BABSON D L TAX FREE INCOME FUND INC, N-14AE, N-14, 2000-06-19

BABSON D L TAX FREE INCOME FUND INC
N-14AE, N-14, 2000-06-19

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File No. 002-65489

As filed June 19, 2000

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.
Post-Effective Amendment No.
(Check appropriate box or boxes)

D. L. Babson Tax-Free Income Fund, Inc.
(Exact Name of Registrant as Specified in Charter)

(816) 751-5900
(Area Code and Telephone Number)

BMA Tower, 700 Karnes Blvd.
Kansas City, MO 64108-3306
Address of Principal Executive Offices:
(Number, Street, City, State, Zip Code)

Stephen S. Soden
BMA Tower, 700 Karnes Blvd.
Kansas City, MO 64108-3306
Name and Address of Agent for Service:
(Number and Street) (City) (State) (Zip Code)

Copies to:

Mark H. Plafker, Esquire
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098

Approximate Date of Proposed Public Offering: As soon as
practicable after this Registration Statement becomes effective
under the Securities Act of 1933, as amended.

It is proposed that this filing will become effective on July 20,
2000, pursuant to Rule 488.

Title of the securities being registered: Shares of stock, par
value $.10 per share, of D. L. Babson Tax-Free Income Fund, Inc.
No filing fee is due because Registrant is relying on Section
24(f) of the Investment Company Act of 1940, as amended.

<PAGE>
D. L. BABSON TAX-FREE INCOME FUND, INC.

PORTFOLIO S

IMPORTANT SHAREHOLDER INFORMATION

These materials are for a special meeting of Portfolio S
shareholders scheduled for September 1, 2000 at 2:00 p.m.
Central time. The materials discuss the proposals to be
voted on at the meeting, and contain your proxy statement
and proxy card. A proxy card is, in essence, a ballot. When
you vote your proxy, it tells us how you wish to vote on
important issues relating to your Portfolio. If you complete
and sign the proxy, we'll vote it exactly as you tell us. If
you simply sign the proxy, we'll vote it in accordance with
the Board of Directors' recommendations.

We urge you to spend a few minutes reviewing the proposals
in the proxy statement. Then, fill out the proxy card and
return it to us so that we know how you would like to vote.
If shareholders return their proxies promptly, we may be
able to avoid making additional mailings.

We welcome your comments. If you have any account specific
questions, please call the Fund at 1-800-[4-BABSON (1-800-
422-2766)]. If you have any proxy related questions, or need
assistance voting your shares, please call our proxy
solicitor, D.F. King & Co., Inc., at 1-800-207-3158.

TELEPHONE AND INTERNET VOTING

For your convenience, you may be able to vote by telephone
or through the Internet, 24 hours a day. If your account is
eligible, a control number and separate instructions are
enclosed.

Vote by Telephone: by calling the toll-free number on your
proxy card and following the recorded instructions. If you
wish to speak with someone before voting, please call our
solicitor, D.F. King & Co., Inc., at 1-800-207-3158.

Vote by Internet: by signing onto the internet web site
listed on your proxy card and entering the proper
information. Please have your proxy card with your control
number ready when using this option.

This page intentionally left blank.

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

PORTFOLIO S

Dear Shareholder:

Enclosed is a Notice of Meeting for a Special Meeting of
Portfolio S shareholders of D. L. Babson Tax-Free Income
Fund, Inc. (the "Fund"). The Meeting is scheduled for
September 1, 2000 at 2:00 p.m. Central time at the offices
of the Fund's manager, Jones & Babson, Inc. on the 19th
floor of the BMA Tower, 700 Karnes Boulevard, Kansas City,
Missouri. The accompanying materials describe an important
proposal which may affect the future of your Portfolio. We
ask you to give this your prompt attention and vote via the
enclosed proxy card.

Please Take a Moment to Fill Out, Sign and Return the
Enclosed Proxy Card

This meeting is very important to the future of Portfolio S.
The Directors of the Fund unanimously recommend that you
consider and approve a Plan of Reorganization that would
result in your shares of Portfolio S being exchanged for
those of Portfolio L of the Fund. If the shareholders of
Portfolio S approve the proposal, you will receive shares of
Portfolio L equal in value to your investment in Portfolio
S. You will no longer be a shareholder of Portfolio S, and
you will instead be a shareholder of Portfolio L. If the
reorganization is completed, Portfolio S will no longer
exist and Portfolio L will thereafter be referred to as the
D. L. Babson Tax-Free Income Fund.

The proposed transaction is intended to be tax-free, which
means that you will not have a taxable gain or loss on the
exchange of your shares.

The Directors recommend this transaction because the
projected growth in assets of Portfolio S was not sufficient
to provide competitive performance and high quality service
to shareholders over the long term. The manager and
underwriter of the Fund is Jones & Babson, Inc. David L.
Babson & Co. provides the day-to-day management of each
Portfolio's assets. Each Portfolio has similar investment
objectives and investment policies, except for the average
weighted maturity of the securities held. After the
Portfolios are combined, the surviving Portfolio may be
better able to obtain trading advantages and efficiency and
the manager's cost of operating the Portfolio may be
reduced.

Please take the time to review this document and vote now.
The Directors of the Fund unanimously recommend that you
vote in favor of this proposal.

To ensure that your vote is counted, indicate your
position on the enclosed proxy card.

Sign and return your card promptly.

You may also vote by telephone or over the Internet.

If you determine at a later date that you wish to
attend this meeting, you may revoke your proxy and vote in
person.

Thank you for your attention to this matter.

Sincerely,

/s/Stephen S. Soden
Stephen S. Soden
President

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

PORTFOLIO S

Babson Funds
c/o Jones & Babson, Inc.
BMA Tower
700 Karnes Boulevard
Kansas City, Missouri 64121-9779

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on September 1, 2000

To the Portfolio S Shareholders of D. L. Babson Tax-Free
Income Fund, Inc.:

NOTICE IS HEREBY GIVEN that a Special Meeting of Portfolio S
shareholders of D. L. Babson Tax-Free Income Fund, Inc. (the
"Fund") will be held at the offices of the Fund's manager,
Jones & Babson, Inc. on the 19th floor of the BMA Tower, 700
Karnes Boulevard, Kansas City, Missouri on September 1,
2000, at 2:00 p.m. Central time. The Meeting is being called
for the following purpose:

To approve or disapprove a Plan of Reorganization of D. L.
Babson Tax-Free Income Fund, Inc. (the "Fund") on behalf of
two of its Portfolios, that provides for the acquisition of
substantially all of the assets of Portfolio S in exchange
for shares of Portfolio L, the distribution of such shares
to the shareholders of Portfolio S, and the liquidation and
dissolution of Portfolio S.

In addition, shareholders will be asked to grant the
proxyholders the authority to vote upon any other business
which may legally come before the Meeting or any adjournment
thereof. The attached Prospectus/Proxy Statement describes
the proposed transaction more completely. A copy of the Plan
of Reorganization is attached as Exhibit A to the
Prospectus/Proxy Statement.

Shareholders of record as of the close of business on June
15, 2000, are entitled to notice of, and to vote at, the
Meeting or any adjournment thereof.

By Order of the Board of Directors,

Martin A. Cramer
Secretary

July 20, 2000

The Board of Directors urges you to complete, date, sign,
and return the enclosed proxy card in the enclosed postage-
paid return envelope. It is important that you return your
signed proxy card promptly so that a quorum may be ensured.

PROSPECTUS/PROXY STATEMENT
TABLE OF CONTENTS

Page
Cover Page Cover
Summary 2
What proposal am I voting on? 2
How will the shareholder voting be handled? 2
Comparisons of Some Important Features 2
How do the investment objectives and policies
of the Portfolios compare? 2
What are the risks of an investment in the Portfolios? 3
Who manages the Fund and the Portfolios? 4
What are the fees and expenses of each Portfolio
and what might they be after the Transaction? 5
Where can I find more financial information about the
Portfolios? 5
What are other key features of the Portfolios? 6
Reasons for the Transaction 6
Information about the Transaction 7
How will the Transaction be carried out? 7
Who will pay the expenses of the Transaction? 7
What are the tax consequences of the Transaction? 8
What should I know about the shares of Portfolio L 8
What are the capitalizations of the Portfolios and what
might
the capitalization be after the Transaction? 8
Voting Information 8
How many votes are necessary to approve the Plan? 8
How do I ensure my vote is accurately recorded? 9
Can I revoke my proxy? 9
What other matters will be voted upon at the Meeting? 10
Who is entitled to vote? 10
What other solicitations will be made? 10
Are there dissenters' rights? 10
More Information about the Fund and the Portfolios 10
Principal Holders of Shares 10
Exhibits to Prospectus and Proxy Statement
Exhibit A - Plan of Reorganization (attached) 11
Exhibit B - Babson Funds Combined Prospectus
dated October 31, 1999, as supplemented
June 8, 2000 (enclosed) 20
Exhibit C - Babson Funds Combined Annual Report
to Shareholders dated June 30, 1999 (enclosed) 21

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

PROSPECTUS/PROXY STATEMENT

Dated July 20, 2000

Acquisition of the Assets of PORTFOLIO S
By and in exchange for shares of PORTFOLIO L

This Prospectus/Proxy Statement solicits proxies to be voted
at a Special Meeting (the "Meeting") of Portfolio S
shareholders of D. L. Babson Tax-Free Income Fund, Inc. (the
"Fund"), to approve or disapprove a Plan of Reorganization
(the "Plan"). If shareholders of Portfolio S vote to approve
the Plan, you will receive shares of Portfolio L equal in
value to your investment in shares of Portfolio S. Portfolio
S will then be liquidated and dissolved and Portfolio L will
thereafter be referred to as the D. L. Babson Tax-Free
Income Fund. The investment objectives and policies of the
Portfolios are substantially similar, except for the
duration and maturity of the securities held by each
Portfolio.

The Meeting will be held at the offices of the Fund's
manager, Jones & Babson, Inc. ("Jones & Babson") which are
located on the 19th floor of the BMA Tower, 700 Karnes
Boulevard, Kansas City, Missouri on September 1, 2000 at
2:00 p.m. Central time. The Board of Directors of the Fund
is soliciting these proxies on behalf of Portfolio S. This
Prospectus/Proxy Statement will first be sent to
shareholders on or about July 20, 2000.

This Prospectus/Proxy Statement gives the information about
the proposed reorganization and shares of Portfolio L that
you should know before investing. You should retain it for
future reference. Additional information about Portfolio L
and the proposed reorganization has been filed with the SEC
and can be found in the following documents:

The Babson Funds Combined Prospectus dated October 31,
1999, as amended June 8, 2000 is enclosed with and
considered a part of this Prospectus/Proxy Statement.

The Babson Funds Combined Annual Report to Shareholders
dated June 30, 1999, which contains financial and
performance information for Portfolio S and Portfolio L, is
enclosed with and considered a part of this Prospectus/Proxy
Statement.

A Statement of Additional Information (SAI) relating to
this Prospectus/Proxy Statement dated July 20, 2000, has
been filed with the SEC and is incorporated by reference
into this Prospectus/Proxy Statement.

You may request a free copy of the SAI relating to this
Prospectus/Proxy Statement or other documents related to the
Fund without charge by calling 1-800[-4-BABSON (1-800-422-
2766] or by writing to the Babson Funds at P.O. Box 219757,
Kansas City, MO 64121-9757.

The SEC has not approved or disapproved these securities or
passed upon the adequacy of this Prospectus/Proxy Statement.
Any representation to the contrary is a criminal offense.

Mutual fund shares are not deposits or obligations of, or
guaranteed or endorsed by, any bank, and are not insured by
the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other U.S. government agency. Mutual
fund shares involve investment risks, including the possible
loss of principal.

SUMMARY

This is only a summary of certain information contained in
this Prospectus/Proxy Statement. You should read the more
complete information in the rest of this Prospectus/Proxy
Statement, including the Plan (attached as Exhibit A), the
Babson Funds Combined Prospectus (enclosed as Exhibit B) and
the Babson Funds Combined Annual Report to Shareholders
(enclosed as Exhibit C).

