BABSON D L TAX FREE INCOME FUND INC, 485BPOS, 1995-11-01

BABSON D L TAX FREE INCOME FUND INC
485BPOS, 1995-11-01

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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. 22 File No. 2-65489 [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 23 File No. 811-2948 [X]

D.L. BABSON TAX-FREE INCOME 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, D.L. BABSON TAX-FREE INCOME 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 Invest-
ment 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,
1996.

Please address inquiries and a carbon copy of all
and communications to: communications to:
John G. Dyer, Esq. Mark H. Plafker, Esq.
D.L. BABSON TAX-FREE Stradley, Ronon, Stevens & Young
INCOME FUND, INC. 2600 One Commerce Square
2440 Pershing Road, G-15 Philadelphia, PA 19103-7098
Kansas City, MO 64108 Telephone: (215) 569-3800
Telephone: (816) 471-5200

D. L. BABSON TAX-FREE INCOME 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

D. L. BABSON TAX FREE INCOME 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
Services Investment 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

D. L. BABSON TAX-FREE
INCOME 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

The Babson Tax-Free Income Fund offers investors a choice
among three Portfolios with differing maturity lengths of
investment-grade municipal securities providing the highest level
of regular income exempt from federal income tax consistent with
their quality and maturity standards.

The Money Market Portfolio further seeks to maintain, but does
not guarantee, a constant net asset value of $1.00 per share.
Although each Portfolio invests in high quality instruments, the
shares of the Portfolios are not insured or guaranteed by the U.S.
Government and there can be no assurance that the Money Market
Portfolio will be able to maintain a constant net asset value per
share.

The Fund was founded particularly for those investors who share
its investment goals and who wish to have their investment receive
continuous portfolio supervision by the staff of David L. Babson
& Co. Inc.

PURCHASE INFORMATION

Minimum Investment
(each Portfolio selected)
Initial Purchase $ 1,000
Initial Uniform Transfers (Gifts)
to Minors Purchases $ 250
Subsequent Purchase:
By Mail $ 100
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 5
Investment Objective and Portfolio Management Policy 7
Risk Factors Peculiar to Municipal Securities 8
Repurchase Agreements 8
Investment Restrictions 9
Performance Measures 9
How to Purchase Shares 10
Initial Investments 11
Investments Subsequent to Initial Investment 11
Telephone Investment Service 12
Automatic Monthly Investment Plan 12
How to Redeem Shares 12
Systematic Redemption Plan 15
How to Exchange Shares Between Portfolios and Babson Funds
16
How Share Price is Determined 17
Officers and Directors 18
Management and Investment Counsel 18
General Information and History 19
Dividends, Distributions and Their Taxation 20
Shareholder Services 22
Shareholder Inquiries 22

FUND EXPENSES

PORTFOLIO L

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 .95%
12b-1 fees None
Other expenses .07%
Total Fund operating expenses 1.02%

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
$10 $32 $56 $124

PORTFOLIO S

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 .95%
12b-1 fees None
Other expenses .06%
Total Fund operating expenses 1.01%

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
$10 $32 $56 $124

PORTFOLIO MM

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 .50%
12b-1 fees None
Other expenses .09%
Total Fund operating expenses .59%

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
$6 $19 $33 $74

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.

D. L. BABSON TAX-FREE INCOME FUND, INC.
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 D.L. Babson Tax-Free Income 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>
PORTFOLIO L 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 $ 8.52 $ 9.49 $ 9.04 $ 8.74 $ 8.63 $ 8.80 $ 8.41 $ 8.64 $ 9.45 $ 8.76
Income from investment
operations:
Net investment income 0.42 0.43 0.46 0.52 0.54 0.56 0.65 0.64 0.63 0.71
Net gains or losses on
securities (both
realized and
unrealized) 0.17 (0.56) 0.57 0.57 0.11 (0.17) 0.39 (0.04) (0.21) 0.69
Total from Investment
Operations 0.59 (0.13) 1.03 1.09 0.65 0.39 1.04 0.60 0.42 1.40

Less distributions:
Dividends from net
investment income (0.42) (0.43) (0.46) (0.52) (0.54) (0.56) (0.65) (0.64) (0.63) (0.71)
Distributions from
capital gains (0.02) (0.41) (0.12) (0.27) -- -- -- (0.19) (0.60) --
Total Distributions (0.44) (0.84) (0.58) (0.79) (0.54) (0.56) (0.65) (0.83) (1.23) (0.71)
Net asset value,
end of year $ 8.67 $ 8.52 $ 9.49 $ 9.04 $ 8.74 $ 8.63 $ 8.80 $ 8.41 $ 8.64 $ 9.45

Total Return 7% (2)% 12% 13% 8% 5% 13% 7% 5% 17%

Ratios/Supplemental
Data
Net assets, end of year
(in millions) $ 28 $ 30 $ 34 $ 30 $ 29 $ 28 $ 26 $ 21 $ 22 $ 21
Ratio of expenses
to average net assets 1.02% 1.02% 1.00% 0.99% 0.98% 1.00% 0.99% 1.00% 0.99% 1.00%
Ratio of net investment
income to
average net assets 4.98% 4.73% 5.03% 5.73% 6.22% 6.47% 5.51% 7.54% 6.80% 7.75%
Portfolio turnover
rate 34% 53% 126% 128% 116% 121% 172% 168% 123% 46%
</TABLE>

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
PORTFOLIO S 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 $10.62 $11.05 $10.78 $10.54 $10.44 $10.46 $10.54 $10.74 $10.72 $10.51
Income from investment
operations:
Net investment income 0.45 0.46 0.50 0.55 0.59 0.61 0.68 0.64 0.64 0.68
Net gains or losses on
securities (both
realized and
unrealized) 0.10 (0.37) 0.29 0.36 0.21 (0.02) (0.05) (0.11) 0.09 0.21
Total from Investment
Operations 0.55 0.09 0.79 0.91 0.80 0.59 0.63 0.53 0.73 0.89
Less distributions:
Dividends from net
investment income (0.45) (0.46) (0.50) (0.55) (0.59) (0.61) (0.68) (0.64) (0.64) (0.68)
Distributions from
capital gains (0.01) (0.06) (0.02) (0.12) (0.11) -- (0.03) (0.09) (0.07) --
Total Distributions (0.46) (0.52) (0.52) (0.67) (0.70) (0.61) (0.71) (0.73) (0.71) (0.68)
Net asset value,
end of year $10.71 $10.62 $11.05 $10.78 $10.54 $10.44 $10.46 $10.54 $10.74 $10.72
Total Return 5% 1% 8% 9% 8% 6% 6% 5% 7% 9%
Ratios/Supplemental
Data
Net assets,
end of year
(in millions) $ 28 $ 29 $ 26 $ 22 $ 18 $ 18 $ 18 $ 17 $ 16 $ 13
Ratio of expenses
to average
net assets 1.01% 1.02% 1.00% 1.00% 0.99% 0.99% 0.99% 1.00% 0.99% 1.00%
Ratio of net
investment income to
average net assets 4.28% 4.22% 4.58% 5.14% 5.57% 5.82% 6.48% 6.01% 5.91% 6.47%
Portfolio turnover
rate 34% 21% 47% 81% 98% 74% 115% 131% 66% 35%
</TABLE>

