SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [X]
Post-Effective Amendment No. 13 File No. 2-93363 [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 15 File No. 811-4114 [X]
BABSON VALUE FUND, INC.___________________________
(Exact Name of Registrant as Specified in Charter)
2440 Pershing Road, G-15 Kansas City, Missouri 64108
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code (816) 471-5200
Larry D. Armel, President, BABSON VALUE FUND, INC.
2440 Pershing Road, G-15, Kansas City, Missouri 64108
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: March 31, 1995
It is proposed that this filing become effective:
_X_ on March 31, 1995, 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, 19954, by
January 30, 1996.
Please address inquiries and a carbon copy of all
and communications to: communications to:
John G. Dyer, Esq. Mark H. Plafker, Esq.
Babson Value Fund, Inc. Stradley, Ronon, Stevens & Young
2440 Pershing Road, G-15 2600 One Commerce Square
Kansas City, MO 64108 Philadelphia, PA 19103-7098
Telephone: (816) 471-5200 Telephone: (215) 564-8024
BABSON VALUE 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 VALUE 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
PROSPECTUS
March 31, 1995
BABSON VALUE FUND, INC.
Managed and Distributed By:
JONES & BABSON, INC.
Three Crown Center
2440 Pershing Road, Suite G-15
Kansas City, Missouri 64108
Toll-Free 1-800-4-BABSON
(1-800-422-2766)
In the Kansas City area 471-5200
Investment Counsel:
DAVID L. BABSON & CO. INC.
Cambridge, Massachusetts
INVESTMENT OBJECTIVE
A no-load mutual fund which seeks 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. The Fund may be considered "contrarian" in nature in
that the portfolio will typically include shares of companies that are
relatively unpopular and out-of-favor with general investors. (For a
definition of "contrarian," see page 5 of this prospectus.) This Fund
is not intended to be a complete investment program. (For a
discussion of risk factors see page 7 of this prospectus.)
PURCHASE INFORMATION
Minimum InvestmentInitial Purchase $1,000
Initial IRA and Uniform Transfers (Gifts)
to Minors Purchases $ 250
Subsequent Purchase:
By Mail $ 100
By Telephone or Wire $1,000
All Automatic Purchases $ 100
Shares are purchased and redeemed at net asset value. There are no
sales, redemption or Rule 12b-1 distribution charges. If you need
further information, please call the Fund at the telephone numbers
indicated.
ADDITIONAL INFORMATION
This prospectus should be read and retained for future reference. It
contains the information that you should know before you invest. A
"Statement of Additional Information" of the same date as this
prospectus has been filed with the Securities and Exchange Commission
and is incorporated by reference. Investors desiring additional
information about the Fund may obtain a copy without charge by writing
or calling the Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
Fund Expenses 3
Financial Highlights 4
Investment Objective and Portfolio Management Policy 5
Repurchase Agreements 6
Risk Factors 7
Investment Restrictions 7
Performance Measures 7
How to Purchase Shares 8
Initial Investments 9
Investments Subsequent to Initial Investment 9
Telephone Investment Service 10
Automatic Monthly Investment Plan 10
How to Redeem Shares 10
Systematic Redemption Plan 12
How to Exchange Shares Between Babson Funds 13
How Share Price is Determined 14
Officers and Directors 14
Management and Investment Counsel 14
General Information and History 16
Dividends, Distributions and Their Taxation 17
Shareholder Services 18
Shareholder Inquiries 19
</TABLE>
BABSON VALUE 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 .95%
12b-1 fees None
Other expenses .04%
Total Fund operating expenses .99%
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
$10 $31 $54 $124
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, 1994. 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 the period from
December 21, 1984 (date of public offering) to November 30, 1985, and
each of the nine years in the period ended November 30, 1994, have
been derived from audited financial statements of Babson Value Fund,
Inc. Such information for each of the five years in the period ended
November 30, 1994 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, 1994 annual report to
shareholders which is incorporated by reference in this prospectus.
The information for the period from December 21, 1984 to November 30,
1985 and the four years ended November 30, 1989 is not covered by the
report of Ernst & Young LLP.
See Financial Data Schedule -- Exhibit 27
INVESTMENT OBJECTIVE AND PORTFOLIO MANAGEMENT POLICY
Babson Value Fund's investment objective is to seek long-term growth
of capital and income by investing principally in a diversified
portfolio of common stocks which are considered to be undervalued in
relation to earnings, dividends and/or assets. 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 out-standing shares.
The Fund intends to invest in stocks of companies which are rated "B-"
or better in investment quality (growth and stability of earnings and
dividends) by Standard & Poor's and/or "B" or better by Value Line in
financial strength. (For a description of these ratings see
"Description of Stock Ratings" in the "Statement of Additional
Information.")
A stock will be considered to be undervalued if it is currently
trading at a price below which the investment adviser believes it
should be trading and therefore a superior potential investment based
on one or more of the following comparisons:
1. price relative to earnings,
2. price relative to dividends,
3. price relative to assets as measured
by book value.
