Babson
Money Market
Fund
Semiannual Report
December 31, 1998
MESSAGE
To Our Shareholders
The U.S. economy remains caught in a tug of war between strength at home and
weakness abroad. This situation has produced great swings in interest rates
and other financial markets.
As the Asian crisis grew over the last year and a half, foreign currency
devaluations cut into U.S. export growth while helping to increase foreign
imports, producing a painful squeeze on manufacturing. Fortunately for the
economy, manufacturing now accounts for less than 30% of Gross Domestic
Product, and the rest of the economy remains fairly healthy.
However, after Russia effectively defaulted on its debt in August, investors
scrambled to buy only the safest, most liquid debt: short- and intermediate-
term U.S. Treasuries. In doing so, they abandoned most other types of debt,
and thus forced credit spreads wider. Wider spreads meant that, although
Treasury yields were falling, the cost of capital for many firms was rising.
The sudden, violent rise in spreads impacted many markets and threatened the
flow of capital so essential for corporate growth. To counter this impact,
the Federal Reserve eased three times between late September and late
November, lowering the target for the Federal Funds rate by three-quarters of
a percent.
The liquidity that the easings produced did revive
corporate bond issuance and gave a boost to interest-
sensitive sectors of the economy. Despite the optimism surrounding these
events, though, corporate bond spreads have not come close to returning to
pre-crisis levels. These historically wide spread levels are an
indication that markets still remain fragile. Given this fragility, we feel
that the Babson Money Market Fund's focus on quality and liquidity will
continue to serve our shareholders well.
The seven-day yield for the Fund's Federal Portfolio was 4.07% and the Prime
Portfolio was 4.25%, as of December 31, 1998. These figures increased to
4.16% and 4.34%, 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, 1998 (unaudited)
PRIME PORTFOLIO
PRINCIPAL MARKET
AMOUNT VALUE
SHORT-TERM CORPORATE NOTES - 74.26%
AIG Funding, Incorporated,
5.00%, due February 26, 1999 $ 1,804,000 $ 1,789,969
Caterpillar Financial Services,
5.23%, due February 17, 1999 2,000,000 1,986,344
duPont (E.I.) deNemours & Company,
5.20%, due January 15, 1999 800,000 798,382
duPont (E.I.) deNemours & Company,
5.08%, due February 11, 1999 1,000,000 994,214
Emerson Electric Company,
5.27%, due January 13, 1999 1,000,000 998,243
Ford Motor Credit Company,
5.24%, due February 5, 1999 1,800,000 1,790,830
Fortune Brands, Incorporated,
5.33%, due January 4, 1999 1,495,000 1,494,336
General Mills, Incorporated,
5.50%, due January 12, 1999 1,800,000 1,796,975
General Motors Acceptance Corporation,
4.70%, due April 30, 1999 1,900,000 1,870,481
Gillette Company,
5.12%, due January 4, 1999 1,059,000 1,058,548
Heinz (H.J.) Company,
5.23%, due January 13, 1999 1,800,000 1,796,862
Kellogg Company,
5.00%, due March 10, 1999 1,000,000 990,556
Lucent Technologies, Incorporated,
5.15%, due January 22, 1999 1,800,000 1,794,593
NICOR, Incorporated,
4.95%, due February 1, 1999 1,800,000 1,792,327
PepsiCo, Incorporated,
5.21%, due January 27, 1999 1,800,000 1,793,227
Proctor & Gamble,
5.05%, due February 25, 1999 1,800,000 1,786,113
TransAmerica Financial,
5.15%, due February 5, 1999 1,300,000 1,293,491
TransAmerica Financial,
5.24%, due February 5, 1999 500,000 497,453
Walt Disney Company,
4.68%, due May 12, 1999 1,900,000 1,867,643
28,358,000 28,190,587
GOVERNMENT SPONSORED ENTERPRISES - 25.84%
Federal Home Loan Banks Discount Notes,
4.88%, due March 31, 1999 1,165,000 1,150,945
Federal Home Loan Mortgage Corporation
Discount Notes,
4.95%, due March 26, 1999 5,000,000 4,942,250
Federal National Mortgage Association
Discount Notes,
4.98%, due March 25, 1999 1,800,000 1,779,333
Federal National Mortgage Association
Discount Notes,
5.21%, due July 16, 1999 1,000,000 971,634
Federal National Mortgage Association
Discount Notes,
4.63%, due September 20, 1999 1,000,000 966,304
9,965,000 9,810,466
TOTAL INVESTMENTS - 100.10% $ 38,001,053
Other assets less liabilities - (0.10%) (36,875)
TOTAL NET ASSETS - 100.00%
(equivalent to $1.00 per share;
1,000,000,000 shares of $0.01 par value
capital shares authorized; 37,968,329 shares outstanding) $ 37,964,178
See accompanying Notes to Financial Statements.