<TABLE>
<CAPTION>
PORTFOLIO MM 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from
investment
operations:
Net investment income 0.03 0.02 0.02 0.03 0.05 0.05 0.05 0.04 0.04 0.05
Less distributions:
Dividends from net
investment income (0.03) (0.02) (0.02) (0.03) (0.05) (0.05) (0.05) (0.04) (0.04) (0.05)
Net asset value,
end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return 3% 2% 2% 3% 5% 6% 6% 4% 4% 5%

Ratios/Supplemental
Data
Net assets, end of
year (in millions) $ 16 $ 15 $ 9 $ 10 $ 10 $ 11 $ 14 $ 13 $ 12 $ 10
Ratio of expenses
to average
net assets 0.59% 0.57% 0.56% 0.55% 0.54% 0.55% 0.54% 0.55% 0.54% 0.55%
Ratio of net
investment income
to average net assets 3.07% 1.99% 2.18% 3.40% 4.82% 5.44% 5.69% 4.44% 4.05% 4.76%
</TABLE>

INVESTMENT OBJECTIVE AND
PORTFOLIO MANAGEMENT POLICY

Babson Tax-Free Income Fund offers three separate Portfolios.
The Fund's objective is to provide investors with the highest level
of investment income exempt from federal income tax consistent
with the quality and maturity standards prescribed for each
Portfolio. The Money Market Portfolio further seeks to maintain
liquidity and a constant price of $1.00 per share. Although the
Fund cannot guarantee that these objectives will be achieved, but
through careful management and diversification it will seek to
reduce risk and enhance the opportunities for higher income and
greater price stability.

Each Portfolio will have substantially all of its assets invested in
investment-grade municipal securities, the interest on which is
deemed exempt from federal income tax (including the alternative
minimum tax). The essential difference in the Portfolios will be the
time to maturity of their holdings. Investors may suit their
financial needs and circumstances by investing in one or more of
the Portfolios or by transferring from one to another. For a
description of municipal securities and their ratings, see
"Municipal Securities Described and Ratings" in the "Statement of
Additional Information." The Portfolios are:

Portfolio L - Longer Term: The weighted average maturity is
expected to be between ten and twenty-five years with maturities
generally being longer than five years at the time of purchase.
There is no maximum maturity. Longer maturities produce higher
income but carry greater possibility of price fluctuation compared
to obligations with shorter terms.

Portfolio S - Shorter Term: The weighted average maturity is
expected to be between two and five years with no maturities more
than ten years at the time of purchase. Shorter maturities usually
result in lower income but provide more stability in price when
compared to obligations with longer maturities.

Portfolio MM - Money Market: Expected average weighted
maturity is 90 days or less. No maturities will be more than one
year at the time of purchase. Net asset value is expected to remain
constant at $1.00 per share.

During periods of normal market conditions, the Fund will invest
at least 80% of the total assets of each Portfolio (exclusive of cash)
in municipal securities, such as bonds and other debt obligations
issued by or on behalf of states, territories and possessions of the
United States including their political subdivisions or their
constituted authorities, agencies and instrumentalities, the interest
on which is exempt from federal income tax including the
alternative minimum tax. This fundamental policy will not be
changed without shareholder approval, except that the Fund
reserves the right to deviate temporarily from this policy during
extraordinary circumstances when, in the opinion of management,
it is advisable to do so in the best interest of shareholders, such as
when market conditions dictate a defensive posture in taxable
obligations. During the Fund's fiscal year ended June 30, 1995, the
following percentages of income were exempt from federal income
taxes: Portfolio L, 98.72%, Portfolio S, 99.10% and Portfolio MM,
99.70%.

At least 90% of the municipal bonds in Portfolio L and Portfolio S
will be rated at the time of purchase within the top three
classifications of Moody's Investors Service, Inc. (Aaa, Aa and A),
or by Standard and Poor's Corp. (AAA, AA and A). Any
municipal bond backed by the full faith and credit of the federal
government shall be considered to have a rating of AAA.
Investments in short-term municipal obligations and notes are
limited to those obligations which at the time of purchase: (1) are
backed by the full faith and credit of the United States; or (2) are
rated MIG-1, MIG-2 or MIG-3 by Moody's; or (3) if the notes are
not rated, then the issuer's long-term bond rating must be at least A
as determined by Moody's or by S&P. Short-term discount notes
are limited to those obligations rated A-1 or A-2 by S&P, or
Prime-1 or Prime-2 by Moody's or their equivalents as determined
by the Board of Directors. With respect to short-term discount
notes which are not rated, the issuer's long-term bond rating must
be at least A by S&P or Moody's.

One hundred percent of the bonds in Portfolio MM must be rated
at the time of purchase within the two highest grades assigned by
Moody's Investors Service, Inc. (Aaa and Aa), or Standard &
Poor's Corporation (AAA and AA), or of comparable quality as
determined by the Board of Directors. Any municipal bond held in
Portfolio MM- Money Market that is backed by the full faith and
credit of the federal government shall be considered to have a
rating of AAA. Investments in short-term municipal obligations
and notes will be limited to those obligations which at the time of
purchase: (1) are backed by the full faith and credit of the United
States; (2) are rated MIG-1 or MIG-2 by Moody's; or (3) if the
obligations or notes are not rated, then of comparable quality as
determined by the Board of Directors. Short-term discount notes
will be limited to those obligations rated A-1 by S&P or Prime-1
by Moody's or their equivalents as determined by the Board of
Directors. If the short-term discount notes are not rated, then they
must be of comparable quality as determined by the Board of
Directors.

While the Fund normally maintains at least 80% of each Portfolio
in municipal securities, it may invest any remaining balance in
taxable money market instruments on a temporary basis, if
management believes this action would be in the best interest of
shareholders. Included in this category are: obligations of the
United States of America, its agents or instrumentalities;
certificates of deposit; bankers' acceptances and other short-term
debt obligations of United States banks with total assets of $1
billion or more; and commercial paper rated A-2 or better by
Standard & Poor's Corp. or Prime-2 or better by Moody's Investors
Service, Inc., or certain rights to acquire these securities.
The Fund reserves the right to hold cash reserves as management
deems necessary for defensive or emergency purposes.
It is the policy of the Fund not to invest more than 25% of its
assets in any one classification of municipal securities, except
project notes or other tax-exempt obligations which are backed by
the U.S. government.

Should the rating organizations used by the Fund cease
to exist or change their systems, the Fund will attempt
to use other comparable ratings as standards for its in-vestments in
municipal securities in accordance with its
investment policies.

For the three years ended June 30, 1995, the annual portfolio
turnover rates were as follows:

Portfolio
Fiscal Turnover
Year Rate

Portfolio L _ 1993 126%
Longer Term 1994 53%
1995 34%

Portfolio S _ 1993 47%
Shorter Term 1994 21%
1995 34%

Since short-term debt securities with maturities of less than one
year are excluded from calculation of portfolio turnover, Portfolio
MM - Money Market has no portfolio turnover. The Fund has paid
no commissions.

