D,
5.70%, due July 1, 2001 500,000 491,455 515,625
Massachusetts Water Resources Auth, Series 90 A,
7.00%, due April 1, 1999 500,000 496,620 521,875
MINNESOTA
St. Cloud Hosp Fac Rev (AMBAC Ins) Series 96 A,
4.00%, due July 1, 1998 500,000 500,705 499,420
MISSOURI
Jackson Cnty Industrial Dev Auth
Health Care Corp Rev
(St. Joseph Health Center) (MBIA Ins),
4.60%, due July 1, 2001 500,000 498,657 501,250
Sikeston Electric Rev Ref (MBIA Ins),
5.80%, due June 1, 2002 500,000 494,380 528,750
NEVADA
Washoe Cnty Hospital Fac Rev Ref
(Washoe Medical Center Inc), Series A,
5.25%, due June 1, 2001 500,000 509,595 513,750
NEW MEXICO
Albuquerque Hosp Rev Ref (MBIA Ins)
Series A, O.I.D.,
5.60%, due August 1, 1999 500,000 499,153 513,750
Las Cruces School Dist (MBIA Ins),
6.125%, due August 1, 2000 500,000 497,835 524,375
NEW YORK
Battery Park City Auth Rev Ref,
6.00%, due November 1, 2003 500,000 524,749 532,500
New York Medical Care Fac Finance Agy Rev Ref
(Mental Health Services) Series F,
6.00%, due August 15, 2002 500,000 519,545 525,000
NEW YORK (Continued)
New York Medical Care Fac Finance Agy Rev
(Surgical Hosp) (FHA Ins) Series A,
5.40%, due August 15, 2004 500,000 500,000 515,625
New York State Dormitory Auth Rev
(Beth Israel Medical Center),
5.35%, due November 1, 2005 500,000 515,030 515,625
NORTH CAROLINA
North Carolina Eastern Municipal Power
Agy Sys Rev Ref, Series 93 B,
5.375%, due January 1, 2001 500,000 496,005 506,250
OHIO
Columbus City School Dist (FGIC Ins)
(Pre-refunded 12/1/02 @ 102),
6.65%, due December 1, 2012 500,000 553,447 560,000
Ohio Special Obligation (AMBAC Ins)
Series A,
5.55%, due June 1, 2000 500,000 500,000 518,750
PENNSYLVANIA
Pennsylvania State Univ GO, E.T.M.,
6.75%, due July 1, 1999 500,000 519,445 523,750
PUERTO RICO
Puerto Rico Commonwealth Hwy & Transportation
Auth Rev Ref, Series V,
6.10%, due July 1, 2001 250,000 248,285 263,750
Puerto Rico Electric Power Auth Rev Ref,
Series Q,
5.30%, due July 1, 1998 500,000 497,525 505,685
RHODE ISLAND
Rhode Island Depositors Economic Protection Corp
Special Obligation (FSA Ins) Series A,
5.60%, due August 1, 1998 500,000 498,675 507,490
SOUTH DAKOTA
South Dakota Housing Dev Auth
(Home Ownership Mortgage) Series C,
4.70%, due May 1, 1999 500,000 500,414 503,125
TENNESSEE
Tennessee Housing Dev Agy Mortgage Finance,
Series A,
4.95%, due July 1, 2000 500,000 501,309 505,000
TEXAS
Fort Bend Cnty Industrial Dev Corp Rev Ref
(Frito-Lay Inc) (Call 10/01/99 @ 100),
4.55%, due October 1, 2011 500,000 502,981 511,250
Houston GO, Series C (Call 3/01/02 @ 100),
5.90%, due March 1, 2003 500,000 525,890 526,875
Round Rock GO (FGIC Ins) (Call 8/1/97 @ 100),
6.40%, due August 1, 1998 500,000 500,890 501,040
San Antonio Water Rev (AMBAC Ins)
(Pre-refunded 5/1/00 @ 49.8), O.I.D.,
0.00%, due May 1, 2010 1,250,000 559,522 548,438
VIRGINIA
Stafford Cnty Certificates of Participation
(AMBAC Ins),
4.15%, due November 1, 2000 500,000 497,828 497,500
WASHINGTON
Washington Public Power Supply Sys Nuclear
Project #2 Rev Ref (MBIA Ins) Series B,
5.10%, due July 1, 2004 500,000 501,366 505,000
Washington Public Power Supply Sys Nuclear
Project #2 Rev Ref, Series B
(Pre-refunded 7/1/00 @ 102),
