File No. 002-65761
As filed June 19, 2000
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.
Post-Effective Amendment No.
(Check appropriate box or boxes)
D. L. Babson Money Market Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
(816) 751-5900
(Area Code and Telephone Number)
BMA Tower, 700 Karnes Blvd.
Kansas City, MO 64108-3306
Address of Principal Executive Offices:
(Number, Street, City, State, Zip Code)
Stephen S. Soden
BMA Tower, 700 Karnes Blvd.
Kansas City, MO 64108-3306
Name and Address of Agent for Service:
(Number and Street) (City) (State) (Zip Code)
Copies to:
Mark H. Plafker, Esquire
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Approximate Date of Proposed Public Offering: As soon as
practicable after this Registration Statement becomes effective
under the Securities Act of 1933, as amended.
It is proposed that this filing will become effective on July 20,
2000, pursuant to Rule 488.
Title of the securities being registered: Shares of stock, par
value $.10 per share, of D. L. Babson Money Market Fund, Inc. No
filing fee is due because Registrant is relying on Section 24(f)
of the Investment Company Act of 1940, as amended.
<PAGE>
D. L. BABSON MONEY MARKET FUND, INC.
FEDERAL PORTFOLIO
IMPORTANT SHAREHOLDER INFORMATION
These materials are for a special meeting of Federal
Portfolio shareholders scheduled for September 1, 2000 at
2:00 pm. Central time. The materials discuss the proposals
to be voted on at the meeting, and contain your proxy
statement and proxy card. A proxy card is, in essence, a
ballot. When you vote your proxy, it tells us how you wish
to vote on important issues relating to your Portfolio. If
you complete and sign the proxy, we'll vote it exactly as
you tell us. If you simply sign the proxy, we'll vote it in
accordance with the Board of Directors' recommendations.
We urge you to spend a few minutes reviewing the proposals
in the proxy statement. Then, fill out the proxy card and
return it to us so that we know how you would like to vote.
If shareholders return their proxies promptly, we may be
able to avoid making additional mailings.
We welcome your comments. If you have any account specific
questions, please call the Fund at 1-800-[4-BABSON (1-800-
422-2766)]. If you have any proxy related questions or need
assistance voting your shares, please call our proxy
solicitor, D.F. King & Co., Inc., at 1-800-207-3158.
TELEPHONE AND INTERNET VOTING
For your convenience, you may be able to vote by telephone
or through the Internet, 24 hours a day. If your account is
eligible, a control number and separate instructions are
enclosed.
VOTE BY TELEPHONE: by calling the toll free number on your
proxy card and following the recorded instructions. If you
wish to speak with someone before voting please call our
solicitor D.F. King & Co., Inc., at 1-800-207-3158.
VOTE BY INTERNET: by signing onto the internet site listed
on your proxy card and entering the proper information.
Please have your proxy card with your control number ready
when using this option.
D. L. BABSON MONEY MARKET fund, INC.
FEDERAL PORTFOLIO
Dear Shareholder:
Enclosed is a Notice of Meeting for a Special Meeting of
Federal Portfolio shareholders of D. L. Babson Money Market
Fund, Inc. (the "Fund"). The Meeting is scheduled for
September 1, 2000 at 2:00 p.m. Central time at the offices
of the Fund's manager, Jones & Babson, Inc. on the 19th
floor of the BMA Tower, 700 Karnes Boulevard, Kansas City,
Missouri. The accompanying materials describe an important
proposal which may affect the future of your Portfolio. We
ask you to give this your prompt attention and vote via the
enclosed proxy card.
Please Take a Moment to Fill Out, Sign and Return the
Enclosed Proxy Card
This meeting is very important to the future of Federal
Portfolio. The Directors of the Fund unanimously recommend
that you consider and approve a Plan of Reorganization that
would result in your shares of Federal Portfolio being
exchanged for those of Prime Portfolio of the Fund. If the
shareholders of Federal Portfolio approve the proposal, you
will receive shares of Prime Portfolio equal in value to
your investment in Federal Portfolio. You will no longer be
a shareholder of Federal Portfolio, and you will instead be
a shareholder of Prime Portfolio. If the reorganization is
completed, Federal Portfolio will no longer exist and Prime
Portfolio will thereafter be referred to as the D. L. Babson
Money Market Fund.
The proposed transaction is intended to be tax-free, which
means that you will not have a taxable gain or loss on the
exchange of your shares.
The Directors recommend this transaction because the
projected growth in assets of Federal Portfolio was not
sufficient to provide competitive performance and high
quality service to shareholders over the long term. The
manager and underwriter of the Fund is Jones & Babson, Inc.
David L. Babson & Co. provides the day-to-day management of
each Portfolio's assets. Each Portfolio has similar
investment objectives and investment policies, except that
Federal Portfolio invest only in U.S. government securities,
while Prime Portfolio primarily invests in other money
market securities. After the Portfolios are combined, the
surviving Portfolio may be better able to obtain trading
advantages and efficiency and the manager's cost of
operating the Portfolio may be reduced.
Please take the time to review this document and vote now.
The Directors of the Fund unanimously recommend that you
vote in favor of this proposal.
To ensure that your vote is counted, indicate your
position on the enclosed proxy card.
Sign and return your card promptly.
You may also vote by telephone or over the Internet.
If you determine at a later date that you wish to attend
this meeting, you may revoke your proxy and vote in person.
Thank you for your attention to this matter.
Sincerely,
/s/Stephen S. Soden
Stephen S. Soden
President
D. L. BABSON Money Market FUND, INC.
federal portfolio
Babson Funds
c/o Jones & Babson, Inc.
BMA Tower
700 Karnes Boulevard
Kansas City, Missouri 64121-9779
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on September 1, 2000
To the Federal Portfolio Shareholders of D. L. Babson Money
Market Fund, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Federal
Portfolio shareholders of D. L. Babson Money Market Fund,
Inc. (the "Fund") will be held at the offices of the Fund's
manager, Jones & Babson, Inc. on the 19th floor of the BMA
Tower, 700 Karnes Boulevard, Kansas City, Missouri on
September 1, 2000, at 2:00 p.m. Central time. The Meeting is
being called for the following purpose:
To approve a Plan of Reorganization of the Fund on behalf of
its two Portfolios, that provides for the acquisition of
substantially all of the assets of Federal Portfolio in
exchange for shares of Prime Portfolio, the distribution of
such shares to the shareholders of Federal Portfolio, and
the liquidation and dissolution of Federal Portfolio.
In addition, shareholders will be asked to grant the
proxyholders the authority to vote upon any other business
which may legally come before the Meeting or any adjournment
thereof. The attached Prospectus/Proxy Statement describes
the proposed transaction more completely. A copy of the Plan
of Reorganization is attached as Exhibit A to the
Prospectus/Proxy Statement.
Shareholders of record as of the close of business on June
15, 2000, are entitled to notice of, and to vote at, the
Meeting or any adjournment thereof.
By Order of the Board of Directors,
Martin A. Cramer
Secretary
July 20, 2000
The Board of Directors urges you to complete, date, sign,
and return the enclosed proxy card in the enclosed postage-
paid return envelope. It is important that you return your
signed proxy card promptly so that a quorum may be ensured.
PROSPECTUS/PROXY STATEMENT
TABLE OF CONTENTS
Page
Cover Page Cover
Summary 2
What proposal am I voting on? 2
How will the shareholder voting be handled? 2
Comparisons of Some Important Features 3
How do the investment objectives and
policies of the Portfolios compare? 3
What are the risks of an investment in the Portfolios?
4
Who manages the Fund and the Portfolios? 5
What are the fees and expenses of each Portfolio
and what might they be after the Transaction? 6
Where can I find more financial information about
the Portfolios? 6
What are other key features of the Portfolios? 7
Reasons for the Transaction 7
Information about the Transaction 8
How will the Transaction be carried out? 8
Who will pay the expenses of the Transaction? 8
What are the tax consequences of the Transaction? 8
What should I know about the shares of Prime Portfolio
9
What are the capitalizations of the Portfolios and what
might
the capitalization be after the Transaction? 9
Voting Information 9
How many votes are necessary to approve the Plan? 9
How do I ensure my vote is accurately recorded? 10
Can I revoke my proxy? 10
What other matters will be voted upon at the Meeting?
10
Who is entitled to vote? 10
What other solicitations will be made? 10
Are there dissenters' rights? 10
More Information about the Fund and the Portfolios 11
Principal Holders of Shares 11
Exhibits to Prospectus and Proxy Statement
Exhibit A - Plan of Reorganization (attached) 12
Exhibit B - Babson Funds Combined Prospectus
dated October 31, 1999,
as supplemented June 8, 2000 (enclosed)
21
Exhibit C - Babson Funds Combined Annual Report to
Shareholders
dated June 30, 1999 (enclosed)
22
D. L. BABSON money market FUND, INC.
PROSPECTUS/PROXY STATEMENT
Dated July 20, 2000
Acquisition of the Assets of federal portfolio
By and in exchange for shares of Prime portfolio
This Prospectus/Proxy Statement solicits proxies to be voted
at a Special Meeting (the "Meeting") of Federal Portfolio
shareholders of D. L. Babson Money Market Fund, Inc. (the
"Fund"), to approve or disapprove a Plan of Reorganization
(the "Plan"). If shareholders of Federal Portfolio vote to
approve the Plan, you will receive shares of the Prime
Portfolio series of the Fund equal in value to your
investment in shares of Federal Portfolio. Federal Portfolio
will then be liquidated and dissolved and Prime Portfolio
will thereafter be referred to as the Babson Money Market
Fund. The investment objectives and policies of the
Portfolios are substantially similar, except that Federal
Portfolio invests only in U.S. government securities, while
Prime Portfolio may also invest in other money market
securities.
The Meeting will be held at the offices of the Fund's
manager, Jones & Babson, Inc. which are located on the 19th
floor of the BMA Tower, 700 Karnes Boulevard, Kansas City,
Missouri on September 1, 2000 at 2:00 p.m. Central time. The
Board of Directors of the Fund is soliciting these proxies
on behalf of Federal Portfolio. This Prospectus/Proxy
Statement will first be sent to shareholders on or about
July 17, 2000.
This Prospectus/Proxy Statement gives the information about
the proposed reorganization and shares of Prime Portfolio
that you should know before investing. You should retain it
for future reference. Additional information about Prime
Portfolio and the proposed reorganization has been filed
with the SEC and can be found in the following documents:
The Babson Funds Combined Prospectus dated October 31,
1999, as supplemented June 8, 2000, is enclosed with and
considered a part of this Prospectus/Proxy Statement.
The Babson Funds Combined Annual Report to Shareholders
dated June 30, 1999, which contains financial and
performance information for Federal Portfolio and Prime
Portfolio, is enclosed with and considered a part of this
Prospectus/Proxy Statement.
A Statement of Additional Information (SAI) relating to
this Prospectus/Proxy Statement dated July 20, 2000, has
been filed with the SEC and is incorporated by reference
into this Prospectus/Proxy Statement.