What proposal am I voting on?

You are being asked to consider and approve a Plan of
Reorganization that will have the effect of combining
Portfolio S and Portfolio L of the Fund into a single mutual
fund. If shareholders of Portfolio S vote to approve the
Plan, the assets of Portfolio S will be transferred to
Portfolio L and Portfolio S shareholders will exchange their
shares of Portfolio S for an equal dollar amount of
Portfolio L shares. The proposed reorganization is referred
to in this Prospectus/Proxy Statement as the "Transaction."
As a result of the Transaction, you will cease to be a
shareholder of Portfolio S and will become a shareholder of
Portfolio L.

For the reasons set forth in the "Reasons for the
Transaction" section, the Board of Directors of the Fund has
determined that the Transaction is in the best interests of
the shareholders of Portfolio S and also concluded that no
dilution in value would result to the shareholders of either
Portfolio as a result of the Transaction.

The Board of Directors of the Fund, on behalf of both
Portfolio S and Portfolio L, has approved the Plan and
unanimously recommends that you vote to approve the Plan.

How will the shareholder voting be handled?

Shareholders who own shares of Portfolio S at the close of
business on June 15, 2000, will be entitled to vote at the
Meeting, and will be entitled to one vote for each full
share and a fractional vote for each fractional share that
they hold. To approve the Transaction, a majority of the
outstanding shares of Portfolio S must be voted in favor of
the Plan.

Please vote by proxy as soon as you receive this
Prospectus/Proxy Statement. You may place your vote by
completing and signing the enclosed proxy card or voting by
telephone or over the Internet. If you vote by any of these
three methods, your votes will be officially cast at the
Meeting by the persons appointed as proxies.

You can revoke your proxy or change your voting instructions
at any time until the vote is taken at the Meeting. For more
details about shareholder voting, see the "Voting
Information" section of this Prospectus/Proxy Statement.

COMPARISONS OF SOME IMPORTANT FEATURES

How do the investment objectives and policies of the
Portfolios compare?

This section describes the differences between the
investment policies of Portfolios S and Portfolio L. For a
complete description of the investment policies and risks of
Portfolio L, you should read the Babson Funds Combined
Prospectus, which is enclosed with this Prospectus/Proxy
Statement.

In general, the investment strategies of the Portfolios are
identical. The investment objective, providing the highest
level of regular income exempt from federal income tax
consistent with quality and maturity standards, is the same
for Portfolio S and Portfolio L. The essential difference
between the Portfolios is the time to maturity of the
securities they hold.

Portfolio L generally has a longer weighted average maturity
than does Portfolio S. The weighted average maturity of
Portfolio L is normally between ten and twenty-five years
with security maturities generally being longer than five
years at the time of purchase. There is no maximum maturity
for Portfolio L. The weighted average maturity for Portfolio
S normally remains between two and five years with no
security maturities of more than ten years at the time of
purchase. The difference in the maturity of the instruments
held by the Portfolios is responsible for differences in the
volatility of the price of their respective shares. The
longer term instruments held by Portfolio L are more
susceptible to price fluctuations in response to interest
rate changes. As a result, Portfolio L share prices will
fluctuate more than Portfolio S shares.

Besides weighted average maturity, there are no notable
differences in the investment strategies of the Portfolios.
Each Portfolio has substantially all of its assets invested
in investment-grade municipal securities, the interest on
which is deemed exempt from federal income tax. Both
portfolios may invest in repurchase agreements; however,
repurchase agreements maturing in more than seven days and
other illiquid securities will not exceed 10% of the net
assets of either Portfolio.

Each of the Portfolios' investments in short-term municipal
obligations and notes, short-term discount notes, and
municipal bonds are limited by the same credit quality
standards. 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 independent ratings
services such as Moody's Investors Services, Inc. (Aaa, Aa
and A) or Standard & Poor's Ratings Group (AAA, AA, and A).
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
U.S. government; 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, or Prime-1 or Prime-2 by
Moody's or their equivalents as determined by the Board of
Directors. 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 as determined by S&P or Moody's.

The fundamental investment restrictions of Portfolio L and
Portfolio S are identical. The more important restrictions
are that each Portfolio will not: invest in equity
securities; purchase the securities of any issuer if more
than 5% of the Portfolio's total assets would be invested in
the securities of such issuer, or if the Portfolio would
hold more than 10% of any class of securities of such
issuer; borrow money 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 investment restrictions can be found in the
Babson Funds Combined Statement of Additional Information
dated October 31, 1999, which is available upon request.

What are the risks of an investment in the Portfolios?

Like all investments, an investment in either Portfolio L or
Portfolio S involves risk. There is no assurance that either
of the Portfolios will meet its investment objective. The
achievement of the Portfolios' objective depends upon
interest rates and market conditions, generally, and on the
portfolio managers' analytical and portfolio management
skills. The risks of the Portfolios are basically the same
as those of other investments in municipal securities.

Risk Factors Particular to Municipal Securities. The change
in market value of municipal securities is largely a
function of changes in the prevailing level of interest
rates. When interest rates are falling, a portfolio with a
shorter weighted average maturity, such as Portfolio S,
generally will not generate as high a level of total return
as a portfolio with a longer weighted average maturity, such
as Portfolio L. When interest rates are flat, shorter
maturity portfolios generally will not generate as high a
level of total return as longer maturity portfolios
(assuming that long-term interest rates are higher than
short-term rates, which is commonly the case). When interest
rates are rising, a portfolio with a shorter weighted
average maturity will generally outperform longer maturity
portfolios. Normally, price volatility and interest rate
risk declines as the average maturity of a portfolio
shortens, as does its anticipated potential for total
return. Besides interest rate risk, there is also a risk
that any of the issues may default on their obligation.

Risk Factors Applicable to Repurchase Agreements. Both
Portfolio L and Portfolio S of the Fund may invest in
repurchase agreements. Repurchase agreements involve
investments in debt securities where the seller (broker-
dealer or bank) agrees to repurchase the securities from the
Portfolio 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
Portfolio'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 Portfolio may be delayed or
prevented from exercising its rights to dispose of the
collateral.

Risk Factors of a Temporary Defensive Strategy. While each
Portfolio normally maintains at least 80% of its investments
in municipal securities, each Portfolio may invest up to
100% of its assets in taxable money market instruments or
hold cash reserves on a temporary basis, if management
believes these actions would be in the best interest of
shareholders. During periods in which these temporary
defensive strategies are in place, the Portfolios may not
achieve their investment objectives.

Who manages the Fund and the Portfolios?

The management of the business and affairs of the Fund and
its Portfolios is supervised by the Board of Directors of
the Fund. Jones & Babson, Inc. is the Fund's manager and
principal underwriter. Jones & Babson was founded in 1959
and presently serves as the investment manager of 18
separate mutual funds, including the 13 funds within the
Babson Funds group. Jones & Babson also serves as principal
underwriter and provides administrative, transfer agency
and/or accounting services for 37 separate funds, including
the Babson Funds. Jones & Babson is located at the BMA
Tower, 700 Karnes Boulevard, Kansas City, MO 64121-9757.

Jones & Babson has engaged David L. Babson & Co. to provide
investment advisory services to the Fund and David L. Babson
& Co. is responsible for the day-to-day management of the
assets of each Portfolio. Joanne E. Keers, CFA is a Vice
President of David L. Babson & Co. and has been primarily
responsible for managing the assets of both Portfolio S and
Portfolio L since 1999. Ms. Keers joined David L. Babson &
Co. in 1987. David L. Babson & Co. is located at One
Memorial Drive, Cambridge, MA 02412-1300.

Jones & Babson has entered into a Management Agreement with
the Fund, under which each Portfolio is obligated to pay
annual management fees equal to 0.95% of that Portfolio's
average daily net assets. In exchange for management fees,
Jones & Babson provides or pays all of the costs of
investment management, fund accounting, transfer agency and
administrative services. Jones & Babson also pays all fees
of the custodian, independent auditors and legal counsel;
and the cost of officers, directors and other personnel;
rent; shareholder services and other services incident to
corporate administration.

What are the fees and expenses of each Portfolio and what
might they be after the Transaction?

Fees and Expenses - The following table describes the fees
and expenses that you may pay if you buy and hold shares of
the Portfolios, as well as the pro forma fees and expenses
of Portfolio L after the Transaction.

Actual+ Pro forma++
Portfolio SPortfolio LAfter Transactio
n
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed
on Purchases None None None
Maximum Deferred Sales Charge (Load) None None
None
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends None None None
Redemption Fee None* None* None*
Exchange Fee None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees 0.95% 0.95% 0.95%
Distribution (12b-1) Fees None None None
Other Expenses 0.06% 0.08% 0.07%
Total Annual Fund Operating Expenses 1.01% 1.03%
1.02%

+ Actual information for Portfolio S and Portfolio L shares is provided
for the fiscal year ended June 30, 1999.
++ Projected expenses based on current and anticipated Portfolio L
expenses.

* A $10.00 fee is imposed for redemptions by wire.

Expense Examples - These examples are intended to help you
compare the cost of investing in each Portfolio with the
cost of investing in other mutual funds. They assume you
invest $10,000 and receive a 5% return each year. Although
your actual costs may be higher or lower, based on the above
assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
Portfolio S $103 $322 $558 $1,236
Portfolio L $105 $328 $569 $1,259
Pro forma (after Transaction) $104 $325 $563
$1,248

Where can I find more financial information about the
Portfolios?

For Portfolio L, per share income information for the past
five fiscal years (and the most recent six month semiannual
period) is shown below. Also, the current Babson Funds
Combined Annual Report to Shareholders, which is enclosed,
contains more financial information about Portfolio L and
Portfolio S as well as discussions of each Portfolio's
performance during the fiscal year ended June 30, 1999. The
SAI relating to this Prospectus/Proxy Statement contains
more financial information about Portfolio L and Portfolio
S, as well as discussions of each Portfolio's performance
for the six month period ended December 31, 1999.

Financial Highlights - Portfolio L

Condensed data for a share ofSix Months Ended
capital stock outstanding December 31, 1999 Years ended June
30,
throughout each period. (unaudited)1999 1998 1997 1996 1995
Net asset value, beginning
of period $8.91 $9.22 $8.96 $8.74 $8.67 $8.52
Income from investment operations:
Net investment income .20 .40 .40 .42 .41 .42
Net gains (losses) on securities
(both realized and unrealized) (.34) (.24) .28 .24 .07 .17
Total from investment operations (.14) .16 .68 .66 .48 .59
Less distributions:
Distributions from net
investment income (.20) (.40) (.40) (.42) (.41) (.42)
Distributions from capital gains (.08) (.07) (.02) (.02) - (.02)
Total distributions (.28) (.47) (.42) (.44) (.41) (.44)
Net asset value, end of period $8.49 $8.91 $9.22 $8.96 $8.74 $8.67
Total return1 (1.63%)(1.70%)(7.82%)(7.69%)(5.60%)(7.21%)

Ratios/Supplemental Data
Net assets, end of period
(in millions) $24 $26 $27 $27 $27 $28
Ratio of expenses to average
net assets2 1.02% 1.03% 1.06% 1.01% 1.01% 1.02%
Ratio of net investment income to
average net assets2 4.49% 4.36% 4.46% 4.71% 4.67% 4.98%
Portfolio turnover rate 20% 9% 18% 21% 39% 34%

1Total return not annualized for periods less than one full year.
2Annualized for periods less than one full year.

What are other key features of the Portfolios?

Shares of each Portfolio are sold on a no-load basis and
there are no sales commissions or Rule 12b-1 fees. Shares of
each Portfolio may be redeemed at their respective net asset
value per share at any time. Shares may also be exchanged at
no cost for shares of any other fund or portfolio in the
Babson Funds group. Because an exchange is technically a
sale and purchase of shares, an exchange is a taxable
transaction (although the Transaction described in this
Proxy Statement is designed to be tax-free).