7.50%, due July 1, 2004 300,000 329,875 331,125
WISCONSIN
Milwaukee Cnty GO, Series A,
5.35%, due September 1, 2001 500,000 509,081 514,375
Milwaukee Metropolitan Sewer Dist GO,
Series A,
7.00%, due September 1, 2000 500,000 524,238 538,750
21,917,019 22,305,528
PRINCIPAL MARKET
DESCRIPTION AMOUNT COST VALUE
REPURCHASE AGREEMENT - 1.27%
UMB Bank, n.a.,
5.30%, due July 1, 1997
(Collateralized by U.S. Treasury Notes,
7.875%, due November 15, 1999) 290,000 290,000 290,000
TOTAL INVESTMENTS - 98.52% $ 22,207,019 22,595,528
Other assets less liabilities - 1.48% 340,314
TOTAL NET ASSETS - 100.00%
(equivalent to $10.74 per share;
50,000,000 shares of $0.10 par value
capital shares authorized;
2,134,847 shares outstanding) $ 22,935,842
</TABLE>
For federal income tax purposes, the identified cost of investments owned at
June 30, 1997, was $22,207,019.
Net unrealized appreciation for federal income tax purposes was $388,509,
which is comprised of unrealized appreciation of $405,137 and unrealized
depreciation of $16,628.
See accompanying Notes to Financial Statements.
STATEMENT OF NET ASSETS
June 30, 1997
PORTFOLIO MM - MONEY MARKET
<TABLE>
<CAPTION>
PRINCIPAL MARKET
STATE/TERRITORY DESCRIPTION AMOUNT COST VALUE
</CAPTION>
<S> <C> <C> <C>
ALASKA
Alaska Housing Finance Corp,
Series C (SBPA: Swiss Bank Corp),
Fltg Rate, 4.15%, due June 1, 2026 $ 300,000 $ 300,000 $ 300,000
CONNECTICUT
Connecticut GO,
Series 97 B, Fltg Rate,
4.10%, due May 15, 2014 200,000 200,000 200,000
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
Connecticut Special Assessment Unemployment
Compensation Adv Fund Rev (FGIC Ins) Series C
(SBPA: FGIC SPI) (Optional Put 7/1/98 @ 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, 4.15%, due October 5, 2022 400,000 400,000 400,000
Florida Municipal Power Agy, Series A,
3.80%, due July 18, 1997 200,000 200,000 200,000
GEORGIA
Burke Cnty Dev Auth PCR (Oglethorpe Power Corp)
Series 97 A (AMBAC Ins),
3.60%, due December 1, 1997 300,000 300,000 300,000
De Kalb Private Hosp Auth Rev Anticipation Certificates
(Egleston Childrens Hosp) Series A,
Fltg Rate, 4.20%, due March 1, 2024 300,000 300,000 300,000
ILLINOIS
Chicago GO Tender Notes (LOC: Landesbank Hessen)
(Madatory Redemption 10/31/97 @ 100),
3.55%, due January 31, 1998 400,000 400,000 400,000
KANSAS
Kansas Dept of Transportation Highway Rev,
Series 94 B,
Fltg Rate, 4.10%, due September 1, 2014 400,000 400,000 400,000
KENTUCKY
Kentucky State Turnpike Auth Economic Dev Road Rev,
Series A (Pre-refunded 7/1/97 @ 102),
8.25%, due July 1, 2007 200,000 204,024 204,024
MASSACHUSETTS
Massachusetts Bay Transportation Auth,
Series 84 A (LOC: State Street Bank)
(Optional Put 9/1/97 @ 100),
3.45%, due March 1, 2014 250,000 250,000 250,000
Massachusetts Health & Ed Fac Auth Rev
(Harvard Univ) Series L
(Mandatory Redemption 8/21/97 @ 100),
3.75%, due January 1, 2024 200,000 200,000 200,000
MINNESOTA
Rochester Health Care Fac Rev
(Mayo Foundation/Mayo Medical Center)
Series 92 A (Call 7/7/97 @ 100),
3.65%, due November 15, 2018 300,000 300,000 300,000
NEW MEXICO
Albuquerque Airport Rev Ref, Series 95 (AMBAC Ins)
(SBPA: Canadian Imperial Bank of Commerce),