STATEMENT OF NET ASSETS
December 31, 1998 (unaudited)
FEDERAL PORTFOLIO
PRINCIPAL MARKET
AMOUNT VALUE
GOVERNMENT SPONSORED ENTERPRISES - 99.14%
Federal Farm Credit Banks Discount Notes,
5.10%, due January 25, 1999 $ 1,000,000 $ 996,600
Federal Farm Credit Banks Discount Notes,
4.98%, due February 11, 1999 500,000 497,164
Federal Farm Credit Banks Discount Notes,
5.28%, due April 7, 1999 500,000 492,960
Federal Farm Credit Banks Discount Notes,
4.70%, due August 5, 1999 500,000 485,900
Federal Home Loan Banks Discount Notes,
5.04%, due January 19, 1999 1,000,000 997,480
Federal Home Loan Banks Discount Notes,
5.04%, due January 22, 1999 1,000,000 997,060
Federal Home Loan Banks Discount Notes,
5.00%, due February 10, 1999 307,000 305,294
Federal Home Loan Banks Discount Notes,
5.02%, due February 26, 1999 500,000 496,096
Federal Home Loan Banks Discount Notes,
4.94%, due March 24, 1999 1,000,000 988,748
Federal Home Loan Mortgage Corporation
Discount Notes,
4.40%, due January 4, 1999 1,055,000 1,054,613
Federal Home Loan Mortgage Corporation
Discount Notes,
5.04%, due February 22, 1999 1,000,000 992,720
Federal Home Loan Mortgage Corporation
Discount Notes,
4.97%, due March 5, 1999 1,000,000 991,303
Federal Home Loan Mortgage Corporation
Discount Notes,
4.97%, due March 9, 1999 1,000,000 990,750
Federal National Mortgage Association
Discount Notes,
5.00%, due February 18, 1999 1,500,000 1,490,000
Federal National Mortgage Association
Discount Notes,
4.80%, due April 7, 1999 1,500,000 1,480,800
Federal National Mortgage Association
Discount Notes,
4.85%, due May 10, 1999 500,000 491,310
13,862,000 13,748,798
TOTAL INVESTMENTS - 99.14% $ 13,748,798
Other assets less liabilities - 0.86% 119,883
TOTAL NET ASSETS - 100.00%
(equivalent to $1.00 per share;
1,000,000,000 shares of $0.01 par value
capital shares authorized; 13,867,123 shares outstanding) $ 13,868,681
See accompanying Notes to Financial Statements.
