Babson Money Market Fund
Annual Report
June 30, 1995
MESSAGE
To Our Shareholders
The last 12 months saw interest rates take a roller coaster ride, rising for
the first part of the year and then descending part of the way back down
during the spring and summer.
Rates rose throughout calendar 1994 as the Federal Reserve engineered a
series of tightenings of monetary policy. The Fed was worried that the economy
was growing at a rate which, if left unchecked, could produce inflationary
pressures.
The last rate hike of this cycle occurred in February of 1995. Soon after
that, money market rates began to fall as economic evidence led investors to
believe that the 3 percent rise of the Federal Funds rate over the prior
twelve months was starting to produce a moderation in economic growth.
Anticipation of an easier Fed policy produced an inverted yield curve, with
rates on short maturity instruments higher than those of longer dated ones.
After the end of the Fund's fiscal year, these expectations were realized as
the Fed cut short-term rates by one-quarter of a percent.
The general rise in yields during the fiscal year ended June 30, 1995 allowed
shareholders of Babson Money Market Fund to enjoy their highest returns in
several years. The Fund's Federal Portfolio returned an annual yield of 4.47%
and the Prime Portfolio earned 4.56%. These figures increased to 4.56% and
4.66%, respectively, for those shareholders who reinvested their dividends.
No one can predict where interest rates will go from here, but there is room
for several more rate cuts if the economy can continue to grow at a moderate
pace so that investors do not worry about inflation. Any reacceleration of
growth, though, might prompt the Fed to return to a more restrictive stance.
No matter what path rates take, we believe that our policy of focusing on
quality and liquidity without the use of derivatives should continue to serve
our shareholders well.
Sincerely,
Larry D. Armel
President
<PAGE>
STATEMENT OF NET ASSETS
June 30, 1995
PRIME PORTFOLIO
PRINCIPAL MARKET
AMOUNT COST VALUE
BANKERS' ACCEPTANCES - 13.40%
Corestates Financial Corporation,
6.01%, due November 3, 1995 $ 1,000,000 $ 969,449 $ 969,449
First National Bank-Maryland,
6.07%, due September 11, 1995 500,000 487,270 487,270
Republic National Bank-New York,
6.15%, due August 17, 1995 1,000,000 969,079 969,079
Republic National Bank-New York,
5.94%, due October 23, 1995 1,000,000 971,620 971,620
Star Banc Corporation,
5.76%, due November 21, 1995 2,000,000 1,946,880 1,946,880
5,500,000 5,344,298 5,344,298
SHORT-TERM CORPORATE NOTES - 68.05%
Allied-Signal, Incorporated,
6.10%, due July 5, 1995 2,000,000 1,998,306 1,998,306
American Telephone & Telegraph Company,
6.05%, due July 18, 1995 2,000,000 1,953,617 1,953,617
Anheuser-Busch Companies, Incorporated,
5.93%, due July 14, 1995 2,000,000 1,992,093 1,992,093
Browning-Ferris Industries, Incorporated,
5.92%, due August 21, 1995 2,000,000 1,978,293 1,978,293
Coca-Cola Company,
5.97%, due July 12, 1995 1,000,000 985,075 985,075
Coca-Cola Financial Corporation,
6.10%, due October 10, 1995 1,000,000 969,161 969,161
duPont (E.I.) deNemours & Company,
5.89%, due August 23, 1995 2,000,000 1,967,932 1,967,932
Ford Motor Credit Company,
5.80%, due October 25, 1995 2,000,000 1,952,633 1,952,633
Kimberly-Clark Corporation,
5.88%, due July 26, 1995 2,000,000 1,975,173 1,975,173
Motorola, Incorporated,
5.94%, due July 26, 1995 1,750,000 1,740,471 1,740,471
Pacificorp,
5.97%, due July 18, 1995 1,000,000 995,191 995,191
PHH Corporation,
5.96%, due July 28, 1995 2,000,000 1,988,080 1,988,080
Shell Oil Company,
5.82%, due August 9, 1995 2,000,000 1,984,480 1,984,480
SHORT-TERM CORPORATE NOTES (Continued)
Toys "R" Us, Incorporated,
5.91%, due July 26, 1995 2,000,000 1,985,882 1,985,882
Wal-Mart Stores, Incorporated,
6.05%, due July 14, 1995 1,700,000 1,695,715 1,695,715
