BABSON D L MONEY MARKET FUND INC, 497J, 1997-11-06

BABSON D L MONEY MARKET FUND INC
497J, 1997-11-06

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BABSON
MONEY
MARKET
FUND

Prospectus
October 31, 1997

A no-load mutual fund invested in high
quality short-term debt instruments for
the purpose of maximizing income to the
extent consistent with safety of principal
and maintenance of liquidity.

JONES & BABSON
MUTUAL FUNDS

PROSPECTUS
October 31, 1997

D. L. BABSON
MONEY MARKET
FUND, INC.

Managed and Distributed By:
JONES & BABSON, INC.
BMA Tower
700 Karnes Blvd.
Kansas City, Missouri 64108-3306

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

Investment Counsel:
DAVID L. BABSON & CO. INC.
Cambridge, Massachusetts

INVESTMENT OBJECTIVE

The Babson Money Market Fund offers two Portfolios to investors who share the
Fund's investment goal of maximizing income consistent with safety of
principal and liquidity, and who desire to have their investment receive
continuous portfolio supervision by the staff of David L. Babson & Co. Inc.

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

PURCHASE INFORMATION

Minimum Investment
(each Portfolio selected)
Initial Purchase (unless Automatic Monthly) $ 1,000
Initial IRA and Uniform Transfers (Gifts)
to Minors Purchases (unless Automatic Monthly) $ 250
Subsequent Purchase (unless Automatic Monthly):
By Mail or Telephone Purchase (ACH) $ 100
By Wire $ 1,000
Automatic Monthly Purchases:
Initial $ 100
Subsequent $ 50

Shares are purchased and redeemed at net asset value. There are no sales,
redemption or Rule 12b-1 distribution charges. If you need further
information, please call the Fund at the telephone numbers indicated.

ADDITIONAL INFORMATION
This prospectus should be read and retained for future reference. It contains
the information that you should know before you invest. A "Statement of
Additional Information" of the same date as this prospectus has been filed
with the Securities and Exchange Commission and is incorporated by reference.
Investors desiring additional information about the Fund may obtain a copy
without charge by writing or calling the Fund.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS
Page
Fund Expenses 3
Financial Highlights 4
Investment Objective and Portfolio Management Policy 5
Repurchase Agreements 6
Risk Factors Peculiar to Money Market Instruments 6
Investment Restrictions 6
Performance Measures 7
How to Purchase Shares 8
Initial Investments 8
Investments Subsequent to Initial Investment 9
Telephone Investment Service 9
Automatic Monthly Investment Plan 9
How to Redeem Shares 10
Systematic Redemption Plan 13
How to Exchange Shares Between Funds and Portfolios 13
How Share Price is Determined 14
Officers and Directors 15
Management and Investment Counsel 15
General Information and History 16
Dividends, Distributions and Their Taxation 17
Shareholder Services 18
Shareholder Inquiries 19

FUND EXPENSES
FEDERAL PORTFOLIO
Shareholder Transaction Expenses
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales load None
Redemption fee None
Exchange fee None
Annual Fund Operation Expenses
(as a percentage of average net assets)
Management fees .85%
12b-1 fees None
Other expenses .06%
Total Fund operating expenses .91%

You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year 3 Year 5 Year 10 Year
$9 $29 $50 $112
PRIME PORTFOLIO
Shareholder Transaction Expenses
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales load None
Redemption fee None
Exchange fee None
Annual Fund Operation Expenses
(as a percentage of average net assets)
Management fees .85%
12b-1 fees None
Other expenses .07%
Total Fund operating expenses .92%

You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:

1 Year 3 Year 5 Year 10 Year
$9 $29 $51 $113

The above information is provided in order to assist you in understanding the
various costs and expenses that a shareholder of the Fund will bear directly
or indirectly. The expenses set forth above are for the fiscal year ended
June 30, 1997. The example should not be considered a representation of past
or future expenses. Actual expenses may be greater or less than those shown.

D. L. BABSON MONEY MARKET FUND, INC.
FINANCIAL HIGHLIGHTS

The following financial highlights for each of the ten years in the period
ended June 30, 1997, have been derived from audited financial statements of
D.L. Babson Money Market Fund, Inc. Such information for each of the five
years in the period ended June 30, 1997, should be read in conjunction with
the financial statements of the Fund and the report of Arthur Andersen LLP,
independent public accountants, appearing in the June 30, 1997, Annual Report
to Shareholders which is incorporated by reference in this prospectus. The
information for each of the five years in the period ended June 30, 1992, is
not covered by the report of Arthur Andersen LLP.

<TABLE>
<CAPTION>
FEDERAL PORTFOLIO 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.04 0.05 0.04 0.02 0.02 0.04 0.06 0.08 0.08 0.06
Less distributions:
Dividends from net
investment income (0.04) (0.05) (0.04) (0.02) (0.02) (0.04) (0.06) (0.08) (0.08) (0.06)
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

Total return 5% 5% 5% 3% 3% 4% 7% 8% 8% 6%

Ratios/Supplemental Data
Net assets, end of year (in millions) $ 13 $ 10 $ 10 $ 10 $ 9 $ 11 $ 14 $ 11 $ 10 $ 8
Ratio of expenses to average
net assets 0.91% 0.91% 0.92% 0.91% 0.90% 0.89% 0.88% 0.89% 0.88% 0.89%
Ratio of net investment income to
average net assets 4.51% 4.67% 4.48% 2.47% 2.51% 4.14% 6.28% 7.63% 7.89% 5.93%
</TABLE>

<TABLE>
<CAPTION>
PRIME PORTFOLIO 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.05 0.05 0.05 0.03 0.02 0.04 0.07 0.08 0.08 0.06
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.03) (0.02) (0.04) (0.07) (0.08) (0.08) (0.06)
Net asset value end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

Total return 5% 5% 5% 3% 3% 4% 7% 8% 8% 6%

Ratios/Supplemental Data
Net assets, end of year (in millions) $ 38 $ 36 $ 40 $ 43 $ 45 $ 60 $ 79 $ 77 $ 81 $ 73
Ratio of expenses to average
net assets 0.92% 0.92% 0.92% 0.92% 0.90% 0.89% 0.88% 0.88% 0.89% 0.90%
Ratio of net investment income to
average net assets 4.58% 4.75% 4.58% 2.51% 2.53% 4.21% 6.53% 7.73% 8.03% 6.16%
</TABLE>

INVESTMENT OBJECTIVE AND PORTFOLIO MANAGEMENT POLICY

Babson Money Market Fund offers two separate Portfolios, each of which invests
in high quality short-term debt instruments for the purpose of maximizing
income consistent with safety of principal and liquidity. Each Portfolio also
seeks to maintain a constant price of $1.00 per share. Neither Portfolio's
objective can be changed without the approval of a majority of its outstanding
shares. Each Portfolio will limit its holdings to the types of securities
hereinafter described.

Federal Portfolio

The Federal Portfolio will invest only in the following "U.S. Government
Securities:"

1. Direct obligations of the U.S. Government, such as bills, notes,
bonds and other debt securities issued by the U.S. Treasury.

2. Obligations of U.S. government agencies and instrumentalities
which are secured by the full faith and credit of the U.S. Treasury such as
securities of the Government National Mortgage Association, the Ex-port-Import
Bank, or the Student Loan Marketing Association; or which are secured by the
right of the issuer to borrow from the Treasury, such as securities issued by
the Federal Financing Bank or the U.S. Postal Service; or are supported by the
credit of the government agency or instrumentality itself, such as securities
of the Federal Home Loan Banks, or the Federal National Mortgage Association.

The Federal Portfolio also may invest in issues of the United States Treasury
or United States government agencies subject to repurchase agreements entered
into with the seller of the issues. The use of repurchase agreements by the
Fund involves certain risks. For a discussion of repurchase agreements and
their risks see page 6.

Prime Portfolio

The Prime Portfolio may invest in any of the following in addition to
securities eligible for the Federal Portfolio:

1. Certificates of deposit, bankers' acceptances, and other short-
term obligations issued domestically by United States commercial banks having
assets of at least $1 billion and which are members of the Federal Deposit
Insurance Corporation, or holding companies of such banks.

2. Commercial paper, including variable rate master demand notes of
companies whose commercial pa-per is rated P-2 or higher by Moody's Investors
Service, Inc. (Moody's) or A-2 or higher by Standard and Poor's Corporation
(S&P). If not rated by either Moody's or S&P, a company's commercial paper,
including variable rate master demand notes, may be purchased by the Portfolio
if the company has an outstanding bond issue rated Aa or higher by Moody's or
AA or higher by S&P. Variable rate master demand notes represent a borrowing
arrangement under a letter of agreement between a commercial paper issuer and
an institutional lender. Applicable interest rates are determined on a formula
basis and are adjusted on a monthly, quarterly, or other term as set out in
the agreement. They vary as to the right of the lender to demand payment. (For
a description of money market securities and their ratings, see "Money Market
Securities Described and Ratings" in the "Statement of Additional
Information.")

3. Short-term debt securities which are non-convertible and which
have one year or less remaining to maturity at the date of purchase and which
are rated Aa or higher by Moody's or AA or higher by S&P.

4. Negotiable certificates of deposit and other short-term debt
obligations of savings and loan associations having assets of at least $1
billion and which are members of the Federal Home Loan Banks Association and
insured by the Federal Deposit Insurance Corporation.

To achieve its objectives the Fund may engage in trading activity in order to
take advantage of opportunities to enhance yield, protect principal or improve
liquidity. This trading activity should not increase the Fund's expenses,
since there are normally no broker's commissions paid by the Fund for the
purchase or sale of money market instruments. However, a markup or spread may
be paid to a dealer from which the Fund purchases a security.

To assure compliance with adopted procedures pursuant to Rule 2a-7 under the
Investment Company Act of 1940 (the "1940 Act"), the Fund will only invest in
U.S. dollar denominated securities with remaining maturities of 397 days or
less, maintain the dollar weighted average maturity of the securities in the
Fund's portfolio at 90 days or less and limit its investments to those
instruments which the Directors of the Fund determines present minimal credit
risks and which are eligible investments under the rule.

