BABSON D L TAX FREE INCOME FUND INC, 485BPOS, 1998-10-23

BABSON D L TAX FREE INCOME FUND INC
485BPOS, 1998-10-23

Previous: SABA PETROLEUM CO, 8-K, 1998-10-23

Next: BABSON D L MONEY MARKET FUND INC, 485BPOS, 1998-10-23

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. 25 File No. 2-65489 [X]

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

Amendment No. 26 File No. 811-2948 [X]

D. L. BABSON TAX-FREE INCOME FUND, INC.
- --------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

700 Karnes Blvd., Kansas City, Missouri 64108-3306
- --------------------------------------------------------------
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code (816)-751-5900

Larry D. Armel, President, D. L. BABSON TAX-FREE INCOME FUND, INC.
700 Karnes Blvd., Kansas City, Missouri 64108-3306
- --------------------------------------------------------------
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: October 31, 1998

It is proposed that this filing become effective:

X On October 31, 1998, pursuant to paragraph (b) of Rule 485

Title of securities being registered:

Common Stock, $1.00 par value

Please address inquiries and communications to:
Martin A. Cramer
D. L. Babson Tax-Free Income Fund, Inc.
700 Karnes Blvd.
Kansas City, MO 64108-3306
Telephone: (816) 751-5900

and a carbon copy of all communications to:
Mark H. Plafker, Esq.
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Telephone: (215) 564-8000

<PAGE>

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

Item 10. Cover Page . . . . . . . . . . . . . Cover Page

Item 11. Table of Contents . . . . . . . . . Cover Page

Item 12. General Information and History . . Investment Objectives and
Policies; Management and
Investment Counsel

Item 13. Investment Objectives and Policies . Investment Objectives
and Policies;
Investment Restrictions

Item 14. Management of the Fund . . . . . . . Management and
Investment Counsel

Item 15. Control Persons and Principal . . . Management and
Holders of Securities Investment Counsel;
Officers and Directors

Item 16. Investment Advisory and other . . . Management and Investment
Services Counsel; Shareholder
Services (Prospectus)

Item 17. Brokerage Allocation . . . . . . . . Portfolio Transactions

Item 18. Capital Stock and Other Securities . General Information;
Financial Statements

Item 19. Purchase, Redemption and Pricing . . How Share Purchases
of Securities Being Offered are Handled; Redemption
of Shares
Financial Statements

Item 20. Tax Status . . . . . . . . . . . . . Dividends, Distributions
and their Taxation (in
Prospectus)

Item 21. Underwriters . . . . . . . . . . . . How the Fund's Shares
are Distributed

Item 22. Calculation of Yield Quotations. . . Performance Measures
of Money Market Fund

Item 23. Financial Statements . . . . . . . . (Incorporated by
reference)

<PAGE>
BABSON
Tax-Free
Income
FUND

Prospectus
October 31, 1998

A no-load mutual fund principally invested
in municipal securities to provide regular
income exempt from federal tax.

BABSON FUNDS
Jones & Babson Distributors
A member of the Generali Group

PROSPECTUS
October 31, 1998

D. L. BABSON TAX-FREE
INCOME FUND, INC.

Managed and Distributed By:
JONES & BABSON, INC.
Kansas City, Missouri

Toll-Free 1-800-4-BABSON
(1-800-422-2766)
In the Kansas City area 751-5900

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 matu-
rity 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 (unless Automatic Monthly) $ 1,000
Initial Uniform Transfers (Gifts) to
Minors Purchases (unless Automatic Monthly) $ 250
Subsequent Purchase (unless Automatic Monthly):
By Mail or Telephone Purchase (ACH) $ 100
By Wire $ 1,000
Automatic Monthly Purchases (ACH):
Initial $ 100
Subsequent $ 50

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 above.

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 calling
the Fund at the telephone numbers indicated above or by writing to the
address on the back cover.

These securities have not been approved or disapproved by the Securities
and Exchange Commission nor has the Commission passed upon the accuracy
or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.

TABLE OF CONTENTS
Page
Fund Expenses 3
Financial Highlights 5
Investment Objective and Portfolio Management Policy 7
Repurchase Agreements 8
Risk Factors 8
Investment Restrictions 9
Performance Measures 9
How to Purchase Shares 11
Initial Investments 11
Investments Subsequent to Initial Investment 12
Telephone Investment Service 12
Automatic Monthly Investment Plan 12
How to Redeem Shares 13
Systematic Redemption Plan 16
How to Exchange Shares Between Funds and Portfolios 16
How Share Price is Determined 17
Officers and Directors 19
Management and Investment Counsel 19
General Information and History 20
Dividends, Distributions and Their Taxation 21
Shareholder Services 22
Shareholder Inquiries 23

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 Operating Expenses
(as a percentage of average net assets)
Management fees .95%
12b-1 fees None
Other expenses .11%
Total Fund operating expenses 1.06%

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 Years 5 Years 10 Years

$11 $34 $58 $129

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 Operating Expenses
(as a percentage of average net assets)
Management fees .95%
12b-1 fees None
Other expenses .11%
Total Fund operating expenses 1.06%

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 Years 5 Years 10 Years

$11 $34 $58 $129

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 Operating Expenses
(as a percentage of average net assets)
Management fees .50%
12b-1 fees None
Other expenses .11%
Total Fund operating expenses .61%

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 Years 5 Years 10 Years

$6 $20 $34 $77

The above information is provided in order to assist you in
understanding the various costs and expenses that a share-
holder of the Fund will bear directly or indirectly. The expenses set
forth above are for the fiscal year ended June 30, 1998. The example
should not be considered a representation of past or future expenses.
Actual expenses may be greater or less than those shown.

FINANCIAL HIGHLIGHTS

The following financial highlights for each of the past ten fiscal years
have been derived from audited financial statements of D.L. Babson Tax-
Free Income Fund, Inc. Such information for the most recent five fiscal
years 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, 1998, Annual Report to
Shareholders which is incorporated by reference into this prospectus.
The information for each of the five fiscal years from the period ended
June 30, 1989 to June 30, 1993, is not covered by the report of Arthur
Andersen LLP.