Valuation levels as described above for each security will be compared
to a large universe of stocks as selected by the investment adviser,
as well as its own past history of valuation over several years. The
universe will vary from time to time and may consist of as many as a
thousand stocks. The holdings in the portfolio will be monitored
regularly by the Fund's manager to determine that they continue to be
relatively favorable investments. For a discussion of risk factors
involved in investing in undervalued stocks, see "Risk Factors."
Investors' attitudes toward different kinds of companies tend to shift
back and forth over time, from enthusiasm to pessimism and back to
enthusiasm. The Fund may be considered to be "con-trarian" in nature
because of its primary focus on undervalued stocks, and typically its
portfolio will consist of companies whose shares are relatively
unpopular and out-of-favor, among investors generally, at the time of
purchase. However, the portfolio will be restricted to companies which
the Fund's investment counsel believes are sound businesses with good
future potential and should, therefore, eventually gain greater
investor favor.
Although individual stocks in the portfolio may be in any price range
because value as determined by the investment adviser is relative
rather than absolute, it is expected that the average price/earnings
ratio of the stocks in the portfolio as a whole will be lower than
that of the Standard & Poor's 500, that the average dividend yield on
the investments will be higher than that of the S&P 500, and that the
average price to book value ratio will be lower than that of the S&P
500. It is also anticipated that some of the companies in the
portfolio may not be paying current dividends.
Except for necessary reserves including but not limited to reserves
held to cover redemptions and unanticipated expenses, as determined by
management, all assets will be invested in marketable securities
composed principally of common stocks and securities convertible into
common stocks. The reserves will be held in cash or high-quality,
short-term debt obligations readily changeable into cash such as: (1)
certificates of deposit, bankers' acceptances and other short-term
obligations issued domestically by United States commercial banks
having assets of at least $1 billion and which are members of the
Federal Deposit Insurance Corporation or holding companies of such
banks; (2) commercial paper of companies rated P-2 or higher by
Moody's Investors Service, Inc. (Moody's) or A-2 or higher by Standard
and Poor's Corporation (S&P), or if not rated by either Moody's or
S&P, a company's commercial paper may be purchased by the Fund if the
company has an outstanding bond issue rated Aa or higher by Moody's or
AA or higher by S&P; (3) short-term debt securities which are
non-convertible and which have one year or less remaining to maturity
at the date of purchase and which are rated Aa or higher by Moody's or
AA or higher by S&P; (4) negotiable certificates of deposit and other
short-term debt obligations of savings and loan associations having
assets of at least $1 billion and which are members of the Federal
Home Loan Banks Association and insured by the Federal Savings and
Loan Insurance Corporation. (For additional information on ratings,
see "Description of Commercial Paper Ratings" in the "Statement of
Additional Information.")
Management believes, however, that there may be times when the
shareholders' interests are best served by investing temporarily in
preferred stocks, bonds or other defensive issues. It 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 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
Agreements."
There is no assurance that the Fund's objective of long-term growth of
capital and income can be achieved. Portfolio turnover will be no more
than is necessary to meet the Fund's objective. Under normal
circumstances, it is anticipated that it will not exceed 100% on an
annual basis. For the fiscal years ended November 30, 1994, November
30, 1993 and November 30, 1992, 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
1994 $184,842 14%
1993 $49,717 26%
1992 $33,404 17%
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 total assets of the
Fund.
RISK FACTORS
There are risks in investing in unpopular stocks since the factors
causing the unpopularity may persist longer than expected at the time
of purchase, or they may get worse. These factors may range from a
reduction in earnings expectations to a major business problem.
However, in the judgment of management, those risks are substantially
mitigated by investing in stocks which are undervalued in the market
in relation to earnings, dividends and/or assets.
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
substantiate 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.
INVESTMENT RESTRICTIONS
In addition to the investment objective and portfolio management
policies set forth under the caption "Investment Objective and
Portfolio Management Policy," the Fund is subject to certain other
restrictions which may not be changed without approval of the 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 Additional 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 considering "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 recognized unmanaged index of common stocks of 30
industrial companies listed on the NYSE, 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, 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 comparisons should not be considered as
representative of the future performance of any Fund. Further
information regarding the performance of the Fund is contained in the
"Statement of Additional Information."
Performance rankings, recommendations, published editorial comments
and listings reported in national financial publications, such as
Money, Barron's and Kiplinger's Personal Finance Magazine,
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
various other sources including No Load Fund X, CDA Investment
Technologies, Inc., Wiesenberger Investment Company Service and
Donoghue's Mutual Fund Almanac.
HOW TO PURCHASE SHARES
Shares are purchased at net asset value (no sales charge) from the
Fund through its agent, Jones & Babson, Inc., Three Crown Center, 2440
Pershing Road, Suite G-15, Kansas City, MO 64108. For information call
toll free 1-800-4-BABSON (1-800-422-2766), or in the Kansas City area
471-5200. 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
investors to make payment. In the event that the Fund sustains a loss
as the result of failure by a purchaser to make payment, the Fund's
underwriter, Jones & Babson, Inc. will cover the loss.
INITIAL INVESTMENTS
Initial investments -- By mail. You may open an account and make an
investment by completing and signing the application which accompanies
this prospectus. Make your check ($1,000 minimum 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) payable to
UMB Bank, n.a. Mail your application and check to:
Babson Value Fund, Inc.
