BABSON
GROWTH
FUND
Annual Report
June 30, 1997
JONES & BABSON
MUTUAL FUNDS
MESSAGE
TO OUR SHAREHOLDERS
1997 is shaping up to be another banner year in the stock market, on the heels
of two very strong years in 1995 and 1996. Babson Growth Fund gained a total
return (price change and reinvested distributions) of 30.1% during the fiscal
year ended June 30, 1997, compared to a gain of 23.9% for the average growth
equity mutual fund (880 total) as measured by Lipper Analytical Services.
Investment Results - Total Return
Periods Ended 6/30/97
3 mos. 6 mos. 12 mos.
BABSON GROWTH FUND 15.8% 17.0% 30.1%
Lipper Growth Funds Average
(880 funds) 15.8% 15.4% 23.9%
S&P 500 Index* 17.4% 20.1% 34.7%
*unmanaged
During the latest fiscal year the Fund paid ordinary income dividends of $.09
per share and realized capital gains of $.78 per share. At fiscal year-end the
net asset value per share was $17.80. For our corporate shareholders, 100% of
the ordinary income distributions qualify for the corporate dividends received
deduction.
The stock market as measured by the Standard & Poors 500 Index gained 17.4% in
the second calendar quarter of 1997, the fourth highest quarterly gain since
1950, and the best since the first quarter of 1987. In the other three
instances, however, the market had fallen in the six months prior to the
strong quarter; this gain follows an 11.7% six-month rise. The S&P 500 has
returned 107% since the latest leg of this bull market began in December 1994
- - quite a remarkable achievement by any measure.
Our approach to investing in growth stocks remains the same: we are focused on
identifying high quality companies with leading market positions, proven
management teams with a track record of consistently superior results, strong
balance sheets with low relative debt levels and solid cash flows. We seek to
invest in firms with the competitive advantages, management and financial
strength to deliver sustained long-term growth.
In the six-month period ended June 30, 1997 we made several new investments in
companies with the aforementioned characteristics: Nike (athletic footwear and
apparel manufacturer and marketer), Compaq Computer (personal computer and
server manufacturer and marketer), Boston Scientific (developer and
manufacturer of specialty medical devices), Linear Technology (designer,
manufacturer and marketer of linear (analog) circuits, including amplifiers,
data converters and voltage regulators). During this same time period we
liquidated our investments in Advanta, Pharmacia & Upjohn and IBP due to
slowing or stalled earnings growth. We also sold our positions in Minnesota
Mining & Manufacturing, McDonnell Douglas and United Technologies which were
highly valued verses their historic levels and verses the market overall.
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.
The year began on a strong note, as economic growth exceeded prior year
expectations. With oil prices on the rise and unemployment near a quarter
century low, there was concern that inflation would begin to accelerate. At
the end of the first quarter, the Federal Reserve felt compelled to tighten
policy for the first time since early 1995 in an effort to cool the economy.
Immediately after the Fed tightened, the economy began to slow from the 5.9%
pace of the first three months of the year. While personal consumption
remained healthy, purchases of big ticket items weakened and industrial
production softened as firms attempted to restrain inventory. Though
unemployment moved still lower, inflationary fears receded as oil prices fell
sharply from the highs of early winter. The year-to-year percentage change in
the Consumer Price Index fell from 3.2% in December to 2.2% just six months
later, and the Fed now appears to be on hold.
As a result of these trends, we appear to have reached economic nirvana, with
growth proceeding at a healthy rate and inflation running at an
extraordinarily low level for such a late stage in the business cycle. In
fact, the current expansion is now the longest of the post-war era. The major
questions facing economists now are what is causing this prosperity and will
it ever come to an end?
Examining the economy's stellar performance of recent years reveals a
confluence of positive trends. Monetary policy has been conducted so as to
allow the economy to grow at its potential without overheating. The fiscal
budget deficit has shrunk to less than $70 billion over the last twelve
months, allowing resources to flow to the more efficient private sector. The
private sector has made use of the additional capital available to it by
embarking on a capital spending spree. The increased efficiencies of this
capital investment are creating productivity gains that are bolstering
profitability even in the face of intense global competition, which is in turn
helping to limit inflation.