<TABLE>
<CAPTION>
PORTFOLIO L 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 8.96 $ 8.74 $ 8.67 $ 8.52 $ 9.49 $ 9.04 $ 8.74 $ 8.63 $ 8.80 $ 8.41
Income from investment operations:
Net investment income 0.40 0.42 0.41 0.42 0.43 0.46 0.52 0.54 0.56 0.65
Net gains (or losses) on securities
(both realized and unrealized) 0.28 0.24 0.07 0.17 (0.56) 0.57 0.57 0.11 (0.17) 0.39
Total from investment
operations 0.68 0.66 0.48 0.59 (0.13) 1.03 1.09 0.65 0.39 1.04

Less distributions:
Dividends from net
investment income (0.40) (0.42) (0.41) (0.42) (0.43) (0.46) (0.52) (0.54) (0.56) (0.65)
Distributions from
capital gains (0.02) (0.02) - (0.02) (0.41) (0.12) (0.27) - - -
Total distributions (0.42) (0.44) (0.41) (0.44) (0.84) (0.58) (0.79) (0.54) (0.56) (0.65)
Net asset value, end of year $ 9.22 $ 8.96 $ 8.74 $ 8.67 $ 8.52 $ 9.49 $ 9.04 $ 8.74 $ 8.63 $ 8.80

Total return 8% 8% 6% 7% (2)% 12% 13% 8% 5% 13%

Ratios/Supplemental Data
Net assets, end of year
(in millions) $ 27 $ 27 $ 27 $ 28 $ 30 $ 34 $ 30 $ 29 $ 28 $ 26
Ratio of expenses to average
net assets 1.06% 1.01% 1.01% 1.02% 1.02% 1.00% 0.99% 0.98% 1.00% 0.99%
Ratio of net investment income to
average net assets 4.46% 4.71% 4.67% 4.98% 4.73% 5.03% 5.73% 6.22% 6.47% 7.51%
Portfolio turnover rate 18% 21% 39% 34% 53% 126% 128% 116% 121% 172%
</TABLE>

<TABLE>
<CAPTION>
PORTFOLIO S 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.74 $10.69 $10.71 $10.62 $11.05 $10.78 $10.54 $10.44 $10.46 $10.54
Income from investment operations:
Net investment income 0.44 0.44 0.44 0.45 0.46 0.50 0.55 0.59 0.61 0.68
Net gains (or losses) on securities
(both realized and unrealized) 0.08 0.10 0.01 0.10 (0.37) 0.29 0.36 0.21 (0.02) (0.05)
Total from investment
operations 0.52 0.54 0.45 0.55 0.09 0.79 0.91 0.80 0.59 0.63

Less distributions:
Dividends from net
investment income (0.44) (0.44) (0.44) (0.45) (0.46) (0.50) (0.55) (0.59) (0.61) (0.68)
Distributions from
capital gains (0.03) (0.05) (0.03) (0.01) (0.06) (0.02) (0.12) (0.11) - (0.03)
Total distributions (0.47) (0.49) (0.47) (0.46) (0.52) (0.52) (0.67) (0.70) (0.61) (0.71)
Net asset value, end of year $10.79 $10.74 $10.69 $10.71 $10.62 $11.05 $10.78 $10.54 $10.44 $10.46

Total return 5% 5% 4% 5% 1% 8% 9% 8% 6% 6%

Ratios/Supplemental Data
Net assets, end of year
(in millions) $ 21 $ 23 $ 25 $ 28 $ 29 $ 26 $ 22 $ 18 $ 18 $ 18
Ratio of expenses to average
net assets 1.06% 1.01% 1.01% 1.01% 1.02% 1.00% 1.00% 0.99% 0.99% 0.99%
Ratio of net investment income to
average net assets 4.00% 4.12% 4.13% 4.28% 4.22% 4.58% 5.14% 5.57% 5.82% 6.48%
Portfolio turnover rate 21% 23% 41% 34% 21% 47% 81% 98% 74% 115%
</TABLE>

<TABLE>
<CAPTION>
PORTFOLIO MM 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
</CAPTION>
<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 0.03 0.03 0.03 0.02 0.02 0.03 0.05 0.05 0.05

Less distributions:
Dividends from net
investment income (0.03) (0.03) (0.03) (0.03) (0.02) (0.02) (0.03) (0.05) (0.05) (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% 3% 3% 3% 2% 2% 3% 5% 6% 6%

Ratios/Supplemental Data
Net assets, end of year
(in millions) $ 10 $ 9 $ 8 $ 16 $ 15 $ 9 $ 10 $ 10 $ 11 $ 14
Ratio of expenses to average
net assets 0.61% 0.58% 0.58% 0.59% 0.57% 0.56% 0.55% 0.54% 0.55% 0.54%
Ratio of net investment income
to average net assets 3.06% 3.10% 3.15% 3.07% 1.99% 2.18% 3.40% 4.82% 5.44% 5.69%
</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 Secu-rities Described and
Ratings" in the "Statement of Addi-tional 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,
1998, the following percentages of income were exempt from federal
income taxes: Portfolio L, 97.85%, Portfolio S, 99.76% and Portfolio MM,
99.82%.

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 investments in municipal securities in
accordance with its investment policies.

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 net assets of the Fund.

RISK FACTORS

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.

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.

Risk Factors Applicable to
Year 2000 Issue

Like other mutual funds, as well as other financial and business
organizations around the world, the Fund could be adversely affected if
the computer systems used by the Manager, Investment Counsel and other
service providers, in performing their administrative functions do not
properly process and calculate date-related information and data as of
and after January 1, 2000. This is commonly known as the "Year 2000
Issue." The Manager and Investment Counsel are taking steps that they
believe are reasonably designed to address the Year 2000 Issue with
respect to computer systems that they use and to obtain reasonable
assurances that comparable steps are being taken by the Fund's other
major service providers. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse
impact to the Fund.

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 751-5900.

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
fig-
ures 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 and
Fortune, 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. To complete a purchase order by
mail, wire or telephone, please provide the information detailed below.
For information or assistance call toll free 1-800-4-BABSON
(1-800-422-2766), or in the Kansas City area 751-5900. 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 effective after a purchase order and payment have been
received and accepted 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 such institutions.

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. The minimum initial purchase for each Portfolio
selected is $1,000 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. However, if electing the
Automatic Monthly Investment Plan, the minimum initial purchase for each
Portfolio selected is reduced to $100 for all accounts. Make your check
payable to UMB Bank, n.a. Mail your application and check to:

D.L. Babson Tax-Free Income Fund, Inc.
P.O. Box 419757
Kansas City, MO 64141-6757

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 751-5900 and provide 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 may 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 telephone purchase, or $1,000 or more
if purchases are made by wire. Automatic monthly investments must be in
amounts of $50 or more.

