BABSON ENTERPRISE FUND INC, 485BPOS, 1998-03-20

BABSON ENTERPRISE FUND INC
485BPOS, 1998-03-20

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No. ______ [ ]

Post-Effective Amendment No. 18 File No. 2-85791 [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 19 File No. 811-3823 [X]

BABSON ENTERPRISE FUND, INC.
(Exact Name of Registrant as Specified in Charter)

BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306.
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code (816)_751-5900

Larry D. Armel, President, BABSON ENTERPRISE FUND, INC.
BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306.
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: March 31, 1998

It is proposed that this filing become effective:

X on March 31, 1998, pursuant to paragraph (b) of Rule 485

Registrant has registered an indefinite number or amount of securities
under the Securities Act of 1933 pursuant to Rule 24f-2 of the
Investment Company Act of 1940, and will file its required Rule 24f-2
Notice for the Registrant's fiscal year ended November 30, 1998, by
January 30, 1999.

Please address inquiries and a carbon copy of all
and communications to: communications to:
John G. Dyer, Esq. Mark H. Plafker, Esq.
BMA Tower Stradley, Ronon, Stevens & Young
700 Karnes Blvd. , 2600 One Commerce Square
Kansas City, MO 64108-3306 Philadelphia, PA 19103-7098
Telephone: (816) 751-5900 Telephone: (215) 564-8024

BABSON ENTERPRISE FUND, INC.

CROSS REFERENCE SHEET

Form N-1A Item Number Location in Prospectus

Item 1. Cover Page . . . . . . . . . . . . . Cover Page

Item 2. Synopsis . . . . . . . . . . . . . . Not Applicable

Item 3. Condensed Financial Information . . Per Share Capital and
Income Changes

Item 4. General Description of Registrant. . Investment Objective
and Portfolio
Management Policy

Item 5. Management of the Fund . . . . . . . Officers and Directors;
Management and
Investment Counsel

Item 6. Capital Stock and Other Securities . How to Purchase Shares;
How to Redeem Shares;
How Share Price is
Determined; General
Information and
History; Dividends,
Distributions and
their Taxation

Item 7. Purchase of Securities . . . . . . . Cover Page; How to
being Offered Purchase Shares;
Shareholder Services

Item 8. Redemption or Repurcdhase . . . . . How to Redeem Shares

Item 9. Pending Legal Proceedings . . . . . Not Applicable

BABSON ENTERPRISE FUND, INC.

CROSS REFERENCE SHEET (Continued)

Location in Statement
of Additional
Form N-1A Item Number Information

Item 10. Cover Page . . . . . . . . . . . . . Cover Page

Item 11. Table of Contents . . . . . . . . . Cover Page

Item 12. General Information and History . . Investment Objectives
and Policies;
Management and
Investment Counsel

Item 13. Investment Objectives and Policies . Investment Objectives
and Policies;
Investment Restrictions

Item 14. Management of the Fund . . . . . . . Management and
Investment Counsel

Item 15. Control Persons and Principal . . . Management and
Holders of Securities Investment Counsel;
Officers and Directors

Item 16. Investment Advisory and other . . . Management and
Services Investment Counsel

Item 17. Brokerage Allocation . . . . . . . . Portfolio Transactions

Item 18. Capital Stock and Other Securities . General Information and
History (Prospectus);
Financial Statements

Item 19. Purchase, Redemption and Pricing . . How Share Purchases
of Securities Being Offered are Handled; Redemption
of Shares
Financial Statements

Item 20. Tax Status . . . . . . . . . . . . . Dividends,
Distributions and their
Taxation (Prospectus)

Item 21. Underwriters . . . . . . . . . . . . How the Fund's Shares
are Distributed

Item 22. Calculation of Yield Quotations . . Performance Measures
of Money Market Fund

Item 23. Financial Statements . . . . . . . . Financial Statements

<PAGE>
Babson
Enterprise
Fund

Prospectus
March 31, 1998

A no-load mutual fund invested
in common stocks of smaller,
faster growing companies.

BABSON FUNDS
JONES & BABSON DISTRIBUTORS
A member of the Generali Group

PROSPECTUS
March 31, 1998

BABSON
ENTERPRISE FUND, INC.

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

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

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

INVESTMENT OBJECTIVE

A no-load mutual fund that seeks long-term growth of capital by
investing in a diversified portfolio of common stocks of smaller,
faster-growing companies which at the time of purchase are considered by
the Investment Adviser to be realistically valued in the smaller company
sector of the market. The Fund is intended to be an investment vehicle
for that part of an investor's capital which can appropriately be
exposed to above-average risk in anticipation of greater rewards. There
is no guarantee that the Fund's objective will be achieved. This Fund is
not intended to be a complete investment program. (For a
discussion of risk factors see page 6 of this prospectus.)

PURCHASE INFORMATION
Effective at the close of business on January 31, 1992, the Directors of
the Fund took action to limit the offering of the Fund's shares until
further notice. See page 8.

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

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

ADDITIONAL INFORMATION

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

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

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

BABSON ENTERPRISE FUND, INC.

FUND EXPENSES

Shareholder Transaction Expenses
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales load None
Redemption fee None
Exchange fee None

Annual Fund Operation Expenses
(as a percentage of average net assets)
Management fees 1.07%
12b-1 fees None
Other expenses .01%
Total Fund operating expenses 1.08%

You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
1 Year 3 Year 5 Year 10 Year
$11 $34 $60 $132

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

FINANCIAL HIGHLIGHTS

The following financial highlights for each of the past ten fiscal years
have been derived from audited financial
statements of Babson Enterprise Fund, Inc. Such information for the most
recent five fiscal years should be read in
conjunction with the financial statements of the Fund and the report of
Ernst & Young LLP, independent auditors,
appearing in the November 30, 1997, Annual Report to Shareholders which
is incorporated by reference in this prospectus. The information for
each of the five fiscal years from the period ended November 30, 1988 to
November 30, 1992, is not
covered by the report of Ernst & Young LLP.

<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 18.51 $ 17.35 $ 16.64 $ 17.20 $ 17.04 $ 13.94 $ 10.68 $ 13.90 $ 11.90 $ 10.12
Income from investment
operations:
Net investment income .058 .057 .101 .032 .057 .081 .084 .127 .209 .052
Net gains or losses on securities
(both realized and unrealized) 5.312 3.060 2.342 .569 2.520 3.862 3.611 (2.537) 2.672 3.428
Total from investment
operations 5.370 3.117 2.443 .601 2.577 3.943 3.695 (2.41) 2.881 3.48
Less distributions:
Dividends from net
investment income - (.114) (.038) (.054) (.087) (.079) (.1275) (.120) (.125) (.035)
Distributions from
capital gains (2.660) (1.843) (1.695) (1.107) (2.330) (.764) (.3075) (.690) (.756) (1.665)
Total distributions (2.660) (1.957) (1.733) (1.161) (2.417) (.843) (.435) (.810) (.881) (1.70)
Net asset value, end of year $ 21.22 $ 18.51 $ 17.35 $ 16.64 $ 17.20 $ 17.04 $ 13.94 $ 10.68 $ 13.90 $ 11.90

Total return 33.49% 20.17% 16.42% 3.70% 17.25% 29.85% 35.94% (18.36)% 25.90% 39.27%

Ratios/Supplemental Data
Net assets, end of year (in millions) $ 216 $ 202 $ 202 $ 188 $ 217 $ 178 $ 121 $ 76 $ 87 $ 52
Ratio of expenses to average net assets 1.08% 1.08% 1.09% 1.08% 1.09% 1.11% 1.17% 1.22% 1.24% 1.37%
Ratio of net investment income to
average net assets .30% .35% .67% .22% .33% .57% .66% 1.08% 1.74% .50%
Portfolio turnover rate 22% 24% 13% 15% 17% 28% 15% 10% 15% 41%
*Average commission paid per
equity share traded $ .0449 $ .0419 - - - - - - - -
</TABLE>

*Disclosure required for fiscal years beginning after September 1, 1995.

INVESTMENT OBJECTIVE AND
PORTFOLIO MANAGEMENT POLICY

Babson Enterprise Fund's investment objective is to seek long-term
growth of capital by investing principally in a diversified portfolio of
common stocks of smaller, faster-growing companies whose securities at
the time of purchase are considered by the investment adviser to be
realistically valued in the smaller company sector of the market.

