BABSON
Growth
FUND
Annual Report
June 30, 1996
JONES & BABSON
MUTUAL FUNDS
MESSAGE
To Our Shareholders
Babson Growth Fund has fully participated in the market's sharp rise
during the twelve months ended June 30, 1996 and has increased by 23.0%
on a total return (price change and reinvested distributions) basis in
this time period. These results are ahead of the 22.2% returns for the
average growth mutual fund (702 total) as measured by Lipper Analytical
Services. Investment returns in Babson Growth Fund were achieved with a
risk-averse broadly diversified portfolio of large, established, high
quality growth companies.
Investment Results Total Return
Periods Ended 6/30/96
3 mos. 6 mos. 12 mos.
BABSON GROWTH FUND 4.9% 9.5% 23.0%
Lipper Growth Funds Average
(702 funds) 4.4% 10.1% 22.2%
S&P 500 Index* 4.5% 10.1% 25.9%
*unmanaged
During the latest fiscal year the Fund paid ordinary income dividends of
$.13 per share and realized capital gains of $1.91 per share. At quarter-
end the net asset value per share was $14.42. For our corporate
shareholders, 100% of the ordinary income distributions qualify for the
corporate dividends received deduction.
We continue to search for large, well-capitalized, high quality
companies that are experiencing an acceleration in their growth rates
from current levels. In the first six months of 1996 we identified
several such investment opportunities: ADVANTA Corp. (credit card
marketer and lender), Cardinal Health, Inc. (drug distributor), Hewlett-
Packard Co. (personal computers, peripherals, test and measurement
equipment), Intel Corp. (semiconductors), KLA Instruments Corp.
(semiconductor capital equipment), McDonnell Douglas Corp. (commercial
aerospace and defense contractor), Monsanto Co. (agriculture,
biotechnology, pharmaceuticals and specialty chemicals), NationsBank
Corp. (banking company based in the southeastern U.S.), Oakwood Homes
Corp. (manufactured housing), Pfizer, Inc.(diversified pharmaceuticals),
Praxair Inc. (industrial gases), and Vons Companies, Inc. (Southern
California grocery retailer). Offsetting these new investments were the
sales of the following positions in the portfolio: Advanced Micro
Devices, Air Products & Chemicals, Banc One, Heilig-Meyers, May Dept.
Stores, Pall, Reader's Digest, Read-Rite, Sigma-Aldrich, Sundstrand,
Texas Instruments and United Healthcare. These investments were all in
large, high quality companies but were experiencing a deceleration in
their rate of earnings growth for one reason or another.
We appreciate your continued interest in Babson Growth Fund.
Sincerely,
/s/Larry D. Armel
Larry D. Armel
President
ECONOMIC AND PORTFOLIO REVIEW
Babson Growth Fund is a no-load mutual fund invested in a diversified
list of common stocks selected for their long-term possibilities of
both capital and income growth. It was founded particularly for those
investors who believe in the Fund's 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.
As summer begins, the U.S. economy is doing quite well. Leaving the
doldrums of the winter months behind, business activity has accelerated
and the economy is now growing at, or above, a 4% real rate. This is
evidenced by strong employment growth in recent months and real wages
and salaries increasing at a 2.5% to 3% rate. The latter bodes well for
consumer spending continuing on an upward path. The fact that
inventories are lean and need to be replenished also argues that the
economy will grow at a rate above its long-term, non-inflationary level
of 2% to 2.5% for at least the near term. As the year progresses, the
economy's momentum should decelerate in response to the sharp sell off
in the bond market and attendant rise in yields.
Inflation remains subdued, but it is no longer on a downward path. Unit
labor costs have begun to move up and with the country at full
employment for over a year, mounting wage pressures should not be a
surprise. However, wage inflation is not expected to accelerate at an
alarming pace. Global competition, easier access to cheap labor in other
parts of the world, and progress in controlling the costs of health
benefits should mean that wage inflation only increases at a gradual
rate.
The stock market continued its advance in the first half of 1996, with
the Standard & Poor's 500 Index increasing 10% on a total return basis.