Checks should be made payable to UMB Bank, n.a. and mailed to the Fund
at:

P.O. Box 419779
Kansas City, MO 64141-6779

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 name of 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 ($100
minimum) for the cost of the shares so purchased. Debits to your
checking account would be processed through the Automated Clearing House
(ACH). 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
followed, the Fund will not 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 shareholders.

AUTOMATIC MONTHLY
INVESTMENT PLAN

You may elect to make monthly investments in a constant dollar amount
from your checking account ($50 minimum, after an initial investment of
$100 or more for any account). 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. Debits to your checking account would be processed through
the Automated Clearing House (ACH). 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

The Fund will redeem shares at the price (net asset value per share)
effective after receipt of a redemption request in "good order." (See
"How Share Price is Determined.") Shares can be redeemed by written
request or if previously authorized by telephone toll free 1-800-4-
BABSON
(1-800-422-2766), or in the Kansas City area 751-5900.

All telephone requests to redeem shares, the proceeds of which are to be
paid by check, made within 30 days of our receipt of an address change
(including requests to redeem that accompany an address change) must be
in writing. The request must be signed by each person in whose name the
shares are owned, and all signatures must be guaranteed.

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 privilege, you should
carefully note the special requirements and limitations relating to
these methods. Draft writing (check) privileges are available for
Portfolio MM - Money Market only. 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.

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:

P.O. Box 419757
Kansas City, MO 64141-6757

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 third business 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, whichever occurs first.
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 of
$50,000 or more 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 in 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 $50,000 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 three-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. Since the minimum investment amount
and the minimum account size are the same, any redemption from an
account containing only the minimum investment amount may result in
redemption of that
account.

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:

A written request for redemption, together with an endorsed share
certificate where a certificate has been issued, must be received by the
Fund in order to constitute a valid tender for redemption. For
authorization of redemptions by a corporation, it will also be necessary
to have an appropriate certified copy of resolutions on file with the
Fund before a redemption request will be considered in "good order."
In the case of certain institutions which have made satisfactory
redemption arrangements with the Fund, redemption orders may be
processed by facsimile or telephone transmission at net asset value per
share next effective after receipt by the Fund.

(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 (see Signature Guarantees);
and

(4) any additional documentation which the Fund may deem
necessary to insure a genuine redemption.

Withdrawal By Telephone or Telegraph - You may withdraw any amount
($1,000 minimum if wired) or more by telephone toll free 1-800-4-BABSON
(1-800-422-2766), or in the Kansas City area 751-5900, 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. Funds will be
sent only to the address of record. 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. Requests received prior to 1:00 P.M.
(Eastern Time) for Portfolio MM and 4:00 P.M. (Eastern Time) for
Portfolios L and S, proceeds will be wired the following business day.
Once the funds are transmitted, the time of receipt and the funds'
availability are not under our control. 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. Wired funds
are subject to a $10 fee to cover bank wire charges, which is normally
deducted from redemption proceeds, unless otherwise instructed. This
charge may be reduced or waived in connection with certain 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 FUNDS AND PORTFOLIOS

Shareholders may exchange without a waiting period shares of Portfolio
MM which are held in an open account, and shareholders may exchange
shares of Portfolio S and Portfolio L if held in an open account for 15
days or more for identically registered shares of any other Babson Fund
or Portfolio, or Buffalo Fund which is authorized for sale in the state
in which the investor is located, except Babson Enterprise Fund, Inc.,
provided that the minimum amount exchanged has a value of $1,000 and
meets the minimum investment requirement of the Fund or Portfolio into
which it is exchanged. Automatic exchanges ($100 minimum) are also
available for all accounts. Once started, they continue monthly until
all shares are exchanged or until you terminate the Automatic Exchange
authorization.

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 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 Privi-lege, all registered
owners must sign the appropriate section on the original application, or
the Fund must receive a special authorization form, provided upon
request. During periods of increased market activity, you may have
difficulty reaching the Fund by telephone, in which case you should
contact the Fund by mail or telegraph. The Fund reserves the right to
initiate a charge for this service and to terminate or modify any or all
of the privileges in connection with this service at any time and
without prior notice under any circumstances where continuance of these
privileges would be detrimental to the Fund or its shareholders such as
an emergency, or where the volume of such activity threatens the ability
of the Fund to conduct business, or under any other circumstances, upon
60 days written notice to shareholders. The Fund will not be responsible
for the consequences of delays including delays in the banking or
Federal Reserve wire systems.

The Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, and if such procedures are
followed, the Fund will not 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 in-
structions received by telephone, providing written confirmations of
such transactions, and/or tape recording of
telephone instructions.

Exchanges by mail may be accomplished by a written request properly
signed by all registered owners identifying the account by name and
number, the number of shares or dollar amount to be redeemed for
exchange and the Fund or Portfolio 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 Babson Fund or Portfolio, or Buffalo Fund, 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. An 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., BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306, was founded in 1959. 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; fees and other charges of governments and
their agencies, including the cost of qualifying the Fund's shares for
sale in any jurisdiction; 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 11 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 19 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.
Jones & Babson, Inc. pays David L. Babson & Co. Inc. a fee of 25/100 of
one percent (.25%) of the average daily total net assets. Portfolio MM
pays Jones & Babson, Inc. a fee at the annual rate of 50/100 of one
percent (.50%) of average daily net assets. Jones & Babson, Inc. pays
David L. Babson & Co. Inc. a fee of 10/100 of one percent (.10%) of the
average daily total net assets. Both fees are computed daily. The fee to
Jones & Babson, Inc. is paid semimonthly and the fee to David L. Babson
& Co. Inc. is paid monthly. The total expenses of the Fund for the
fiscal year ended June 30, 1998, amounted to 1.06% of the average net
assets for Portfolio L; 1.06% for Portfolio S and .61% 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, 1999, 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, as
required under the Investment Company Act of 1940.

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 particu-
lar 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 General Corporation Law permits 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 gain 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 a
Portfolio 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.

Distributions by each Portfolio of the Fund will consist primarily of
exempt-interest dividends from interest earned on municipal bonds and
notes. In general, exempt-interest dividends are exempt from federal
income tax. However, a Portfolio may invest a portion of its assets in
securities that generate income that is not tax exempt. Distributions by
a Portfolio from such income are taxable as ordinary income. Any capital
gains distributed by a Portfolio are taxable as long-term capital gains
no matter how long you have owned your shares. Distributions of ordinary
income or capital gains are taxable to you whether you reinvest your
distributions or receive them in cash.

