BABSON
MONEY
MARKET
FUND
Semiannual Report
December 31, 1996
JONES & BABSON
MUTUAL FUNDS
MESSAGE
TO OUR SHAREHOLDERS
The second half of calendar 1996 was almost the mirror image of the first half
for the fixed income markets. Very short-term rates were unchanged as Federal
Reserve policy remained on hold, while longer-term rates fell as the
surprising economic strength witnessed earlier in the year subsided.
Federal Reserve Chairman Alan Greenspan has noted that inflation has remained
remarkably low given the age and strength of the current expansion. Hopefully,
the rate of price increases will remain small over the next few years, but
last Fall's jump in oil prices and a tightening labor market are beginning to
push overall prices higher. Greenspan has hinted that further declines in the
unemployment rate could prompt the Fed to tighten policy and raise short-term
rates in an effort to keep inflation tame.
The seven-day yield for the Fund's Federal Portfolio was 4.44% and the Prime
Portfolio was 4.57%, as of December 31, 1996. These figures increased to 4.54%
and 4.67%, respectively, for those shareholders who reinvested their
dividends.
Money market funds are neither insured nor guaranteed by the U.S. Government.
There is no assurance that the fund will maintain a stable net asset value of
one dollar per share.
While the economy currently seems healthy, the basic principles of the
business cycle have not been repealed. Sooner or later, there will be an
unexpected event that causes a recession. For this reason, we believe that our
policy of focusing on quality and liquidity without the use of derivatives
should continue to serve our shareholders well.
We appreciate your continued interest in Babson Money Market Fund.
Sincerely,
/s/Larry D. Armel
Larry D. Armel
President
STATEMENT OF NET ASSETS
December 31, 1996 (unaudited)
PRIME PORTFOLIO
PRINCIPAL MARKET
AMOUNT VALUE
BANKERS' ACCEPTANCE - 3.61%
First Union NC Bank,
5.27%, due April 23, 1997 $ 1,400,000 $ 1,366,799
SHORT-TERM CORPORATE NOTES - 62.92%
Allied Signal, Incorporated,
5.50%, due January 22, 1997 1,900,000 1,890,420
Ameritech Corporation,
5.38%, due January 10, 1997 1,800,000 1,792,199
AT & T Company,
5.48%, due January 24, 1997 1,900,000 1,891,034
Emerson Electric Company,
5.32%, due January 23, 1997 1,000,000 993,646
Ford Motor Credit Company,
5.33%, due January 29, 1997 1,800,000 1,787,208
Heinz (H.J.) Company,
5.46%, due January 17, 1997 1,800,000 1,788,534
IBM Corporation,
5.30%, due February 5, 1997 1,800,000 1,785,425
Minnesota Mining & Manufacturing Company,
5.28%, due February 24, 1997 1,000,000 989,000
Motorola, Incorporated,
5.50%, due January 24, 1997 1,900,000 1,891,872
PepsiCo, Incorporated,
5.52%, due January 31, 1997 1,900,000 1,889,803
Proctor & Gamble Company,
5.28%, due February 19, 1997 1,800,000 1,781,520
Sonoco Products Company,
5.37%, due January 14, 1997 1,800,000 1,791,140
Walt Disney Company,
5.23%, due May 12, 1997 1,800,000 1,754,238
Weyerhauser Company,
5.30%, due February 10, 1997 1,800,000 1,783,305
24,000,000 23,809,344
GOVERNMENT SPONSORED ENTERPRISES - 29.15%
Federal Farm Credit Banks
Discount Notes, 5.31%, due April 10, 1997 1,300,000 1,257,048
Federal Home Loan Banks
Discount Notes, 5.44%, due January 21, 1997 3,000,000 2,918,400
Federal Home Loan Banks
Discount Notes, 5.32%, due October 3, 1997 1,000,000 947,982
Federal Home Loan Mortgage Corporation
Discount Notes, 5.57%, due January 22, 1997 705,000 702,600
Federal Home Loan Mortgage Corporation
Discount Notes, 5.45%, due February 24, 1997 3,000,000 2,974,567
Federal National Mortgage Association
Discount Notes, 5.43%, due January 15, 1997 2,000,000 1,947,812
Federal National Mortgage Association
Discount Notes, 5.15%, due August 8, 1997 290,000 279,462
11,295,000 11,027,871
REPURCHASE AGREEMENT - 4.65% (Note 4)
Morgan Guaranty Trust Company,
6.75%, due January 2, 1997
(Collateralized by U.S. Treasury Notes,
7.625%, due November 15, 2022) 1,760,000 1,760,000
TOTAL INVESTMENTS - 100.33% $ 37,964,014
Other assets less liabilities - (0.33%) (125,319)
TOTAL NET ASSETS - 100.00%
(equivalent to $1.00 per share;
1,000,000,000 shares of $0.01 par value
capital shares authorized;
37,842,582 shares outstanding) $ 37,838,695
See accompanying Notes to Financial Statements.
