BABSON VALUE FUND INC, 497J, 1998-04-02

BABSON VALUE FUND INC
497J, 1998-04-02

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Babson
Value
FunD

Prospectus
March 31, 1998

A no-load mutual fund
invested in common stocks
considered undervalued.

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

PROSPECTUS
March 31, 1998

BABSON
VALUE FUND, INC.

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

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

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

INVESTMENT OBJECTIVE

A no-load mutual fund 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 (unless Automatic Monthly) $ 1,000
Initial IRA and Uniform Transfers (Gifts)
to Minors Purchases (unless Automatic Monthly) $ 250
Subsequent Purchase (unless Automatic Monthly):
By Mail $ 100
By Telephone Purchase (ACH) $ 100
By Wire $ 1,000
Automatic Monthly Purchases:
Initial $ 100
Subsequent $ 50

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

ADDITIONAL INFORMATION

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

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

TABLE OF CONTENTS
Page
Fund Expenses 3
Financial Highlights 4
Investment Objective and Portfolio Management Policy 5
Repurchase Agreements 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 13
How to Exchange Shares Between Funds 13
How Share Price is Determined 14
Officers and Directors 14
Management and Investment Counsel 15
General Information and History 16
Dividends, Distributions and Their Taxation 17
Shareholder Services 18
Shareholder Inquiries 19

BABSON 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 .02%
Total Fund operating expenses .97%

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 $119

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

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $38.65 $31.78 $25.19 $25.36 $22.24 $18.74 $16.20 $19.00 $16.85 $13.59
Income from investment
operations:
Net investment income .511 .553 .589 .562 .543 .649 .711 .770 .764 .636
Net gains or losses on securities
(both realized and unrealized) 9.653 7.194 7.205 .577 3.932 3.565 2.539 (3.025) 2.226 2.656
Total from investment
operations 10.164 7.747 7.794 1.139 4.475 4.214 3.250 (2.255) 2.990 3.292
Less distributions:
Dividends from net
investment income (.475) (.532) (.60) (.398) (1.030) (.714) (.710) (.506) (.760) (.032)
Distributions from
capital gains (.609) (.345) (.604) (.911) (.325) - - (.039) (.080) -
Total distributions (1.084) (.877) (1.204) (1.309) (1.355) (.714) (.710) (.545) (.840) (.032)
Net asset value, end of year $47.73 $38.65 $31.78 $25.19 $25.36 $22.24 $18.74 $16.20 $19.00 $16.85

Total return 26.89% 24.91% 32.07% 4.51% 21.13% 23.29% 20.81% (12.21)% 18.59% 24.27%

Ratios/Supplemental Data
Net assets, end of year (in millions) $ 1,419 $ 764 $ 293 $ 120 $ 42 $ 34 $ 25 $ 22 $ 20 $ 10
Ratio of expenses to average
net assets .97% .96% .98% .99% 1.00% 1.01% 1.01% 1.04% 1.06% 1.11%
Ratio of net investment income to
average net assets 1.22% 1.63% 2.12% 2.32% 2.34% 3.10% 3.82% 4.44% 4.10% 3.87%
Portfolio turnover rate 17% 11% 6% 14% 26% 17% 31% 6% 17% 24%
*Average commission paid per
equity share traded $ .0562 $.0548 - - - - - - - -
</TABLE>

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

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 supe-
rior 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 rela-
tively unpopular and out-of-favor, among investors gener-
ally, at the time of purchase. However, the portfolio will be
restricted to companies which the Fund's investment coun-
sel 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 ex-
penses, as determined by management, all assets will be invested in
marketable securities composed principally of common stocks and
securities convertible into common stocks. The reserves will be held in
cash or high-quality, short-term debt obligations readily changeable
into cash such as: (1) certificates of deposit, bankers' acceptances and
other short-term obligations issued domestically by United States
commercial banks having assets of at least
$1 billion and which are members of the Federal Deposit Insurance
Corporation or holding companies of such banks; (2) commercial paper of
companies rated P-2 or higher by Moody's Investors Service, Inc.
(Moody's) or A-2 or higher by Standard and Poor's Corporation (S&P), or
if not rated by either Moody's or S&P, a company's commercial paper may
be purchased by the Fund if the company has an outstanding bond issue
rated Aa or higher by Moody's or AA or higher by S&P; (3) short-term
debt securities which are non-
convertible and which have one year or less remaining to maturity at the
date of purchase and which are rated Aa or higher by Moody's or AA or
higher by S&P; (4) negotiable certificates of deposit and other short-
term debt obligations of savings and loan associations having assets of
at least
$1 billion and which are members of the Federal Home Loan Banks
Association and insured by the Federal Savings and Loan Insurance
Corporation. (For additional information on ratings, see "Description of
Commercial Paper Ratings" in the "Statement of Additional Information.")

