March 13, 1996
Securities and Exchange Commission
450 5th Street N.W.
Washington, D. C. 20549
Re: Babson Value Fund, Inc.
File No. 2-93363
File No. 811-4114
Post-Effective Amendment No. 14
and Amendment No 16 to
Registration Statement on Form N-1A
-----------------------------------
Ladies & Gentlemen:
Enclosed herewith is Post-Effective Amendment No. 14 on Form N-1A
pursuant to paragraph (b) of Rule 485.
The purpose of this filing is to update the prospectus and SAI
with current financial information.
Thank you very much for your consideration in this matter.
Sincerely,
John G. Dyer
John G. Dyer
Attorney
JGD:com
Encl.
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. 14 File No. 2-93363 [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 16 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, 1996
It is proposed that this filing become effective:
X on March 31, 1996, 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, 1996, by
January 30, 1997.
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
<PAGE>
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
<PAGE>
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
<PAGE>
PROSPECTUS
March 31, 1996
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 1-800-4BABSON
(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 6
of this prospectus.)
PURCHASE INFORMATION
Minimum Investment
Initial 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.
<PAGE>
TABLE OF CONTENTS
Page
Fund Expenses 3
Financial Highlights 4
Investment Objective and Portfolio Management Policy 5
Repurchase Agreements 6
Risk Factors 6
Investment Restrictions 7
Performance Measures 7
How to Purchase Shares 8
Initial Investments 9
Investments Subsequent to Initial Investment 9
Telephone Investment Service 9
Automatic Monthly Investment Plan 10
How to Redeem Shares 10
Systematic Redemption Plan 12
How to Exchange Shares Between Babson Funds 12
How Share Price is Determined 13
Officers and Directors 14
Management and Investment Counsel 14
General Information and History 15
Dividends, Distributions and Their Taxation 16
Shareholder Services 17
Shareholder Inquiries 18
<PAGE>
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 .03%
Total Fund operating expenses .98%
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 $120
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, 1995.
The example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than
those shown.
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights for each of the ten years in
the period ended November 30, 1995, 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, 1995 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,
1995 Annual Report to Shareholders which is incorporated by
reference in this prospectus. The information for each of the
five years in the period ended November 30, 1990 is not covered
by the report of Ernst & Young LLP.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
Net asset value,
beginning of
year $25.19 $25.36 $22.24 $18.74 $16.20 $19.00 $16.85 $13.59 $15.04 $12.59
Income from investment
operations:
Net investment
income .589 .562 .543 .649 .711 .770 .764 .636 .553 .494
Net gains or losses on
securities (both realized
and unrealized) 7.205 .577 3.932 3.565 2.539 (3.025) 2.226 2.656 (1.333) 3.005
Total from
investment operations 7.794 1.139 4.475 4.214 3.250 (2.255) 2.990 3.292 (.780) 3.499
Less distributions:
Dividends from net
investment
income (.60) (.398) (1.030) (.714) (.710) (.506) (.760) (.032) (.630) (.867)
Distributions from
capital gains (.604) (.911) (.325) _ _ (.039) (.080) _ (.040) (.182)
Total
Distributions (1.204) (1.309) (1.355) (.714) (.710) (.545) (.840) (.032) (.670) (1.049)
Net asset value,
end of year $31.78 $25.19 $25.36 $22.24 $18.74 $16.20 $19.00 $16.85 $13.59 $15.04
Total Return 32% 5% 21% 23% 21% (12)% 19% 24% (5)% 29%
Ratios/Supplemental Data
Net assets, end of year
(in millions) $ 293 $ 120 $ 42 $ 34 $ 25 $ 22 $ 20 $ 10 $ 13 $ 7
Ratio of expenses to
average net
assets .98% .99% 1.00% 1.01% 1.01% 1.04% 1.06% 1.11% 1.08% 1.20%
Ratio of net investment
income to average
net assets 2.12% 2.32% 2.34% 3.10% 3.82% 4.44% 4.10% 3.87% 3.31% 3.60%
Portfolio turnover
rate 6% 14% 26% 17% 31% 6% 17% 24% 52% 28%
</TABLE>
<PAGE>
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 outstanding 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 "contrarian"
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
<PAGE>
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 higher
by S&P; (3) short-term debt securities which are non-
convertible and which have one year or less remaining to
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. 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, 1995, November 30, 1994 and November 30, 1993, 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
1995 $243,470 6%
1994 $184,842 14%
1993 $ 49,717 26%
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
<PAGE>
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 perfect
its interest in the underlying securities. While the Fund's
management acknowledges these risks, it is expected that they can be
controlled through stringent security selection criteria and careful
monitoring procedures.