Warner-Lambert Company,
5.85%, due September 6, 1995 1,000,000 984,238 984,238
27,450,000 27,146,340 27,146,340
GOVERNMENT SPONSORED ENTERPRISES _ 9.02%
Federal Home Loan Banks Discount Notes,
6.50%, due July 7, 1995 250,000 240,385 240,385
Federal Home Loan Banks Discount Notes,
6.15%, due July 24, 1995 250,000 239,878 239,878
Federal Home Loan Banks Discount Notes,
6.37%, due September 28, 1995 750,000 710,055 710,055
Federal Home Loan Banks Discount Notes,
6.28%, due February 2, 1996 500,000 469,472 469,472
Federal National Mortgage Association
Discount Notes,
6.32%, due July 10, 1995 1,000,000 970,858 970,858
Federal National Mortgage Association
Discount Notes,
6.32%, due July 24, 1995 1,000,000 967,522 967,522
3,750,000 3,598,170 3,598,170
REPURCHASE AGREEMENT - 8.51% (Note 4)
Morgan Guaranty Trust Company,
5.80%, due July 3, 1995
(Collateralized by U.S. Treasury Notes,
7.50%, due November 15, 2016) 3,395,000 3,395,000 3,395,000
TOTAL INVESTMENTS - 98.98% $ 39,483,808 39,483,808
Other assets less liabilities - 1.02% 407,427
TOTAL NET ASSETS - 100.00%
(equivalent to $1.00 per share;
1,000,000,000 shares of $0.01 par value
capital shares authorized; 39,895,581
shares outstanding) $ 39,891,235
For federal income tax purposes, the identified cost of investments at
June 30, 1995 was $39,483,808.
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENT OF NET ASSETS
June 30, 1995
FEDERAL PORTFOLIO
PRINCIPAL MARKET
AMOUNT COST VALUE
GOVERNMENT SPONSORED ENTERPRISES - 72.14%
Federal Farm Credit Banks Discount Notes,
5.95%, due July 7, 1995 $ 200,000 $ 196,628 $ 196,628
Federal Farm Credit Banks Discount Notes,
5.88%, due August 17, 1995 500,000 492,650 492,650
Federal Farm Credit Banks Discount Notes,
5.79%, due September 18, 1995 500,000 491,235 491,235
Federal Home Loan Banks Discount Notes,
5.88%, due July 18, 1995 500,000 493,875 493,875
Federal Home Loan Banks Discount Notes,
6.15%, due July 24, 1995 200,000 191,902 191,902
Federal Home Loan Banks Discount Notes,
5.80%, due September 11, 1995 425,000 418,838 418,838
Federal Home Loan Banks Discount Notes,
6.02%, due September 22, 1995 200,000 193,880 193,880
Federal Home Loan Banks Discount Notes,
6.37%, due September 28, 1995 200,000 189,348 189,348
Federal Home Loan Banks Discount Notes,
5.60%, due November 17, 1995 500,000 488,022 488,022
Federal Home Loan Mortgage Corporation
Discount Notes,
5.97%, due August 7, 1995 540,000 528,806 528,806
Federal Home Loan Mortgage Corporation
Discount Notes,
5.82%, due August 10, 1995 500,000 492,644 492,644
Federal Home Loan Mortgage Corporation
Discount Notes,
5.93%, due August 14, 1995 400,000 391,896 391,896
Federal National Mortgage Association
Discount Notes,
5.88%, due July 14, 1995 420,000 415,198 415,198
Federal National Mortgage Association
Discount Notes,
5.90%, due July 24, 1995 385,000 379,889 379,889
Federal National Mortgage Association
Discount Notes,
5.85%, due July 27, 1995 500,000 493,662 493,662
Federal National Mortgage Association
Discount Notes,
5.80%, due August 10, 1995 500,000 494,925 494,925
Federal National Mortgage Association
Discount Notes,
5.88%, due August 18, 1995 500,000 492,487 492,487
Federal National Mortgage Association
Discount Notes,
5.91%, due August 28, 1995 120,000 117,695 117,695
7,090,000 6,963,580 6,963,580
REPURCHASE AGREEMENT - 27.09% (Note 4)
Morgan Guaranty Trust Company,
5.80%, due July 3, 1995
(Collateralized by U.S. Treasury Notes,
7.50%, due November 15, 2016) 2,615,000 2,615,000 2,615,000
TOTAL INVESTMENTS - 99.23% $ 9,578,580 9,578,580
Other assets less liabilities - 0.77% 74,049
TOTAL NET ASSETS - 100.00%
(equivalent to $1.00 per share;
1,000,000,000 shares of $0.01 par value
capital shares authorized;
9,652,303 shares outstanding) $ 9,652,629
For federal income tax purposes, the identified cost of investments at
June 30, 1995 was $9,578,580.