You may request a free copy of the SAI relating to this
Prospectus/Proxy Statement or other documents related to the
Fund without charge by calling 1-800[-4-BABSON (1-800-422-
2766] or by writing to the Babson Funds at P.O. Box 219757,
Kansas City, MO 64121-9757.
The SEC has not approved or disapproved these securities or
passed upon the adequacy of this Prospectus/Proxy Statement.
Any representation to the contrary is a criminal offense.
Mutual fund shares are not deposits or obligations of, or
guaranteed or endorsed by, any bank, and are not insured by
the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other U.S. government agency. Mutual
fund shares involve investment risks, including the possible
loss of principal.
SUMMARY
This is only a summary of certain information contained in
this Prospectus/Proxy Statement. You should read the more
complete information in the rest of this Prospectus/Proxy
Statement, including the Plan (attached as Exhibit A), the
Babson Funds Combined Prospectus (enclosed as Exhibit B) and
the Babson Funds Combined Annual Report to Shareholders
(enclosed as Exhibit C).
What proposal am I voting on?
You are being asked to consider and approve a Plan of
Reorganization that will have the effect of combining
Federal Portfolio and Prime Portfolio of the Fund into a
single mutual Fund. If shareholders of Federal Portfolio
vote to approve the Plan, the assets of Federal Portfolio
will be transferred to Prime Portfolio and Federal Portfolio
shareholders will exchange their shares of Federal Portfolio
for an equal dollar amount of Prime Portfolio shares. The
proposed reorganization is referred to in this
Prospectus/Proxy Statement as the "Transaction." As a result
of the Transaction, you will cease to be a shareholder of
Federal Portfolio and will become a shareholder of Prime
Portfolio.
For the reasons set forth in the "Reasons for the
Transaction" section, the Board of Directors of the Fund has
determined that the Transaction is in the best interests of
the shareholders of Federal Portfolio and also concluded
that no dilution in value would result to the shareholders
of either Portfolio as a result of the Transaction.
The Board of Directors of the Fund, on behalf of both
Federal Portfolio and Prime Portfolio, has approved the Plan
and unanimously recommends that you vote to approve the
Plan.
How will the shareholder voting be handled?
Shareholders who own shares of Federal Portfolio at the
close of business on June 15, 2000 will be entitled to vote
at the Meeting, and will be entitled to one vote for each
full share and a fractional vote for each fractional share
that they hold. To approve the Transaction, a majority of
the outstanding shares of Federal Portfolio must be voted in
favor of the Plan.
Please vote by proxy as soon as you receive this
Prospectus/Proxy Statement. You may place your vote by
completing and signing the enclosed proxy card or voting by
telephone or over the Internet. If you vote by any of these
three methods, your votes will be officially cast at the
Meeting by the persons appointed as proxies.
You can revoke your proxy or change your voting instructions
at any time until the vote is taken at the Meeting. For more
details about shareholder voting, see the "Voting
Information" section of this Prospectus/Proxy Statement.
COMPARISONS OF SOME IMPORTANT FEATURES
How do the investment objectives and policies of the
Portfolios compare?
This section describes the differences between the
investment policies of Federal Portfolio and Prime
Portfolio. For a complete description of the Prime
Portfolio's investment policies and risks, you should read
the Babson Funds Combined Prospectus that is enclosed with
this Prospectus/Proxy Statement.
Both Federal Portfolio and Prime Portfolio are money market
funds that share the same investment objective: to maximize
income consistent with safety of principal and liquidity. As
money market funds, the Portfolios seek to maintain a stable
share price (net asset value per share) of $1.00 and invest
only in high quality, short-term debt instruments for the
purpose of maximizing income consistent with safety of
principal and liquidity.
Federal Portfolio only invests in high quality, short-term
money market securities whose interest and principal
payments are backed by the full faith and credit of the U.S.
government (hereafter "U.S. government securities"). Prime
Portfolio may also invest in U.S. government securities, but
primarily invests in other high quality, short-term money
market securities such as certificates of deposit, bankers
acceptances and commercial paper.
To assure compliance with Rule 2a-7 under the Investment
Company Act of 1940, as amended (the "1940 Act") relating to
money market mutual funds, each Portfolio only invests in
U.S. dollar denominated securities with remaining maturities
of 397 days or less, and each Portfolio maintains the dollar
weighted average maturity of its portfolio of securities at
90 days or less.
Each Portfolio is subject to income risk, which is the risk
that falling short-term interest rates will cause the
Portfolio's income - and thus its yield, to decline. Prime
Portfolio is also subject to credit risk, which is the risk
that the issuer of a security will fail to pay interest or
principal in a timely manner.
An investment in either Portfolio is not insured or
guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although each Portfolio invests
in high quality instruments and seeks to preserve the value
of your investment at $1 per share, it is possible that you
could lose money by investing in a Portfolio.
U.S. Government Securities - Both Portfolios may invest in
direct obligations of the U.S. government, such as bills,
notes, bonds and other debt securities issued by the U.S.
Treasury. Both Portfolios may also invest in obligations of
U.S. government agencies and instrumentalities which are
secured by the full faith and credit of the U.S. Treasury
such as the Government National Mortgage Association, Export-
Import Bank, or the Student Loan Marketing Association; or
which are secured by the right of the issuer to borrow from
the U.S. 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.
Other Money Market Securities - While Prime Portfolio may
invest in U.S. government securities, it primarily invests
in other money market securities such as the following: (1)
certificates of deposit, bankers' acceptances and other
short-term obligations issued domestically by U.S.
commercial banks or savings and loan associations having
assets of at least $1 billion and which are members of the
Federal Deposit Insurance Corporation or Federal Home Loan
Association; (2) high quality commercial paper or variable
demand notes of companies rated P-2/MIG-2 or higher by
Moody's Investors Service, Inc. ("Moody's") or A-2 or higher
by Standard and Poor's Corporation ("S&P"), or if not rated
by either Moody's or S&P, a company's commercial paper
(including variable demand notes) may be purchased by Prime
Portfolio if the company has an outstanding bond issue rated
Aa or higher by Moody's or AA or higher by S&P; (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.
Repurchase Agreements - Both Portfolios may invest in
repurchase agreements collateralized by issues of the U.S.
Treasury or U.S. government agencies. A repurchase agreement
involves the sale of securities to a 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 period.
The result is a fixed rate of return insulated from market
fluctuations during such period. Both Portfolios may enter
into such repurchase agreements only with U.S. banks having
assets in excess of $1 billion which are members of the
FDIC, 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 a 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 net assets of each Portfolio.
Investment Restrictions - Each Portfolio is subject to the
same fundamental investment restrictions, which can not be
changed without shareholder approval. The restrictions are
set forth in the current Babson Funds Combined Statement of
Additional Information which is available upon request from
the Fund. Some of the more important restrictions are as
follows: The investments of each Portfolio are diversified
and therefore a Portfolio will not purchase the securities
of any issuer (other than obligations issued or guaranteed
as to principal and interest by the government of the U.S.,
its agencies or instrumentalities), if as a result, (a) more
than 5% of the Portfolio's total assets (taken at current
value) would be invested in the securities of such issuer,
or (b) the Portfolio 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). In addition,
neither Portfolio will purchase any securities which would
cause more than 25% of the value of the Portfolio's total
net assets at the time of such purchase to be invested in
any one industry; provided, however, the Prime Portfolio
does not consider assets in certificates of deposit or
bankers' acceptances of domestic branches of U.S. banks to
be investments in a single industry.
What are the risks associated with an investment in the
Portfolios?
Like all investments, an investment in either Portfolio
involves risk and there is no assurance that the Portfolios
will meet their investment objectives. The achievement of
the Portfolios' objectives depends upon interest rates,
market conditions, generally, and on the advisers'
analytical and portfolio management skills.
Investments in both Portfolios are subject to interest rate,
income, credit, market and repurchase agreement risks.
Interest rate risk is the risk that changes in interest
rates can reduce the value of a security. When interest
rates rise, the value of debt securities tends to decrease.
The opposite is also true: debt security prices go up when
interest rates fall. Interest rates have increased and
decreased in the past. These changes are unpredictable. In
addition, the yield and the principal value of money market
instruments are sensitive to short-term lending conditions.
Income risk is the risk that a Portfolio's income will
decrease due to falling interest rates. Since a Portfolio
can only distribute what it earns, a Portfolio's
distributions to its shareholders may decline when interest
rates fall.
Credit risk is the possibility that an issuer of a security
will be unable to make interest payments or to pay the
principal of a security upon maturity. Changes in an
issuer's financial strength or in a security's credit rating
may affect its value. Changes in the credit quality of the
credit provider could affect the value of the security and
the Portfolio's share price. A change in the credit risk
associated with a security may cause a corresponding change
in the security's price, and therefore, the Portfolio's
share price. To the extent the Portfolios' invest in U.S.
government securities, credit risk is minimal because the
obligation to repay principal and interest payments is
backed by the full faith and credit of the U.S. government.
Market risk is the risk that a security's value will be
reduced by market activity or the results of supply and
demand. This is a basic risk associated with all securities.
When there are more sellers than buyers, prices tend to
decline. Likewise, when there are more buyers than seller,
prices tend to increase. A security's maturity length also
affects its price. In general, securities with longer
maturities are more sensitive to price changes.
Repurchase agreement risk involves the risk that if the
seller of the agreement defaults on its obligation to
repurchase the underlying securities at a time when the
value of those securities has declined, the Portfolios may
incur a loss upon disposition of them. If the seller of the
agreement becomes insolvent and subject to liquidation or
reorganization under the Bankruptcy Code or other laws,
disposition of the underlying securities may be delayed
pending court proceedings. In addition, it is possible that
a Portfolio may not be able to perfect its interest in the
underlying securities. The Portfolios' sub-advisor attempts
to control these risks through stringent security selection
criteria and careful monitoring procedures.
Who manages the Fund and the Portfolios?
The management of the business and affairs of the Fund and
its Portfolios is supervised by the Board of Directors of
the Fund. Jones & Babson is the Fund's manager and principal
underwriter. Jones & Babson was founded in 1959 and
presently serves as the investment manager of 18 separate
mutual funds, including the 13 funds within the Babson Funds
group. Jones & Babson also serves as principal underwriter
and provides administrative, transfer agency and/or
accounting services for 37 separate funds, including the
Babson Funds. Jones & Babson is located at the BMA Tower,
700 Karnes Boulevard, Kansas City, MO 64121-9757.
Jones & Babson has engaged David L. Babson & Co. to provide
investment sub-advisory services to the Fund and David L.
Babson & Co. is responsible for the day-to-day management of
the assets of each Portfolio. David L. Babson & Co. is
located at One Memorial Drive, Cambridge, MA 02412-1300.
Jones & Babson has entered into a Management Agreement with
the Fund, under which each Portfolio is obligated to pay
annual management fees equal to 0.85% of its average daily
net assets. In exchange for management fees, Jones & Babson
provides or pays all of the costs of investment management,
fund accounting, transfer agency and administrative
services. Jones & Babson also pays all fees of the
custodian, independent auditors and legal counsel; and the
cost of officers, directors and other personnel; rent;
shareholder services and other services incident to
corporate administration.