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 the 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
<PAGE>
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 Mutual
Funds, Investor's Business Daily, Institutional Investor, The
Wall Street Journal, Mutual Fund Forecaster, No-Load
Investor, Money, Forbes, Fortune and Barron's may also be
used in comparing performance of the Fund. Performance
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 Money,
Barron's, Kiplinger's Personal Finance Magazine, Financial
World, Forbes, U.S. News & World Report, Business
Week, The Wall Street Journal, Investors Business Daily,
USA Today, Fortune and Stangers's may also be cited (if
the Fund is listed in any such publication) or used for
comparison, as well as performance listings and rankings
from Morningstar Mutual Funds, Personal Finance,
Income and Safety, The Mutual Fund Letter, No-Load Fund
Investor, United Mutual Fund Selector, No-Load Fund
Analyst, No-Load Fund X, Louis Rukeyser's Wall Street
newsletter, Donoghue's Money Letter, CDA Investment
Technologies, Inc., Wiesenberger Investment Companies
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 by 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
<PAGE>
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. Payment of redemption proceeds
will be delayed until the completed application is
received by the Fund.
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.
<PAGE>
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 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 application, or, subsequently, on a
special authorization form provided upon request. Availability
and continuance of this privilege is subject to acceptance and
approval by the Fund and all participating banks. If the date
selected falls on a day upon which the Fund shares are not
priced, investment will be made on the first date thereafter upon
which Fund shares are priced. The Fund will not be responsible
for the consequences of delays, including delays in the banking
or Federal Reserve wire systems.
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.")
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 (see Signature
Guarantees); and
(4) any additional documentation which the Fund may deem
necessary to insure a genuine redemption.
<PAGE>
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.")
The Fund will endeavor to transmit redemption proceeds to the
proper party, as instructed, as soon as practicable after a
redemption request has been received in "good order" and
accepted, but in no event later than the third business day
thereafter. Transmissions are made by mail unless an expedited
method has been authorized and specified in the redemption
request. The Fund will not be responsible for the consequences
of delays including delays in the banking or Federal Reserve
wire systems.
Redemptions will not become effective until all documents in the
form required have been received. In the case of redemption
requests made within 15 days of the date of purchase, the Fund
will delay transmission of proceeds until such time as it is
certain that unconditional payment in federal funds has been
collected for the purchase of shares being redeemed or 15 days
from the date of purchase. You can avoid the possibility of delay
by paying for all of your purchases with a transfer of federal
funds.
Signature Guarantees are required in connection with all
redemptions by mail, or changes in share registration, except as
hereinafter provided. These requirements may be waived by the
Fund in certain instances where it appears reasonable to do so
and will not unduly affect the interests of other shareholders.
Signature(s) must be guaranteed by an "eligible Guarantor
institution" as defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934. Eligible guarantor institutions include:
(1) national or state banks, savings associations, savings and
loan associations, trust companies, savings banks, industrial
loan companies and credit unions; (2) national securities
exchanges, registered securities associations and clearing
agencies; or (3) securities broker/dealers which are members of a
national securities exchange or clearing agency or which have a
minimum net capital of $100,000. A notarized signature will not
be sufficient for the request to be in proper form.
Signature guarantees will be waived for mail redemptions of
$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 three-day period when the New York
Stock Exchange is closed or under emergency circumstances as
determined by the Securities and Exchange Commission. Further,
the Fund reserves the right to redeem its shares in kind under
certain circumstances. If shares are redeemed in kind, the
shareholder may incur brokerage costs when converting into cash.
Additional details are set forth in the "Statement of Additional
Information."
<PAGE>
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 an open account valued at $10,000 or more,
and desire to make regular monthly or quarterly withdrawals
without the necessity and inconvenience of executing a separate
redemption request to initiate each withdrawal, you may enter
into a Systematic Withdrawal Plan by completing forms obtainable
from the Fund. For this service, the manager may charge you a fee
not to exceed $1.50 for each withdrawal. Currently the manager
assumes the additional expenses arising out of this type of plan,
but it reserves the right to initiate such a charge at any time
in the future when it deems it necessary. If such a charge is
imposed, participants will be provided 30 days notice.
Subject to a $50 minimum, you may withdraw each period a
specified dollar amount. Shares also may be redeemed at a rate
calculated to exhaust the account at the end of a specified
period of time.
