SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 73 File No. 2-15530 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 74 File No. 811-901 [X]
DAVID L. BABSON GROWTH FUND, INC.
(Exact Name of Registrant as Specified in Charter)
2440 Pershing Road, G-15 Kansas City, Missouri 64108
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code (816) 471-5200
Larry D. Armel, President, DAVID L. BABSON GROWTH FUND, INC.
2440 Pershing Road, G-15, Kansas City, Missouri 64108
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: October 31, 1995
It is proposed that this filing become effective:
X on October 31, 1995 pursuant to paragraph (b) of Rule 485
Registrant has registered an indefinite number or amount of securities
under the Securities Act of 1933 pursuant to Rule 24f-2 of the
Investment Company Act of 1940, and will file its required Rule 24f-2
Notice for the Registrant's fiscal year ended June 30, 1996, by
August 30, 1995.
Please address inquiries and a carbon copy of all
and communications to: communications to:
John G. Dyer, Esq. Mark H. Plafker, Esq.
David L Babson Stradley, Ronon, Stevens & Young
Growth Fund, Inc. 2600 One Commerce Square
2440 Pershing Road, G-15 Philadelphia, PA 19103-7098
Kansas City, MO 64108 Telephone: (215) 564-8024
Telephone: (816) 471-5200
<PAGE>
DAVID L. BABSON GROWTH FUND, INC.
CROSS REFERENCE SHEET
Form N-1A Item Number Location in Prospectus
Item 1. Cover Page . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . Not Applicable
Item 3. Condensed Financial Information . . Per Share Capital and
Income Changes
Item 4. General Description of Registrant. . Investment Objective
and Portfolio
Management Policy
Item 5. Management of the Fund . . . . . . . Officers and Directors;
Management and
Investment Counsel
Item 6. Capital Stock and Other Securities . How to Purchase Shares;
How to Redeem Shares;
How Share Price is
Determined; General
Information and
History; How Share
Price is Determined
Dividends Distributions
and their Taxation
Item 7. Purchase of Securities . . . . . . . Cover Page; How to
being Offered Purchase Shares;
Shareholder Services
Item 8. Redemption or Repurchase . . . . . . How to Redeem Shares
Item 9. Pending Legal Proceedings . . . . . Not Applicable
<PAGE>
DAVID L. BABSON GROWTH FUND, INC.
CROSS REFERENCE SHEET (Continued)
Location in Statement
of Additional
Form N-1A Item Number Information
Item 10. Cover Page . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . Cover Page
Item 12. General Information and History . Investment Objectives and
Policies; Management and
Investment Counsel
Item 13. Investment Objectives and Policies.Investment Objectives
and Policies;
Investment Restrictions
Item 14. Management of the Fund . . . . . . Management and
Investment Counsel
Item 15. Control Persons and Principal . . Management and
Holders of Securities Investment Counsel;
Officers and Directors
Item 16. Investment Advisory and other . . Management and Investment
Services Counsel; Shareholder
Services (Prospectus)
Item 17. Brokerage Allocation . . . . . . . Portfolio Transactions
Item 18. Capital Stock and Other Securities.General Information;
Financial Statements
Item 19. Purchase, Redemption and Pricing . How Share Purchases
of Securities Being Offered are Handled; Redemption
of Shares
Financial Statements
Item 20. Tax Status . . . . . . . . . . . . Dividends, Distributions
and their Taxation (in
Prospectus)
Item 21. Underwriters . . . . . . . . . . . How the Fund's Shares
are Distributed
Item 22. Calculation of Yield Quotations . Performance Measures
of Money Market Fund
Item 23. Financial Statements . . . . . . . (Incorporated by
reference)
<PAGE>
PROSPECTUS
October 31, 1995
DAVID L. BABSON
GROWTH FUND, INC.
Managed and Distributed By:
JONES & BABSON, INC.
Three Crown Center
2440 Pershing Road, Suite G-15
Kansas City, Missouri 64108
Toll-Free 1-800-4-BABSON
(1-800-422-2766)
In the Kansas City area 471-5200
Investment Counsel:
DAVID L. BABSON & CO. INC.
Cambridge, Massachusetts
INVESTMENT OBJECTIVE
A no-load mutual fund invested in a diversified list of common
stocks representing companies selected for their long-term
possibilities of both capital and income growth.
The Fund was founded particularly for those investors who believe
in its fundamental investment policy, and who wish to receive,
through ownership of the Fund's shares, continuous portfolio
supervision by the staff of David L. Babson & Co. Inc. There is
no guarantee that the Fund's objective will be achieved. (For a
discussion of risk factors see page 6 of this prospectus.)
PURCHASE INFORMATION
Minimum Investment
Initial Purchase $ 500
Initial IRA and Uniform Transfers (Gifts)
to Minors Purchases $ 250
Subsequent Purchase:
By Mail $ 50
By Telephone or Wire $ 1,000
All Automatic Purchases $ 100
Shares are purchased and redeemed at net asset value. There are
no sales, redemption or Rule 12b-1 distribution charges. If you
need further information, please call the Fund at the telephone
numbers indicated.
ADDITIONAL INFORMATION
This prospectus should be read and retained for future reference.
It contains the information that you should know before you
invest. A "Statement of Additional Information" of the same date
as this prospectus has been filed with the Securities and
Exchange Commission and is incorporated by reference. Investors
desiring additional information about the Fund may obtain a copy
without charge by writing or calling the Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
Fund Expenses 3
Financial Highlights 4
Investment Objective and Portfolio Management Policy 5
Repurchase Agreements 5
Investment Restrictions 6
Performance Measures 6
How to Purchase Shares 7
Initial Investments 7
Investments Subsequent to Initial Investment 8
Telephone Investment Service 8
Automatic Monthly Investment Plan 8
How to Redeem Shares 9
Systematic Redemption Plan 10
How to Exchange Shares Between Babson Funds 10
How Share Price is Determined 11
Officers and Directors 11
Management and Investment Counsel 11
General Information and History 13
Dividends, Distributions and Their Taxation 13
Shareholder Services 14
Shareholder Inquiries 15
DAVID L. BABSON GROWTH FUND, INC.
FUND EXPENSES
Shareholder Transaction Expenses
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends
None
Deferred sales load None
Redemption fee None
Exchange fee None
Annual Fund Operation Expenses
(as a percentage of average net assets)
Management fees .85%
12b-1 fees None
Other expenses _
Total Fund operating expenses .85%
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period:
1 Year 3 Year 5 Year 10 Year
$9 $27 $47 $105
<PAGE>
The above information is provided in order to assist you in
understanding the various costs and expenses that a shareholder
of the Fund will bear directly or indirectly. The expenses set
forth above are for the fiscal year ended
June 30, 1995. The example should not be considered a
representation of past or future expenses. Actual expenses may be
greater or less than those shown.
FINANCIAL HIGHLIGHTS
The following financial highlights for each of the ten years in
the period ended June 30, 1995, have been derived from audited
financial statements of David L. Babson Growth Fund, Inc. Such
information for each of the five years in the period ended June
30, 1995 should be read in conjunction with the financial
statements of the Fund and the report of Arthur Andersen LLP,
independent public accountants, appearing in the June 30, 1995
annual report to shareholders which is incorporated by reference
in this prospectus. The information for each of the five years in
the period ended June 30, 1990 is not covered by the report of
Arthur Andersen LLP.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $11.78 $12.30 $11.70 $11.05 $11.18 $11.87 $11.66 $16.25 $13.62 $13.40
Income from investment
operations:
Net investment income 0.18 0.20 0.22 0.20 0.24 0.27 0.30 0.29 0.30 0.34
Net gains or losses on
securities (both
realized and
unrealized) 2.18 0.27 1.44 0.69 0.06 0.45 1.52 (1.40) 3.08 3.64
Total from Investment
Operations 2.36 0.47 1.66 0.89 0.30 0.72 1.82 (1.11) 3.38 3.98
Less distributions:
Dividends from net
investment income (0.18) (0.20) (0.20) (0.20) (0.25) (0.27) (0.31) (0.45) (0.15) (0.55)
Distributions from
capital gains (0.53) (0.79) (0.86) (0.04) (0.18) (1.14) (1.30) (0.03) (0.60) (3.21)
Total Distributions (0.71) (0.99) (1.06) (0.24) (0.43) (1.41) (1.61) (3.48) (0.75) (3.76)
Net asset value,
end of year $13.43 $11.78 $12.30 $11.70 $11.05 $11.18 $11.87 $11.66 $16.25 $13.62
Total Return 20% 4% 14% 8% 3% 6% 17% (6)% 26% 35%
Ratios/Supplemental
Data
Net assets, end of
year (in millions) $ 247 $ 228 $ 245 $ 232 $ 235 $ 259 $ 266 $ 237 $ 289 $ 254
Ratio of expenses to
average net assets 0.85% 0.86% 0.86% 0.86% 0.86% 0.86% 0.86% 0.81% 0.74% 0.75%
Ratio of net
investment income to
average net assets 1.42% 1.54% 1.54% 1.69% 2.26% 2.28% 2.53% 2.21% 2.12% 2.65%
Portfolio turnover
rate 17% 10% 13% 12% 22% 23% 33% 26% 14% 20%
</TABLE>
INVESTMENT OBJECTIVE AND
PORTFOLIO MANAGEMENT POLICY
Babson Growth Fund's objective is to provide above-average total
return to investors over longer periods of time through the
growth of both capital and dividend income. Current yield is
secondary to this long-term growth objective. The Fund generally
defines "above average total return" as total return that is
higher than return generated by traditional investment vehicles
other than equity products, including but not limited to,
passbook savings accounts, certificates of deposit, bonds, U.S.
government securities and traditional insurance products, such as
whole life policies and annuities.
The Fund believes the true value of a company's stock is
determined by its earning power, dividend paying ability, and in
many cases, by its assets. Consequently, it will seek its
objective by remaining substantially fully invested in the common
stocks of progressive, well-managed companies in growing
industries which have demonstrated both a consistent and an
above-average ability to increase their earnings and dividends
and which have favorable prospects of sustaining such growth.
The Fund also believes that the intrinsic worth and the
consequent value of the stock of most well-managed and successful
companies usually does not change rapidly, even though wide
variations in the price may occur. Normally, long-term positions
in stocks of the portfolio companies selected will be taken and
maintained while the company's record and prospects continue to
meet with management's approval. While the Fund does not have a
policy of seeking short-term trading profits, it is possible that
holdings may be increased when a stock is considered to be
undervalued and decreased when it is considered to be overvalued.