What are the fees and expenses of each Portfolio
and what might they be after the Transaction?
Fees and Expenses - The following table describes the fees
and expenses that you may pay if you buy and hold shares of
the Portfolios, as well as the pro forma fees and expenses
of Prime Portfolio after the Transaction.
Actual+ Pro forma++
Federal Prime Prime Portfolio
Portfolio Portfolio After Transaction
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases None None None
Maximum Deferred Sales Charge (Load) None None None
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends None None None
Redemption Fee None* None* None*
Exchange Fee None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees 0.85% 0.85% 0.85%
Distribution (12b-1) Fees None None None
Other Expenses 0.03% 0.03% 0.03%
Total Annual Fund Operating Expenses 0.88% 0.88% (0.88%)
+ Actual information for Federal Portfolio and Prime
Portfolio shares is provided for the fiscal year ended June
30, 1999.
++ Projected expenses based on current and anticipated Prime
Portfolio expenses.
* A $10.00 fee is imposed for redemptions by wire.
Expense Examples - These examples are intended to help you
compare the cost of investing in each Portfolio with the
cost of investing in other mutual funds. They assume you
invest $10,000 and receive a 5% return each year. Although
your actual costs may be higher or lower, based on the above
assumptions your costs would be:
1 Year 3 Years 5 Years10 Years
Federal Portfolio $90 $281 $488 $1,084
Prime Portfolio $90 $281 $488 $1,084
Pro forma Prime Portfolio (after Transaction) $90 $281 $488
$1,084
Where can I find more financial information about the
Portfolios?
For Prime Portfolio, per share income information for the
past five fiscal years (and the most recent six month
semiannual period) is shown below. Also the current Babson
Funds Combined Annual Report to Shareholders, which is
enclosed, contains more financial information about Prime
Portfolio and Federal Portfolio as well as discussions of
each Portfolio's performance during the fiscal year ended
June 30, 1999 and the six month period ended December 31,
1999.
Financial Highlights - Prime portfolio
Condensed data for a share ofSix Months Ended
capital stock outstanding December 31, 1999 Years ended June 30,
throughout each period. (unaudited)1999 1998 1997 1996 1995
Net asset value, beginning
of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income .02 .04 .05 .05 .05 .05
Less distributions:
Dividends from net investment
income (.02) (.04) (.05) (.05) (0.5) (.05)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total return1 2.30% 4.38% 4.82% 4.61% 4.83% 4.66%
Ratios/Supplemental Data
Net assets, end of period
(in millions) $40 $39 $37 $38 $36 $40
Ratio of expenses to average
net assets2 .88% .88% .91% .92% .92% .92%
Ratio of net investment income to
average net assets2 4.54% 4.30% 4.73% 4.58% 4.75% 4.58%
1 Total return not annualized for periods less than one full year.
2 Annualized for periods less than one full year.
What are other key features of the Portfolios?
Shares of each Portfolio are sold on a no-load basis and
there are no sales commissions or Rule 12b-1 fees. Shares of
each Portfolio may be redeemed at their respective net asset
value per share at any time. Shares may also be exchanged at
no cost for shares of any other portfolio or fund in the
Babson Funds group. Because an exchange is technically a
sale and purchase of shares, an exchange is a taxable
transaction (although the Transaction described in this
Proxy Statement is designed to be tax-free).
Additional information and specific instructions explaining
how to buy, sell, and exchange shares of the Portfolios is
contained in the Babson Funds Combined Prospectus, and the
Prospectus also lists phone numbers for you to call if you
have any questions about your account.
Each Portfolio declares a dividend from its net investment
income at the end of each business day, and such dividends
are payable to shareholders of record at the end of the
previous business day. On the last day of each month, all
dividends declared during that month are credited to the
accounts of those shareholders. Distributions from capital
gains, if any, are declared annually by December 31.
REASONS FOR THE TRANSACTION
The Board of Directors of the Fund has recommended the
Transaction to Federal Portfolio shareholders in order to
combine Federal Portfolio with Prime Portfolio to make a
larger fund that has similar investment policies. A larger
fund may be able to benefit from reduced trading costs and
increased operational efficiencies.
The Plan was presented to the Board of Directors of the Fund
at a meeting held on April 27, 2000. At the meeting, the
Board of Directors reviewed the expense ratios of both
Portfolios; the comparative investment performance of the
Portfolios; the compatibility of the investment objectives,
policies, restrictions and investments of the Portfolios;
and the tax consequences of the Transaction. During the
course of its deliberations, the Board of Directors noted
that the expenses of the Transaction will be borne by the
manager and not by the Fund or either Portfolio.
The Board of Directors including a majority of the Directors
who are not interested persons of the Fund, unanimously
concluded that the Transaction is in the best interests of
the shareholders of Federal Portfolio and that no dilution
of value would result to the shareholders of Federal
Portfolio or Prime Portfolio from the Transaction, and the
Board approved the Plan and recommended that shareholders of
Federal Portfolio vote to approve the Transaction.
For the reasons discussed above, the Board of Directors
unanimously recommends that you vote For the Plan.
If shareholders of Federal Portfolio do not approve the
Plan, the Board of Directors will consider other possible
courses of action for Federal Portfolio, including
liquidation and dissolution.
INFORMATION ABOUT THE TRANSACTION
This is only a summary of the Plan. You should read the
actual Plan attached as Exhibit A.
How will the Transaction be carried out?
If shareholders of Federal Portfolio approve the Plan, the
Transaction will take place after various conditions are
satisfied by the Fund on behalf of Federal Portfolio and
Prime Portfolio, including the preparation of certain
documents. The Fund will determine a specific date for the
actual Transaction to take place. This is called the closing
date. If the shareholders of Federal Portfolio do not
approve the Plan, the Transaction will not take place.
If shareholders of Federal Portfolio approve the Plan at the
Meeting, shares of Federal Portfolio will no longer be
offered for sale to existing shareholders, except for the
reinvestment of dividend and capital gain distributions or
through established automatic investment plans. Until the
close of business on the day of the Meeting, you may
continue to add to your existing account subject to your
applicable minimum additional investment amount or buy
additional shares through the reinvestment of dividend and
capital gain distributions.
If the shareholders of Federal Portfolio approve the Plan,
Federal Portfolio will deliver to Prime Portfolio
substantially all of its assets on the closing date. In
exchange, shareholders of Federal Portfolio will receive
shares of Prime Portfolio that have a value equal to the
dollar value of the assets delivered to Federal Portfolio.
The stock transfer books of Federal Portfolio will be
permanently closed on the closing date. Federal Portfolio
will only accept requests for redemption received in proper
form before 10:00 a.m. Central time on the closing date.
Requests received after that time will be considered
requests to redeem shares of Prime Portfolio.
To the extent permitted by law, the Fund may amend the Plan
without shareholder approval. It may also agree to terminate
and abandon the Transaction at any time before or, to the
extent permitted by law, after the approval by shareholders
of Federal Portfolio.
Who will pay the expenses of the Transaction?
The expenses resulting from the Transaction will be paid by
the manager and not by the Fund or either Portfolio.
What are the tax consequences of the Transaction?
The Transaction is intended to qualify as a tax-free
reorganization for federal income tax purposes under Section
368(a)(1) of the Internal Revenue Code of 1986, as amended.
Based on certain assumptions and representations received
from the Fund, on behalf of the Portfolios, it is the
opinion of Stradley, Ronon, Stevens & Young, LLP, counsel to
the Fund, that shareholders of Federal Portfolio will not
recognize any gain or loss for federal income tax purposes
as a result of the exchange of their shares of Federal
Portfolio for shares of Prime Portfolio and that neither
Prime Portfolio nor its shareholders will recognize any gain
or loss upon receipt of the assets of Federal Portfolio.
What should I know about the shares of Prime Portfolio?
Shares of Prime Portfolio will be distributed to
shareholders of Federal Portfolio and will have the same
legal characteristics as the shares of Federal Portfolio
with respect to such matters as voting rights,
assessibility, conversion rights, and transferability.
Former shareholders of Federal Portfolio whose shares are
represented by outstanding share certificates will not be
allowed to redeem shares of Prime Portfolio until Federal
Portfolio certificates have been returned.
What are the capitalizations of the Portfolios and
what might the capitalization be after the Transaction?
The following table sets forth, as of May 31, 2000, the
capitalization of shares of Federal Portfolio and Prime
Portfolio. The table also shows the projected capitalization
of Prime Portfolio shares as adjusted to give effect to the
proposed Transaction. The capitalization of Prime Portfolio
is likely to be different when the Transaction is
consummated.
PRIME PORTFOLIO
FEDERAL PORTFOLIO PRIME PORTFOLIO PRO FORMA
(UNAUDITED) (UNAUDITED) (UNAUDITED)
Net assets (millions) $10 $40 $50
Total shares outstanding 9,714,084 40,003,297 49,717,381
Net asset value per share $1.00 $1.00 $1.00
VOTING INFORMATION
How many votes are necessary to approve the Plan?
The affirmative vote of a majority of the total number of
outstanding shares of Federal Portfolio is necessary to
approve the Plan. Each shareholder will be entitled to one
vote for each full share, and a fractional vote for each
fractional share of Federal Portfolio held at the close of
business on June 15, 2000 (the "Record Date"). If sufficient
votes to approve the Plan are not received by the date of
the Meeting, the Meeting may be adjourned to permit further
solicitations of proxies.
Under relevant state law and the Fund's governing documents,
abstentions and broker non-votes will be included for
purposes of determining whether a quorum is present at the
Meeting, but will be treated as votes not cast and,
therefore, will not be counted for purposes of determining
whether the matters to be voted upon at the Meeting have
been approved, and will have the same effect as a vote
against the Plan.
How do I ensure my vote is accurately recorded?
You can vote in any one of four ways:
By mail, with the enclosed proxy card.
In person at the Meeting.
Through D.F. King & Co., Inc., a proxy solicitor, by
calling toll-free 1-800/207-3158.
By telephone or through the Internet; a control number and
internet site address or a toll free number for the
automated voting option are provided on your proxy card and
separate instructions are enclosed.
A proxy card is, in essence, a ballot. If you simply sign
and date the proxy but give no voting instructions, your
shares will be voted in favor of the Plan and in accordance
with the views of management upon any unexpected matters
that come before the Meeting or adjournment of the Meeting.
Can I revoke my proxy?
You may revoke your proxy at any time before it is voted by
sending a written notice to the Fund expressly revoking your
proxy, by signing and forwarding to the Fund a later-dated
proxy, or by attending the Meeting and voting in person.
What other matters will be voted upon at the Meeting?
The Board of Directors of the Fund does not intend to bring
any matters before the Meeting other than those described in
this proxy. It is not aware of any other matters to be
brought before the Meeting by others. If any other matter
legally comes before the Meeting, proxies for which
discretion has been granted will be voted in accordance with
the views of management.
Who is entitled to vote?
Shareholders of record of Federal Portfolio on the Record
Date will be entitled to vote at the meeting. On the Record
Date, there were 8,751,046.88 outstanding shares of Federal
Portfolio issued and outstanding.