Management believes, however, that there may be times when the
shareholders' interests are best served by invest-
ing temporarily in preferred stocks, bonds or other defen-
sive 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. Nor-
mally, however, the Fund will maintain at least 80% of the portfolio in
common stocks. There are no restrictions or guidelines regarding the
investment of Fund assets in shares listed on an exchange or traded
over-the-counter.

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

There is no assurance that the Fund's objective of long-term growth of
capital and income can be achieved. Portfo-
lio 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, 1997, 1996 and 1995, the total dollar
amount of brokerage commissions paid by the Fund and the annual
portfolio turnover rate were as follows:

Portfolio
Fiscal Brokerage Turnover
Year Commissions Rate

1997 $1,103,306 17%
1996 $ 669,271 11%
1995 $ 243,470 6%

REPURCHASE AGREEMENTS

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

The Fund will enter into such repurchase agreements only with United
States banks having assets in excess of
$1 billion which are members of the Federal Deposit Insurance
Corporation, and with certain securities dealers who meet the
qualifications set from time to time by the Board of Directors of the
Fund. The term to maturity of a repurchase agreement normally will be no
longer than a few days. Repurchase agreements maturing in more than
seven days and other illiquid securities will not exceed 10% of the net
assets of the Fund.

RISK FACTORS

There are risks in investing in unpopular stocks since the factors
causing the unpopularity may persist longer than expected at the time of
purchase, or they may get worse. These factors may range from a
reduction in earnings expectations to a major business problem. However,
in the judgment of management, those risks are substantially mitigated
by investing in stocks which are undervalued in the market in relation
to earnings, dividends and/or assets.

Risk Factors Applicable to

Repurchase Agreements

The use of repurchase agreements involves certain risks. For example, if
the seller of the agreement defaults on its obligation to repurchase the
underlying securities at a time when the value of these securities has
declined, the Fund may incur a loss upon disposition of them. If the
seller of the agreement becomes insolvent and subject to liquidation or
reorganization under the Bankruptcy Code or other laws, disposition of
the underlying securities may be delayed pending court proceedings.
Finally, it is possible that the Fund may not be able to perfect its
interest in the underlying securities. While the Fund's management
acknowledges these risks, it is expected that they can be controlled
through stringent security selection criteria and careful monitoring
procedures.

Risk Factors Applicable to
Year 2000 Issue

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

INVESTMENT RESTRICTIONS

In addition to the investment objective and portfolio management
policies set forth under the caption "Invest-
ment Objective and Portfolio Management Policy," the Fund is subject to
certain other restrictions which may not be changed without approval of
the lesser of: (1) at least 67% of the voting securities present at a
meeting if the holders of more than 50% of the outstanding securities of
the Fund are present or represented by proxy, or (2) more than 50% of
the outstanding voting securities of the Fund. Among these restrictions,
the more important ones are that the Fund will not purchase the
securities of any issuer if more than 5% of the Fund's total assets
would be invested in the securities of such issuer, or the Fund would
hold more than 10% of any class of securities of such issuer; the Fund
will not make any loan (the purchase of a security subject to a
repurchase agreement or the purchase of a portion of an issue of
publicly distributed debt securities is not considered the making of a
loan); and the Fund will not borrow or pledge its credit under normal
circumstances, except up to 10% of its total assets (computed at the
lower of fair market value or cost) for temporary or emergency purposes,
and not for the purpose of leveraging its investments; and provided
further that any borrowings shall have asset coverage of at least 3 to
1. The Fund will not buy securities while borrow-
ings 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 dis-
cussion of these matters also appears in the "Statement of Additional
Information." A discussion of Fund performance is included in the Fund's
Annual Report to Shareholders which is available from the Fund upon
request at no charge.