The Fund also reserves the freedom to invest in securities
convertible into common stocks, preferred stocks, high grade
bonds or other defensive issues when, in management's judgment,
economic and market conditions make such a course desirable and
indicate that the shareholders' interests are likely to be best
served. The Fund's investment objective and policy as described
in this section will not be changed without approval of a
majority of the Fund's outstanding shares.
The Fund also may invest in issues of the United States Treasury
and United States government agencies subject to repurchase
agreements. The use of repurchase agreements by the Fund involves
certain risks. For a discussion of these risks see "Risk Factors
Applicable to Repurchase Agreements."
The Fund cannot guarantee that these objectives will be achieved
because there are inherent risks in the ownership of any
investment. The value of the Fund's shares will reflect changes
in the market value of its investments, and dividends paid by the
Fund will vary with the income it receives from these
investments, but through careful management and diversification
it will seek to reduce risk and enhance the opportunities for
long-term growth of capital and income.
For the three years ended June 30, 1995 the total dollar amount
of brokerage commissions paid by the Fund and the annual
portfolio turnover rate were as follows:
Portfolio
Fiscal Brokerage Turnover
Year Commissions Rate
1993 $90,591 13%
1994 $90,513 10%
1995 $73,122 17%
The Fund does not intend to concentrate its investments in any
particular industry. Without the approval of shareholders, it
will not purchase a security if as a result of such purchase more
than 25% of its assets will be invested in a particular industry.
REPURCHASE AGREEMENTS
A repurchase agreement involves the sale of securities to the
Fund with the concurrent agreement by the seller to repurchase
the securities at the Fund's cost plus interest at an agreed rate
upon demand or within a specified time, thereby determining the
yield during the purchaser's period of ownership. The result is a
fixed rate of return insulated from market fluctuations during
such period. Under the Investment Company Act of 1940, repurchase
agreements are considered loans by the Fund.
The Fund will enter into such repurchase agreements only with
United States banks having assets in excess of $1 billion which
are members of the Federal Deposit Insurance Corporation, and
with certain securities dealers who meet the qualifications set
from time to time by the Board of Directors of the Fund. The term
to maturity of a repurchase agreement normally will be no longer
than a few days. Repurchase agreements maturing in more than
seven days and other illiquid securities will not exceed 10% of
the total assets of the Fund.
Risk Factors Applicable to
Repurchase Agreements
The use of repurchase agreements involves certain risks. For
example, if the seller of the agreement defaults on its
obligation to repurchase the underlying securities at a time when
the value of these securities has declined, the Fund may incur a
loss upon disposition of them. If the seller of the agreement
becomes insolvent and subject to liquidation or reorganization
under the Bankruptcy Code or other laws, disposition of the
underlying securities may be delayed pending court proceedings.
Finally, it is possible that the Fund may not be able to perfect
its interest in the underlying securities. While the Fund's
management acknowledges these risks, it is expected that they can
be controlled through stringent security selection criteria and
careful monitoring procedures.
INVESTMENT RESTRICTIONS
In addition to the policies set forth under the caption
"Investment Objective and Portfolio Management Policy," the Fund
is subject to certain other restrictions which may not be changed
without approval of the lesser of: (1) at least 67% of the voting
securities present at a meeting if the holders of more than 50%
of the outstanding securities of the Fund are present or
represented by proxy, or (2) more than 50% of the outstanding
voting securities of the Fund. Among these restrictions, the more
important ones are that the Fund will not purchase the securities
of any issuer if more than 5% of the Fund's total assets would be
invested in the securities of such issuer, or the Fund would hold
more than 10% of any class of securities of such issuer; the Fund
will not make any loan (the purchase of a security subject to a
repurchase agreement or the purchase of a portion of an issue of
publicly distributed debt securities is not considered the making
of a loan); and the Fund will not borrow or pledge its credit
under normal circumstances, except up to 10% of its total assets
(computed at the lower of fair market value or cost) for
temporary or emergency purposes, and not for the purpose of
leveraging its investments; and provided further that any
borrowings shall have asset coverage of at least 3 to 1. The Fund
will not buy securities while such borrowings are outstanding.
The full text of these restrictions are set forth in the
"Statement of Additional Information."
PERFORMANCE MEASURES
From time to time, the Fund may advertise its performance in
various ways, as summarized below. Further discussion of these
matters also appears in the "Statement of Additional
Information." A discussion of Fund performance is included in the
Fund's Annual Report to Shareholders which is available from the
Fund upon request at no charge.
Total Return
The Fund may advertise "average annual total return" over various
periods of time. Such total return figures show the average
percentage change in value of an investment in the Fund from the
beginning date of the measuring period to the end of the
measuring period. These figures reflect changes in the price of
the Fund's shares and assume that any income dividends and/or
capital gains distributions made by the Fund during the period
were reinvested in shares of the Fund. Figures will be given for
recent one-, five- and ten-year periods (if applicable), and may
be given for other periods as well (such as from commencement of
the Fund's operations, or on a year-by-year basis). When
considering "average" total return figures for periods longer
than one year, it is important to note that a Fund's annual total
return for any one year in the period might have been greater or
less than the average for the entire period.
Performance Comparisons
In advertisements or in reports to shareholders, the Fund may
compare its performance to that of other mutual funds with
similar investment objectives and to stock or other relevant
indices. For example, it may compare its performance to rankings
prepared by Lipper Analytical Services, Inc. (Lipper), a widely
recognized independent service which monitors the performance of
mutual funds. The Fund may compare its performance to the
Standard & Poor's 500 Stock Index (S&P 500), an index of
unmanaged groups of common stocks, the Dow Jones Industrial
Average, a recognized unmanaged index of common stocks of 30
industrial companies listed on the NYSE, or the Consumer Price
Index. The Fund may compare its performance to the
Shearson/Lehman Government/Corporate Index, an unmanaged index of
government and corporate bonds. Performance information,
rankings, ratings, published editorial comments and listings as
reported in national financial publications such as Kiplinger's
Personal Finance Magazine, Business Week, Morningstar Mutual
Funds, Investor's Business Daily, Institutional Investor, The
Wall Street Journal, Mutual Fund Forecaster, No-Load Investor,
Money, Forbes, Fortune and Barron's may also be used in comparing
performance of the Fund. Performance comparisons should not be
considered as representative of the future performance of any
Fund. Further information regarding the performance of the Fund
is contained in the "Statement of Additional Information."
Performance rankings, recommendations, published editorial
comments and listings reported in Money, Barron's, Kiplinger's
Personal Finance Magazine, Financial World, Forbes, U.S. News &
World Report, Business Week, The Wall Street Journal, Investors
Business Daily, USA Today, Fortune and Stangers's may also be
cited (if the Fund is listed in any such publication) or used for
comparison, as well as performance listings and rankings from Morningstar
Mutual Funds, Personal Finance, Income and Safety, The Mutual
Fund Letter, No-Load Fund Investor, United Mutual Fund Selector,
No-Load Fund Analyst, No- Load Fund X, Louis Rukeyser's Wall
Street newsletter, Donoghue's Money Letter, CDA Investment
Technologies, Inc., Wiesenberger Investment Companies Service,
and Donoghue's Mutual Fund Almanac.
HOW TO PURCHASE SHARES
Shares are purchased at net asset value (no sales charge) from
the Fund through its agent, Jones & Babson, Inc., Three Crown
Center, 2440 Pershing Road, Suite G-15, Kansas City, MO 64108.
For information call toll free 1-800-4-BABSON (1-800-422-2766),
or in the Kansas City area 471-5200. If an investor wishes to
engage the services of any other broker to purchase (or redeem)
shares of the Fund, a fee may be charged by such broker. The Fund
will not be responsible for the consequences of delays including
delays in the banking or Federal Reserve wire systems.
You do not pay a sales commission when you buy shares of the
Fund. Shares are purchased at the Fund's net asset value (price)
per share next effective after a purchase order and payment have
been received by the Fund. In the case of certain institutions
which have made satisfactory payment arrangements with the Fund,
orders may be processed at the net asset value per share next
effective after a purchase order has been received by the Fund.
The Fund reserves the right in its sole discretion to withdraw
all or any part of the offering made by this prospectus or to
reject purchase orders when, in the judgment of management, such
withdrawal or rejection is in the best interest of the Fund and
its shareholders. The Fund also reserves the right at any time to
waive or increase the minimum requirements applicable to initial
or subsequent investments with respect to any person or class of
persons, which include shareholders of the Fund's special
investment programs. The Fund reserves the right to refuse to
accept orders for fund shares unless accompanied by payment,
except when a responsible person has indemnified the Fund against
losses resulting from the failure of investors to make payment.
In the event that the Fund sustains a loss as the result of
failure by a purchaser to make payment, the Fund's underwriter,
Jones & Babson, Inc. will cover the loss.
INITIAL INVESTMENTS
Initial investments - By mail. You may open an account
and make an investment by completing and signing the application
which accompanies this prospectus. Make your check ($500 minimum
unless your purchase is pursuant to an IRA or the Uniform
Transfers (Gifts) to Minors Act in which case the minimum initial
purchase is $250) payable to UMB Bank, n.a. Mail your application
and check to:
David L. Babson Growth Fund, Inc.
Three Crown Center
2440 Pershing Road, Suite G-15
Kansas City, Missouri 64108
Initial investments - By wire. You may purchase shares
of the Fund by wiring funds ($1,000 minimum) through
the Federal Reserve Bank to the custodian, UMB Bank, n.a. Prior
to sending your money, you must call the Fund toll free
1-800-4-BABSON (1-800-422-2766), or in the Kansas City area
471-5200 and provide it with the identity of the registered
account owner, the registered address, the Social Security or
Taxpayer Identification Number of the registered owner, the
amount being wired, the name and telephone number of the wiring
bank and the person to be contacted in connection with the order.
You will then be provided a Fund account number, after which you
should instruct your bank to wire the specified amount, along
with the account number and the account registration to:
UMB Bank, n.a.
Kansas City, Missouri, ABA #101000695
For David L. Babson Growth Fund, Inc./
AC=987032-6264
OBI=(assigned Fund number and name in
which registered.)
A completed application must be sent to the Fund as soon as
possible so the necessary remaining information can be recorded
in your account. Payment of redemption proceeds will be delayed
until the completed application is received by the Fund.