REPURCHASE AGREEMENTS

A repurchase agreement involves the sale of securities to the Portfolio with
the concurrent agreement by the seller to repurchase the securities at the
Portfolio's cost plus interest at an agreed rate upon demand or within a
specified time, thereby determining the yield during the purchaser's period of
ownership. This results in a fixed rate of return insulated from market
fluctuations during such period. Under the Investment Company Act of 1940,
repurchase agreements are considered loans by the Fund.

The Fund will enter into such repurchase agreements only with United States
banks having assets in excess of $1 billion which are members of the Federal
Deposit Insurance Corporation, and with certain securities dealers who meet
the qualifications set from time to time by the Board of Directors of the
Fund. Securities subject to a repurchase agreement may bear maturities
exceeding one year but the term of the repurchase agreement normally will be
no longer than a few days. Repurchase agreements maturing in more than seven
days and other illiquid securities will not exceed 10% of the total assets of
the Portfolio.

Risk Factors Applicable to Repurchase Agreements

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

RISK FACTORS PECULIAR TO MONEY MARKET INSTRUMENTS

The yield and the principal value of money market instruments are sensitive to
short-term lending conditions, and it is possible that an issuer may default.
The Fund will seek to minimize these risks through portfolio diversification,
careful portfolio selection among securities considered to be high quality and
by maintaining short average maturities.

Concentration of assets in the banking industry may increase the element of
risk because banks are highly leveraged. The manager believes this risk is
reduced be-cause purchases will be limited to banks which are members of the
Federal Deposit Insurance Corporation, al-though securities purchased by the
Fund may not be F.D.I.C. insured deposits. Furthermore, the manager will
carefully evaluate the financial ratios and asset characteristics of banks in
which the Fund might invest, and reject those banks whose financial ratios and
asset characteristics are not, in the manager's opinion, sufficiently strong.

INVESTMENT RESTRICTIONS

In addition to the policies set forth under the caption "Investment Objective
and Portfolio Management Policy" the Fund is subject to certain other
restrictions which may not be changed without approval of the "holders of a
majority of the outstanding shares" of the Fund or the affected Portfolio.
Among these restrictions, the more important ones are that the Fund
(Portfolio) will not invest in equity securities; purchase the securities of
any issuer if more than 5% of the Fund's total assets would be invested in the
securities of such issuer, or the Fund would hold more than 10% of any class
of securities of such issuer; borrow money in excess of 15% of total assets
taken at market value, and then only from banks as a temporary measure for
extraordinary or emergency purposes; will not borrow to increase income
(leveraging) but only to facilitate redemption requests which might otherwise
require untimely dispositions of portfolio securities; will repay all
borrowings before making additional investments (interest paid on such
borrowings will reduce net income). The full text of these restrictions is set
forth in the "Statement of Additional Information."

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

PERFORMANCE MEASURES

From time to time, the Fund may advertise its performance in various ways, as
summarized below. Further discussion of these matters also appears in the
"Statement of Additional Information."

Yield

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

Each Portfolio of the Fund may quote its yield in advertisements or in reports
to shareholders. Yield information may be useful in reviewing the performance
of the Fund Portfolios and in providing a basis for comparison with other
investment alternatives. However, since the net in-vestment income of these
Funds changes in response to fluctuations in interest rates and Fund expenses,
any given yield quotations should not be considered representative of the
Fund's yields for any future period. Current yield and price quotations for
the Fund may be obtained by telephoning 1-800-4-BABSON (1-800-422-2766), or in
the Kansas City area 751-5900.

Performance Comparisons

In advertisements or in reports to shareholders, the Fund may compare its
performance to that of other mutual funds with similar investment objectives
and to stock or other relevant indices. For example, each Portfolio may
compare its yields to the Donoghue's Money Fund Average and the Donoghue's
Government Money Fund Average which are averages compiled by Donoghue's Money
Fund Report, a widely recognized independent publication that monitors the
performance of money market mutual funds, or to the average yield reported by
the Bank Rate Monitor for money market deposit accounts offered by the 50
leading banks and thrift institutions in the top five standard metropolitan
statistical areas. Performance comparisons should not be considered as
representative of the future performance of any Fund. Further information
regarding the performance of the Fund is contained in the "Statement of
Additional Information."

Performance rankings, recommendations, published editorial comments and
listings reported in Money, Barron's, Kiplinger's Personal Finance Magazine,
Financial World, Forbes, U.S. News & World Report, Business Week, The Wall
Street Journal, Investors Business Daily, USA Today, Fortune and Stanger's may
also be cited (if the Fund is listed in any such publication) or used for
comparison, as well as performance listings and rankings from Morningstar
Mutual Funds, Personal Finance, Income and Safety, The Mutual Fund Letter, No-
Load Fund Investor, United Mutual Fund Selector, No-Load Fund Analyst, No-
Load Fund X, Louis Rukeyser's Wall Street newsletter, Donoghue's Money Letter,
CDA Investment Technologies, Inc., Wiesenberger Investment Companies Service
and Donoghue's Mutual Fund Almanac.

HOW TO PURCHASE SHARES

Shares are purchased at net asset value (no sales charge) from the Fund
through its agent, Jones & Babson, Inc., BMA Tower, 700 Karnes Blvd., Kansas
City, MO 64108-3306. For information call toll free 1-800-4-BABSON (1-800-422-
2766), or in the Kansas City area 751-5900. If an investor wishes to engage
the services of any other broker to purchase (or redeem) shares of the Fund, a
fee may be charged by such broker. The Fund will not be responsible for the
consequences of delays including delays in the banking or Federal Reserve wire
systems.

You do not pay a sales commission when you buy shares of the Fund. Shares are
purchased at the Fund's net asset value (price) per share next effective after
a purchase order and payment have been received by the Fund. Normally, but not
necessarily, this price will be $1.00. (See "How Share Price is Determined.")
In the case of certain institutions which have made satisfactory payment
arrangements with the Fund, orders may be processed at the net asset value per
share next effective after a purchase order has been received by the Fund.

The Fund reserves the right in its sole discretion to withdraw all or any part
of the offerings made by the prospectus or to reject purchase orders when, in
the judgment of management, such withdrawal or rejection is in the best
interest of the Fund and its shareholders. The Fund also reserves the right at
any time to waive or increase the minimum requirements applicable to initial
or subsequent investments with respect to any person or class of persons,
which includes shareholders of the Fund's special investment programs. The
Fund reserves the right to refuse to accept orders for Fund shares unless
accompanied by payment, except when a responsible person has indemnified the
Fund against losses resulting from the failure of investors to make payment.
In the event that the Fund sustains a loss as the result of failure by a
purchaser to make payment, the Fund's underwriter, Jones & Babson, Inc. will
cover the loss.

INITIAL INVESTMENTS

Initial investments - By mail. You may open an account and make an investment
by completing and signing the application which accompanies this prospectus.
The minimum initial purchase for each Portfolio selected is $1,000 unless your
purchase is pursuant to an IRA or the Uniform Transfers (Gifts) to Minors Act,
in which case the minimum initial purchase is $250 for each Portfolio
selected. However, if electing the Automatic Monthly Investment Plan, the
minimum initial purchase for each Portfolio selected is reduced to $100 for
all accounts. Make your check payable to UMB Bank, n.a. Mail your application
and check to:

D.L. Babson Money Market Fund, Inc.
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306

Initial investments - By wire. You may purchase shares of the Fund by wiring
the purchase price ($1,000 minimum for each Portfolio selected) through the
Federal Reserve Bank to the custodian, UMB Bank, n.a. Prior to sending your
money, you must call the Fund toll free 1-800-4-BABSON (1-800-422-2766), or in
the Kansas City area 751-5900 and provide it with the identity of the
registered account owner, the registered address, the Social Security or
Taxpayer Identification Number of the registered owner, the amount being
wired, the name and telephone number of the wiring bank and the person to be
contacted in connection with the order. You will then be provided a Fund
account number, after which you should instruct your bank to wire the
specified amount, along with the account number and the account registration
to:

UMB Bank, n.a.
Kansas City, Missouri, ABA #101000695
For Babson Money Market Fund, Inc.
Federal Portfolio/AC = 980103-3883
Prime Portfolio/AC = 980103-3581
For Account No. (insert assigned Fund account
number and name in which account is registered)

A completed application must be sent to the Fund as soon as possible so the
necessary remaining information can be recorded in your account. Payment of
redemption proceeds will be delayed until the completed application is
received by the Fund.

INVESTMENTS SUBSEQUENT TO INITIAL INVESTMENT

You may add to your Fund account at any time in amounts of $100 or more if
purchases are made by mail or telephone purchase (ACH), or $1,000 or more if
purchases are made by wire. Automatic monthly investments must be in amounts
of $50 or more.

Checks should be mailed to the Fund at its address, and make them payable to
UMB Bank, n.a. Always identify your account number or include the detachable
reminder stub which accompanies each confirmation.

Wire share purchases should include your account registration, your account
number and the Babson Fund (Portfolio) in which you are purchasing shares. It
also is advisable to notify the Fund by telephone that you have sent a wire
purchase order to the bank.

TELEPHONE INVESTMENT SERVICE

To use the Telephone Investment Service, you must first establish your Fund
account and authorize telephone orders in the application form, or,
subsequently, on a special authorization form provided upon request. If you
elect the Telephone Investment Service, you may purchase Fund shares by
telephone and authorize the Fund to draft your checking account ($100 minimum)
for the cost of the shares so purchased. You will receive the next available
price after the Fund has received your telephone call. Availability and
continuance of this privilege is subject to acceptance and approval by the
Fund and all participating banks. During periods of increased market activity,
you may have difficulty reaching the Fund by telephone, in which case you
should contact the Fund by mail or telegraph. The Fund will not be responsible
for the consequences of delays, including delays in the banking or Federal
Reserve wire systems.

The Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, and if such procedures are not
followed, the Fund may be liable for losses due to unauthorized or fraudulent
instructions. Such procedures may include, but are not limited to requiring
personal identification prior to acting upon instructions received by
telephone, providing written confirmations of such transactions, and/or tape
recording of telephone instructions.

The Fund reserves the right to initiate a charge for this service and to
terminate or modify any or all of the privileges in connection with this
service at any time upon 15 days written notice to shareholders, and to
terminate or modify the privileges without prior notice in any circumstances
where such termination or modification is in the best interest of the Fund and
its investors.

AUTOMATIC MONTHLY INVESTMENT PLAN

You may elect to make monthly investments in a constant dollar amount from
your checking account ($50 minimum, after an initial investment of $100 or
more for any account). The Fund will draft your checking account on the same
day each month in the amount you authorize in your application, or,
subsequently, on a special authorization form provided upon request.
Availability and continuance of this privilege is subject to acceptance and
approval by the Fund and all participating banks. If the date selected falls
on a day upon which the Fund shares are not priced, investment will be made on
the first date thereafter upon which Fund shares are priced. The Fund will not
be responsible for the consequences of delays, including delays in the banking
or Federal Reserve wire systems.

HOW TO REDEEM SHARES

Shareholders registered in the stock records of the Fund may withdraw all or
part of their investment by redeeming shares for which the Fund has received
unconditional payment in the form of federal funds or such payment has been
converted to federal funds and accepted by the Fund. For your convenience, and
to enable your account to continue earning daily dividends as long as
possible, the Fund offers expedited redemption procedures by
telephone/telegraph and draft ("check"), in addition to normal mail
procedures.

In each instance you must comply with the general requirements relating to all
redemptions as well as with specific requirements set out for the particular
redemption method you select. If you wish to expedite redemptions by using the
telephone/telegraph or draft writing (check) privileges, you should carefully
note the special requirements and limitations relating to these methods. If an
investor wishes to engage the services of any other broker to redeem (or
purchase) shares of the Fund, a fee may be charged by such broker.

Where additional documentation is normally required to support redemptions as
in the case of corporations, fiduciaries, and others who hold shares in a
representative or nominee capacity, such as certified copies of corporate
resolutions, or certificates of incumbency, or such other documentation as may
be required under the Uniform Commercial Code or other applicable laws or
regulations, it is the responsibility of the shareholder to maintain such
documentation on file and in a current status. A failure to do so will delay
the redemption. If you have questions concerning redemption requirements,
please write or telephone the Fund well ahead of an anticipated redemption in
order to avoid any possible delay.

Requests which are subject to special conditions or which specify an effective
date other than as provided herein cannot be accepted. All redemption requests
must be transmitted to the Fund at BMA Tower, 700 Karnes Blvd., Kansas City,
MO 64108-3306. Shareholders who have authorized telephone redemption may call
toll free 1-800-4-BABSON (1-800-422-2766), or in the Kansas City area 751-
5900. The Fund will redeem shares at the price (net asset value per share)
next computed after receipt of a redemption request in "good order." Normally
this price will be $1.00. (For more information on how the Fund intends to
maintain a constant price see "How Share Price is Determined.")

The Fund will endeavor to transmit redemption proceeds to the proper party, as
instructed, as soon as practicable after a redemption request has been
received in "good order" and accepted, but in no event later than the third
business day thereafter. Transmissions are made by mail unless an expedited
method has been authorized and specified in the redemption request. The Fund
will not be responsible for the consequences of delays including delays in the
banking or Federal Reserve wire systems.

Redemptions will not become effective until all documents in the form required
have been received. In the case of redemption requests made within 15 days of
the date of purchase, the Fund will delay transmission of proceeds until such
time as it is certain that unconditional payment in federal funds has been
collected for the purchase of shares being redeemed or 15 days from the date
of purchase. You can avoid the possibility of delay by paying for all of your
purchases with a transfer of federal funds.

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

Signature Guarantees are required in connection with all redemptions of
$50,000 or more by mail, or changes in share registration, except as
hereinafter provided. These requirements may be waived by the Fund in certain
in-stances where it appears reasonable to do so and will not unduly affect the
interests of other shareholders. Signature(s) must be guaranteed by an
"eligible Guarantor institution" as defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934. Eligible guarantor institutions include: (1)
national or state banks, savings associations, savings and loan associations,
trust companies, savings banks, industrial loan companies and credit unions;
(2) national securities exchanges, registered securities associations and
clearing agencies; or (3) securities broker/dealers which are members of a
national securities exchange or clearing agency or which have a minimum net
capital of $100,000. A notarized signature will not be sufficient of the
request to be in proper form.

Signature guarantees will be waived for mail redemptions of $50,000 or less,
but they will be required if the checks are to be payable to someone other
than the registered owner(s), or are to be mailed to an address different from
the registered address of the shareholder(s), or where there appears to be a
pattern of redemptions designed to circumvent the signature guarantee
requirement, or where the Fund has other reason to believe that this
requirement would be in the best interests of the Fund and its shareholders.

The right of redemption may be suspended or the date of payment postponed
beyond the normal three-day period when the New York Stock Exchange is closed
or under emergency circumstances as determined by the Securities and Exchange
Commission. Further, the Fund reserves the right to redeem its shares in kind
under certain circumstances. If the shares are redeemed in kind, the
shareholder may incur brokerage costs when converting into cash. Additional
details are set forth in the "Statement of Additional Information."

Due to the high cost of maintaining smaller accounts, the Board of Directors
has authorized the Fund to close shareholder accounts where their value falls
below the current minimum initial investment requirement at the time of
initial purchase as a result of redemptions and not as the result of market
action, and remains below this level for 60 days after each such shareholder
account is mailed a notice of: (1) the Fund's intention to close the account,
(2) the minimum account size requirement, and (3) the date on which the
account will be closed if the minimum size requirement is not met. Since the
minimum investment amount and the minimum account size are the same, any
redemption from an account containing only the minimum investment amount may
result in redemption of that account.

Withdrawal By Mail - Shares may be redeemed by mailing your request to the
Fund. To be in "good order" the request must include the following:

(1) A written redemption request or stock assignment (stock power)
containing the genuine signature of each registered owner exactly as the
shares are registered with clear identification of the account by registered
name(s) and account number and the number of shares or the dollar amount to be
redeemed;

(2) any outstanding stock certificates representing shares to be redeemed;

(3) signature guarantees as required (see Signature Guarantees); and

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

Withdrawal By Telephone or Telegraph - You may withdraw any amount ($1,000
minimum if wired) or more by telephone toll free 1-800-4-BABSON (1-800-422-
2766), or in the Kansas City area 751-5900, or by telegram to the Fund's
address. Telephone/telegraph redemption authorization signed by all registered
owners with signatures guaranteed must be on file with the Fund before you may
redeem by telephone or telegraph. Funds will be sent only to the address of
record. The signature guarantee requirement may be waived by the Fund if the
request for this redemption method is made at the same time the initial
application to purchase shares is submitted.

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

Telephone or telegraph redemption proceeds may be transmitted to your pre-
identified bank account. Requests received prior to 1:00 P.M. (Eastern Time),
normally will be wired the following business day. Once the funds are
transmitted, the time of receipt and the funds' availability are not under our
control. If your request is received during the day thereafter, proceeds
normally will be wired on the second business day following the day of receipt
of your request. Wired funds are subject to a $10 fee to cover bank wire
charges, which is deducted from redemption proceeds, but this charge may be
reduced or waived in connection with certain accounts. The Fund reserves the
right to change this policy or to refuse a telephone or telegraph redemption
request or require additional documentation to assure a genuine redemption,
and, at its option, may pay such redemption by wire or check and may limit the
frequency or the amount of such request. The Fund reserves the right to
terminate or modify any or all of the services in connection with this
privilege at any time without prior notice. Neither the Fund nor Jones &
Babson, Inc. assumes responsibility for the authenticity of withdrawal
instructions, and there are provisions on the authorization form limiting
their liability in this respect.

Withdrawal by Draft ("Check") - This method of redemption is limited to open
account shares. You may elect this method of redemption on your initial
application, or on a form which will be sent to you upon request. All
signatures must be guaranteed unless this method of redemption is elected on
your initial application. The authorization form, which all registered owners
must sign, also contains a provision relieving the Fund and Jones & Babson,
Inc. from liability for loss, if any, which you may sustain arising out of a
non-genuine redemption pursuant to this redemption feature. Any additional
documentation required to assure a genuine redemption must be maintained on
file with the Fund in such current status as the Fund may deem necessary. A
new form properly signed, with signature(s) guaranteed must be received and
accepted by the Fund before authorized redemption instructions already on file
with the Fund can be changed.

When the draft authorization form is received by the Fund in "good order" and
accepted, you will be provided a supply of drafts ("checks") which may be
drawn on the Fund. Drafts must be deposited in a bank account of the payee to
be cleared through the banking system in order to be presented to the Fund for
payment through UMB Bank, n.a. An additional supply of drafts will be
furnished upon request. There presently is no charge for these drafts or their
clearance. However, the Fund and UMB Bank, n.a. reserve the right to make
reasonable charges and to terminate or modify any or all of the services in
connection with this privilege at any time and without prior notice.

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

SYSTEMATIC REDEMPTION PLAN

If you own shares in an open account valued at $10,000 or more, and desire to
make regular monthly or quarterly withdrawals without the necessity and
inconvenience of executing a separate redemption request to initiate each
withdrawal, you may enter into a Systematic Withdrawal Plan by completing
forms obtainable from the Fund. For this service, the manager may charge you a
fee not to exceed $1.50 for each withdrawal. Currently the manager assumes the
additional expenses arising out of this type of plan, but it reserves the
right to initiate such a charge at any time in the future when it deems it
necessary. If such a charge is imposed, participants will be provided 30 days
notice.

Subject to a $50 minimum, you may withdraw each period a specified dollar
amount. Shares also may be redeemed at a rate calculated to exhaust the
account at the end of a specified period of time.