Technology stocks, including hardware, software and service companies,
led the market in the first six months of the year, following a dramatic
selloff in this group in the latter part of 1995. Retailers are also
performing well this year after a difficult consumer environment in
1995. Since the end of the second quarter, we have witnessed an
increased amount of volatility in the equity market with a meaningful
correction in the more speculative NASDAQ universe of securities.
After a solid start to the year, consumer durables and financial stocks
both experienced a significant loss of momentum; the quick rise in
intermediate and long-term interest rates is the obvious culprit.
Concerns over credit quality, the rise in credit card and mortgage delin-
quencies and an upturn in personal bankruptcies have affected both of
these sectors and may continue to do so for the balance of the year.
Healthcare stocks in general have underperformed in 1996 following a
banner year in 1995. The nagging concern about this sector is the
psychological shift after the presidential election. Regardless of the
election outcome the looming "bankruptcy" of the Medicare system by 2001
is a reality that must be dealt with, possibly meaning a slowing in the
rate of healthcare spending by the federal government.
Last year was a record year for money coming into mutual funds, with
more than $128 billion flowing into equity mutual funds in calendar year
1995. In 1996 this pace of cash flows accelerated even further, with
equity mutual funds taking in $138 billion in the first 6 months of 1996
alone. To put this into perspective, mutual fund sales in just the first
two months of 1996 ($51 billion) exceeded the total amount that flowed
into corporate and public pension funds combined for any full year in
history.
At the same time, the amount of stock available for investment has been
shrinking. New stock issues in the active initial public offerings
market added to stock supplies in the years 1991 through 1994, but the
high level of company stock buybacks and merger activity in 1995-1996
has resulted in a net decline in the stock supply since 1994. As classic
economic theory would predict, when you have rising demand for a product
combined with a decline in supply, higher prices are the end result.
Surging growth in corporate earnings has also led to rising stock prices
over the past decade. Increased capital spending and aggressive
restructuring by corporate America have made U.S. companies more
profitable and competitive than they have been in the past 30 years. We
see this rate of earnings growth slowing through 1996 as the overall
economy slows.
Lower interest rates and low inflation have been and will continue to be
important factors in preserving the now 14-year old bull market for U.S.
stocks. Long-term interest rates have dropped by 50% since their highs
in the early eighties.
A prolonged period of low inflation and low interest rates will be a
very favorable environment for U.S. equity investors. Lower rates mean
cheaper costs of capital for U.S. companies. A cheaper cost of capital
allows for continued capital spending outlays, leading to higher levels
of corporate earnings power in the future.
Despite the run-up in the stock market in recent years, stocks are still
trading at reasonable valuation levels today relative to earnings.
Market psychology, however, plays an important role in the short term
and can move markets wildly to extremes both up and down.
David L. Babson & Co. Inc.
The Fund's Ten Largest Holdings
<TABLE>
<CAPTION>
OWNED BY PERCENT
1996 1995 THE FUND MARKET OF S&P
RANK RANK COMPANY SINCE VALUE PORTFOLIO RANKING
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1 - Bristol-Myers Squibb Co. 1995 $9,450,000 3.37% A
2 9 American Home Products Corp. 1990 9,018,750 3.21% A+
3 3 Johnson & Johnson 1974 8,910,000 3.18% A+
4 8 Philip Morris Cos., Inc. 1989 8,840,000 3.15% A+
5 39 First Data Corp. 1995 8,294,616 2.96% NR
6 18 General Electric Co. 1990 7,785,000 2.77% A+
7 4 General Re Corp. 1990 7,612,500 2.71% A
8 12 Anheuser-Busch Cos., Inc. 1981 7,500,000 2.67% A
9 6 Automatic Data Processing, Inc. 1990 7,145,625 2.55% A+
10 25 PepsiCo, Inc. 1991 7,075,000 2.52% A+
</TABLE>
David L. Babson Growth Fund versus S&P 500 and Value Line
GRAPH
Babson Growth Fund's average annual compounded total returns for
one, five and ten year periods ended June 30, 1996 were
22.99%, 13.65% and 11.08%, respectivley.
Performance data contained in this report is for past periods only.
Past performance is not predictive of future performance.
Investment return and share value will fluctuate,
and past redemption value may be more or less than original cost.
HISTORICAL RECORD
Progress of the Fund since it was founded in 1960.