The Fund is a diversified investment company and generally intends to
invest in stocks of smaller companies with market capitalization of $15
million to $300 million at the time of purchase and which are listed on
a national or regional exchange or over-the-counter with prices quoted
daily in the financial press. The Fund's management be-
lieves, however, that there may be times when the shareholders'
interests are best served by investing in preferred stocks, bonds or
other defensive issues. Normally, how-
ever, the Fund will maintain at least 80% of the portfolio in common
stocks. There are no restrictions or guidelines regarding investment of
Fund assets in shares listed on an exchange or traded over-the-counter.

Smaller companies are typically in an early phase of their development.
They are in or nearer the entrepreneurial stage than the
institutionalized, professional management status of larger companies.
Generally, smaller companies offer the possibility of more rapid sales
and profit expansion - if they are successful - than larger, older and
more mature businesses. At the same time, smaller, less-seasoned firms
are generally subject to greater business risk. (See "Risk Factors.")

The Fund's investment objective and policy as described in this section
will not be changed without approval of a majority of the Fund's
outstanding shares.

The Fund may also invest in issues of the United States Treasury or a
United States government agency subject to repurchase agreements. The
use of repurchase agreements by the Fund involves certain risks. For a
discussion of these
risks, see "Risk Factors Applicable to Repurchase Agree-
ments."

There is no assurance that the Fund's objective of long-term growth of
capital can be achieved. Portfolio turnover will be no more than is
necessary to meet the Fund's
objectives. Under normal circumstances, it is anticipated that it will
not exceed 100%. For the fiscal years ended November 30, 1997, 1996 and
1995, the total dollar amount of brokerage commissions paid by the Fund
and the annual portfolio turnover rate were as follows:

Portfolio
Fiscal Brokerage Turnover
Year Commissions Rate

1997 $264,561 22%
1996 $306,945 24%
1995 $164,066 13%

REPURCHASE AGREEMENTS

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

The Fund will enter into such repurchase agreements only with United
States banks having assets in excess of
$1 billion which are members of the Federal Deposit Insurance
Corporation, and with certain securities dealers who meet the
qualifications set from time to time by the Board of Directors of the
Fund. The term to maturity 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 the Fund.

RISK FACTORS

The Fund is intended to be an investment vehicle for that part of an
individual or institutional investor's capital which can appropriately
be exposed to above-average risk in anticipation of greater rewards. The
Fund is not designed to offer a complete or balanced investment program
suitable for all investors.

While smaller companies generally have potential for rapid growth, they
often involve higher risk because they may lack the management
experience, financial resources, product diversification and competitive
strengths of larger corporations. While management cannot eliminate this
risk, it will seek to minimize it by diversifying its investments among
a broad list of companies.

In many instances, the securities of smaller companies are traded only
over-the-counter or on a regional securities exchange, and the
frequency and volume of their trading is substantially less than is
typical of larger companies. There-
fore, the securities of smaller companies may be subject to wider price
fluctuations. When making larger sales, the Fund may have to sell
portfolio holdings at discounts from quoted prices or may have to make a
series of small sales over an extended period of time. The Fund does not
intend to invest in any security which, at the time of purchase, is not
readily marketable.

Risk Factors Applicable to
Repurchase Agreements

The use of repurchase agreements involves certain risks. For example, if
the seller of the agreement defaults on its obligation to repurchase the
underlying securities at a time when the value of these securities has
declined, the Fund 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.
Finally, it is possible that the Fund may not be able to perfect its
interest in the underlying securities. While the Fund's management
acknowledges these risks, it is expected that they can be controlled
through stringent security selection criteria and careful monitoring
procedures.

Risk Factors Applicable to
Year 2000 Issue

Like other mutual funds, as well as other financial and business
organizations around the world, the Fund could be adversely affected if
the computer systems used by the Manager, Investment Counsel and other
service providers, in performing their administrative functions do not
properly process and calculate date-related information and data as of
and after January 1, 2000. This is commonly known as the "Year 2000
Issue." The Manager and Investment Counsel are taking steps that they
believe are reasonably designed to address the Year 2000 Issue with
respect to computer systems that they use and to obtain reasonable
assurances that comparable steps are being taken by
the Fund's other major service providers. At this time,
however, there can be no assurance that these steps will be sufficient
to avoid any adverse impact to the Fund.

INVESTMENT RESTRICTIONS

In addition to the investment objective and portfolio management
policies set forth under the caption "Invest-
ment Objective and Portfolio Management Policy," the Fund is subject to
certain other restrictions which may not be changed without approval of
the lesser of: (1) at least 67% of the voting securities present at a
meeting if the holders of more than 50% of the outstanding securities of
the Fund are present or represented by proxy, or (2) more than 50% of
the outstanding voting securities of the Fund. Among these restrictions,
the more important ones are that the Fund will not purchase the
securities of any issuer if more than 5% of the Fund's total assets
would be invested in the securities of such issuer, or the Fund would
hold more than 10% of any class of securities of such issuer; the Fund
will not make any loan (the purchase of a security subject to a
repurchase agreement or the purchase of a portion of an issue of
publicly distributed debt securities is not considered the making of a
loan); and the Fund will not borrow or pledge its credit under normal
circumstances, except up to 10% of its total assets (computed at the
lower
of fair market value or cost) for temporary or emergency purposes, and
not for the purpose of leveraging its investments; and provided further
that any borrowings shall have asset coverage of at least 3 to 1. The
Fund will not buy securities while borrowings are outstanding. The full
text of these restrictions are set forth in the "Statement of Addi-
tional Information."

PERFORMANCE MEASURES

From time to time, the Fund may advertise its performance in various
ways, as summarized below. Further discussion of these matters also
appears in the "Statement of Additional Information." A discussion of
Fund performance is included in the Fund's Annual Report to Shareholders
which is
available from the Fund upon request at no charge.

Total Return

The Fund may advertise "average annual total return" over various
periods of time. Such total return figures show the average percentage
change in value of an investment in the Fund from the beginning date of
the measuring period to the end of the measuring period. These figures
reflect changes in the price of the Fund's shares and assume that any
income dividends and/or capital gains distributions made by the Fund
during the period were reinvested in shares of the Fund. Figures will be
given for recent one-, five- and ten-year periods (if applicable), and
may be given for other periods as well (such as from commencement of the
Fund's operations, or on a year-by-year basis). When consid-
ering "average" total return figures for periods longer than one year,
it is important to note that a Fund's annual total return for any one
year in the period might have been greater or less than the average for
the entire period.

Performance Comparisons

In advertisements or in reports to shareholders, the Fund may compare
its performance to that of other mutual funds with similar investment
objectives and to stock or other
relevant indices. For example, it may compare its performance to
rankings prepared by Lipper Analytical Services, Inc. (Lipper), a widely
recognized independent service which monitors the performance of mutual
funds. The Fund may compare its performance to the Standard & Poor's 500
Stock Index (S&P 500), an index of unmanaged groups of common stocks,
the Dow Jones Industrial Average, a recog-
nized unmanaged index of common stocks of 30 industrial companies listed
on the NYSE, the Russell 2000 Index, a small company stock index, or the
Consumer Price Index. Performance information, rankings, ratings,
published editorial comments and listings as reported in national
financial publications such as Kiplinger's Personal Finance Magazine,
Business Week, Morningstar Mutual Funds, Investor's Business Daily,
Institutional Investor, The Wall Street Journal, Mutual Fund Forecaster,
No-Load Investor, Money, Forbes, Fortune and Barron's may also be used
in comparing performance of the Fund. Performance com-
parisons should not be considered as representative of the future
performance of any Fund. Further information re-
garding the performance of the Fund is contained in the "Statement of
Additional Information."

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

HOW TO PURCHASE SHARES
LIMITED OFFERING

Effective at the close of business on January 31, 1992, the Directors of
the Fund took action to limit the offering of the Fund's shares. These
limitations are as follows:

1. New Accounts: Babson Enterprise Fund, Inc. will not accept
any new accounts, including IRAs and other retirement plans, until
further notice.

2. Additional Investments: All Babson Enterprise Fund
shareholders of record on January 31, 1992, may continue to add to their
accounts.

3. Dividend Reinvestment/Cash Option: Shares may continue to be
purchased through reinvestment of dividends and/or capital gains
distributions.

The Directors reserve the right to modify the
sales restrictions at any time. If you have questions about these
limitations, please call the Fund toll free
1-800-4-BABSON (1-800-422-2766), or in the Kansas City area 751-5900.

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

You do not pay a sales commission when you buy shares of the Fund.
Shares are purchased at the Fund's net asset value (price) per share
next effective after a purchase order and payment have been received by
the Fund. In the case of certain institutions which have made
satisfactory payment arrangements with the Fund, orders may be processed
at the net asset value per share next effective after a purchase order
has been received by the Fund.