RISK FACTORS PECULIAR TO
MUNICIPAL SECURITIES

The values of the Portfolios and in turn the price of their shares,
may increase or decrease whenever interest rates change on new
issues. Normally, Portfolio price volatility declines as its average
maturity shortens. The Money Market Portfolio will attempt to
maintain a constant price, but there is no guarantee. There also is a
possibility that any of the issues may default on their obligation.
Management intends to minimize this risk by maintaining all
Portfolios in issues rated high in quality.

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

Repurchase agreements involve investments in debt securities
where the seller (broker-dealer or bank) agrees to repurchase the
securities from the Fund at cost plus an agreed-to interest rate
within a specified time. A risk of repurchase agreements is that if
the seller seeks the protection of the bankruptcy laws, the Fund's
ability to liquidate the security involved could be temporarily
impaired, and it subsequently might incur a loss if the value of the
security declines or if the other party to a repurchase agreement
defaults on its obligation. There is also the risk that the Fund may
be delayed or prevented from exercising its rights to dispose of the
collateral.

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 "holders of a majority of the outstanding shares" of
the Fund or the affected Portfolio series. Among these restrictions,
the more important ones are that the Fund (Portfolio) will not
invest in equity securities; 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; borrow money in any
Portfolio except for temporary emergency purposes, and then only
in an amount not exceeding 10% of the value of the total assets of
that Portfolio. The full text of these restrictions is set forth in the
"Statement of Additional Information."

There is no limitation with respect to investments in U.S. Treasury
Bills, or other obligations issued or guaranteed by the federal
government, its agencies and instrumentalities.

PERFORMANCE MEASURES

From time to time, each of the Portfolios 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.
Yield of Portfolio MM

From time to time, Portfolio MM may advertise "yield" and
"effective yield." The "yield" of a Fund refers to the income
generated by an investment over a seven-day period (which period
will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the
investment during that week is assumed to be generated each week
over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly, but, when
annualized, the income earned by an investment in a Fund is
assumed to be reinvested. The "effective yield" will be slightly
higher than the "yield" because of the compounding effect of this
assumed reinvestment.

Portfolio MM may quote its yield in advertisements or in reports
to shareholders. Yield information may be useful in reviewing the
performance of Portfolio MM and in providing a basis for
comparison with other investment alternatives. However, since the
net investment income of Portfolio MM changes in response to
fluctuations in interest rates and Portfolio expenses, any given
yield quotations should not be considered representative of the
Portfolio's yield for any future period. Current yield and price
quotations for the Portfolio may be obtained by telephoning 1-800-
4-BABSON (1-800-422-2766), or in the Kansas City area 471-
5200.
Total Return of Portfolios L and S

Portfolio L and Portfolio S 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 a
Portfolio from the beginning date of the measuring period to the
end of the measuring period. These figures reflect changes in the
price of the Portfolio's shares and assume that any income
dividends and/or capital gains distributions made by the Portfolios
during the period were reinvested in additional shares. 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 a Portfolio'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 Portfolio'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, each Portfolio may
compare its performance to that of other mutual funds with similar
investment objectives and to bond or other relevant indices.
Portfolio S and Portfolio L may compare their performance to
rankings prepared by Lipper Analytical Services, Inc. (Lipper), a
widely recognized independent service and to the Shearson
Lehman Hutton Government/Corporate Index, an unmanaged
index of government and corporate bonds, or the Consumer Price
Index. 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.
Similarly, Portfolio MM may compare its yields to the Donoghue's
Money Fund Average and the Donoghue's Government Money
Fund Average which are averages compiled by Donoghue's Money
Fund Report, a widely recognized independent publication that
monitors the performance of money market mutual funds, or to the
average yield reported by the Bank Rate Monitor for money
market deposit accounts offered by the 50 leading banks and thrift
institutions in the top five standard metropolitan statistical areas.
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
Stanger's, may also be cited (if a 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 Rukeyeser's Wall Street
newsletter, Donoghue's Money Letter, CDA Investment
Technologies, Inc., Wiesenberger Investment Company 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 Portfolio's net asset value (price)
per share next computed after a purchase order becomes effective
and payment has 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.

A purchase order becomes effective when it has been received in
the form of federal funds or converted to federal funds and
accepted by the Fund. Payments transmitted by federal funds wire
can become effective upon receipt. Payments transmitted by other
bank wire may take longer to be converted to federal funds. Money
transmitted by check is normally converted into federal funds on
the second business day following receipt. (Federal funds are
deposits made by member banks of the Federal Reserve System
with the Federal Reserve Bank which can be electronically
transferred from one member bank to another.)

The Fund reserves the right in its sole discretion to withdraw all or
any part of the offerings 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 includes 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 ($1,000 minimum
for each Portfolio selected unless your purchase is pursuant to the
Uniform Transfers (Gifts) to Minors Act, in which case the
minimum initial purchase is $250 for each portfolio selected)
payable to UMB Bank, n.a. Mail your application and check to:

D.L. Babson Tax-Free Income 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 the purchase price ($1,000 minimum for each
Portfolio selected) 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 Tax 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 Babson Tax-Free Income Fund (insert
name and number of Portfolio)
Portfolio L _ Longer Term/AC=987032-619-1
Portfolio S _ Shorter Term/AC=987032-618-3
Portfolio MM _ Money Market/AC=987032-617-5
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
$100 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 (Portfolio) 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.

HOW TO REDEEM SHARES

Shareholders registered in the stock records of the Fund may
withdraw all or part of their investment by redeeming shares for
which the Fund has received unconditional payment in the form of
federal funds or such payment has been converted to federal funds
and accepted by the Fund. For your convenience, and to enable
your account to continue earning daily dividends as long as
possible, the Fund offers several redemption procedures.
Portfolio L _ Longer Term and Portfolio S _ Shorter Term _ You
may redeem shares from these Portfolios only by mail. 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.
Portfolio MM _ Money Market _ You may redeem shares from
this Portfolio by mail, telephone/telegraph or by "check" (draft) if
you have met all of the conditions as hereinafter prescribed for
these features.

In each instance you must comply with the general requirements
relating to all redemptions as well as with specific requirements set
out for the particular redemption method you select. If you wish to
expedite redemptions by using the telephone/telegraph or draft
writing (check) privileges, you should carefully note the special
requirements and limitations relating to these methods, (available
for Portfolio MM - Money Market only).

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. Shareholders who have authorized telephone
redemption (Portfolio MM only) may call toll free 1-800-4-
BABSON (1-800-422-2766), or in the Kansas City area 471-5200.
The Fund will redeem shares at the price (net asset value per share)
next computed after receipt of a redemption request in "good
order." (For more information on how the Fund intends to
maintain a constant price for shares of Portfolio MM, 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.

Shares redeemed will be entitled to receive all dividends declared
through the date of redemption. If you redeem all of the shares in
your account, in addition to the share redemption check, a separate
check representing all dividends declared but unpaid on the shares
redeemed will be distributed on the next dividend payment date,
according to your dividend instructions on file with the fund. Any
amount due you in your declared but unpaid dividend account
cannot be redeemed by draft.

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. Further,
the Fund reserves the right to redeem its shares in kind under
certain circumstances. If shares are redeemed in kind, the
shareholder may incur brokerage costs when converting into cash.
Additional details are set forth in the "Statement of Additional
Information."

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.