INVESTMENTS SUBSEQUENT
TO INITIAL INVESTMENT
You may add to your Fund account at any time in amounts of $50 or
more if purchases are made by mail, or $1,000 or more if
purchases are made by wire or telephone. Automatic monthly
investments must be in amounts of $100 or more.
Checks should be mailed to the Fund at its address, but make them
payable to UMB Bank, n.a. Always identify your account number or
include the detachable reminder stub which accompanies each
confirmation.
Wire share purchases should include your account registration,
your account number and the Babson Fund in which you are
purchasing shares. It also is advisable to notify the Fund by
telephone that you have sent a wire purchase order to the bank.
TELEPHONE INVESTMENT SERVICE
To use the Telephone Investment Service, you must first establish
your Fund account and authorize telephone orders in the
application form, or, subsequently, on a special authorization
form provided upon request. If you elect the Telephone Investment
Service, you may purchase Fund shares by telephone and authorize
the Fund to draft your checking account for the cost of the
shares so purchased. You will receive the next available price
after the Fund has received your telephone call. Availability and
continuance of this privilege is subject to acceptance and
approval by the Fund and all participating banks. During periods
of increased market activity, you may have difficulty reaching
the Fund by telephone, in which case you should contact the Fund
by mail or telegraph. The Fund will not be responsible for the
consequences of delays including delays in the banking or Federal
Reserve wire systems.
The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, and if such
procedures are not followed, the Fund may be liable for losses
due to unauthorized or fraudulent instructions. Such procedures
may include, but are not limited to requiring personal
identification prior to acting upon instructions received by
telephone, providing written confirmations of such transactions,
and/or tape recording of telephone instructions.
The Fund reserves the right to initiate a charge for this service
and to terminate or modify any or all of the privileges in
connection with this service at any time upon 15 days written
notice to shareholders, and to terminate or modify the privileges
without prior notice in any circumstances where such termination
or modification is in the best interest of the Fund and its
investors.
AUTOMATIC MONTHLY INVESTMENT PLAN
You may elect to make monthly investments in a constant dollar
amount from your checking account ($100 minimum). The Fund will
draft your checking account on the same day each month in the
amount you authorize in your application, or, subsequently, on a
special authorization form provided upon request. Availability
and continuance of this privilege is subject to acceptance and
approval by the Fund and all participating banks. If the date
selected falls on a day upon which the Fund shares are not
priced, investment will be made on the first date thereafter upon
which Fund shares are priced. The Fund will not be responsible
for the consequences of delays including delays in the banking or
Federal Reserve wire systems.
The Fund reserves the right to initiate a charge for this service
and to terminate or modify any or all of the privileges in
connection with this service at any time upon 15 days written
notice to shareholders, and to terminate or modify the privileges
without prior notice in any circumstances where such termination
or modification is in the best interest of the Fund and its
investors.
HOW TO REDEEM SHARES
The Fund will redeem shares at the price (net asset value per
share) next computed after receipt of a redemption request in
"good order." (See "How Share Price is Determined.")
A written request for redemption, together with an endorsed share
certificate where a certificate has been issued, must be received
by the Fund in order to constitute a valid tender for redemption.
For authorization of redemptions by a corporation, it will also
be necessary to have an appropriate certified copy of resolutions
on file with the Fund before a redemption request will be
considered in "good order." In the case of certain institutions
which have made satisfactory redemption arrangements with the
Fund, redemption orders may be processed by facsimile or
telephone transmission at net asset value per share next
effective after receipt by the Fund. If an investor wishes to
engage the services of any other broker to redeem (or purchase)
shares of the Fund, a fee may be charged by such broker.
To be in "good order" the request must include the following:
(1) A written redemption request or stock assignment (stock
power) containing the genuine signature of each registered owner
exactly as the shares are registered, with clear identification
of the account by registered name(s) and account number and the
number of shares or the dollar amount to be redeemed;
(2) any outstanding stock certificates representing shares
to be redeemed;
(3) signature guarantees as required; and
(See Signature Guarantees.)
(4) any additional documentation which the Fund may deem
necessary to insure a genuine redemption.
Where additional documentation is normally required to support
redemptions as in the case of corporations, fiduciaries, and
others who hold shares in a representative or nominee capacity
such as certified copies of corporate resolutions, or
certificates of incumbency, or such other documentation as may be
required under the Uniform Commercial Code or other applicable
laws or regulations, it is the responsibility of the shareholder
to maintain such documentation on file and in a current status. A
failure to do so will delay the redemption. If you have questions
concerning redemption requirements, please write or telephone the
Fund well ahead of an anticipated redemption in order to avoid
any possible delay.
Requests which are subject to special conditions or which specify
an effective date other than as provided herein cannot be
accepted. All redemption requests must be transmitted to the Fund
at Three Crown Center, 2440 Pershing Road, Suite G-15, Kansas
City, Missouri 64108. The Fund will redeem shares at the price
(net asset value per share) next computed after receipt of a
redemption request in "good order." (See "How Share Price is
Determined.")
The Fund will endeavor to transmit redemption proceeds to the
proper party, as instructed, as soon as practicable after a
redemption request has been received in "good order" and
accepted, but in no event later than the fifth day thereafter.
Transmissions are made by mail unless an expedited method has
been authorized and specified in the redemption request. The Fund
will not be responsible for the consequences of delays including
delays in the banking or Federal Reserve wire systems.
Redemptions will not become effective until all documents in the
form required have been received. In the case of redemption
requests made within 15 days of the date of purchase, the Fund
will delay transmission of proceeds until such time as it is
certain that unconditional payment in federal funds has been
collected for the purchase of shares being redeemed or 15 days
from the date of purchase. You can avoid the possibility of delay
by paying for all of your purchases with a transfer of federal
funds.
Signature Guarantees are required in connection with all
redemptions by mail, or changes in share registration, except as
hereinafter provided. These requirements may be waived by the
Fund in certain instances where it appears reasonable to do so
and will not unduly affect the interests of other shareholders.
Signature(s) must be guaranteed by an "eligible Guarantor
institution" as defined under Rule 17Ad-15 under the Securities
Exchange Act of 1934. Eligible guarantor institutions include:
(1) national or state banks, savings associations, savings and
loan associations, trust companies, savings banks, industrial
loan companies and credit unions; (2) national securities
exchanges, registered securities associations and clearing
agencies; or (3) securities broker/dealers which are members of a
national securities exchange or clearing agency or which have a
minimum net capital of $100,000. A notarized signature will not
be sufficient for the request to be in proper form.
Signature guarantees will be waived for mail redemptions of
$10,000 or less, but they will be required if the checks are to
be payable to someone other than the registered owner(s), or are
to be mailed to an address different from the registered address
of the shareholder(s), or where there appears to be a pattern of
redemptions designed to circumvent the signature guarantee
requirement, or where the Fund has other reason to believe that
this requirement would be in the best interests of the Fund and
its shareholders.
The right of redemption may be suspended or the date of payment
postponed beyond the normal five-day period when the New York
Stock Exchange is closed or under emergency circumstances as
determined by the Securities and Exchange Commission.
Due to the high cost of maintaining smaller accounts, the Board
of Directors has authorized the Fund to close shareholder
accounts where their value falls below the current minimum
initial investment requirement at the time of initial purchase as
a result of redemptions and not as the result of market action,
and remains below this level for 60 days after each such
shareholder account is mailed a notice of: (1) the Fund's
intention to close the account, (2) the minimum account size
requirement, and (3) the date on which the account will be closed
if the minimum size requirement is not met.
SYSTEMATIC REDEMPTION PLAN
If you own shares in an open account valued at $10,000 or more,
and desire to make regular monthly or quarterly withdrawals
without the necessity and inconvenience of executing a separate
redemption request to initiate each withdrawal, you may enter
into a Systematic Withdrawal Plan by completing forms obtainable
from the Fund. For this service, the manager may charge you a fee
not to exceed $1.50 for each withdrawal. Currently the manager
assumes the additional expenses arising out of this type of plan,
but it reserves the right to initiate such a charge at any time
in the future when it deems it necessary. If such a charge is
imposed, participants will be provided 30 days notice.
Subject to a $50 minimum, you may withdraw each period a
specified dollar amount. Shares also may be redeemed at a rate
calculated to exhaust the account at the end of a specified
period of time.
Dividends and capital gains distributions must be reinvested in
additional shares. Under all withdrawal programs, liquidation of
shares in excess of dividends and distributions reinvested will
diminish and may exhaust your account, particularly during a
period of declining share values.
You may revoke or change your plan or redeem all of your
remaining shares at any time. Withdrawal payments will be
continued until the shares are exhausted or until the Fund or you
terminate the plan by written notice to the other.
HOW TO EXCHANGE SHARES
BETWEEN BABSON FUNDS
Shareholders may exchange their Fund shares, which have been held
in open account for 15 days or more, and for which good payment
has been received, for identically registered shares of any other
Fund in the Babson Fund Group which is legally registered for
sale in the state of residence of the investor, except Babson
Enterprise Fund, Inc., provided that the minimum amount exchanged
has a value of $1,000 or more and meets the minimum investment
requirement of the Fund or Portfolio into which it is exchanged.
Effective at the close of business on January 31, 1992, the
Directors of the Babson Enterprise Fund, Inc. took action to
limit the offering of that Fund's shares. Babson Enterprise Fund,
Inc. will not accept any new accounts, including IRAs and other
retirement plans, until further notice, nor will Babson
Enterprise Fund accept transfers from shareholders of other
Babson Funds, who were not shareholders of record of Babson
Enterprise Fund at the close of business on January 31, 1992.
Investors may want to consider purchasing shares in Babson
Enterprise Fund II, Inc. as an alternative.
To authorize the Telephone/Telegraph Exchange Privilege, all
registered owners must sign the appropriate section on the
original application, or the Fund must receive a special
authorization form, provided upon request. During periods of
increased market activity, you may have difficulty reaching the
Fund by telephone, in which case you should contact the Fund by
mail or telegraph. The Fund reserves the right to initiate a
charge for this service and to terminate or modify any or all of
the privileges in connection with this service at any time and
without prior notice under any circumstances where continuance of
these privileges would be detrimental to the Fund or its
shareholders such as an emergency, or where the volume of such
activity threatens the ability of the Fund to conduct business,
or under any other circumstances, upon 60 days written notice to
shareholders. The Fund will not be responsible for the
consequences of delays including delays in the banking or Federal
Reserve wire systems.