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

INITIAL INVESTMENTS

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

Babson Enterprise Fund, Inc.
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306

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

UMB Bank, n.a.
Kansas City, Missouri, ABA #101000695
For Babson Enterprise Fund, Inc./
AC=987032-6205
OBI=(assigned Fund number and name in
which registered)

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

INVESTMENTS SUBSEQUENT TO
INITIAL INVESTMENT

If you were a shareholder of the Fund on January 31, 1992, you may add
to your Fund account at any time in amounts of $100 or more if purchases
are made by mail, $1,000 or more if purchases are made by wire, or $100
or more if purchases are made by telephone purchase (ACH). Automatic
monthly investments must be in amounts of $50 or more.

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

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

TELEPHONE INVESTMENT SERVICE

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

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

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

AUTOMATIC MONTHLY INVESTMENT PLAN

Automatic Monthly Investment Plans will continue without interruption,
as long as the limits on the public offering of the Fund's shares remain
in effect, but no new Automatic Monthly Investment Plans will be
established.

If you were a shareholder on January 31, 1992, you may elect to make
monthly investments in a constant dollar amount from your checking
account ($50 minimum, after an initial investment of $100 or more for
any account). The Fund will draft your checking account on the same day
each month in the amount you authorize in your application, or,
subsequently, on a special authorization form provided upon request.
Availability and continuance of this privilege is subject to acceptance
and approval by the Fund and all participating banks. If the date
selected falls on a day upon which the Fund shares are not priced,
investment will be made on the first date thereafter upon which Fund
shares are priced. The Fund will not be responsible for the consequences
of delays, including delays in the banking or Federal Reserve wire
systems.

HOW TO REDEEM SHARES

The Fund will redeem shares at the price (net asset value per share)
next computed after receipt of a redemption request in "good order."
(See "How Share Price is Determined.") Shares can be redeemed by written
request or if previously authorized by telephone toll free 1-800-4-
BABSON
(1-800-422-2766), or in the Kansas City area 751-5900.

All telephone requests to redeem shares, the proceeds of which are to be
paid by check, made within 30 days of our receipt of an address change
(including requests to redeem that accompany an address change) must be
in writing. The request must be signed by each person in whose name the
shares are owned, and all signatures must be guaranteed.

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

If you completely redeem your account, your account will be considered
closed and you will not subsequently be allowed to purchase additional
shares of Babson Enterprise Fund. Transfers of accounts in the Babson
Enterprise Fund to other Babson Funds will be considered to be
liquidations from the Babson Enterprise Fund.

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

Requests which are subject to special conditions or which specify an
effective date other than as provided herein
cannot be accepted. All redemption requests must be transmitted to the
Fund at BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306. The
Fund will redeem shares at the price (net asset value per share) next
computed after receipt of a redemption request in "good order." (See
"How Share Price is Determined.")

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

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

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

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

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

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

You may transfer the registration of your Babson Enter-
prise Fund account to another individual, however, if the entire balance
is transferred, your account will then be
considered closed; any transferred amount less than the entire account
balance will be considered as a redemption from your account, and you
will be able to continue to add to your account.

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

A written request for redemption, together with an endorsed share
certificate where a certificate has been issued, must be received by the
Fund in order to constitute a valid tender for redemption. For
authorization of redemp-
tions by a corporation, it will also be necessary to have an appropriate
certified copy of resolutions on file with the Fund before a redemption
request will be considered in "good order." In the case of certain
institutions which have made satisfactory redemption arrangements with
the Fund, redemption orders may be processed by facsimile or telephone
transmission at net asset value per share next effective after receipt
by the Fund.

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

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

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

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

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

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

Telephone or telegraph redemption proceeds may be transmitted to your
pre-identified bank account. Requests received prior to 4:00 P.M.
(Eastern Time), normally will be wired the following business day. Once
the funds are transmitted, the time of receipt and the funds'
availability are not under our control. If your request is received
during the day thereafter, proceeds normally will be wired on the second
business day following the day of receipt of your request. Wired funds
are subject to a $10 fee to cover bank wire charges, which is deducted
from redemption proceeds, but this charge may be reduced or waived in
connection with certain accounts. The Fund reserves the right to change
this policy or to refuse a telephone or telegraph redemption request or
require additional documentation to assure a genuine redemption, and, at
its option, may pay such redemption by wire or check and may limit the
frequency or the amount of such request. The Fund reserves the right to
terminate or modify any or all of the services in connection with this
privilege at any time without prior notice. Neither the Fund nor Jones &
Babson, Inc. assumes responsibility for the authenticity of withdrawal
instructions, and there are provisions on the authorization form
limiting their liability in this respect.

SYSTEMATIC REDEMPTION PLAN

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

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

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

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

If your Systematic Redemption Plan depletes your
Babson Enterprise Fund account to the point of a complete liquidation of
the account, you will not be allowed to open a new account in the Fund
as long as the limits on the
offering of the Fund's shares remain in effect.

HOW TO EXCHANGE SHARES
BETWEEN FUNDS

Shareholders may exchange their Fund shares, which have been held in
open account for 15 days or more, and for which good payment has been
received, for identically registered shares of any other Babson Fund or
Buffalo Fund which is legally registered for sale in the state of
residence of the investor, provided that the minimum amount exchanged
has a value of $1,000 and meets the minimum investment requirement of
the Fund into which it is exchanged. Transfers of accounts in the Babson
Enterprise Fund to other Babson or Buffalo Funds will be considered to
be liquidations from the Babson Enterprise Fund, and if you completely
redeem your account, your account will be considered closed and you will
not subsequently be allowed to purchase additional shares of Babson
Enterprise Fund. Any transferred amount less than the entire account
balance will be considered as a redemption from your account, and you
will be able to continue to add to your account.

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

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

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

HOW SHARE PRICE IS DETERMINED

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

The price at which new shares of the Fund will be sold and at which
issued shares presented for redemption will be
liquidated is computed once daily at 4:00 P.M. (Eastern Time), except on
those days when the Fund is not open for business.

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

Each security listed on an Exchange is valued at its last sale price on
that Exchange on the date as of which assets are valued. Where the
security is listed on more than one Exchange, the Fund will use the
price of that Exchange which it generally considers to be the principal
Exchange on which the stock is traded. Lacking sales, the security is
valued at the mean between the last current closing bid and asked
prices. An unlisted security for which over-the-counter market
quotations are readily available is valued at the mean between the last
current bid and asked prices. When market quotations are not readily
available, any security or other asset is valued at its fair value as
determined in good faith by the Board of Directors.

OFFICERS AND DIRECTORS

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

MANAGEMENT AND INVESTMENT COUNSEL

Jones & Babson, Inc. was founded in 1960. It organized the Fund in 1983,
and acts as its manager and principal underwriter. Pursuant to the
current Management Agree-
ment, Jones & Babson, Inc. provides or pays the cost of all management,
supervisory and administrative services re-
quired in the normal operation of the Fund. This includes investment
management and supervision; fees of the custodian, independent auditors
and legal counsel; remuneration of officers, directors and other
personnel; rent; shareholder services, including the maintenance of the
shareholder accounting system and transfer agency; and such other items
as are incidental to corporate administration.

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

As a part of the Management Agreement, Jones & Bab-
son, Inc. employs at its own expense David L. Babson & Co. Inc. as its
investment counsel to assist in the investment advisory function. David
L. Babson & Co. Inc. is an
investment counseling firm founded in 1940. It serves a broad variety of
individual, corporate and other institu-
tional clients by maintaining an extensive research and
analytical staff. It has an experienced investment analysis and research
staff which eliminates the need for Jones & Babson, Inc. and the Fund to
maintain an extensive duplicate staff, with the consequent increase in
the cost of
investment advisory service. The cost of the services of David L. Babson
& Co. Inc. is included in the fee of Jones & Babson, Inc. The Management
Agreement limits the
liability of the manager and its investment counsel, as well as their
officers, directors and personnel, to acts or omissions involving
willful malfeasance, bad faith, gross negligence or reckless disregard
of their duties. Peter C. Schliemann has been the manager of Babson
Enterprise Fund since 1985. He joined David L. Babson & Co. in 1979, and
has 29 years of investment management experience.

As compensation for all the foregoing services, the Fund pays Jones &
Babson, Inc. a fee at the annual rate of 150/100 of one percent (1.50%)
of the first $30 million and 1% of amounts in excess of $30 million of
its average daily net assets.