Total Return

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

Performance Comparisons

In advertisements or in reports to shareholders, the Fund may compare
its performance to that of other mutual funds with similar investment
objectives and to stock or other relevant indices. For example, it may
compare its performance to rankings prepared by Lipper Analytical
Services, Inc. (Lipper), a widely recognized independent service which
monitors the performance of mutual funds. The Fund may compare its
performance to the Standard & Poor's 500 Stock Index (S&P 500), an index
of unmanaged groups of common stocks, the Dow Jones Industrial Average,
a recog-
nized 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 na-
tional 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, Finan-
cial World, Forbes, U.S. News & World Report, Business
Week, The Wall Street Journal, Investors Business Daily,
USA Today, Fortune and Stanger's may also be cited (if
the Fund is listed in any such publication) or used for
comparison, as well as performance listings and rankings
from Morningstar Mutual Funds, Personal Finance, In-
come 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., BMA Tower, 700 Karnes Blvd.,
Kansas City, MO 64108-3306. For information call toll free
1-800-4-BABSON (1-800-422-2766), or in the Kansas City area 751-5900. If
an investor wishes to engage the services of any other broker to
purchase (or redeem) shares of the Fund, a fee may be charged by such
broker. The Fund will not be responsible for the consequences of delays
including delays in the banking or Federal Reserve wire systems.

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

The Fund reserves the right in its sole discretion to withdraw all or
any part of the offering made by this prospectus or to reject purchase
orders when, in the judgment of management, such withdrawal or rejection
is in the best interest of the Fund and its shareholders. The Fund also
reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with
respect to any person or class of persons, which include shareholders of
the Fund's special investment programs. The Fund reserves the right to
refuse to accept orders for Fund shares unless accompanied by payment,
except when a responsible person has indemnified the Fund against losses
resulting from the failure of 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. The minimum initial purchase is $1,000 unless your
purchase is pursuant to an IRA or the Uniform Transfers (Gifts) to
Minors Act, in which case the minimum initial purchase is $250. However,
if electing the Automatic Monthly Investment Plan, the minimum initial
purchase is reduced to $100 for all accounts. Make your check payable to
UMB Bank, n.a. Mail your application and check to:

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

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 751-5900 and
provide it with the identity of the registered account owner, the
registered address, the Social Security or Taxpayer Identification
Number of the registered owner, the amount being wired, the name and
telephone number of the wiring bank and the person to be contacted in
connection with the order. You will then be provided a Fund account
number, after which you should instruct your bank to wire the specified
amount, along with the account number and the account registration to:

UMB Bank, n.a.
Kansas City, Missouri, ABA #101000695
For Babson 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, $1,000 or more if purchases are made by
wire, or $100 or more
if purchases are made by telephone purchase (ACH). Automatic monthly
investments must be in amounts
of $50 or more.

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

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

TELEPHONE INVESTMENT SERVICE

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

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

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

AUTOMATIC MONTHLY
INVESTMENT PLAN

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

HOW TO REDEEM SHARES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SYSTEMATIC REDEMPTION PLAN

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

Subject to a $50 minimum, you may withdraw each period a specified
dollar amount. Shares also may be re-
deemed 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 FUNDS

Shareholders may exchange their Fund shares, which have been held in
open account for 15 days or more, and for which good payment has been
received, for identically registered shares of any other Babson Fund or
Buffalo Fund which is legally registered for sale in the state of
residence of the investor, except Babson Enterprise Fund, Inc., provided
that the minimum amount exchanged has a value of $1,000 and meets the
minimum investment requirement of the Fund into which it is exchanged.

Effective at the close of business on January 31, 1992, the Directors of
the Babson Enterprise Fund took action to limit the offering of that
Fund's shares. Babson Enterprise Fund 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 Privi-
lege, all registered owners must sign the appropriate section on the
original application, or the Fund must receive a special authorization
form, provided upon request. Dur-
ing periods of increased market activity, you may have difficulty
reaching the Fund by telephone, in which case you should contact the
Fund by mail or telegraph. The Fund reserves the right to initiate a
charge for this service and to terminate or modify any or all of the
privileges in connection with this service at any time and without prior
notice under any circumstances where continuance of these privi-
leges would be detrimental to the Fund or its shareholders such as an
emergency, or where the volume of such activity threatens the ability of
the Fund to conduct business, or under any other circumstances, upon 60
days written notice to shareholders. The Fund will not be responsible
for the consequences of delays including delays in the banking or
Federal Reserve wire systems.