The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, and if such
procedures are not followed, the Fund may be liable for losses
due to unauthorized or fraudulent instructions. Such procedures
may include, but are not limited to requiring personal
identification prior to acting upon instructions received by
telephone, providing written confirmations of such transactions,
and/or tape recording of telephone instructions.
Exchanges by mail may be accomplished by a written request
properly signed by all registered owners identifying the account,
the number of shares or dollar amount to be redeemed for
exchange, and the Babson Fund into which the account is being
transferred.
If you wish to exchange part or all of your shares in the Fund
for shares of another Fund or Portfolio in the Babson Fund Group,
you should review the prospectus of the Fund to be purchased,
which can be obtained from Jones & Babson, Inc. Any such exchange
will be based on the respective net asset values of the shares
involved. Any exchange between Funds involves the sale of an
asset. Unless the shareholder account is tax-deferred, this is a
taxable event.
HOW SHARE PRICE IS DETERMINED
In order to determine the price at which new shares will be sold
and at which issued shares presented for redemption will be
liquidated, the net asset value per share is computed once daily,
Monday through Friday, at the specific time during the day that
the Board of Directors sets at least annually, except on days on
which changes in the value of portfolio securities will not
materially affect the net asset value, or days during which no
security is tendered for redemption and no order to purchase or
sell such security is received by the Fund, or customary
holidays. For a list of the holidays during which the Fund is not
open for business, see "How Share Price is Determined" in the
"Statement of Additional Information."
The price at which new shares of the Fund will be sold and at
which issued shares presented for redemption will be liquidated
is computed once daily at 4:00 P.M. (Eastern Time), except on
those days when the Fund is not open
for business.
The per share calculation is made by subtracting from the Fund's
total assets any liabilities and then dividing into this amount
the total outstanding shares as of the date of the calculation.
Each security listed on an Exchange is valued at its last sale
price on that Exchange on the date as of which assets are valued.
Where the security is listed on more than one Exchange, the Fund
will use the price of that Exchange which it generally considers
to be the principal Exchange on which the stock is traded.
Lacking sales, the security is valued at the mean between the
current closing bid and asked prices. An unlisted security for
which over-the-counter market quotations are readily available is
valued at the mean between the last current bid and asked prices.
When market quotations are not readily available, any security or
other asset is valued at its fair value as determined in good
faith by the Board of Directors.
OFFICERS AND DIRECTORS
The officers of the Fund manage its day-to-day operations. The
Fund's manager and its officers are subject to the supervision
and control of the Board of Directors. A list of the officers and
directors of the Fund and a brief statement of their present
positions and principal occupations during the past five years is
set forth in the "Statement of Additional Information."
MANAGEMENT AND INVESTMENT COUNSEL
Jones & Babson, Inc. was founded in 1960. It organized the Fund
in 1960, and acts as its manager and principal underwriter.
Pursuant to the current Management Agreement, Jones & Babson,
Inc. provides or pays the cost of all management, supervisory and
administrative services required in the normal operation of the
Fund. This includes investment management and supervision; fees
of the custodian, independent public accountants and legal
counsel; remuneration of officers, directors and other personnel;
rent; shareholder services, including maintenance of the
shareholder accounting system and transfer agency; and such other
items as are incidental to corporate administration.
Not considered normal operating expenses, and therefore payable
by the Fund, are taxes, interest, governmental charges and fees,
including registration of the Fund and its shares with the
Securities and Exchange Commission and the Securities Departments
of various States, brokerage costs, dues, and all extraordinary
costs and expenses including but not limited to legal and
accounting fees incurred in anticipation of or arising out of
litigation or administrative proceedings to which the Fund, its
officers or directors may be subject or a party thereto.
As a part of the Management Agreement, Jones & Babson, Inc.
employs at its own expense David L. Babson & Co. Inc. as its
investment counsel to assist in the investment advisory function.
David L. Babson & Co. Inc. is an investment counseling firm
founded in 1940. It serves a broad variety of individual,
corporate and other institutional clients by maintaining an
extensive research and analytical staff. It has an experienced
investment analysis and research staff which eliminates the need
for Jones & Babson, Inc. and the Fund to maintain an extensive
duplicate staff, with the consequent increase in the cost of
investment advisory service. The cost of the services of David L.
Babson & Co. Inc. is included in the fee of Jones & Babson, Inc.
The Management Agreement limits the liability of the manager and
its investment counsel, as well as their officers, directors and
personnel, to acts or omissions involving willful malfeasance,
bad faith, gross negligence, or reckless disregard of their
duties. David G. Kirk has been the portfolio manager for the
David L. Babson Growth Fund since 1985. He is a Chartered
Financial Analyst. He joined David L. Babson & Co. in 1974 and
has 28 years investment management experience.
As compensation for all the foregoing services, the Fund pays
Jones & Babson, Inc. a fee at the annual rate of 85/100 of one
percent (.85%) of the first $250 million of its average daily net
assets. This fee reduces to 70/100 of one percent (.70%) on net
assets in excess of $250 million.
The annual fee charged by Jones & Babson, Inc. is higher than the
fees of most other investment advisers whose charges cover only
investment advisory services with all remaining operational
expenses absorbed directly by the Fund. Yet, it compares
favorably with these other advisers when all expenses to Fund
shareholders are taken into account. The fee, from which Jones &
Babson, Inc. pays David L. Babson & Co. Inc. a fee of 30/100 of
1% (.30%) of the first $100 million, 25/100 of 1% (.25%) on the
next $150 million, and 20/100 (.20%) of 1% on assets above $250
million, is computed daily and paid semimonthly. The total
expenses of the Fund for the fiscal year ended June 30, 1995
amounted to 85/100 of one percent (.85%) of the average net
assets. The cost of the services of David L. Babson & Co. Inc. is
included in the fee of Jones & Babson, Inc.
Certain officers and directors of the Fund are also officers or
directors or both of other Babson Funds, Jones & Babson, Inc. or
David L. Babson & Co. Inc.
Jones & Babson, Inc. is a wholly-owned subsidiary of Business
Men's Assurance Company of America which is considered to be a
controlling person under the Investment Company Act of 1940.
Assicurazioni Generali S.p.A., an insurance organization founded
in 1831 based in Trieste, Italy, is considered to be a
controlling person and is the ultimate parent of Business Men's
Assurance Company of America. Mediobanca is a 5% owner of
Generali.
David L. Babson & Co. Inc. is a wholly-owned subsidiary of
Massachusetts Mutual Life Insurance Company headquartered in
Springfield, Massachusetts. Massachusetts Mutual Life Insurance
Company is an insurance organization founded in 1851 and is
considered to be a controlling person of David L. Babson & Co.
Inc., under the Investment Company Act of 1940.
The current Management Agreement between the Fund and Jones &
Babson, Inc., which includes the Investment Counsel Agreement
between Jones & Babson, Inc. and David L. Babson & Co. Inc., will
continue in effect until October 31, 1996, and will continue
automatically for successive annual periods ending each October
31 so long as such continuance is specifically approved at least
annually by the Board of Directors of the Fund or by the vote of
a majority of the outstanding voting securities of the Fund, and,
provided also that such continuance is approved by the vote of a
majority of the directors who are not parties to the Agreements
or interested persons of any such party at a meeting held in
person and called specifically for the purpose of evaluating and
voting on such approval. Both Agreements provide that either
party may terminate by giving the other 60 days written notice.
The Agreements terminate automatically if assigned by either
party.
GENERAL INFORMATION AND HISTORY
The Fund, originally incorporated in Delaware in 1959, was merged
into a Maryland corporation in 1978. The Fund has a present
authorized capitalization of 100,000,000 shares of $1 par value
common stock. All shares are of the same class with like rights
and privileges. Each full and fractional share, when issued and
outstanding, has: (1) equal voting rights with respect to matters
which affect the Fund, and (2) equal dividend, distribution and
redemption rights to the assets of the Fund. Shares when issued
are fully paid and non-assessable. The Fund will not issue any
senior securities. Shareholders do not have pre-emptive or
conversion rights.
Non-cumulative voting _ These shares have non-cumulative voting
rights, which means that the holders of more than 50% of the
shares voting for the election of directors can elect 100% of the
directors, if they choose to do so, and in such event, the
holders of the remaining less than 50% of
the shares voting will not be able to elect any directors.
The Maryland Statutes permit registered investment
companies, such as the Fund, to operate without an annual meeting
of shareholders under specified circumstances if an annual
meeting is not required by the Investment Company Act of 1940.
There are procedures whereby the shareholders may remove
directors. These procedures are described in the "Statement of
Additional Information" under the caption "Officers and
Directors." The Fund has adopted the appropriate provisions in
its By-Laws and may not, at its discretion, hold annual meetings
of shareholders for the following purposes unless required to do
so: (1) election of directors; (2) approval of any investment
advisory agreement; (3) ratification of the selection of
independent public accountants; and (4) approval of a
distribution plan. As a result, the Fund does not intend to hold
annual meetings.
The Fund may use the name "David L. Babson" in its name so long
as Jones & Babson, Inc. is continued as manager and David L.
Babson & Co. Inc. as its investment counsel. Complete details
with respect to the use of the name are set out in the Management
Agreement between the Fund and Jones & Babson, Inc.
This prospectus omits certain of the information contained in the
registration statement filed with the Securities and Exchange
Commission, Washington, D.C. These items may be inspected at the
offices of the Commission or obtained from the Commission upon
payment of the fee prescribed.
DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION
The Fund pays dividends from net investment income and capital
gains semiannually, usually in June and December. Dividend and
capital gains distributions will be reinvested automatically in
additional shares at the net asset value per share next computed
and effective at the close of business on the day after the
record date, unless the shareholder has elected on the original
application, or by written instructions filed with the Fund, to
have them paid in cash.
The Fund has qualified and intends to continue to qualify for
taxation as a "regulated investment company" under the Internal
Revenue Code so that the Fund will not be subject to federal
income tax to the extent that it distributes its income to its
shareholders. Dividends, either in cash or reinvested in shares,
paid by the Fund from net investment income will be taxable to
shareholders as ordinary income, and will generally qualify in
part for the 70% dividends-received deduction for corporations.
The portion of the dividends so qualified depends on the
aggregate taxable qualifying dividend income received by the Fund
from domestic (U.S.) sources. The Fund will send to shareholders
a statement each year advising the amount of the dividend income
which qualifies for such treatment.