The annual fee charged by Jones & Babson, Inc. is higher than the fees
of most other investment advisers whose charges cover only investment
advisory services with all remaining operational expenses absorbed
directly by the Fund. Yet, it compares favorably with these other
advisers when all expenses to Fund shareholders are taken into account.
Jones & Babson, Inc. pays David L. Babson & Co. Inc. a fee of 70/100 of
one percent (.70%) of the first $30 million and 50/100 of 1% (.50%) of
amounts in excess of $30 million of average daily total net assets,
which is
computed daily and paid semimonthly. The total
expenses of the Fund for the fiscal year ended November 30, 1997,
amounted to 108/100 of one percent (1.08%) of
the average net assets.

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

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

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

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

GENERAL INFORMATION AND HISTORY

The Fund, incorporated in Maryland on July 5, 1983, has a present
authorized capitalization of 20,000,000 shares of $1 par value common
stock. All shares are of the same class with like rights and privileges.
Each full and fractional share, when issued and outstanding, has: (1)
equal voting rights with respect to matters which affect the Fund, and
(2) equal dividend, distribution and redemption rights to the assets of
the Fund. Shares when issued are fully paid and non-assessable. The Fund
may create other series of stock but will not issue any senior
securities. Shareholders do not have pre-emptive or conversion rights.

Non-cumulative voting - These shares have non-cumulative voting rights,
which means that the holders of more than 50% of the shares voting for
the election of directors can elect 100% of the directors, if they
choose to do so, and in such event, the holders of the remaining less
than 50% of the shares voting will not be able to elect any directors.

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

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

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

DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION

On August 5, 1997, President Clinton signed into law the Taxpayer Relief
Act of 1997 (the "1997 Act"). This new law made significant changes to
the Internal Revenue Code. Because many of these changes are complex,
they are discussed in the "Statement of Additional Information."

Distributions from net investment income and from
capital gains realized on the sale of securities, if any, will be
declared annually on or before December 31. Dividend and capital gains
distributions will be reinvested automatically in additional shares at
the net asset value per share next computed and effective at the close
of business on the day after the record date, unless the shareholder has
elected on the original application, or by written instructions filed
with the Fund, to have them paid in cash.

The Fund has qualified and intends to continue to qualify for taxation
as a "regulated investment company" under the Internal Revenue Code so
that the Fund will not be subject to federal income tax or to any excise
tax to the extent that it distributes its income to its shareholders.
Dividends, either in cash or reinvested in shares, paid by the Fund from
net investment income and short-term capital gains will
be taxable to shareholders as ordinary income, and will generally
qualify in part for the 70% dividends-received deduction for
corporations. The portion of the dividends so qualified depends on the
aggregate taxable qualifying
dividend income received by the Fund from domestic (U.S.) sources and,
under the 1997 Act, compliance with certain holding period requirements.
The Fund will send to shareholders a statement each year advising the
amount of the dividend income which qualifies for such treatment.

Whether paid in cash or additional shares of the Fund, and regardless of
the length of time Fund shares have been owned by the shareholder,
distributions from long-term capital gains are taxable to shareholders
as such, but are not eligible for the dividends-received deduction for
corporations. Shareholders are notified annually by the Fund as to
federal tax status of dividends and distributions paid by the Fund.
Under the 1997 Act, the Fund is required to tell shareholders how much
of their capital gain distribution is subject to the 28% tax rate. The
remainder of the capital gain would be subject to the 20% tax rate. Such
dividends and distributions may also be subject to state and
local taxes.

Exchange and redemption of Fund shares are taxable events for federal
income tax purposes. Shareholders may also be subject to state and
municipal taxes on such ex-
changes and redemptions. You should consult your tax adviser with
respect to the tax status of distributions from the Fund in your state
and locality.

The Fund intends to declare and pay dividends and
capital gains distributions so as to avoid imposition of the federal
excise tax. To do so, the Fund expects to distribute during each
calendar year an amount equal to: (1) 98% of its calendar year ordinary
income; (2) 98% of its capital gains net income (the excess of short-
and long-term capital gain over short- and long-term capital loss) for
the one-year
period ending each November 30; and (3) 100% of any undistributed
ordinary or capital gain net income from the prior calendar year.
Dividends declared in October, No-
vember or December and made payable to shareholders of record in such a
month are deemed to have been paid by the Fund and received by
shareholders on December 31 of such year, so long as the dividends are
actually paid before February 1 of the following year.

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

The federal income tax status of all distributions will be reported to
shareholders each January as a part of the annual statement of
shareholder transactions. Shareholders not subject to tax on their
income will not be required to pay tax on amounts distributed to them.

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

SHAREHOLDER SERVICES

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

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

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

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

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

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

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

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

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

Individual Retirement Accounts - Also available are the following
Individual Retirement Accounts (IRAs):

Traditional IRA: The IRS has increased the phase-out ranges for
deductible contributions. The IRA uses the IRS model form of plan and
provides an excellent way to accumulate a retirement fund which will
earn tax-deferred
dollars until withdrawn. An IRA may also be used to defer taxes on
certain distributions from employer-sponsored retirement plans. You may
contribute up to $2,000 of
compensation each year ($4,000 if a spousal IRA is
established), some or all of which may be deductible. Consult your tax
adviser concerning the amount of the tax deduction, if any, as well as
the best IRA for your financial goals.

Roth IRA: Unlike the traditional IRA, contributions are non-deductible,
however, distribution will be exempt from federal taxes provided that,
at the time of withdrawal, the IRA has been held for five years and (1)
the account holder is 59 1/2 years old or (2) the withdrawals are used
to purchase a first home. The maximum contribution to a Roth IRA is
$2,000 and eligibility is subject to restrictions. Traditional IRAs may
be converted into Roth IRAs. Consult your tax adviser to determine the
best IRA for your financial goals.

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

SHAREHOLDER INQUIRIES

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

Shareholders may address written inquiries to the
Fund at:

Babson Enterprise Fund, Inc.
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306

INDEPENDENT AUDITORS
ERNST & YOUNG LLP
Kansas City, Missouri

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

JOHN G. DYER
Kansas City, Missouri

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

TRANSFER AGENT

JONES & BABSON, INC.
Kansas City, Missouri

Equities
Growth Fund
Enterprise Fund*
Enterprise Fund II
Value Fund
Shadow Stock Fund
International Fund
Fixed Income
Bond Trust
Money Market Fund
Tax-Free Income Fund

*Closed to new investors.

BABSON FUNDS
JONES & BABSON DISTRIBUTORS
A member of the Generali Group

BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306
816-751-5900

1-800-4-BABSON
(1-800-422-2766)
http://www.jbfunds.com

JB18B 3/98

PART B

BABSON ENTERPRISE FUND, INC.

STATEMENT OF ADDITIONAL
INFORMATION

March 31, 1998

This Statement is not a prospectus but should be read in
conjunction with the Fund's current Prospectus dated March 31,
1998. To obtain the Prospectus please call the Fund toll-free at
1-800-4-BABSON (1-800-422-2766), or in the Kansas City area
751-5900.

TABLE OF CONTENTS

Investment Objective and Policies 2
Portfolio Transactions 2
Investment Restrictions 3
Performance Measures 3
How the Fund's Shares are Distributed 4
How Share Purchases are Handled 4
Redemption of Shares 5
Signature Guarantees 5
Management and Investment Counsel 5
How Share Price is Determined 6
Officers and Directors 6
Dividends, Distributions and Their Taxation 9
Custodian 12
Independent Auditors 12
Other Jones & Babson Funds 12
Financial Statements 13

JB54 3/98

INVESTMENT OBJECTIVE AND
POLICIES

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

All assets of the Fund will be invested in
marketable securities composed principally of
common stocks and securities convertible into
common stock. Necessary reserves will be held
in cash or high-quality short-term debt
obligations readily changeable to cash, such as
treasury bills, commercial paper or repurchase
agreements. The Fund retains the freedom to
administer the portfolio of the Fund accordingly
when, in its judgment, economic and market
conditions make such a course desirable.
Normally, however, the Fund will maintain at
least 80% of the portfolio in common stocks.
There are no restrictions or guidelines regarding
the investment of Fund assets in shares listed on
an exchange or traded over-the-counter.

The overall income return on the Portfolio
may be low because smaller companies
frequently need to retain all or most of their
profits to finance their growth. Thus, a number
of the stocks held by the Fund will have small
dividend yields, or none. If the companies are
successful, this plow-back of earnings and
internal financing of growth without the need to
issue additional shares ultimately should
enhance the companies' per share earnings and
dividend capability and make their shares more
attractive in the marketplace.