<TABLE>
<CAPTION>
NET ASSET
NET ASSET VALUE PER
*LONG-TERM *SHORT-TERM VALUE PER SHARE WITH
FISCAL NET *ORDINARY CAPITAL CAPITAL SHARE WITH DIVIDENDS AND
YEAR TOTAL ASSET INCOME GAINS GAINS CAPITAL GAINS CAPITAL GAINS
ENDED NET VALUE DIVIDENDS DISTRIBUTIONS DISTRIBUTIONS DISTIBUTIONSS DISTRIBUTIONS
JUNE 30 ASSETS PER SHARE PER SHARE PER SHARE PER SHARE REINVESTED REVINVESED
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1960* $ 128,066 $ 4.87 $ 0 $ 0 $ 0 $ 4.87 $ 4.87
1965 5,176,041 6.36 0.100 0.07 0 6.52 6.97
1970 28,729,379 7.16 0.170 0.02 0 7.63 8.87
1971 54,672,327 9.60 0.190 0 0 10.23 12.15
1972 77,860,344 10.90 0.180 0 0 11.62 14.05
1973 106,017,401 10.66 0.160 0.09 0 11.46 14.05
1974 143,011,492 9.34 0.200 0 0 10.04 12.54
1975 207,734,395 10.22 0.220 0 0 10.99 14.09
1976 224,727,885 10.00 0.250 0 0 10.75 14.16
1977 217,273,868 9.27 0.240 0 0 9.97 13.46
1978 217,114,139 9.40 0.280 0 0 10.11 14.06
1979 218,528,345 10.20 0.320 0 0 10.97 15.76
1980 234,348,577 11.25 0.390 0 0 12.08 18.01
1981 281,980,936 12.74 0.410 0 0 13.68 21.04
1982 205,749,921 9.67 0.440 0.79 0 11.24 17.97
1983 249,201,722 14.40 0.380 0.19 0.04 16.96 27.97
1984 208,290,661 10.85 0.380 1.615 0 14.68 24.91
1985 215,374,722 13.40 0.4025 1.6285 0.2225 18.14 31.36
1986 253,780,848 13.62 0.3525 1.3725 0 22.89 42.37
1987 288,727,782 16.25 0.305 1.29 0.005 28.45 53.43
1988 237,465,629 11.66 0.2925 2.3425 0 26.09 50.10
1989 266,125,877 11.87 0.3085 1.20 0.0965 29.38 58.38
1990 259,076,870 11.18 0.2725 1.125 0.01 30.36 62.04
1991 235,812,697 11.05 0.245 0.18 0 30.55 63.92
1992 232,400,994 11.70 0.20 0.025 0.011 32.45 69.10
1993 245,201,417 12.30 0.195 0.865 0 36.49 78.97
1994 227,724,061 11.78 0.20 0.7931 0 37.28 81.97
1995 247,282,420 13.43 0.18 0.5345 0 44.19 98.55
1996 280,457,130 14.42 0.132 1.908 0 53.72 121.21
</TABLE>
* (Inception
April 30)
** Includes dividends and distributions applicable to the fiscal year which
may have been paid soon after the fiscal year-end.