The key to extending this business cycle further is to keep these trends
intact. It appears that monetary and fiscal policy will continue to be run
prudently for the foreseeable future, so it will be up to the private sector
to keep productivity growing at a fast enough rate to keep up with overall
demand. This task becomes more difficult as the expansion ages, but the
application of new technology means that it is not impossible. If capital
spending can help keep the economy in balance and if an outside shock can be
avoided, then it is conceivable that the economy could continue to grow for
quite some time.
Corporate profit growth continues to be stronger and better than expected.
Technology companies have reported the highest earnings gains so far this
year, with healthcare companies just behind them. Earnings growth in most
sectors of the market is being driven by strong growth in revenues this year.
This is different from the growth we experienced in 1995 and 1996, where many
gains in corporate profits came from cost cutting and restructuring efforts.
Healthcare and consumer stocks are leading the market to new highs, but all
sectors of the market are up year-to-date. The only disappointing segment of
the market has been in the utilities sector, where looming deregulation is
still creating uncertainty among investors.
With economic growth proceeding at a healthy rate and the current low level of
inflation we are optimistic about the long-term picture for the financial
markets. We are cautious, however, on the shorter-term outlook for the markets
if we should experience some meaningful but unexpected outside shock to the
system.
David L. Babson & Co. Inc.
The Fund's Ten Largest Holdings
<TABLE>
<CAPTION>
OWNED BY PERCENT
1997 1996 THE FUND MARKET OF S&P
RANK RANK COMPANY SINCE VALUE PORTFOLIO RANKING
</CATPION>
<S> <C> <C> <C> <C> <C> <C>
1 4 Philip Morris Cos., Inc. 1989 $11,315,625 3.13% A+
2 2 American Home Products Corp. 1990 11,092,500 3.07% A+
3 3 Johnson & Johnson 1974 10,943,750 3.03% A+
4 6 General Electric Co. 1990 10,460,000 2.90% A+
5 21 Intel Corp. 1996 9,948,147 2.75% B+
6 5 First Data Corp. 1995 9,154,027 2.53% B+
7 1 Bristol-Meyers Squibb Co. 1995 8,910,000 2.47% A
8 9 Automatic Data Processing, Inc. 1990 8,695,000 2.41% A+
9 20 Federal Home Loan Mortgage Corp. 1994 8,525,000 2.36% N
10 8 Anheuser-Busch Cos., Inc. 1981 8,387,500 2.32% A
</TABLE>
David L. Babson Growth Fund versus S&P 500 and Value Line
GRAPH - David L. Babson Growth Fund versus S&P 500 and Value Line
Babson Growth Fund's average annual compounded total return for one, five
and ten year periods ended June 30, 1997, were 30.10%, 17.94% and 11.43%,
respectively. Performance data contained in this report is for past periods
only. Past performance is not predictive of future performance. Investment
return and share value will fluctuate, redemption value may be more or less
than original cost.
HISTORICAL RECORD
Progress of the Fund since it was founded in 1960.
<TABLE>
<CATPION>
NET ASSET
NET ASSET VALUE PER
*LONG TERM *SHORT TERM VALUE PER SHARE WITH
FISCAL NET *ORDINARY CAPITAL CAPTIAL SHARE WITH DIVIDENDS AND
YEAR TOTAL ASSET INCOME GAINS GAINS CAPITAL GAINS CAPITAL GAINS
ENDED NET VALUE DIVIDENDS DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
JUNE 30 ASSETS PER SHARE PER SHARE PER SHARE PER SHARE REINVESTED REINVESTED
(Inception April 30)
<CATPION>
<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
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
1997 365,224,285 17.80 0.09 0.78 -0- 69.26 157.69
</TABLE>
* 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, 1997
<TABLE>
<CAPTION>
S&P
RANKING** SHARES COMPANY COST MARKET VALUE
</CAPTION>
<S> <C> <C>
COMMON STOCKS - 96.67%
BASIC MATERIALS - 7.55%
B+ 124,000 duPont (E.I.) deNemours & Co. $ 2,266,372 $ 7,796,500