Dividends and capital gains distributions must be reinvested in
additional shares. Under all withdrawal programs, liquidation of
shares in excess of dividends and distributions reinvested will
diminish and may exhaust your account, particularly during a
period of declining share values.
You may revoke or change your plan or redeem all of your
remaining shares at any time. Withdrawal payments will be
continued until the shares are exhausted or until the Fund or you
terminate the plan by written notice to the other.
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
<PAGE>
you should contact the Fund by
mail or telegraph. The Fund reserves the right to initiate a
charge for this service and to terminate or modify any or all of
the privileges in connection with this service at any time and
without prior notice under any circumstances where continuance of
these privileges would be detrimental to the Fund or its
shareholders such as an emergency, or where the volume of such
activity threatens the ability of the Fund to conduct business,
or under any other circumstances, upon 60 days written notice to
shareholders. The Fund will not be responsible for the
consequences of delays including delays in the banking or Federal
Reserve wire systems.
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 registered 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.
<PAGE>
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 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 has an experienced investment
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 its
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. 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 its
inception in 1984. He is a Chartered Financial Analyst. He joined
David L. Babson & Co. in 1974 and has over 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.
<PAGE>
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, 1995 amounted to 98/100 of one
percent (.98%) of the average net assets.
Certain officers and directors of the Fund are also officers or
directors or both of other Babson Funds, Jones & Babson, Inc. or
David L. Babson & Co. Inc.
Jones & Babson, Inc. is a wholly-owned subsidiary of Business
Men's Assurance Company of America which is considered to be a
controlling person under the Investment Company Act of 1940.
Assicurazioni Generali S.p.A., an insurance organization founded
in 1831 based in Trieste, Italy, is considered to be a
controlling person and is the ultimate parent of Business Men's
Assurance Company of America. Mediobanca is a 5% owner of
Generali.
David L. Babson & Co. Inc. is a wholly-owned subsidiary of
Massachusetts Mutual Life Insurance Company headquartered in
Springfield, Massachusetts. Massachusetts Mutual Life Insurance
Company is an insurance organization founded in 1851 and is
considered to be a controlling person of David L. Babson & Co.
Inc., under the Investment Company Act of 1940.
The current Management Agreement between the Fund and Jones &
Babson, Inc., which includes the Investment Counsel Agreement
between Jones & Babson, Inc. and David L. Babson & Co. Inc., will
continue in effect until October 31, 1996, 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 20,000,000 shares of $1 par
value common stock. All shares are of the same class with like
rights and privileges. Each full and fractional share, when
issued and outstanding, has: (1) equal voting rights with respect
to matters which affect the Fund; and (2) equal dividend,
distribution and redemption rights to the assets of the Fund.
Shares when issued are fully paid and non-assessable. The Fund
may create other series of stock but will not issue any senior
securities. Shareholders do not have pre-emptive or conversion
rights.
Non-cumulative voting - These shares have non-cumulative voting
rights, which means that the holders of more than 50% of the
shares voting for the election of directors can elect 100% of the
directors, if they choose to do so, and in such event, the
holders of the remaining less than 50% of the shares voting will
not be able to elect any directors.
The Maryland 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
<PAGE>
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
<PAGE>
during each calendar year an amount equal to: (1) 98% of its
calendar year ordinary income; (2) 98% of its capital gains
net income (the excess of short- and long-term capital gain
over short- and long-term capital loss) for the one-year
period ending each November 30; and (3) 100% of any
undistributed ordinary or capital gain net income from
the prior calendar year. Dividends declared in October,
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 except Babson Enterprise Fund, Inc. 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.
<PAGE>
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
<PAGE>
PART B
BABSON VALUE FUND, INC.
STATEMENT OF ADDITIONAL
INFORMATION
March 31, 1996
This Statement is not a prospectus but should be read in
conjunction with the Fund's current Prospectus dated
March 31, 1996. 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
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
<PAGE>
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 practices
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 1933, 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 expressed 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 12/1/94-11/30/95 32.07%
For the five years 12/1/90-11/30/95 20.02%
For the ten years12/1/85-11/30/95 14.64%
From commencement of 15.45%
operation to 11/30/95*
___________________________________________
*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, 1996, 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., Scout Stock Fund, Inc.,
Scout Bond Fund, Inc., Scout Money Market Fund,
Inc., Scout Tax-Free Money Market Fund, Inc., Scout
Regional Fund, Inc., Scout WorldWide Fund, Inc.,
Scout Balanced Fund, Inc., Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc. and Buffalo USA Global 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 three-
day period by the Fund's Board of Directors under the
following conditions authorized by the Investment
Company Act of 1940: (1) for any period (a) during
which the New York Stock Exchange is closed, other
than customary weekend and holiday closing, or (b)
during which trading on the New York Stock
Exchange is restricted; (2) for any period during which
an emergency exists as a result of which (a) disposal by
the Fund of securities owned by it is not reasonably
practicable, or (b) it is not reasonably practicable for
the Fund to determine the fair value of its net assets; or
(3) for such other periods as the Securities and
Exchange Commission may by order permit for the
protection of the Fund's shareholders.