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1995
PRIME FEDERAL
PORTFOLIO PORTFOLIO
ASSETS:
Investment securities, at market value
(identified cost of $39,483,808 and
$9,578,580, respectively) $ 39,483,808 $ 9,578,580
Cash 124,771 4,771
Interest receivable 304,511 69,278
Total assets 39,913,090 9,652,629
LIABILITIES AND NET ASSETS:
Payable to shareholders 21,855 _
Total liabilities 21,855 _
NET ASSETS $ 39,891,235 $ 9,652,629
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 39,902,795 $ 9,652,689
Accumulated net realized loss on investments (11,560) (60)
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 39,891,235 $ 9,652,629
Capital shares, $0.01 par value
Authorized 1,000,000,000 1,000,000,000
Outstanding 39,895,581 9,652,303
NET ASSET VALUE PER SHARE $ 1.00 $ 1.00
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENT OF OPERATIONS
Year Ended June 30, 1995
PRIME FEDERAL
PORTFOLIO PORTFOLIO
INVESTMENT INCOME:
Income:
Interest $ 2,282,267 $ 520,199
Expenses:
Management fees (Note 3) 354,339 82,331
Registration fees and other expenses 26,253 5,884
380,592 88,215
Net investment income 1,901,675 431,984
REALIZED LOSS ON INVESTMENTS (Note 1):
Realized loss from investment transactions:
Proceeds from sales of investments 2,201,376,897 852,067,493
Cost of investments sold 2,201,383,619 852,067,543
Net realized loss from investment transactions (6,722) (50)
Increase in net assets resulting from operations $ 1,894,953 $ 431,934
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS
For The Two Years Ended June 30, 1995
PRIME FEDERAL
PORTFOLIO PORTFOLIO
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,059,166 $ 224,942
Net realized loss from investment
transactions (81) _
Net increase in net assets resulting
from operations 1,059,085 224,942
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,059,166) (224,942)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ($1.00 per share) 51,705,884 7,933,368
Net asset value of shares issued for reinvestment of
distributions ($1.00 per share) 920,208 217,921
52,626,092 8,151,289
Cost of shares redeemed ($1.00 per share) (54,782,771) (7,365,483)
Net increase (decrease) from capital share
transactions (2,156,679) 785,806
Total increase (decrease) in net assets (2,156,760) 785,806
NET ASSETS - June 30, 1993 44,940,527 9,477,258
NET ASSETS - June 30, 1994 $ 42,783,767 $ 10,263,064
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,901,675 $ 431,984
Net realized loss from investment
transactions (6,722) (50)
Net increase in net assets resulting
from operations 1,894,953 431,934
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,901,675) (431,984)
DECREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ($1.00 per share) 38,007,450 8,173,682
Net asset value of shares issued for reinvestment
of distributions ($1.00 per share) 1,735,407 409,010
39,742,857 8,582,692
Total decrease in net assets (2,892,532) (610,435)
NET ASSETS - June 30, 1994 42,783,767 10,263,064
NET ASSETS - June 30, 1995 $ 39,891,235 $ 9,652,629
See accompanying Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940, as amended,
as a diversified open-end management investment company. Its shares are
currently issued in two series with each series, in effect, representing a
separate Fund. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
Investments - Valuation of securities is on the basis of amortized cost which
approximates market value. Investment transactions are recorded on the trade
date. Investment income and dividends to shareholders are recorded daily and
dividends are distributed monthly. Realized gains and losses from investment
transactions are reported on the identified cost basis.
