BABSON
MONEY
MARKET
FUND
Semiannual Report
December 31, 1997
JONES & BABSON
MUTUAL FUNDS
MESSAGE
TO OUR SHAREHOLDERS
As a new calendar year begins, the domestic
economy remains on sound footing. The outlook's wildcard is the unknown
fallout from the Asian financial crisis. The fear is that the weakness
of many Asian currencies will impact the current record level of U.S.
corporate earnings and lead to a substantial reduction of growth.
Financial markets are behaving as if the entire economy will suffer from
the "Asian flu," with long-term interest rates having fallen nearly a
full percent since the Asian currencies began their plummet last summer.
However, these lower rates could consequently
contribute to a strengthening of the economy later this year. They will
directly benefit interest sensitive sectors such as housing, and will
allow corporations in all industries to lower their borrowing costs. In
addition, falling mortgage rates typically act as a tax cut. As
homeowners refinance their mortgages, discretionary income is increased
and consumer spending is given a boost.
The U.S. also has had to deal with similar shocks in the recent past and
has coped fairly well. The oil price collapse of 1986 and the Mexican
peso crisis of 1995 are examples of events that worried many economists,
yet the domestic economy emerged stronger from them after slight and
brief slowdowns.
This does not mean that the potential impact of Asia's troubles is not
significant. It does mean that, because of its good balance and fiscal
discipline, the U.S. economy is in relatively good shape to handle the
unexpected curve balls that may be thrown its way. This resilience may
make the future course of interest rates even more unpredictable than
usual. Given this uncertainty, we believe that our policy of focusing on
quality and liquidity without the use of derivatives should continue to
serve our shareholders well.
The seven-day yield for the Fund's Federal Portfolio was 4.78% and the
Prime Portfolio was 4.93%, as of December 31, 1997. These figures
increased to 4.90% and 5.05%, respectively, for those shareholders who
reinvested their dividends.
Money market funds are neither insured nor guaranteed by the U.S.
Government. There is no assurance that the fund will maintain a stable
net asset value of one dollar per share.
We appreciate your continued interest in Babson Money Market Fund.
Sincerely,
/s/Larry D. Armel
Larry D. Armel
President
STATEMENT OF NET ASSETS
December 31, 1997 (unaudited)
PRIME PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
</CAPTION>
<S> <C> <C>
SHORT-TERM CORPORATE NOTES - 88.34%
Abbott Laboratories,
5.90%, due January 13, 1998 $ 1,700,000 $ 1,696,099
AT & T Company,
5.46%, due March 10, 1998 1,000,000 974,520
AT & T Company,
5.46%, due March 23, 1998 700,000 680,996
Brown-Forman Corporation,
5.82%, due January 13, 1998 1,700,000 1,692,305
Caterpillar Financial Services,
5.66%, due February 17, 1998 1,700,000 1,677,816
Coca-Cola Company,
5.66%, due February 17, 1998 1,700,000 1,681,558
duPont (E.I.) deNemours & Company,
5.48%, due May 4, 1998 1,000,000 959,661
Eastman Kodak Company,
5.95%, due January 15, 1998 1,700,000 1,693,538
Emerson Electric Company,
5.75%, due February 6, 1998 1,700,000 1,689,682
Ford Motor Credit Company,
5.48%, due March 25, 1998 1,900,000 1,831,165
Fortune Brands, Incorporated,
5.92%, due January 23, 1998 1,700,000 1,691,334
General Electric Capital Corporation,
5.65%, due April 23, 1998 1,800,000 1,757,908
Hewlett-Packard Company,
5.90%, due January 7, 1998 1,700,000 1,694,706
IBM Corporation,
5.90%, due January 16, 1998 1,600,000 1,592,658
Kellogg Company,
5.70%, due January 26, 1998 1,700,000 1,687,349
Lucent Technologies, Incorporated,
5.71%, due February 6, 1998 1,700,000 1,685,979
Motorola, Incorporated,
5.70%, due February 6, 1998 1,700,000 1,688,695
NICOR, Incorporated,
5.67%, due February 2, 1998 1,000,000 988,345
Procter & Gamble Company,
5.70%, due February 27, 1998 1,700,000 1,681,158
Sara Lee Corporation,
6.00%, due January 6, 1998 1,700,000 1,696,317
Walt Disney Company,
5.66%, due February 17, 1998 1,700,000 1,681,023
32,800,000 32,422,812
GOVERNMENT SPONSORED ENTERPRISES - 7.92%
Federal Farm Credit Banks Discount Notes,
5.43%, due April 27, 1998 2,000,000 1,945,700
Federal Home Loan Banks Discount Notes,
5.40%, due May 27, 1998 1,000,000 959,050
3,000,000 2,904,750
REPURCHASE AGREEMENT - 4.43% (Note 4)