A 96,000 Kimberly-Clark Corp. 4,410,869 4,776,000
B+ 179,000 Monsanto Co. 6,049,773 7,708,187
NR 130,000 Praxair Inc. 5,246,045 7,280,000
17,973,059 27,560,687
CAPITAL GOODS - 6.42%
B+ 124,000 Boeing Co. 2,536,049 6,579,750
A+ 160,000 General Electric Co. 2,172,760 10,460,000
A 45,000 Grainger (W.W.), Inc. 2,445,830 3,518,437
A- 120,000 Oakwood Homes Corp. 2,573,738 2,880,000
9,728,377 23,438,187
CONSUMER CYCLICAL - 13.80%
A 110,000 Circuit City Stores, Inc. 1,206,425 3,911,875
B 90,000 CVS Corp. 3,545,644 4,612,500
B+ 150,000 King World Productions, Inc. 2,561,704 5,250,000
B+ 175,000 Mattel, Inc. 2,893,302 5,928,125
A 92,000 Nike, Inc. Cl. B 5,607,645 5,370,500
A- 149,250 Paychex, Inc. 4,621,016 5,671,500
B+ 75,000 Reebok International Ltd. 1,461,595 3,520,313
B 142,500 Safeway, Inc. 2,978,862 6,572,813
NR 236,400 Viking Office Products, Inc.* 3,891,649 4,491,600
A 62,959 Walt Disney Co. 2,772,720 5,052,460
31,540,562 50,381,686
CONSUMER STAPLES - 11.17%
A 200,000 Anheuser-Busch Cos., Inc. 1,289,349 8,387,500
A+ 65,000 CPC International, Inc. 3,171,847 6,000,313
A+ 80,000 Gillette Co. 2,482,720 7,580,000
A 200,000 PepsiCo, Inc. 3,254,300 7,512,500
A+ 255,000 Philip Morris Cos., Inc. 2,700,234 11,315,625
12,898,450 40,795,938
ENERGY - 3.40%
B+ 100,000 Mobil Corp. 1,470,150 6,987,500
A 100,000 Royal Dutch Petroleum Co. 549,437 5,437,500
2,019,587 12,425,000
FINANCIAL - 10.76%
A+ 55,000 American International Group, Inc. 1,437,975 8,215,625
NR 248,000 Federal Home Loan Mortgage Corp. 3,241,171 8,525,000
A 45,000 General Re Corp. 3,605,130 8,190,000
B 140,000 Mellon Bank Corp. 2,598,167 6,317,500
A- 125,000 NationsBank Corp. 4,616,059 8,062,500
15,498,502 39,310,625
HEALTH CARE - 18.93%
A+ 70,000 Abbott Laboratories 1,720,225 4,672,500
A+ 145,000 American Home Products Corp. 3,585,863 11,092,500
NR 132,000 Boston Scientific Corp.* 6,360,488 8,109,750
A 110,000 Bristol-Myers Squibb Co. 4,228,073 8,910,000
B+ 105,000 Cardinal Health, Inc. 4,215,087 6,011,250
A+ 170,000 Johnson & Johnson 500,844 10,943,750
A- 67,000 Pfizer, Inc. 4,686,256 8,006,500
NR 92,000 Scherer (R.P.) Corp.* 4,235,608 4,749,500
NR 225,000 Tenet Healthcare Corp. 4,080,125 6,651,562
33,612,569 69,147,312
MISCELLANEOUS - 1.80%
A- 200,000 Service Corp. International 1,718,500 6,575,000
TECHNOLOGY - 22.84%
A+ 185,000 Automatic Data Processing, Inc. 2,290,683 8,695,000
B 82,000 Cisco Systems, Inc.* 4,604,000 5,504,250
B 75,000 Compaq Computer Corp.* 6,203,875 7,443,750
B+ 81,000 Computer Sciences Corp. 1,176,390 5,842,125
B+ 208,342 First Data Corp. 5,173,495 9,154,027
NR 95,000 Guidant Corp. 4,581,199 8,075,000
A 96,000 Hewlett-Packard Co. 4,469,456 5,376,000
B+ 70,150 Intel Corp. 4,882,677 9,948,147
NR 142,500 KLA-Tencor Corp.* 4,712,150 6,946,875
B+ 96,900 Linear Technology Corp. 4,770,822 5,014,575
B 71,000 Seagate Technology* 855,602 2,498,312
NR 85,000 Vodafone PLC ADR 2,633,740 4,117,187
A 160,000 Wallace Computer Services, Inc. 2,762,044 4,810,000
49,116,133 83,425,248
TOTAL COMMON STOCKS - 96.67% 174,105,739 353,059,683
FACE AMOUNT DESCRIPTION COST MARKET VALUE
SHORT-TERM CORPORATE NOTES - 2.19%
$ 3,000,000 Ford Motor Credit Corp.,
5.52%, due July 2, 1997 3,000,000 3,000,000
2,000,000 General Electric Capital Corp.,
5.55%, due July 16, 1997 2,000,000 2,000,000
3,000,000 General Motors Acceptance Corp.,
5.56%, due July 9, 1997 3,000,000 3,000,000
TOTAL SHORT-TERM CORPORATE NOTES - 2.19% 8,000,000 8,000,000
REPURCHASE AGREEMENT - 1.28%
$ 4,670,000 UMB Bank, n.a, 5.30%, due July 1, 1997
(Collateralized by U.S. Treasury Notes,
7.875%, due November 15, 1999) 4,670,000 4,670,000
TOTAL INVESTMENTS - 100.14% $186,775,739 365,729,683
Other assets less liabilities - (0.14%) (505,398)
TOTAL NET ASSETS - 100.00%
(equivalent to $17.80 per share;
100,000,000 shares of $1.00 par
value capital shares authorized;