Additional information and specific instructions explaining
how to buy, sell, and exchange shares of the Portfolios is
contained in the Babson Funds Combined Prospectus, and the
Prospectus also lists phone numbers for you to call if you
have any questions about your account.

Each Portfolio declares a dividend from its net investment
income at the end of each business day, and such dividends
are payable to shareholders of record at the end of the
previous business day. On the last day of each month, all
dividends declared during that month are credited to the
accounts of those shareholders. Distributions from capital
gains, if any, are declared annually by December 31.

REASONS FOR THE TRANSACTION

The Board of Directors of the Fund has recommended the
Transaction to Portfolio S shareholders in order to combine
Portfolio S with Portfolio L to make a larger fund that has
similar investment policies. A larger fund may be able to
benefit from reduced trading costs and increased operational
efficiencies.

The Plan was presented to the Board of Directors of the Fund
at a meeting held on April 27, 2000. At the meeting, the
Board of Directors reviewed the expense ratios of both
Portfolios; the comparative investment performance of the
Portfolios; the compatibility of the investment objectives,
policies and restrictions of the Portfolios; and the tax
consequences of the Transaction. During the course of its
deliberations, the Board of Directors noted that the
expenses of the Transaction will be borne by the Manager and
not by the Fund or either Portfolio.

The Board of Directors including a majority of the Directors
who are not interested persons of the Fund, unanimously
concluded that the Transaction is in the best interests of
the shareholders of Portfolio S and that no dilution of
value would result to the shareholders of Portfolio S or
Portfolio L from the Transaction, and the Board approved the
Plan and recommended that shareholders of Portfolio S vote
to approve the Transaction.

For the reasons discussed above, the Board of Directors
unanimously recommends that you vote For the Plan.

If shareholders of Portfolio S do not approve the Plan, the
Board of Directors will consider other possible courses of
action for Portfolio S, including liquidation and
dissolution.

INFORMATION ABOUT THE TRANSACTION

This is only a summary of the Plan. You should read the
actual Plan attached as Exhibit A.

How will the Transaction be carried out?

If shareholders of Portfolio S approve the Plan, the
Transaction will take place after various conditions are
satisfied by the Fund on behalf of Portfolio S and Portfolio
L, including the preparation of certain documents. The Fund
will determine a specific date for the actual Transaction to
take place. This is called the closing date. If the
shareholders of Portfolio S do not approve the Plan, the
Transaction will not take place.

If shareholders of Portfolio S approve the Plan at the
Meeting, shares of Portfolio S will no longer be offered for
sale to existing shareholders, except for the reinvestment
of dividend and capital gain distributions or through
established automatic investment plans. Until the close of
business on the day of the Meeting, you may continue to add
to your existing account subject to your applicable minimum
additional investment amount or buy additional shares
through the reinvestment of dividend and capital gain
distributions.

If the shareholders of Portfolio S approve the Plan,
Portfolio S will deliver to Portfolio L substantially all of
its assets on the closing date. In exchange, shareholders of
Portfolio S will receive shares of Portfolio L that have a
value equal to the dollar value of the assets delivered to
Portfolio S. The stock transfer books of Portfolio S will be
permanently closed on the closing date. Portfolio S will
only accept requests for redemption received in proper form
before 10:00 a.m. Central time on the closing date. Requests
received after that time will be considered requests to
redeem shares of Portfolio L.

To the extent permitted by law, the Fund may amend the Plan
without shareholder approval. It may also agree to terminate
and abandon the Transaction at any time before or, to the
extent permitted by law, after the approval by shareholders
of Portfolio S.

Who will pay the expenses of the Transaction?

The expenses resulting from the Transaction will be paid by
the Manager and not by the Fund or either Portfolio.

What are the tax consequences of the Transaction?

The Transaction is intended to qualify as a tax-free
reorganization for federal income tax purposes under Section
368(a)(1) of the Internal Revenue Code of 1986, as amended.
Based on certain assumptions and representations received
from the Fund, on behalf of the Portfolios, it is the
opinion of Stradley, Ronon, Stevens & Young, LLP, counsel to
the Fund, that shareholders of Portfolio S will not
recognize any gain or loss for federal income tax purposes
as a result of the exchange of their shares of Portfolio S
for shares of Portfolio L and that neither Portfolio L nor
its shareholders will recognize any gain or loss upon
receipt of the assets of Portfolio S.

You will continue to be responsible for tracking the
purchase cost and holding period of your shares and should
consult your tax advisor regarding the effect, if any, of
the Transaction in light of your individual circumstances.
You should also consult your tax advisor as to state and
local tax consequences, if any, of the Transaction, because
this discussion only relates to the federal income tax
consequences.

What should I know about the shares of Portfolio L?

Shares of Portfolio L will be distributed to shareholders of
Portfolio S and will have the same legal characteristics as
the shares of Portfolio S with respect to such matters as
voting rights, assessibility, conversion rights, and
transferability.

What are the capitalizations of the Portfolios and what
might the capitalization be after the Transaction?

The following table sets forth, as of May 31, 2000, the
capitalization of shares of Portfolio S and Portfolio L. The
table also shows the projected capitalization of Portfolio L
shares as adjusted to give effect to the proposed
Transaction. The capitalization of Portfolio L is likely to
be different when the Transaction is consummated.

Portfolio L
Portfolio SPortfolio Lpro forma
(unaudited)(unaudited)(unaudited)
Net assets (millions) $17 $24 $41
Total shares outstanding 1,652,333 2,852,350 4,879,193
Net asset value per share $10.41 $8.49 $8.49

VOTING INFORMATION

How many votes are necessary to approve the Plan?

The affirmative vote of a majority of the total number of
outstanding shares of Portfolio S is necessary to approve
the Plan. Each shareholder will be entitled to one vote for
each full share, and a fractional vote for each fractional
share of Portfolio S held at the close of business on June
15, 2000 (the "Record Date"). If sufficient votes to approve
the Plan are not received by the date of the Meeting, the
Meeting may be adjourned to permit further solicitations of
proxies.

Under relevant state law and the Fund's governing documents,
abstentions and broker non-votes will be included for
purposes of determining whether a quorum is present at the
Meeting, but will be treated as votes not cast and,
therefore, will not be counted for purposes of determining
whether the matters to be voted upon at the Meeting have
been approved, and will have the same effect as a vote
against the Plan.

How do I ensure my vote is accurately recorded?

You can vote in any one of four ways:

By mail, with the enclosed proxy card.

In person at the Meeting.

Through D.F. King, a proxy solicitor, by calling toll-free
1-800/207-3158.

By telephone or through the Internet; a control number and
internet site or a toll-free number for the automated voting
option is provided on your proxy card and separate
instructions are enclosed.

A proxy card is, in essence, a ballot. If you simply sign
and date the proxy but give no voting instructions, your
shares will be voted in favor of the Plan and in accordance
with the views of management upon any unexpected matters
that come before the Meeting or adjournment of the Meeting.

Can I revoke my proxy?

You may revoke your proxy at any time before it is voted by
sending a written notice to the Fund expressly revoking your
proxy, by signing and forwarding to the Fund a later-dated
proxy, or by attending the Meeting and voting in person.

What other matters will be voted upon at the Meeting?

The Board of Directors of the Fund does not intend to bring
any matters before the Meeting other than those described in
this proxy. It is not aware of any other matters to be
brought before the Meeting by others. If any other matter
legally comes before the Meeting, proxies for which
discretion has been granted will be voted in accordance with
the views of management.

Who is entitled to vote?

Shareholders of record of Portfolio S on the Record Date
will be entitled to vote at the meeting. On the Record Date,
there were 1,460,362.541 outstanding shares of Portfolio S
issued and outstanding.

What other solicitations will be made?

The Fund will request broker-dealer firms, custodians,
nominees and fiduciaries to forward proxy material to the
beneficial owners of the shares of record. The Fund may
reimburse broker-dealer firms, custodians, nominees and
fiduciaries for their reasonable expenses incurred in
connection with such proxy solicitation. In addition to
solicitations by mail, officers and employees of the Fund,
without extra pay, may conduct additional solicitations by
telephone, personal interviews and other means. The Fund, on
behalf of Portfolio S, has engaged D.F. King to solicit
proxies from brokers, banks, other institutional holders and
individual shareholders for an approximate fee, including
out-of-pocket expenses ranging between $5,000 and $10,000.
The costs of any additional solicitation and of any
adjourned session will be borne by the Manager.

Are there dissenters' rights?

Shareholders of Portfolio S will not be entitled to any
"dissenters' rights" since the proposed Transaction involves
two open-end investment companies registered under the 1940
Act (commonly called mutual funds). Although no dissenters'
rights may be available, you have the right to redeem your
shares at net asset value until the closing date. After the
closing date, you may redeem your Portfolio L shares or
exchange them for shares of other funds in the Babson Funds
group, subject to the terms in the prospectus of the
respective fund.

MORE INFORMATION ABOUT THE FUND AND THE PORTFOLIOS

Portfolio S and Portfolio L are separate series of the Fund,
which is an open-end management investment company
registered with the SEC under the 1940 Act. Each Portfolio
is, in effect, a separate mutual fund. Detailed information
about the Fund and each Portfolio (as well as the other
funds in the Babson Funds group) is contained in the current
Babson Funds Combined Prospectus which is enclosed with and
considered a part of this Prospectus/Proxy Statement.
Additional information about the Fund and each Portfolio is
included in the Babson Funds Combined SAI, dated October 31,
1999, which has been filed with the SEC and is incorporated
into the SAI relating to this Prospectus/Proxy Statement.

You may request a free copy of the Semiannual Report to
Shareholders for the six month period ended December 31,
1999, by calling 1-800-4-BABSON or by writing to the Fund at
P.O. Box 219747, Kansas City, MO 64121-9757. The Fund's
Annual Report to Shareholders for the fiscal year ended June
30, 1999, is enclosed with and considered a part of this
Prospectus/Proxy Statement.

The Fund files proxy materials, reports and other
information with the SEC in accordance with the
informational requirements of the Securities Exchange Act of
1934 and the 1940 Act. These materials can be inspected and
copied at: the SEC's Public Reference Room at 450 Fifth
Street NW, Washington, DC 20549, and at the Regional Offices
of the SEC located in New York City at 7 World Trade Center,
Suite 1300, New York, NY 10048 and in Chicago at 500 West
Madison Street, Suite 1400, Chicago, IL 60661. Also, copies
of such material can be obtained from the SEC's Public
Reference Section, Washington, DC 20549-6009, at prescribed
rates, or from the SEC's Internet address at
http://www.sec.gov.

PRINCIPAL HOLDERS OF SHARES

As of the Record Date, the principal shareholders of
Portfolio S, beneficial or of record, were:

Name and Address Percentage (%)

Bowen, David & Co. 16.08%

From time to time, the number of Portfolio S shares held in
the "street name" accounts of various securities dealers for
the benefit of their clients or in centralized securities
depositories may exceed 5% of the total shares outstanding.
No other person owned (beneficially or of record) 5% or more
of the outstanding shares of Portfolio S.

As of the Record Date, the officers and Directors of the
Fund, as a group, owned less than 1% of the outstanding
voting shares of Portfolio S.

EXHIBITS TO PROSPECTUS/PROXY STATEMENT

EXHIBIT A -Plan of Reorganization by D. L. Babson Tax-Free
Income Fund, Inc. on behalf of Portfolio L and Portfolio S

EXHIBIT B -Babson Funds Combined Prospectus dated October
31, 1999, as supplemented June 8, 2000 (enclosed)

EXHIBIT C -Babson Funds Combined Annual Report to
Shareholders dated June 30, 1999 (enclosed)

EXHIBIT A

FORM OF PLAN OF REORGANIZATION

THIS PLAN OF REORGANIZATION (the "Plan"), is made by D. L.
Babson Tax-Free Fund, Inc., a corporation organized under
the laws of the State of Maryland on August 22, 1979 (the
"Fund"), as of this ___ day of ________, 2000, on behalf of
its two series Portfolio S and Portfolio L (collectively,
the "Portfolios"), with a principal place of business at 700
Karnes Blvd., Kansas City, MO 64108.