What other solicitations will be made?
The Fund will request broker-dealer firms, custodians,
nominees and fiduciaries to forward proxy material to the
beneficial owners of the shares of record. The Fund may
reimburse broker-dealer firms, custodians, nominees and
fiduciaries for their reasonable expenses incurred in
connection with such proxy solicitation. In addition to
solicitations by mail, officers and employees of the Fund,
without extra pay, may conduct additional solicitations by
telephone, personal interviews and other means. The Fund, on
behalf of Federal Portfolio, has engaged D.F. King to
solicit proxies from brokers, banks, other institutional
holders and individual shareholders for an approximate fee,
including out-of-pocket expenses ranging between $5,000 and
$10,000. The costs of any additional solicitation and of any
adjourned session will be borne by the manager.
Are there dissenters' rights?
Shareholders of Federal Portfolio will not be entitled to
any "dissenters' rights" since the proposed Transaction
involves two open-end investment companies registered under
the 1940 Act (commonly called mutual funds). Although no
dissenters' rights may be available, you have the right to
redeem your shares at net asset value until the closing
date. After the closing date, you may redeem your Prime
Portfolio shares or exchange them for shares of other funds
in the Babson Funds group, subject to the terms in the
prospectus of the respective fund.
MORE INFORMATION ABOUT THE FUND AND THE PORTFOLIOS
Federal Portfolio and Prime Portfolio are separate series of
the Fund, which is an open-end management investment company
registered with the SEC under the 1940 Act. Each Portfolio
is, in effect, a separate mutual fund. Detailed information
about the Fund and each Portfolio (as well as the other
funds in the Babson Funds group) is contained in the Babson
Funds Combined Prospectus which is enclosed with and
considered a part of this Prospectus/Proxy Statement.
Additional information about the Fund and each Portfolio is
included in the Babson Funds Combined SAI dated October 31,
1999 which has been filed with the SEC and is incorporated
by reference into the SAI relating to this Prospectus/Proxy
Statement
You may request a free copy of the Semiannual Report to
Shareholders for the six month period ended December 31,
1999, by calling 1-800-4-BABSON or by writing to the Fund at
P.O. Box 219747, Kansas City, MO 64121-9757. The Fund's
Annual Report to Shareholders for the fiscal year ended June
30, 1999, is enclosed with and considered a part of this
Prospectus/Proxy Statement.
The Fund files proxy materials, reports and other
information with the SEC in accordance with the
informational requirements of the Securities Exchange Act of
1934 and the 1940 Act. These materials can be inspected and
copied at: the SEC's Public Reference Room at 450 Fifth
Street NW, Washington, DC 20549, and at the Regional Offices
of the SEC located in New York City at 7 World Trade Center,
Suite 1300, New York, NY 10048 and in Chicago at 500 West
Madison Street, Suite 1400, Chicago, IL 60661. Also, copies
of such material can be obtained from the SEC's Public
Reference Section, Washington, DC 20549-6009, at prescribed
rates, or from the SEC's Internet address at
http://www.sec.gov.
PRINCIPAL HOLDERS OF SHARES
As of the Record Date, the principal shareholders of Federal
Portfolio, beneficial or of record, were:
Name and Address Percentage (%)
Norman Von Herzen, DDS 10.62%
P/S Plan
Newport Bech, CA
Dober & Associates, Inc. 8.63%
Cambridge, MA
Theodore W. Ofiner, MD GTR 5.40%
Philadelphia, PA
From time to time, the number of Federal Portfolio shares
held in the "street name" accounts of various securities
dealers for the benefit of their clients or in centralized
securities depositories may exceed 5% of the total shares
outstanding. No other person owned (beneficially or of
record) 5% or more of the outstanding shares of Federal
Portfolio.
As of the Record Date, the officers and Directors of the
Fund, as a group, owned less than 1% of the outstanding
voting shares of Federal Portfolio.
EXHIBITS TO PROSPECTUS/PROXY STATEMENT
EXHIBIT A - Plan of Reorganization by D.L. Babson Money
Market Fund, Inc. on behalf of Prime Portfolio and Federal
Portfolio
EXHIBIT B - Babson Funds Combined Prospectus dated
October 31, 1999, as supplemented June 8, 2000 (enclosed)
EXHIBIT C - Babson Funds Combined Annual Report to
Shareholders dated June 30, 1999 (enclosed)
EXHIBIT A
FORM OF PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION (the "Plan") is made by D.L.
Babson Money Market Fund, Inc., a corporation organized
under the laws of the State of Maryland on October 19, 1979
(the "Fund"), as of this ___ day of ________, 2000, on
behalf of its two series-Federal Portfolio and Prime
Portfolio (collectively, the "Portfolios"), with a principal
place of business at 700 Karnes Blvd., Kansas City, MO
64108.
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the "Plan of
Reorganization") will consist of (i) the acquisition by
Prime Portfolio, of substantially all of the property,
assets and goodwill of Federal Portfolio in exchange solely
for shares of common stock, par value $0.01 each, of Prime
Portfolio ("Prime Portfolio Shares"); (ii) the distribution
of Prime Portfolio Shares to the shareholders of Federal
Portfolio according to their respective interests; and (iii)
the subsequent dissolution of Federal Portfolio as soon as
practicable after the closing (as defined in Section 3,
hereinafter called the "Closing"), all upon and subject to
the terms and conditions of this Plan hereinafter set forth.
In order to consummate the Plan, the following actions shall
be taken by the Fund on behalf of the Portfolios:
1. Sale and Transfer of Assets, Liquidation and Dissolution
of Federal Portfolio.
(a) Subject to the terms and conditions of this Plan, the Fund on behalf of
Federal Portfolio shall convey, transfer and deliver to Prime Portfolio at
the Closing all of Federal Portfolio's then existing assets, free and clear
of all liens, encumbrances, and claims whatsoever (other than shareholders'
rights of redemption), except for cash, bank deposits, or cash equivalent
securities in an estimated amount necessary to (i) discharge its unpaid
liabilities on its books at the closing date, including, but not limited
to, its income dividends and capital gains distributions, if any, payable
for the period prior to, and through, the Closing Date; and (ii) pay such
contingent liabilities as the Board of Directors shall reasonably deem to
exist against Federal Portfolio, if any, at the Closing Date, for which
contingent and other appropriate liability reserves shall be established on
Federal Portfolio's books (hereinafter "Net Assets"). Federal Portfolio
shall also retain any and all rights that it may have over and against any
person that may have accrued up to and including the close of business on
the Closing Date.
(b) Subject to the terms and conditions of this Plan, the
Fund on behalf of Prime Portfolio shall at the Closing
deliver to Federal Portfolio the number of Prime Portfolio
Shares, determined by dividing the net asset value per share
of the shares of Federal Portfolio ("Federal Portfolio
Shares") by the net asset value per share of Prime Portfolio
Shares, and multiplying the result thereof by the number of
outstanding Federal Portfolio Shares as of 1:00 P.M. Central
time on the Closing Date. All such values shall be
determined in the manner and as of the time set forth in
Section 2 hereof.
(c) Immediately following the Closing, the Fund shall
dissolve Federal Portfolio and distribute pro rata to the
shareholders of record of Federal Portfolio as of the close
of business on the Closing Date, the Prime Portfolio Shares
to be delivered to Federal Portfolio pursuant to this
Section 1. Such liquidation and distribution shall be
accomplished by the establishment of accounts on the share
records of the Fund relating to Prime Portfolio and noting
in such accounts the type and amounts of such Prime
Portfolio Shares that such former Federal Portfolio
shareholders are due based on their respective holdings of
Federal Portfolio as of the close of business on the Closing
Date. Fractional Prime Portfolio Shares shall be carried to
the third decimal place. At the time of merger, all
outstanding certificated shares of Federal Portfolio will be
deemed canceled. Holders in possession of certificated
shares of Federal Portfolio will not be required to
surrender their certificates to complete the acquisition by
Prime Portfolio. After the acquisition, holders may request
a certificate representing the number of Prime Portfolio
Shares they own.
2. Valuation.
(a) The value of Federal Portfolio's Net Assets to be
transferred to Prime Portfolio hereunder shall be computed
as of 1:00 P.M. Central time on the Closing Date using the
valuation procedures set forth in Federal Portfolio's
currently effective prospectus.
(b) The net asset value of a share of Prime Portfolio shall
be determined to the nearest full cent as of 1:00 P.M.
Central time on the Closing Date using the valuation
procedures set forth in Prime Portfolio's currently
effective prospectus.
(c) The net asset value of a share of Federal Portfolio
shall be determined to the third decimal point as of 1:00
P.M. Central time on the Closing Date using the valuation
procedures set forth in Federal Portfolio's currently
effective prospectus.
3. Closing and Closing Date.
The Closing Date shall be October 27, 2000, or such later
date as determined by the Fund's officers. The Closing shall
take place at the principal office of the Fund at 2:00 P.M.
Central time on the Closing Date. The Fund on behalf of
Federal Portfolio shall have provided for delivery as of the
Closing of Federal Portfolio's Net Assets to be transferred
to the account of Portfolio at the Fund's Custodian, UMB
Bank, n.a., 1010 Grand Boulevard, Kansas City, MO 64106.
Also, the Fund on behalf of Federal Portfolio shall produce
at the Closing a list of names and addresses of the
shareholders of record of its Federal Portfolio Shares and
the number of shares owned by each such shareholder,
indicating thereon which such shares are represented by
outstanding certificates and which by book-entry accounts,
all as of 1:00 P.M. Central time on the Closing Date,
certified by its transfer agent or by its President to the
best of its or his or her knowledge and belief. The Fund on
behalf of Prime Portfolio shall issue and deliver a
certificate or certificates evidencing the shares of Prime
Portfolio to be delivered to the account of Federal
Portfolio at said transfer agent registered in such manner
as the officers of the Fund on behalf of Federal Portfolio
may request, or provide evidence satisfactory to Federal
Portfolio that such Prime Portfolio Shares have been
registered in an account on the books of Prime Portfolio in
such manner as the Fund on behalf of Federal Portfolio may
request.
4. Representations and Warranties by the Fund on behalf of
Federal Portfolio.
The Fund makes the following representations and warranties
about Federal Portfolio:
(a) Federal Portfolio is a series of the Fund, a
corporation organized under the laws of the State of
Maryland on October 19, 1979 and validly existing and in
good standing under the laws of that State. The Fund is duly
registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a diversified, open-end,
management investment company and all of the Federal
Portfolio Shares sold were sold pursuant to an effective
registration statement filed under the Securities Act of
1933, as amended (the "1933 Act"), except for those shares
sold pursuant to the private offering exemption for the
purpose of raising the required initial capital.
(b) The Fund is authorized to issue 2,000,000,000 shares of
common stock, par value $0.01 each, each outstanding share
of which is fully paid, non-assessable, fully transferable
and has full voting rights and currently issues shares of
two (2) series. The Fund is authorized to issue
1,000,000,000 shares of common stock of each series.