20,520,714 shares outstanding) $365,224,285
</TABLE>
For federal income tax purposes, the identified cost of investments owned at
June 30, 1997, was $186,775,739.
Net unrealized appreciation for federal income tax purposes was $178,953,944,
which is comprised of unrealized appreciation of $179,191,089 and unrealized
depreciation of $237,145.
*Securities on which no cash dividends were paid during the preceding year.
**Standard & Poor's rankings are derived from statistical measurements of past
earnings and dividend stability and growth.
See accompanying Notes to Financial Statements.
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1997
ASSETS:
Investment securities, at market value
(identified cost $186,775,739) $ 365,729,683
Dividends receivable 370,328
Interest receivable 6,171
Total assets 366,106,182
LIABILITIES AND NET ASSETS:
Cash overdraft 136,652
Payable for investments purchased 745,245
Total liabilities 881,897
NET ASSETS $ 365,224,285
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 178,543,696
Accumulated undistributed income:
Undistributed net investment income 100,904
Accumulated net realized gain on
investment transactions 7,625,741
Net unrealized appreciation in value
of investments 178,953,944
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 365,224,285
Capital shares, $1.00 par value
Authorized 100,000,000
Outstanding 20,520,714
NET ASSET VALUE PER SHARE $ 17.80
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Year Ended June 30, 1997
INVESTMENT INCOME:
Income:
Dividends $ 4,255,467
Interest 238,142
4,493,609
Expenses:
Management fees (Note 3) 2,566,555
Registration fees and other expenses 32,978
2,599,533
Net investment income 1,894,076
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (Note 1):
Realized gain from investment transactions
(excluding repurchase agreements):
Proceeds from sales of investments 66,426,322
Cost of investments sold 49,404,697
Net realized gain from investment
transactions 17,021,625
Unrealized appreciation on investments:
Beginning of year 113,825,062
End of year 178,953,944
Increase in net unrealized
appreciation on investments 65,128,882
Net gain on investments 82,150,507
Increase in net assets resulting
from operations $ 84,044,583
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
For The Two Years Ended June 30, 1997
<TABLE>
<CAPTION>
1997 1996
</CATPION>
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,894,076 $ 2,208,127
Net realized gain from investment transactions 17,021,625 38,894,419
Increase in net unrealized appreciation
on investments 65,128,882 14,218,102
Net increase in net assets resulting
from operations 84,044,583 55,320,648
Net equalization included in the price of shares
issued and redeemed (Note 1) 51,755 (27,236)
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (1,793,172) (2,370,143)
Net realized gain from investment transactions** (15,303,933) (33,840,437)
Total distributions to shareholders (17,097,105) (36,210,580)
INCREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 4,240,248 and
1,633,664 shares sold 67,566,845 23,910,743
Net asset value of 971,556 and
2,332,901 shares issued for
reinvestment of distributions 15,850,216 33,475,089
83,417,061 57,385,832
Cost of 4,135,058 and 2,928,940 shares redeemed (65,649,139) (43,293,954)
Net increase from capital share transactions 17,767,922 14,091,878
Total increase in net assets 84,767,155 33,174,710
NET ASSETS:
Beginning of year 280,457,130 247,282,420
End of year (including undistributed net
investment income of $100,904 in 1997 and
$0 in 1996) $ 365,224,285 $ 280,457,130
*Distributions to shareholders:
Income dividends per share $ 0.09 $ .132
Capital gains distribution per share $ 0.78 $ 1.908
**During the year ended June 30, 1996,
the Fund designated $33,840,437, as capital gain
dividends for federal income tax purposes.