PORTFOLIO TRANSACTIONS

Decisions to buy and sell securities for the
Fund are made by Jones & Babson, Inc.
pursuant to recommendations by David L.
Babson & Co. Inc. Officers of the Fund and
Jones & Babson, Inc. are generally responsible
for implementing or supervising these decisions,
including allocation of portfolio brokerage and
principal business as well as the negotiation of
commissions and/or the price of the securities.
In instances where securities are purchased on a
commission basis, the Fund will seek competi-
tive and reasonable commission rates based on
circumstances of the trade involved and to the
extent that they do not detract from the quality
of the execution.
The Fund, in purchasing and selling portfolio
securities, will seek the best available
combination of execution and overall price
(which shall include the cost of the transaction)
consistent with the cir-cumstances which exist
at the time. The Fund does not intend to solicit
competitive bids on each transaction.

The Fund believes it is in its best interest and
that of its shareholders to have a stable and
continuous relationship with a diverse group of
financially strong and technically qualified
broker-dealers who will provide quality
executions at competitive rates. Broker-dealers
meeting these qualifications also will be selected
for their demonstrated loyalty to the Fund, when
acting on its behalf, as well as for any research
or other services provided to the Fund.
Substantially all of the portfolio transactions are
through brokerage firms which are members of
the New York Stock Exchange which is
typically the most active market in the size of
the Fund's transactions and for the types of
securities predominant in the Fund's portfolio.
When buying securities in the over-the-counter
market, the Fund will select a broker who
maintains a primary market for the security
unless it appears that a better combination of
price and execution may be obtained elsewhere.
The Fund normally will not pay a higher
commission rate to broker-dealers providing
benefits or services to it than it would pay to
broker-dealers who do not provide it such
benefits or services. However, the Fund reserves
the right to do so within the principles set out in
Section 28(e) of the Securities Exchange Act of
1934 when it appears that this would be in the
best interests of the shareholders.

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

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

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

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

INVESTMENT RESTRICTIONS

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

The Fund will not: (1) purchase the securities
of any one issuer, except the United States
Government, if immediately after and as a result
of such purchase (a) the value of the holdings of
the Fund in the securities of such issuer exceeds
5% of the value of the Fund's total assets, or (b)
the Fund owns more than 10% of the
outstanding voting securities, or any other class
of securities, of such issuer; (2) engage in the
purchase or sale of real estate or commodities;
(3) underwrite the securities of other issuers; (4)
make loans to any of its officers, directors, or
employees, or to its manager, or general
distributor, or officers or directors thereof; (5)
make loans to other persons, except by the
purchase of debt obligations which are permitted
under its investment policy; (6) invest in
companies for the purpose of exercising control
of management; (7) purchase securities on
margin, or sell securities short; (8) purchase
shares of other investment companies except in
the open market at ordinary broker's
commission, but not in excess of 5% of the
Fund's assets, or pursuant to a plan of merger or
consolidation; (9) invest in the aggregate more
than 5% of the value of its gross assets in the
securities of issuers (other than federal, state,
territorial, or local governments, or
corporations, or authorities established thereby),
which, including predecessors, have not had at
least three years' continuous operations nor
invest more than 25% of the Fund's assets in any
one industry; (10) enter into dealings with its
officers or directors, its manager or underwriter,
or their officers or directors, or any organization
in which such persons have a financial interest
except for transactions in the Fund's own shares
or other securities through brokerage practices
which are considered normal and generally
accepted under circumstances existing at the
time; (11) purchase or retain securities of any
company in which any Fund officers or
directors, or Fund manager, its partner, officer,
or director beneficially owns more than 1/2 of
1% of said company's securities, if all such
persons owning more than 1/2 of 1% of such
company's securities, own in the aggregate more
than 5% of the outstanding securities of such
company; (12) borrow or pledge its credit under
normal circumstances, except up to 10% of its
gross assets (computed at the lower of fair
market value or cost) for temporary or
emergency purposes, and not for the purpose of
leveraging its investments, and provided further
that any borrowing in excess of 5% of the total
assets of the Fund shall have asset coverage of at
least 3 to 1; (13) make itself or its assets liable
for the indebtedness of others; (14) invest in
securities which are assessable or involve
unlimited liability; or (15) issue senior securities
except for those investment procedures
permissible under the Fund's other restrictions.

PERFORMANCE MEASURES

Total Return

The Fund's "average annual total return"
figures described and shown below are
computed according to a formula prescribed by
the Securities and Exchange Commission. The
formula can be expressed as follows:

P(1+T)n = ERV

Where: P = a hypothetical initial payment
of $1000

T = average annual total return

n = number of years

ERV = Ending Redeemable Value of a
hypothetical $1000 payment
made at the beginning of the
1, 5 or 10 year (or other)
periods at the end of the 1, 5
or 10 year (or other) periods
(or fractional portions
thereof).

The table below shows the average total return
for the Fund for the specified periods.

For the one year 12/1/96-11/30/97 33.49%

For the five years 12/1/92-11/30/97 17.82%

For the ten years 12/1/87-11/30/97 19.10%

From commencement of 14.91%
operation to 11/30/97*
_______________________________________

* The Fund commenced operation December 2,
1983.

HOW THE FUND'S SHARES ARE
DISTRIBUTED

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

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

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

HOW SHARE PURCHASES ARE
HANDLED

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

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

Normally, the shares which you purchase are
held by the Fund in open account, thereby
relieving you of the responsibility of providing
for the safekeeping of a negotiable share
certificate. Should you have a special need for a
certificate, one will be issued on request for all
or a portion of the whole shares in your account.
There is no charge for the first certificate issued.
A charge of $3.50 will be made for any
replacement certificates issued. In order to
protect the interests of the other shareholders,
share certificates will be sent to those
shareholders who request them only after the
Fund has determined that unconditional
payment for the shares represented by the
certificate has been received by its custodian,
UMB Bank, n.a.

If an order to purchase shares must be
canceled due to non-payment, the purchaser will
be responsible for any loss incurred by the Fund
arising out of such cancellation. To recover any
such loss, the Fund reserves the right to redeem
shares owned by any purchaser whose order is
canceled, and such purchaser may be prohibited
or restricted in the manner of placing further
orders.

The Fund reserves the right in its sole
discretion to withdraw all or any part of the
offering made by the prospectus or to reject
purchase orders when, in the judgment of
management, such withdrawal or rejection is in
the best interest of the Fund and its
shareholders. The Fund also reserves the right
at any time to waive or increase the minimum
requirements applicable to initial or subsequent
investments with respect to any person or class
of persons, which include shareholders of the
Fund's special investment programs.

REDEMPTION OF SHARES

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

The Fund has elected to be governed by Rule
18f-1 under the Investment Company Act of
1940 pursuant to which the Fund is obligated to
redeem shares solely in cash up to the lesser of
$250,000 or 1% of the Fund's net asset value
during any 90-day period for any one
shareholder. Should redemptions by any
shareholder exceed such limitation, the Fund
may redeem the excess in kind. If shares are
redeemed in kind, the redeeming shareholder
may incur brokerage costs in converting the
assets to cash. The method of valuing securities
used to make redemptions in kind will be the
same as the method of valuing portfolio
securities described under "How Share Price is
Determined" in the Prospectus, and such
valuation will be made as of the same time the
redemption price is determined.

SIGNATURE GUARANTEES

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

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

(1) a written request for redemption;

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

(3) all stock certificates tendered for
redemption.

MANAGEMENT AND INVESTMENT
COUNSEL

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

The aggregate management fees paid to Jones
& Babson, Inc. during the most recent fiscal
year ended November 30, 1997, and from which
Jones & Babson, Inc. paid all the Fund's
expenses except those payable directly by the
Fund, were $2,176,042. The annual fee charged
by Jones & Babson, Inc. covers all normal
operating costs of the Fund.

David L. Babson & Co. Inc. has an experi-
enced investment analysis and research staff
which eliminates the need for Jones & Babson,
Inc. and the Fund to maintain an extensive
duplicate staff, with the consequent increase in
the cost of investment advisory service. The
cost of the services of David L. Babson & Co.
Inc., is included in the services of Jones &
Babson, Inc. During the most recent fiscal year
ended November 30, 1997, Jones & Babson, Inc.
paid David L. Babson & Co. Inc. fees amount-
ing to $1,088,713.