STATEMENT OF NET ASSETS
December 31, 1996 (unaudited)
FEDERAL PORTFOLIO
PRINCIPAL MARKET
AMOUNT VALUE
GOVERNMENT SPONSORED ENTERPRISES - 87.66%
Federal Farm Credit Banks
Discount Notes, 5.27%, due January 21, 1997 $ 500,000 $ 496,926
Federal Farm Credit Banks
Discount Notes, 5.31%, due April 10, 1997 200,000 193,392
Federal Home Loan Banks
Discount Notes, 5.39%, due January 28, 1997 500,000 497,080
Federal Home Loan Banks
Discount Notes, 5.27%, due February 4, 1997 200,000 192,300
Federal Home Loan Banks
Discount Notes, 5.21%, due March 27, 1997 700,000 686,425
Federal Home Loan Banks
Discount Notes, 5.51%, due April 10, 1997 500,000 480,715
Federal Home Loan Banks
Discount Notes, 5.50%, due May 12, 1997 250,000 240,795
Federal Home Loan Mortgage Corporation
Discount Notes, 5.57%, due January 23, 1997 637,000 634,733
Federal Home Loan Mortgage Corporation
Discount Notes, 5.48%, due January 30, 1997 500,000 497,412
Federal Home Loan Mortgage Corporation
Discount Notes, 5.25%, due January 31, 1997 1,200,000 1,190,725
Federal Home Loan Mortgage Corporation
Discount Notes, 5.33%, due February 3, 1997 500,000 496,669
Federal Home Loan Mortgage Corporation
Discount Notes, 5.23%, due February 21, 1997 500,000 491,356
Federal Home Loan Mortgage Corporation
Discount Notes, 5.25%, due February 24, 1997 250,000 243,401
Federal Home Loan Mortgage Corporation
Discount Notes, 5.45%, due February 24, 1997 750,000 743,642
Federal Home Loan Mortgage Corporation
Discount Notes, 5.18%, due March 18, 1997 500,000 491,511
Federal National Mortgage Association
Discount Notes, 5.35%, due February 24, 1997 1,000,000 990,637
Federal National Mortgage Association
Discount Notes, 5.24%, due February 26, 1997 500,000 494,469
Federal National Mortgage Association
Discount Notes, 5.20%, due February 27, 1997 500,000 493,356
Federal National Mortgage Association
Discount Notes, 5.23%, due March 6, 1997 500,000 489,322
Federal National Mortgage Association
Discount Notes, 5.26%, due March 17, 1997 400,000 390,824
Federal National Mortgage Association
Discount Notes, 5.19%, due April 30, 1997 250,000 243,476
10,837,000 10,679,166
REPURCHASE AGREEMENT - 14.41% (Note 4)
Morgan Guaranty Trust Company,
6.75%, due January 2, 1997
(Collateralized by U.S. Treasury Notes,
8.125%, due August 15, 2021) 1,755,000 1,755,000
TOTAL INVESTMENTS - 102.07% $ 12,434,166
Other assets less liabilities - (2.07%) (252,327)
TOTAL NET ASSETS - 100.00%
(equivalent to $1.00 per share;
1,000,000,000 shares of $0.01 par value
capital shares authorized;
12,181,207 shares outstanding) $ 12,181,839
See accompanying Notes to Financial Statements.