Dividends and capital gains distributions must be reinvested in additional
shares. Under all withdrawal pro-grams, liquidation of shares in excess of
dividends and distributions reinvested will diminish and may exhaust your
account, particularly during a period of declining share values.

You may revoke or change your plan or redeem all of your remaining shares at
any time. Withdrawal payments will be continued until the shares are exhausted
or until the Fund or you terminate the plan by written notice to the other.

HOW TO EXCHANGE SHARES BETWEEN FUNDS AND PORTFOLIOS

Shareholders may exchange without a waiting period their Fund shares which are
held in open account, and for which good payment has been received, for
identically registered shares of any other Babson Fund or Portfolio, Buffalo
Fund or AFBA Five Star Fund which is legally registered for sale in the state
of residence of the investor, except Babson Enterprise Fund, Inc., provided
that the minimum amount exchanged has a value of $1,000 or meets the minimum
investment requirement of the Fund or Portfolio into which it is exchanged.

Effective at the close of business on January 31, 1992, the Directors of the
Babson Enterprise Fund, Inc. took action to limit the offering of that Fund's
shares. Babson Enterprise Fund, Inc. will not accept any new accounts,
including IRAs and other retirement plans, until further notice, nor will
Babson Enterprise Fund accept transfers from shareholders of other Babson
Funds, who were not shareholders of record of Babson Enterprise Fund at the
close of business on January 31, 1992. Investors may want to consider
purchasing shares in Babson Enterprise Fund II, Inc. as an alternative.

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

Exchanges by mail may be accomplished by a written request properly signed by
all registered owners identifying the account, the number of shares or dollar
amount to be redeemed for exchange, and the Fund or Portfolio into which the
account is being transferred.

If you wish to exchange part or all of your shares in the Fund for shares of
another Babson Fund or Portfolio, Buffalo Fund or AFBA Five Star Fund, you
should review the prospectus of the Fund to be purchased which can be obtained
from Jones & Babson, Inc. Any such exchange will be based on the respective
net asset values of the shares involved. Any exchange between Funds or
Portfolios involves the sale of an asset. Unless the shareholder account is
tax-deferred, this is a taxable event.

HOW SHARE PRICE IS DETERMINED

In order to determine the price at which new shares will be sold and at which
issued shares presented for redemption will be liquidated, the net asset value
per share of each Portfolio is computed once daily, Monday through Friday, at
the specific time during the day that the Board of Directors sets at least
annually, except on days on which changes in the value of portfolio securities
will not materially affect the net asset value, or days during which no
security is tendered for redemption and no order to purchase or sell such
security is received by the Fund, or customary holidays. For a list of the
holidays during which the Fund is not open for business, see "How Share Price
is Determined" in the "Statement of Additional Information."

The price at which new shares of the Fund will be sold and at which issued
shares presented for redemption will be liquidated is computed once daily at
1:00 P.M. (Eastern Time), except on those days when the Fund is not open for
business.

The per share calculation is made by subtracting from each Portfolio's total
assets any liabilities and then dividing into this amount the total
outstanding shares as of the date of the calculation.

Normally each Portfolio's price will be $1.00 because the Fund will adhere to
a number of procedures designed, but not guaranteed, to maintain a constant
price of $1.00 per share. Although unlikely, it still is possible that the
value of the shares you redeem may be more or less than your cost depending on
the market value of the Portfolio's securities at the time a redemption
becomes effective.

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

The use of amortized cost and the maintenance of each Portfolio's per share
net asset value at $1.00 is based on its election to operate under the
provisions of Rule 2a-7 under the Investment Company Act of 1940. To assure
compliance with adopted procedures pursuant to Rule 2a-7 under the Investment
Company Act of 1940 (the "1940 Act"), the Fund will only invest in U.S. dollar
denominated securities with remaining maturities of 397 days or less, maintain
the dollar weighted average maturity of the securities in the Fund's portfolio
at 90 days or less and limit its investments to those instruments which the
Directors of the Fund determines present minimal credit risks and which are
eligible investments under the rule.

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

There are various methods of valuing the assets and of paying dividends and
distributions from a money market fund. Each Portfolio values its assets at
amortized cost while also monitoring the available market bid prices, or yield
equivalents. Since dividends from net investment income will be accrued daily
and paid monthly, the net asset value per share of each Portfolio's daily
dividends will vary in amount.

OFFICERS AND DIRECTORS

The officers of the Fund manage its day-to-day operations. The Fund's manager
and its officers are subject to the supervision and control of the Board of
Directors. A list of the officers and directors of the Fund and a brief
statement of their present positions and principal occupations during the past
five years is set forth in the "Statement of Additional Information."

MANAGEMENT AND INVESTMENT COUNSEL

Jones & Babson, Inc. was founded in 1960. It organized the Fund in 1979, and
acts as its manager and principal underwriter. Pursuant to the current
Management Agreement, Jones & Babson, Inc. provides or pays the cost of all
management, supervisory and administrative services required in the normal
operation of the Fund. This includes investment management and supervision;
fees of the custodian, independent public accountants and legal counsel;
remuneration of officers, directors and other personnel; rent; shareholder
services, including maintenance of the shareholder accounting system and
transfer agency; and such other items as are incidental to corporate
administration.

Not considered normal operating expenses, and therefore payable by the Fund,
are taxes, interest, governmental charges and fees, including registration of
the Fund and its shares with the Securities and Exchange Commission and the
Securities Departments of the various States, brokerage costs, dues, and all
extraordinary costs and expenses including but not limited to legal and
accounting fees incurred in anticipation of or arising out of litigation or
administrative proceedings to which the Fund, its officers or directors may be
subject or a party thereto.

As a part of the Management Agreement, Jones & Babson, Inc. employs at its own
expense David L. Babson & Co. Inc. as its investment counsel to assist in the
investment advisory function. David L. Babson & Co. Inc. is an investment
counseling firm founded in 1940. It serves a broad variety of individual,
corporate and other institutional clients by maintaining an extensive research
and analytical staff. It has an experienced investment analysis and research
staff which eliminates the need for Jones & Babson, Inc. and the Fund to
maintain an extensive duplicate staff, with the consequent increase in the
cost of investment advisory service. The cost of the services of David L.
Babson & Co. Inc. is included in the fee of Jones & Babson, Inc. The
Management Agreement limits the liability of the manager and its investment
counsel, as well as their officers, directors and personnel, to acts or
omissions involving willful malfeasance, bad faith, gross negligence, or
reckless disregard of their duties. Brian F. Reynolds has been the portfolio
manager of both the Federal and Prime Portfolios of D.L. Babson Money Market
Fund since 1986. He is a Chartered Financial Analyst. He joined David L.
Babson & Co. in 1984, and has 14 years investment management experience.

As compensation for the services provided by Jones & Babson, Inc., the Fund
pays Jones & Babson, Inc. a fee at the annual rate of 85/100 of one percent
(.85%) of its average daily net assets, which is computed daily and paid
semimonthly, from which Jones & Babson, Inc. pays David L. Babson & Co. Inc. a
fee of 20/100 of one percent (.20%).

The annual fee charged by Jones & Babson, Inc. is higher than the fees of most
other investment advisers whose charges cover only investment advisory
services with all remaining operational expenses absorbed directly by the
Fund. Yet, it compares favorably with these other advisers when all expenses
to Fund shareholders are taken into account. The total expenses of the Fund
for the fiscal year ended June 30, 1997, amounted to .92% and .91%,
respectively, of the average net assets of the Prime and Federal Portfolios.
Per share expenses of both series may differ due to differences in
registration fees.

Certain officers and directors of the Fund are also officers or directors or
both of other Babson Funds, Jones & Babson, Inc. or David L. Babson & Co. Inc.

Jones & Babson, Inc. is a wholly-owned subsidiary of Business Men's Assurance
Company of America, which is considered to be a controlling person under the
Investment Company Act of 1940. Assicurazioni Generali S.p.A., an insurance
organization founded in 1831 based in Trieste, Italy, is considered to be a
controlling person and is the ultimate parent of Business Men's Assurance
Company of America. Mediobanca is a 5% owner of Generali.

David L. Babson & Co. Inc. is a wholly-owned subsidiary of Massachusetts
Mutual Life Insurance Company headquartered in Springfield, Massachusetts.
Massachusetts Mutual Life Insurance Company is an insurance organization
founded in 1851 and is considered to be a controlling person of David L.
Babson & Co. Inc., under the Investment Company Act of 1940.

The current Management Agreement between the Fund and Jones & Babson, Inc.,
which includes the Investment Counsel Agreement between Jones & Babson, Inc.
and David L. Babson & Co. Inc., will continue in effect until October 31,
1998, and will continue automatically for successive annual periods ending
each October 31 so long as such continuance is specifically approved at least
annually by the Board of Directors of the Fund or by the vote of a majority of
the outstanding voting securities of the Fund, and, provided also that such
continuance is approved by the vote of a majority of the directors who are not
parties to the Agreements or interested persons of any such party at a meeting
held in person and called specifically for the purpose of evaluating and
voting on such approval. Both Agreements provide that either party may
terminate by giving the other 60 days written notice. The Agreements terminate
automatically if assigned by either party, as required under the Investment
Company Act of 1940.

GENERAL INFORMATION AND HISTORY

The Fund, incorporated in Maryland on October 19, 1979, has a present
authorized capitalization of 2,000,000,000 shares of $.01 par value common
stock. Half of the shares are presently reserved for issuance to shareholders
invested in the Federal Portfolio and half are re-served for the Prime
Portfolio shareholders. Each full and fractional share, when issued and
outstanding, has: (1) equal voting rights with respect to matters which affect
the Fund in general and with respect to matters relating solely to the
interests of the Portfolio for which issued, and (2) equal dividend,
distribution and redemption rights to the assets of the Portfolio for which
issued and to general assets, if any, of the Fund which are not specifically
allocated to a particular Portfolio. Shares when issued are fully paid and
non-assessable. Except for the priority of each share in the assets of its
Portfolio, the Fund will not issue any class of securities senior to any other
class. Shareholders do not have pre-emptive or conversion rights. The Fund may
issue additional series of stock with the approval of the Fund's Board of
Directors.