HOW SHARE PRICE IS DETERMINED

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

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

OFFICERS AND DIRECTORS

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

*Larry D. Armel (56), President and
Director. President and Director, Jones &
Babson, Inc., David L. Babson Growth Fund,
Inc., D.L. Babson Money Market Fund, Inc.,
D.L. Babson Tax-Free Income Fund, Inc.,
Babson Enterprise Fund II, Inc., Babson
Value Fund, Inc., Shadow Stock Fund, Inc.,
Babson-Stewart Ivory International Fund,
Inc., Scout Stock Fund, Inc., Scout Bond
Fund, Inc., Scout Money Market Fund, Inc.,
Scout Tax-Free Money Market Fund, Inc.,
Scout Regional Fund, Inc., Scout WorldWide
Fund, Inc., Scout Balanced Fund, Inc., Scout
Capital Preservation Fund, Inc., Scout Kansas
Tax-Exempt Bond Fund, Inc., Buffalo
Balanced Fund, Inc., Buffalo Equity Fund,
Inc., Buffalo High Yield Fund, Inc., Buffalo
USA Global Fund, Inc., Buffalo Small Cap
Fund, Inc., Investors Mark Series Fund, Inc.;
President and Trustee, D.L. Babson Bond
Trust; Director, AFBA Five Star Fund, Inc.
______________________________________

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

Francis C. Rood (63), Director. Retired, 73-
395 Agave Lane, Palm Desert, California
92260-6653. Formerly Vice President of
Finance, Hallmark Cards, Inc.; Director, David
L. Babson Growth Fund, Inc., D.L. Babson
Money Market Fund, Inc., D.L. Babson Tax-
Free Income Fund, Inc., Babson Enterprise Fund
II, Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund,
Inc., Buffalo USA Global Fund, Inc., Buffalo
Small Cap Fund, Inc., Investors Mark Series
Fund, Inc.; Trustee, D.L. Babson Bond Trust.

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

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

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

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

Martin A. Cramer (48), Vice President and
Secretary. Vice President and Secretary, Jones
& Babson, Inc., David L. Babson Growth Fund,
Inc., D.L. Babson Money Market Fund, Inc.,
D.L. Babson Tax-Free Income Fund, Inc.,
Babson Enterprise Fund II, Inc., Babson Value
Fund, Inc., Shadow Stock Fund, Inc., Babson-
Stewart Ivory International Fund, Inc., D. L.
Babson Bond Trust, Scout Stock Fund, Inc.,
Scout Bond Fund, Inc., Scout Money Market
Fund, Inc., Scout Tax-Free Money Market Fund,
Inc., Scout Regional Fund, Inc., Scout
WorldWide Fund, Inc., Scout Balanced Fund,
Inc., Scout Capital Preservation Fund, Inc.,
Scout Kansas Tax-Exempt Bond Fund, Inc.,
Buffalo Balanced Fund, Inc., Buffalo Equity
Fund, Inc., Buffalo High Yield Fund, Inc.,
Buffalo USA Global Fund, Inc., Buffalo Small
Cap Fund, Inc.; Secretary and Assistant Vice
President, AFBA Five Star Fund, Inc.;
Secretary, Investors Mark Series Fund, Inc.

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

Peter C. Schliemann (52), Vice President-
Portfolio. Executive Vice President and Direc-
tor, David L. Babson & Co. Inc., One Memorial
Drive, Cambridge, Massachusetts 02142; Vice
President-Portfolio, Babson Enterprise Fund II,
Inc., Shadow Stock Fund, Inc.

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

COMPENSATION TABLE
<TABLE>
<CAPTION>
Aggregate Pension or Retirement Estimated Total Compensation
Compensation Benefits Accrued As Annual Benefits From All Babson Funds
Name of Director From the Fund Part of Fund Expenses Upon Retirement Paid to Directors**
______________ _____________ __________________ _____________ ___________________
</CAPTION>
<S> <C> <C> <C> <C>
Larry D. Armel* -- -- -- --
Francis C. Rood $500 -- -- $7,250
William H. Russell $500 -- -- $7,625
H. David Rybolt $500 -- -- $7,250
</TABLE>
* As an interested director, Mr. Armel received no compensation for his
services as a director.

** The amounts reported in this column reflect the total compensation
paid to Messrs. Rood and Rybolt for services as directors or trustees
of eight Babson Funds and to Mr. Russell for services as a director
or trustee of nine Babson Funds during the fiscal year ended
November 30, 1997. Directors' fees are paid by the Funds'
manager and not by the Funds themselves.

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

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

The officers and directors of the Fund as a group
own less than 1% of the Fund.

The Fund will not hold annual meetings except as
required by the Investment Company Act of 1940 and
other applicable laws. The Fund is a Maryland
corporation. Under Maryland law, a special meeting of
stockholders of the Fund must be held if the Fund
receives the written request for a meeting from the
stockholders entitled to cast at least 25% of all the
votes entitled to be cast at the meeting. The Fund has
undertaken that its Directors will call a meeting of
stockholders if such a meeting is requested in writing
by the holders of not less than 10% of the outstanding
shares of the Fund. To the extent required by the
undertaking, the Fund will assist shareholder
communications in such matters.

DIVIDENDS, DISTRIBUTIONS
AND THEIR TAXATION

Distributions

Distributions of Net Investment Income. The
Fund receives income generally in the form of
dividends, interest and other income derived from its
investments. This income, less expenses incurred in
the operation of the Fund, constitutes its net
investment income from which dividends may be
paid to you. Any distributions by the Fund from
such income will be taxable to you as ordinary
income, whether you take them in cash or in
additional shares.

Distributions of Capital Gains. The Fund may
derive capital gains and losses in connection with
sales or other dispositions of its portfolio securities.
Distributions derived from the excess of net short-
term capital gains over net long-term capital losses
will be taxable to you as ordinary income.
Distributions paid from long-term capital gains
realized by the Fund will be taxable to you as long-
term capital gains, regardless of how long you have
held your shares in the Fund. Any net short-term or
long-term capital gains realized by the Fund (net of
any capital loss carryovers) generally will be
distributed once each year, and may be distributed
more frequently, if necessary, in order to reduce or
eliminate federal excise or income taxes on the
Fund.

Under the Taxpayer Relief Act of 1997 (the 1997
Act), the Fund is required to report the capital gain
distributions paid to you from gains realized on the
sale of portfolio securities using the following
categories:

28% tax rate gains: Gains resulting from
securities sold by the Fund after July 28, 1997 that
were held for more than one year but not more than
18 months, and securities sold by the Fund before
May 7, 1997 that were held for more than one year.
These gains will be taxable to individual investors at
a maximum rate of 28%.

20% tax rate gains: Gains resulting from
securities sold by the Fund after July 28, 1997 that
were held for more than 18 months, and under a
transitional rule, securities sold by the Fund between
May 7 and July 28, 1997 (inclusive) that were held
for more than one year. These gains will be taxable
to individual investors at a maximum rate of 20% for
individual investors in the 28% or higher federal
income tax brackets, and at a maximum rate of 10%
for investors in the 15% federal income tax bracket.

The 1997 Act also provides for a new maximum
rate of tax on capital gains of 18% for individuals in
the 28% or higher federal income tax brackets and
8% for individuals in the 15% federal income tax
bracket for qualified 5-year gains. For individuals
in the 15% bracket, qualified 5-year gains are net
gains on securities held for more than 5 years which
are sold after December 31, 2000. For individuals
who are subject to tax at higher rates, qualified 5-
year gains are net gains on securities which are
purchased after December 31, 2000 and are held for
more than 5 years. Taxpayers subject to tax at the
higher rates may also make an election for shares
held on January 1, 2001 to recognize gain on their
shares in order to qualify such shares as qualified 5-
year property.

The Fund will advise you at the end of each
calendar year of the amount of its capital gain
distributions paid during the calendar year that
qualify for these maximum federal tax rates.
Questions concerning each investor's personal tax
reporting should be addressed to the investor's
personal tax advisor.

Certain Distributions Paid in January.
Distributions which are declared in October,
November or December and paid to you in January
of the following year will be treated for tax purposes
as if they had been received by you on December 31
of the year in which they were declared. The Fund
will report this income to you on your Form 1099-
DIV for the year in which these distributions were
declared.

Information on the Tax Character of Distri-
butions. The Fund will inform you of the amount
and character of your distributions at the time they
are paid, and will advise you of the tax status for
federal income tax purposes of such distributions
shortly after the close of each calendar year. If you
have not held Fund shares for a full year, you may

have designated and distributed to you as ordinary
income or capital gain a percentage of income that is
not equal to the actual amount of such income
earned during the period of your investment in the
Fund.