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996 (unaudited)
PRIME FEDERAL
PORTFOLIO PORTFOLIO
ASSETS:
Investment securities, at market value
(identified cost of $37,964,014
and $12,434,166, respectively) $ 37,964,014 $ 12,434,166
Interest receivable 229,977 69,130
Other assets 5,581 1,247
Total assets 38,199,572 12,504,543
LIABILITIES AND NET ASSETS:
Cash overdraft 360,877 322,704
Total liabilities 360,877 322,704
NET ASSETS $ 37,838,695 $ 12,181,839
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 37,850,255 $ 12,181,899
Accumulated net realized loss on investments (11,560) (60)
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 37,838,695 $ 12,181,839
Capital shares, $0.01 par value
Authorized 1,000,000,000 1,000,000,000
Outstanding 37,842,582 12,181,207
NET ASSET VALUE PER SHARE $ 1.00 $ 1.00
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Six Months ended December 31, 1996 (unaudited)
PRIME FEDERAL
PORTFOLIO PORTFOLIO
INVESTMENT INCOME:
Income:
Interest $ 1,032,037 $ 314,320
Expenses:
Management fees (Note 3) 163,040 49,925
Registration fees and other expenses 11,190 3,436
174,230 53,361
Net investment income 857,807 260,959
REALIZED GAIN ON INVESTMENTS (Note 1):
Realized gain from investment transactions:
Proceeds from sales of investments 890,801,687 379,041,451
Cost of investments sold 890,801,687 379,041,451
Net realized gain from
investment transactions - -
Increase in net assets resulting
from operations $ 857,807 $ 260,959
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
Six months Ended December 31, 1996 (unaudited)
and Year Ended June 30, 1996
PRIME FEDERAL
PORTFOLIO PORTFOLIO
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,801,114 $ 457,401
Net realized gain from investment transactions - -
Net increase in net assets resulting
from operations 1,801,114 457,401
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,801,114) (457,401)
INCREASE (DECREASE) FROM CAPITAL
SHARE TRANSACTIONS:
Proceeds from shares sold ($1.00 per share) 47,783,750 9,267,672
Net asset value of shares issued for
reinvestment of distributions
($1.00 per share) 1,660,736 437,686
49,444,486 9,705,358
Cost of shares redeemed ($1.00 per share) (53,430,201) (9,069,253)
Net increase (decrease) from capital
share transactions (3,985,715) 636,105
Total increase (decrease) in net assets (3,985,715) 636,105
NET ASSETS - June 30, 1995 39,891,235 9,652,629
NET ASSETS - June 30, 1996 $ 35,905,520 $ 10,288,734
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 857,807 $ 260,959
Net realized gain from investment transactions - -
Net increase in net assets resulting
from operations 857,807 260,959
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (857,807) (260,959)
INCREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ($1.00 per share) 22,372,167 6,949,442
Net asset value of shares issued
for reinvestment of
distributions ($1.00 per share) 803,891 250,942
23,176,058 7,200,384
Cost of shares redeemed ($1.00 per share) (21,242,883) (5,307,279)
Net increase from capital share transactions 1,933,175 1,893,105
Total increase in net assets 1,933,175 1,893,105
NET ASSETS - June 30, 1996 35,905,520 10,288,734
NET ASSETS - December 31, 1996 $ 37,838,695 $ 12,181,839
See accompanying Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940, as amended,
as a diversified open-end management investment company. Its shares are
currently issued in two series with each series, in effect, representing a
separate Fund. The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial statements. The
following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.
Investments - 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.
2. PURCHASES AND SALES OF SECURITIES:
The aggregate amounts of security transactions during the period ended
December 31, 1996, were as follows:
Prime Portfolio
Purchases $ 893,363,803
Proceeds from sales 890,801,687
Federal Portfolio
Purchases $ 381,271,408
Proceeds from sales 379,041,451
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.
This report has been prepared for the information of the Shareholders of 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.
EQUITIES
Growth Fund
Enterprise Fund*
Enterprise Fund II
Value Fund
Shadow Stock Fund
International Fund
FIXED INCOME
Bond Trust
Money Market Fund
Tax-Free Income Fund
*Closed to new investors
JONES & BABSON
MUTUAL FUNDS
2440 Pershing Road
Kansas City, MO 64108-2561
816-471-5200
1-800-4-BABSON
(1-800-422-2766)
http://www.jbfunds.com
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