Three Crown Center
2440 Pershing Road, Suite G-15
Kansas City, Missouri 64108
Initial investments -- By wire. You may purchase shares of the Fund 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 471-5200 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 Value Fund, Inc./
AC=987032-6213
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. No redemptions can occur until this is done.
INVESTMENTS SUBSEQUENT TO
INITIAL INVESTMENT
You may add to your Fund account at any time in amounts of $100 or
more if purchases are made by mail, or $1,000 or more if purchases are
made by wire or telephone. Automatic monthly investments must be in
amounts of $100 or more.
Checks should be mailed to the Fund at its address, but make them
payable to UMB Bank, n.a. Always identify your account
number or include the detachable reminder stub which accompanies each
confirmation.
Wire share purchases should include your account registration, your
account number and the Babson Fund 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 for the cost of the shares so purchased. You will
receive the next available price after the Fund has received your
telephone call. Availability and continuance of this privilege is
subject to acceptance and approval by the Fund and all participating
banks. During periods of increased market activity, you may have
difficulty reaching the Fund by telephone, in which case you should
contact the Fund by mail or telegraph. The Fund will not be
responsible for the consequences of delays including delays in the
banking or Federal Reserve wire systems.
The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, and if such
procedures are not followed, the Fund may be liable for losses due to
unauthorized or fraudulent instructions. Such procedures may include,
but are not limited to requiring personal identification prior to
acting upon instructions received by telephone, providing written
confirmations of such transactions, and/or tape recording of telephone
instructions.
The Fund reserves the right to initiate a charge for this service and
to terminate or modify any or all of the privileges in connection with
this service at any time upon 15 days written notice to shareholders,
and to terminate or modify the privileges without prior notice in any
circumstances where such termination or modification is in the best
interest of the Fund and its investors.
AUTOMATIC MONTHLY
INVESTMENT PLAN
You may elect to make monthly investments in a constant dollar amount
from your checking account ($100 minimum). The Fund will draft your
checking account on the same day each month in the amount you
authorize in your appli cation, 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.
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.
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," page 14.)
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 redemptions 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. 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.
To be in "good order" the request must include the following:
(1) A written redemption request or stock assignment (stock
power) containing the genuine signature of each registered owner
exactly as the shares are registered, with clear identification of the
account by registered name(s) and account number and the number of
shares or the dollar amount to be redeemed;
(2) any outstanding stock certificates representing shares to be
redeemed;
(3) signature guarantees as required; and (See
Signature Guarantees page 12.)
(4) any additional documentation which the Fund may deem
necessary to insure a genuine redemption.
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 Three Crown
Center, 2440 Pershing Road, Suite G-15, Kansas City, Missouri 64108.
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," page 14.)
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 seventh 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
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 under
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 $10,000 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 seven-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. Additional details are set forth in the
"Statement of Additional Information."
Due to the high cost of maintaining smaller accounts, the Board of
Directors has authorized the Fund to close shareholder accounts where
their value falls below the current minimum initial investment
requirement at the time of initial purchase as a result of redemptions
and not as the result of market action, and remains below this level
for 60 days after each such shareholder account is mailed a notice of:
(1) the Fund's intention to close the account, (2) the minimum account
size requirement, and (3) the date on which the account will be closed
if the minimum size requirement is not met.
SYSTEMATIC REDEMPTION PLAN
If you own shares in 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.
HOW TO EXCHANGE SHARES
BETWEEN BABSON FUNDS
Shareholders may exchange their Fund shares, which have been held in
open account for 30 days or more, and for which good payment has been
received, for identically registered shares of any other Fund in the
Babson Fund Group which is legally registered for sale in the state of
residence of the investor, except Babson Enterprise Fund, Inc.,
provided that the minimum amount exchanged has a value of $1,000 or
more and meets the minimum investment requirement of the Fund or
Portfolio into which it is exchanged.
Effective at the close of business on January 31, 1992, the Directors
of the Babson Enterprise Fund, Inc. took action to limit the offering
of that Fund's shares. Babson Enterprise Fund, Inc. will not accept
any new accounts, including IRAs and other retirement plans, until
further notice, nor will Babson Enterprise Fund accept transfers from
shareholders of other Babson Funds, who were not shareholders of record
of Babson Enterprise Fund at the close of business on January 31, 1992.
Investors may want to consider purchasing shares in Babson Enterprise
Fund II, Inc. as an alternative.
To authorize the Telephone/Telegraph Exchange Privilege, all
registered owners must sign the appropriate section on the original
application, or the Fund must receive a special authorization form,
provided upon request. During periods of increased market activity,
you may have difficulty reaching the Fund by telephone, in which case
you should contact the Fund by mail or telegraph. The Fund reserves
the right to initiate a charge for this service and to terminate or
modify any or all of the privileges in connection with this service at
any time and without prior notice under any circumstances where
continuance of these privileges would be detrimental to the Fund or
its shareholders such as an emergency, or whre 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.