Non-cumulative voting - These shares have non-cumulative voting rights, which
means that the holders of more than 50% of the shares voting for the election
of directors can elect 100% of the directors, if they choose to do so, and in
such event, the holders of the remaining less than 50% of the shares voting
will not be able to elect any directors. Each series will vote separately on
investment advisory agreements, changes in fundamental policies, and other
matters affecting each series separately.

The Maryland Statutes permit registered investment companies, such as the
Fund, to operate without an annual meeting of shareholders under specified
circumstances if an annual meeting is not required by the Investment Company
Act of 1940. There are procedures whereby the shareholders may remove
directors. These procedures are de-scribed in the "Statement of Additional
Information" under the caption "Officers and Directors." The Fund has adopted
the appropriate provisions in its By-Laws and may not, at its discretion, hold
annual meetings of shareholders for the following purposes unless required to
do so: (1) election of directors; (2) approval of any investment advisory
agreement; (3) ratification of the selection of independent public
accountants; and (4) approval of a distribution plan. As a result, the Fund
does not intend to hold annual meetings.

The Fund may use the name "Babson" in its name so long as Jones & Babson, Inc.
is continued as manager and David L. Babson & Co. Inc. as its investment
counsel. Complete details with respect to the use of the name are set out in
the Management Agreement between the Fund and Jones & Babson, Inc.

This prospectus omits certain of the information contained in the registration
statement filed with the Securities and Exchange Commission, Washington, D.C.
These items may be inspected at the offices of the Commission or obtained from
the Commission upon payment of the fee prescribed.

DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION

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

Shares begin earning income on the day following the effective date of
purchase. Income earned by the Fund on weekends, holidays and other days on
which the Fund is closed for business is declared as a dividend on the next
day on which the Fund is open for business, except for month-ends when such
dividend is declared as of the last day of the month.

Each Portfolio within the Fund has qualified, and intends to continue to
qualify for taxation as a "regulated investment company" under the Internal
Revenue Code so that each Portfolio will not be subject to federal income tax
to the extent it distributes its income to shareholders. Dividends, either in
cash or reinvested in shares, paid by a Portfolio from net investment income
will be taxable to shareholders as ordinary income and will not qualify for
the 70% dividends-received deduction for corporations.

Each Portfolio intends to declare and pay dividends so as to avoid imposition
of the federal excise tax. To do so, the Fund expects to distribute during the
calendar year an amount equal to: (1) 98% of its calendar year ordinary
income; and (2) 100% of any undistributed income from the prior calendar year.
Dividends declared in December by a Portfolio will be deemed to have been paid
by such Portfolio and received by its shareholders on the record date so long
as the dividends are actually paid before February 1 of the following year.

Promptly after the end of each calendar year, each shareholder will receive a
statement of the federal income tax status of all dividends and distributions
paid during the year.

To comply with IRS regulations, the Fund is required by federal law to
withhold 31% of reportable payments (which may include dividends, capital
gains distributions, and redemptions) paid to shareholders who have not
complied with IRS regulations. In order to avoid this withholding requirement,
shareholders must certify on their Application, or on a separate form supplied
by the Fund, that their Social Security or Taxpayer Identification Number
provided is correct and that they are not currently subject to backup
withholding, or that they are exempt from backup withholding.

Shareholders also may be subject to state and local taxes on distributions
from the Fund. You should consult your tax adviser with respect to the tax
status of distributions from the Fund in your state and locality.

THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED HEREIN FOR GENERAL INFORMATION
ONLY. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISERS WITH RESPECT
TO THE TAX CONSEQUENCES TO THEM OF AN INVESTMENT IN THE FUND.

SHAREHOLDER SERVICES

The Fund and its manager offer shareholders a broad variety of services
described throughout this prospectus. In addition, the following services are
available:

Automatic Monthly Investment - You may elect to make monthly investments in a
constant dollar amount from your checking account ($50 minimum, after an
initial investment of $100 or more). The Fund will draft your checking account
on the same day each month in the amount you authorize in your application,
or, subsequently, on a special authorization form provided upon request.

Automatic Reinvestment - Dividends and capital gains distributions may be
reinvested automatically, or share-holders may elect to have dividends paid in
cash and capital gains reinvested, or to have both paid in cash.

Telephone Investments - You may make investments of $100 or more by telephone
if you have authorized such investments in your application, or, subsequently,
on a special authorization form provided upon request. (See "Telephone
Investment Service.")

Automatic Exchange - You may exchange shares from your account ($100 minimum)
in any of the Babson Funds to an identically registered account in any other
Babson Fund or Portfolio, Buffalo Fund or AFBA Five Star Fund, except Babson
Enterprise Fund, Inc., according to your instructions. Monthly exchanges will
be continued until all shares have been exchanged or until you terminate the
Automatic Exchange authorization. A special authorization form will be
provided upon request.

Transfer of Ownership - A shareholder may transfer shares to another
shareholder account. The requirements which apply to redemptions apply to
transfers. A transfer to a new account must meet initial investment
requirements.

Systematic Redemption Plan - Shareholders who own shares in open account
valued at $10,000 or more may arrange to make regular withdrawals without the
necessity of executing a separate redemption request to initiate each
withdrawal.

Sub-Accounting - Keogh and corporate tax qualified retirement plans, as well
as certain other investors who must maintain separate participant accounting
records, may meet these needs through services provided by the Fund's manager,
Jones & Babson, Inc. Investment minimums may be met by accumulating the
separate accounts of the group. Although there is currently no charge for sub-
accounting, the Fund and its manager reserve the right to make reasonable
charges for this service.

Prototype Retirement Plans - Jones & Babson, Inc. offers a defined
contribution prototype plan - The Universal Retirement Plan - which is
suitable for all who are self-employed, including sole proprietors,
partnerships, and corporations. The Universal Prototype includes both money
purchase pension and profit-sharing plan options.

Individual Retirement Accounts - Also available is an Individual Retirement
Account (IRA). The IRA uses the IRS model form of plan and provides an
excellent way to accumulate a retirement fund which will earn tax-deferred
dollars until withdrawn. An IRA may also be used to defer taxes on certain
distributions from employer-sponsored retirement plans. You may contribute up
to $2,000 of compensation each year ($4,000 if a spousal IRA is established),
some or all of which may be deductible. Consult your tax adviser concerning
the amount of the tax deduction, if any.

Simplified Employee Pensions (SEPs) - The Jones & Babson IRA may be used with
IRS Form 5305-SEP to establish a SEP-IRA, to which the self-employed
individual may contribute up to 15% of net earned income or $30,000, whichever
is less. A SEP-IRA offers the employer the ability to make the same level of
deductible contributions as a Profit-Sharing Plan with greater ease of
administration, but less flexibility in plan coverage of employees.

SHAREHOLDER INQUIRIES

Telephone inquiries may be made toll free to the Fund, 1-800-4-BABSON (1-800-
422-2766), or in the Kansas City area 751-5900.

Shareholders may address written inquiries to the Fund at:

D.L. Babson Money Market Fund, Inc.
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306

AUDITORS
ARTHUR ANDERSEN LLP
Kansas City, Missouri

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

JOHN G. DYER
Kansas City, Missouri

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

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

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

Fixed Income
Bond Trust
Money Market Fund
Tax-Free Income Fund

*Closed to new investors.

JONES & BABSON
MUTUAL FUNDS

BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306

816-751-5900

1-800-4-BABSON
(1-800-422-2766)

http://www.jbfunds.com

JB8B 10/97

PART B

D. L. BABSON MONEY MARKET
FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION

October 31, 1997

This Statement is not a Prospectus but should be read in conjunction
with the Fund's current Prospectus dated October 31, 1997. To obtain the
Prospectus please call the Fund toll-free 1-800-4-BABSON (1-800-422-2766),
or in the Kansas City area 751-5900.

TABLE OF CONTENTS

Page
Investment Objective and Policies 2
Portfolio Transactions 2
Investment Restrictions 3
Performance Measures 4
How the Fund's Shares are Distributed 4
How Share Purchases are Handled 4
Redemption of Shares 5
Signature Guarantees 5
Management and Investment Counsel 6
How Share Price is Determined 6
Officers and Directors 6
Custodian 9
Independent Public Accountants 9
Other Jones & Babson Funds 9
Money Market Securities Described and Ratings 11
Financial Statements 13

JB52 10/97

<PAGE>

INVESTMENT OBJECTIVE
AND POLICIES

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

PORTFOLIO TRANSACTIONS

Decisions to buy and sell securities for the
Fund are made by Jones & Babson, Inc.
pursuant to recommendations by David L.
Babson & Co. Inc. Officers of the Fund and
Jones & Babson, Inc. are generally responsible
for implementing or supervising these decisions,
including allocation of portfolio brokerage and
principal business as well as the negotiation of
commissions and/or the price of the securities.
In instances where securities are purchased on a
commission basis, the Fund will seek
competitive and reasonable commission rates
based on the circumstances of the trade involved
and to the extent that they do not detract from
the quality of the execution.

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

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

The Fund believes it is in its best interest and
that of its shareholders to have a stable and
continuous relationship with a diverse group of
financially strong and technically qualified
broker-dealers who will provide quality
executions at competitive rates. Broker-dealers
meeting these qualifications also will be selected
for their demonstrated loyalty to the Fund, when
acting on its behalf, as well as for any research
or other services provided to the Fund. The
Fund normally will not pay a higher commission
rate to broker-dealers providing benefits or
services to it than it would pay to broker-dealers
who do not provide it such benefits or services.
However, the Fund reserves the right to do so
within the principles set out in Section 28(e) of
the Securities Act of 1934 when it appears that
this would be in the best interests of the
shareholders.

No commitment is made to any broker or
dealer with regard to placing of orders for the
purchase or sale of Fund securities, and no
specific formula is used in placing such
business. Allocation is reviewed regularly by
both the Board of Directors of the Fund and
Jones & Babson, Inc.