Withdrawal By Mail - Shares may be redeemed by mailing your
request to the Fund. 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.
Withdrawal By Telephone or Telegraph (Portfolio MM only) You
may withdraw any amount of $1,000 or more by telephone toll free
1-800-4-BABSON (1-800-422-2766), or in the Kansas City area
471-5200, or by telegram to the Fund's address.

Telephone/telegraph redemption authorization signed by all
registered owners with signatures guaranteed must be on file with
the Fund before you may redeem by telephone or telegraph. The
signature guarantee requirement may be waived by the Fund if the
request for this redemption method is made at the same time the
initial application to purchase shares is submitted.

All communications must include the Fund's name, Portfolio
name, your account number, the exact registration of your shares,
the number of shares or dollar amount to be redeemed, and the
identity of the bank and bank account (name and number) to
which the proceeds are to be wired. This procedure may only be
used for non-certificated shares held in open account. For the
protection of shareholders, your redemption instructions can only
be changed by filing with the Fund new instructions on a form
obtainable from the Fund which must be properly signed with
signature(s) guaranteed.

Telephone or telegraph redemption proceeds may be transmitted to
your pre-identified bank account either by wire or mail to a
domestic commercial bank which is a member of the Federal
Reserve System as designated by you on your pre-authorization
form. If you elect to have proceeds wired to your bank, and your
request is received prior to 1:00 P.M. (Eastern Time), proceeds
normally will be wired the following business day. If your request
is received during the day thereafter, proceeds normally will be
wired on the second business day following the day of receipt of
your request. It is the Fund's present policy not to assess wire
charges on amounts of $5,000 or more. A charge of $5 normally
will be made on lesser amounts, but this charge may be reduced or
waived in connection with master accounts. The Fund reserves the
right to change this policy or to refuse a telephone or telegraph
redemption request or require additional documentation to assure a
genuine redemption, and, at its option, may pay such redemption
by wire or check and may limit the frequency or the amount of
such request. The Fund reserves the right to terminate or modify
any or all of the services in connection with this privilege at any
time without prior notice. Neither the Fund nor Jones & Babson,
Inc. assumes responsibility for the authenticity of withdrawal
instructions, and there are provisions on the authorization form
limiting their liability in this respect.

Withdrawal by Draft ("Check") (Portfolio MM only) _ This
method of redemption is limited to open account shares. You may
elect this method of redemption on your initial application, or on a
form which will be sent to you upon request. All signatures must
be guaranteed unless this method of redemption is elected on your
initial application. The authorization form, which all registered
owners must sign, also contains a provision relieving the Fund and
Jones & Babson, Inc. from liability for loss, if any, which you may
sustain arising out of a non-genuine redemption pursuant to this
redemption feature. Any additional documentation required to
assure a genuine redemption must be maintained on file with the
Fund in such current status as the Fund may deem necessary. A
new form properly signed, with signature(s) guaranteed must be
received and accepted by the Fund before authorized redemption
instructions already on file with the Fund can be changed.
When the draft authorization form is received by the Fund in
"good order" and accepted, you will be provided a supply of drafts
("checks") which may be drawn on the Fund. Drafts must be
deposited in a bank account of the payee to be cleared through the
banking system in order to be presented to the Fund for payment
through UMB Bank, n.a. An additional supply of drafts will be
furnished upon request. There presently is no charge for these
drafts or their clearance. However, the Fund and UMB Bank, n.a.
reserve the right to make reasonable charges and to terminate or
modify any or all of the services in connection with this privilege
at any time and without prior notice.

These drafts must be signed by all registered owners exactly as the
shares are registered, except that if shares are owned in joint
tenancy, drafts may be signed by any one joint owner unless
otherwise indicated on the application. They may be made payable
to the order of any person in any amount ranging from $500 to
$100,000. The bank of the draft payee must present it for
collection through UMB Bank, n.a. which delivers it to the Fund
for redemption of a sufficient number of shares to cover the
amount of the draft. Dividends will be earned by the shareholder
on the draft proceeds until it clears at UMB Bank, n.a. Drafts will
not be honored by the Fund and will be returned unpaid if there
are insufficient open account shares to meet the withdrawal
amount. The Fund reserves the right to withhold the bank's
redemption request until it determines that it has received
unconditional payment in federal funds for at least the number of
shares required to be redeemed to make payment on the draft. If
such a delay is necessary, the bank may return the draft not
accepted (by the Fund) because there are not sufficient shares for
which good payment has been received in the shareholder account.
Dividends declared but not yet paid to you cannot be withdrawn
by drafts. Drafts (checks) written on the Babson Tax-Free Income
Fund (Portfolio MM) should not be used as a redemption form or
for the transfer of shares to another Babson Fund unless the
registration of the accounts involved is identical.

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 PORTFOLIOS AND BABSON FUNDS

Shareholders may exchange without a waiting period their shares
of Portfolio MM which are held in open account, and shareholders
may exchange their shares of Portfolio S and Portfolio L if held in
open account for 30 days or more for identically registered shares
of any other Babson Fund, or any other Portfolio 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.

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 or Portfolios 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 of each Portfolio 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 prices for Portfolio S and Portfolio L are determined at 4:00
P.M.(Eastern Time). The price for Portfolio MM is determined at
1:00 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 each
Portfolio's total assets any liabilities and then dividing into this
amount the total outstanding shares as of the date of the
calculation.

Portfolio L and Portfolio S - Securities in Portfolio L
and Portfolio S for which market quotations are readily available
are valued at the mean between the most recent bid and asked
prices which may be furnished by a pricing service or directly by
market makers for such securities. Portfolio securities for which
market quotations are not readily available, and other assets, will
be valued at fair value using methods determined in good faith by
the Board of Directors and may include yield equivalents (bonds
are frequently quoted on the basis of yield), which will be applied
on a consistent basis. This shall include valuations which may be
furnished by a pricing service which may employ electronic data
processing techniques, including a matrix system to determine
valuations. Short-term instruments maturing within 60 days of the
valuation date may be valued at cost plus or minus any amortized
discount or premium. The Board of Directors will review valuation
methods regularly in order to determine their appropriateness.
Portfolio MM _ Normally Portfolio MM's price will be $1.00 per
share. Although unlikely, it still is possible that the value of the
shares you redeem may be more or less than your cost depending
on the market value of the Portfolio's securities at the time a
redemption becomes effective. The Fund has received an order of
exemption permitting the Money Market Portfolio to value its
assets on the basis of amortized cost.

The valuation of securities based upon amortized cost does not
take into account unrealized capital gains or losses. Using
amortized cost, an instrument is valued at its cost and thereafter a
constant amortization to maturity of any discount or premium is
assumed, regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method provides
certainty in valuation, it may result in periods during which value,
as determined by amortized cost, is higher or lower than the price
the Portfolio would receive if it sold the instrument. During
periods of declining interest rates, the daily yield on shares of the
Portfolio computed as described above may tend to be higher than
a like computation made by a fund with identical investments
utilizing a method of valuation based upon market prices and
estimates of market prices for its portfolio instruments. Thus, if the
use of amortized cost by the Portfolio resulted in a lower aggregate
Portfolio value on a particular day, a prospective investor in the
Portfolio would be able to obtain a somewhat higher yield than
would result from investment in a fund utilizing market values,
and existing investors in the Portfolio would receive less
investment income. The converse would apply in a period of rising
interest rates.