The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, and if such
procedures are not followed, the Fund may be liable for losses due to
unauthorized or fraudulent instructions. Such procedures may include,
but are not limited to requiring personal identification prior to
acting upon instructions received by telephone, providing written
confirmations of such transactions, and/or tape recording of telephone
instructions.
Exchanges by mail may be accomplished by a written request properly
signed by all regis tered owners identifying the account, the number
of shares or dollar amount to be redeemed for exchange, and the Babson
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 Fund or Portfolio in the Babson Fund Group, you
should review the prospectus of the Fund to be purchased, which can be
obtained from Jones & Babson, Inc. Any such exchange will be based on
the respective net asset values of the shares involved. Any exchange
between Funds 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 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
1984, and acts as its manager and principal underwriter. Pursuant to
the current Management Agreement, Jones & Babson, Inc. provides or
pays the cost of all management, supervisory and administrative
services required in the normal operation of the Fund. This includes
investment management and supervision; fees of the custodian,
independent 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 including but not limited to legal and accounting fees
incurred in anticipation of or arising out of litigation or
administrative proceedings to which the Fund, its officers or
directors may be subject or a party thereto.
As a part of the Management Agreement, Jones & Babson, Inc. employs at
its own expense David L. Babson & Co. Inc. as its investment counsel
to assist in the investment advisory function. David L. Babson & Co.
Inc. is an independent investment counseling firm founded in 1940. It
serves a broad variety of individual, corporate and other
institutional clients by maintaining an extensive research and
analytical staff. It is a principal owner of Jones & Babson, Inc. 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.
Roland W. Whitridge has been the manager of Babson Value Fund since
ite inception in 1984. He is a Chartered Financial Analyst. He
joined David L. Babson & Co. in 1974 and has 30 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 95/100 of one percent (.95%)
of 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
35/100 of one percent (.35%) of the 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, 1994 amounted to
99/100 of one percent (.99%) 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 closely held
corporations and has limitations in the ownership of its stock
designed to maintain control in those who are active in management.
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, 1995, and will continue automatically for successive
annual periods ending each October 31 so long as such continuance is
specifically approved at least annually by the Board of Directors of
the Fund or by the vote of a majority of the outstanding voting
securities of the Fund, and, provided also that such continuance is
approved by the vote of a majority of the directors who are not
parties to the Agreements or interested persons of any such party at a
meeting held in person and called specifically for the purpose of
evaluating and voting on such approval. Both Agreements provide that
either party may terminate by giving the other 60 days written notice.
The Agreements terminate automatically if assigned by either party.
GENERAL INFORMATION
AND HISTORY
The Fund, incorporated in Maryland on July 24, 1984, has a present
authorized capitalization of 10,000,000 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 Statutes permit registered investment companies, such as
the Fund, to operate without an annual meeting of shareholders under
specified circumstances if an annual meeting is not required by the
Investment Company Act of 1940. There are procedures whereby the
shareholders may remove directors. These procedures are 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
The Fund pays dividends from net investment income quarterly, usually
in March, June, September and December. Distribution 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 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 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. 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.
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 exchanges 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 fiscal year.
Dividends declared in October, November 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
Application, or on a separate form supplied by the Fund, that their
Social Security or Taxpayer Identification Number provided is correct
and that they are not currently subject to backup withholding, or that
they are exempt from backup withholding.
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
($100 minimum). 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 shareholders 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 $1,000 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 fund in the Babson Group according to your instructions.
Monthly exchanges will be continued until all shares have been exchanged
or until you terminate the Automatic Exchange authorization. A special
authorization form will be provided upon request.
Transfer of Ownership -- A shareholder may transfer shares to another
shareholder account. The requirements which apply to redemptions apply
to transfers. A transfer to a new account must meet initial investment
requirements.
Systematic Redemption Plan -- Shareholders who own shares in open
account valued at $10,000 or more may arrange to make regular
withdrawals without the necessity of executing a separate redemption
request to initiate each withdrawal.
Sub-Accounting -- Keogh and corporate tax qualified retirement plans,
as well as certain other investors who must maintain separate
participant accounting records, may meet these needs through services
provided by the Fund's manager, Jones & Babson, Inc. Investment
minimums may be met by accumulating the separate accounts of the
group. Although there is currently no charge for sub-accounting, the
Fund and its manager reserve the right to make reasonable charges for
this service.
Prototype Retirement Plans -- Jones & Babson, Inc. offers a defined
contribution prototype plan -- The Universal Retirement Plan -- which is
suitable for all who are self-employed, including sole proprietors,
partnerships, and corporations. The Universal Prototype includes both
money purchase pension and profit-sharing plan options.
Individual Retirement Accounts -- Also available is an Individual
Retirement Account (IRA). The IRA uses the IRS model form of plan and
provides an excellent way to accumulate a retirement fund which will
earn tax-deferred dollars until withdrawn. An IRA may also be used to
defer taxes on certain distributions from employer-sponsored
retirement plans. You may contribute up to $2,000 of compensation each
year ($2,250 if a spousal IRA is established), some or all of which
may be deductible. Consult your tax adviser concerning the amount of
the tax deduction, if any.