When you sell your shares of a Portfolio, you may have a capital gain or
loss. For tax purposes, an exchange is the same as a sale. The tax rate
on any gain from the sale or exchange of your shares depends on how long
you have held your shares. Because the Money Market Portfolio expects to
maintain a $1.00 net asset value per share, you should not have any gain
or loss on the sale of Money Market Portfolio shares.

Exempt-interest dividends are taken into account in determining the
taxable portion of your social security or railroad retirement benefits.
A Portfolio may invest a portion of its assets in private activity
bonds, the income from which is a preference item in determining your
alternative minimum tax.

Exempt-interest dividends from interest earned on municipal bonds of a
state, or of its political subdivisions, will generally be exempt from
that state's personal income taxes. A state does not, however, grant
tax-free treatment to interest on investments in municipal bonds of
other states. Ordinary income and capital gain distributions and gains
from the sale or exchange of a Portfolio's shares will generally be
subject to state and local income tax. Non-U.S. investors may be subject
to U.S. withholding and estate tax.

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 Federal, State, Local and Foreign 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 ($50
minimum, after an initial investment of $100 or more). 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 $100 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 in any
of the Babson Funds for shares to be held in an identically registered
account in any other Babson Fund or Portfolio, or Buffalo Fund, except
Babson Enterprise Fund, Inc., according to your instructions. The
minimum amount is $100, and monthly exchanges will continue 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 751-5900.

Shareholders may address written inquiries to the
Fund at:

Mailing Addresses
For Subsequent Purchases:
D.L. Babson Tax-Free Income Fund, Inc.
P.O. Box 419779
Kansas City, MO 64141-6779

For All Other Correspondence:
D.L. Babson Tax-Free Income Fund, Inc.
P.O. Box 419757
Kansas City, MO 64141-6757

Overnight Deliveries
D.L. Babson Tax-Free Income Fund, Inc.
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306

AUDITORS
ARTHUR ANDERSEN LLP
Kansas City, Missouri

LEGAL COUNSEL
STRADLEY, RONON, STEVENS & YOUNG, LLP
Philadelphia, Pennsylvania

CUSTODIAN
UMB BANK, n.a.
Kansas City, Missouri

TRANSFER AGENT
JONES & BABSON, INC.
Kansas City, Missouri

EQUITIES
Growth Fund
Enterprise Fund*
Enterprise Fund II
Value Fund
Shadow Stock Fund
International Fund

FIXED INCOME
Bond Trust
Money Market Fund
Tax-Free Income Fund

*Closed to new investors.

BABSON FUNDS
Jones & Babson Distributors
A member of the Generali Group

P.O. Box 419757
Kansas City, MO 64141-6757
816-751-5900

1-800-4-BABSON
(1-800-422-2766)
www.babsonfunds.com

JB5B 10/98

<PAGE>
PART B

D. L. BABSON TAX-FREE INCOME FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION

October 31, 1998

This Statement is not a Prospectus but should be read in conjunction with
the Fund's current Prospectus dated October 31, 1998. To obtain the
Prospectus please call the Fund toll-free at 1-800-4-BABSON (1-800-422-2766),
or in the Kansas City area 751-5900.

TABLE OF CONTENTS

Page
INVESTMENT OBJECTIVE AND POLICIES 1
PORTFOLIO TRANSACTIONS 1
INVESTMENT RESTRICTIONS 2
PERFORMANCE MEASURES 3
HOW THE FUND'S SHARES ARE DISTRIBUTED 4
HOW SHARE PURCHASES ARE HANDLED 4
REDEMPTION OF SHARES 5
SIGNATURE GUARANTEES 5
MANAGEMENT AND INVESTMENT COUNSEL 6
HOW SHARE PRICE IS DETERMINED 6
OFFICERS AND DIRECTORS 6
DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION 9
CUSTODIAN 10
INDEPENDENT PUBLIC ACCOUNTANTS 10
OTHER JONES & BABSON FUNDS 11
MUNICIPAL SECURITIES DESCRIBED AND RATINGS 12
FINANCIAL STATEMENTS 16

JB60 10/98

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.

For the past three fiscal years ended on June 30 each year, the annual
portfolio turnover rates were as follows:

Portfolio
Fiscal Turnover
Year Rate

Portfolio L - 1996 39%
Longer Term 1997 21%
1998 18%

Portfolio S - 1996 41%
Shorter Term 1997 23%
1998 21%

The Fund has paid no commissions.

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.

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 751-5900.

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, 1998, the current annualized
yield of Portfolio MM was 3.32% and the compound effective yield was
3.37%. At June 30, 1998, Portfolio MM's average maturity was 56 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 annual total return for Portfolios L
and S for the specified periods.

Portfolio L Portfolio S
For the one year
7/l/97-6/30/98 7.82% 4.84%

For the five years
7/1/93-6/30/98 5.25% 4.05%

For the ten years
7/1/88-6/30/98 7.55% 5.61%

From commencement
of operations
to 6/30/98* 7.58% 6.41%
___________________________________________________
*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, 1999, 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., UMB Scout Stock Fund,
Inc., UMB Scout Bond Fund, Inc., UMB Scout Money Market Fund, Inc., UMB
Scout Tax-Free Money Market Fund, Inc., UMB Scout Regional Fund, Inc.,
UMB Scout WorldWide Fund, Inc., UMB Scout Balanced Fund, Inc., UMB Scout
Capital Preservation Fund, Inc., UMB Scout Kansas Tax-Exempt Bond Fund,
Inc., Buffalo Balanced Fund, Inc., Buffalo Equity Fund, Inc., Buffalo
High Yield Fund, Inc., Buffalo Small Cap Fund, Inc., Buffalo USA Global
Fund, Inc. and AFBA Five Star 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.

The Fund may authorize certain brokers or other institutions
(intermediaries) to accept, on the Fund's behalf, purchase, redemption
or exchange orders. These parties may also designate other
intermediaries to accept orders on the Fund's behalf. The Fund will be
deemed to have received a purchase, redemption or exchange order when an
authorized intermediary (or authorized designee), accepts the order.
All customer orders will be priced at the Fund's net asset value next
computed after such orders are accepted by an authorized intermediary
(or designee).