STATEMENT OF NET ASSETS
June 30, 1996
S&P
RANKING** SHARES COMPANY COST MARKET VALUE
COMMON STOCKS 98.72%
BASIC MATERIALS 4.91%
B+ 62,000 duPont (E.I.) deNemours & Co. $ 2,266,372 $ 4,905,750
A 130,000 Monsanto Co. 4,239,833 4,225,000
NR 110,000 Praxair Inc. 4,519,845 4,647,500
11,026,050 13,778,250
CAPITAL GOODS 9.57%
B+ 62,000 Boeing Co. 2,536,049 5,401,750
A+ 90,000 General Electric Co. 2,446,945 7,785,000
A 45,000 Grainger (W.W.), Inc. 2,445,830 3,487,500
B 86,000 McDonnell Douglas Corp. 4,132,395 4,171,000
A 112,000 Oakwood Homes Corp. 2,402,258 2,310,000
B 32,000 United Technologies 3,018,794 3,680,000
16,982,271 26,835,250
CONSUMER CYCLICAL 12.06%
A 150,000 Circuit City Stores, Inc. 1,645,125 5,418,750
A+ 90,000 Dillard Department
Stores, Inc. Cl. A 1,983,690 3,285,000
B+ 150,000 King World Productions, Inc.* 2,561,704 5,456,250
B 175,000 Mattel, Inc. 2,893,302 5,009,375
B+ 150,000 Reebok International Ltd. 2,940,970 5,043,750
NR 180,000 Viking Office Products, Inc.* 2,500,250 5,647,500
A 62,959 Walt Disney Co. 2,772,720 3,958,547
17,297,761 33,819,172
CONSUMER STAPLES 15.22%
A 100,000 Anheuser-Busch Cos., Inc. 1,289,349 7,500,000
A+ 65,000 CPC International, Inc. 3,171,847 4,680,000
A+ 80,000 Gillette Co. 2,482,720 4,990,000
B+ 212,000 IBP, Inc. 6,515,222 5,856,500
A+ 200,000 PepsiCo, Inc. 3,254,300 7,075,000
A+ 85,000 Philip Morris Cos., Inc. 2,700,234 8,840,000
B 100,000 Vons Companies, Inc.* 2,978,862 3,737,500
22,392,534 42,679,000
ENERGY 5.01%
B+ 110,000 Coastal Corp. 2,057,953 4,592,500
B+ 50,000 Mobil Corp. 1,470,150 5,606,250
A 25,000 Royal Dutch Petroleum Co. 549,437 3,843,750
4,077,540 14,042,500
FINANCIAL 12.13%
B+ 74,500 ADVANTA Corp. Cl. A 3,336,600 3,799,500
A+ 55,000 American International Group, Inc.1,437,975 5,424,375
NR 62,000 Federal Home Loan Mortgage Corp. 3,241,171 5,301,000
A 50,000 General Re Corp. 4,081,235 7,612,500
A+ 75,562 KeyCorp New 1,196,276 2,928,028
B 70,000 Mellon Bank Corp. 2,598,167 3,990,000
A 60,000 NationsBank Corp. 4,315,753 4,957,500
20,207,177 34,012,903
HEALTH CARE 19.23%
A+ 70,000 Abbott Laboratories 1,720,225 3,045,000
A+ 150,000 American Home Products Corp. 3,717,855 9,018,750
A 70,000 Bausch & Lomb, Inc. 3,258,251 2,975,000
A 105,000 Bristol-Myers Squibb Co. 8,130,815 9,450,000
A 55,000 Cardinal Health, Inc. 3,201,674 3,966,875
B+ 43,000 DENTSPLY International, Inc. 1,284,800 1,827,500
NR 57,000 Foundation Health Corp.* 2,495,460 2,044,875
A+ 180,000 Johnson & Johnson 532,327 8,910,000
A 52,000 Pfizer, Inc. 3,615,107 3,711,500
NR 92,000 Scherer (R.P.) Corp.* 4,235,608 4,174,500
NR 225,000 Tenet Healthcare Corp.* 4,080,125 4,809,375
36,272,247 53,933,375
MISCELLANEOUS 3.53%
A+ 60,000 Minnesota Mining &
Manufacturing Co. 2,709,910 4,140,000
A 100,000 Service Corp. International 1,718,500 5,750,000
4,428,410 9,890,000
TECHNOLOGY 17.06%
A+ 185,000 Automatic Data Processing, Inc. 2,290,683 7,145,625
B+ 81,000 Computer Sciences Corp.* 1,176,390 6,054,750
NR 104,171 First Data Corp. 5,173,495 8,294,616
A 48,000 Hewlett-Packard Co. 4,469,456 4,782,000
B+ 70,000 Intel Corp. 4,861,002 5,140,625
B 130,000 KLA Instruments Corp.* 3,771,247 3,022,500
B 111,000 Seagate Technology* 2,821,730 4,995,000
NR 115,000 Vodafone PLC ADR 3,564,820 4,240,625
A 70,000 Wallace Computer Services, Inc. 2,210,816 4,182,500
30,339,639 47,858,241
TOTAL COMMON STOCKS 98.72% 163,023,629 276,848,691
FACE AMOUNT DESCRIPTION COST MARKET VALUE
REPURCHASE AGREEMENT 0.52%
$1,470,000 UMB Bank, n.a, 4.80%, due July 1, 1996
(Collateralized by U.S. Treasury Notes,
6.875%, due October 31, 1996) 1,470,000 1,470,000
TOTAL INVESTMENTS 99.24% $164,493,629 278,318,691
Other assets less liabilities 0.76% 2,138,439
TOTAL NET ASSETS 100.00%
(equivalent to $14.42 per share; 100,000,000
shares of $1.00 par value capital shares
authorized; 19,443,968 shares outstanding) $280,457,130
For federal income tax purposes, the identified
cost of investments owned at June 30, 1996
was $164,493,629. Net unrealized appreciation
for federal income tax purposes was $113,825,062,
which is comprised of unrealized appreciation
of $116,134,566 and unrealized depreciation
of $2,309,504.