Taxes

Election to be Taxed as a Regulated Investment
Company. The Fund has elected to be treated as a
regulated investment company under Subchapter M
of the Internal Revenue Code (the Code), has
qualified as such for its most recent fiscal year, and
intends to so qualify during the current fiscal year.
The directors reserve the right not to maintain the
qualification of the Fund as a regulated investment
company if they determine such course of action to
be beneficial to you. In such case, the Fund will be
subject to federal, and possibly state, corporate taxes
on its taxable income and gains, and distributions to
you will be taxed as ordinary dividend income to the
extent of the Fund's available earnings and profits.

In order to qualify as a regulated investment
company for tax purposes, the Fund must meet
certain specific requirements, including:

Maintain a diversified portfolio of securities,
wherein no security (other than U.S.
Government securities and securities of other
regulated investment companies) can exceed
25% of the Fund's total assets, and, with respect
to 50% of the Fund's total assets, no investment
(other than cash and cash items, U.S.
Government securities and securities of other
regulated investment companies) can exceed 5%
of the Fund's total assets;

Derive at least 90% of its gross income from
dividends, interest, payments with respect to
securities loans, and gains from the sale or
disposition of stock, securities or foreign
currencies, or other income derived with respect
to its business of investing in such stock,
securities or currencies; and

Distribute to its shareholders at least 90% of its
net investment income and net tax-exempt
income for each of its fiscal years.

Excise Tax Distribution Requirements. The
Code requires the Fund to distribute at least 98% of
its taxable ordinary income earned during the
calendar year and 98% of its capital gain net income
earned during the 12-month period ending
November 30 (in addition to undistributed amounts
from the prior year) to you by December 31 of each
year in order to avoid federal excise taxes. The Fund
intends to declare and pay sufficient dividends in
December (or in January that are treated by you as
received in December) but does not guarantee and
can give no assurances that its distributions will be
sufficient to eliminate all such taxes.

Redemption of Fund Shares. Redemptions and
exchanges of Fund shares are taxable transactions
for federal and state income tax purposes. The tax
law requires that you recognize a gain or loss in an
amount equal to the difference between your tax
basis and the amount you received in exchange for
your shares, subject to the rules described below. If
you hold your shares as a capital asset, the gain or
loss that you realize will be capital gain or loss, and
will be long-term for federal income tax purposes if
you have held your shares for more than one year at
the time of redemption or exchange. Any loss
incurred on the redemption or exchange of shares
held for six months or less will be treated as a long-
term capital loss to the extent of any long-term
capital gains distributed to you by the Fund on those
shares. The holding periods and categories of
capital gain that apply under the 1997 Act are
described above in the Distributions section.

All or a portion of any loss that you realize upon
the redemption of your Fund shares will be
disallowed to the extent that you purchase other
shares in the Fund (through reinvestment of
dividends or otherwise) within 30 days before or
after your share redemption. Any loss disallowed
under these rules will be added to your tax basis in
the new shares you purchase.

U.S. Government Obligations. Many states grant
tax-free status to dividends paid to you from interest
earned on direct obligations of the U.S. Government,
subject in some states to minimum investment
requirements that must be met by the Fund.
Investments in GNMA/FNMA securities, bankers'

acceptances, commercial paper and repurchase
agreements collateralized by U.S. Government
securities do not generally qualify for tax-free
treatment. At the end of each calendar year, the
Fund will provide you with the percentage of any
dividends paid that may qualify for tax-free
treatment on your personal income tax return. You
should consult with your own tax advisor to
determine the application of your state and local
laws to these distributions. Because the rules on
exclusion of this income are different for
corporations, corporate shareholders should consult
with their corporate tax advisors about whether any
of their distributions may be exempt from corporate
income or franchise taxes.

Dividends-Received Deduction for Corpora-
tions. As a corporate shareholder, you should note
that a percentage of the dividends paid by the Fund
for the most recent calendar year qualified for the
dividends-received deduction. You will be permitted
in some circumstances to deduct these qualified
dividends, thereby reducing the tax that you would
otherwise be required to pay on these dividends. The
dividends-received deduction will be available only
with respect to dividends designated by the Fund as
eligible for such treatment. Dividends so designated
by the Fund must be attributable to dividends earned
by the Fund from U.S. corporations that were not
debt-financed.

Under the 1997 Act, the amount that the Fund
may designate as eligible for the dividends-received
deduction will be reduced or eliminated if the shares
on which the dividends were earned by the Fund
were debt-financed or held by the Fund for less than
a 46 day period during a 90 day period beginning 45
days before the ex-dividend date of the corporate
stock. Similarly, if your Fund shares are debt-
financed or held by you for less than this same 46
day period, then the dividends-received deduction
may also be reduced or eliminated. Even if
designated as dividends eligible for the dividends-
received deduction, all dividends (including the
deducted portion) must be included in your
alternative minimum taxable income calculation.

Conversion Transactions. Gains realized by a
Fund from transactions that are deemed to be
conversion transactions under the Code, and that
would otherwise produce capital gain may be
recharacterized as ordinary income to the extent that
such gain does not exceed an amount defined as the
applicable imputed income amount. A conversion
transaction is any transaction in which substantially
all of the Fund's expected return is attributable to the
time value of the Fund's net investment in such
transaction, and any one of the following criteria are
met:

(1) there is an acquisition of property with a
substantially contemporaneous agreement to
sell the same or substantially identical
property in the future;

(2) the transaction is an applicable straddle;

(3) the transaction was marketed or sold to the
Fund on the basis that it would have the
economic characteristics of a loan but would
be taxed as capital gain; or

(4) the transaction is specified in Treasury
regulations to be promulgated in the future.

The applicable imputed income amount, which
represents the deemed return on the conversion
transaction based upon the time value of money, is
computed using a yield equal to 120% of the
applicable federal rate, reduced by any prior
recharacterizations under this provision or the
provisions of Section 263(g) of the Code dealing
with capitalized carrying costs.

Stripped Preferred Stock. Occasionally, the
Fund may purchase stripped preferred stock that is
subject to special tax treatment. Stripped preferred
stock is defined as certain preferred stock issues
where ownership of the stock has been separated
from the right to receive dividends that have not yet
become payable. The stock must have a fixed
redemption price, must not participate substantially
in the growth of the issuer and must be limited and
preferred as to dividends. The difference between
the redemption price and purchase price is taken into
Fund income over the term of the instrument as if it
were original issue discount. The amount that must
be included in each period generally depends on the
original yield to maturity, adjusted for any
prepayments of principal.

Defaulted Obligations. The Fund may be
required to accrue income on defaulted obligations
and to distribute such income to you even though it
is not currently receiving interest or principal
payments on such obligations. In order to generate
cash to satisfy these distribution requirements, the
Fund may be required to dispose of portfolio
securities that it otherwise would have continued to
hold or to use cash flows from other sources such as
the sale of Fund shares.

CUSTODIAN

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

INDEPENDENT AUDITORS

The Fund's financial statements are audited annually
by independent auditors approved by the directors each
year, and in years in which an annual meeting is held
the directors may submit their selection of independent
auditors to the shareholders for ratification. Ernst &
Young LLP, One Kansas City Place, 1200 Main Street,
Suite 2000, Kansas City, Missouri 64105, is the Fund's
present independent auditor.

Reports to shareholders will be published at least
semiannually.

OTHER JONES & BABSON FUNDS

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

EQUITY FUNDS

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

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

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

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

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

FIXED INCOME FUNDS

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

D. L. BABSON MONEY MARKET FUND, INC.
was organized in 1979, to provide investors the
opportunity to manage their money over the short
term by investing in high-quality short-term debt
instruments for the purpose of maximizing income to
the extent consistent with safety of principal and
maintenance of liquidity. It offers two portfolios -
Prime and Federal. Money Market funds are neither
insured nor guaranteed by the U.S. Government and
there is no assurance that the funds will maintain a
stable net asset value.

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

BUFFALO FUNDS

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

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

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

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

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

BUFFALO SMALL CAP FUND, INC. was
organized in 1998, with the objective of long-term
capital growth by investment in equity securities of
small companies.

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

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

Jones & Babson, Inc. also sponsors the AFBA Five
Star Fund, Inc.

FINANCIAL STATEMENTS

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

PART C

OTHER INFORMATION

Item 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements:

Herewith are all financial statements and exhibits
filed as a part of this registration statement:

Included in Part A - Prospectus:

Per Share Capital and Income Changes

Included in Part B - Statement of Additional
Information:

The audited financial statements contained in
the most recent Annual Report to Shareholders
of Babson Enterprise Fund, Inc., are
incorporated by reference into Part B. of
this Registration Statement.