The Exemptive Order permitting the Money Market Portfolio to
value its assets on the basis of amortized cost and to maintain a
stable net asset value of $1.00 per share, is subject to certain
conditions which have been agreed to by the Fund. Accordingly,
the Fund maintains a dollar-weighted average Portfolio maturity
for the Money Market Portfolio of 90 days or less, and has agreed
to purchase instruments having remaining maturities not
exceeding one year, and to invest only in securities determined by
the Board of Directors to be of good quality with minimal credit
risks.

The Directors have established procedures designed to maintain
the Money Market Portfolio's price per share, as computed for the
purpose of sales and redemptions, at $1.00. These procedures
include a review of the Portfolio's holdings by the Directors at
such intervals as they deem appropriate to determine whether the
Portfolio's net asset value calculated by using available market
quotations deviates from $1.00 per share based on amortized cost.
If any deviation exceeds one-half of one percent, the Directors will
promptly consider what action, if any, will be initiated. In the
event the Directors determine that a deviation exists which may
result in material dilution or other unfair results to investors or
existing shareholders, they have agreed to take such corrective
action as they regard as necessary and appropriate, including the
sale of Portfolio instruments prior to maturity to realize capital
gains or losses or to shorten average Portfolio maturity; withhold
dividends; make a special capital distribution; redeem shares in
kind; or establish net asset value per share using available market
quotations.

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 1979, 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 the
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. Joanne E. Keers has been the
portfolio manager of Babson Tax-Free Portfolio MM since 1989.
She joined David L. Babson & Co. in 1987 and has eight years
investment management experience. Joel M. Vernick has been the
portfolio manager of Portfolios L and S since 1986. He is
Chartered Financial Analyst. He joined David L. Babson & Co. in
1986 and has 16 years investment management experience.
As compensation for all the foregoing services, Portfolio L and
Portfolio S pay Jones & Babson, Inc. a fee at the annual rate of
95/100 of one percent (.95%) of each Portfolio's average daily net
assets, which is computed daily and paid semimonthly, from
which Jones & Babson, Inc. pays David L. Babson & Co. Inc. a
fee of 25/100 of one percent (.25%). Portfolio MM pays Jones &
Babson, Inc. a fee at the annual rate of 50/100 of one percent
(.50%) computed daily and paid semimonthly, from which Jones
& Babson, Inc. pays David L. Babson & Co. Inc. a fee of 10/100
of one percent (.10%).

The annual fee charged by Jones & Babson, Inc. covers all normal
operating costs of the Fund. As a result, it 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 total expenses of the
Fund for the fiscal year ended June 30, 1995, amounted to 1.02%
of the average net assets for Portfolio L; 1.01% for Portfolio S and
.59% for Portfolio MM. Per share expenses of the three series may
differ due to differences in registration fees.

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 and 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, incorporated in Maryland on August 22, 1979, has a
present authorized capitalization of 200,000,000 shares of $.10 par
value common stock to be issued in three separate classes
("Portfolios"). Each full and fractional share, when issued and
outstanding, has: (1) equal voting rights with respect to matters
which affect the Fund in general and with respect to matters
relating solely to the interests of the Portfolio for which issued,
and (2) equal dividend, distribution and redemption rights to the
assets of the Portfolio for which issued and to general assets, if
any, of the Fund which are not specifically allocated to a particular
Portfolio. Shares when issued are fully paid and non-assessable.
Except for the priority of each share in the assets of its Portfolio,
the Fund will not issue any class of securities senior to any other
class. Shareholders do not have pre-emptive or conversion rights.
The Fund may issue additional series of stock with the approval of
the Fund's Board of Directors.

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. Each series will vote separately on
investment advisory agreements, changes in fundamental policies,
and other matters affecting each series separately.

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 "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

At the close of each business day, dividends consisting of
substantially all of each Portfolio's net investment income are
declared payable to shareholders of record at the close of the
previous business day, and credited to their accounts. All daily
dividends declared during a given month will be distributed on the
last day of the month. Dividend and capital gains distributions, if
any, are automatically reinvested in additional shares at net asset
value, unless the shareholder has elected in writing to receive cash.
The method of payment elected remains in effect until the Fund is
notified in writing to the contrary. If at the time of a complete
redemption and closing of a shareholder account, there is net
undistributed income to the credit of the shareholder, it will be
paid by separate check on the next dividend distribution date. In
the case of a partial redemption, any net undistributed credit will
be distributed on the next dividend date according to the
shareholder's instructions on file with the Fund.

Shares begin earning income on the day following the effective
date of purchase. Income earned by the Fund on weekends,
holidays and other days on which the Fund is closed for business
is declared as a dividend on the next day on which the Fund is
open for business, except for month-ends when such dividend is
declared as of the last day of the month.
Shareholders are notified annually by the Fund as to the Federal
tax status of dividends and distributions paid by each Portfolio
during the calendar year.

Each Portfolio within the Fund has qualified and intends to
continue to qualify for taxation as a "regulated investment
company" under the Internal Revenue Code so that each Portfolio
will not be subject to Federal income tax to the extent that it
distributes its income to its shareholders. In addition each Portfolio
intends to invest a sufficient portion of its assets in municipal
bonds and municipal notes so that it will qualify to pay "exempt-
interest dividends" (as defined in the Internal Revenue Code) to
shareholders. The dividends payable by a Portfolio from net tax-
exempt interest from municipal bonds will qualify as exempt-
interest dividends if, at the close of each quarter of its taxable year,
at least 50% of the value of the total assets of such Portfolio
consists of municipal bonds.

Exempt-interest dividends distributed to shareholders are not
includable in the shareholder's gross income for Federal income
tax purposes. Any insurance proceeds which represent maturing
interest on defaulted municipal obligations held by a Portfolio will
be excludable from Federal gross income. Distributions of net
investment income received by a Portfolio from investments in
debt securities other than municipal obligations, and any net
realized short-term capital gains distributed by a Portfolio, will be
taxable to the shareholders as ordinary income and will not be
eligible for the dividends-received deduction for corporations.
Further, any distribution of net realized capital gains will generally
be subject to taxation at the state and local level.
Any loss incurred on sale or exchange of shares, held for six
months or less, will be disallowed to the extent of exempt-interest
dividends received with respect to such shares.

The Tax Reform Act of 1986 imposes certain additional
restrictions on the use of tax-exempt bond financing for non-
governmental business activities, such as industrial development
bonds. Accordingly, interest on certain types of non-essential, or
private activity bonds may no longer be exempt from Federal
income tax. Interest on other types of non-essential or private
activity bonds while still tax-exempt, will be treated as a tax
preference item for corporate and individual investors in
determining their liability in tax years beginning after 1986.
Whether paid in cash or additional shares of a Portfolio, and
regardless of the length of time the shares in such Portfolio 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.
Information as to tax status of dividends will be provided annually
showing on an average basis that portion which is taxable and that
portion which is tax-exempt based on income received during the
previous year. Shareholders who have not been in a Portfolio for a
full fiscal year may have designated as tax-exempt a percentage of
income which is not equivalent to the actual amount applicable to
the period for which they have held shares. Such dividends and
distributions may also be subject to state and local taxes.
Exchanges and redemptions of shares in a Portfolio 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.