Fltg Rate, 4.15%, due July 1, 2014 300,000 300,000 300,000
NEW YORK
New York City Municipal Water Fin Auth Water & Sewer
Sys Rev (FGIC Ins) Series 92 C,
Fltg Rate, 4.15%, due June 15, 2022 200,000 200,000 200,000
Port Auth New York & New Jersey Special
Obligation Rev, Fltg Rate,
4.10%, due August 1, 2024 200,000 200,000 200,000
NORTH CAROLINA
Charlotte Airport Rev Ref, Series 93 A
(MBIA Ins) (SBPA: Commerzbank),
Fltg Rate, 4.15%, due July 1, 2016 300,000 300,000 300,000
Winston-Salem Water & Sewer Sys Rev
(SBPA: Wachovia Bank NC),
Fltg Rate, 4.20%, due June 1, 2014 200,000 200,000 200,000
OHIO
Ohio Highway GO, Series R,
5.00%, due May 15, 1998 100,000 101,063 101,063
TENNESSEE
Metropolitan Govt Nashville & Davidson Cnty
Health & Ed Fac Board Rev (Vanderbilt Univ)
Series 85 A (Optional Put 1/15/98 @ 100),
3.65%, due January 15, 2015 200,000 200,000 200,000
TEXAS
Dallas Area Rapid Transit Sales Tax A
(LOC: Credit Suisse Bank),
3.70%, due September 9, 1997 200,000 200,000 200,000
Lone Star Airport Improvement Auth Inc Rev
(American Airlines) Series B-1
(LOC: Royal Bank of Canada),
Fltg Rate, 4.10%, due December 1, 2014 200,000 200,000 200,000
Lower Colorado River Auth Rev Ref (MBIA Ins),
Fltg Rate, 4.15%, due January 1, 2013 200,000 200,000 200,000
Lower Neches Valley Auth Industrial
Dev Corp PCR (Mobil Corp),
Fltg Rate, 4.15%, due February 1, 2004 300,000 300,000 300,000
North Central Health Fac Dev Corp Rev
(Presbyterian Medical Center) (MBIA Ins)
Series D (SBPA: NationsBank NC),
Fltg Rate, 4.10%, due December 1, 2015 200,000 200,000 200,000
Southwest Higher Ed Auth Inc Rev
(Southern Methodist Univ) Series 85
(LOC: Morgan Guaranty Trust Co),
Fltg Rate, 4.10%, due July 1, 2015 100,000 100,000 100,000
Texas GO Tax & Rev Anticipation Notes,
4.75%, due August 29, 1997 140,000 140,182 140,182
UTAH
Intermountain Power Agy Supply Rev,
Series F (LOC: Bank of America)
(Optional Put 9/15/97 @ 100),
3.50%, due July 1, 2015 300,000 300,000 300,000
Salt Lake City (British Petroleum) Series A,
Fltg Rate, 4.10%, due February 1, 2008 200,000 200,000 200,000
VERMONT
Vermont Ed & Health Bldg Fin Agy Rev
(Middlebury College) Series 88 A
(Optional Putable 5/1/98 @ 100),
3.95%, due May 1, 2028 200,000 200,000 200,000
VIRGINIA
Virginia Public Bldg Auth Rev, Series A,
5.10%, due August 1, 1997 100,000 100,123 100,123
WASHINGTON
Washington GO, Series 96 B
(LOC: Landesbank Hessen),
Fltg Rate, 4.10%, due June 1, 2020 400,000 400,000 400,000
Washington Health Care Fac Auth Rev
(Sisters of Providence) Series D
(Line: Morgan Guaranty Trust Co),
Fltg Rate, 4.05%, due October 1, 2005 400,000 400,000 400,000
WISCONSIN
Sheboygan PCR (Wisconsin Power & Light Co),
Fltg Rate, 4.00%, due August 1, 2014 300,000 300,000 300,000
Wisconsin GO,
3.90%, due July 9, 1997 200,000 200,000 200,000
TOTAL INVESTMENTS - 95.19% $ 8,995,392 8,995,392
Other assets less liabilities - 4.81% 454,981
TOTAL NET ASSETS - 100.00%
(equivalent to $1.00 per share;
100,000,000 shares of $0.10 par value
capital shares authorized;
9,444,358 shares outstanding) $ 9,450,373
</TABLE>
For federal income tax purposes, the identified cost of investments
owned at June 30, 1997, was $8,995,392.