(c) The financial statements appearing in the Fund's Annual
Report to Shareholders for the fiscal year ended June 30,
1999, audited by Ernst & Young LLP, and the Fund's unaudited
Semiannual Report to Shareholders for the six months ended
December 31, 1999, fairly present the financial position of
Federal Portfolio as of such dates and the results of its
operations for the periods indicated in conformity with
generally accepted accounting principles applied on a
consistent basis.
(d) The Fund has the necessary power and authority to
conduct Federal Portfolio's business as such business is now
being conducted.
(e) The Fund on behalf of Federal Portfolio is not a party
to or obligated under any provision of the Fund's Articles
of Incorporation, as amended and supplemented, or By-laws,
or any contract or any other commitment or obligation, and
is not subject to any order or decree that would be violated
by its execution of or performance under this Plan.
(f) The Fund has elected to treat Federal Portfolio as a
regulated investment company ("RIC") for federal income tax
purposes under Part I of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and Federal
Portfolio has qualified as a RIC for each taxable year since
its inception and will qualify as a RIC as of the Closing
Date.
5. Representations and Warranties by the Fund on behalf of
Prime Portfolio.
The Fund makes the following representations and warranties
about Prime Portfolio:
(a) Prime Portfolio is a series of the Fund, a corporation
organized under the laws of the State of Maryland on October
19, 1979 and validly existing and in good standing under the
laws of that State. The Fund is duly registered under the
1940 Act as an open-end, management investment company and
all its shares sold have been sold pursuant to an effective
registration statement filed under the 1933 Act, except for
those shares sold pursuant to the private offering exemption
for the purpose of raising the required initial capital.
(b) The Fund is authorized to issue 1,000,000,000 shares of
Prime Portfolio, par value $0.01 each, each outstanding
share of which is fully paid, non-assessable, fully
transferable, and has full voting rights. Prime Portfolio
Shares to be issued pursuant to this Plan will be fully
paid, non-assessable, freely transferable and have full
voting rights.
(c) At the Closing, Prime Portfolio Shares will be eligible
for offering to the public in those states of the United
States and jurisdictions in which the shares of Federal
Portfolio are presently eligible for offering to the public,
and there are a sufficient number of Prime Portfolio Shares
registered under the 1933 Act to permit the transfers
contemplated by this Plan to be consummated.
(d) The financial statements appearing in the Fund's Annual
Report to Shareholders for the fiscal year ended June 30,
1999, audited by Ernst & Young LLP, and the Fund's unaudited
Semiannual Report to Shareholders for the six months ended
December 31, 1999, fairly present the financial position of
Prime Portfolio as of such dates and the results of its
operations for the periods indicated in conformity with
generally accepted accounting principles applied on a
consistent basis.
(e) The Fund has the necessary power and authority to
conduct Prime Portfolio's business as such business is now
being conducted.
(f) The Fund on behalf of Prime Portfolio is not a party to
or obligated under any provision of the Fund's Articles of
Incorporation, as amended and supplemented, or By-laws, or
any contract or any other commitment or obligation, and is
not subject to any order or decree that would be violated by
its execution of or performance under this Plan.
(g) The Fund has elected to treat Prime Portfolio as a RIC
for federal income tax purposes under Part I of Subchapter M
of the Code, and Prime Portfolio has qualified as a RIC for
each taxable year since its inception and will qualify as a
RIC as of the Closing Date.
6. Representations and Warranties by the Fund on behalf of
the Portfolios.
The Fund makes the following representations and warranties
about both Federal Portfolio and Prime Portfolio:
(a) The statement of assets and liabilities to be created
by the Fund for each of the Portfolios as of 1:00 P.M.
Central time on the Closing Date for the purpose of
determining the number of Prime Portfolio Shares to be
issued pursuant to Section 1 of this Plan will accurately
reflect the Net Assets in the case of Federal Portfolio and
the net assets in the case of Prime Portfolio, and
outstanding shares, as of such date, in conformity with
generally accepted accounting principles applied on a
consistent basis.
(b) At the Closing, the Portfolios will have good and
marketable title to all of the securities and other assets
shown on the statement of assets and liabilities referred to
in "(a)" above, free and clear of all liens or encumbrances
of any nature whatsoever, except such imperfections of title
or encumbrances as do not materially detract from the value
or use of the assets subject thereto, or materially affect
title thereto.
(c) Except as disclosed in the Fund's current effective
prospectus relating to Federal Portfolio and Prime
Portfolio, there is no material suit, judicial action, or
legal or administrative proceeding pending or threatened
against either of the Portfolios.
(d) There are no known actual or proposed deficiency
assessments with respect to any taxes payable by either of
the Portfolios.
(e) The execution, delivery, and performance of this Plan
have been duly authorized by all necessary action of the
Fund's Board of Directors, and this Plan constitutes a valid
and binding obligation enforceable in accordance with its
terms.
(f) It anticipates that consummation of this Plan will not
cause either of the Portfolios to fail to conform to the
requirements of Subchapter M of the Code for Federal income
taxation as a RIC at the end of each fiscal year.
(g) The Fund has the necessary power and authority to
conduct the business of the Portfolios, as such business is
now being conducted.
7. Intentions of the Fund on behalf of the Portfolios.
(a) The Fund intends to operate each Portfolio's respective
business as presently conducted between the date hereof and
the Closing.
(b) The Fund intends that the Federal Portfolio will not
acquire the Prime Portfolio Shares for the purpose of making
distributions thereof to anyone other than Federal
Portfolio's shareholders.
(c) The Fund on behalf of Federal Portfolio intends, if
this Plan is consummated, to liquidate and dissolve Federal
Portfolio.
(d) The Fund intends that, by the Closing, all of the
Portfolios' Federal and other tax returns and reports
required by law to be filed on or before such date shall
have been filed, and all Federal and other taxes shown as
due on said returns shall have either been paid or adequate
liability reserves shall have been provided for the payment
of such taxes.
(e) At the Closing, the Fund on behalf of Federal Portfolio
intends to have available a copy of the shareholder ledger
accounts, certified by the Fund's transfer agent or its
President to the best of its or his or her knowledge and
belief, for all the shareholders of record of Federal
Portfolio Shares as of 1:00 P.M. Central time on the Closing
Date who are to become shareholders of Prime Portfolio as a
result of the transfer of assets that is the subject of this
Plan.
(f) The Fund intends to mail to each shareholder of record
of Federal Portfolio entitled to vote at the meeting of its
shareholders at which action on this Plan is to be
considered, in sufficient time to comply with requirements
as to notice thereof, a Combined Proxy Statement and
Prospectus that complies in all material respects with the
applicable provisions of Section 14(a) of the Securities
Exchange Act of 1934, as amended, and Section 20(a) of the
1940 Act, and the rules and regulations, respectively,
thereunder.
(g) The Fund intends to file with the U.S. Securities and
Exchange Commission a registration statement on Form N-14
under the 1933 Act relating to the Prime Portfolio Shares
issuable hereunder ("Registration Statement"), and will use
its best efforts to provide that the Registration Statement
becomes effective as promptly as practicable. At the time it
becomes effective, the Registration Statement will: (i)
comply in all material respects with the applicable
provisions of the 1933 Act, and the rules and regulations
promulgated thereunder; and (ii) not contain any untrue
statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading. At the time the
Registration Statement becomes effective, at the time of
Federal Portfolio's shareholders' meeting, and at the
Closing Date, the prospectus and statement of additional
information included in the Registration Statement will not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading.
8. Conditions Precedent to be Fulfilled by Fund on behalf of
the Portfolios.
The consummation of the Plan shall be subject to the
following conditions:
(a) That: (i) all the representations and warranties
contained herein shall be true and correct as of the Closing
with the same effect as though made as of and at such date;
(ii) performance of all obligations required by this Plan to
be performed by the Fund on behalf of the Portfolios shall
occur prior to the Closing; and (iii) the Fund shall execute
a certificate signed by the President and by the Secretary
or equivalent officer to the foregoing effect.
(b) That this Plan shall have been adopted and approved by
the appropriate action of the Board of Directors of the Fund
on behalf of each of the Portfolios.
(c) That the U.S. Securities and Exchange Commission shall
not have issued an unfavorable management report under
Section 25(b) of the 1940 Act or instituted or threatened to
institute any proceeding seeking to enjoin consummation of
the Plan under Section 25(c) of the 1940 Act. And, further,
no other legal, administrative or other proceeding shall
have been instituted or threatened that would materially
affect the financial condition of either Portfolio or would
prohibit the transactions contemplated hereby.
(d) That the Plan contemplated hereby shall have been
adopted and approved by the appropriate action of the
shareholders of Federal Portfolio at an annual or special
meeting or any adjournment thereof.
(e) That a distribution or distributions shall have been
declared for both Portfolios, prior to the Closing Date
that, together with all previous distributions, shall have
the effect of distributing to shareholders of each party (i)
all net investment income and all net realized capital
gains, if any, for the period from the close of its last
fiscal year to 1:00 P.M. Central time on the Closing Date;
and (ii) any undistributed net investment income and net
realized capital gains from any period to the extent not
otherwise declared for distribution.
(f) That there shall be delivered to the Fund on behalf of
Federal Portfolio an opinion from Messrs. Stradley, Ronon,
Stevens & Young, LLP, counsel to the Fund, to the effect
that, provided the acquisition contemplated hereby is
carried out in accordance with this Plan and based upon
certificates of the officers of the Fund with regard to
matters of fact:
(1) The acquisition by Prime Portfolio of substantially all
the assets of Federal Portfolio as provided for herein in
exchange for Prime Portfolio Shares will qualify as a
reorganization within the meaning of Section 368(a)(1)(C) of
the Code, and Federal Portfolio and Prime Portfolio will
each be a party to the reorganization within the meaning of
Section 368(b) of the Code;
(2) No gain or loss will be recognized by Federal Portfolio
upon the transfer of substantially all of its assets to
Prime Portfolio in exchange solely for voting shares of
Prime Portfolio (Sections 361(a) and 357(a)). No opinion,
however, will be expressed as to whether any accrued market
discount will be required to be recognized as ordinary
income pursuant to Section 1276 of the Code;
(3) No gain or loss will be recognized by Prime Portfolio
upon the receipt of substantially all of the assets of
Federal Portfolio in exchange solely for voting shares of
Prime Portfolio (Section 1032(a);
(4) The basis of the assets of Federal Portfolio received
by Prime Portfolio will be the same as the basis of such
assets to Federal Portfolio immediately prior to the
exchange (Section 362(b));
(5) The holding period of the assets of Federal Portfolio
received by Prime Portfolio will include the period during
which such assets were held by Federal Portfolio (Section
1223(2));
(6) No gain or loss will be recognized by the shareholders
of Federal Portfolio upon the exchange of their shares in
Federal Portfolio for voting shares of Prime Portfolio
(Section 354(a));
(7) The basis of the Prime Portfolio Shares received by
Federal Portfolio's shareholders shall be the same as the
basis of the Federal Portfolio Shares exchanged therefor
(Section 358(a)(1));
(8) The holding period of Prime Portfolio Shares received
by Federal Portfolio's shareholders (including fractional
shares to which they may be entitled) will include the
holding period of Federal Portfolio's Shares surrendered in
exchange therefor, provided that Federal Portfolio's Shares
were held as a capital asset on the date of the exchange
(Section 1223(1)); and
(9) Prime Portfolio will succeed to and take into account
as of the date of the proposed transfer (as defined in
Section 1.381(b)-1(b) of the Income Tax Regulations) the
items of Federal Portfolio described in Section 381(c) of
the Code (as defined in Section 1.381(b)-1(b) of the Income
Tax Regulations), subject to the conditions and limitations
specified in Sections 381(b) and (c), 382, 383 and 384 of
the Code and the Income Tax Regulations thereunder.