Since the Fund does not market its shares
through intermediary brokers or dealers, it is not
the Fund's practice to allocate brokerage or
principal business on the basis of sales of its
shares which may be made through such firms.
However, it may place portfolio orders with
qualified broker-dealers who recommend the
Fund to other clients, or who act as agent in the
purchase of the Fund's shares for their clients.

Research services furnished by broker-dealers
may be useful to the Fund manager and its
investment counsel in serving other clients, as
well as the Fund. Conversely, the Fund may
benefit from research services obtained by the
manager or its investment counsel from the
placement of portfolio brokerage of other clients.

When it appears to be in the best interest of its
shareholders, the Fund may join with other
clients of the manager and its investment
counsel in acquiring or disposing of a portfolio
holding. Securities acquired or proceeds
obtained will be equitably distributed between
the Fund and other clients participating in the
transaction. In some instances, this investment
procedure may affect the price paid or received
by the Fund or the size of the position obtained
by the Fund.

The Fund does not intend to purchase
securities solely for short-term trading; nor will
securities be sold for the sole purpose of
realizing gains. A security may be sold and

2
<PAGE>

another of comparable quality purchased at
approximately the same time; however, to take
advantage of what the Fund's manager believes
to be a disparity in the normal yield relationship
between the so securities. In addition, a security
may be sold and another purchased when, in the
opinion of the Fund's management, a favorable
yield spread exists between specific issues or
different market sectors.

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

INVESTMENT RESTRICTIONS

In addition to the investment objective and
portfolio management policies set forth in the
Prospects under the caption "investment
Objective and Portfolio Management Policy,"
the following restrictions also may not be
changed without approval of the "holders of a
majority of the outstanding shares" of the Fund
or the affected Portfolio series.

The Fund will not: (1) invest in equity
securities or securities convertible into equities;
(2) purchase the securities of any issuer (other
than obligations issued or guaranteed as to
principal and interest by the government of the
United States, its agencies or instrumentalities)
if, as a result, (a) more than 5% of the Fund's
total assets (taken at current value) would be
invested in the securities of such issuer, or (b)
the Fund would hold more than 10% of any
class of securities of such issuer (for this
purpose, all debts and obligations of an issuer
maturing in less than one year are treated as a
single class of securities); (3) borrow money in
excess of 15% of its total assets taken at market
value, and then only from banks as a temporary
measure for extraordinary or emergency
purposes; the Fund will not borrow to increase
income (leveraging) but only to facilitate
redemption requests which might otherwise
require untimely dispositions of Portfolio
securities; the Fund will repay all borrowings
before making additional investments, and
interest paid on such borrowings will reduce net
income; (4) mortgage, pledge or hypothecate its
assets except in an amount up to 15% (10% as
long as the Fund's shares are registered for sale
in certain states) of the value of its total assets
but only to secure borrowings for temporary or
emergency purposes; (5) issue senior securities,
as defined in the Investment Company Act of
1940, as amended; (6) underwrite securities
issued by other persons; (7) purchase or sell real
estate, but this shall not prevent investment in
obligations secured by real estate; (8) make
loans to other persons, except by the purchase of
debt obligations which are permitted under its
investment policy; (9) purchase securities on
margin or sell short; (10) purchase or retain
securities of an issuer if to the knowledge of the
Fund's management those directors of the Fund,
each of whom owns more than one-half of one
percent (.5%) of such securities, together own
more than five percent (5%) of the securities of
such issuer; (11) purchase or sell commodities
or commodity contracts; (12) write or invest in
put, call, straddle or spread options or invest in
interests in oil, gas or other mineral exploration
or development programs; (13) invest in
companies for the purpose of exercising control;
(14) invest in securities of other investment
companies, except as they may be acquired as
part of a merger, consolidation or acquisition of
assets; (15) invest more than 5% of the value of
its total assets at the time of investment in the
securities of any issuer or issuers which have
records of less than three years continuous
operation, including the operation of any
predecessor, but this limitation does not apply to
securities issued or guaranteed as to interest and
principal by the United States government or its
agencies or instrumentalities; or (16) purchase
any securities which would cause more than
25% of the value of a Portfolio's total net assets
at the time of such purchase to be invested in
any one industry; provided, however, the Prime
Portfolio reserves freedom of action to invest up
to 100% of its assets in certificates of deposit or
bankers' acceptances of domestic branches of
U.S. banks.

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

3
<PAGE>

PERFORMANCE MEASURES

Yield

From time to time, each Portfolio of the Fund
may quote its yield in advertisements,
shareholder reports or other communications to
shareholders. Yield information is generally
available by calling the Fund toll free 1-800-4-
BABSON (1-800-422-2766), or in the Kansas
City area 751-5900.

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

For the seven-day period ended June 30, 1997
the current annualized yield of the Federal
Portfolio was 4.80% and the compound effective
yield was 4.91%. At June 30, 1997, that
Portfolio's average maturity was 50 days. For the
seven-day period ended June 30, 1997, the
current annualized yield of the Prime Portfolio
was 4.83% and the compound effective yield
was 4.95%. At June 30, 1997, that Portfolio's
average maturity was 50 days.

Yield information is useful in reviewing the
Funds' performance, but because yields
fluctuate, such information cannot necessarily be
used to compare an investment in a Fund's
shares with bank deposits, savings accounts and
similar investment alternatives which often
provided an agreed or guaranteed fixed yield for
a stated period of time. Shareholders should
remember that yield is a function of the kind
and quality of the instruments in the Funds'
portfolios, portfolio maturity, operating expenses
and market conditions. Shares of the Fund are
not insured.

HOW THE FUND'S SHARES
ARE DISTRIBUTED

Jones & Babson, Inc., as agent of the Fund,
agrees to supply its best efforts as sole
distributor of the Fund's shares and, at its own
expense, pay all sales and distribution expenses
in connection with their offering other than
registration fees and other government charges.

Jones & Babson, Inc. does not receive any fee
or other compensation under the distribution
agreement which continues in effect until
October 31, 1998, and which will continue
automatically for successive annual periods
ending each October 31, if continued at least
annually by the Fund's Board of Directors,
including a majority of those Directors who are
not parties to such agreements or interested
persons of any such party. It terminates
automatically if assigned by either party or upon
60 days written notice by either party to the
other.

Jones & Babson, Inc. also acts as sole
distributor of the shares for David L. Babson
Growth Fund, Inc., Babson Enterprise Fund,
Inc., Babson Enterprise Fund II, Inc., D. L.
Babson Tax-Free Income Fund, Inc., Babson
Value Fund, Inc., D. L. Babson Bond Trust,
Shadow Stock Fund, Inc., Babson-Stewart Ivory
International Fund, Inc., Scout Stock Fund, Inc.,
Scout Bond Fund, Inc., Scout Money Market
Fund, Inc., Scout Tax-Free Money Market Fund,
Inc., Scout Regional Fund, Inc., Scout
WorldWide Fund, Inc., Scout Balanced Fund,
Inc., Buffalo Balanced Fund, Inc., Buffalo Equity
Fund, Inc., Buffalo High Yield Fund, Inc.,
Buffalo USA Global Fund, Inc. and AFBA Five
Star Fund, Inc.

HOW SHARE PURCHASES
ARE HANDLED

Each order accepted will be fully invested in
whole and fractional shares, unless the purchase
of a certain number of whole shares is specified,
at the net asset value per share next effective
after the order is accepted by the Fund.

4
<PAGE>

Each investment is confirmed by a year-to-
date statement which provides the details of the
immediate transaction, plus all prior
transactions in your account during the current
year. This includes the dollar amount invested,
number of shares purchased or redeemed, price
per share, and aggregate shares owned. A
transcript of all activity in your account during
the previous year will be furnished each January.
By retaining each annual summary and the last
year-to-date statement, you have a complete
detailed history of your account. A duplicate
copy of a past annual statement is available from
Jones & Babson, Inc. at its cost, subject to a
minimum charge of $5 per account, per year
requested.

Normally, the shares which you purchase are
held by the Fund in open account, thereby
relieving you of the responsibility of providing
for the safekeeping of a negotiable share
certificate. Should you have a special need for a
certificate, one will be issued on request for all
or a portion of the whole shares in your account.
There is no charge for the first certificate issued.
A charge of $3.50 will be made for any
replacement certificates issued. In order to
protect the interests of the other shareholders,
share certificates will be sent to those
shareholders who request them only after the
Fund has determined that unconditional
payment for the shares represented by the
certificate has been received by its custodian,
UMB Bank, n.a.
If an order to purchase shares must be
canceled due to non-payment, the purchaser will
be responsible for any loss incurred by the Fund
arising out of such cancellation. To recover any
such loss, the Fund reserves the right to redeem
shares owned by any purchaser whose order is
canceled, and such purchaser may be prohibited
or restricted in the manner of placing further
orders.

The Fund reserves the right in its sole
discretion to withdraw all or any part of the
offering made by the prospectus or to reject
purchase orders when, in the judgment of
management, such withdrawal or rejection is in
the best interest of the Fund and its
shareholders. The Fund also reserves the right at
any time to waive or increase the minimum

requirements applicable to initial or subsequent
investments with respect to any person or class
of persons, which includes shareholders of the
Fund's special investment programs.

REDEMPTION OF SHARES

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

SIGNATURE GUARANTEES

Signature guarantees normally reduce the
possibility of forgery and are required in
connection with each redemption method to
protect shareholders from loss. Signature
guarantees are required in connection with all
redemptions of $50,000 or more by mail or
changes in share registration, except as provided
in the Prospectus.

Signature guarantees must appear together
with the signature(s) of the registered owner(s),
on:

(1) a written request for redemption;

(2) a separate instrument of assignment,
which should specify the total number
of shares to be redeemed (this "stock
power" may be obtained from the Fund
or from most banks or stock brokers);
or

(3) all stock certificates tendered for
redemption.