The Fund has elected to be governed by Rule 18f-1
under the Investment Company Act of 1940 pursuant
to which the Fund is obligated to redeem shares solely
in cash up to the lesser of $250,000 or 1% of the
Fund's net asset value during any 90-day period for any
one shareholder. Should redemptions by any
shareholder exceed such limitation, the Fund may
redeem the excess in kind. If shares are redeemed in
kind, the redeeming shareholder may incur brokerage
costs in converting the assets to cash. The method of
valuing securities used to make redemptions in kind
will be the same as the method of valuing portfolio
securities described under "How Share Price is
Determined" in the Prospectus, and such valuation will
be made as of the same time the redemption price is
determined.
SIGNATURE GUARANTEES
Signature guarantees normally reduce the possibility
of forgery and are required in connection with each
redemption method to protect shareholders from loss.
Signature guarantees are required in connection with
all redemptions 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 as a private
investment research and counseling organization. On
June 30, 1995, David L. Babson & Co. Inc. became a
wholly-owned subsidiary of Massachusetts Mutual Life
Insurance Company. David L. Babson & Co. Inc.
serves individual, corporate and other institutional
clients. It participates with Jones & Babson in the
management of nine Babson no-load mutual funds, in
addition to Scout Money Market Fund, Inc. and Scout
Tax-Free Money Market Fund, Inc.
The aggregate management fees paid to Jones &
Babson, Inc. during the most recent fiscal year ended
November 30, 1995, and from which Jones & Babson,
Inc. paid all the Fund's expenses except those payable
directly by the Fund, were $1,892,581. 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, 1995, Jones & Babson, Inc. paid David
L. Babson & Co. Inc. a fee amounting to $697,267.
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, Scout
Stock Fund, Inc. , Scout Bond Fund, Inc., Scout
Money Market Fund, Inc., Scout Tax-Free Money
Market Fund, Inc., Scout Regional Fund, Inc., Scout
WorldWide Fund, Inc.,Scout Balanced Fund, Inc.,
Buffalo Balanced Fund, Inc., Buffalo Equity Fund,
Inc., Buffalo High Yield Fund, Inc., Buffalo USA
Global Fund, Inc.; President and 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.
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., Buffalo Equity Fund,
Inc., Buffalo High Yield Fund, Inc., Buffalo USA
Global 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.,
Buffalo Equity Fund, Inc., Buffalo High Yield Fund,
Inc., Buffalo USA Global 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.,
Buffalo Equity Fund, Inc., Buffalo High Yield Fund,
Inc., Buffalo USA Global Fund, Inc.; Trustee of D.L.
Babson Bond Trust.
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; Scout Stock Fund, Inc., Scout
Bond Fund, Inc., Scout Money Market Fund, Inc.,
Scout Tax-Free Money Market Fund, Inc., Scout
Regional Fund, Inc., Scout WorldWide Fund, Inc.,
Scout Balanced Fund, Inc.; Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global 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, Scout Stock Fund, Inc., Scout Bond Fund,
Inc., Scout Money Market Fund, Inc., Scout Tax-Free
Money Market Fund, Inc., Scout Regional Fund, Inc,
Scout WorldWide Fund, Inc., Scout Balanced Fund,
Inc.; Buffalo Balanced Fund, Inc., Buffalo Equity
Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo
USA Global 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; Scout Stock Fund, Inc., Scout
Bond Fund, Inc., Scout Money Market Fund, Inc.,
Scout Tax-Free Money Market Fund, Inc., Scout
Regional Fund, Inc., Scout WorldWide Fund, Inc.,
Scout Balanced Fund, Inc.; Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global 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 anticipa-
tion of greater-than-average rewards. The Fund
expects to reach its objective by investing in small
company stocks called "Shadow Stocks," i.e., stocks
that combine the characteristics of "small stocks" (as
ranked by market capitalization) and "neglected
stocks" (least held by institutions and least covered by
analysts).