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1998 (unaudited)
<TABLE>
<CAPTION>
PRIME FEDERAL
PORTFOLIO PORTFOLIO
</CAPTION>
<S> <C> <C>
ASSETS:
Investment securities, at market value (identified cost
of $38,001,053 and $13,748,798, respectively) $ 38,001,053 $ 13,748,798
Cash 104,847 168,362
Total assets 38,105,900 13,917,160
LIABILITIES AND NET ASSETS:
Fees payable 9,339 -
Distributions payable (132,383) 48,479
Total liabilities 141,722 48,479
NET ASSETS $ 37,964,178 $ 13,868,681
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 37,971,760 $ 13,868,636
Accumulated net realized gain (loss) on investments (7,582) 45
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 37,964,178 $ 13,868,681
Capital shares, $0.01 par value
Authorized 1,000,000,000 1,000,000,000
Outstanding 37,968,329 13,867,123
NET ASSET VALUE PER SHARE $ 1.00 $ 1.00
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Six Months ended December 31, 1998 (unaudited)
<TABLE>
<CAPTION>
PRIME FEDERAL
PORTFOLIO PORTFOLIO
</CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest $ 1,048,835 $ 373,550
Expenses:
Management fees (Note 3) 163,406 59,319
Registration fees and other expenses 10,258 3,045
173,664 62,364
Net investment income 875,171 311,186
REALIZED GAIN ON INVESTMENTS (Note 1):
Realized gain from investment transactions:
Proceeds from sales of investments 698,244,362 367,929,465
Cost of investments sold 698,244,362 367,929,465
Net gain from investment transactions -
Increase in net assets resulting from operations $ 875,171 $ 311,186
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
Six months Ended December 31, 1998 (unaudited)
and Year Ended June 30, 1998
<TABLE>
<CAPTION>
PRIME FEDERAL
PORTFOLIO PORTFOLIO
</CAPTION>
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,769,053 $ 586,131
Net realized gain (loss) from investment transactions (136) 105
Net increase in net assets resulting from operations 1,768,917 586,236
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,769,053) (586,131)
DECREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ($1.00 per share) 35,309,938 11,233,372
Net asset value of shares issued for reinvestment of
distributions ($1.00 per share) 1,677,694 560,706
36,987,632 11,794,078
Cost of shares redeemed ($1.00 per share) (38,544,301) (12,688,801)
Net decrease from capital share transactions (1,556,669) (894,723)
Total decrease in net assets (1,556,805) (894,618)
NET ASSETS - June 30, 1997 38,274,573 13,200,129
NET ASSETS - June 30, 1998 $ 36,717,768 $ 12,305,511
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 875,171 $ 311,186
Net realized gain from investment transactions - -
Net increase in net assets resulting from operations 875,171 311,186
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (875,171) (311,186)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ($1.00 per share) 21,566,743 9,252,888
Net asset value of shares issued for reinvestment of
distributions ($1.00 per share) 720,727 253,421
22,287,470 9,506,309
Cost of shares redeemed ($1.00 per share) (21,041,060) (7,943,139)
Net increase from capital share transactions 1,246,410 1,563,170
Total increase in net assets 1,246,410 1,563,170
NET ASSETS - June 30, 1998 36,717,768 12,305,511
NET ASSETS - December 31, 1998 $ 37,964,178 $ 13,868,681
</TABLE>
See accompanying Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940, as amended,
as a diversified open-end management investment company. Its shares are
currently issued in two series with each series, in effect, representing a
separate Fund. The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial statements.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.
Investments - Valuation of securities is on the basis of amortized cost
which approximates market value. Investment transactions are recorded on the
trade date. Investment income and dividends to shareholders are recorded
daily and dividends are distributed monthly. Realized gains and losses from
investment transactions are reported on the identified cost basis.
Federal and State Taxes - The Fund's policy is to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Therefore, no provision for federal or state tax is required.
2. PURCHASES AND SALES OF SECURITIES:
The aggregate amounts of security transactions during the period ended
December 31, 1998, were as follows:
Prime Portfolio
Purchases $ 697,027,582
Proceeds from sales 698,244,362
Federal Portfolio
Purchases $ 369,088,947
Proceeds from sales 367,929,465
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
FundOs 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 FundOs
custodian, UMB Bank, n.a. The FundOs 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.
EUQITIES
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.
Babson Funds
Jones & Babson Distributors
A member of the Generali Group
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306
816-751-5900
1-800-4-BABSON
(1-800-422-2766)
www.babsonfunds.com
JB8C_1 (2/99) 505499