5
<PAGE>

MANAGEMENT AND
INVESTMENT COUNSEL

As a part of the Management Agreement,
Jones & Babson, Inc. employs at its own
expense David L. Babson & Co. Inc., as its
investment counsel. David L. Babson & Co. Inc.
was founded in 1940 as a private investment
research and counseling organization. David L.
Babson & Co. Inc. is a wholly-owned subsidiary
of Massachusetts Mutual Life Insurance
Company. David L. Babson & Co. Inc. serves
individual, corporate and other institutional
clients and participates with Jones & Babson in
the management of nine Babson no-load mutual
funds.

The aggregate management fee paid to Jones
& Babson, Inc. during the most recent fiscal
year ended June 30, 1997, from which Jones &
Babson, Inc. paid all the Fund's expenses except
those payable directly by the Fund, was
$436,044. The .85% annual fee charged by
Jones & Babson, Inc. covers all normal
operating costs of the Fund. As a result, it is
higher than the fees of some other advisers
whose charges cover only investment advisory
services with all remaining operational expenses
absorbed directly by the Fund. Yet, Jones &
Babson's charges compare favorably with those
other advisors when all expenses to Fund
shareholders (i.e., operating expenses as a
percent of average net assets) are taken into
account.

David L. Babson & Co. Inc. has an
experienced investment analysis and research
staff which eliminates the need for Jones &
Babson, Inc. and the Fund to maintain an
extensive duplicate staff, with the consequent
increase in the cost of investment advisory
service. The cost of the services of David L.
Babson & Co. Inc. is included in the services of
Jones & Babson, Inc. For its investment
supervisory services and counsel, Jones &
Babson, Inc. pays David L. Babson & Co. Inc. a
fee computed on an annual basis at the rate of
20/100 (.20%) of the average daily total net
assets of the Fund. During the most recent fiscal

year ended June 30, 1997, Jones & Babson, Inc.
paid David L. Babson & Co. Inc. fees
amounting to $102,869.

HOW SHARE PRICE IS DETERMINED

The net asset value per share of each Fund
Portfolio is computed once daily, Monday
through Friday, at the specific time during the
day that the Board of Directors of each Fund sets
at least annually, except on days on which
changes in the value of a Fund's portfolio
securities will not materially affect the net asset
value, or days during which no security is
tendered for redemption and no order to
purchase or sell such security is received by the
Fund, or the following holidays:

New Year's Day January 1
Martin Luther King Day Third Monday
in January
Presidents' Holiday Third Monday
in February
Good Friday Friday before
Easter
Memorial Day Last Monday
in May
Independence Day July 4
Labor Day First Monday
in September
Columbus Day Second Monday
in October
Veterans' Day November 11
Thanksgiving Day Fourth Thursday
in November
Christmas Day December 25

OFFICERS AND DIRECTORS

The Fund is managed by Jones & Babson, Inc.
subject to the supervision and control of the
Board of Directors. the following table lists the
Officers and Directors of the Fund. Unless noted
otherwise, the address of each Officer and
Director is BMA Tower, 700 Karnes Blvd.,
Kansas City, Missouri 64108-3306. Except as
indicated, each has been an employee of Jones &
Babson, Inc. for more than five years.

6
<PAGE>

* Larry D. Armel, President and Director (55).
President and Director, Jones & Babson, Inc.,
David L. Babson Growth Fund, Inc., D. L.
Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund
II, Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Babson-Stewart Ivory International
Fund, Inc., Scout Stock Fund, Inc., Scout Bond
Fund, Inc., Scout Money Market Fund, Inc.,
Scout Tax-Free Money Market Fund, Inc., Scout
Regional Fund, Inc., Scout WorldWide Fund,
Inc., Scout Balanced Fund, Inc., Buffalo
Balanced Fund, Inc., Buffalo Equity Fund, Inc.,
Buffalo High Yield Fund, Inc., Buffalo USA
Global Fund, Inc.; President and Trustee, D. L.
Babson Bond Trust; Director, AFBA Five Star
Fund, Inc.

Francis C. Rood, Director (63). Retired, 6429
West 92nd Street, Overland Park, Kansas
66212. Formerly Vice President of Finance,
Hallmark Cards, Inc.; Director, David L.
Babson Growth Fund, Inc., D.L. Babson Tax-
Free Income Fund, Inc., Babson Enterprise
Fund, Inc., Babson Enterprise Fund II, Inc.,
Babson Value Fund, Inc., Shadow Stock Fund,
Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund,
Inc., Buffalo USA Global Fund, Inc.; Trustee,
D.L. Babson Bond Trust.

William H. Russell, Director (74). Financial
Consultant, 645 West 67th Street, Kansas City,
Missouri 64113, previously Vice President,
Sprint; Director, David L. Babson Growth Fund,
Inc., D.L. Babson Tax-Free Income Fund, Inc.,
Babson Enterprise Fund, Inc., Babson
Enterprise Fund II, Inc., Babson Value Fund,
Inc., Shadow Stock Fund, Inc., Babson-Stewart
Ivory International Fund, Inc., Buffalo Balanced
Fund, Inc., Buffalo Equity Fund, Inc., Buffalo
High Yield Fund, Inc., Buffalo USA Global
Fund, Inc.; Trustee, D. L. Babson Bond Trust.
_______________________________________

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

H. David Rybolt, Director (55). Consultant,
HDR Associates, P.O. Box 2468, Shawnee
Mission, Kansas 66201; Director, David L.
Babson Growth Fund, Inc., D.L. Babson Tax-
Free Income Fund, Inc., Babson Enterprise
Fund, Inc., Babson Enterprise Fund II, Inc.,
Babson Value Fund, Inc., Shadow Stock Fund,
Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund,
Inc., Buffalo USA Global Fund, Inc.; Trustee,
D.L. Babson Bond Trust.

P. Bradley Adams, Vice President and
Treasurer (37). Vice President and Treasurer,
Jones & Babson, Inc., David L. Babson Growth
Fund, Inc., D.L. Babson Tax-Free Income Fund,
Inc., Babson Enterprise Fund, Inc., Babson
Enterprise Fund II, Inc., Babson Value Fund,
Inc., Shadow Stock Fund, Inc., Babson-Stewart
Ivory International Fund, Inc., D.L. Babson
Bond Trust, Scout Stock Fund, Inc., Scout Bond
Fund, Inc., Scout Money Market Fund, Inc.,
Scout Tax-Free Money Market Fund, Inc., Scout
Regional Fund, Inc., Scout WorldWide Fund,
Inc., Scout Balanced Fund, Inc., Buffalo
Balanced Fund, Inc., Buffalo Equity Fund, Inc.,
Buffalo High Yield Fund, Inc., Buffalo USA
Global Fund, Inc.; Vice President and Chief
Financial Officer, AFBA Five Star Fund, Inc.

Michael A. Brummel, Vice President,
Assistant Secretary and Assistant Treasurer
(40). Vice President, Jones & Babson, Inc.,
David L. Babson Growth Fund, Inc., D.L.
Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund
II, Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Babson-Stewart Ivory International
Fund, Inc., D.L. Babson Bond Trust, Scout
Stock Fund, Inc., Scout Bond Fund, Inc., Scout
Money Market Fund, Inc., Scout Tax-Free
Money Market Fund, Inc., Scout Regional Fund,
Inc., Scout WorldWide Fund, Inc., Scout
Balanced Fund, Inc., Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High
Yield Fund, Inc., Buffalo USA Global Fund,
Inc.

7
<PAGE>

Martin A. Cramer, Vice President and
Secretary (47). Vice President and Secretary,
Jones & Babson, Inc., David L. Babson Growth
Fund, Inc., D.L. Babson Tax-Free Income Fund,
Inc., Babson Enterprise Fund, Inc., Babson
Enterprise Fund II, Inc., Babson Value Fund,
Inc., Shadow Stock Fund, Inc., Babson-Stewart
Ivory International Fund, Inc., D.L. Babson
Bond Trust, Scout Stock Fund, Inc., Scout Bond
Fund, Inc., Scout Money Market Fund, Inc.,
Scout Tax-Free Money Market Fund, Inc., Scout
Regional Fund, Inc., Scout WorldWide Fund,
Inc., Scout Balanced Fund, Inc., Buffalo
Balanced Fund, Inc., Buffalo Equity Fund, Inc.,
Buffalo High Yield Fund, Inc., Buffalo USA
Global Fund, Inc.; Secretary and Assistant Vice
President, AFBA Five Star Fund, Inc.

Constance E. Martin, Vice President (36).
Assistant Vice President, Jones & Babson, Inc.;
Vice President, David L. Babson Growth Fund,
Inc., D.L. Babson Tax-Free Income Fund, Inc.,
Babson Enterprise Fund, Inc., Babson
Enterprise Fund II, Inc., Babson Value Fund,
Inc., Babson-Stewart Ivory International Fund,
Inc., Shadow Stock Fund, Inc., D.L. Babson
Bond Trust, Scout Stock Fund, Inc., Scout Bond
Fund, Inc., Scout Money Market Fund, Inc.,
Scout Tax-Free Money Market Fund, Inc., Scout
Regional Fund, Inc., Scout WorldWide Fund,
Inc., Scout Balanced Fund, Inc., Buffalo
Balanced Fund, Inc., Buffalo Equity Fund, Inc.,
Buffalo High Yield Fund, Inc., Buffalo USA
Global Fund, Inc.

Edward L. Martin, Vice President (48).
Executive Vice President and Director, David L.
Babson & Co. Inc., One Memorial Drive,
Cambridge, Massachusetts 02142; Vice
President, D. L. Babson Tax-Free Income Fund,
Inc., D. L. Babson Bond Trust.

Remuneration of Officers and Directors.
None of the officers or directors will be
remunerated by the Fund for their normal duties
and services. Their compensation and expenses
arising out of normal operations will be paid by
Jones & Babson, Inc. under the provisions of the
Management Agreement.