BABSON-STEWART IVORY INTERNATIONAL
FUND, INC. was organized in 1987 with the
objective of seeking a favorable total return (from
market appreciation and income) by investing
primarily in a diversified portfolio of equity securities
(common stocks and securities convertible into
common stocks) of established companies whose
primary business is carried on outside the United
States.
FIXED INCOME FUNDS
D. L. BABSON BOND TRUST was organized in
1944, and has been managed by Jones & Babson, Inc.
since 1972, with the objective of a high level of
current income and reasonable stability of principal.
It offers two portfolios - Portfolio L and Portfolio S.
D. L. BABSON MONEY MARKET FUND, INC.
was organized in 1979 to provide investors the
opportunity to manage their money over the short
term by investing in high-quality short-term debt
instruments for the purpose of maximizing income to
the extent consistent with safety of principal and
maintenance of liquidity. It offers two portfolios -
Prime and Federal. Money market funds are neither
insured nor guaranteed by the U.S. Government and
there is no assurance that the funds will maintain a
stable net asset value.
D. L. BABSON TAX-FREE INCOME FUND,
INC. was organized in 1979 to provide shareholders
the highest level of regular income exempt from
federal income taxes consistent with investing in
quality municipal securities. It offers three separate
high-quality portfolios (including a money market
portfolio) which vary as to average length of maturity.
Income from the Tax-Free Money Market portfolio
may be subject to state and local taxes, as well as the
Alternative Minimum Tax.
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 seven mutual
funds which especially seek to provide services to
customers of affiliate banks of UMB Financial
Corporation. They are Scout Stock Fund, Inc., Scout
Bond Fund, Inc., Scout Money Market Fund, Inc.,
Scout Tax-Free Money Market Fund, Inc., Scout
Regional Fund, Inc., Scout WorldWide Fund, Inc. and
Scout Balanced Fund, Inc.
Jones & Babson, Inc. also sponsors and manages the
Buffalo Group of Mutual Funds. They are: Buffalo
Balanced Fund, Inc., Buffalo Equity Fund, Inc.,
Buffalo High Yield Fund, Inc. and Buffalo USA Global
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, 1995 Annual
Report to Shareholders are incorporated herein by
reference.
<PAGE>
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,
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 8, 1996, is
as follows:
(1) (2)
Title of class Number of Record Holders
Common Stock 19,938
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:
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
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
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
Martin A. Cramer Vice President Vice President
Three Crown Center and Secretary and Secretary
2440 Pershing Road, G-15
Kanasas City, Missouri 64108
(c) The principal underwriter does not receive any
remuneration or compansation for the duties or
services rendered to the Registrant pursuant to
the principal underwriting Agreement.
Item 30. LOCATION OF ACCOUNTS AND RECORDS.
Each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act and the
Rules (17 CFR 270.31a-1 to 31a-3) promulgated
thereunder is in the physical possession of Jones &
Babson, Inc., at Three Crown Center, 2440 Pershing
Road, G-15, Kansas City, Missouri 64108.
Item 31. MANAGEMENT SERVICES.
All management services are covered in the management
agreement between the Registrant and Jones & Babson,
Inc., which are discussed in Parts A and B.
Item 32. DISTRIBUTION EXPENSES.
Not applicable.
Item 33. UNDERTAKINGS.
Registrant undertakes that, if requested to do so by
the holders of at least 10% of the registrant;s
outstanding shares, to call a meeting of shareholders
for the purpose of voting upon the question of removal
of a director or directors and to assist in
communications with other shareholders as required by
Section 16(c) of the Investment Company Act of 1940, as
amended.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant 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 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 13th day of March, 1996.
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 #14 to the Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.
Larry D. Armel President, March 13, 1996
Larry D. Armel Principal Executive
Officer, and Director
H. David Rybolt Director March 13, 1996
H. David Rybolt*
William H. Russell Director March 13, 1996
William H. Russell*
Francis C. Rood Director March 13, 1996
Francis C. Rood*
P. Bradley Adams Treasurer and March 13, 1996
P. Bradley Adams Principal Financial
and Accounting Officer
*Signed pursuant to Power of Attorney
By Larry D. Armel
Attorney-in Fact
REPRESENTATIONS OF COUNSEL
I assisted in the preparation of this Post Effective Amendment
to the Fund's Registration Statement filed under the Securities
Act of 1933 and the Amendment to the Fund's Registration Statement
filed under the Investment Company Act of 1940. Based on my review
it is my opinion that this amendment does not contain 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 13, 1996
John G. Dyer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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