Whether paid in cash or additional shares of the Fund, and
regardless of the length of time Fund shares have been owned by
the shareholder, distributions from long-term capital gains are
taxable to shareholders as such, but are not eligible for the
dividends-received deduction for corporations. Shareholders are
notified annually by the Fund as to the federal tax status of
dividends and distributions paid by the Fund. Such dividends and
distributions may also be subject to state and local taxes.
Exchange and redemption of Fund shares are taxable events for
federal income tax purposes. Shareholders may also be subject to
state and municipal taxes on such exchanges and redemptions. You
should consult your tax adviser with respect to the tax status of
distributions from the Fund in your state and locality.
The Fund intends to declare and pay dividends and capital gains
distributions so as to avoid imposition of the federal excise
tax. To do so, the Fund expects to distribute during each
calendar year an amount equal to: (1) 98% of its calendar year
ordinary income; (2) 98% of its capital gains net income (the
excess of short- and long-term capital gain over short- and
long-term capital loss) for the one-year period ending each
October 31; and (3) 100% of any undistributed ordinary or capital
gain net income from the prior calendar year. Dividends declared
in December will be deemed to have been paid by the Fund and
received by shareholders on the record date so long as the
dividends are actually paid before February 1 of the following
year.
To comply with IRS regulations, the Fund is required by federal
law to withhold 31% of reportable payments (which may include
dividends, capital gains distributions, and redemptions) paid to
shareholders who have not complied with IRS regulations. In order
to avoid this withholding requirement, shareholders must certify
on their Application, or on a separate form supplied by the Fund,
that their Social Security or Taxpayer Identification Number
provided is correct and that they are not currently subject to
backup withholding, or that they are exempt from backup
withholding.
The federal income tax status of all distributions will be
reported to shareholders each January as a part of the annual
statement of shareholder transactions. Shareholders not subject
to tax on their income will not be required to pay tax on amounts
distributed to them.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED HEREIN FOR GENERAL
INFORMATION ONLY. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN
TAX ADVISERS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF AN
INVESTMENT IN THE FUND.
SHAREHOLDER SERVICES
The Fund and its manager offer shareholders a broad variety of
services described throughout this prospectus. In addition, the
following services are available:
Automatic Monthly Investment _ You may elect to make monthly
investments in a constant dollar amount from your checking
account ($100 minimum). The Fund will draft your checking account
on the same day each month in the amount you authorize in your
application, or, subsequently, on a special authorization form
provided upon request.
Automatic Reinvestment _ Dividends and capital gains
distributions may be reinvested automatically, or shareholders
may elect to have dividends paid in cash and capital gains
reinvested, or to have both paid in cash.
Telephone Investments _ You may make investments of $1,000 or
more by telephone if you have authorized such investments in your
application, or, subsequently, on a special authorization form
provided upon request. See "Telephone Investment Service."
Automatic Exchange _ You may exchange shares from your account
($100 minimum) in any of the Babson Funds to an identically
registered account in any other fund in
the Babson Group except Babson Enterprise Fund, Inc. according to
your instructions. Monthly exchanges will be continued until all
shares have been exchanged or until you terminate the Automatic
Exchange authorization. A special authorization form will be
provided upon request.
Transfer of Ownership _ A shareholder may transfer shares to
another shareholder account. The requirements which apply to
redemptions apply to transfers. A transfer to a new account must
meet initial investment requirements.
Systematic Redemption Plan _ Shareholders who own shares in open
account valued at $10,000 or more may arrange to make regular
withdrawals without the necessity of executing a separate
redemption request to initiate each withdrawal.
Sub-Accounting _ Keogh and corporate tax qualified retirement
plans, as well as certain other investors who must maintain
separate participant accounting records, may meet these needs
through services provided by the Fund's manager, Jones & Babson,
Inc. Investment minimums may be met by accumulating the separate
accounts of the group. Although there is currently no charge for
sub-accounting, the Fund and its manager reserve the right to
make reasonable charges for this service.
Prototype Retirement Plans _ Jones & Babson, Inc. offers a
defined contribution prototype plan _ The Universal Retirement
Plan _ which is suitable for all who are self-employed, including
sole proprietors, partnerships, and corporations. The Universal
Prototype includes both money purchase pension and profit-sharing
plan options.
Individual Retirement Accounts _ Also available is an Individual
Retirement Account (IRA). The IRA uses the IRS model form of plan
and provides an excellent way to accumulate a retirement fund
which will earn tax-deferred dollars until withdrawn. An IRA may
also be used to defer taxes on certain distributions from
employer-sponsored retirement plans. You may contribute up to
$2,000 of compensation each year ($2,250 if a spousal IRA is
established), some or all of which may be deductible. Consult
your tax adviser concerning the amount of the tax deduction, if
any.
Simplified Employee Pensions (SEPs) _ The Jones & Babson IRA may
be used with IRS Form 5305-SEP to establish a SEP-IRA, to which
the self-employed individual may contribute up to 15% of net
earned income or $30,000, whichever is less. A SEP-IRA offers
the employer the ability to make the same level of deductible
contributions as a Profit-Sharing Plan with greater ease of
administration, but less flexibility in plan coverage of
employees.
SHAREHOLDER INQUIRIES
Telephone inquiries may be made toll free to the Fund,
1-800-4-BABSON (1-800-422-2766), or in the Kansas City area
471-5200.
Shareholders may address written inquiries to the Fund at:
David L. Babson Growth Fund, Inc.
Three Crown Center
2440 Pershing Road, Suite G-15
Kansas City, MO 64108
AUDITORS
ARTHUR ANDERSEN LLP
Kansas City, Missouri
LEGAL COUNSEL
STRADLEY, RONON, STEVENS & YOUNG
Philadelphia, Pennsylvania
JOHN G. DYER
Kansas City, Missouri
CUSTODIAN
UMB BANK, n.a.
Kansas City, Missouri
TRANSFER AGENT
JONES & BABSON, INC.
Kansas City, Missouri
<PAGE>
PART B
DAVID L. BABSON GROWTH FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
October 31, 1995
This Statement is not a prospectus but should be read in conjunction with the
Fund's current Prospectus dated October 31, 1995. To obtain the Prospectus
please call the Fund toll free 1-800-4-BABSON (1-800-422-2766), or in the
Kansas City area 471-5200.
TABLE OF CONTENTS
PAGE
Investment Objective and Policies
Portfolio Transactions
Investment Restrictions
Performance Measures
How the Fund's Shares are Distributed
How Share Purchases are Handled
Redemption of Shares
Signature Guarantees
Management and Investment Counsel
How Share Price is Determined
Officers and Directors
Custodian
Independent Public Accountants
Other Jones & Babson Funds
Financial Statements
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement the Fund's
investment objective and policies set forth in the
Prospectus.
All assets of the Fund will be invested in
marketable securities composed principally of
common stocks and securities convertible into
common stock. Necessary reserves will be held in
cash or high-quality short-term debt obligations
readily changeable to cash, such as treasury bills,
commercial paper or repurchase agreements. The
Fund retains the freedom to administer the
portfolio of the Fund accordingly when, in its
judgment, economic and market conditions make
such a course desirable. Normally, however, the
Fund will maintain at least 80% of the portfolio in
common stocks. There are no restrictions or
guidelines regarding the investment of Fund
assets in shares listed on an exchange or traded
over-the-counter.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for the Fund
are made by Jones & Babson, Inc. pursuant to
recommendations by David L. Babson & Co. Inc.
Officers of the Fund and Jones & Babson, Inc. are
generally responsible for implementing or
supervising these decisions, including allocation
of portfolio brokerage and principal business as
well as the negotiation of commissions and/or the
price of the securities. In instances where
securities are purchased on a commission basis,
the Fund will seek competitive and reasonable
commission rates based on circumstances of the
trade involved and to the extent that they do not
detract from the quality of the execution.
The Fund, in purchasing and selling portfolio
securities, will seek the best available combination
of execution and overall price (which shall
include the cost of the transaction) consistent with
the circumstances which exist at the time. The
Fund does not intend to solicit competitive bids on
each transaction.
The Fund believes it is in its best interest and
that of its shareholders to have a stable and
continuous relationship with a diverse group of
financially strong and technically qualified
broker-dealers who will provide quality executions
at competitive rates. Broker-dealers meeting these
qualifications also will be selected for their
demonstrated loyalty to the Fund, when acting on
its behalf, as well as for any research or other
services provided to the Fund. Substantially all of
the portfolio transactions are through brokerage
firms which are members of the New York Stock
Exchange because usually the most active market
in the size of the Fund's transactions and for the
types of securities predominant in the Fund's
portfolio is to be found there. When buying
securities in the over-the-counter market, the
Fund will select a broker who maintains a primary
market for the security unless it appears that a
better combination of price and execution may be
obtained elsewhere. The Fund normally will not
pay a higher commission rate to broker-dealers
providing benefits or services to it than it would
pay to broker-dealers who do not provide it such
benefits or services. However, the Fund reserves
the right to do so within the principles set out in
Section 28(e) of the Securities Act of 1934 when it
appears that this would be in the best interests of
the shareholders.
No commitment is made to any broker or dealer
with regard to placing of orders for the purchase
or sale of Fund portfolio securities, and no specific
formula is used in placing such business.
Allocation is reviewed regularly by both the Board
of Directors of the Fund and Jones & Babson, Inc.
Since the Fund does not market its shares
through intermediary brokers or dealers, it is not
the Fund's practice to allocate brokerage or
principal business on the basis of sales of its
shares which may be made through such firms.
However, it may place portfolio orders with
qualified broker-dealers who recommend the Fund
to other clients, or who act as agent in the
purchase of the Fund's shares for their clients.
Research services furnished by broker-dealers
may be useful to the Fund manager and its
investment counsel in serving other clients, as
well as the Fund. Conversely, the Fund may
benefit from research services obtained by the
manager or its investment counsel from the
placement of portfolio brokerage of other clients.
When it appears to be in the best interest of its
shareholders, the Fund may join with other clients
of the manager and its investment counsel in
acquiring or disposing of a portfolio holding.
Securities acquired or proceeds obtained will be
equitably distributed between the Fund and other
clients participating in the transaction. In some
instances, this investment procedure may affect
the price paid or received by the Fund or the size
of the position obtained by the Fund.