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

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

HOW SHARE PRICE IS DETERMINED

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

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

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

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

OFFICERS AND DIRECTORS

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

MANAGEMENT AND INVESTMENT COUNSEL

Jones & Babson, Inc. was founded in 1960. It organized the Fund in 1984,
and acts as its manager and principal underwriter. Pursuant to the
current Management Agree-
ment, Jones & Babson, Inc. provides or pays the cost of all management,
supervisory and administrative services re-
quired in the normal operation of the Fund. This includes investment
management and supervision; fees of the custo-
dian, independent auditors and legal counsel; remuneration of officers,
directors and other personnel; rent; shareholder services, including the
maintenance of the shareholder ac-
counting system and transfer agency; and such other items as are
incidental to corporate administration.

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

As a part of the Management Agreement, Jones & 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
analysis and research staff which eliminates the need for Jones &
Babson, Inc. and the Fund to maintain an extensive duplicate staff, with
the consequent increase in the cost of investment advisory service. The
cost of the services of David L. Babson & Co. Inc. is included in the
fee of Jones & Babson, Inc. The Management Agreement limits the
liability of the manager and its investment counsel, as well as their
officers, directors and personnel, to acts or omissions involving
willful malfeasance, bad faith, gross
negligence or reckless disregard of their duties. Roland
W. Whitridge has been the manager of Babson Value Fund since 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. 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, 1997, amounted to 97/100 of one
percent (.97%) of the average net assets.

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

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

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

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

GENERAL INFORMATION AND HISTORY

The Fund, incorporated in Maryland on July 24, 1984, has a present
authorized capitalization of 50,000,000 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-cumula-
tive voting rights, which means that the holders of more than 50% of the
shares voting for the election of directors can elect 100% of the
directors, if they choose to do so, and in such event, the holders of
the remaining less than 50% of the shares voting will not be able to
elect any directors.

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

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

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

DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION

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

The Fund pays dividends from net investment income quarterly, usually in
March, June, September and Decem-
ber. 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 or to any excise
tax to the extent that it distributes its income to its shareholders.
Dividends, either in cash or reinvested in shares, paid by the Fund from
net investment income and short-term capital gains will be taxable to
shareholders as ordinary income, and will generally qualify in part for
the 70% dividends-received deduction for corporations. The portion of
the dividends so qualified depends on the aggregate taxable qualifying
dividend income received by the Fund from domestic (U.S.) sources and,
under the 1997 Act, compliance with certain holding period requirements.
The Fund will send to shareholders a statement each year advising the
amount of the dividend income which qualifies for such treatment.

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

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

The Fund intends to declare and pay dividends and
capital gains distributions so as to avoid imposition of the federal
excise tax. To do so, the Fund expects to distribute during each
calendar year an amount equal to: (1) 98% of its calendar year ordinary
income; (2) 98% of its capital gains net income (the excess of short-
and long-term capital gain over short- and long-term capital loss) for
the one-year period ending each November 30; and (3) 100% of any
undistributed ordinary or capital gain net income from the prior
calendar year. Dividends declared in October,
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 Applica-
tion, 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 IN-
CLUDED HEREIN FOR GENERAL INFORMATION ONLY. PROSPECTIVE INVESTORS SHOULD
CONSULT THEIR OWN TAX ADVISERS WITH RE-
SPECT TO THE TAX CONSEQUENCES TO THEM OF AN INVESTMENT IN THE FUND.

SHAREHOLDER SERVICES

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

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

Automatic Reinvestment - Dividends and capital gains distributions may
be reinvested automatically, or 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 $100 or more by
telephone if you have authorized such investments in your application,
or, subsequently, on a special authorization form provided upon request.
(See "Telephone Investment Service.")