Federal and State Taxes - The Fund's policy is to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income to its shareholders. Therefore, no
provision for federal or state tax is required. At June 30, 1995, the Fund
has accumulated net realized losses on sales of investments for federal
income tax purposes of $11,560 (Prime Portfolio) and $60 (Federal Portfolio)
which are available to offset future taxable gains.
2. PURCHASES AND SALES OF SECURITIES:
The aggregate amounts of security transactions during the year ended
June 30, 1995, were as follows:
Prime Portfolio
Purchases $ 2,198,278,125
Proceeds from sales 2,201,376,897
Federal Portfolio
Purchases $ 851,439,437
Proceeds from sales 852,067,493
3. MANAGEMENT FEES:
Management fees, which include all normal expenses of the Fund other than
taxes, fees and other charges of governmental agencies for qualifying the
Fund's shares for sale, special legal fees, interest and brokerage
commissions, are paid to Jones & Babson, Inc., an affiliated company. These
fees are based on average daily net assets of the Fund at the annual rate of
.85 of one percent of net assets. Certain officers and/or directors of the
Fund are also officers and/or directors of Jones & Babson, Inc.
4. REPURCHASE AGREEMENTS:
Securities purchased under agreements to resell are held by the Fund's
custodian, UMB Bank, n.a. The Fund's adviser monitors the market values of
the underlying securities which they have purchased on behalf of the Fund to
ensure that they are sufficient to protect the Fund in the event of default
by the seller. In the event of bankruptcy or other default of the seller,
the Fund could experience delays in liquidating the underlying securities
and possible loss to the extent that the repurchase agreement and accrued
interest is more than proceeds received upon liquidation of the underlying
securities.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table sets forth information as to capital and income changes
for a share outstanding for each of the five
years in the period ended June 30, 1995:
PRIME PORTFOLIO
1995 1994 1993 1992 1991
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.05 0.03 0.02 0.04 0.07
Less distributions:
Dividends from net investment income (0.05) (0.03) (0.02) (0.04) (0.07)
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return 5% 3% 3% 4% 7%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 40 $ 43 $ 45 $ 60 $ 79
Ratio of expenses to average net assets 0.92% 0.92% 0.90% 0.89% 0.88%
Ratio of net investment income to
average net assets 4.58% 2.51% 2.53% 4.21% 6.53%
FEDERAL PORTFOLIO
1995 1994 1993 1992 1991
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.04 0.02 0.02 0.04 0.06
Less distributions:
Dividends from net investment income (0.04) (0.02) (0.02) (0.04) (0.06)
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return 5% 3% 3% 4% 7%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 10 $ 10 $ 9 $ 11 $ 14
Ratio of expenses to average net assets 0.92% 0.91% 0.90% 0.89% 0.88%
Ratio of net investment income to
average net assets 4.48% 2.47% 2.51% 4.14% 6.28%
See accompanying Notes to Financial Statements.
<PAGE>
REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
D.L. Babson Money Market Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the statement of net assets, of D.L. Babson Money Market Fund, Inc.
(a Maryland corporation, comprising, respectively, the Prime and Federal
Portfolios), as of June 30, 1995, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements and the financial highlights. Our procedures
included confirmation of securities owned as of June 30, 1995, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement and the financial
highlights presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective portfolios constituting the D. L. Babson Money Market
Fund, Inc. as of June 30, 1995, the results of their operations for the year
then ended, the changes in their net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Kansas City, Missouri
August 4, 1995
This report has been prepared for the information of the Shareholders of the
D.L. Babson Money Market Fund, Inc., and is not to be construed as an
offering of the shares of the Fund. Shares of this Fund and of the other
Babson Funds are offered only by the Prospectus, a copy of which may be
obtained from Jones & Babson, Inc.