Simplified Employee Pensions (SEPs) -- The Jones & Babson IRA may be
used with IRS Form 5305 - SEP to establish a SEP-IRA, to which the
self-employed individual may contribute up to 15% of net earned income
or $30,000, whichever is less. A SEP-IRA offers the employer the
ability to make the same level of deductible contributions as a
Profit-Sharing Plan with greater ease of administration, but less
flexibility in plan coverage of employees.
SHAREHOLDER INQUIRIES
Telephone inquiries may be made toll free to the Fund, 1-800-4-BABSON
(1-800-422-2766), or in the Kansas City area 471-5200.
Shareholders may address written inquiries to the Fund at:
Babson Value Fund, Inc.
Three Crown Center
2440 Pershing Road, Suite G-15
Kansas City, MO 64108
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
Kansas City, Missouri
LEGAL COUNSEL
STRADLEY, RONON, STEVENS & YOUNG
Philadelphia, Pennsylvania
JOHN G. DYER
Kansas City, Missouri
CUSTODIAN
UMB BANK, n.a.
Kansas City, Missouri
TRANSFER AGENT
JONES & BABSON, INC.
Kansas City, Missouri
PART B
BABSON VALUE FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
March 31, 1995
This Statement is not a prospectus but should be read in conjunction
with the Fund's current Prospectus dated March 31, 1995. To obtain
the Prospectus please call the Fund toll-free 1-800-4-BABSON
(1-800-422-2766), or in the Kansas City area 471-5200.
TABLE OF CONTENTS
Investment Objective and Policies
Portfolio Transactions
Investment Restrictions
Risk Factors Involving Repurchase Agreements
Performance Measures
How the Fund's Shares are Distributed
How Share Purchases are Handled
Redemption of Shares
Signature Guarantees
Management and Investment Counsel
How Share Price is Determined
Officers and Directors
Custodian
Independent Auditors
Other Jones & Babson Funds
Description of Stock Ratings
Description of Commercial Paper Ratings
Financial Statements
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement the Fund's investment objective and
policies set forth in the Prospectus.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for the Fund are made by Jones &
Babson, Inc. pursuant to recommendations by David L. Babson & Co. Inc.
Officers of the Fund and Jones & Babson, Inc. are generally
responsible for implementing or supervising these decisions, including
allocation of portfolio brokerage and principal business and the
negotiation of commissions and/or the price of the securities. In
instances where securities are purchased on a commission basis, the
Fund will seek competitive and reasonable commission rates based on
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
circumstances 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
counsel in acquiring or disposing of a portfolio holding. Securities
acquired or proceeds obtained will be equitably distributed between
the Fund and other clients participating in the transaction. In some
instances, this investment procedure may affect the price paid or
received by the Fund or the size of the position obtained by the Fund.
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 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); (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 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' con-tinuous operations; (10) except for
transactions in its shares or other securities through brokerage
prac-tices which are considered normal and generally accepted under
circumstances existing at the time, 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; (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; or (14) invest in securities which are
assessable or involve unlimited liability.
In addition to the fundamental investment restric-tions set out above,
in order to comply with the law or regulations of various States, the
Fund will not engage in the following practices: (1) invest in
securities which are not readily marketable or in securities of
foreign issuers which are not listed on a recognized domestic or
foreign securities exchange; (2) write put or call options; (3) invest
in oil, gas and other mineral leases or arbitrage transactions; (4)
purchase or sell real estate (including limited partnership interests,
but excluding readily marketable interests in real estate investment
trusts or readily marketable securities of companies which invest in
real estate), or (5) purchase securities of issuers which the company
is restricted from selling to the public without registration under the
Securities Act of 1993, including Rule 144(a) securities.
Certain States also require that the Fund's investments in warrants,
valued at the lower of cost or market, may not exceed 5% of the value
of the Fund's net assets. Included within that amount, but not to
exceed 2% of the value of the Fund's net assets may be warrants which
are not listed on the New York or American Stock Exchange. Warrants
acquired by the Fund in units or attached to securities may be deemed
to be without value for purposes of this limitation.
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 ex-pressed as follows:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1000
T = average annual total return
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 12/1/93-11/30/94 4.51%
For the five years 12/1/89-11/30/94 10.61%
From commencement of 13.85%
operation to 11/30/94*
___________________________________________
*The Fund commenced operation December 21, 1984.
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, 1994, 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, Inc., Babson Enterprise Fund II, Inc., Shadow
Stock Fund, Inc., Babson-Stewart Ivory International Fund, Inc., UMB
Stock Fund, Inc., UMB Bond Fund, Inc., UMB Money Market Fund, Inc.,
UMB Tax-Free Money Market Fund, Inc., UMB Heartland Fund, Inc. and UMB
WorldWide Fund, Inc., and Buffalo Balanced 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 statement, 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 seven-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 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 investment counsel.
David L. Babson & Co. Inc. was founded in 1940. It is a private
investment research and counseling organization serving individual,
corporate and other institutional clients. It participates with Jones
& Babson in the management of nine Babson no-load mutual funds, in
addition to UMB Money Market Fund, Inc. and UMB Tax-Free Money Market
Fund, Inc.