PLAN OF REORGANIZATION

The reorganization (hereinafter referred to as the "Plan of
Reorganization") will consist of (i) the acquisition by
Portfolio L, of substantially all of the property, assets
and goodwill of Portfolio S in exchange solely for shares of
common stock, par value $0.10 each, of Portfolio L
("Portfolio L Shares"); (ii) the distribution of Portfolio L
Shares to the shareholders of Portfolio S according to their
respective interests; and (iii) the subsequent dissolution
of Portfolio S as soon as practicable after the closing (as
defined in Section 3, hereinafter called the "Closing"), all
upon and subject to the terms and conditions of this Plan
hereinafter set forth.

In order to consummate the Plan, the following actions shall
be taken by the Fund on behalf of the Portfolios:

1. Sale and Transfer of Assets, Liquidation and Dissolution
of Portfolio S.

(a) Subject to the terms and conditions of this Plan, the
Fund on behalf of Portfolio S shall convey, transfer and
deliver to Portfolio L at the Closing all of Portfolio S's
then existing assets, free and clear of all liens,
encumbrances, and claims whatsoever (other than
shareholders' rights of redemption), except for cash, bank
deposits, or cash equivalent securities in an estimated
amount necessary to (i) discharge its unpaid liabilities on
its books at the closing date, including, but not limited
to, its income dividends and capital gains distributions, if
any, payable for the period prior to, and through, the
Closing Date; and (ii) pay such contingent liabilities as
the Board of Directors shall reasonably deem to exist
against Portfolio S, if any, at the Closing Date, for which
contingent and other appropriate liability reserves shall be
established on Portfolio S's books (hereinafter "Net
Assets"). Portfolio S shall also retain any and all rights
that it may have over and against any person that may have
accrued up to and including the close of business on the
Closing Date.

(b) Subject to the terms and conditions of this Plan, the
Fund on behalf of Portfolio L shall at the Closing deliver
to Portfolio S the number of Portfolio L Shares, determined
by dividing the net asset value per share of the shares of
Portfolio S ("Portfolio S Shares") by the net asset value
per share of Portfolio L Shares, as of 1:00 P.M. Central
time on the Closing Date. All such values shall be
determined in the manner and as of the time set forth in
Section 2 hereof.

(c) Immediately following the Closing, the Fund shall
dissolve Portfolio S and distribute pro rata to the
shareholders of record of Portfolio S as of the close of
business on the Closing Date, the Portfolio L Shares to be
delivered to Portfolio L pursuant to this Section 1. Such
liquidation and distribution shall be accomplished by the
establishment of accounts on the share records of the Fund
relating to Portfolio S and noting in such accounts the type
and amounts of such Portfolio L Shares that such former
Portfolio S shareholders are due
based on their respective holdings of Portfolio S as of the
close of business on the Closing Date. Fractional Portfolio
L Shares shall be carried to the third decimal place. At the
time of merger, all outstanding certificated shares of
Portfolio S will be deemed canceled. Holders in possession
of certificated shares of Portfolio S will not be required
to surrender their certificates to complete the acquisition
by Portfolio L. After the acquisition, holders may request a
certificate representing the number of Portfolio L Shares
they own.

2. Valuation.

(a) The value of Portfolio S's Net Assets to be transferred
to Portfolio L hereunder shall be computed as of 1:00 P.M.
Central time on the Closing Date using the valuation
procedures set forth in Portfolio S's currently effective
prospectus.

(b) The net asset value of a share of Portfolio L shall be
determined to the third decimal point as of 1:00 P.M.
Central time on the Closing Date using the valuation
procedures set forth in Portfolio L's currently effective
prospectus.

(c) The net asset value of a share of Portfolio S shall be
determined to the third decimal point as of 1:00 P.M.
Central time on the Closing Date using the valuation
procedures set forth in Portfolio S's currently effective
prospectus.

3. Closing and Closing Date.

The Closing Date shall be October 27, 2000, or such later
date as determined by the Fund's officers. The Closing shall
take place at the principal office of the Fund at 2:00 P.M.
Central time on the Closing Date. The Fund on behalf of
Portfolio S shall have provided for delivery as of the
Closing of Portfolio S's Net Assets to be transferred to the
account of Portfolio at the Fund's Custodian, UMB Bank,
n.a., 700 Karnes Blvd, Kansas City, MO 64108. Also, the Fund
on behalf of Portfolio S shall produce at the Closing a list
of names and addresses of the shareholders of record of its
Portfolio S Shares and the number of shares owned by each
such shareholder, indicating thereon which such shares are
represented by outstanding certificates and which by book-
entry accounts, all as of 1:00 P.M. Central time on the
Closing Date, certified by its transfer agent or by its
President to the best of its or his or her knowledge and
belief. The Fund on behalf of Portfolio L shall issue and
deliver a certificate or certificates evidencing the shares
of Portfolio L to be delivered to the account of Portfolio S
at said transfer agent registered in such manner as the
officers of the Fund on behalf of Portfolio S may request,
or provide evidence satisfactory to Portfolio S that such
Portfolio L Shares have been registered in an account on the
books of Portfolio L in such manner as the Fund on behalf of
Portfolio S may request.

4. Representations and Warranties by the Fund on behalf of
Portfolio S.

The Fund makes the following representations and warranties
about Portfolio S:

(a) Portfolio S is a series of the Fund, a corporation
organized under the laws of the State of Maryland on August
22, 1979 and validly existing and in good standing under the
laws of that State. The Fund is duly registered under the
Investment Company Act of 1940, as amended (the "1940 Act"),
an open-end, management investment company and all of the
Portfolio S Shares sold were sold pursuant to an effective
registration statement filed under the Securities Act of
1933, as amended (the "1933 Act"), except for those shares
sold pursuant to the private offering exemption for the
purpose of raising the required initial capital.

(b) The Fund is authorized to issue 100,000,000 shares of
common stock, par value $0.10 each, each outstanding share
of which is fully paid, non-assessable, fully transferable
and has full voting rights and currently issues shares of
two (2) series. The Fund is authorized to issue 50,000,000
shares of beneficial interest of each series.

(c) The financial statements appearing in the Fund's Annual
Report to Shareholders for the fiscal year ended June 30,
1999, audited by Ernst & Young LLP, and the Fund's unaudited
Semiannual Report to shareholders for the six months ended
December 31, 1999, fairly present the financial position of
Portfolio S as of such dates and the results of its
operations for the periods indicated in conformity with
generally accepted accounting principles applied on a
consistent basis.

(d) The Fund has the necessary power and authority to
conduct Portfolio S's business as such business is now being
conducted.

(e) The Fund on behalf of Portfolio S is not a party to or
obligated under any provision of the Fund's Articles of
Incorporation, as amended and supplemented or By-laws, or
any contract or any other commitment or obligation, and is
not subject to any order or decree that would be violated by
its execution of or performance under this Plan.

(f) The Fund has elected to treat Portfolio S as a regulated
investment company ("RIC") for federal income tax purposes
under Part I of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), and Portfolio S has qualified
as a RIC for each taxable year since its inception and will
qualify as a RIC as of the Closing Date.

5. Representations and Warranties by the Fund on behalf of
Portfolio L.

The Fund makes the following representations and warranties
about Portfolio L:

(a) Portfolio L is a series of the Fund, a corporation
organized under the laws of the State of Maryland on August
22, 1994 and validly existing and in good standing under the
laws of that State. The Fund is duly registered under the
1940 Act an open-end, management investment company and all
its shares sold have been sold pursuant to an effective
registration statement filed under the 1933 Act, except for
those shares sold pursuant to the private offering exemption
for the purpose of raising the required initial capital.

(b) The Fund is authorized to issue 50,000,000 shares of
Portfolio L, par value $0.10 each, each outstanding share of
which is fully paid, non-assessable, fully transferable, and
has full voting rights. Portfolio L Shares to be issued
pursuant to this Plan will be fully paid, non-assessable,
freely transferable and have full voting rights.

(c) At the Closing, Portfolio L Shares will be eligible for
offering to the public in those states of the United States
and jurisdictions in which the shares of Portfolio S are
presently eligible for offering to the public, and there are
a sufficient number of Portfolio L Shares registered under
the 1933 Act to permit the transfers contemplated by this
Plan to be consummated.

(d) The financial statements appearing in the Fund's Annual
Report to Shareholders for the fiscal year ended June 30,
1999, audited by Ernst & Young LLP, and the Fund's unaudited
Semiannual Report to shareholders for the six months ended
December 31, 1999, fairly present the financial position of
Portfolio L as of such dates and the results of its
operations for the periods indicated in conformity with
generally accepted accounting principles applied on a
consistent basis.

(e) The Fund has the necessary power and authority to
conduct Portfolio L's business as such business is now being
conducted.

(f) The Fund on behalf of Portfolio L is not a party to or
obligated under any provision of the Fund's Articles of
Incorporation, as amended and supplemented or By-laws, or
any contract or any other commitment or obligation, and is
not subject to any order or decree that would be violated by
its execution of or performance under this Plan.

(g) The Fund has elected to treat Portfolio L as a RIC for
federal income tax purposes under Part I of Subchapter M of
the Code, and Portfolio L has qualified as a RIC for each
taxable year since its inception and will qualify as a RIC
as of the Closing Date.

6. Representations and Warranties by the Fund on behalf of
the Portfolios.

The Fund makes the following representations and warranties
about both Portfolio S and Portfolio L:

(a) The statement of assets and liabilities to be created by
the Fund for each of the Portfolios as of 1:00 P.M. Central
time on the Closing Date for the purpose of determining the
number of Portfolio L Shares to be issued pursuant to
Section 1 of this Plan will accurately reflect the Net
Assets in the case of Portfolio S and the net assets in the
case of Portfolio L, and outstanding shares, as of such
date, in conformity with generally accepted accounting
principles applied on a consistent basis.

(b) At the Closing, the Portfolios will have good and
marketable title to all of the securities and other assets
shown on the statement of assets and liabilities referred to
in "(a)" above, free and clear of all liens or encumbrances
of any nature whatsoever, except such imperfections of title
or encumbrances as do not materially detract from the value
or use of the assets subject thereto, or materially affect
title thereto.

(c) Except as disclosed in the Fund's current effective
prospectus relating to Portfolio S and Portfolio L, there is
no material suit, judicial action, or legal or
administrative proceeding pending or threatened against
either of the Portfolios.

(d) There are no known actual or proposed deficiency
assessments with respect to any taxes payable by either of
the Portfolios.

(e) The execution, delivery, and performance of this Plan
have been duly authorized by all necessary action of the
Fund's Board of Directors, and this Plan constitutes a valid
and binding obligation enforceable in accordance with its
terms.

(f) It anticipates that consummation of this Plan will not
cause either of the Portfolios to fail to conform to the
requirements of Subchapter M of the Code for Federal income
taxation as a RIC at the end of each of the fiscal year.

(g) The Fund has the necessary power and authority to
conduct the business of the Portfolios, as such business is
now being conducted.

7. Intentions of the Fund on behalf of the Portfolios.

(a) The Fund intends to operate each Portfolio's respective
business as presently conducted between the date hereof and
the Closing.

(b) The Fund intends that the Portfolio S will not acquire
the Portfolio L Shares for the purpose of making
distributions thereof to anyone other than Portfolio S's
shareholders.

(d) The Fund intends that, by the Closing, all of the
Portfolios' Federal and other tax returns and reports
required by law to be filed on or before such date shall
have been filed, and all Federal and other taxes shown as
due
on said returns shall have either been paid or adequate
liability reserves shall have been provided for the payment
of such taxes.

(e) At the Closing, the Fund on behalf of Portfolio S
intends to have available a copy of the shareholder ledger
accounts, certified by the Fund's transfer agent or its
President to the best of its or his or her knowledge and
belief, for all the shareholders of record of Portfolio S
Shares as of 1:00 p.m. Central time on the Closing Date who
are to become shareholders of Portfolio L as a result of the
transfer of assets that is the subject of this Plan.