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 three-day period by the Fund's Board of
Directors under the following conditions authorized by the Investment
Company Act of 1940: (1) for any period (a) during which the New York
Stock Exchange is closed, other than customary weekend and holiday
closing, or (b) during which trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists as a
result of which (a) disposal by the Fund of securities owned by it is
not reasonably practicable, or (b) it is not reasonably practicable for
the Fund to determine the fair value of its net assets; or (3) for such
other periods as the Securities and Exchange Commission may by order
permit for the protection of the Fund's shareholders.

SIGNATURE GUARANTEES

Signature guarantees normally reduce the possibility of forgery and are
required in connection with each redemption method to protect
shareholders from loss. Signature guarantees are required in connection
with all redemptions of $50,000 or more 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. David L. Babson & Co. Inc. is a
wholly-owned subsidiary of Massachusetts Mutual Life Insurance Company.
David L. Babson & Co. Inc. serves individual, corporate and other
institutional clients. It participates with Jones & Babson in the
management of nine Babson no-load mutual funds.

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.

The aggregate management fees paid to Jones & Babson, Inc. during the
three most recent fiscal years ended June 30, 1998, 1997 and 1996, from
which Jones & Babson, Inc. paid all the Fund's expenses except those
payable directly by the Fund, were $530,401, $535,180 and $585,550,
respectively. The annual fee charged by Jones & Babson, Inc. covers all
normal operating costs of the Fund.

During the three most recent fiscal years ended June 30, 1998, 1997 and
1996, Jones & Babson, Inc. paid David L. Babson & Co. Inc. fees
amounting to $136,416, $137,997 and $149,861, respectively.

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 the Fund sets at least annually, except on
days on which changes in the value of the 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 Year's Day January 1
Martin Luther King, Jr. Day Third Monday 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 and their ages. Unless noted otherwise, the
address of each officer and director is BMA Tower, 700 Karnes Blvd.,
Kansas City, Missouri 64108-3306. Except as indicated, each has been an
employee of Jones & Babson, Inc. for more than five years.

*Larry D. Armel (56), 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., UMB Scout Stock
Fund, Inc., UMB Scout Bond Fund, Inc., UMB Scout Money Market Fund,
Inc., UMB Scout Tax-Free Money Market Fund, Inc., UMB Scout Regional
Fund, Inc., UMB Scout WorldWide Fund, Inc., UMB Scout Balanced Fund,
Inc., UMB Scout Capital Preservation Fund, Inc., UMB Scout Kansas
Tax-Exempt Bond Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo USA Global
Fund, Inc., Buffalo Small Cap Fund, Inc., Investors Mark Series Fund,
Inc.; Trustee and President, D.L. Babson Bond Trust; Director, AFBA
Five Star Fund, Inc.

Francis C. Rood (64), Director. Retired, 73-395 Agave Lane, Palm
Desert, California 92260-6653. Formerly Vice President of Finance,
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., Babson-Stewart Ivory International Fund, Inc., Buffalo
Balanced Fund, Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo Small Cap Fund,
Inc., Investors Mark Series Fund, Inc.; Trustee, D.L. Babson Bond
Trust.

William H. Russell (75), Director. Financial Consultant, 645 West
67th Street, Kansas City, Missouri 64113; previously Vice President,
Sprint; 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., Buffalo Small Cap Fund, Inc.,
Investors Mark Series Fund, Inc.; Trustee, D.L. Babson Bond Trust.

H. David Rybolt (56), Director. Consultant, HDR Associates, P.O. Box
2468, Shawnee Mission, Kansas 66201; 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., Buffalo Small Cap Fund, Inc., Investors Mark Series Fund, Inc.;
Trustee, D.L. Babson Bond Trust.

P. Bradley Adams (38), 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, UMB Scout Stock Fund, Inc., UMB Scout
Bond Fund, Inc., UMB Scout Money Market Fund, Inc., UMB Scout Tax-
Free Money Market Fund, Inc., UMB Scout Regional Fund, Inc., UMB
Scout WorldWide Fund, Inc., UMB Scout Balanced Fund, Inc., UMB Scout
Capital Preservation Fund, Inc., UMB Scout Kansas Tax-Exempt Bond
Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo Equity Fund, Inc.,
Buffalo High Yield Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo
Small Cap Fund, Inc.; Vice President and Chief Financial Officer,
AFBA Five Star Fund, Inc.; Principal Financial Officer, Investors
Mark Series Fund, Inc.

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

Martin A. Cramer (48), 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, UMB Scout Stock Fund, Inc., UMB Scout
Bond Fund, Inc., UMB Scout Money Market Fund, Inc., UMB Scout Tax-
Free Money Market Fund, Inc., UMB Scout Regional Fund, Inc., UMB
Scout WorldWide Fund, Inc., UMB Scout Balanced Fund, Inc., UMB Scout
Capital Preservation Fund, Inc., UMB Scout Kansas Tax-Exempt Bond
Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo Equity Fund, Inc.,
Buffalo High Yield Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo
Small Cap Fund, Inc.; Secretary and Assistant Vice President, AFBA
Five Star Fund, Inc.; Secretary, Investors Mark Series Fund, Inc.

Constance E. Martin (37), Vice President. Assistant Vice President,
Jones & Babson, Inc.; Vice President, 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, UMB Scout Stock Fund, Inc., UMB Scout
Bond Fund, Inc., UMB Scout Money Market Fund, Inc., UMB Scout Tax-
Free Money Market Fund, Inc., UMB Scout Regional Fund, Inc., UMB
Scout WorldWide Fund, Inc., UMB Scout Balanced Fund, Inc., UMB Scout
Capital Preservation Fund, Inc., UMB Scout Kansas Tax-Exempt Bond
Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo Equity Fund, Inc.,
Buffalo High Yield Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo
Small Cap Fund, Inc.

Edward L. Martin (49), 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.

Remuneration of Officers and Directors. 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.