The aggregate management fees paid to Jones & Babson, Inc. during the
most recent fiscal year ended November 30, 1994, and from which Jones
& Babson, Inc. paid all the Fund's expenses except those payable
directly by the Fund, were $709,585. The annual fee charged by Jones
& Babson, Inc. covers all normal operating costs of the Fund.
David L. Babson & Co. Inc. has an experienced investment analysis and
research staff which eliminates the need for Jones & Babson, Inc. and
the Fund to maintain an extensive duplicate staff, with the consequent
increase in the cost of investment advisory service. The cost of the
services of David L. Babson & Co. Inc. is included in the services of
Jones & Babson, Inc. During the most recent fiscal year ended
November 30, 1994, Jones & Babson, Inc. paid David L. Babson & Co.
Inc. a fee amounting to $261,435.
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
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. Unless noted otherwise, the
address of each Officer and Director is Three Crown Center, 2440
Pershing Road, Suite G-15, Kansas City, Missouri 64108. Except as
indicated, each has been an employee of Jones & Babson, Inc. for more
than five years.
* Larry D. Armel, 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, Inc., Babson
Enterprise Fund II, Inc., Shadow Stock Fund, Inc., Babson-Stewart
Ivory International Fund, Inc; UMB Stock Fund , Inc. , UMB
Bond, UMB Money Market Fund, Inc., UMB Tax-Free Money Market Fund, Inc.,
UMB Heartland Fund, Inc., UMB WorldWide Fund, Inc., Buffalo Balanced
Fund, Inc.; President and Trustee of D.L. Babson Bond Trust.
Francis C. Rood, Director.
Retired, 6429 West 92nd Street, Overland Park, Kansas 66212.
Formerly, Group Vice President-Administration, 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, Inc., Babson Enterprise Fund II, Inc., Shadow Stock
Fund, Inc., Buffalo Balanced Fund, Inc.; Trustee of D.L. Babson Bond Trust.
William H. Russell, Director.
Financial consultant, 645 West 67th Street, Kansas City, Missouri
64113; 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, Inc., Babson Enterprise Fund II, Inc., Shadow Stock
Fund, Inc., Babson-Stewart Ivory International Fund, Inc., Buffalo
Balanced Fund, Inc.; Trustee of D.L. Babson Bond Trust.
H. David Rybolt, Director.
Consultant, HDR Associates, P.O. Box 2468, Shawnee Mission,
Kansas 66202; 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, Inc., Babson Enterprise Fund II, Inc., Shadow
Stock Fund, Inc., Buffalo Balanced Fund, Inc.; Trustee of D.L. Babson
Bond Trust.
__________________________________
* Directors who are interested persons as that term is defined in the
Investment Company Act of 1940, as amended.
P. Bradley Adams, 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, Inc., Babson
Enterprise Fund II, Inc., Shadow Stock Fund, Inc., Babson-Stewart
Ivory International Fund, Inc., D. L. Babson Bond Trust; UMB Stock
Fund, Inc., UMB Bond Fund, Inc., UMB Money Market Fund, Inc., UMB
Tax-Free Money Market Fund, Inc., UMB Heartland Fund, Inc., UMB
WorldWide Fund, Inc., Buffalo Balanced Fund, Inc.
Michael A. Brummel, 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, Inc., Babson Enterprise Fund II,
Inc., Shadow Stock Fund, Inc., Babson-Stewart Ivory International
Fund, Inc., D.L. Babson Bond Trust; Vice President, Assistant
Secretary and Assistant Treasurer, UMB Stock Fund, Inc., UMB Bond
Fund, Inc., UMB Money Market Fund, Inc., UMB Tax-Free Money Market
Fund, Inc., UMB Heartland Fund, Inc, UMB WorldWide Fund, Inc., Buffalo
Balanced Fund, Inc.
Martin A. Cramer, 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, Inc., Babson
Enterprise Fund II, Inc., Shadow Stock Fund, Inc., Babson-Stewart
Ivory International Fund, Inc., D.L. Babson Bond Trust; UMB Stock
Fund, Inc., UMB Bond Fund, Inc., UMB Money Market Fund, Inc., UMB
Tax-Free Money Market Fund, Inc., UMB Heartland Fund, Inc., UMB
WorldWide Fund, Inc., Buffalo Balanced Fund, Inc.
Ruth Evans, Vice President.
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, Inc., Babson Enterprise Fund II,
Inc., Shadow Stock Fund, Inc., Babson-Stewart Ivory International
Fund, Inc., D.L. Babson Bond Trust; UMB Stock Fund, Inc., UMB Bond
Fund, Inc., UMB Money Market Fund, Inc., UMB Tax-Free Money Market
Fund, Inc., UMB Heartland Fund, Inc. , UMB WorldWide Fund, Inc., Buffalo
Balanced Fund, Inc.
David G. Kirk, Vice President.
Senior Vice President and Director, David L. Babson & Co. Inc., One
Memorial Drive, Cambridge, Massachusetts 02142. Vice President,
Babson Enterprise Fund, Inc., Babson Enterprise Fund II, Inc.