(f) The Fund intends to mail to each shareholder of record
of Portfolio S entitled to vote at the meeting of its
shareholders at which action on this Plan is to be
considered, in sufficient time to comply with requirements
as to notice thereof, a Combined Proxy Statement and
Prospectus that complies in all material respects with the
applicable provisions of Section 14(a) of the Securities
Exchange Act of 1934, as amended, and Section 20(a) of the
1940 Act, and the rules and regulations, respectively,
thereunder.

(g) The Fund intends to file with the U.S. Securities and
Exchange Commission a registration statement on Form N-14
under the 1933 Act relating to the Portfolio L Shares
issuable hereunder ("Registration Statement"), and will use
its best efforts to provide that the Registration Statement
becomes effective as promptly as practicable. At the time it
becomes effective, the Registration Statement will: (i)
comply in all material respects with the applicable
provisions of the 1933 Act, and the rules and regulations
promulgated thereunder; and (ii) not contain any untrue
statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading. At the time the
Registration Statement becomes effective, at the time of
Portfolio S's shareholders' meeting, and at the Closing
Date, the prospectus and statement of additional information
included in the Registration Statement will not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in
the light of the circumstances under which they were made,
not misleading.

8. Conditions Precedent to be Fulfilled by Fund on behalf of
the Portfolios.

The consummation of the Plan shall be subject to the
following conditions:

(a) That: (i) all the representations and warranties
contained herein shall be true and correct as of the Closing
with the same effect as though made as of and at such date;
(ii) performance of all obligations required by this Plan to
be performed by the Fund on behalf of the Portfolios shall
occur prior to the Closing; and (iii) the Fund shall execute
a certificate signed by the President and by the Secretary
or equivalent officer to the foregoing effect.

(b) That this Plan shall have been adopted and approved by
the appropriate action of the Board of Directors of the Fund
on behalf of each of the Portfolios.

(c) That the U.S. Securities and Exchange Commission shall
not have issued an unfavorable management report under
Section 25(b) of the 1940 Act or instituted or threatened to
institute any proceeding seeking to enjoin consummation of
the Plan under Section 25(c) of the 1940 Act. And, further,
no other legal, administrative or other proceeding shall
have been instituted or threatened that would materially
affect the financial condition of either Portfolio or would
prohibit the transactions contemplated hereby.

(d) That the Plan contemplated hereby shall have been
adopted and approved by the appropriate action of the
shareholders of Portfolio S at an annual or special meeting
or any adjournment thereof.

(e) That a distribution or distributions shall have been
declared for both Portfolios, prior to the Closing Date
that, together with all previous distributions, shall have
the effect of distributing to shareholders of each party (i)
all net investment income and all net realized capital
gains, if any, for the period from the close of its last
fiscal year to 1:00 P.M. Central time on the Closing Date;
and (ii) any undistributed net investment income and net
realized capital gains from any period to the extent not
otherwise declared for distribution.

(f) That there shall be delivered to the Fund on behalf of
Portfolio S an opinion from Messrs. Stradley, Ronon, Stevens
& Young, LLP, counsel to the Fund, to the effect that,
provided the acquisition contemplated hereby is carried out
in accordance with this Plan and based upon certificates of
the officers of the Fund with regard to matters of fact:

(1) The acquisition by Portfolio L of substantially all the
assets of Portfolio S as provided for herein in exchange for
Portfolio L Shares will qualify as a reorganization within
the meaning of Section 368(a)(1)(C) of the Code, and
Portfolio S and Portfolio L will each be a party to the
respective reorganization within the meaning of Section
368(b) of the Code;

(2) No gain or loss will be recognized by Portfolio S upon
the transfer of substantially all of its assets to Portfolio
L in exchange solely for voting shares of Portfolio L
(Sections 361(a) and 357(a)). No opinion, however, will be
expressed as to whether any accrued market discount will be
required to be recognized as ordinary income pursuant to
Section 1276 of the Code;

(3) No gain or loss will be recognized by Portfolio L upon
the receipt of substantially all of the assets of Portfolio
S in exchange solely for voting shares of Portfolio L
(Section 1032(a));

(4) The basis of the assets of Portfolio S received by
Portfolio L will be the same as the basis of such assets to
Portfolio S immediately prior to the exchange (Section
362(b));

(5) The holding period of the assets of Portfolio S received
by Portfolio L will include the period during which such
assets were held by Portfolio S (Section 1223(2));

(6) No gain or loss will be recognized to the shareholders
of Portfolio S upon the exchange of their shares in
Portfolio S for voting shares of Portfolio L (Section
354(a));

(7) The basis of the Portfolio L Shares received by
Portfolio S's shareholders shall be the same as the basis of
the Portfolio S Shares exchanged therefor (Section
358(a)(1));

(8) The holding period of Portfolio L Shares received by
Portfolio S's shareholders (including fractional shares to
which they may be entitled) will include the holding period
of Portfolio S's shares surrendered in exchange therefor,
provided that Portfolio S's shares were held as a capital
asset on the date of the exchange (Section 1223(1)); and

(9) Portfolio L will succeed to and take into account as of
the date of the proposed transfer (as defined in Section
1.381(b)-1(b) of the Income Tax Regulations) the items of
Portfolio S described in Section 381(c) of the Code (as
defined in Section 1.381(b)-1(b) of the Income Tax
Regulations), subject to the conditions and limitations
specified in Sections 381(b) and (c), 382, 383 and 384 of
the Code and the Income Tax Regulations thereunder.

(g) That there shall be delivered to the Fund on behalf of
the Portfolios an opinion in form and substance satisfactory
to it from Messrs. Stradley Ronon Stevens & Young, LLP,
counsel to the Fund, to the effect that, subject in all
respects to the effects of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other
laws now or hereafter affecting generally the enforcement of
creditors' rights:

(1) Portfolio S is a series of the Fund, which was organized
as a corporation under the laws of the State of Maryland on
August 22, 1979 and is validly existing and in good standing
under the laws of that State;

(2) The Fund is authorized to issue 50,000,000 shares of
Portfolio S, par value $0.10 each. Assuming that the initial
shares were issued in accordance with the 1940 Act and the
Fund's Articles of Incorporation, as amended and
supplemented and By-laws of the Fund, and that all other
outstanding shares of Portfolio S were sold, issued and paid
for in accordance with the terms of Portfolio S's prospectus
in effect at the time of such sales, each such outstanding
share is fully paid, non-assessable, fully transferable and
has full voting rights;

(3) Portfolio S is a series of the Fund is an open-end,
investment company of the management type registered as such
under the 1940 Act;

(4) Except as disclosed in Portfolio S's currently effective
prospectus, such counsel does not know of any material suit,
action, or legal or administrative proceeding pending or
threatened against Portfolio S, the unfavorable outcome of
which would materially and adversely affect Portfolio S;

(5) All actions required to be taken by the Fund and/or
Portfolio S to authorize and effect the Plan contemplated
hereby have been duly authorized by all necessary action on
the part of the Fund and Portfolio S; and

(6) Neither the execution, delivery nor performance of this
Plan by the Fund and/or Portfolio S violates any provision
of the Fund's Articles of Incorporation, as amended and
supplemented or By-laws, or the provisions of any agreement
or other instrument known to such counsel to which the Fund
is a party or by which Portfolio S is otherwise bound; this
Plan is the legal, valid and binding obligation of the Fund
and Portfolio S and is enforceable against the Fund and/or
Portfolio S in accordance with its terms.

In giving the opinions set forth above, counsel may state
that it is relying on certificates of the officers of the
Fund with regard to matters of fact, and certain
certifications and written statements of governmental
officials with respect to the good standing of the Fund.

(h) That there shall be delivered to the Fund on behalf of
the Portfolio S an opinion in form and substance
satisfactory to it from Messrs. Stradley, Ronon, Stevens &
Young, LLP, counsel to the Fund, to the effect that, subject
in all respects to the effects of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other
laws now or hereafter affecting generally the enforcement of
creditors' rights:

(1) Portfolio L is a series of the Fund, which was organized
as a corporation under the laws of the State of Maryland on
August 22, 1979 and is validly existing and in good standing
under the laws of that State;

(2) The Fund is authorized to issue 50,000,000 shares of
Portfolio L, par value $0.10 each. Assuming that the initial
capital shares of Portfolio L were issued in accordance with
the 1940 Act, and the Amended and Restated Agreement and
Declaration of Fund and By-laws of the Fund, and that all
other outstanding shares of Portfolio L were sold, issued
and paid for in accordance with the terms of Portfolio L's
prospectus in effect at the time of such sales, each such
outstanding share of Portfolio L is fully paid, non-
assessable, freely transferable and has full voting rights;

(3) The Fund is an open-end, non-diversified investment
company of the management type registered as such under the
1940 Act;

(4) Except as disclosed in Portfolio L's currently effective
prospectus, such counsel does not know of any material suit,
action, or legal or administrative proceeding pending or
threatened against Portfolio L, the unfavorable outcome of
which would materially and adversely affect Portfolio L;

(5) Portfolio L Shares to be issued pursuant to the terms of
this Plan have been duly authorized and, when issued and
delivered as provided in this Plan, will have been validly
issued and fully paid and will be non-assessable by the
Fund, on behalf of Portfolio L;

(6) All actions required to be taken by the Fund and/or
Portfolio L to authorize the Plan contemplated hereby have
been duly authorized by all necessary action on the part of
Portfolio L;

(7) Neither the execution, delivery nor performance of the
Plan by the Fund and/or Portfolio L violates any provision
of the Fund's Articles of Incorporation, as amended and
supplemented, or its By-laws, or the provisions of any
agreement or other instrument known to such counsel to which
the Fund is a party or by which Portfolio L is otherwise
bound; this Plan is the legal, valid and binding obligation
of the Fund and Portfolio L and is enforceable against the
Fund and/or Portfolio L in accordance with its terms; and

(8) The Fund's registration statement of which the
prospectus dated October 31, 1999, as supplemented June 8,
2000 of Portfolio L is a part (the "Prospectus") is, at the
time of the signing of this Plan, effective under the 1933
Act, and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of such registration
statement has been issued, and no proceedings for such
purpose have been instituted or are pending before or
threatened by the U.S. Securities and Exchange Commission
under the 1933 Act, and nothing has come to counsel's
attention that causes it to believe that, at the time the
Prospectus became effective, or at the time of the signing
of this Plan, or at the Closing, such Prospectus (except for
the financial statements and other financial and statistical
data included therein, as to which counsel need not express
an opinion), contained any untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein
not misleading; and such counsel knows of no legal or
government proceedings required to be described in the
Prospectus, or of any contract or document of a character
required to be described in the Prospectus that is not
described as required.

(i) That the Fund's Registration Statement with respect to
the Portfolio L Shares to be delivered to the Portfolio S's
shareholders in accordance with this Plan shall have become
effective, and no stop order suspending the effectiveness of
the Registration Statement or any amendment or supplement
thereto, shall have been issued prior to the Closing Date or
shall be in effect at Closing, and no proceedings for the
issuance of such an order shall be pending or threatened on
that date.

(j) That the Portfolio L Shares to be delivered hereunder
shall be eligible for sale by Portfolio L with each state
commission or agency with which such eligibility is required
in order to permit the Portfolio L Shares lawfully to be
delivered to each Portfolio S shareholder.

(k) That, at the Closing, there shall be transferred to
Portfolio L aggregate Net Assets of Portfolio S comprising
at least 90% in fair market value of the total net assets
and 70% of the fair market value of the total gross assets
recorded on the books of Portfolio S on the Closing Date.

9. Expenses.

(a) The Fund represents and warrants that there are no
broker or finders' fees payable by it in connection with the
transactions provided for herein.

(b) The expenses of entering into and carrying out the
provisions of this Plan shall be borne by the Manager.