Each Portfolio intends to declare and pay dividends and capital
gains distributions so as to avoid imposition of
the federal excise tax. To do so, each Portfolio expects to distribute
during the 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 by a
Portfolio will be deemed to have been paid by such Portfolio and
received by shareholders on December 31 so long as the dividends
are actually paid before February 1 of the following year.
Pursuant to the Social Security Act Amendments of 1983, up to
50% of a social security recipient's benefits may be included in
federal taxable income for benefit recipients whose adjusted gross
income (including income from the tax-exempt sources such as
tax-exempt bonds in each Portfolio) plus 50% of their benefits
exceeds certain established amounts.

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 exemption of interest income for federal income tax purposes
may not result in similar exemptions under the laws of a particular
state or local taxing authority. The Fund will report annually to its
shareholders the percentage and source, on a state-by-state basis,
of interest income earned on municipal securities held be each
Portfolio during the preceding year.

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 _ 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.

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:
D.L. Babson Tax-Free Income 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

D.L. BABSON TAX-FREE INCOME 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
Municipal Securities Described and Ratings
Financial Statements

<PAGE>

INVESTMENT OBJECTIVE AND
POLICIES

The following policies supplement the
Fund's investment objective and policies
set forth in the Prospectus.

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 the
circumstances of the trade involved and to
the extent that they do not detract from
the quality of the execution.

In all transactions, it is the Fund's policy
to obtain the best combination of price and
execution commensurate with the
circumstances as viewed at the time.

The Fund expects that purchases and
sales of portfolio securities usually will be
principal transactions. Portfolio securities
normally will be purchased directly from
the issuer or in the over-the-counter
market from a principal market maker for
the securities, unless it appears that a
better combination of price and execution
may be obtained elsewhere. Usually there
will be no brokerage commission paid by
the Fund for such purchases. Purchases
from underwriters of portfolio securities
will include a commission or concession
paid by the issuer to the underwriter, and
purchases from dealers serving as market
makers will include the spread between the
bid and asked price.

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. 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 and
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.

The Fund does not intend to purchase
securities solely for short-term trading; nor
will securities be sold for the sole purpose
of realizing gains. A security may be sold
and another of comparable quality
purchased at approximately the same time,
however, to take advantage of what the
Fund's manager believes to be a disparity
in the normal yield relationship between
the two securities. In addition, a security
may be sold and another purchased when,
in the opinion of the Fund's management, a
favorable yield spread exists between
specific issues or different market sectors.

Since short-term debt instruments with
maturities of less than one year are
excluded from the calculation of portfolio
turnover, the Fund does not anticipate
having a portfolio turnover ratio for
Portfolio MM.

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 or the affected Portfolio series.

The Fund will not: (1) invest in equity
securities or securities convertible into
equities; (2) purchase more than 10% of
the outstanding publicly issued debt
obligations of any issuer; (3) borrow
money in any Portfolio except for
temporary emergency purposes, and then
only in an amount not exceeding 10% of
the value of the total assets of that
Portfolio; (4) pledge, mortgage or
hypothecate the assets of any Portfolio to
an extent greater than 10% of the value of
the net assets of that Portfolio; (5) issue
senior securities, as defined in the
Investment Company Act of 1940, as
amended; (6) underwrite any issue of
securities; (7) purchase or sell real estate,
but this shall not prevent investment in
municipal bonds secured by real estate; (8)
make loans to other persons, except by the
purchase of bonds, debentures or similar
obligations which are publicly distributed;
(9) purchase on margin or sell short; (10)
purchase or retain securities of an issuer if
to the knowledge of the Fund's
management those directors of the Fund,
each of whom owns more than one-half of
one percent (.5%) of such securities,
together own more than five percent (5%)
of the securities of such issuer; (11)
purchase or sell commodities or
commodity contracts; (12) invest in put,
call, straddle or special options; (13)
purchase securities of any issuer (except
the United States government, its agencies
and instrumentalities, and any municipal
bond guaranteed by the United States
government) in any Portfolio if, as a result,
more than 5% of the total assets of that
Portfolio would be invested in the
securities of such issuer; for purposes of
this limitation, "issuer" will be based on a
determination of the source of assets and
revenues committed to meeting interest
and principal payments of each security,
and a government entity which guarantees
the securities issued by another entity is
also considered an issuer of that security;
(14) invest in companies for the purpose of
exercising control; (15) invest in securities
of other investment companies, except as
they may be acquired as part of a merger,
consolidation or acquisition of assets; or
(16) invest more than 5% of the value of
its total assets at the time of investment in
the securities of any issuer or issuers which
have records of less than three years
continuous operation, including the
operation of any predecessor, but this
limitation does not apply to securities
issued or guaranteed as to interest and
principal by the United States government
or its agencies or instrumentalities.

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; or (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).

Certain states also require that the
Fund's investments in warrants which are
not listed on the New York or American
Stock Exchange, 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

Yield of Portfolio MM

From time to time, Portfolio MM may
quote its yield in advertisements,
shareholder reports or other
communications to shareholders. Yield
information is generally available by calling
the Fund toll free 1-800-4-BABSON (1-
800-422-2766), or in the Kansas City area
471-5200.

The current annualized yield for
Portfolio MM is computed by: (a)
determining the net change in the value of
a hypothetical pre-existing account in a
Fund having a balance of one share at the
beginning of a seven calendar-day period
for which yield is to be quoted, (b)
dividing the net change by the value of the
account at the beginning of the period to
obtain the base period return, and (c)
annualizing the results (i.e., multiplying the
base period return by 365/7). The net
change in value of the account reflects the
value of additional shares purchased with
dividends declared on the original share
and any such additional shares, but does
not include realized gains and losses or
unrealized appreciation and depreciation.
In addition, each Fund may calculate a
compound effective yield by adding 1 to
the base period return (calculated as
described above, raising the sum to a
power equal to 365/7 and subtracting 1).

For the seven-day period ended June 30,
1995, the current annualized yield of
Portfolio MM was 3.64% and the
compound effective yield was 3.70%. At
June 30, 1995, Portfolio MM's average
maturity was 44 days.

Total Return for Portfolio L and
Portfolio S

These Portfolios' "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 each of the Funds or Portfolios
for the specified periods.

Portfolio L Portfolio
S
For the one year
7/1/94-6/30/95 7.21% 5.32%

For the five years
7/1/90-6/30/95 7.46% 6.00%

For the ten years
7/1/85-6/30/95 8.27% 6.28%

From commencement
of operations
to 6/30/95* 7.69% 6.74%
__________________________________
* Portfolios L & S commenced operation
on February 22, 1980.

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 David L.
Babson Growth Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise
Fund II, Inc., Babson Value Fund, Inc., D.
L. Babson Money Market Fund, Inc., D.
L. Babson Bond Trust, 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, price per
share, and 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. 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 includes
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 practical, 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.

The aggregate management fee 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, was $613,654. The
.95% annual fee charged by Jones &
Babson, Inc. covers all normal operating
costs of the Fund. As a result, it is higher
than the fees of some other advisers whose
charges cover only investment advisory
services with all remaining operational
expenses absorbed directly by the Fund.
Yet, Jones & Babson's charges compare
favorably with these other advisers when
all expenses to Fund shareholders (i.e.,
operating expenses as a percent of average
net assets) are taken into account.