Roland W. Whitridge, Vice President-Portfolio.
Sr. Vice President and Director, David L. Babson & Co. Inc., One
Memorial Drive, Cambridge, Massachussetts 02142; Vice
President-Portfolio, Shadow Stock Fund, Inc.
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.
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 percent of all the votes entitled to be cast at the meeting. The
Fund has undertaken that its Directors will call a meeting of
stockholders if such a meeting is requested in writing by the holders
of not less than 10% of the outstanding shares of the Fund. To the
extent required by the undertaking, the Fund will assist shareholder
communications in such matters.
CUSTODIAN
The Fund's assets are held for safekeeping by an independent
custodian, UMB Bank, n.a. This means the bank, rather
than the Fund, has possession of the Fund's cash and securities. The
custodian bank is not responsible for the Fund's investment management
or administration. But, as directed by the Fund's officers, it
delivers cash to those who have sold securities to the Fund in return
for such securities, and to those who have purchased 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 auditors.
Reports to shareholders will be published at least semiannually.
OTHER JONES & BABSON FUNDS
The Fund is one of nine no-load funds comprising the Babson Mutual
Fund Group managed by Jones & Babson, Inc. in association with its
investment counsel, David L. Babson & Co. Inc. The other funds are:
EQUITY FUNDS
DAVID L. BABSON GROWTH FUND, INC. was organized in 1960 with the
objective of long-term growth of both capital and dividend income
through investment in the common stocks of well-managed companies
which have a record of long term above-average growth of both earnings
and dividends.
BABSON ENTERPRISE FUND, INC. was organized in 1983 with the objective
of long-term growth of capital by investing in a diversified portfolio
of common stocks of smaller, faster-growing companies with market
capital of $15 million to $300 million at the time of purchase. This
Fund is intended to be an investment vehicle for that part of an
investor's capital which can appropriately be exposed to above-average
risk in anticipation of greater rewards. This Fund is currently
closed to new shareholders.
BABSON ENTERPRISE FUND II, INC. was organized in 1991 with the
objective of long-term growth of capital by investing in a diversified
portfolio of common stocks of smaller, faster-growing companies which
at the time of purchase are considered by the Investment Adviser to be
realistically valued in the smaller company sector of the market.
This Fund is intended to be an investment vehicle for that part of an
investor's capital which can appropriately be exposed to above-average
risk in anticipation of greater rewards.
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.
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.
A prospectus for any of the Funds may be obtained from Jones & Babson,
Inc., Three Crown Center, 2440 Pershing Road, Suite G-15, Kansas City,
Missouri 64108.
Jones & Babson, Inc. also sponsors and manages six mutual funds which
especially seek to provide services to customers of affiliate banks of
UMB Financial Corporation. They are UMB Stock Fund,
Inc., UMB Bond Fund, Inc., UMB Money Market Fund, Inc., UMB Tax-Free
Money Market Fund, Inc., UMB Heartland Fund, Inc. and UMB WorldWide
Fund, Inc.
Jones & Babson, Inc. also sponsors and manages the Buffalo Balanced Fund,
Inc.
DESCRIPTION OF STOCK RATINGS
Standard & Poor's Earnings and Dividend Rankings for Common Stocks
(S&P) - Growth and stability of earnings and dividends are deemed key
elements in establishing Standard & Poor's earnings and dividend
rankings for common stocks. Basic scores are computed for earnings
and dividends, then adjusted by a set of predetermined modifiers for
growth, stability within long-term trend, and cyclically. Adjusted
scores for earnings and dividends are then combined to yield a final
score. The final score is measured against a scoring matrix
determined by an analysis of the scores of a large and representative
sample of stocks. The rankings are:
A+ Highest
A High
A- Above Average
B+ Average
B Below Average
B- Lower
C Lowest
D In Reorganization
Value Line Ratings of Financial Strength - The financial strength of
each of the companies reviewed by Value Line is rated relative to all
the others. The ratings are:
A++ The very highest relative financial strength.
A+ Excellent financial position relative to other companies.
A High grade relative financial strength.
B++ Superior financial health on a relative basis.
B+ Very good relative financial structure.
B Good overall relative financial structure.
C++ Satisfactory finances relative to other companies.
C+ Below-average relative financial position.
C Poorest financial strength relative to other major companies.
The ratings are based upon computer analysis of a number of key
variables that determine: (a) financial leverage, (b) business risk
and (c) company size plus the judgment of their analysts and senior
editors regarding factors that cannot be quantified across-the-board
for all stocks. The primary variables that are indexed and studied
include equity coverage of debt, equity coverage of intangibles,
"quick ratio" accounting methods, variability of return, quality of
fixed charge coverage, stock price stability and company size.