10. Termination; Postponement; Waiver; Order.

(a) Anything contained in this Plan to the contrary
notwithstanding, this Plan may be terminated and abandoned
at any time (whether before or after approval thereof by the
shareholders of Portfolio S) prior to the Closing or the
Closing may be postponed by the Fund on behalf of either
party by resolution of the Board of Directors, if
circumstances develop that, in the opinion of the Board,
make proceeding with the Plan inadvisable.

(b) If the transactions contemplated by this Plan have not
been consummated by December 31, 2000, the Plan shall
automatically terminate on that date, unless a later date is
agreed to by the Fund on behalf of Portfolio L and Portfolio
S.

(c) In the event of termination of this Plan pursuant to the
provisions hereof, the same shall become void and have no
further effect, and neither the Fund, Portfolio S nor
Portfolio L, nor the directors, officers, agents or
shareholders shall have any liability in respect of this
Plan.

(d) At any time prior to the Closing, any of the terms or
conditions of this Plan may be waived by the party who is
entitled to the benefit thereof by action taken by the
Fund's Board of Directors if, in the judgment of such Board
of Directors, such action or waiver will not have a material
adverse affect on the benefits intended under this Plan to
its shareholders, on behalf of whom such action is taken.

(e) The respective representations and warranties contained
in Sections 4 to 6 hereof shall expire with and be
terminated by the Plan of Reorganization, and neither the
Fund nor any of its officers, Directors, agents or
shareholders nor the Funds nor any of their shareholders
shall have any liability with respect to such
representations or warranties after the Closing. This
provision shall not protect any officer, Director, agent or
shareholder of either of the Funds or the Fund against any
liability to the entity for which that officer, Director,
agent or shareholder so acts or to any of the Funds'
shareholders to which that officer, Director, agent or
shareholder would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless
disregard of the duties in the conduct of such office.

(f) If any order or orders of the U.S. Securities and
Exchange Commission with respect to this Plan shall be
issued prior to the Closing and shall impose any terms or
conditions that are determined by action of the Board of
Directors of the Fund on behalf of the Portfolio S or
Portfolio L to be acceptable, such terms and conditions
shall be binding as if a part of this Plan without further
vote or approval of the shareholders of Portfolio S, unless
such terms and conditions shall result in a change in the
method of computing the number of Portfolio L Shares to be
issued to Portfolio S in which event, unless such terms and
conditions shall have been included in the proxy
solicitation material furnished to the shareholders of
Portfolio S prior to the meeting at which the transactions
contemplated by this Plan shall have been approved, this
Plan shall not be consummated and shall terminate unless the
Fund on behalf of Portfolio S shall promptly call a special
meeting of shareholders at which such conditions so imposed
shall be submitted for approval.

11. Entire Plan and Amendments.

This Plan embodies the entire plan of the Fund on behalf of
the Portfolios and there are no agreements, understandings,
restrictions, or warranties between the parties other than
those set forth herein or herein provided for. This Plan may
be amended only by the Fund on behalf of the Portfolio in
writing. Neither this Plan nor any interest herein may be
assigned without the prior written consent of the Fund on
behalf of the Portfolio.

12. Notices.

Any notice, report, or demand required or permitted by any
provision of this Plan shall be in writing and shall be
deemed to have been given if delivered or mailed, first
class postage prepaid, addressed to the Fund at 700 Karnes
Blvd., Kansas City, MO, 64108, Attention: Secretary.

13. Governing Law.

This Plan shall be governed by and carried out in accordance
with the laws of the State of Maryland.

IN WITNESS WHEREOF, D. L. Babson Tax-Free Income Fund, Inc.
on behalf of Portfolio L and Portfolio S, has executed this
Plan by its duly authorized officer, all as of the date and
year first-above written.

D. L. Babson Tax-Free Income Fund, Inc.
on behalf of
Portfolio S
Attest:
By:
Assistant Secretary

D. L. Babson Tax-Free Income Fund, Inc.
on behalf of
Portfolio L
Attest:
By:
Assistant Secretary

EXHIBIT B

Babson Funds Combined Prospectus

Dated October 31, 1999, as Supplemented June 8, 2000

The Babson Funds Combined Prospectus dated October 31, 1999,
as supplemented June 8, 2000, is part of this
Prospectus/Proxy Statement and will be included in the proxy
solicitation mailing to shareholders. For purposes of this
EDGAR filing, the above-referenced prospectus (as
supplemented) is incorporated herein by reference to the
electronic filings made on June 8, 2000 (the supplement) and
November 2, 1999 (the prospectus).

EXHIBIT C

BABSON FUNDS COMBINED ANNUAL REPORT TO SHAREHOLDERS

Dated June 30, 2000

The Babson Funds Combined Annual Report to Shareholders
dated June 30, 1999 is part of this Prospectus/Proxy
Statement and will be included in the proxy solicitation
mailing to shareholders. For purposes of this EDGAR filing,
the above-referenced shareholder report is incorporated
herein by reference to the electronic filing made on
September 3, 1999.

STATEMENT OF ADDITIONAL INFORMATION

FOR

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

Dated July 20, 2000

Acquisition of the Assets of
PORTFOLIO S,
a series of D. L. Babson Tax-Free Income Fund, Inc.

By and in exchange for shares of the
PORTFOLIO L,
also a series of D. L. Babson Tax-Free Income Fund, Inc.

This Statement of Additional Information (SAI) relates
specifically to the proposed delivery of substantially all
of the assets of Portfolio S for shares of Portfolio L.

This SAI consists of this Cover Page and the following
documents. Each of these documents is enclosed with and is
legally considered to be a part of this SAI:

1. Babson Funds Combined Statement of Additional
Information dated October 31, 1999.

2. Babson Funds Combined Semiannual Report to Shareholders
for the six months ended December 31, 1999.

3. Projected (Pro Forma) after Transaction Financial
Statements.

This SAI is not a Prospectus; you should read this SAI in
conjunction with the Prospectus/Proxy Statement dated July
20, 2000, relating to the above-referenced transaction. You
can request a copy of the Prospectus/Proxy Statement by
calling 1-800-4BABSON (1-800-422-2766)] or by writing to the
Babson Funds at P.O. Box 219757, Kansas City, MO 64121-9757.

Attachments to SAI (page 1 of 3)

The Babson Funds Combined Statement of Additional
Information dated October 31, 1999 is part of this SAI and
will be provided to all shareholders requesting this SAI.
For purposes of this EDGAR filing, the above-referenced SAI
is incorporated herein by reference to the electronic filing
made on November 2, 1999.

Attachments to SAI (page 2 of 3)

The Babson Funds Combined Semiannual Report to Shareholders
dated December 31, 1999 is part of this SAI and will be
provided to all shareholders requesting this SAI. For
purposes of this EDGAR filing, the above-referenced
Shareholder Report is incorporated herein by reference to
the electronic filing made on February 28, 2000.

Attachments to SAI (page 3 of 3)

The following are projected (pro forma) financial statements that were
prepared to indicate the anticipated financial information for Portfolio L
following the completion of the reorganization. They consist of a Pro Forma
Combining Statement of Assets and Liabilities; a Pro Forma Combining
Statement of Operations; notes relating to the combining Statements; and a
Combined Pro Forma Statement of Investments.

<PAGE>
PRO FORMA COMBINING STATEMENT OF INVESTMENTS
BABSON TAX-FREE INCOME FUND - PORTFOLIO S
BABSON TAX-FREE INCOME FUND - PORTFOLIO L
DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
BABSON TAX-FREE INCOME FUND BABSON TAX-FREE INCOME FUND
PORTFOLIO S PORTFOLIO L PRO FORMA COMBINED
SHARES/ SHARES/ SHARES/
DESCRIPTION COUNTRY WARRANTS VALUE WARRANTS VALUE WARRANTS VALUE
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ALABAMA
Jefferson County Sewer,
5.00%, due February 1, 2033 United States $1,000,000 $ 822,500 $1,000,000 $ 822,500

ARIZONA
Chandler,
6.90%, due July 1, 2005 United States $1,000,000 $ 1,097,137 1,000,000 1,097,137
Maricopa County Unified School District #93,
6.40%, due July 1, 2005 United States 500,000 532,500 500,000 532,500
Maricopa County Unified School District, #48,
9.25%, due July 1, 2007 United States 500,000 631,875 500,000 631,875

ARKANSAS
Arkansas, Series B,
0.00%, due June 1, 2010 United States 1,000,000 571,250 1,000,000 571,250

CALIFORNIA
California,
5.50%, due October 1, 2011 United States 1,000,000 1,020,000 1,000,000 1,020,000
Santa Rosa Water, Series B,
6.00%, due September 1, 2015 United States 500,000 521,875 500,000 521,875
University of California, Series D,
5.75%, due July 1, 2013 United States 1,000,000 1,017,500 1,000,000 1,017,500

COLORADO
Adams County School District #12,
6.20%, due December 15, 2010 United States 500,000 517,500 500,000 517,500
Jefferson County School District #R-001,
Series A,
6.00%, due December 15, 2006 United States 500,000 529,375 500,000 529,375

DISTRICT OF COLUMBIA
District of Columbia, Series A,
5.75%, due June 1, 2003 United States 245,000 252,350 245,000 252,350 490,000 504,700
District of Columbia, Series A,
5.75%, due June 1, 2003 United States 255,000 262,013 255,000 262,013 510,000 524,026

FLORIDA
Dade County,
0.00%, due October 1, 2027 United States 1,000,000 195,000 1,000,000 195,000
Florida State Public Board of Education,
Series A,
7.25%, due June 1, 2023 United States 1,000,000 1,032,540 1,000,000 1,032,540
Miami-Dade County, Series A,
0.00%, due October 1, 2015 United States 500,000 196,250 500,000 196,250
Palm Beach County Airport,
7.75%, due October 1, 2010 United States 500,000 535,000 500,000 535,000
Tampa (Catholic Health Care East),
4.875%, due November 15, 2023 United States 500,000 417,500 500,000 417,500

GUAM
Guam Government Limited Obligation, Series A,
5.75%, due May 1, 2001 United States 500,000 508,750 500,000 508,750

HAWAII
Hawaii State,
5.50%, due September 1, 2006 United States 500,000 513,750 500,000 513,750

ILLINOIS
Chicago Public Building,
5.375%, due February 1, 2005 United States 250,000 255,313 250,000 255,313
Chicago, Series B,
5.125%, due January 1, 2022 United States 1,000,000 872,500 1,000,000 872,500
Du Page & Will Counties
Community School District #204,
7.25%, due December 30, 2004 United States 500,000 551,250 500,000 551,250
Lake County School District,
5.00%, due December 15, 2014 United States 100,000 918,750 100,000 918,750
Metro Pier & Expo Tax Authority,
5.375%, due December 15, 2017 United States 1,000,000 931,250 1,000,000 931,250

INDIANA
Indiana Bond Bank Special Program,
Series 94 A-1,
5.60%, due August 1, 2015 United States 500,000 495,625 500,000 495,625
Kokomo-Center School Building Corp.,
6.75%, due July 15, 2007 United States 250,000 275,625 250,000 275,625

KANSAS
Johnson County Unified
School District #229, Series A,
4.90%, due October 1, 2011 United States 1,000,000 958,750 1,000,000 958,750

LOUISIANA
St. Tammany Parish Hospital
Service District #2,
(Slidell Memorial Hospital &
Medical Center),
6.125%, due October 1, 2011 United States 500,000 521,875 500,000 521,875

MASSACHUSETTS
Massachusetts Health & Education
(Milford-Whitinsville Regional),
Series C,
4.75%, due July 15, 2003 United States 500,000 483,125 500,000 483,125
Massachusetts Health &
Education, Series D,
5.75%, due July 1, 2014 United States 500,000 501,250 500,000 501,250
Massachusetts Housing
Finance Agency Projects, Series A,
5.35%, due April 1, 2003 United States 500,000 508,750 500,000 508,750
Massachusetts Housing
Finance Agency Projects, Series A,
6.375%, due April 1, 2021 United States 975,000 987,187 975,000 987,187
Massachusetts State Consolidated Loan,
5.25%, due August 1, 2018 United States 1,000,000 921,250 1,000,000 921,250