INVESTMENT RESTRICTIONS
In addition to the investment objective and
portfolio management policies set forth in the
Prospectus under the caption "Investment
Objective and Portfolio Management Policy," the
following restrictions also may not be changed
without approval of the "holders of a majority of
the outstanding shares" of the Fund.
The Fund will not: (1) purchase the securities of
any one issuer, except the United States
government, if immediately after and as a result of
such purchase (a) the value of the holdings of the
Fund in the securities of such issuer exceeds 5%
of the value of the Fund's total assets, or (b) the
Fund owns more than 10% of the outstanding
voting securities, or any other class of securities,
of such issuer; (2) engage in the purchase or sale
of real estate or commodities; (3) underwrite the
securities of other issuers; (4) make loans to any
of its officers, directors, or employees, or to its
manager, or general distributor, or officers or
directors thereof; (5) make any loan (the purchase
of a security subject to a repurchase agreement or
the purchase of a portion of an issue of publicly
distributed debt securities is not considered the
making of a loan); (6) invest in companies for the
purpose of exercising control of management; (7)
purchase securities on margin, or sell securities
short; (8) purchase shares of other investment
companies except in the open market at ordinary
broker's commission or pursuant to a plan of
merger or consolidation; (9) invest in the
aggregate more than 5% of the value of its gross
assets in the securities of issuers (other than
federal, state, territorial, or local governments, or
corporations, or authorities established thereby),
which, including predecessors, have not had at
least three years' continuous operations; (10)
except for transactions in its shares or other
securities through brokerage practices which are
considered normal and generally accepted under
the circumstances existing at the time, enter into
dealings with its officers or directors, its manager
or underwriter, or their officers or directors, or
any organization in which such persons have a
financial interest; (11) purchase or retain
securities of any company in which any Fund
officers or directors, or Fund manager, its partner,
officer, or director beneficially own more than 1/2
of 1% of said company's securities, if all such
persons owning more than 1/2 of 1% of such
company's securities, own in the aggregate more
than 5% of the outstanding securities of such
company; (12) borrow or pledge its credit under
normal circumstances, except up to 10% of its
gross assets (computed at the lower of fair market
value or cost) for temporary or emergency
purposes, and not for the purpose of leveraging its
investments, and provided further that any
borrowing in excess of 5% of the total assets of
the Fund shall have asset coverage of at least 3 to
1 (the Fund has never borrowed against its assets
and does not intend to do so); (13) make itself or
its assets liable for the indebtedness of others; or
(14) invest in securities which are assessable or
involve unlimited liability.
In addition to the fundamental investment
restrictions set out above, in order to comply with
the law or regulations of various States, the Fund
will not engage in the following practices: (1)
invest in securities which are not readily
marketable or in securities of foreign issuers
which are not listed on a recognized domestic or
foreign securities exchange; (2) write put or call
options; (3) invest in oil, gas and other mineral
leases or arbitrage transactions; (4) purchase or
sell real estate (including limited partnership
interests, but excluding readily marketable
interests in real estate investment trusts or readily
marketable securities of companies which invest
in real estate); or (5) purchase securities,
including Rule 144(a) securities of issuers which
the company is restricted from selling to the
public without registration under the Securities
Act of 1933.
Certain States also require that the Fund's
investments in warrants, valued at the lower of
cost or market, may not exceed 5% of the value of
the Fund's net assets. Included within that
amount, but not to exceed 2% of the value of the
Fund's net assets may be warrants which are not
listed on the New York or American Stock
Exchange. Warrants acquired by the Fund in
units or attached to securities may be deemed to
be without value for purposes of this limitation.
PERFORMANCE MEASURES
Total Return
The Fund's "average annual total return" figures
described and shown below are computed
according to a formula prescribed by the
Securities and Exchange Commission. The
formula can be expressed as follows:
P(1+T)n = ERV
Where: P = a hypothetical initial payment
of $1000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a
hypothetical $1000 payment
made at the beginning of the 1,
5, or 10 years (or other) periods
at the end of the 1,5, or 10
years (or other) periods (or
fractional portions thereof);
The table below shows the average total return
for the Fund for the specified periods.
For the one year 7/1/94-6/30/95 20.23%
For the five years 7/1/90-6/30/95 9.70%
For the ten years 7/1/85-6/30/95 12.13%
From commencement
of operation to 6/30/95* 8.91%
_________________________________________
* The Fund commenced operation on April 30, 1960.
HOW THE FUND'S SHARES
ARE DISTRIBUTED
Jones & Babson, Inc., as agent of the Fund,
agrees to supply its best efforts as sole distributor
of the Fund's shares and, at its own expense, pay
all sales and distribution expenses in connection
with their offering other than registration fees and
other government charges.
Jones & Babson, Inc. does not receive any fee or
other compensation under the distribution
agreement which continues in effect until
October 31, 1996, and which will continue
automatically for successive annual periods
ending each October 31, if continued at least
annually by the Fund's Board of Directors,
including a majority of those Directors who are
not parties to such agreements or interested
persons of any such party. It terminates
automatically if assigned by either party or upon
60 days written notice by either party to the other.
Jones & Babson, Inc., also acts as sole
distributor of the shares of D.L. Babson Bond
Trust, Babson Enterprise Fund, Inc., Babson
Enterprise Fund II, Inc., Babson Value Fund, Inc.,
D.L. Babson Money Market Fund, Inc., D.L.
Babson Tax-Free Income Fund, Inc., Shadow
Stock Fund, Inc., Babson-Stewart Ivory
International Fund, Inc., Scout Stock Fund, Inc.,
Scout Bond Fund, Inc., Scout Money Market
Fund, Inc., Scout Tax-Free Money Market Fund,
Inc., Scout Regional Fund, Inc., Scout WorldWide
Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund, Inc.
and Buffalo USA Global Fund, Inc.
HOW SHARE PURCHASES ARE HANDLED
Each order accepted will be fully invested in
whole and fractional shares, unless the purchase
of a certain number of whole shares is specified, at
the net asset value per share next effective after
the order is accepted by the Fund.
Each investment is confirmed by a year-to-date
statement which provides the details of the
immediate transaction, plus all prior transactions
in your account during the current year. This
includes the dollar amount invested, the number
of shares purchased or redeemed, the price per
share, and the aggregate shares owned. A
transcript of all activity in your account during the
previous year will be furnished each January. By
retaining each annual summary and the last year-
to-date statement, you have a complete detailed
history of your account which provides necessary
tax information. A duplicate copy of a past
annual statement is available from Jones &
Babson, Inc. at its cost, subject to a minimum
charge of $5 per account, per year requested.
Normally, the shares which you purchase are
held by the Fund in open account, thereby
relieving you of the responsibility of providing for
the safekeeping of a negotiable share certificate.
Should you have a special need for a certificate,
one will be issued on request for all or a portion of
the whole shares in your account. There is no
charge for the first certificate issued. A charge of
$3.50 will be made for any replacement
certificates issued. In order to protect the interests
of the other shareholders, share certificates will be
sent to those shareholders who request them only
after the Fund has determined that unconditional
payment for the shares represented by the
certificate has been received by its custodian,
UMB Bank, n.a.
If an order to purchase shares must be canceled
due to non-payment, the purchaser will be
responsible for any loss incurred by the Fund
arising out of such cancellation. To recover any
such loss, the Fund reserves the right to redeem
shares owned by any purchaser whose order is
canceled, and such purchaser may be prohibited or
restricted in the manner of placing further orders.
The Fund reserves the right in its sole discretion
to withdraw all or any part of the offering made by
the prospectus or to reject purchase orders when,
in the judgment of management, such withdrawal
or rejection is in the best interest of the Fund and
its shareholders. The Fund also reserves the right
at any time to waive or increase the minimum
requirements applicable to initial or subsequent
investments with respect to any person or class of
persons, which include shareholders of the Fund's
special investment programs.
REDEMPTION OF SHARES
The right of redemption may be suspended, or
the date of payment postponed beyond the normal
five-day period by the Fund's Board of Directors
under the following conditions authorized by the
Investment Company Act of 1940: (1) for any
period (a) during which the New York Stock
Exchange is closed, other than customary
weekend and holiday closing, or (b) during which
trading on the New York Stock Exchange is
restricted; (2) for any period during which an
emergency exists as a result of which (a) disposal
by the Fund of securities owned by it is not
reasonably practicable, or (b) it is not reasonably
practicable for the Fund to determine the fair
value of its net assets; or (3) for such other periods
as the Securities and Exchange Commission may
by order permit for the protection of the Fund's
shareholders.
SIGNATURE GUARANTEES
Signature guarantees normally reduce the
possibility of forgery and are required in
connection with each redemption method to
protect shareholders from loss. Signature
guarantees are required in connection with all
redemptions by mail or changes in share
registration, except as provided in the Prospectus.
Signature guarantees must appear together with
the signature(s) of the registered owner(s), on:
(1) a written request for redemption,
(2) a separate instrument of assignment,
which should specify the total number of
shares to be redeemed (this "stock power"
may be obtained from the Fund or from
most banks or stock brokers), or
(3) all stock certificates tendered for
redemption.
MANAGEMENT AND
INVESTMENT COUNSEL
As a part of the Management Agreement, Jones
& Babson, Inc. employs at its own expense
David L. Babson & Co. Inc. as its investment
counsel. David L. Babson & Co. Inc. was founded
in 1940 as a private investment research and
counseling organization. On June 30, 1995,
David L. Babson & Co. Inc. became a wholly-
owned subsidiary of Massachusetts Mutual Life
Insurance Company. David L. Babson & Co. Inc.
serves individual, corporate and other institutional
clients and participates with Jones & Babson in
the management of nine Babson no-load mutual
funds.
As compensation for its services the Fund pays
Jones & Babson, Inc. a fee at the annual rate of a
fee of 85/100 of 1% (.85%) of the first $250
million of its average daily net assets. This fee
reduces to 70/100 of 1% (.70%) on net assets in
excess of $250 million. The fee, from which
Jones & Babson, Inc. pays David L. Babson & Co.
Inc. a fee of 30/100 of 1% (.30%) of the first $100
million of average daily total net assets, 25/100 of
1% (.25%) of the next $150 million and 20/100 of
1% (.20%) on net assets in excess of $250 million,
is computed daily and paid semimonthly.