DESCRIPTION OF COMMERCIAL
PAPER RATINGS
Moody's . . . Moody's commercial paper rating is an opinion of the
ability of an issuer to repay punctually promissory obligations not
having an original maturity in excess of nine months. Moody's has one
rating - prime. Every such prime rating means Moody's believes that
the commercial paper note will be redeemed as agreed. Within this
single rating category are the following classifications:
Prime - 1 Highest Quality
Prime - 2 Higher Quality
Prime - 3 High Quality
The criteria used by Moody's for rating a commercial paper issuer
under this graded system include, but are not limited to the following
factors:
(1) evaluation of the management of the issuer;
(2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative type risks which may be inherent in certain
areas;
(3) evaluation of the issuer's products in relation to competition
and customer acceptance;
(4) liquidity;
(5) amount and quality of long-term debt;
(6) trend of earnings over a period of ten years;
(7) financial strength of a parent company and relationships which
exist with the issuer; and
(8) recognition by the management of obligations which may be present
or may arise as a result of public interest questions and preparations
to meet such obligations.
S&P . . . Standard & Poor's commercial paper rating is a current
assessment of the likelihood of timely repayment of debt having an
original maturity of no more than 270 days. Ratings are graded into
four categories, ranging from "A" for the highest quality obligations
to "D" for the lowest. The four categories are as follows:
"A" Issues assigned this highest rating are regarded as having
the greatest capacity for timely payment. Issues in this category are
further refined with the designations 1, 2, and 3 to indicate the
relative degree of safety.
"A-1" This designation indicates that the degree of safety
regarding timely payment is very strong.
"A-2" Capacity for timely payment on issues with this designation
is strong. However, the relative degree of safety is not as
overwhelming.
"A-3" Issues carrying this designation have a satisfactory
capacity for timely payment. They are, however, somewhat more
vulnerable to the adverse effects of changes in circumstances than
obligations carrying the higher designations.
"B" Issues rated "B" are regarded as having only an adequate capacity
for timely payment. Furthermore, such capacity may be damaged by
changing conditions or short-term adversities.
"C" This rating is assigned to short-term debt obligations with
a doubtful capacity for payment.
"D" This rating indicates that the issuer is either in default or is
expected to be in default upon maturity.
FINANCIAL STATEMENTS
The audited financial statements of the Fund which are contained in
the November 30, 1994 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 Value Fund, Inc., are incorporated by
reference into Part B of this Registration
Statement.
Included in Part C - Other Information
Consent of Independent Public Accountants
Annual Report to Shareholders of Babson Value
Fund, Inc.
(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 LLP, 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-1A 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 10, 1995, is as follows:
(1) (2)
Title of class Number of Record Holders
Common Stock 15,185
Value 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
the David L. Babson Growth Fund, Inc., Babson
Enterprise Fund, Inc., Babson Enterprise Fund II, Inc.,
D.L. Babson Money Market Fund, Inc., D.L. Babson
Tax-Free Income Fund, Inc., D.L. Babson Bond Trust, UMB
Stock Fund, Inc., UMB Bond Fund, Inc., UMB Money Market
Fund, Inc., UMB Tax-Free Money Market Fund, Inc. and
UMB Heartland 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:
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
<S> <S> <S>
Stephen S. Soden Chairman and Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Larry D. Armel President and Director President and
Three Crown Center Director
2440 Pershing Road
Kansas City, MO 64108
Giorgio Balzer Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
J. William Sayler Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Edward S. Ritter Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Robert N. Sawyer Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Vernon W. Voorhees Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141
Richard S. Graber Sr. Vice President - None
Three Crown Center Marketing and Director
2440 Pershing Road, G-15
Kanasas City, Missouri 64108
P. Bradley Adams Vice President Vice President
Three Crown Center and Treasurer and Treasurer
2440 Pershing Road, G-15
Kanasas City, Missouri 64108
Michael A Brummel Vice President Vice President
Three Crown Center
2440 Pershing Road, G-15
Kanasas City, Missouri 64108
Ruth Evans Vice President Vice President
Three Crown Center
2440 Pershing Road, G-15
Kanasas City, Missouri 64108
Martin A. Cramer Vice President Vice President
Three Crown Center and Secretary and Secretary
2440 Pershing Road, G-15
Kanasas City, Missouri 64108
</TABLE>
(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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this amendment to its 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 17th day of March,
1995.
BABSON VALUE 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 #12 to the Registration Statement has been
signed below by the following persons in the capacities and on the
date indicated.
LARRY D. ARMEL President, Principal March 17, 1995
Larry D. Armel Executive Officer, and Director
FRANCIS C. ROOD Director March 17, 1995
Francis C. Rood*
WILLIAM H. RUSSELL Director March 17, 1995
William H. Russell*
H. DAVID RYBOLT Director March 17, 1995
H. David Rybolt*
P. BRADLEY ADAMS Treasurer and Principal March 17, 1995
P. Bradley Adams 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 disclosures which would render it
ineligible to become effective pursuant to paragraph (b) of Rule 485
under the Securities Act of 1933.
JOHN G. DYER Attorney March 17, 1995
John G. Dyer
<PAGE>
Exhibit (11)
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 January 6, 1995 in this post-effective amendment to the
Registration Statement (Form N-1A) and related Prospectus of Value Fund,
Inc. filed with the Securities and Exchange Commission under the
Securities Act of 1933.
Kansas City, Missouri
March 13, 1995
Ernst & Young LLP
Ernst & Young LLP
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000753901
<NAME> BABSON VALUE FUND INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
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