(g) That there shall be delivered to the Fund on behalf of
the Portfolios an opinion in form and substance satisfactory
to it from Messrs. Stradley Ronon Stevens & Young, LLP,
counsel to the Fund, to the effect that, subject in all
respects to the effects of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other
laws now or hereafter affecting generally the enforcement of
creditors' rights:
(1) Federal Portfolio and Prime Portfolio are series of the
Fund, which was organized as a corporation organized under
the laws of the State of Maryland on October 19, 1979 and is
validly existing and in good standing under the laws of that
State;
(2) The Fund is authorized to issue 1,000,000,000 shares of
Federal Portfolio and 1,000,000,000 shares of Prime
Portfolio, par value $0.01 each. Assuming that the initial
shares were issued in accordance with the 1940 Act and the
Fund's Articles of Incorporation, as amended and
supplemented, and By-laws of the Fund, and that all other
outstanding shares of the Portfolios were sold, issued and
paid for in accordance with the terms of the Portfolios'
prospectus in effect at the time of such sales, each such
outstanding share is fully paid, non-assessable, fully
transferable and has full voting rights;
(3) Each Portfolio is a diversified series of the Fund,
which is an open-end, investment company of the management
type registered as such under the 1940 Act;
(4) Except as disclosed in the Portfolios' currently
effective prospectus, such counsel does not know of any
material suit, action, or legal or administrative proceeding
pending or threatened against either Portfolio, the
unfavorable outcome of which would materially and adversely
affect either Portfolio;
(5) Prime Portfolio Shares to be issued pursuant to the
terms of this Plan have been duly authorized and, when
issued and delivered as provided in this Plan, will have
been validly issued and fully paid and will be non-
assessable by the Fund, on behalf of Prime Portfolio;
(6) All actions required to be taken by the Fund and/or
Portfolios to authorize and effect the Plan contemplated
hereby have been duly authorized by all necessary action on
the part of the Fund and the Portfolios; and
(7) Neither the execution, delivery nor performance of this
Plan by the Fund violates any provision of the Fund's
Articles of Incorporation, as amended and supplemented, or
By-laws, or the provisions of any agreement or other
instrument known to such counsel to which the Fund is a
party or by which the Portfolios are otherwise bound; this
Plan is the legal, valid and binding obligation of the Fund
and each Portfolio and is enforceable against the Fund
and/or each Portfolio in accordance with its terms.
(8) The Fund's registration statement of which the
prospectus dated October 31, 1999, as supplemented June 8,
2000, relating to Prime Portfolio is a part (the
"Prospectus") is, at the time of the signing of this Plan,
effective under the 1933 Act, and, to the best knowledge of
such counsel, no stop order suspending the effectiveness of
such registration statement has been issued, and no
proceedings for such purpose have been instituted or are
pending before or threatened by the U.S. Securities and
Exchange Commission under the 1933 Act, and nothing has come
to counsel's attention that causes it to believe that, at
the time the Prospectus became effective, or at the time of
the signing of this Plan, or at the Closing, such Prospectus
(except for the financial statements and other financial and
statistical data included therein, as to which counsel need
not express an opinion), contained any untrue statement of a
material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading; and such counsel knows of no legal
or government proceedings required to be described in the
Prospectus, or of any contract or document of a character
required to be described in the Prospectus that is not
described as required.
In giving the opinions set forth above, counsel may state
that it is relying on certificates of the officers of the
Fund with regard to matters of fact, and certain
certifications and written statements of governmental
officials with respect to the good standing of the Fund.
(h) That the Fund's Registration Statement with respect to
the Prime Portfolio Shares to be delivered to the Federal
Portfolio's shareholders in accordance with this Plan shall
have become effective, and no stop order suspending the
effectiveness of the Registration Statement or any amendment
or supplement thereto, shall have been issued prior to the
Closing Date or shall be in effect at Closing, and no
proceedings for the issuance of such an order shall be
pending or threatened on that date.
(i) That the Prime Portfolio Shares to be delivered
hereunder shall be eligible for sale by Prime Portfolio with
each state commission or agency with which such eligibility
is required in order to permit the Prime Portfolio Shares
lawfully to be delivered to each Federal Portfolio
shareholder.
(j) That, at the Closing, there shall be transferred to
Prime Portfolio aggregate Net Assets of Federal Portfolio
comprising at least 90% in fair market value of the total
net assets and 70% of the fair market value of the total
gross assets recorded on the books of Federal Portfolio on
the Closing Date.
9. Expenses.
(a) The Fund represents and warrants that there are no
broker or finders' fees payable by it in connection with the
transactions provided for herein.
(b) The expenses of entering into and carrying out the
provisions of this Plan shall be borne by the manager.
10. Termination; Postponement; Waiver; Order.
(a) Anything contained in this Plan to the contrary
notwithstanding, this Plan may be terminated and abandoned
at any time (whether before or after approval thereof by the
shareholders of Federal Portfolio) prior to the Closing or
the Closing may be postponed by the Fund on behalf of either
Portfolio by resolution of the Board of Directors, if
circumstances develop that, in the opinion of the Board,
make proceeding with the Plan inadvisable.
(b) If the transactions contemplated by this Plan have not
been consummated by December 31, 2000, the Plan shall
automatically terminate on that date, unless a later date is
agreed to by the Fund on behalf of Prime Portfolio and
Federal Portfolio.
(c) In the event of termination of this Plan pursuant to the
provisions hereof, the same shall become void and have no
further effect, and neither the Fund, Federal Portfolio nor
Prime Portfolio, nor the directors, officers, agents or
shareholders shall have any liability in respect of this
Plan.
(d) At any time prior to the Closing, any of the terms or
conditions of this Plan may be waived by the party who is
entitled to the benefit thereof by action taken by the
Fund's Board of Directors if, in the judgment of such Board
of Directors, such action or waiver will not have a material
adverse affect on the benefits intended under this Plan to
its shareholders, on behalf of whom such action is taken.
(e) The respective representations and warranties contained
in Sections 4 to 6 hereof shall expire with and be
terminated by the Plan of Reorganization, and neither the
Fund nor any of its officers, directors, agents or
shareholders nor the Portfolios nor any of their
shareholders shall have any liability with respect to such
representations or warranties after the Closing. This
provision shall not protect any officer, director, agent or
shareholder of either of the Portfolios or the Fund against
any liability to the entity for which that officer,
director, agent or shareholder so acts or to any of the
Funds' shareholders to which that officer, director, agent
or shareholder would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties in the conduct of such
office.
(f) If any order or orders of the U.S. Securities and
Exchange Commission with respect to this Plan shall be
issued prior to the Closing and shall impose any terms or
conditions that are determined by action of the Board of
Directors of the Fund on behalf of the Federal Portfolio or
Prime Portfolio to be acceptable, such terms and conditions
shall be binding as if a part of this Plan without further
vote or approval of the shareholders of Federal Portfolio,
unless such terms and conditions shall result in a change in
the method of computing the number of Prime Portfolio Shares
to be issued to Federal Portfolio in which event, unless
such terms and conditions shall have been included in the
proxy solicitation material furnished to the shareholders of
Federal Portfolio prior to the meeting at which the
transactions contemplated by this Plan shall have been
approved, this Plan shall not be consummated and shall
terminate unless the Fund on behalf of Federal Portfolio
shall promptly call a special meeting of shareholders at
which such conditions so imposed shall be submitted for
approval.
11. Entire Plan and Amendments.
This Plan embodies the entire plan of the Fund on behalf of
the Portfolios and there are no agreements, understandings,
restrictions, or warranties between the parties other than
those set forth herein or herein provided for. This Plan may
be amended only by the Fund on behalf of the Portfolio in
writing. Neither this Plan nor any interest herein may be
assigned without the prior written consent of the Fund on
behalf of the Portfolio.
12. Notices.
Any notice, report, or demand required or permitted by any
provision of this Plan shall be in writing and shall be
deemed to have been given if delivered or mailed, first
class postage prepaid, addressed to the Fund at 700 Karnes
Blvd., Kansas City, MO, 64108, Attention: Secretary.
13. Governing Law.
This Plan shall be governed by and carried out in accordance
with the laws of the State of Maryland.
IN WITNESS WHEREOF, D.L. Babson Money Market Fund, Inc. on
behalf of Prime Portfolio and Federal Portfolio, has
executed this Plan by its duly authorized officer, all as of
the date and year first-above written.
D. L. Babson Money Market Fund, Inc.
on behalf of
Federal Portfolio
Attest:
By:
Assistant Secretary
D. L. Babson Money Market Fund, Inc.
on behalf of
Prime Portfolio
Attest:
By:
Assistant Secretary
EXHIBIT B
Babson Funds Combined Prospectus
Dated October 31, 1999,
as Supplemented June 8, 2000
The Babson Funds Combined Prospectus dated October 31, 1999,
as supplemented June 8, 2000, is part of this
Prospectus/Proxy Statement and will be included in the proxy
solicitation mailing to shareholders. For purposes of this
EDGAR filing, the above-referenced prospectus (as
supplemented) is incorporated herein by reference to the
electronic filings made on June 8, 2000 (the supplement) and
November 2, 1999 (the prospectus).
<PAGE>
EXHIBIT C
BABSON FUNDS COMBINED
ANNUAL REPORT TO SHAREHOLDERS
Dated June 30, 2000
The Babson Funds Combined Annual Report to Shareholders
dated June 30, 1999 is part of this Prospectus/Proxy
Statement and will be included in the proxy solicitation
mailing to shareholders. For purposes of this EDGAR filing,
the above-referenced shareholder report is incorporated
herein by reference to the electronic filing made on
September 3, 1999.
STATEMENT OF ADDITIONAL INFORMATION
FOR
D. L. BABSON money market FUND, INC.
Dated July 20, 2000
Acquisition of the Assets of
FEDERAL PORTFOLIO,
a series of D. L. Babson Money Market Fund, Inc.
By and in exchange for shares of the
PRIME PORTFOLIO,
also a series of D. L. Babson Money Market Fund, Inc.
This Statement of Additional Information (SAI) relates
specifically to the proposed delivery of substantially all
of the assets of Federal Portfolio for shares of Prime
Portfolio.
This SAI consists of this Cover Page and the following
documents. Each of these documents is enclosed with and is
legally considered to be a part of this SAI:
1. Babson Funds Combined Statement of Additional
Information dated October 31, 1999.
2. Babson Funds Combined Semiannual Report to Shareholders
for the six months ended December 31, 1999.