MICHIGAN
Utica Community Schools,
5,.375%, due May 1, 2005 United States 500,000 510,625 500,000 510,625

MISSOURI
Sikeston Electric,
5.80%, due June 1, 2002 United States 500,000 515,000 500,000 515,000
NEVADA
Clark County School District,
Series A,
6.75%, due March 1, 2007 United States 500,000 514,375 500,000 514,375
Washoe County Hospital,
Series A,
5.25%, due June 1, 2001 United States 500,000 505,625 500,000 505,625
Washoe County (Reno Sparks Bowling Facility),
Series A,
5.40%, due July 1, 2006 United States 500,000 508,750 500,000 508,750

NEW HAMPSHIRE
New Hampshire Higher Education
& Health Facility
(Concord Hospital),
5.70%, due October 1, 2010 United States 500,000 513,750 500,000 513,750
New Hampshire Higher Education
& Health Facility
(Franklin Pierce Law Center),
5.50%, due July 1, 2018 United States 500,000 442,500 500,000 442,500

NEW JERSEY
New Jersey Turnpike,
10.375%, due January 1, 2003 United States 115,000 125,781 115,000 125,781

NEW YORK
Battery Park City,
6.00%, due November 1, 2003 United States 500,000 518,750 500,000 518,750
Long Island Power,
3.60%, due May 1, 2033 United States 400,000 400,000 800,000 800,000 1,200,000 1,200,000
Metropolitan Transportation,
5.00%, due April 1, 2008 United States 500,000 494,375 500,000 494,375
New York City Municipal Water
Financing Authority, Series A,
6.80%, due June 15, 2004 United States 1,000,000 1,041,250 1,000,000 1,041,250
New York Dormitory
(State University Education Facility),
Series B,
6.10%, due May 15, 2008 United States 1,000,000 1,067,500 1,000,000 1,067,500
New York Environmental, Series B,
6.65%, due September 15, 2013 United States 500,000 527,500 500,000 527,500
New York Medical Care Finance Agency,
Series F,
6.00%, due August 15, 2002 United States 500,000 515,000 500,000 515,000
New York Medical Care Finance Agency,
Series A,
5.40%, due August 15, 2004 United States 235,000 237,693 235,000 237,693
New York State Dormitory,
5.35%, due November 1, 2005 United States 500,000 511,250 500,000 511,250
New York State Thruway
Authority Highway,
5.50%, due 2005 United States 500,000 514,375 500,000 514,375

NORTH CAROLINA
North Carolina Eastern
Municipal Power Agency,
Series 93 B,
5.375%, due January 1, 2001 United States 500,000 501,115 500,000 501,115

OHIO
Columbus City School District,
6.65%, due December 1, 2012 United States 500,000 536,250 500,000 536,250
Ohio Major Infrastructure,
5.00%, due December 15, 2007 United States 500,000 497,500 500,000 497,500
Ohio State Building Authority,
4.00%, due October 1, 2004 United States 250,000 241,562 250,000 241,562

PENNSYLVANIA
North Hampton County,
4.20%, due August 15, 2008 United States 500,000 464,375 500,000 464,375

RHODE ISLAND
Rhode Island Depositors
Economic Protection Corp.,
Series B,
5.80%, due August 1, 2009 United States 500,000 521,875 500,000 521,875
Rhode Island Industrial Facility Corp.,
9.125%, due October 1, 2000 United States 20,000 20,015 20,000 20,015

TENNESSEE
McKinney Independent School,
5.25%, due February 15, 2006 United States 500,000 508,125 500,000 508,125
Metro Nashville Airport,
5.00%, due October 1, 2012 United States 200,000 200,000 200,000 200,000
Tennessee Housing Development Agency,
Series A,
4.95%, due July 1, 2000 United States 490,000 491,377 490,000 491,377

TEXAS
Houston,
Series C,
5.90%, due March 1, 2003 United States 140,000 143,675 140,000 143,675
Houston,
Series C,
5.90%, due March 1, 2003 United States 360,000 369,000 360,000 369,000
San Antonio Electric & Gas,
5.75%, due February 1, 2011 United States 295,000 298,319 295,000 298,319
San Antonio Electric & Gas,
5.75%, due February 1, 2011 United States 205,000 211,406 205,000 211,406

VIRGINIA
Fairfax County Industrial Development,
5.50%, due August 15, 2009 United States 500,000 499,375 500,000 499,375

WASHINGTON
Tacoma Conservation System Project
(Tacoma Public Utilities),
6.50%, due January 1, 2012 United States 500,000 526,250 500,000 526,250
Seattle Water System,
5.75%, due July 1, 2023 United States 1,000,000 955,000 1,000,000 955,000
Washington Public Power Supply System
Nuclear Project #2,
Series B,
5.10%, due July 1, 2004 United States 500,000 504,375 500,000 504,375
Washington Public Power Supply System
Nuclear Project #2,
Series B,
7.50%, due July 1, 2004 United States 300,000 310,767 300,000 310,767
Washington, Series B,
5.00%, due January 1, 2008 United States 500,000 495,625 500,000 495,625

WISCONSIN
Milwaukee County, Series A,
5.35%, due September 1, 2001 United States 500,000 506,875 500,000 506,875
Milwaukee Metropolitan Sewer District,
Series A,
7.00%, due September 1, 2000 United States 500,000 509,280 500,000 509,280
Wisconsin Public Power,
5.90%, due July 1, 2011 United States 500,000 518,125 500,000 518,125
TOTAL INVESTMENTS - 98.67%
17,081,282 23,884,611 40,965,893
Other Assets less Liabilities - 1.33%
234,052 319,037 553,089
TOTAL NET ASSETS - 100.00% $17,315,334 $24,203,648 $41,518,982
</TABLE>

PRO FORMA COMBINING STATEMENTS OF ASSETS AND LIABILITIES
BABSON TAX-FREE INCOME FUND - PORTFOLIO S
BABSON TAX-FREE INCOME FUND - PORTFOLIO L
DECEMBER 31, 1999 (UNAUDITED)
BABSON
BABSON BABSON TAX-FREE INCOME FUND
TAX-FREE TAX-FREE PORTFOLIO L
INCOME FUNDINCOME FUND PRO FORMA PRO FORMA
PORTFOLIO S PORTFOLIO L ADJUSTMENTS COMBINED
ASSETS:
Investments in securities
Cost $16,778,732 $23,073,865 $ - $39,852,597
Value 1 6,681,282 22,884,611 - 39,565,893
Repurchase agreements,
at value and cost 400,000 1,000,000 - 1,400,000
Cash 26,780 27,560 - 54,341
Receivables:
Capital shares sold - 28,000 - 28,000
Dividends and interest 278,258 375,913 - 654,170
Total assets 17,386,320 24,316,084 - 41,702,404

LIABILITIES:
Payables for:
Management fees 14,043 19,752 - 33,795
Registration fees 1,330 243 - 1,573
Dividends 55,613 92,442 - 148,055
Total liabilities 70,986 112,437 - 183,423
Net assets $17,315,334 $24,203,647 $ - $41,518,981

NET ASSETS CONSIST OF:
Paid in capital 17,463,388 24,427,053 - 41,890,441
Undistributed net investment
income (loss) 906 - - 906
Accumulated undistributed net
realized gain (loss)
on sale of investments (51,510) (34,152) - (85,662)
Net unrealized appreciation
(depreciation) in value
of investments (97,450) (189,253) - (286,703)
Total net assets 17,315,334 24,203,647 - 41,518,981
(A)
Capital shares outstanding 1,662,554 2,852,374 2,038,538 4,890,912
Net assets 17,315,334 24,203,647 41,518,981
Net asset value per share 10.41 8.49 8.49

(A) Reflect new shares issued, net of retired shares of Portfolio S

PRO FORMA COMBINING STATEMENT OF OPERATIONS
BABSON TAX-FREE INCOME FUND - PORTFOLIO S
BABSON TAX-FREE INCOME FUND - PORTFOLIO L
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
BABSON
BABSON BABSON TAX-FREE INCOME FUND
TAX-FREE TAX-FREE PORTFOLIO L
INCOME FUNDINCOME FUND PRO FORMA PRO FORMA
PORTFOLIO S PORTFOLIO L ADJUSTMENTS COMBINED

INVESTMENT INCOME:
Interest $ 916,514 $ 1,406,500 $ - $ 2,323,074
Total investment income 916,514 1,406,500 - 2,323,074

EXPENSES:
Management fees 182,027 247,876 - 429,903
Registration and filing fees 12,271 15,315 - 27,586
Total expenses 194,298 263,191 - 457,489
Net investment income
(loss) 722,216 1,143,369 - 1,865,585

REALIZED AND UNREALIZED GAINS (LOSS):
Net realized gain (loss)
during the period on
investments (1,599) 180,920 - 179,321
Net change in unrealized
appreciation (depreciation)
during the period on
investments (631,541) (2,146,286) - (2,777,827)
Net gain (loss) (633,140) (1,965,366) - (2,598,506)
Net increase (decrease)
in net assets resulting
from operations $ 89,076 $ (821,997) $ - $ (732,921)

See accompanying notes to pro forma combining financial statements.

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

NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1: BASIS OF COMBINATION

On April 27, 2000, the Babson Board of Directors approved an Agreement and Plan
of Reorganization (the "Plan") whereby, subject to approval by the shareholders
of Babson Tax-Free Income Fund Portfolio Short, Babson Tax-Free Income Portfolio
Long will acquire all the assets of the Babson Tax-Free Income Fund Short
subject to the liabilities of such a fund, in exchange for a number of shares
equal to the pro rata net assets of shares of the Tax-Free Income Fund Long (the
"Merger").

The Merger will be accounted for as a tax-free merger of investment companies.
The pro forma combined financial statements are presented for the information of
the reader and may not necessarily be representative of what the actual combined
financial statements would have been had the reorganization occurred at December
31, 1999. The unaudited pro forma portfolio of investments and statement of
assets and liabilities reflect the financial position of the Babson Tax-Free
Income Fund Portfolio Short and the Babson Tax-Free Income Fund Portfolio Long
at December 31, 1999. The unaudited pro forma statement of operations reflects
the results of operations of the Babson Tax-Free Income Fund Portfolio Short and
the Babson Tax-Free Income Fund Portfolio Long fund for the year ended December
31, 1999. These statements have been derived from the Funds' respective books
and records utilized in calculating daily net asset value at the dates indicated
above for Babson Tax-Free Income Fund Portfolio Short and Babson Tax-Free Income
Fund Portfolio Long under accounting principles generally accepted in the United
States. The historical cost of investment securities will be carried forward to
the surviving entity and results of operations of Babson Tax-Free Income Fund
Portfolio Long for pre-combination periods will not be restated.

The pro forma portfolio of investment and statements of assets and liabilities
and operations should be read in conjunction with the historical financial
statement of the Funds incorporated by reference in the Statements of Additional
Information.

note 2: capital shares

The pro forma net asset value per share assumes additional shares of common
stock issued in connection with the proposed acquisition of Babson Tax-Free
Income Fund Portfolio Short by Babson Tax-Free Income Fund Portfolio Long as of
December 31, 1999. The number of additional shares issued was calculated by
dividing the net asset value of Babson Tax-Free Income Fund Portfolio Short by
the net asset value per share of Babson Tax-Free Income Fund Portfolio Long.

note 3: Pro Forma Adjustment

The accompanying pro forma financial statements reflect changes in fund shares
as if the merger had taken place on December 31, 1999.

note 4: merger costs and distributions

Merger costs are estimated at approximately $10,000 and are not included in the
pro forma statement of operations since these costs are nonrecurring. These
costs represent the estimated expense of all funds carrying out their
obligations under the Plan and consist of management's estimate of legal fees,
accounting fees, printing costs and mailing charges related to the proposed
merger.

It is the policy of the Funds, to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies and to
distribute substantially all of their net investment income and any net realized
gains to their shareholders. Therefore, a federal income tax or excise tax
provision is not required. In addition, by distributing during each calendar
year substantially all of its net investment income and net realized capital
gains, each Fund intends not be subject to any federal
excise tax.