Compensation Table
<TABLE>
<CAPTION>
Aggregate Pension or Retirement Estimated Total Compensation
Compensation Benefits Accrued As Annual Benefits From All Babson Funds
Name of Director From the Fund Part of Fund Expenses Upon Retirement Paid to Directors**
</CAPTION>
<S> <C> <C> <C> <C>
Larry D. Armel* -- -- -- --
Francis C. Rood $3,625 -- -- $7,125
William H. Russell $3,625 -- -- $7,375
H. David Rybolt $3,625 -- -- $7,125
</TABLE>
*As an "interested director," Mr. Armel received no compensation for
his services as a director.
**The amounts reported in this column reflect the total compensation
paid to Messrs. Rood and Rybolt for services as directors of eight
Babson Funds and to Mr. Russell for services as a director of nine
Babson Funds during the fiscal year ended June 30, 1998. Directors'
fees are paid by the Funds' manager and not by the Funds themselves.

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 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.

DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION

Distributions of Net Investment Income. By meeting certain requirements
of the Code, each Portfolio of the Fund has qualified and continues to
qualify to pay "exempt-interest dividends" to you. These dividends
are derived from interest income exempt from regular federal income tax,
and are not subject to regular federal income tax when they are
distributed to you. In addition, exempt-interest dividends from
interest earned in municipal bonds of a state, or of its political
subdivisions, will generally be exempt from that state's personal income
taxes. A state does not, however, grant tax-free treatment to interest
on investments in municipal bonds of other states.
Each Portfolio may earn taxable income on any temporary investments, on
the discount from stripped obligations or their coupons, on income from
securities loans or other taxable transactions, on the excess of short-
term capital gains over long-term capital losses earned by a Portfolio
("net short-term capital gain"), or on ordinary income derived from
the sale of market discount bonds. Any distributions by a Portfolio
from such income will be taxable to you as ordinary income, whether you
take them in cash or additional shares.

Distributions of Capital Gains. The Portfolios may derive capital gains
and losses in connection with sales or other dispositions of its
portfolio securities. Distributions derived from the excess of net
short-term capital gain over net long-term capital loss will be taxable
to you as ordinary income. Distributions paid from long-term capital
gains realized by a Portfolio will be taxable to you as long-term
capital gain, regardless of how long you have held your shares in a
Portfolio. Any net short-term or long-term capital gains realized by a
Portfolio (net of any capital loss carryovers) generally will be
distributed once each year, and may be distributed more frequently, if
necessary, in order to reduce or eliminate federal excise or income
taxes on a Portfolio.

Information on the Tax Character of Distributions. The Fund will inform
you of the amount and character of your distributions by the Portfolios
at the time they are paid, and will shortly after the close of each
calendar year advise you of the tax status for federal income tax
purposes of such distributions, including the portion of the
distributions that on average comprise taxable income or interest income
that is a tax preference item under the alternative minimum tax. If you
have not held shares of a Portfolio for a full year, you may have
designated as taxable, tax-exempt or as a tax preference a percentage of
income that is not equal to the actual amount of such income earned
during the period of your investment in a Portfolio.
Election to be Taxed as a Regulated Investment Company. Each Portfolio
has elected to be treated as a regulated investment company under
Subchapter M of the Code, has qualified as such for its most recent
fiscal year and intends to so qualify during the current fiscal year.
As a regulated investment company, a Portfolio generally pays no federal
income on the income and gains it distributes to you. The Board
reserves the right not to maintain the qualification of a Portfolio as a
regulated investment company if it determines such course of action to
be beneficial to you. In such case, the Fund will be subject to
federal, and possibly state, corporate taxes on its taxable income and
gains, and distributions to you will be taxed as ordinary dividend
income to the extent of the Fund's available earnings and profits.
Excise Tax Distribution Requirements. The Code requires the Fund to
distribute at least 98% of its taxable ordinary income earned during the
calendar year and 98% of its capital gain net income earned during the
12-month period ending October 31 (in addition to undistributed amounts
from the prior year) to you by December 31 of each year in order to
avoid federal excise taxes. The Portfolios intend to declare and pay
sufficient dividends in December (or in January that are treated by you
as received in December) but does not guarantee and can give no
assurances that its distributions will be sufficient to eliminate all
such taxes.

Redemption of Fund Shares. Redemptions and exchanges of Portfolio
shares are taxable transactions for federal and state income tax
purposes that cause you to recognize a gain or loss. If you hold your
shares as a capital asset, the gain or loss that you realize will be
capital gain or loss. Any loss incurred on the redemption or exchange
of shares held for six months or less will be disallowed to the extent
of any exempt-interest dividends distributed to you with respect to your
shares in the Fund and any remaining loss will be treated as a long-term
capital loss to the extent of any long-term capital gains distributed to
you by a Portfolio on those shares.

All or a portion of any loss that you realize upon the redemption of
your Portfolio shares will be disallowed to the extent that you purchase
other shares in a Portfolio (through reinvestment of dividends or
otherwise) within 30 days before or after your share redemption. Any
loss disallowed under these rules will be added to your tax basis in the
new shares you purchase.

Dividends-Received Deduction for Corporations. Because a Portfolio's
income is derived primarily from interest rather than dividends, no
portion of its distributions will generally be eligible for the
corporate dividends-received deduction. None of the dividends paid by a
Portfolio for the most recent fiscal year qualified for such deduction,
and it is anticipated that none of the current year's dividends will so
qualify.

Treatment of Private Activity Bond Interest. Interest on certain
"private activity bonds," while still exempt from regular federal
income tax, constitutes a preference item for taxpayers in determining
their alternative minimum tax under the Code and under the income tax
provisions of several states. Private activity bond interest could
subject you to or increase your liability under federal and state
alternative minimum taxes, depending on your individual or corporate tax
position. Persons who are defined in the Code as "substantial users"
(or persons related to such users) of facilities financed by private
activity bonds should consult with their tax advisers before purchasing
shares in a Portfolio.

Investment in Complex Securities. The Portfolios may invest in complex
securities. Such investments may be subject to numerous special and
complicated tax rules. These rules could affect whether gains and
losses recognized by a Portfolio are treated as ordinary income or
capital gain and/or accelerate the recognition of income to the Fund or
defer the Fund's ability to recognize losses. In turn, these rules may
affect the amount, timing or character of the income distributed to you
by a Portfolio.

CUSTODIAN

The Fund's assets are held for safekeeping by an independent custodian,
UMB Bank, n.a. This means UMB Bank, n.a., rather than the Fund, has
possession of the Fund's cash and securities. UMB Bank, n.a. 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 audited 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, 911 Main Street, Suite 1500, Kansas City, Missouri
64105, is the Fund's present independent public accountant.

Reports to shareholders will be published at least semiannually.