3. Projected (Pro Forma) after Transaction Financial
Statements.
This SAI is not a Prospectus; you should read this SAI in
conjunction with the Prospectus/Proxy Statement dated July
17, 2000, relating to the above-referenced transaction. You
can request a copy of the Prospectus/Proxy Statement by
calling 1-800-4BABSON (1-800-422-2766)] or by writing to the
Babson Funds at P.O. Box 219757, Kansas City, MO 64121-9757.
Attachments to SAI (page 1 of 3)
The Babson Funds Combined Statement of Additional
Information dated October 31, 1999, is part of this SAI and
will be provided to all shareholders requesting this SAI.
For purposes of this EDGAR filing, the above-referenced SAI
is incorporated herein by reference to the electronic filing
made on November 2, 1999.
Attachments to SAI (page 2 of 3)
The Babson Funds Combined Semiannual Report to Shareholders
dated December 31, 1999, is part of this SAI and will be
provided to all shareholders requesting this SAI. For
purposes of this EDGAR filing, the above-referenced
Shareholder Report is incorporated herein by reference to
the electronic filing made on February 28, 2000.
Attachments to SAI (page 3 of 3)
The following are projected (pro forma) financial statements
that were prepared to indicate the anticipated financial
information for Portfolio L following the completion of the
reorganization. They consist of a Pro Forma Combining
Statement of Assets and Liabilities; a Pro Forma Combining
Statement of Operations; notes relating to the combining
Statements; and a Combined Pro Forma Statement of
Investments.
<PAGE>
COMBINED PRO FORMA STATEMENT OF INVESTMENTS
BABSON MONEY MARKET FUND - PRIME
BABSON MONEY MARKET FUND - FEDERAL
DECEMBER 31, 1999 (UNAUDITED)
BABSON MONEY MARKET FUND BABSON MONEY MARKET FUND
PRIME PORTFOLIO FEDERAL PORTFOLIOPRO FORMA COMBINED
SHARES/ SHARES/ SHARES/
COUNTRY WARRANTS VALUE WARRANTS VALUE WARRANTS VALUE
DESCRIPTION
SHORT-TERM CORPORATE NOTES - 93.44%
AIG Funding, Incorporated,5.68%, due May 5, 2000
United States$1,500,000$1,470,417 $1,500,000$1,470,417
AT&T Corporation,5.90%, due January 25, 2000
United States 2,000,000 1,992,133 2,000,000 1,992,133
Associates Corporation,5.90%, due January 27, 2000
United States 2,000,000 1,991,478 2,000,000 1,991,478
Bell Atlantic Financial,5.88%, due January 24, 2000
United States 1,900,000 1,892,862 1,900,000 1,892,862
Caterpillar Financial Services,5.72%, due January 28, 2000
United States 2,000,000 1,991,420 2,000,000 1,991,420
Coca-Cola Company,5.75%, due March 7, 2000
United States 2,000,000 1,978,917 2,000,000 1,978,917
duPont (E.I.) deNemours & Company,5.85%, due January 18, 2000
United States 1,000,000 997,238 1,000,000 997,238
duPont (E.I.) deNemours & Company,5.45%, due March 2, 2000
United States 1,000,000 990,765 1,000,000 990,765
Emerson Electric Company,5.95%, due January 31, 2000
United States 1,000,000 995,042 1,000,000 995,042
Ford Motor Credit Company,6.50%, due January 4, 2000
United States 1,500,000 1,499,188 1,500,000 1,499,188
General Mills, Incorporated,5.80%, due February 23, 2000
United States 1,900,000 1,883,776 1,900,000 1,883,776
General Motors Acceptance Corporation,5.70%, due March 6, 2000
United States 2,000,000 1,979,417 2,000,000 1,979,417
Grainger (W.W.), Incorporated,5.82%, due February 17, 2000
United States 1,900,000 1,885,563 1,900,000 1,885,563
Heinz (H.J.) Company,5.85%, due January 31, 2000
United States 2,000,000 1,990,250 2,000,000 1,990,250
IBM Credit Corporation,5.52%, due February 4, 2000
United States 1,800,000 1,790,616 1,800,000 1,790,616
Lucent Technologies, Incorporated,5.77%, due February 2, 2000
United States 1,900,000 1,890,255 1,900,000 1,890,255
McGraw-Hill Companies, Incorporated,6.20%, due January 21, 2000
United States 2,000,000 1,993,111 2,000,000 1,993,111
Merck & Company, Incorporated,5.30%, due February 4, 2000
United States 1,800,000 1,790,990 1,800,000 1,790,990
Motorola, Incorporated,6.55%, due January 28, 2000
United States 1,100,000 1,094,596 1,100,000 1,094,596
Nicor, Incorporated,5.89%, due January 18, 2000
United States 2,000,000 1,994,437 2,000,000 1,994,437
Proctor & Gamble Company,5.85%, due February 4, 2000
United States 2,000,000 1,988,950 2,000,000 1,988,950
Sonoco Products Company,5.75%, due March 14, 2000
United States 1,000,000 988,340 1,000,000 988,340
TOTAL short-term
corporate notes 37,300,00037,069,761 37,300,00037,069,761
GOVERNMENT SPONSORED ENTERPRISES - 87.7%
Federal Home Loan MortgageCorporation Discount Notes,5.20%, due March 31,
2000
United States 1,000,000 987,000 1,000,000 987,000
Federal Home Loan MortgageCorporation Discount Notes,5.22%, due March 31,
2000
United States 1,000,000 986,950 1,000,000 986,950
Federal Farm Credit Banks Discount Notes,5.50%, due March 27, 2000
United States 1,000,000 986,861 1,000,000 986,861
Federal Home Loan MortgageCorporation Discount Notes
5.75%, due January 24, 2000
United States 1,500,000 1,494,490 1,500,000 1,494,490
5.51%, due March 8, 2000
United States 500,000 494,873 500,000 494,873
5.49%, due February 2, 2000
United States 1,000,000 995,120 1,000,000 995,120
5.73%, due March 30, 2000
United States 1,000,000 985,834 1,000,000 985,834
Federal National Mortgage Association
Discount Notes
5.53%, due February 2, 2000
United States 2,250,000 2,238,940 2,250,000 2,238,940
5.57%, due March 1, 2000
United States 750,000 743,037 750,000 743,037
TOTAL government sponsored enterprises
2,000,000 1,973,950 8,000,000 7,939,15510,000,000 9,913,105
REPURCHASE AGREEMENT - 19.55%
Morgan Guaranty Trust Company,2.25%, due January 3, 2000
(Collateralized by U.S. Treasury Notes,
6.75%, due August 15, 2026 with a value of $730,317)
United States 716,000 716,000 716,000 716,000
Morgan Guaranty Trust Company,2.25%, due January 3, 2000
(Collateralized by U.S. Treasury Notes,
6.75%, due August 15, 2026 witha value of $1,738,076)
1,704,0001,704,0001,704,0001,704,000
TOTAL INVESTMENTS - 100.27% 39,759,711 9,643,155 49,402,866
Other Assets Less
Liabilities - (0.27%) (86,889) (44,324.00) (131,213)
TOTAL NET ASSETS - 100.00% $39,672,822 $9,598,831
$49,271,653
PRO FORMA COMBINING STATEMENTS OF ASSETS AND LIABILITIES
BABSON MONEY MARKET FUND - PRIME
BABSON MONEY MARKET FUND - FEDERAL
DECEMBER 31, 1999 (UNAUDITED)
BABSON
BABSON BABSON MONEY MARKET FUND
MONEY MARKETMONEY MARKET PRIME PORTFOLIO
FUND - PRIMEFUND - FEDERAL PRO FORMAPRO FORMA
PORTFOLIO PORTFOLIO ADJUSTMENTS COMBINED
ASSETS:
Investments in securities:
Cost $7,939,155 $39,043,711 $ - $46,982,866
Value 7,939,155 39,043,711 - 46,982,866
Repurchase agreements,
at value and cost 1,704,000 716,000 - 2,420,000
Cash - 88,261 - 88,261
Receivables:
Dividends and interest 107 44 - 151
Other Assets 11,984 23,372 35,356
Total assets 9,655,246 39,871,388 - 49,526,634
LIABILITIES:
Payables for:
Cash overdraft 11,470 11,470
Management fees 7,068 29,927 - 36,995
Dividends 37,876 169,162 - 207,038
Total liabilities 56,415 199,089 - 255,504
Net assets $9,598,831 $39,672,299 $ - $49,271,130
NET ASSETS CONSIST OF:
Paid in capital 9,598,786 39,679,667 - 49,278,453
Undistributed net investment
income (loss) 45 - - 45
Accumulated undistributed net
realized gain (loss)
on sale of investments 0 (7,368) - (7,368)
Net unrealized appreciation
(depreciation) in value
of investments 0 0 - 0
Total net assets 9,598,831 39,672,299 - 49,271,130
Capital shares outstanding 9,597,567 39,677,241 9,597,567(A) 49,274,808
Net assets $9,598,831 $39,672,299 $ 49,271,130
Net asset value per share $ 1.00 $ 1.00 $ 1.00
(A) Reflects new shares issued, net of retired shares of the Federal
Portfolio
PRO FORMA COMBINING STATEMENT OF OPERATIONS
BABSON MONEY MARKET FUND - PRIME
BABSON MONEY MARKET FUND - FEDERAL
DECEMBER 31, 1999 (UNAUDITED)
BABSON
BABSON BABSON MONEY MARKET FUND
MONEY MARKETMONEY MARKET PRIME PORTFOLIO
FUND - PRIMEFUND - FEDERAL PRO FORMAPRO FORMA
PORTFOLIO PORTFOLIO ADJUSTMENTS COMBINED
INVESTMENT INCOME:
Interest $304,661 $1,097,831 $- $1,402,492
Total investment income 304,661 1,097,831 - 1,402,492
Expenses:
Management fees 49,623 173,050 - 222,673
Registration and filing fees 1,408 4,692 6,100
Total expenses 51,031 177,742 - 228,773
Net investment income (loss) 253,630 920,089 - 1,173,719
Realized and unrealized gain (loss):
Net realized gain (loss) during
the period on investments - - - -
Net change in unrealized
appreciation (depreciation)
during the period on investments - - - -
Net gain (loss) - - - -
Net increase (decrease) in net
assets resulting from operations $253,630 $920,089 $- $1,173,719
D. L. BABSON MONEY MARKET FUND, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1: BASIS OF COMBINATION
On April 27, 2000, the Babson Board of Directors approved an
Agreement and Plan of Reorganization (the "Plan") whereby,
subject to approval by the shareholders of Babson Money
Market Fund - Federal, Babson Money Market Fund - Prime will
acquire all the assets of the Babson Money Market Fund -
Federal subject to the liabilities of such a fund, in
exchange for a number of shares equal to the pro rata net
assets of shares of the Babson Money Market Fund - Prime
(the "Merger").