David L. Babson & Co. 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. For its investment
supervisory services and counsel, Jones &
Babson, Inc. pays David L. Babson & Co.
Inc. a fee computed on an annual basis at
the rate of .25% of the average daily total
net assets of the Fund. During the most
recent fiscal year ended June 30, 1995,
Jones & Babson, Inc. paid David L.
Babson & Co. Inc. fees amounting to
$156,465.

HOW SHARE PRICE IS
DETERMINED

The net asset value per share of each
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
Martin Luther Third Monday
King Day* in January
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
Columbus Day* Second Monday
in October
Veterans' Day* November 11
Thanksgiving Day Fourth Thursday
in November
Christmas Day December 25

* Money Market Portfolio only.

OFFICERS AND DIRECTORS

The Fund is managed by Jones &
Babson subject to the supervision and
control of the Board of Directors.
Following is a list of the 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., David L. Babson Growth Fund, Inc.,
D.L. Babson Money Market 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.; Trustee and
President, D. L. Babson Bond Trust.

Francis C. Rood, Director.
Retired, 6429 West 92nd Street, Overland
Park, Kansas 66212. Formerly, Group
Vice President-Administration of
Hallmark Cards, Inc.; Director, David L.
Babson Growth Fund, Inc., D.L. Babson
Money Market 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,
David L. Babson Growth Fund, Inc., D.
L. Babson Money Market 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.

__________________________________

* Directors who are interested persons as
that term is defined in the Investment
Company Act of 1940, as amended.

H. David Rybolt, Director.
Consultant, HDR Associates, P.O. Box
2468, Shawnee Mission, Kansas 66202;
Director, David L. Babson Growth Fund,
Inc., D.L. Babson Money Market 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., David L. Babson Growth
Fund, Inc., D.L. Babson Money Market
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.

Michael A. Brummel, Vice President,
Assistant Secretary and Assistant
Treasurer.
Vice President, Jones & Babson, Inc.,
David L. Babson Growth Fund, Inc., D.L.
Babson Money Market 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., David L. Babson Growth
Fund, Inc., D.L. Babson Money Market
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.

Edward L. Martin, Vice President.
Executive Vice President and Director,
David L. Babson & Co. Inc., One
Memorial Drive, Cambridge,
Massachusetts 02142; Vice President,
D.L. Babson Money Market Fund, Inc.,
D.L. Babson Bond Trust.

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 approved by the directors
each year, and in years in which an annual
meeting is held the directors may submit
their selection of independent public
accountants 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

DAVID L. BABSON GROWTH
FUND, INC. was organized in 1960
with the objective of long-term growth
of both capital and dividend income
through investment in the common
stocks of well-managed companies
which have a record of long-term above-
average growth of both earnings and
dividends.

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.

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 Fund 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.

MUNICIPAL SECURITIES
DESCRIBED
AND RATINGS

In evaluating investment suitability, each
investor must relate the characteristics of a
particular investment under consideration
to personal financial circumstances and
goals.

Municipal securities include bonds and
other debt obligations issued by or on
behalf of states, territories and possessions
of the United States of America and the
District of Columbia including their
political subdivisions or their duly
constituted authorities, agencies and
instrumentalities, the interest on which is
exempt from federal income tax.

Municipal securities are issued to obtain
funds for various public purposes,
including the construction of a wide range
of public facilities, such as airports,
bridges, highways, housing, hospitals,
mass transportation, schools, streets,
waterworks and sewer systems. Municipal
securities also may be issued in connection
with the refunding of outstanding
obligations and obtaining funds to lend to
other public institutions and facilities or for
general operating expenses.

The two principal classifications of
municipal bonds are "general obligation"
and "revenue." General obligation bonds
are secured by the issuer's pledge of its full
faith, credit and taxing power for the
payment of principal and interest.
Revenue bonds are payable only from the
revenues derived from a particular facility
or class of facilities, or in some cases, from
the proceeds of a special excise tax or
other specific revenue source.

The Fund may invest in industrial
development bonds, the interest from
which is exempt from federal income tax.
Under certain circumstances, "substantial
users" of the facilities financed with such
obligations, or persons related to
"substantial users," may be required to pay
federal income tax on this otherwise
exempted interest. Such persons should
consult the Internal Revenue Code and
their financial adviser to determine
whether or not the Fund is an appropriate
investment for them.

There are a variety of hybrid and special
types of municipal obligations, as well as
numerous differences in the security of
municipal bonds, both within and between
the two principal classifications of general
obligation and revenue.

Municipal notes include tax, revenue and
bond anticipation notes of short maturity,
generally less than three years, which are
issued to obtain temporary funds for
various public purposes. Also included in
this category are Construction Loan
Notes, Short-Term Discount Notes and
Project Notes issued by a state or local
housing agency but secured by the full
faith and credit of the United States.

Yields on municipal securities depend on
a variety of factors, such as the size of a
particular offering, the maturity and the
rating of the obligation, economic and
monetary conditions, and conditions of the
municipal securities market, including the
volume of municipal securities available.
Market values of municipal securities will
vary according to the relation of their
yields available. Consequently, the net
asset value of the Fund and its shares can
be expected to change as the level of
interest rates fluctuates.

Municipal obligations, like all other debt
obligations, carry a risk of default.
Through careful selection and supervision,
and concentration in the higher-quality
investment grade issues, management
intends to reduce this risk.

Prices of outstanding municipal
securities will fluctuate with changes in the
interest rates on new issues. Thus, the
price of the Fund's shares will tend to
increase as the rates on new issues decline,
and decrease whenever the current rate is
rising. Management will seek to minimize
such share price fluctuation to the extent
this can be achieved without detracting
from the Fund's primary objective of the
highest quality and maturity characteristics
of the Portfolio.

Municipal securities are not traded as
actively as other securities. Even though
municipal securities will be redeemed at
face value upon maturity, from time to
time, when there has been no active
trading in a particular Portfolio holding, its
interim pricing for the purpose of the daily
valuation of the Fund shares may have to
be based on other sources of information
and methods deemed fair and reasonable
by the Board of Directors. One principal
method which is commonly used by Funds
and other investors who own municipal
securities is called matrix pricing.

From time to time, proposals have been
introduced in Congress to restrict or
eliminate the federal income tax exemption
for interest on municipal securities.
Similar proposals may be introduced in the
future. If such a proposal was enacted, the
availability of municipal securities for
investment by the Fund would be
adversely affected. In such event, the
Fund would re-evaluate its investment
objective and policies and submit possible
changes in the structure of the Fund for
the consideration of the shareholders.

RATINGS OF MUNICIPAL
SECURITIES

The ratings of bonds by Moody's and
Standard and Poor's Corporation represent
their opinions of quality of the municipal
bonds they undertake to rate. These
ratings are general and are not absolute
standards. Consequently, municipal bonds
with the same maturity, coupon and rating
may have different yields, while municipal
bonds of the same maturity and coupon
with different ratings may have the same
yield.

Both Moody's and S&P's Municipal
Bond Ratings cover obligations of states
and political subdivisions. Ratings are
assigned to general obligation and revenue
bonds. General obligation bonds are
usually secured by all resources available
to the municipality and the factors outlined
in the rating definitions below are
weighted in determining the rating.
Because revenue bonds in general are
payable from specifically pledged
revenues, the essential element in the
security for a revenue bond is the quantity
and quality of the pledged revenues
available to pay debt service.