Included in Part C - Other Information:

Consent of Independent Public Accountants

(b) *(1) (a) Registrant's Articles of Incorporation

(b) Articles Supplementary

*(2) Registrant's By-laws

(3) Not applicable, because there is no voting
trust agreement

*(4) Specimen copy of each security to be issued
by the registrant

*(5) (a) Form of Management Agreement between
Jones & Babson, Inc. and the Registrant

(b) Form of Investment Counsel Agreement
between Jones & Babson, Inc. and David
L. Babson & Co. Inc.

*(6) Form of principal Underwriting Agreement
between Jones & Babson, Inc. and the
Registrant

(7) Not applicable, because there are no pension,
bonus or other agreements for the benefit of
directors and officers

*(8) Form of Custodian Agreement between
Registrant and United Missouri Bank of Kansas
City, N.A.

(9) There are no other material contracts not
made in the ordinary course of business
between the Registrant and others

(10) Opinion and consent of counsel as to the
legality of the registrant's securities being
registered. (To be supplied annually pursuant
to Rule 24f-2 of the Investment Company Act
of 1940.)

(11) The consent of Ernst & Young,
Independent Public Accountants.

(12) Not applicable.

*(13) Form of letter from contributors of
initial capital to the Registrant that
purchase was made for investment
purposes without any present intention
of redeeming or selling.

*(14) Copies of the model plan used in the
establishment of any retirement plan in
conjunction with which Registrant offers
its securities.

(15) Not applicable.

*(16) Schedule for computation of performance
quotations.

*(17) Copies of Powers of Attorney pursuant to
Rule 402(c).

* Previously filed on Form N-1 and herein
incorporated by reference

Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL OF THE
REGISTRANT.

NONE

Item 26. NUMBER OF HOLDERS OF SECURITIES.

The number of record holders of each class of
securities of the Registrant as of March 13, 1998, is
as follows:

(1) (2)
Title of class Number of Record Holders

Common Stock
$1.00 par value 5,485
Enterprise Portfolio

Item 27. INDEMNIFICATION.

Under the terms of the Maryland General Corporation Law
and the company's By-laws, the company shall indemnify
any person who was or is a director, officer, or
employee of the company 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 company only as
authorized in the specific case upon a determination
that indemnification of such persons 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 company 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 company to
any director or officer of the company for any
liability to the company or shareholders to which he
would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless
disregard of duty.

Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.

The principal business of Jones & Babson, Inc. is the
management of the Babson family of mutual funds. It
also has expertise in the tax and pension plan field.
It supervises a number of prototype and profit-sharing
plan programs sponsored by various organizations
eligible to be prototype plan sponsors.

The principal business of David L. Babson & Co., Inc.
is to provide investment counsel and advice to a wide
variety of clients. David L. Babson & Co. Inc. and its
affiliates have $4 billion under management, of which
$2.4 billion is securities and $1.6 billion is real
estate.

Item 29. PRINCIPAL UNDERWRITERS.

(a) Jones & Babson, Inc., the only principal
underwriter of the Registrant, also acts as
principal underwriter for David L. Babson
Growth Fund, Inc., D.L. Babson Bond Trust,
D.L. Babson Money Market Fund, Inc., D.L.
Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund II, Inc., Babson Value Fund,
Inc., Shadow Stock Fund, Inc., Babson-Stewart
Ivory International Fund, Inc., Scout Stock
Fund, Inc., Scout Bond Fund, Inc., Scout Money
Market Fund, Inc., Scout Tax-Free Money
Market Fund, Inc., Scout Regional Fund, Inc.,
Scout WorldWide Fund, Inc., Scout Balanced
Fund, Inc., Scout Capital Preservation Fund,
Inc., Scout Kansas Tax-Exempt Bond Fund,
Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund,
Inc., Buffalo USA Global Fund, Inc., Buffalo
Small Cap Fund, Inc. and AFBA Five Star
Fund, Inc.

(b) Herewith is the information required by the
following table with respect to each director,
officer or partner of the only underwriter named
in answer to Item 21 of Part B:

Name and Principal Position and Offices Positions and Offices
_Business Address_ __with Underwriter__ ___with Registrant___

Stephen S. Soden Chairman None
BMA Tower and Director
700 Karnes Blvd.
Kansas City, MO 64108-3306.

Larry D. Armel President and President and
BMA Tower Director Director
700 Karnes Blvd.,
Kansas City, MO 64108-3306.

Giorgio Balzer Director None
BMA Tower
700 Karnes Blvd.,
Kansas City, MO 64108-3306.

Robert T. Rakich Director None
BMA Tower
700 Karnes Blvd.,
Kansas City, MO 64108-3306.

Edward S. Ritter Director None
BMA Tower
700 Karnes Blvd.,
Kansas City, MO 64108-3306.

Robert N. Sawyer Director None
BMA Tower
700 Karnes Blvd.,
Kansas City, MO 64108-3306.

Vernon W. Voorhees Director None
BMA Tower
700 Karnes Blvd.,
Kansas City, MO 64108-3306.

P. Bradley Adams Vice President Vice President
BMA Tower and Treasurer and Treasurer
700 Karnes Blvd.,
Kansas City, MO 64108-3306.

Michael A Brummel Vice President Vice President
BMA Tower
700 Karnes Blvd.,
Kansas City, MO 64108-3306.

Martin A. Cramer Vice President Vice President
BMA Tower and Secretary and Secretary
700 Karnes Blvd.,
Kansas City, MO 64108-3306.

Constance E. Martin Asst. Vice Vice President
BMA Tower President
700 Karnes Blvd.,
Kansas City, MO 64108-3306.

(c) The principal underwriter does not receive any
remuneration or compansation for the duties or
services rendered to the Registrant pursuant to
the principal underwriting Agreement.

Item 30. LOCATION OF ACCOUNTS AND RECORDS.

Each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act and the
Rules (17 CFR 270.31a-1 to 31a-3) promulgated
thereunder is in the physical possession of Jones &
Babson, Inc., at Three Crown Center, 2440 Pershing
Road, G-15, Kansas City, Missouri 64108.

Item 31. MANAGEMENT SERVICES.

All management services are covered in the management
agreement between the Registrant and Jones & Babson,
Inc., which are discussed in Parts A and B.

Item 32. DISTRIBUTION EXPENSES.

Not applicable.

Item 33. UNDERTAKINGS.

Registrant undertakes that, if requested to do so by
the holders of at least 10% of the registrant's
outstanding shares, to call a meeting of shareholders
for the purpose of voting upon the question of removal
of a director or directors and to assist in
communications with other shareholders as required by
Section 16(c) of the Investment Company Act of 1940, as
amended.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has duly
caused this registration statement to be signed on its behalf by
the undersigned, thereunto authorized, in the City of Kansas
City, and State of Missouri on the 16th day of March, 1998.

BABSON ENTERPRISE FUND, INC.
(Registrant)

By Larry D. Armel
(Larry D. Armel, President)

Pursuant to the requirements of the Securities Act of 1933,
this Post-effective Amendment #18 to the Registration Statement
has been signed below by the following persons in the capacities
and on the date indicated.

Larry D. Armel President, March 16, 1998
Larry D. Armel Principal Executive
Officer, and Director

H. David Rybolt Director March 16, 1998
H. David Rybolt*

William H. Russell Director March 16, 1998
William H. Russell*

Francis C. Rood Director March 16, 1998
Francis C. Rood*

P. Bradley Adams Treasurer and March 16, 1998
P. Bradley Adams Principal Financial
and Accounting Officer

*Signed pursuant to Power of Attorney

By Larry D. Armel
Attorney-in Fact

REPRESENTATIONS OF COUNSEL

I assisted in the preparation of this Post Effective Amendment to
the Fund's Registration Statement filed under the Securities Act
of 1933 and the Amendment to the Fund's Registration Statement
filed under the Investment Company Act of 1940. Based on my
review it is my opinion that this amendment does not contain dis-
closures which would render it ineligible to become effective pur-
suant to paragraph (b) of Rule 485 under the Securities Act of
1933.

John G. Dyer Attorney March 16, 1998
John G. Dyer

Consent of Independent Auditors

We consent to the references to our firm under the captions "Financial
Highlights" and "Independent Auditors" and to the incorporation by reference
of our report dated December 29, 1997 in the Registration Statement
(Form N-1A) and related Prospectus of Babson Enterprise Fund, Inc. filed with
the Securities and Exchange Commission in this Post-Effective Amendment
No. 18 under the Securities Act of 1933 (Registration No. 2-85791) and
Amendment No. 19 under the Investment Company Act of 1940 (Registration
No. 811-3823).

/s Ernst & Young LLP
Ernst & Young LLP

Kansas City, Missouri
March 16, 1998

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