The Board of Directors intends to offset any net capital gains with any
available capital loss carryforward until each carryforward has been fully
utilized or expires. In addition, no capital gain distribution shall be made
until the capital loss carryforward has been fully utilized or expires.

Babson Tax-Free Income Fund Portfolio Short and Babson Tax-Free Income Fund
Portfolio Long will distribute substantially all their investment income and any
realized gains prior to the merger date.

<PAGE>
D. L. BABSON TAX-FREE INCOME FUND, INC.

NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1: BASIS OF COMBINATION

On April 27, 2000, the Babson Board of Directors approved an Agreement
and Plan of Reorganization (the "Plan") whereby, subject to approval
by the shareholders of Babson Tax-Free Income Fund Portfolio Short,
Babson Tax-Free Income Portfolio Long will acquire all the assets of
the Babson Tax-Free Income Fund Short subject to the liabilities of
such a fund, in exchange for a number of shares equal to the pro rata
net assets of shares of the Tax-Free Income Fund Long (the "Merger").

The Merger will be accounted for as a tax-free merger of investment
companies. The pro forma combined financial statements are presented
for the information of the reader and may not necessarily be
representative of what the actual combined financial statements would
have been had the reorganization occurred at December 31, 1999. The
unaudited pro forma portfolio of investments and statement of assets
and liabilities reflect the financial position of the Babson Tax-Free
Income Fund Portfolio Short and the Babson Tax-Free Income Fund
Portfolio Long at December 31, 1999. The unaudited pro forma statement
of operations reflects the results of operations of the Babson Tax-
Free Income Fund Portfolio Short and the Babson Tax-Free Income Fund
Portfolio Long fund for the year ended December 31, 1999. These
statements have been derived from the Funds' respective books and
records utilized in calculating daily net asset value at the dates
indicated above for Babson Tax-Free Income Fund Portfolio Short and
Babson Tax-Free Income Fund Portfolio Long under accounting principles
generally accepted in the United States. The historical cost of
investment securities will be carried forward to the surviving entity
and results of operations of Babson Tax-Free Income Fund Portfolio
Long for pre-combination periods will not be restated.

The pro forma portfolio of investment and statements of assets and
liabilities and operations should be read in conjunction with the
historical financial statement of the Funds incorporated by reference
in the Statements of Additional Information.

note 2: capital shares

The pro forma net asset value per share assumes additional shares of
common stock issued in connection with the proposed acquisition of
Babson Tax-Free Income Fund Portfolio Short by Babson Tax-Free Income
Fund Portfolio Long as of December 31, 1999. The number of additional
shares issued was calculated by dividing the net asset value of Babson
Tax-Free Income Fund Portfolio Short by the net asset value per share
of Babson Tax-Free Income Fund Portfolio Long.

note 3: Pro Forma Adjustment

The accompanying pro forma financial statements reflect changes in
fund shares as if the merger had taken place on December 31, 1999.

note 4: merger costs and distributions

Merger costs are estimated at approximately $10,000 and are not
included in the pro forma statement of operations since these costs
are nonrecurring. These costs represent the estimated expense of all
funds carrying out their obligations under the Plan and consist of
management's estimate of legal fees, accounting fees, printing costs
and mailing charges related to the proposed merger.

It is the policy of the Funds, to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment
companies and to distribute substantially all of their net investment
income and any net realized gains to their shareholders. Therefore, a
federal income tax or excise tax provision is not required. In
addition, by distributing during each calendar year substantially all
of its net investment income and net realized capital gains, each Fund
intends not be subject to any federal
excise tax.

The Board of Directors intends to offset any net capital gains with
any available capital loss carryforward until each carryforward has
been fully utilized or expires. In addition, no capital gain
distribution shall be made until the capital loss carryforward has
been fully utilized or expires.

Babson Tax-Free Income Fund Portfolio Short and Babson Tax-Free Income
Fund Portfolio Long will distribute substantially all their investment
income and any realized gains prior to the merger date.

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

FILE NOS. 002-65489 & 811-02948

FORM N-14
PART C
OTHER INFORMATION

Item 15. Indemnification

Under the terms of the Maryland General Corporation Law and
the Registrant's By-Laws, the Registrant shall indemnify any
person who was or is a director, officer, or employee of the
Registrant to the maximum extent permitted by the Maryland
General Corporation Law, provided however, that any such
indemnification (unless ordered by a court) shall by made by
the Registrant only as authorized in the specific case upon
a determination that indemnification of such person 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
Registrant 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 Registrant to any
director or officer of the Registrant for any liability to
the Registrant or shareholders to which he would otherwise
be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of duty.

Item 16. Exhibits

The following exhibits are incorporated by reference to the
previously filed document indicated below, except Exhibits
12(A), 14(A), 16(A) and 16(B):

(1) Copies of the charter of the D. L. Babson Tax-Free
Income Fund, Inc. as now in effect;

(A) Articles of Incorporation of the Registrant as filed in
Maryland on August 22, 1979 and previously filed with Post-
Effective Amendment No. 26 to Registration Statement filed
on Form N-1A on August 30, 1999.

(B) Articles of Amendment of the Registrant as filed in
Maryland on November 30, 1979 and previously filed with Post-
Effective Amendment No. 26 to Registration Statement filed
on Form N-1A on August 30, 1999.

(C) Articles of Amendment of the Registrant as filed in
Maryland on January 2, 1981 and previously filed with Post-
Effective Amendment No. 26 to Registration Statement filed
on Form N-1A on August 30, 1999.

(2) Copies of the existing by-laws or corresponding
instruments of the Registrant;

(A) By-laws for the Registrant Previously filed with Post-
Effective Amendment No. 26 to Registration Statement filed
on Form N-1A on August 30, 1999.

(3) Copies of any voting trust agreement affecting more than
five percent of any class of equity securities of the
Registrant;

Not Applicable

(4) Copies of the agreement of acquisition, reorganization,
merger, liquidation and any amendments to it;

(A) The Plan of Reorganization is included in this
registration statement as Exhibit A to the Prospectus/Proxy
Statement

(5) Copies of all instruments defining the rights of holders
of the securities being registered including, where
applicable, the relevant portion of the articles of
incorporation or by-laws of the Registrant;

Not Applicable

(6) Copies of all investment advisory contracts relating to
the management of the assets of the Registrant;

(A) Investment Management Agreement between Registrant and
Jones & Babson, Inc. dated June 30, 1995, was previously
filed with Post-Effective Amendment No. 26 to Registration
Statement filed on Form N-1A on August 30, 1999.

(B) Investment Counsel Agreement between Jones & Babson,
Inc. and David L. Babson & Co., Inc. dated June 30, 1995,
was previously filed with Post-Effective Amendment No. 26 to
Registration Statement filed on Form N-1A on August 30,
1999.

(7) Copies of each underwriting or distribution contract
between the Registrant and a principal underwriter, and
specimens or copies of all agreements between principal
underwriters and dealers;

(A) Underwriting Contract between D. L. Babson Tax-Free
Income Fund, Inc. and Jones & Babson, Inc. dated September
30, 1995, was previously filed with Post-Effective Amendment
No. 26 to Registration Statement filed on Form N-1A on
August 30, 1999.

(8) Copies of all bonus, profit sharing, pension, or other
similar contracts or arrangements wholly or partly for the
benefit of trustees or officers of the Registrant in their
capacity as such. Furnish a reasonably detailed description
of any plan that is not set forth in a formal document;

Not Applicable

(9) Copies of all custodian agreements and depository
contracts under Section 17(f) of the 1940 Act for securities
and similar investments of the Registrant, including the
schedule of remuneration;

(A) Contract between registrant and UMB Bank, N.A. dated May
5, 1997 was previously filed with Post-Effective Amendment
No. 26 to Registration Statement filed on Form N-1A on
August 30, 1999.

(10) Copies of any plan entered into by Registrant pursuant
to Rule 12b-1 under the 1940 Act and any agreements with any
person relating to implementation of the plan, and copies of
any plan entered into by Registrant pursuant to Rule 18f-3
under the 1940 Act, any agreement with any person relating
to implementation of the plan, any amendment to the plan,
and a copy of the portion of the minutes of the meeting of
the Registrant's trustees describing any action taken to
revoke the plan;

Not applicable.

(11) An opinion and consent of counsel as to the legality of
the securities being registered, indicating whether they
will, when sold, be legally issued, fully paid and
nonassessable;

(A) Opinion and consent of counsel was previously filed with
Post-Effective Amendment No. 26 to Registration Statement
filed on Form N-1A on August 30, 1999.

(12) An opinion, and consent to their use, of counsel or, in
lieu of an opinion, a copy of the revenue ruling from the
Internal Revenue Service, supporting the tax matters and
consequences to shareholders discussed in the prospectus;

(A) Form of Opinion and Consent of Counsel Supporting Tax
Matters and Consequences to Shareholders is filed herewith
as Exhibit No. EX99.12(A).

(13) Copies of all material contracts of the Registrant not
made in the ordinary course of business which are to be
performed in whole or in part on or after the date of filing
the registration statement;

(A) Transfer Agency Agreement between D. L. Babson Tax-Free
Income Fund, Inc. and Jones & Babson, Inc. dated October 31,
1994, was previously filed with Post-Effective Amendment No.
26 to Registration Statement filed on Form N-1A on August
30, 1999.

(14) Copies of any other opinions, appraisals, or rulings,
and consents to their use, relied on in preparing the
registration statement and required by Section 7 of the 1933
Act;

(A) Consent of independent auditors is filed herewith as
Exhibit No. EX99.14(A).

(15) All financial statements omitted pursuant to Items
14(a)(1);

Not Applicable

(16) Manually signed copies of any power of attorney
pursuant to which the name of any person has been signed to
the registration statement; and

(A) Power of Attorney is filed herewith as Exhibit No.
EX99.16(A).

(17) Any additional exhibits which the registrant may
wish to file.

Not Applicable

Item 17. Undertakings
(a) The undersigned Registrant agrees that prior to any
public reoffering of the securities registered through the
use of prospectus which is part of this registration
statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the
Securities Act, the reoffering prospectus will contain the
information called for by the applicable registration form
for reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other items
of the applicable form.
(b) The undersigned Registrant agrees that every prospectus
that is filed under paragraph (1) above will be filed as
part of an amendment to the registration statement and will
not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each post-
effective amendment shall be deemed to be a new
registrations statement for the securities offered therein,
and the offering of the securities at that time shall be
deemed top be the initial bona fide offering of them.

SIGNATURES

As required by the Securities Act of 1933, this registration
statement has been signed on behalf of the Registrant, in
the City of Kansas City and the State of Missouri, on the
16th day of June, 2000.

D. L. Babson Tax-Free Income Fund, Inc.
(Registrant)

By: /s/ Stephen S. Soden
Stephen S. Soden
President

As required by the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the
capacities and on the dates indicated:

/s/ Stephen S. Soden President, Principal Executive
Officer and Director
Stephen S. Soden Dated: June 16, 2000

/s/ F. C. Rood* Director
F. C. Rood Dated: June 16, 2000

/s/ William H. Russell* Director
William H. Russell Dated: June 16, 2000

/s/ H. David Rybolt* Director
H. David Rybolt Dated: June 16, 2000

/s/ P. Bradley Adams Treasurer and Principal Financial
and
P. Bradley Adams Accounting Officer
Dated: June 16, 2000

*By: /s/ Stephen S. Soden
Stephen S. Soden
Attorney-in-Fact
(Pursuant to Power of Attorney filed herewith)

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

REGISTRATION STATEMENT ON FORM N-14

<PAGE>
EXHIBIT INDEX

EXHIBIT 99.(12)(A) Form of Opinion and Consent of Counsel
Supporting Tax Matters and Consequences to Shareholders

EXHIBIT 99.(14)(A) Consent of Auditors, Ernst and Young LLP

EXHIBIT 99.(16)(A) Power of Attorney