The aggregate management fees paid to Jones
& Babson, Inc. during the most recent fiscal year
ended June 30, 1995 from which Jones & Babson,
Inc. paid all the Fund's expenses except those
payable directly by the Fund, were $1,974,454.
The annual fee charged by Jones & Babson, Inc.
covers all normal operating costs of the Fund.
David L. Babson & Co. Inc., has an experienced
investment analysis and research staff which
eliminates the need for Jones & Babson, Inc. and
the Fund to maintain an extensive duplicate staff,
with the consequent increase in the cost of
investment advisory service. The cost of the
services of David L. Babson & Co. Inc. is
included in the services of Jones & Babson, Inc.
During the most recent fiscal year ended June 30,
1995, Jones & Babson, Inc., paid David L. Babson
& Co. Inc. fees amounting to $630,717.
HOW SHARE PRICE IS DETERMINED
The net asset value per share of the Fund
portfolio is computed once daily, Monday through
Friday, at the specific time during the day that the
Board of Directors of each Fund sets at least
annually, except on days on which changes in the
value of a Fund's portfolio securities will not
materially affect the net asset value, or days
during which no security is tendered for
redemption and no order to purchase or sell such
security is received by the Fund, or the following
holidays:
New Years Day January 1
Presidents' Holiday Third Monday
in February
Good Friday Friday before Easter
Memorial Day Last Monday in May
Independence Day July 4
Labor Day First Monday
in September
Thanksgiving Day Fourth Thursday
in November
Christmas Day December 25
OFFICERS AND DIRECTORS
The Fund is managed by Jones & Babson, Inc.
subject to the supervision and control of the Board
of Directors. The following table lists Officers
and Directors of the Fund. Unless noted
otherwise, the address of each Officer and
Director is Three Crown Center, 2440 Pershing
Road, Suite G-15, Kansas City, Missouri 64108.
Except as indicated, each has been an employee of
Jones & Babson, Inc. for more than five years.
* Larry D. Armel, President and Director.
President and Director, Jones & Babson, Inc.,
D.L. Babson Money Market Fund, Inc., D.L.
Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund II,
Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Babson-Stewart Ivory International
Fund, Inc., Scout Stock Fund, Inc., Scout Bond
Fund, Inc., Scout Money Market Fund, Inc., Scout
Tax-Free Money Market Fund, Inc., Scout
Regional Fund, Inc., Scout WorldWide Fund,
Inc., Buffalo Balanced Fund, Inc., Buffalo Equity
Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo
USA Global Fund, Inc.; President and Trustee,
D.L. Babson Bond Trust.
* Directors who are interested persons as that
term is defined in the Investment Company Act
of 1940, as amended.
Francis C. Rood, Director.
Retired, 6429 West 92nd Street, Overland Park,
Kansas 66212. Formerly, Group Vice President-
Administration of Hallmark Cards, Inc.; Director,
D.L. Babson Money Market Fund, Inc., D.L.
Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund II,
Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund, Inc.,
Buffalo USA Global Fund, Inc.; Trustee, D.L.
Babson Bond Trust.
William H. Russell, Director.
Financial consultant, 645 West 67th Street,
Kansas City, Missouri 64113, previously Vice
President, United Telecommunications, Inc.;
Director, D.L. Babson Money Market Fund, Inc.,
D.L. Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund II,
Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Babson-Stewart Ivory International
Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund, Inc.,
Buffalo USA Global Fund, Inc.; Trustee, D. L.
Babson Bond Trust.
H. David Rybolt, Director.
Consultant, HDR Associates, P.O. Box 2468,
Shawnee Mission, Kansas 66202; Director, D.L.
Babson Money Market Fund, Inc., D.L. Babson
Tax-Free Income Fund, Inc., Babson Enterprise
Fund, Inc., Babson Enterprise Fund II, Inc.,
Babson Value Fund, Inc., Shadow Stock Fund,
Inc., Buffalo Balanced Fund, Inc., Buffalo Equity
Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo
USA Global Fund, Inc.; Trustee, D.L. Babson
Bond Trust.
P. Bradley Adams, Vice President and
Treasurer.
Vice President and Treasurer, Jones & Babson,
Inc., D.L. Babson Money Market Fund, Inc., D.L.
Babson Tax-Free Income Fund, Inc., Babson En-
terprise Fund, Inc., Babson Enterprise Fund II,
Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Babson-Stewart Ivory International
Fund, Inc., D.L. Babson Bond Trust, Scout Stock
Fund, Inc., Scout Bond Fund, Inc., Scout Money
Market Fund, Inc., Scout Tax-Free Money Market
Fund, Inc., Scout Regional Fund, Inc., Scout
WorldWide Fund, Inc., Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High
Yield Fund, Inc., Buffalo USA Global Fund, Inc.
Michael A. Brummel, Vice President, Assistant
Secretary and Assistant Treasurer.
Vice President, Jones & Babson, Inc., D.L.
Babson Money Market Fund, Inc., D.L. Babson
Tax-Free Income Fund, Inc., Babson Enterprise
Fund, Inc., Babson Enterprise Fund II, Inc.,
Babson Value Fund, Inc., Shadow Stock Fund,
Inc., Babson-Stewart Ivory International Fund,
Inc., D.L. Babson Bond Trust, Scout Stock Fund,
Inc., Scout Bond Fund, Inc., Scout Money Market
Fund, Inc., Scout Tax-Free Money Market Fund,
Inc., Scout Regional Fund, Inc., Scout WorldWide
Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund, Inc.,
Buffalo USA Global Fund, Inc.
Martin A. Cramer, Vice President and
Secretary.
Vice President and Secretary, Jones & Babson,
Inc., D.L. Babson Money Market Fund, Inc., D.L.
Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund II,
Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Babson-Stewart Ivory International
Fund, Inc., D. L. Babson Bond Trust, Scout Stock
Fund, Inc., Scout Bond Fund, Inc., Scout Money
Market Fund, Inc., Scout Tax-Free Money Market
Fund, Inc., Scout Regional Fund, Inc., Scout
WorldWide Fund, Inc., Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High
Yield Fund, Inc., Buffalo USA Global Fund, Inc.
David G. Kirk, Vice President-Portfolio.
Executive Vice President and Director, David L.
Babson & Co. Inc., One Memorial Drive,
Cambridge, Massachusetts 02142. Vice
President, Babson Enterprise Fund, Inc., Babson
Enterprise Fund II, Inc., Babson Value Fund, Inc.
None of the officers or directors will be
remunerated by the Fund for their normal duties
and services. Their compensation and expenses
arising out of normal operations will be paid by
Jones & Babson, Inc. under the provisions of the
Management Agreement.
Messrs. Rood, Russell and Rybolt have no
financial interest in, nor are they affiliated with,
either Jones & Babson, Inc. or David L. Babson &
Co. Inc.
The Audit Committee of the Board of Directors
is composed of Messrs. Rood, Russell and Rybolt.
The Officers and Directors of the Fund as a
group own less than 1% of the Fund.
The Fund will not hold annual meetings except
as required by the Investment Company Act of
1940 and other applicable laws. The Fund is a
Maryland corporation. Under Maryland law, a
special meeting of stockholders of the Fund must
be held if the Fund receives the written request for
a meeting from the stockholders entitled to cast at
least 25 percent of all the votes entitled to be cast
at the meeting. The Fund has undertaken that its
Directors will call a meeting of stockholders if
such a meeting is requested in writing by the
holders of not less than 10% of the outstanding
shares of the Fund. To the extent required by the
undertaking, the Fund will assist shareholder
communications in such matters.
CUSTODIAN
The Fund's assets are held for safekeeping by an
independent custodian, UMB Bank, n.a. This
means the bank, rather than the Fund, has
possession of the Fund's cash and securities. The
custodian bank is not responsible for the Fund's
investment management or administration. But,
as directed by the Fund's officers, it delivers cash
to those who have sold securities to the Fund in
return for such securities, and to those who have
purchased portfolio securities from the Fund, it
delivers such securities in return for their cash
purchase price. It also collects income directly
from issuers of securities owned by the Fund and
holds this for payment to shareholders after
deduction of the Fund's expenses. The custodian
is compensated for its services by the manager.
There is no charge to the Fund.
INDEPENDENT PUBLIC ACCOUNTANTS
The Fund's financial statements are examined
annually by independent public accountants ap-
proved by the directors each year, and in years in
which an annual meeting is held the directors may
submit their selection of independent auditors to
the shareholders for ratification. Arthur Andersen
LLP, P.O. Box 13406, Kansas City, Missouri
64199, is the Fund's present independent public
accountant.
Reports to shareholders will be published at
least semiannually.
OTHER JONES & BABSON FUNDS
The Fund is one of nine no-load funds
comprising the Babson Mutual Fund Group
managed by Jones & Babson, Inc. in association
with its investment counsel, David L. Babson &
Co. Inc. The other funds are:
EQUITY FUNDS
BABSON ENTERPRISE FUND, INC. was
organized in 1983 with the objective of long-
term growth of capital by investing in a
diversified portfolio of common stocks of
smaller, faster-growing companies with market
capital of $15 million to $300 million at the
time of purchase. This Fund is intended to be
an investment vehicle for that part of an
investor's capital which can appropriately be
exposed to above-average risk in anticipation of
greater rewards. This Fund is currently closed
to new shareholders.
BABSON ENTERPRISE FUND II, INC. was
organized in 1991 with the objective of long-
term growth of capital by investing in a
diversified portfolio of common stocks of
smaller, faster-growing companies which at the
time of purchase are considered by the
Investment Adviser to be realistically valued in
the smaller company sector of the market. This
Fund is intended to be an investment vehicle for
that part of an investor's capital which can
appropriately be exposed to above-average risk
in anticipation of greater rewards.
BABSON VALUE FUND, INC. was
organized in 1984 with the objective of long-
term growth of capital and income by investing
in a diversified portfolio of common stocks
which are considered to be undervalued in
relation to earnings, dividends and/or assets.
SHADOW STOCK FUND, INC. was
organized in 1987 with the objective of long-
term growth of capital that can be exposed to
above-average risk in anticipation of greater-
than-average rewards. The Fund expects to
reach its objective by investing in small
company stocks called "Shadow Stocks," i.e.,
stocks that combine the characteristics of "small
stocks" (as ranked by market capitalization) and
"neglected stocks" (least held by institutions and
least covered by analysts).
BABSON-STEWART IVORY INTERNA-
TIONAL FUND, INC. was organized in 1987
with the objective of seeking a favorable total
return (from market appreciation and income)
by investing primarily in a diversified portfolio
of equity securities (common stocks and
securities convertible into common stocks) of
established companies whose primary business
is carried on outside the United States.