[FN]
<F1>
*Securities on which no cash dividends were paid
during the preceding year.
<F2>
**Standard & Poor's rankings are derived from
statistical measurements of past earnings and
dividend stability and growth.
[/FN]
NR - indicates no ranking is available.
Rankings are not covered by the report of
independent auditors.
See accompanying Notes to Financial Statements.
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1996
ASSETS:
Investment securities, at market value
(identified cost $164,493,629) $ 278,318,691
Cash 1,767,217
Dividends receivable 371,222
Total assets 280,457,130
NET ASSETS $ 280,457,130
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 160,724,019
Accumulated undistributed income:
Undistributed net investment income
Accumulated net realized gain on
investment transactions 5,908,049
Net unrealized appreciation in value of investments 113,825,062
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 280,457,130
Capital shares, $1.00 par value
Authorized 100,000,000
Outstanding 19,443,968
NET ASSET VALUE PER SHARE $ 14.42
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Year Ended June 30, 1996
INVESTMENT INCOME:
Income:
Dividends $ 4,166,943
Interest 321,904
4,488,847
Expenses:
Management fees (Note 3) 2,258,966
Registration fees and other expenses 21,754
2,280,720
Net investment income 2,208,127
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (Note 1):
Realized gain from investment transactions
(excluding repurchase agreements):
Proceeds from sales of investments 108,367,828
Cost of investments sold 69,473,409
Net realized gain from investment
transactions 38,894,419
Unrealized appreciation on investments:
Beginning of year 99,606,960
End of year 113,825,062
Increase in net unrealized
appreciation on investments 14,218,102
Net gain on investments 53,112,521
Increase in net assets resulting
from operations $ 55,320,648
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
For The Two Years Ended June 30, 1996
1996 1995
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 2,208,127 $ 3,311,100
Net realized gain from investment
transactions 38,894,419 10,032,297
Increase in net unrealized
appreciation on investments 14,218,102 30,108,767
Net increase in net assets
resulting from operations 55,320,648 43,452,164
Net equalization included in the
price of shares issued and
redeemed (Note 1) (27,236) (40,263)
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (2,370,143) (3,314,210)
Net realized gain from investment
transactions** (33,840,437) (9,640,620)
Total distributions
to shareholders (36,210,580) (12,954,830)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 1,633,664 and
1,301,049 shares sold 23,910,743 16,159,476
Net asset value of 2,332,901 and
909,226 shares issued for
reinvestment of distributions 33,475,089 12,003,961
57,385,832 28,163,437
Cost of 2,928,940 and 3,136,550
shares redeemed (43,293,954) (39,062,149)
Net increase (decrease)
from capital share transactions 14,091,878 (10,898,712)
Total increase in net assets 33,174,710 19,558,359
NET ASSETS:
Beginning of year 247,282,420 227,724,061
End of year (including undistributed
net investment income of
$0 in 1996 and $162,016 in 1995) $ 280,457,130 $ 247,282,420
*Distributions to shareholders:
Income dividends per share $ .132 $ 0.18
Capital gains distribution per share $ 1.908 $ 0.5345
During the year ended June 30, 1996, the
Fund designated $33,840,437 as capital
gain dividends for federal income
tax purposes.
See accompanying Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940, as amended, as
a diversified open-end management investment company. The financial statements
have been prepared in conformity with generally accepted accounting principles
which require management to make certain estimates and assumptions at the date
of the financial statements. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its
financial statements.