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, 1997
<TABLE>
<CAPTION>
PORTFOLIO L PORTFOLIO S PORTFOLIO MM
</CAPTION>
<S>
ASSETS: <C> <C> <C>
Investment securities, at market value
(identified cost of $25,741,896,
$22,207,019 and $8,995,392, respectively) $ 26,786,794 $ 22,595,528 $ 8,995,392
Cash - - 676,502
Interest receivable 481,693 387,706 78,479
Total assets 27,268,487 22,983,234 9,750,373
LIABILITIES AND NET ASSETS:
Cash overdraft 25,260 46,632 -
Payable for investments purchased - - 300,000
Payable to shareholders 98 760 -
Total liabilities 25,358 47,392 300,000
NET ASSETS $ 27,243,129 $ 22,935,842 $ 9,450,373
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 26,093,502 $ 22,563,560 $ 9,445,758
Accumulated undistributed net realized gain
(loss) on investments 104,729 (16,227) 4,615
Net unrealized appreciation in
value of investments 1,044,898 388,509 -
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 27,243,129 $ 22,935,842 $ 9,450,373
Capital shares, $0.10 par value
Authorized 50,000,000 50,000,000 100,000,000
Outstanding 3,040,600 2,134,847 9,444,358
NET ASSET VALUE PER SHARE $ 8.96 $ 10.74 $ 1.00
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Year Ended June 30, 1997
<TABLE>
<CAPTION>
PORTFOLIO L PORTFOLIO S PORTFOLIO MM
</CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Income:
Interest $ 1,545,370 $ 1,234,093 $ 355,476
Expenses:
Management fees (Note 3) 256,650 228,419 50,111
Registration fees and other expenses 15,953 14,695 5,939
272,603 243,114 56,050
Net investment income 1,272,767 990,979 299,426
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (Note 1):
Realized gain from investment transactions
(excluding repurchase agreements):
Proceeds from sales of investments 6,138,975 8,507,541 29,430,000
Cost of investments sold 6,050,960 8,436,103 29,430,000
Net realized gain from investment
transactions 88,015 71,438 -
Unrealized appreciation on investments:
Beginning of year 405,971 234,298 -
End of year 1,044,898 388,509 -
Increase in net unrealized appreciation
on investments 638,927 154,211 -
Net gain on investments 726,942 225,649 -
Increase in net assets resulting
from operations $ 1,999,709 $ 1,216,628 $ 299,426
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
For The Two Years Ended June 30, 1997
<TABLE>
<CAPTION>
PORTFOLIO L PORTFOLIO S PORTFOLIO MM
</CAPTION>
<S> <C> <C> <C>
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
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,272,767 $ 990,979 $ 299,426
Net realized gain from investment transactions 88,015 71,438 -
Increase in net unrealized appreciation
on investments 638,927 154,211 -
Net increase in net assets resulting
from operations 1,999,709 1,216,628 299,426
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,272,767) (990,979) (299,426)
Net realized gain from investment transactions (60,533) (112,777) -
Total distributions to shareholders (1,333,300) (1,103,756) (299,426)
INCREASE (DECREASE) FROM CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares sold, 105,940(L),
54,132(S), 18,555,914(MM) 930,420 579,845 18,555,943
Net asset value of shares issued for
reinvestment of distributions,
88,162(L), 62,762(S), 237,906(MM) 791,899 673,723 237,906
1,722,319 1,253,568 18,793,849
Cost of shares redeemed, 238,370(L),