FIXED INCOME FUNDS
D.L. BABSON BOND TRUST was organized
in 1944, and has been managed by Jones &
Babson, Inc. since 1972, with the objective of a
high level of current income and reasonable
stability of principal. It offers two portfolios -
Portfolio L and Portfolio S.
D. L. BABSON MONEY MARKET FUND,
INC. was organized in 1979 to provide
investors the opportunity to manage their
money over the short term by investing in high-
quality short-term debt instruments for the
purpose of maximizing income to the extent
consistent with safety of principal and
maintenance of liquidity. It offers two
portfolios - Prime and Federal. Money market
funds are neither insured nor guaranteed by the
U.S. Government and there is no assurance that
the funds will maintain a stable net asset value.
D. L. BABSON TAX-FREE INCOME
FUND, INC. was organized in 1979 to provide
shareholders the highest level of regular income
exempt from federal income taxes consistent
with investing in quality municipal securities.
It offers three separate high-quality portfolios
(including a money market portfolio) which
vary as to average length of maturity. Income
from the Tax-Free Money Market portfolio may
be subject to state and local taxes, as well as the
Alternative Minimum Tax.
A prospectus for any of the Funds may be
obtained from Jones & Babson, Inc., Three Crown
Center, 2440 Pershing Road, Suite G-15, Kansas
City, Missouri 64108.
Jones & Babson, Inc. also sponsors and
manages six mutual funds which especially seek
to provide services to customers of affiliate banks
of UMB Financial Corporation. They are Scout
Stock Fund, Inc., Scout Bond Fund, Inc., Scout
Money Market Fund, Inc., Scout Tax-Free Money
Market Fund, Inc., Scout Regional Fund, Inc. and
Scout WorldWide Fund, Inc.
Jones & Babson, Inc. also sponsors and
manages the Buffalo Group of Mutual Funds.
They are: Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund, Inc.
and Buffalo USA Global Fund, Inc.
FINANCIAL STATEMENTS
The audited financial statements of the Fund
which are contained in the June 30, 1995 Annual
Report to Shareholders, are incorporated herein by
reference.
<PAGE>
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
Herewith are all financial statements and exhibits filed as
a part of this registration statement:
(a) Financial Statements:
Included in Part A - Prospectus:
Per Share Capital and Income Changes
Included in Part B - Statement of Additional Information:
The audited financial statements contained in the
most recent Annual Report to Shareholders of David L.
Babson Growth Fund, Inc., are incorporated by
reference into Part B. of this Registration
Statement.
Included in Part C - Other Information:
Consents of Independent Public Accountants
Arthur Andersen & Co.
(b) *(1) Registrant's Articles of Incorporation.
*(2) Registrant's Bylaws.
(3) Not applicable, because there is no voting
trust agreement.
*(4) Specimen copy of each security to be issued by
the registrant.
*(5) (a) Form of Management Agreement between
Jones & Babson, Inc. and the Registrant.
(b) Form of Investment Counsel Agreement
between Jones & Babson, Inc. and David L.
Babson & Co. Inc.
*(6) Form of principal Underwriting Agreement
between Jones & Babson, Inc. and the
Registrant.
(7) Not applicable, because there are no pension,
bonus or other agreements for the benefit of
directors and officers.
*(8) Form of Custodian Agreement between Registrant
and United Missouri Bank of Kansas City, N. A.
(9) There are no other material contracts not made
in the ordinary course of business between the
Registrant and others.
(10) Opinion and consent of counsel as to the
legality of the registrant's securities being
registered. (To be supplied annually pursuant
to Rule 24f-2 of the Investment Company Act of
1940.)
*(11) The consent of Arthur Andersen & Co.,
Independent Public Accountants.
(12) Not applicable.
*(13) Letter from contributors of initial capital to
the Registrant that purchase was made for
investment purposes without any present
intention of redeeming or selling.
*(14) Copies of the model plan used in the establishment
of any retirement plan in conjunction with which
Registrant offers its securities.
(15) Not applicable.
*(16) Schedule for computation of performance
quotations.
*(17) Copies of Powers of Attorney pursuant to Rule
402(c).
*Previously filed and incorporated herein by reference.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL OF THE
REGISTRANT.
NONE
Item 26. NUMBER OF HOLDERS OF SECURITIES.
The number of record holders of each class of securities of
the Registrant as of October 20, 1995, is as follows:
(1) (2)
Title of class Number of Record Holders
Common Stock $1.00 par value 7,794
Item 27. INDEMNIFICATION.
Under the terms of the Maryland General Corporation Law and
the company's By-laws, the company shall indemnify any
person who was or is a director, officer, or employee of the
company to the maximum extent permitted by the Maryland
General Corporation Law; provided however, that any such
indemnification (unless ordered by a court) shall be made by
the company only as authorized in the specific case upon a
determination that indemnification of such persons is proper
in the circumstances. Such determination shall be made
(i) by the Board of Directors by a majority vote of a
quorum which consists of the directors who are neither
"interested persons" of the company as defined in
Section 2(a)(19) of the 1940 Act, nor parties to the
proceedings, or
(ii) if the required quorum is not obtainable or if a quorum
of such directors so directs, by independent legal
counsel in a written opinion.
No indemnification will be provided by the company to any
director or officer of the company for any liability to the
company or shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of duty.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.
The principal business of Jones & Babson, Inc. is the
management of the Babson family of mutual funds. It also
has expertise in the tax and pension plan field. It
supervises a number of prototype and profit-sharing plan
programs sponsored by various organizations eligible to be
prototype plan sponsors.
The principal business of David L. Babson & Co., Inc. is to
provide investment counsel and advice to a wide variety of
clients. It supervises assets in excess of $3,000,000,000.
Item 29. PRINCIPAL UNDERWRITERS.
(a) Jones & Babson, Inc., the only principal underwriter of
the Registrant, also acts as principal underwriter for
the David L. Babson Growth Fund, Inc., Babson Value Fund,
Inc., Babson Enterprise Fund, Inc., D.L. Babson Money Market
Fund, Inc., D.L. Babson Tax-Free Income Fund, Inc., D.L.
Babson Bond Trust, Scout Stock Fund, Inc., Scout Bond Fund, Inc.,
Shadow Stock Fund, Inc., Scout Money Market Fund, Inc., Scout
Tax-Free Money Market Fund, Inc., Scout Regional Fund, Inc.,
Scout WorldWide Fund, Inc., Buffalo Balanced Fund, Inc.,
Buffalo Equity Fund, Inc., Buffalo USA Global Fund, Inc., and
Buffalo High Yield Fund, Inc.
(b) Herewith is the information required by the following
table with respect to each director, officer or partner
of the only underwriter named in answer to Item 21 of
Part B:
Name and Principal Position and Offices Positions and Offices
_Business Address_ __with Underwriter__ ___with Registrant___
Stephen S. Soden Chairman and Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Larry D. Armel President and Director President and
Three Crown Center Director
2440 Pershing Road
Kansas City, MO 64108
Giorgio Balzer Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
J. William Sayler Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Edward S. Ritter Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Robert N. Sawyer Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Vernon W. Voorhees Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
P. Bradley Adams Vice President Vice President
Three Crown Center and Treasurer and Treasurer
2440 Pershing Road, G-15
Kanasas City, Missouri 64108
Michael A Brummel Vice President Vice President
Three Crown Center
2440 Pershing Road, G-15
Kanasas City, Missouri 64108
Martin A. Cramer Vice President Vice President
Three Crown Center and Secretary and Secretary
2440 Pershing Road, G-15
Kanasas City, Missouri 64108
(c) The principal underwriter does not receive any
remuneration or compansation for the duties or
services rendered to the Registrant pursuant to
the principal underwriting Agreement.
Item 30. LOCATION OF ACCOUNTS AND RECORDS.
Each account, book or otherdocument required to be
maintained by Section 31(a) of the 1940 Act and the Rules
(17 CFR 270.31a-1 to 31a-3) promulgated thereunder is in the
physical possession of Jones & Babson, Inc., at Three Crown
Center, 2440 Pershing Road, G-15, Kansas City, Missouri
64108.
Item 31. MANAGEMENT SERVICES.
All management services are covered in the management
agreement between the Registrant and Jones & Babson, Inc.,
which are discussed in Parts A and B.
Item 32. DISTRIBUTION EXPENSES.
Not applicable.
Item 33. UNDERTAKINGS.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amendment to
its registration statement to be signed on its behalf by the undersigned,
thereunto authorized, in the City of Kansas City, and State of Missouri on the
26th day of October, 1995.
DAVID L. BABSON GROWTH FUND, INC.
(Registrant)
By Larry D. Armel
(Larry D. Armel, President)
Pursuant to the requirements of the Securities Act of 1933, this
Post-effective Amendment #73 to the Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.
Larry D. Armel President, Principal October 26, 1995
Larry D. Armel Executive Officer, and Director
H. David Rybolt Director October 26, 1995
H. David Rybolt*
William H. Russell Director October 26, 1995
William H. Russell*
Francis C. Rood Director October 26, 1995
Francis C. Rood*
P. Bradley Adams Treasurer and Principal October 26, 1995
P. Bradley Adams Financial and Accounting Officer
*Signed pursuant to Power of Attorney
By Larry D. Armel
Attorney-in Fact
REPRESENTATIONS OF COUNSEL
I assisted in the preparation of this Post Effective Amendment to the Fund's
Registration Statement filed under the Securities Act of 1933 and the
Amendment to the Fund's Registration Statement filed under the Investment
Company Act of 1940. Based on my review it is my opinion that this amendment
does not contain disclosures which would render it ineligible to become
effective pursuant to paragraph (b) of Rule 485 under the Securities Act of
1933.
John G. Dyer Attorney October 26, 1995
John G. Dyer
Exhibit (11)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our report dated August 4, 1995, included in the David L.
Babson Growth Fund, Inc.'s Annual Report for the year ended June 30, 1995
(and all references to our Firm) included in or made a part of this
Post-effective Amendment No. 73 to the Registration Statement
File No. 2-79132 under the Securities Act of 1933 and Amendment No. 74
to the Registration Statement File No. 811-3558 under the Investment Company
Act of 1940 on Form N-1A.
Arthur Andersen LLP
Kansas City, Missouri,
October 25, 1995