OTHER JONES & BABSON FUNDS

BABSON FUNDS. The Fund is one of nine no-load funds comprising the
Babson Mutual Fund Group. These funds are managed by Jones & Babson,
Inc. in association with investment counsels: David L. Babson & Co.
Inc., Babson-Stewart Ivory International and Analytic Systems, Inc. The
other funds are:

Equity Funds

David L. Babson Growth Fund, Inc. was organized in 1959, 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 International 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.

BUFFALO FUNDS. Jones & Babson, Inc. also sponsors and manages the
Buffalo Group of Mutual Funds. They are:

Buffalo Balanced Fund, Inc. was organized in 1994, with the objective
of long-term capital growth and high current income through investing
in common stocks and secondarily by investing in convertible bonds,
preferred stocks and convertible preferred stocks.

Buffalo Equity Fund, Inc. was organized in 1994, with the objective
of long-term capital appreciation to be achieved primarily by
investment in common stocks. Realization of dividend income is a
secondary consideration.

Buffalo High Yield Fund, Inc. was organized in 1994, with the
objective of a high level of current income and secondarily, capital
growth by investing primarily in high-yielding fixed income
securities.

Buffalo USA Global Fund, Inc. was organized in 1994, with the
objective of capital growth by investing in common stocks of
companies based in the United States that receive greater than 40% of
their revenues or pre-tax income from international operations.

Buffalo Small Cap Fund, Inc. was organized in 1997, with the
objective of long-term capital growth by investment in equity
securities of small companies.

A prospectus for any of the Funds may be obtained from Jones & Babson,
Inc., BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306.

Jones & Babson, Inc. also sponsors nine mutual funds which especially
seek to provide services to customers of affiliate banks of UMB
Financial Corporation. They are: UMB Scout Stock Fund, Inc., UMB Scout
Bond Fund, Inc., UMB Scout Money Market Fund, Inc., UMB Scout Tax-Free
Money Market Fund, Inc., UMB Scout Regional Fund, Inc., UMB Scout
WorldWide Fund, Inc., UMB Scout Balanced Fund, Inc., UMB Scout Capital
Preservation Fund, Inc. and UMB Scout Kansas Tax-Exempt Bond Fund, Inc.

Jones & Babson, Inc. also sponsors the AFBA Five Star 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 reevaluate 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-l" 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, 1998, Annual Report to Shareholders, are incorporated herein by
reference.

<PAGE>
PART C

OTHER INFORMATION

Item 24. FINANCIAL STATEMENTS AND EXHIBITS.

(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
D. L. Babson Tax-Free Income Fund, Inc.
are incorporated by reference into Part B of
this Registration Statement.

Included in Part C - Other Information:

Consents of Independent Public Accountants

(b) (1) Registrants's Articles of Incorporation*

(2) Form of Registrant's By-laws*

(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) Forms of Custodian Agreement between Registrant
and UMB Bank, n.a.*

(9) There are no other material contracts not made in
the ordinary course of business between the
Registrant and others

(10) Opinion and consent of counsel as to the legality
of the registrant's securities being registered.*

(11) (a) Powers of Attorney*

(b) Auditors Consent

(12) Not applicable.

(13) Form of letter from contributors of initial
capital to the Registrant that purchase was made
for investment purposes without any present
intention of redeeming or selling.*

(14) Copies of model plan used in the
establishment of any retirement plan in
conjunction with which Registrant offers
its securities.*

(15) Not applicable.

(16) Schedule for computation of performance
quotations.*

(17) Financial Data Schedules for
D. L. Babson Tax-Free Income Fund, Inc.

*Previously filed on Form N-1 and incorporated by reference herein.

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
Registrants as of October 16, 1998, is as follows:

(1) (2)
Title of Class

Common Stock Number of Record Holders

Common Stock $0.10 par value 379
Portfolio S - Shorter Term

Common Stock $0.10 par value 624
Portfolio L - Longer Term

Common Stock $0.10 par value 282
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 and Buffalo family of mutual funds.
It supervises a number of prototype and profit-sharing plan
programs sponsored by various organizations eligible to be
prototype plan sponsors.

The principal business of David L. Babson & Co. Inc. is
to provide investment counsel and advice to a wide variety of
clients.

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.
D.L. Babson Money Market Fund, Inc.,
D.L. Babson Bond Trust,
Babson Value Fund, Inc.,
Shadow Stock Fund, Inc.,
Babson-Stewart Ivory International Fund, Inc.,
Babson Enterprise Fund, Inc.,
Babson Enteprise Fund II, Inc.,
Buffalo Balanced Fund, Inc.
Buffalo Equity Fund, Inc.
Buffalo USA Global Fund, Inc.
Buffalo Small Cap Fund, Inc.
Buffalo High Yield Fund, Inc.
Scout Stock Fund, Inc.,
Scout Bond Fund, Inc.,
Scout Money Market Fund, Inc. and
Scout Tax-Free Money Market Fund, Inc.,
Scout Regional Fund, Inc.,
Scout WorldWide Fund, Inc.,
Scout Capital Preservation Fund, Inc.,
Scout Kansas Tax-Exempt Bond Fund, Inc.,
Scout Balanced Fund, Inc.,
AFBA Five Star Fund, Inc., and
Investors Mark Series 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 Position and Positions and
Principal Offices with Offices with
Business Address Underwriter Registrant

Stephen S. Soden Chairman and Director
700 Karnes Blvd. Director
Kansas City, MO 64108-3306

Larry D. Armel President and President and
700 Karnes Blvd. Director Director
Kansas City, MO 64108-3306

Giorgio Balzer Director None
700 Karnes Blvd.
Kansas City, MO 64108-3306

Robert T. Rakich Director None
700 Karnes Blvd.
Kansas City, MO 64108-3306

Edward S. Ritter Director None
700 Karnes Blvd.
Kansas City, MO 64108-3306

Robert N. Sawyer Director None
700 Karnes Blvd.
Kansas City, MO 64108-3306

Vernon W. Voorhees Director None
700 Karnes Blvd.
Kansas City, MO 64108-3306

P. Bradley Adams Vice President Vice President
700 Karnes Blvd. and Treasurer and Treasurer
Kansas City, MO 64108-3306

Martin A. Cramer Vice President Vice President
700 Karnes Blvd. and Secretary and Secretary
Kansas City, MO 64108-3306

(c) The principal underwriter does not receive any remuneration or
compensation 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 other document 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 700 Karnes Blvd., Kansas City, Missouri
64108-3306.