345,284(S), 17,374,707(MM) (2,112,020) (3,699,095) (17,374,733)
Net increase (decrease) from capital share
transactions (389,701) (2,445,527) 1,419,116
Total increase (decrease) in net assets 276,708 (2,332,655) 1,419,116
NET ASSETS - June 30, 1996 26,966,421 25,268,497 8,031,257
NET ASSETS - June 30, 1997 $ 27,243,129 $ 22,935,842 $ 9,450,373
</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,
1997 (excluding repurchase agreements), were as follows:
Portfolio L
Purchases $ 5,500,655
Proceeds from sales 6,138,975
Portfolio S
Purchases $ 5,485,431
Proceeds from sales 8,507,541
Portfolio MM
Purchases $ 30,212,373
Proceeds from sales 29,430,000
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,
1997:
PORTFOLIO L
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
</CATPION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 8.74 $ 8.67 $ 8.52 $ 9.49 $ 9.04
Income from investment operations:
Net investment income 0.42 0.41 0.42 0.43 0.46
Net gains (or losses) on securities
(both realized and unrealized) 0.24 0.07 0.17 (0.56) 0.57
Total from investment operations 0.66 0.48 0.59 (0.13) 1.03
Less distributions:
Dividends from net investment income (0.42) (0.41) (0.42) (0.43) (0.46)
Distributions from capital gains (0.02) - (0.02) (0.41) (0.12)
Total distributions (0.44) (0.41) (0.44) (0.84) (0.58)
Net asset value, end of year $ 8.96 $ 8.74 $ 8.67 $ 8.52 $ 9.49
Total return 8% 6% 7% (2%) 12%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 27 $ 27 $ 28 $ 30 $ 34
Ratio of expenses to average net assets 1.01% 1.01% 1.02% 1.02% 1.00%
Ratio of net investment income to
average net assets 4.71% 4.67% 4.98% 4.73% 5.03%
Portfolio turnover rate 21% 39% 34% 53% 126%
</TABLE>
PORTFOLIO S
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
</CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.69 $10.71 $10.62 $11.05 $10.78
Income from investment operations:
Net investment income 0.44 0.44 0.45 0.46 0.50
Net gains (or losses) on securities
(both realized and unrealized) 0.10 0.01 0.10 (0.37) 0.29
Total from investment operations 0.54 0.45 0.55 0.09 0.79
Less distributions:
Dividends from net investment income (0.44) (0.44) (0.45) (0.46) (0.50)
Distributions from capital gains (0.05) (0.03) (0.01) (0.06) (0.02)
Total distributions 0.49) (0.47) (0.46) (0.52) (0.52)
Net asset value, end of year $10.74 $10.69 $10.71 $10.62 $11.05
Total return 5% 4% 5% 1% 8%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 23 $ 25 $ 28 $ 29 $ 26
Ratio of expenses to average net assets 1.01% 1.01% 1.01% 1.02% 1.00%
Ratio of net investment income to
average net assets 4.12% 4.13% 4.28% 4.22% 4.58%
Portfolio turnover rate 23% 41% 34% 21% 47%
</TABLE>
PORTFOLIO MM
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
</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 0.03 0.02 0.02
Less distributions:
Dividends from net investment income (0.03) (0.03) (0.03) (0.02) (0.02)
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total return 3% 3% 3% 2% 2%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 9 $ 8 $ 16 $ 15 $ 9
Ratio of expenses to average net assets 0.58% 0.58% 0.59% 0.57% 0.56%
Ratio of net investment income to
average net assets 3.10% 3.15% 3.07% 1.99% 2.18%
See accompanying Notes to Financial Statements.