Although an appraisal of most of the
same factors that bear on the quality of
general obligation bond credit is usually
appropriate in the rating analysis of a
revenue bond, other factors are important,
including particularly the competitive
position of the municipal enterprise under
review and the basic security covenants.
Although a rating reflects S&P's judgment
as to the issuer's capacity for the timely
payment of debt service, in certain
instances it may also reflect a mechanism
or procedure for an assured and prompt
cure of a default, should one occur, i.e., an
insurance program, federal or state
guaranty, or the automatic withholding
and use of state aid to pay the defaulted
debt service.

S&P'S RATINGS

AAA Prime - These are obligations of
the highest quality. They have the
strongest capacity for timely payment of
debt service.

General Obligation Bonds - In a period
of economic stress, the issuers will suffer
the smallest declines in income and will be
least susceptible to autonomous decline.
Debt burden is moderate. A strong
revenue structure appears more than
adequate to meet future expenditure
requirements. Quality of management
appears superior.

Revenue Bonds - Debt service coverage
has been, and is expected to remain,
substantial. Stability of the pledged
revenues is also exceptionally strong, due
to the competitive position of the
municipal enterprise or to the nature of the
revenues. Basic security provisions
(including rate covenant, earnings test for
issuance of additional bonds, debt service,
reserve requirements) are rigorous. There
is evidence of superior management.

AA - High Grade - The investment
characteristics of general obligation and
revenue bonds in this group are only
slightly less marked than those of the
prime quality issues. Bonds rated "AA"
have the second strongest capacity for
payment of debt service.

A - Good Grade - Principal and interest
payments on bonds in this category are
regarded as safe. This rating describes the
third strongest capacity for payment of
debt service. It differs from the two higher
ratings because:

General Obligation Bonds - There is
some weakness, either in the local
economic base, in debt burden, in the
balance between revenues and
expenditures, or in quality of management.
Under certain adverse circumstances, any
one such weakness might impair the ability
of the issuer to meet debt obligations at
some future date.

Revenue Bonds - Debt service coverage
is good, but not exceptional. Stability of
the pledged revenues could show some
variations because of increased
competition or economic influences on
revenues. Basic security provisions, while
satisfactory, are less stringent.
Management performance appears
adequate.

MOODY'S RATINGS OF
MUNICIPAL BONDS

Aaa - Bonds which are rated Aaa are
judged to be of the best quality. These
securities carry the smallest degree of
investment risk and are generally referred
to as "gilt-edge". Interest payments are
protected by a large, or by an
exceptionally stable margin, and principal
is secure. While the various protective
elements are likely to change, such
changes as can be visualized are most
unlikely to impair the fundamentally strong
position of such issues.

Aa - Bonds which are rated Aa are
judged to be of high quality by all
standards. They are rated lower than the
best bonds because margins of protection
may not be as large as in Aaa securities,
fluctuation of protective elements may be
of greater amplitude, or there may be other
elements present which make the long-
term risks appear somewhat greater.

A - Bonds which are rated A possess
many favorable investment attributes and
are to be considered as upper medium
grade obligations. Factors giving security
to principal and interest are considered
adequate, but elements may be present
which suggest a susceptibility to
impairment sometime in the future.

MOODY'S RATINGS OF
MUNICIPAL NOTES

MIG 1: The best quality, enjoying
strong protection from established cash
flows of funds for their servicing or from
established and broad based access to the
market for refinancing, or both.

MIG 2: High quality, with margins of
protection ample, although not so large as
in the preceding group.

MIG 3: Favorable quality, with all
security elements accounted for, but
lacking the undeniable strength of the
preceding grades. Market access for
refinancing, in particular, is likely to be
less well established.

COMMERCIAL PAPER RATINGS

Moody's . . . Moody's commercial paper
rating is an opinion of the ability of an
issuer to repay punctually promissory
obligations not having an original maturity
in excess of nine months. Moody's has
one rating - prime. Every such prime
rating means Moody's believes that the
commercial paper note will be redeemed
as agreed. Within this single rating
category are the following classifications:

Prime - 1 Highest Quality
Prime - 2 Higher Quality
Prime - 3 High Quality

The criteria used by Moody's for rating a
commercial paper issuer under this graded
system include, but are not limited to the
following factors:

(1) evaluation of the management of the
issuer;

(2) economic evaluation of the issuer's
industry or industries and an
appraisal of speculative type risks
which may be inherent in certain
areas;

(3) evaluation of the issuer's products in
relation to competition and customer
acceptance;

(4) liquidity;

(5) amount and quality of long-term
debt;

(6) trend of earnings over a period of ten
years;

(7) financial strength of a parent
company and relationships which
exist with the issuer; and

(8) recognition by the management of
obligations which may be present or
may arise as a result of public
interest questions and preparations
to meet such obligations.

S&P . . . Standard & Poor's commercial
paper rating is a current assessment of the
likelihood of timely repayment of debt
having an original maturity of no more
than 270 days. Ratings are graded into
four categories, ranging from "A" for the
highest quality obligations to "D" for the
lowest. The four categories are as
follows:

"A" Issues assigned this highest rating
are regarded as having the greatest
capacity for timely payment. Issues in
this category are further refined with
the designations 1, 2 and 3 to indicate
the relative degree of safety.

"A-1" This designation indicates
that the degree of safety
regarding timely payment is very
strong.

"A-2" Capacity for timely
payment on issues with this
designation is strong. However,
the relative degree of safety is
not as overwhelming.

"A-3" Issues carrying this
designation have a satisfactory
capacity for timely payment.
They are, however, somewhat
more vulnerable to the adverse
effects of changes in
circumstances than obligations
carrying the higher designations.

"B" Issues rated "B" are regarded as
having only an adequate capacity for
timely payment. Furthermore, such
capacity may be damaged by changing
conditions or short-term adversities.

"C" This rating is assigned to short-term
debt obligations with a doubtful
capacity for payment.

"D" This rating indicates that the issuer
is either in default or is expected to be
in default upon maturity.

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 State Street Bank and Trust Company.

(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.
(to be supplied by further amendment)

(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) Not Applicable.

(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 $0.10 par value 524
Portfolio S - Shorter Term

Common Stock $0.10 par value 759
Portfolio L - Longer Term

Common Stock $0.10 par value 344
Portfolio MM - Money Market

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 sponsoredby 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
Enterprise Fund, Inc., Babson Value Fund, Inc., D.L.
Babson Money Market Fund, Inc., D.L. Babson Bond Trust,
Shadow Stock Fund, Inc., Babson-Stewart Ivory
International Fund, Inc., UMB Stock Fund, Inc., UMB
Bond Fund, Inc., UMB Money Market Fund, Inc. and UMB
Tax-Free Money Market Fund, Inc. and UMB Qualified
Dividend 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

3
<PAGE>
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
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.

D. L. BABSON TAX-FREE INCOME 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 #22 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

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 D. L.
Babson Tax-Free Income 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. 22 to the Registration Statement File
No. 2-79132 under the Securities Act of 1933 and Amendment No. 23 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

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</TABLE>