Morgan Guaranty Trust Company,
6.25%, due January 2, 1998
(Collateralized by U.S. Treasury Notes,
13.25%, due May 15, 2014) 1,625,000 1,625,000
TOTAL INVESTMENTS - 100.69% $ 36,952,562
Other assets less liabilities - (0.69%) (251,911)
TOTAL NET ASSETS - 100.00%
(equivalent to $1.00 per share;
1,000,000,000 shares of $0.01 par value
capital shares authorized;
36,686,519 shares outstanding) $ 36,700,651
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENT OF NET ASSETS
December 31, 1997 (unaudited)
FEDERAL PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
</CAPTION>
<S> <C> <C>
GOVERNMENT SPONSORED ENTERPRISES - 84.49%
Federal Farm Credit Banks Discount Notes,
5.53%, due March 18, 1998 $ 500,000 $ 477,035
Federal Farm Credit Banks Discount Notes,
5.41%, due March 2, 1998 500,000 490,758
Federal Farm Credit Banks Discount Notes,
5.43%, due April 27, 1998 750,000 729,638
Federal Home Loan Banks Discount Notes,
5.40%, due May 27, 1998 250,000 239,763
Federal Home Loan Banks Discount Notes,
5.40%, due June 8, 1998 500,000 481,250
Federal Home Loan Banks Discount Notes,
5.65%, due January 15, 1998 1,000,000 995,762
Federal Home Loan Banks Discount Notes,
5.64%, due February 18, 1998 1,050,000 991,227
Federal Home Loan Banks Discount Notes,
5.80%, due January 14, 1998 1,000,000 997,583
Federal National Mortage Association
Discount Notes,
5.59%, due FeEbruary 6, 1998 500,000 1,485,326
Federal Home Loan Mortgage Corporation
Discount Notes,
5.66 %, due February 6, 1998 1,000,000 990,881
Federal Home Loan Mortgage Corporation
Discount Notes,
5.65 %, due February 20, 1998 1,500,000 991,682
Federal National Mortgage Association
Discount Notes,
5.44 %, due April 9, 1998 500,000 488,364
Federal National Mortgage Association
Discount Notes,
5.66%, due February 18, 1998 1,000,000 1,484,573
Federal National Mortgage Association
Discount Notes,
5.61%, due February 23, 1998 1,500,000 989,938
12,050,000 11,833,780
REPURCHASE AGREEMENT - 14.09% (Note 4)
Morgan Guaranty Trust Company,
6.25%, due January 2, 1998
(Collateralized by U.S. Treasury Notes,
13.25%, due May 15, 2014) 1,974,000 1,974,000
TOTAL INVESTMENTS - 98.58% $ 13,807,780
Other assets less liabilities - (1.42%) 198,635
TOTAL NET ASSETS - 100.00%
(equivalent to $1.00 per share;
1,000,000,000 shares of $0.01 par value
capital shares authorized;
13,989,099 shares outstanding) $ 14,006,145
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997 (unaudited)
<TABLE>
<CAPTION>
PRIME FEDERAL
PORTFOLIO PORTFOLIO
</CAPTION>
<S> <C> <C>
ASSETS:
Investment securities, at market value
(identified cost of $36,952,562 and
$13,807,780, respectively) $ 36,952,562 $ 13,807,780
Cash - 133,935
Interest receivable 199,380 62,825
Other assets 6,375 1,605
Total assets 37,158,317 14,006,145
LIABILITIES AND NET ASSETS:
Cash overdraft 457,666 -
Total liabilities 457,666 -
NET ASSETS $ 36,700,651 $ 14,006,145
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 36,708,097 $ 14,006,205
Accumulated net realized loss on investments (7,446) (60)
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 36,700,651 $ 14,006,145
Capital shares, $0.01 par value
Authorized 1,000,000,000 1,000,000,000
Outstanding 36,686,519 13,989,099
NET ASSET VALUE PER SHARE $ 1.00 $ 1.00
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Six Months ended December 31, 1997 (unaudited)
<TABLE>
<CAPTION>
PRIME FEDERAL
PORTFOLIO PORTFOLIO
</CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest $ 1,082,696 $ 359,184
Expenses:
Management fees (Note 3) 163,560 54,994
Registration fees and other expenses 14,157 4,725
177,717 59,719
Net investment income 904,979 299,465
REALIZED GAIN ON INVESTMENTS (Note 1):
Realized gain from investment transactions:
Proceeds from sales of investments 800,454,180 371,444,027
Cost of investments sold 800,454,180 371,444,027
Net gain from investment transactions - -
Increase in net assets resulting from
operations $ 904,979 $ 299,465
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
Six months Ended December 31, 1997 (unaudited)
and Year Ended June 30, 1997
<TABLE>
<CAPTION>
PRIME FEDERAL
PORTFOLIO PORTFOLIO
</CAPTION>
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,767,101 $ 549,929
Net realized gain (loss) from
investment transactions (306) -
Net increase in net assets resulting
from operations 1,766,795 549,929
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,767,101) (549,929)
INCREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ($1.00 per share) 46,769,218 12,649,739
Net asset value of shares issued for
reinvestment of distributions ($1.00 per share) 1,661,796 530,398
48,431,014 13,180,137
Cost of shares redeemed ($1.00 per share) (46,061,655) (10,268,742)
Net increase from capital share transactions 2,369,359 2,911,395
Total increase in net assets 2,369,053 2,911,395
NET ASSETS - June 30, 1996 35,905,520 10,288,734
NET ASSETS - June 30, 1997 $ 38,274,573 $ 13,200,129
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 904,979 $ 299,465
Net realized gain from investment transactions - -
Net increase in net assets resulting from
operations 904,979 299,465
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (904,979) (299,465)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ($1.00 per share) 21,630,870 6,416,132
Net asset value of shares issued for reinvestment
ofdistributions ($1.00 per share) 857,908 286,399
22,488,778 6,702,531
Cost of shares redeemed ($1.00 per share) (24,062,700) (5,896,515)
Net increase (decrease) from capital share
transactions (1,573,922) 806,016
Total increase (decrease) in net assets (1,573,922) 806,016
NET ASSETS - June 30, 1997 38,274,573 13,200,129
NET ASSETS - December 31, 1997 $ 36,700,651 $ 14,006,145
</TABLE>
See accompanying Notes to Financial Statements.
1. SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940, as
amended, as a diversified open-end management investment company. Its
shares are currently issued in two series with each series, in effect,
representing a separate Fund. The financial statements have been
prepared in conformity with generally accepted accounting principles
which require management to make certain estimates and assumptions at
the date of the financial statements. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
Investments - Valuation of securities is on the basis of amortized
cost which approximates market value. Investment transactions are
recorded on the trade date. Investment income and dividends to
shareholders are recorded daily and
dividends are distributed monthly. Realized gains and losses from
investment transactions are reported on the identified cost basis.
Federal and State Taxes - The Fund's policy is to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Therefore, no provision for federal or state tax is
required.
2. PURCHASES AND SALES OF SECURITIES:
The aggregate amounts of security transactions during the period ended
December 31, 1997, were as follows:
Prime Portfolio
Purchases $ 799,894,589
Proceeds from sales 800,454,180
Federal Portfolio
Purchases $ 372,132,866
Proceeds from sales 371,444,027
3. MANAGEMENT FEES:
Management fees, which include all normal expenses of the Fund other
than taxes, fees and other charges of governmental agencies for
qualifying the Fund's shares for sale, special legal fees, interest and
brokerage commissions, are paid to Jones & Babson, Inc., an affiliated
company. These fees are based on average daily net assets of the Fund at
the annual rate of .85 of one percent of net assets. Certain officers
and/or directors of the Fund are also officers and/or directors of Jones
& Babson, Inc.
4. REPURCHASE AGREEMENTS:
Securities purchased under agreements to resell are held by the Fund's
custodian, UMB Bank, n.a. The Fund's adviser monitors the market values
of the underlying securities which they have purchased on behalf of the
Fund to ensure that they are sufficient to protect the Fund in the event
of default by the seller. In the event of bankruptcy or other default of
the seller, the Fund could experience delays in liquidating the
underlying securities and possible loss to the extent that the
repurchase agreement and accrued interest is more than proceeds received
upon liquidation of the underlying securities.
This report has been prepared for the information of the Shareholders of
D.L. Babson Money Market Fund, Inc., and is not to be
construed as an offering of the shares of the Fund. Shares of this Fund
and of the other Babson Funds are offered only by the Prospectus, a copy
of which may be obtained from Jones & Babson, Inc.
EQUITIES
Growth Fund
Enterprise Fund*
Enterprise Fund II
Value Fund
Shadow Stock Fund
International Fund
FIXED INCOME
Bond Trust
Money Market Fund
Tax-Free Income Fund
* Closed to new investors.
JONES & BABSON
MUTUAL FUNDS
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
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