</TABLE>
See accompanying Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940, as amended,
as a diversified open-end management investment company. 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, 1997, $51,755 was reclassified from undistributed net
investment income to capital stock.
2. PURCHASES AND SALES OF SECURITIES:
The aggregate amounts of security transactions during the year ended June 30,
1997 (excluding short-term commercial notes and repurchase agreements), were
as follows:
Purchases $ 60,486,807
Proceeds from sales 66,426,322
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, 1997:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
</CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $14.42 $13.43 $11.78 $12.30 $11.70
Income from investment operations:
Net investment income 0.09 0.12 0.18 0.20 0.22
Net gains on securities
(both realized and unrealized) 4.16 2.91 2.18 0.27 1.44
Total from investment operations 4.25 3.03 2.36 0.47 1.66
Less distributions:
Dividends from net investment income (0.09) (0.13) (0.18) (0.20) (0.20)
Distributions from capital gains (0.78) (1.91) (0.53) (0.79) (0.86)
Total distributions (0.87) (2.04) (0.71) (0.99) (1.06)
Net asset value, end of year $17.80 $14.42 $13.43 $11.78 $12.30
Total return 30% 23% 20% 4% 14%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 365 $ 280 $ 247 $ 228 $ 245
Ratio of expenses to average net assets 0.83% 0.85% 0.85% 0.86% 0.86%
Ratio of net investment income to average net assets 0.61% .82% 1.42% 1.54% 1.54%
Portfolio turnover rate 20% 33% 17% 10% 13%
*Average commission paid per equity share traded $ .0591 - - - -
*Disclosure required for fiscal years beginning after
September 1, 1995.
</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 of David
L. Babson Growth Fund, Inc. (a Maryland corporation), including the statement
of net assets as of June 30, 1997, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of June 30, 1997, by correspondence with the custodian or
verification of settlement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
David L. Babson Growth Fund, Inc. as of June 30, 1997, 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 28, 1997
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 Pershing Road
Kansas City, MO 64108-2561
816-471-5200
1-800-4-BABSON
(1-800-422-2766)
http://www.jbfunds.com
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 186775739
<INVESTMENTS-AT-VALUE> 365729683
<RECEIVABLES> 376499
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 366106182
<PAYABLE-FOR-SECURITIES> 745245
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 136652
<TOTAL-LIABILITIES> 811897
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 178543696
<SHARES-COMMON-STOCK> 20520714
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 100904
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7625741
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 178953944
<NET-ASSETS> 365224285
<DIVIDEND-INCOME> 4255467
<INTEREST-INCOME> 238142
<OTHER-INCOME> 0
<EXPENSES-NET> 2599533
<NET-INVESTMENT-INCOME> 1894076
<REALIZED-GAINS-CURRENT> 17021625
<APPREC-INCREASE-CURRENT> 65128882
<NET-CHANGE-FROM-OPS> 84044583
<EQUALIZATION> 51755
<DISTRIBUTIONS-OF-INCOME> 1793172
<DISTRIBUTIONS-OF-GAINS> 15303933
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4240248
<NUMBER-OF-SHARES-REDEEMED> 4135058
<SHARES-REINVESTED> 971556
<NET-CHANGE-IN-ASSETS> 84767155
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2566555
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2599533
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 14.42
<PER-SHARE-NII> .09
<PER-SHARE-GAIN-APPREC> 4.16
<PER-SHARE-DIVIDEND> .09
<PER-SHARE-DISTRIBUTIONS> .78
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.80
<EXPENSE-RATIO> .83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