The Merger will be accounted for as a tax-free merger of
investment companies. The pro forma combined financial
statements are presented for the information of the reader
and may not necessarily be representative of what the actual
combined financial statements would have been had the
reorganization occurred at December 31, 1999. The unaudited
pro forma portfolio of investments and statement of assets
and liabilities reflect the financial position of the Babson
Money Market Fund - Federal and the Babson Money Market Fund
- Prime at December 31, 1999. The unaudited pro forma
statement of operations reflects the results of operations
of the Babson Money Market Fund - Federal and the Babson
Money Market Fund - Prime for the year ended December 31,
1999. These statements have been derived from the Funds'
respective books and records utilized in calculating daily
net asset value at the dates indicated above for Babson
Money Market Fund - Federal and Babson Money Market Fund -
Prime under generally accepted accounting principles. The
historical cost of investment securities will be carried
forward to the surviving entity and results of operations of
Babson Money Market Fund - Prime for pre-combination periods
will not be restated.
The pro forma portfolio of investments and statements of
assets and liabilities and operations should be read in
conjunction with the historical financial statements of the
Funds incorporated by reference in the Statements of
Additional Information.
NOTE 2: CAPITAL SHARES
The pro forma net asset value per share assumes additional
shares of common stock issued in connection with the
proposed acquisition of Babson Money Market Fund - Federal
by Babson Money Market Fund - Prime as of December 31, 1999.
The number of additional shares issued was calculated by
dividing the net asset value of Babson Money Market Fund -
Federal by the net asset value per share of Babson Money
Market Fund - Prime.
NOTE 3: PRO FORMA ADJUSTMENT
The accompanying pro forma financial statements reflect
changes in fund shares as if the merger had taken place on
December 31, 1999.
NOTE 4: MERGER COSTS AND DISTRIBUTIONS
Merger costs are estimated at approximately $10,000 and are
not included in the pro forma statement of operations since
these costs are nonrecurring. These costs represent the
estimated expense of all funds carrying out their
obligations under the Plan and consist of management's
estimate of legal fees, accounting fees, printing costs and
mailing charges related to the proposed merger.
It is the policy of the Funds, to comply with the
requirements of the Internal Revenue Code that are
applicable to regulated investment companies and to
distribute substantially all of their net investment income
and any net realized gains to their shareholders. Therefore,
a federal income tax or excise tax provision is not
required. In addition, by distributing during each calendar
year substantially all of its net investment income and net
realized capital gains, each Fund intends not to be subject
to any federal excise tax.
The Board of Directors intends to offset any net capital
gains with any available capital loss carryforward until
each carryforward has been fully utilized or expires. In
addition, no capital gain distribution shall be made until
the capital loss carryforward has been fully utilized or
expires.
Babson Money Market Fund - Federal and Babson Money Market
Fund - Prime will distribute substantially all their
investment income and any realized gains prior to the merger
date.
<PAGE>
D. L. BABSON MONEY MARKET FUND, INC.
FILE NOS. 2-65761 & 811-2963
FORM N-14
PART C
OTHER INFORMATION
Item 15. Indemnification
Under the terms of the Maryland General Corporation Law and
the Registrant's By-Laws, the Registrant shall indemnify any
person who was or is a director, officer, or employee of the
Registrant to the maximum extent permitted by the Maryland
General Corporation Law; provided however, that any such
indemnification (unless ordered by a court) shall be made by
the Registrant only as authorized in the specific case upon
a determination that indemnification of such person is
proper in the circumstances. Such determination shall be
made:
(i) by the Board of Directors by a majority vote of a quorum
which consists of the directors who are neither "interested
persons" of the Registrant as defined in Section 2(a)(19) of
the 1940 Act, nor parties to the proceedings, or
(ii) if the required quorum is not obtainable or if a quorum
of such directors so directs, by independent legal counsel
in a written opinion.
No indemnification will be provided by the Registrant to any
director or officer of the Registrant for any liability to
the Registrant or shareholders to which he would otherwise
be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of duty.
Item 16. Exhibits
The following exhibits are incorporated by reference to the
previously filed document indicated below, except Exhibits
12(A), 14(A) and 16(A):
(1) Copies of the charter of the D. L. Babson Money Market
Fund, Inc. as now in effect;
(A) Articles of Incorporation of the Registrant as filed in
Maryland on October 19, 1979 and previously filed with Post-
Effective Amendment No. 26 to Registration Statement filed
on Form N-1A on August 30, 1999.
(B) Articles of Amendment of the Registrant as filed in
Maryland on April 15, 1982 and previously filed with Post-
Effective Amendment No. 26 to Registration Statement filed
on Form N-1A on August 30, 1999.
(C) Articles Supplementary of the Registrant as filed in
Maryland on April 22, 1982 and previously filed with Post-
Effective Amendment No. 26 to Registration Statement filed
on Form N-1A on August 30, 1999.
(2) Copies of the existing by-laws or corresponding
instruments of the Registrant;
(A) Amended and Restated By-laws as of October 28, 1999 for
the Registrant Previously filed with Post-Effective
Amendment No. 26 to Registration Statement filed on Form N-
1A on August 30, 1999.
(3) Copies of any voting trust agreement affecting more than
five percent of any class of equity securities of the
Registrant;
Not Applicable
(4) Copies of the agreement of acquisition, reorganization,
merger, liquidation and any amendments to it;
(A) The Plan of Reorganization is included in this
registration statement as Exhibit A to the Prospectus/Proxy
Statement
(5) Copies of all instruments defining the rights of holders
of the securities being registered including, where
applicable, the relevant portion of the articles of
incorporation or by-laws of the Registrant;
Not Applicable
(6) Copies of all investment advisory contracts relating to
the management of the assets of the Registrant;
(A) Investment Management Agreement between Registrant and
Jones & Babson, Inc. dated June 30, 1995, was previously
filed with Post-Effective Amendment No. 26 to Registration
Statement filed on Form N-1A on August 30, 1999.
(B) Investment Counsel Agreement between Jones & Babson,
Inc. and David L. Babson & Co., Inc. dated June 30, 1995,
was previously filed with Post-Effective Amendment No. 26 to
Registration Statement filed on Form N-1A on August 30,
1999.
(7) Copies of each underwriting or distribution contract
between the Registrant and a principal underwriter, and
specimens or copies of all agreements between principal
underwriters and dealers;
(A) Underwriting Contract between D. L. Babson Money Market
Fund, Inc. and Jones & Babson, Inc. dated September 30,
1995, was previously filed with Post-Effective Amendment No.
26 to Registration Statement filed on Form N-1A on August
30, 1999.
(8) Copies of all bonus, profit sharing, pension, or other
similar contracts or arrangements wholly or partly for the
benefit of directors or officers of the Registrant in their
capacity as such. Furnish a reasonably detailed description
of any plan that is not set forth in a formal document;
Not Applicable
(9) Copies of all custodian agreements and depository
contracts under Section 17(f) of the 1940 Act for securities
and similar investments of the Registrant, including the
schedule of remuneration;
(A) Contract between the Registrant and UMB Bank, N.A. dated
May 5, 1997 was previously filed with Post-Effective
Amendment No. 26 to Registration Statement filed on Form N-
1A on August 30, 1999.
(10) Copies of any plan entered into by Registrant pursuant
to Rule 12b-1 under the 1940 Act and any agreements with any
person relating to implementation of the plan, and copies of
any plan entered into by Registrant pursuant to Rule 18f-3
under the 1940 Act, any agreement with any person relating
to implementation of the plan, any amendment to the plan,
and a copy of the portion of the minutes of the meeting of
the Registrant's directors describing any action taken to
revoke the plan;
Not applicable.
(11) An opinion and consent of counsel as to the legality of
the securities being registered, indicating whether they
will, when sold, be legally issued, fully paid and
nonassessable;
(A) Opinion and consent of counsel was previously filed with
Post-Effective Amendment No. 26 to Registration Statement
filed on Form N-1A on August 30, 1999.
(12) An opinion, and consent to their use, of counsel or, in
lieu of an opinion, a copy of the revenue ruling from the
Internal Revenue Service, supporting the tax matters and
consequences to shareholders discussed in the prospectus;
(A) Form of Opinion and Consent of Counsel Supporting Tax
Matters and Consequences to Shareholders is filed herewith
as Exhibit No. EX99.12(A).
(13) Copies of all material contracts of the Registrant not
made in the ordinary course of business which are to be
performed in whole or in part on or after the date of filing
the registration statement;
(A) Transfer Agency Agreement between D. L. Babson Money
Market Fund, Inc. and Jones & Babson, Inc. dated October 31,
1994, was previously filed with Post-Effective Amendment No.
26 to Registration Statement filed on Form N-1A on August
30, 1999.
(14) Copies of any other opinions, appraisals, or rulings,
and consents to their use, relied on in preparing the
registration statement and required by Section 7 of the 1933
Act;
(A) Consent of independent auditors is filed herewith as
Exhibit No. EX99.14(A).
(15) all financial statements omitted pursuant to Items
14(a)(1);
Not Applicable
(16) Manually signed copies of any power of attorney
pursuant to which the name of any person has been signed to
the registration statement; and
(A) Power of Attorney is filed herewith as Exhibit No.
EX99.16(A).
(17) Any additional exhibits which the registrant may wish
to file.
Not Applicable
Item 17 Undertakings
(a) The undersigned Registrant agrees that prior to any
public reoffering of the securities registered through the
use of prospectus which is part of this registration
statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the
Securities Act, the reoffering prospectus will contain the
information called for by the applicable registration form
for reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other items
of the applicable form.
(b) The undersigned Registrant agrees that every prospectus
that is filed under paragraph (1) above will be filed as
part of an amendment to the registration statement and will
not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each post-
effective amendment shall be deemed to be a new
registrations statement for the securities offered therein,
and the offering of the securities at that time shall be
deemed top be the initial bona fide offering of them.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this registration
statement has been signed on behalf of the Registrant, in
the City of Kansas City and the State of Missouri, on the 16
day of June, 2000.
D. L. Babson Money Market Fund, Inc.
(Registrant)
By: /s/ Stephen S. Soden
Stephen S. Soden
President
As required by the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the
capacities and on the dates indicated:
/s/ Stephen S. Soden President, Principal Executive
Officer
and Director
Stephen S. Soden Dated: June 16, 2000
/s/ F. C. Rood* Director
F. C. Rood Dated: June 16, 2000
/s/ William H. Russell* Director
William H. Russell Dated: June 16, 2000
/s/ H. David Rybolt* Director
H. David Rybolt Dated: June 16, 2000
/s/ P. Bradley Adams Treasurer and
Principal Financial
and Accounting Officer
P. Bradley Adams Dated: June 16, 2000
*By:/s/ Stephen S. Soden
Stephen S. Soden
Attorney-in-Fact
(Pursuant to Power of Attorney filed herewith)
<PAGE>
D. L. BABSON MONEY MARKET FUND, INC.
REGISTRATION STATEMENT ON FORM N-14
EXHIBIT INDEX
EXHIBIT 99.(12)(A) Form of Opinion and Consent of Counsel
Supporting Tax Matters and Consequences to Shareholders
EXHIBIT 99.(14)(A) Consent of Independent Auditors, Ernst
and Young LLP
EXHIBIT 99.(16)(A) Power of Attorney