Investments Common stocks traded on a national securities exchange are valued
at the last reported sales price on the last business day of the period or, if
no sale was reported on that date, at the average of the last reported bid and
asked prices. Common stocks traded over-the-counter are valued at the average of
the last reported bid and asked prices. Investment transactions are recorded on
the trade date. Dividend income and distributions to shareholders are recorded
on the ex- dividend dates. Realized gains and losses from investment
transactions and unrealized appreciation and depreciation of investments are
reported on the identified cost basis.
Federal and State Taxes The Fund's policy is to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no
provision for federal or state tax is required.
Equalization The Fund uses the accounting practice known as equalization, by
which a portion of the proceeds from sales and costs of redemption of capital
shares, equivalent on a per share basis to the amount of undistributed net
investment income on the date of the transactions, is credited or charged to
undistributed income. As a result, undistributed net investment income per share
is unaffected by sales or redemptions of capital shares. During the year ended
June 30, 1996, $27,236 was reclassified from undistributed net investment income
to capital stock.E
2. PURCHASES AND SALES OF SECURITIES:
The aggregate amounts of security transactions during the year ended June 30,
1996 (excluding repurchase agreements), were as follows:
Purchases $ 86,485,796
Proceeds from sales 108,367,828
3. MANAGEMENT FEES:
Management fees, which include all normal expenses of the Fund other than taxes,
fees and other charges of governmental agencies for qualifying the Fund's shares
for sale, special legal fees, interest and brokerage commissions, are paid to
Jones & Babson, Inc., an affiliated company. These fees are based on average
daily net assets of the Fund at the annual rate of .85 of one percent on net
assets up to $250,000,000, and .70 of one percent on net assets exceeding that
amount. Certain officers and/or directors of the Fund are also officers and/or
directors of Jones & Babson, Inc.
FINANCIAL HIGHLIGHTS
The following table sets forth information as to capital and income changes for
a share outstanding for each of the five
years in the period ended June 30, 1996:
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
</CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $13.43 $11.78 $12.30 $11.70 $11.05
Income from investment operations:
Net investment income 0.12 0.18 0.20 0.22 0.20
Net gains on securities
(both realized and unrealized) 2.91 2.18 0.27 1.44 0.69
Total from investment operations 3.03 2.36 0.47 1.66 0.89
Less distributions:
Dividends from net investment income (0.13) (0.18) (0.20) (0.20) (0.20)
Distributions from capital gains (1.91) (0.53) (0.79) (0.86) (0.04)
Total distributions (2.04) (0.71) (0.99) (1.06) (0.24)
Net asset value, end of year $14.42 $13.43 $11.78 $12.30 $11.70
Total return 23% 20% 4% 14% 8%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 280 $ 247 $ 228 $ 245 $ 232
Ratio of expenses to average net assets 0.85% 0.85% 0.86% 0.86% 0.86%
Ratio of net investment income to average net assets 0.82% 1.42% 1.54% 1.54% 1.69%
Portfolio turnover rate 33% 17% 10% 13% 12%
</TABLE>
See accompanying Notes to Financial Statements.
REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
David L. Babson Growth Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the statement of net assets, of David L. Babson Growth Fund, Inc. (a Maryland
corporation), as of June 30, 1996, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These finan- cial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and the financial highlights. Our procedures included confirmation of
securities owned as of June 30, 1996, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement and the financial highlights presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
David L. Babson Growth Fund, Inc. as of June 30, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Kansas City, Missouri
July 26, 1996
This report has been prepared for the information of the Shareholders
of David L. Babson Growth Fund, Inc., and is not to be construed
as an offering of the shares of the Fund. Shares of
this Fund and of the other Babson Funds are offered only by
the Prospectus, a copy of which may be obtained from Jones & Babson, Inc.
EQUITIES
Growth Fund
Enterprise Fund*
Enterprise Fund II
Value Fund
Shadow Stock Fund
International Fund
FIXED INCOME
Bond Trust
Money Market Fund
Tax-Free Income Fund
*Closed to new investors.
JONES & BABSON
MUTUAL FUNDS
2440 Perhsing Road
Kansas City, MO 64108-2518
816-471-5200
1-800-4-BABSON
(1-800-422-2766)
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David L. Babson Growth Fund, Inc.
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