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. UNDERTAKINGS.

Not Applicable.

EXHIBIT INDEX

11(b) Consent of Auditors

11(c) 485(b) Letter from Counsel

27 Financial Data Schedules

<PAGE>
SIGNATURES

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 19th day of October, 1998.

D. L. BABSON TAX-FREE INCOME FUND, INC.

By /s/Larry D. Armel
Larry D. Armel

Pursuant to the requirements of the Securities Act of 1933, this
Post-effective Amendment 25/26 to the Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.

/s/Larry Armel President, October 19, 1998
Larry Armel Prinicple Executive Officer,
and Director

/s/F.C. Rood* Director October 19, 1998
F.C. Rood

/s/H. David Rybolt* Director October 19, 1998
H. David Rybolt

/s/William H. Russell* Director October 19, 1998
William H. Russell

/s/P. Bradley Adams Vice President and October 19, 1998
P. Bradley Adams Principal Financial
and Accounting Officer

*Signed pursuant to Power of
Attorney

By /s/Larry D. Armel
Larry D. Armel
Attorney-in-Fact

EX-99.B11(b)
ARTHUR ANDERSEN LLP

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference of our report dated July 28, 1998, included in the D. L. Babson
Tax-Free Income Fund, Inc.'s Annual Report for the year ended June 30, 1998
(and all references to our Firm) included in or made a part of this
Post-effective Amendment No. 25 to the Registration Statement File No. 2-65489
under the Securities Act of 1933 and Amendment No. 26 to the Registration
Statement File No. 811-2948 under the Investment Company Act of 1940
on Form N-1A.

Arthur Andersen LLP

Kansas City, Missouri,
October 19, 1998

EX-99.B11(c)
Law Offices

Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000

October 19, 1998

FILED VIA EDGAR
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Attn: Filing Desk

Re: D. L. Babson Tax-Free Income Fund, Inc.
File Nos. 2-65489; 811-2948
Post-Effective Amendment No. 25; Amendment No. 26
CIK No. 313136

Dear Sir or Madam:

Included for filing via EDGAR is Post-Effective Amendment No. 25 to the
Registration Statement on Form N-1A for D. L. Babson Tax-Free Income Fund,
Inc. This post-effective amendment is being filed under Section 6 of
the Securities Act of 1933 and Rule 485(b) thereunder for the purpose of
bringing the Financial Statements and other information up-to-date, and in
conjunction therewith, making other appropriate non-material changes.
No material event requiring disclosure in the Prospectus has occurred since
the effective date of the most recent Post-Effective Amendment. The amendment
does not contain disclosures which would render it ineligible to become
effective pursuant to Rule 485(b). Questions related to this filing should
be directed to me at the number above.

Very truly yours,
/s/Michael P. O'Hare
Michael P. O'Hare

<ARTICLE> 6
<CIK> 0000313136
<NAME> D L BABSON TAX-FREE INCOME FUND INC
<SERIES>
<NUMBER> 1
<NAME> PORTFOLIO L

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 25476734
<INVESTMENTS-AT-VALUE> 27156414
<RECEIVABLES> 400710
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27557124
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 262558
<TOTAL-LIABILITIES> 262558
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25355681
<SHARES-COMMON-STOCK> 2960707
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 259205
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1679680
<NET-ASSETS> 27294566
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1513748
<OTHER-INCOME> 0
<EXPENSES-NET> 290207
<NET-INVESTMENT-INCOME> 1223541
<REALIZED-GAINS-CURRENT> 219956
<APPREC-INCREASE-CURRENT> 634782
<NET-CHANGE-FROM-OPS> 2078279
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1223541
<DISTRIBUTIONS-OF-GAINS> 65480
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 198138
<NUMBER-OF-SHARES-REDEEMED> 355788
<SHARES-REINVESTED> 77757
<NET-CHANGE-IN-ASSETS> 51437
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 261400
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 290207
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 8.96
<PER-SHARE-NII> .40
<PER-SHARE-GAIN-APPREC> .28
<PER-SHARE-DIVIDEND> .40
<PER-SHARE-DISTRIBUTIONS> .02
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.22
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000313136
<NAME> D L BABSON TAX-FREE INCOME FUND INC
<SERIES>
<NUMBER> 2
<NAME> PORTFOLIO S

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 21007236
<INVESTMENTS-AT-VALUE> 21475346
<RECEIVABLES> 867181
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 22342527
<PAYABLE-FOR-SECURITIES> 557990
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 439626
<TOTAL-LIABILITIES> 997616
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 20881292
<SHARES-COMMON-STOCK> 1979110
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4491)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 468110
<NET-ASSETS> 21344911
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1134344
<OTHER-INCOME> 0
<EXPENSES-NET> 236991
<NET-INVESTMENT-INCOME> 897353
<REALIZED-GAINS-CURRENT> 74039
<APPREC-INCREASE-CURRENT> 79601
<NET-CHANGE-FROM-OPS> 1050993
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 897353
<DISTRIBUTIONS-OF-GAINS> 62303
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 105752
<NUMBER-OF-SHARES-REDEEMED> 316848
<SHARES-REINVESTED> 55359
<NET-CHANGE-IN-ASSETS> (1590931)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 213466
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 236991
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.74
<PER-SHARE-NII> .44
<PER-SHARE-GAIN-APPREC> .08
<PER-SHARE-DIVIDEND> .44
<PER-SHARE-DISTRIBUTIONS> .03
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.79
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000313136
<NAME> D L BABSON TAX-FREE INCOME FUND INC
<SERIES>
<NUMBER> 3
<NAME> PORTFOLIO MM

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 10683060
<INVESTMENTS-AT-VALUE> 10683060
<RECEIVABLES> 87267
<ASSETS-OTHER> 4547
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10774874
<PAYABLE-FOR-SECURITIES> 502391
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3108
<TOTAL-LIABILITIES> 505499
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10264760
<SHARES-COMMON-STOCK> 10263360
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4615
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 10269375
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 401366
<OTHER-INCOME> 0
<EXPENSES-NET> 67019
<NET-INVESTMENT-INCOME> 334347
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 334347
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 334347
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16714916
<NUMBER-OF-SHARES-REDEEMED> 16157904
<SHARES-REINVESTED> 261990
<NET-CHANGE-IN-ASSETS> 819002
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 55535
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 67019
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>