<TABLE>
<CAPTION>
COMPENSATION TABLE

Pension or Estimated Total
Aggregate Retirement Annual Compensation
Name of Compensation Benefits Accrued Benefits From All Babson
Director From the As Part of Fund Upon Funds Paid to
Fund Expenses Retirement Directors**
______________ ____________ ________________ __________ _____________
</CAPTION>
<S> <C> <C> <C> <C>
Larry D. Armel* -- -- -- --
Francis C. Rood $3,500 -- -- $7,250
William H. Russell $3,500 -- -- $7,625
H. David Rybolt $3,500 -- -- $7,250
</TABLE>
______________ ____________ ________________ ___________ _____________

* As an "interested director," Mr. Armel received no compensation for
his services as a director.
** The amounts reported in this column reflect the total compensation
paid to Messrs. Rood and Rybolt for services as directors of eight
Babson Funds and to Mr. Russell for services as a director of nine
Babson Funds during the fiscal year ended June 30, 1997. Directors'
fees are paid by the Funds' manager and not by the Funds themselves.

Messrs. Rood, Russell and Rybolt have no
financial interest in, nor are they affiliated with
either Jones & Babson, Inc. or David L. Babson
& Co. Inc.

The Audit Committee of the Board of
Directors is composed of Messrs. Rood, Russell
and Rybolt.

The Officers and Directors of the Fund as a
group own less than 1% of the Fund.

The Fund will not hold annual meetings
except as required by the Investment Company
Act of 1940 and other applicable laws. The
Fund is a Maryland corporation. Under

8
<PAGE>

Maryland law, a special meeting of stockholders
of the Fund must be held if the Fund receives
the written request for a meeting from the
stockholders entitled to cast at least 25 percent
of all the votes entitled to be cast at the meeting.
The Fund has undertaken that its Directors will
call a meeting of stockholders if such a meeting
is requested in writing by the holders of not less
than 10% of the outstanding shares of the Fund.
To the extent required by the undertaking, the
Fund will assist shareholder communications in
such matters.

CUSTODIAN

The Fund's assets are held for safekeeping by
an independent custodian, UMB Bank, n.a.
This
means the bank, rather than the Fund, has
possession of the Fund's cash and securities.
The custodian bank is not responsible for the
Fund's investment management or
administration. But, as directed by the Fund's
officers, it delivers cash to those who have sold
securities to the Fund in return for such
securities, and to those who have purchased
securities from the Fund, it delivers such
securities in return for their cash purchase
price. It also collects income directly from
issuers of securities owned by the Fund and
holds this for payment to shareholders after
deduction of the Fund's expenses. The custodian
is compensated for its services by the manager.
There is no charge to the Fund.

INDEPENDENT PUBLIC
ACCOUNTANTS

The Fund's financial statements are examined
annually by independent public accountants
approved by the directors each year, and in
years in which an annual meeting is held the
directors may submit their selection of
independent public accountants to the
shareholders for ratification. Arthur Andersen
LLP, P.O. Box 13406, Kansas City, Missouri
64199, is the Fund's present independent public
accountant.

Reports to shareholders will be published at
least semiannually.

OTHER JONES & BABSON FUNDS

The Fund is one of nine no-load funds
comprising the Babson Mutual Fund Group
managed by Jones & Babson, Inc. in association
with its investment counsel, David L. Babson &
Co. Inc. The other funds are:
EQUITY FUNDS

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

BABSON ENTERPRISE FUND, INC. was
organized in 1983, with the objective of long-
term growth of capital by investing in a
diversified portfolio of common stocks of
smaller, faster-growing companies with
market capital of $15 million to $300 million
at the time of purchase. This Fund is intended
to be an investment vehicle for that part of an
investor's capital which can appropriately be
exposed to above-average risk in anticipation
of greater rewards. This Fund is currently
closed to new shareholders.

BABSON ENTERPRISE FUND II, INC.
was organized in 1991, with the objective of
long-term growth of capital by investing in a
diversified portfolio of common stocks of
smaller, faster-growing companies which at
the time of purchase are considered by the
Investment Adviser to be realistically valued
in the smaller company sector of the market.
This Fund is intended to be an investment
vehicle for that part of an investor's capital
which can appropriately be exposed to above-
average risk in anticipation of greater
rewards.

BABSON VALUE FUND, INC. was
organized in 1984, with the objective of long-
term growth of capital and income by
investing in a diversified portfolio of common
stocks which are considered to be
undervalued in relation to earnings, dividends
and/or assets.

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<PAGE>

SHADOW STOCK FUND, INC. was
organized in 1987, with the objective of long-
term growth of capital that can be exposed to
above-average risk in anticipation of greater
than-average rewards. The Fund expects to
reach its objective by investing in small
company stocks called "Shadow Stocks", i.e.,
stocks that combine the characteristics of
"small stocks" (as ranked by market
capitalization) and "neglected stocks" (least
held by institutions and least covered by
analysts).

BABSON-STEWART IVORY INTERNA-
TIONAL FUND, INC. was organized in
1987, with the objective of seeking a
favorable total return (from market
appreciation and income) by investing
primarily in a diversified portfolio of equity
securities (common stocks and securities
convertible into common stocks) of
established companies whose primary
business is carried on outside the United
States.

FIXED INCOME FUNDS

D.L. BABSON BOND TRUST was
organized in 1944, and has been managed by
Jones & Babson, Inc. since 1972, with the
objective of a high level of current income
and reasonable stability of principal. It offers
two portfolios Portfolio L and Portfolio S.

D. L. BABSON TAX-FREE INCOME
FUND, INC. was organized in 1979, to
provide shareholders the highest level of
regular income exempt from federal income
taxes consistent with investing in quality
municipal securities. It offers three separate
high-quality portfolios (including a money
market portfolio) which vary as to average
length of maturity. Income from the Tax-Free
Money Market portfolio may be subject to
state and local taxes, as well as the
Alternative Minimum Tax.

BUFFALO FUNDS

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

BUFFALO BALANCED FUND, INC. was
organized in 1994, with the objective of long-
term capital growth and high current income
through investing in common stocks and
secondarily by investing in convertible bonds,
preferred stocks and convertible preferred
stocks.

BUFFALO EQUITY FUND, INC. was
organized in 1994, with the objective of long-
term capital appreciation to be achieved
primarily by investment in common stocks.
Realization of dividend income is a secondary
consideration.

BUFFALO HIGH YIELD FUND, INC.
was organized in 1994, with the objective of a
high level of current income and secondarily,
capital growth by investing primarily in high-
yielding fixed income securities.

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

AFBA FIVE STAR FUND, INC.

Jones & Babson also sponsors the AFBA Five
Star Fund, Inc., organized in 1997. The AFBA
Five Star Fund consists of four portfolios
(funds). They are:

AFBA FIVE STAR BALANCED FUND
seeks both long-term capital growth and high
current income. The Fund invests in a
diversified array of common stocks, preferred
stocks, convertible preferred stocks, corporate
bonds and government bonds.

10
<PAGE>

AFBA FIVE STAR EQUITY FUND seeks
long-term capital appreciation by investment
in a broad array of common stocks, in terms
of companies and industries.

AFBA FIVE STAR HIGH YIELD FUND
primarily seeks a high level of current income
and secondarily, capital growth. The Fund
invests primarily in debt securities and may
invest in preferred stock.

AFBA FIVE STAR USA GLOBAL FUND
seeks capital growth by investing in common
stocks of companies based in the United
States that receive greater than 40% of their
revenues or pre-tax income from interna-
tional operations.

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

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

MONEY MARKET SECURITIES
DESCRIBED AND RATINGS

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

Money market instruments are generally
described as short-term debt obligations issued
by governments, corporations and financial
institutions. Usually maturities are one year or
less.

The yield from this type of instrument is very
sensitive to short-term lending conditions.
Thus, the income of the Fund will follow
closely the trend of short-term interest rates,

rising when those rates increase and declining
when they fall.

Because of the short maturities, fluctuation in
the principal value of money market-type
securities resulting from changes in short-term
interest rates normally will not be sufficient to
change the net asset value (price) per share.
Although the Fund's shareholders can
anticipate that this principal value stability will
be reflected in the price of the Fund's shares, it
cannot be guaranteed.

A money market security does not have the
characteristics usually associated with a long-
term investment. Long-term investors who
commit their assets to a money market security
must understand that short-term interest rates
have a history of sharp and frequent peaks and
valleys. Thus, there me be occasions when the
rates are sufficiently low as to be unattractive
when compared to the return on other types of
investments. The investor who commits long-
term funds to a short-term investment is
exposed to the risks associated with buying and
selling securities in anticipation of
unpredictable future market events.

Description of Bond ratings:

Standard & Poor's Corporation (S&P) . . .

AAA - Highest Grade. These securities
possess the ultimate degree of protection as to
principal and interest. Marketwise, they move
with interest rates and hence provide the
maximum safety on all counts.

AA - High Grade. generally, these bonds
differ from AAA issues only in a small
degree. Here too, prices move with the long-
term money market.

A - Upper-medium Grade. They have
considerable investment strength, but are not
entirely free from adverse effects of changes
in economic and trade conditions. Interest
and principal are regarded as safe. They
predominately reflect money rates in their
market behavior but, to some extent, also
economic conditions.

11
<PAGE>

Moody's Investors Service, Inc. (Moody's) .
Aaa - Best Quality. These securities carry
the smallest degree of investment risk and arc
generally referred to as "gilt-edged." Interest
payments are protected by a large, or by an
exceptionally stable margin, and principal is
secure. While the various protective elements
are likely to change, such changes as can be
visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa - High Quality by All Standards. They
are rated lower than the best bonds because
margins of protection may not be as large as
in Aaa securities, fluctuation of protective
elements may be of greater amplitude, or
there may be other elements present which
make the long-term risks appear somewhat
greater.

A - Upper-medium Grade. Factors giving
security to principal and interest are
considered adequate, but elements may be
present which suggest a susceptibility to
impairment sometime in the future.

Description of Commercial Paper Ratings:

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

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

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

(1) evaluation of the management of the
issuer;

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

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

(4) liquidity;

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

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

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

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

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

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

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

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

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<PAGE>

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

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

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

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

FINANCIAL STATEMENTS

The audited financial statements of the Fund
which are contained in the June 30, 1997
Annual Report to Shareholders, are
incorporated herein by reference.