</TABLE>
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 of D.L.
Babson Tax-Free Income Fund, Inc. (a Maryland corporation, comprising,
respectively, Portfolio L, Portfolio S and Portfolio MM), including the
statement of net assets as of June 30, 1997, 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. Our procedures included confirmation of securities
owned as of June 30, 1997, by correspondence with the custodian or
verification of settlement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
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, 1997, 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 28, 1997
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 64108-2561
816-471-5200
1-800-4-BABSON
(1-800-422-2766)
http://www.jbfunds.com
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
D L BABSON TAX-FREE INCOME FUND - PORTFOLIO L
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 25741896
<INVESTMENTS-AT-VALUE> 26786794
<RECEIVABLES> 481693
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27268487
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25358
<TOTAL-LIABILITIES> 25358
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26093502
<SHARES-COMMON-STOCK> 3040600
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 104729
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1044898
<NET-ASSETS> 27243129
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1545370
<OTHER-INCOME> 0
<EXPENSES-NET> 272603
<NET-INVESTMENT-INCOME> 1272767
<REALIZED-GAINS-CURRENT> 88015
<APPREC-INCREASE-CURRENT> 638927
<NET-CHANGE-FROM-OPS> 1999709
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1272797
<DISTRIBUTIONS-OF-GAINS> 60533
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 105940
<NUMBER-OF-SHARES-REDEEMED> 238370
<SHARES-REINVESTED> 88162
<NET-CHANGE-IN-ASSETS> 276708
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 256650
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 272603
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 8.74
<PER-SHARE-NII> .42
<PER-SHARE-GAIN-APPREC> .24
<PER-SHARE-DIVIDEND> .42
<PER-SHARE-DISTRIBUTIONS> .02
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.96
<EXPENSE-RATIO> 1.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
D L BABSON TAX-FREE INCOME FUND - PORTFOLIO S
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 22207019
<INVESTMENTS-AT-VALUE> 22595528
<RECEIVABLES> 387706
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 22983234
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 47392
<TOTAL-LIABILITIES> 47392
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22563560
<SHARES-COMMON-STOCK> 2134847
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (16227)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 388509
<NET-ASSETS> 22935842
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1234093
<OTHER-INCOME> 0
<EXPENSES-NET> 243114
<NET-INVESTMENT-INCOME> 990979
<REALIZED-GAINS-CURRENT> 71438
<APPREC-INCREASE-CURRENT> 154211
<NET-CHANGE-FROM-OPS> 1216628
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 990979
<DISTRIBUTIONS-OF-GAINS> 71438
<DISTRIBUTIONS-OTHER> 154211
<NUMBER-OF-SHARES-SOLD> 54132
<NUMBER-OF-SHARES-REDEEMED> 345284
<SHARES-REINVESTED> 62762
<NET-CHANGE-IN-ASSETS> (2332655)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 228419
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<GROSS-EXPENSE> 243114
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.69
<PER-SHARE-NII> .44
<PER-SHARE-GAIN-APPREC> .10
<PER-SHARE-DIVIDEND> .44
<PER-SHARE-DISTRIBUTIONS> .05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.74
<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 MONEY MARKET - PORTFOLIO MM
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 8995392
<INVESTMENTS-AT-VALUE> 8995392
<RECEIVABLES> 78479
<ASSETS-OTHER> 676502
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9750373
<PAYABLE-FOR-SECURITIES> 300000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 300000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9445758
<SHARES-COMMON-STOCK> 9444358
<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> 9450373
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 355476
<OTHER-INCOME> 0
<EXPENSES-NET> 56050
<NET-INVESTMENT-INCOME> 299426
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 299426
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 299426
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18555914
<NUMBER-OF-SHARES-REDEEMED> 17374707
<SHARES-REINVESTED> 237906
<NET-CHANGE-IN-ASSETS> 1419116
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 50111
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 56050
<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>