Automatic Exchange - You may exchange shares from your account ($100
minimum) in any of the Babson Funds to an identically registered account
in any other Babson Fund or Buffalo Fund, 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.

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 reason-
able charges for this service.

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

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

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

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

Simplified Employee Pensions (SEPs) - The Jones & Babson IRA may be
used with IRS Form 5305 - SEP to establish a SEP-IRA, to which the self-
employed 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 751-5900.

Shareholders may address written inquiries to the
Fund at:

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

INDEPENDENT AUDITORS
ERNST & YOUNG LLP
Kansas City, Missouri

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

JOHN G. DYER
Kansas City, Missouri

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

TRANSFER AGENT
JONES & BABSON, INC.
Kansas City, Missouri

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

*Closed to new investors.

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

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

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

JB4B 3/98

PART B

BABSON VALUE FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION

March 31, 1998

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

TABLE OF CONTENTS

Investment Objective and Policies 2
Portfolio Transactions 2
Investment Restrictions 2
Performance Measures 3
How the Fund's Shares are Distributed 4
How Share Purchases are Handled 4
Redemption of Shares 4
Signature Guarantees 5
Management and Investment Counsel 5
How Share Price is Determined 5
Officers and Directors 6
Dividends, Distributions and Their Taxation 8
Custodian 11
Independent Auditors 11
Other Jones & Babson Funds 11
Description of Stock Ratings 13
Description of Commercial Paper Ratings 13
Financial Statements 14

JB63 3/98

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.

PERFORMANCE MEASURES

Total Return

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

P(1+T)n = ERV

Where: P = a hypothetical initial payment
of $1000

T = average annual total return

n = number of years

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

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

For the one year 12/1/96-11/30/97 26.89%

For the five years 12/1/92-11/30/97 21.52%

For the ten years 12/1/87-11/30/97 17.71%

From commencement of 16.91%
operation to 11/30/97*
__________________________________________

* 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, 1998, and
which will continue automatically for successive
annual periods ending each October 31, if continued
at least annually by the Fund's Board of Directors,
including a majority of those Directors who are not
parties to such Agreements or interested persons of
any such party. It terminates automatically if
assigned by either party or upon 60 days written
notice by either party to the other.

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

HOW SHARE PURCHASES ARE HANDLED

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

Each investment is confirmed by a year-to-date
statement which provides the details of the
immediate transaction, plus all prior transactions in
your account during the current year. This includes
the dollar amount invested, the number of shares
purchased or redeemed, the price per share, and the
aggregate shares owned. A transcript of all activity
in your account during the previous year will be
furnished each January. By retaining each annual
summary and the last year-to-date 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 of $50,000 or more
by mail or changes in share registration, except as
provided in the Prospectus.

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

(1) a written request for redemption;

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

(3) all stock certificates tendered for redemption.

MANAGEMENT AND
INVESTMENT COUNSEL

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

The aggregate management fees paid to Jones &
Babson, Inc. during the most recent fiscal year ended
November 30, 1997, and from which Jones &
Babson, Inc. paid all the Fund's expenses except
those payable directly by the Fund, were
$10,674,266. 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, 1997, Jones & Babson,
Inc. paid David L. Babson & Co. Inc. a fee
amounting to $3,911,594.

HOW SHARE PRICE IS DETERMINED

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

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

OFFICERS AND DIRECTORS

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

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

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

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

William H. Russell (74), Director. Financial
Consultant, 645 West 67th Street, Kansas City,
Missouri 64113; previously Vice President, Sprint;
Director, David L. Babson Growth Fund, Inc., D.L.
Babson Money Market Fund, Inc., D.L. Babson Tax-
Free Income Fund, Inc., Babson Enterprise Fund,
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., Buffalo Small Cap Fund,
Inc., Investors Mark Series Fund, Inc.; Trustee, D.L.
Babson Bond Trust.

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

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

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

Martin A. Cramer (48), Vice President and
Secretary. Vice President and Secretary, Jones &
Babson, Inc., David L. Babson Growth Fund, Inc.,
D.L. Babson Money Market Fund, Inc., D.L. Babson
Tax-Free Income Fund, Inc., Babson Enterprise
Fund, 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.,
Scout Capital Preservation Fund, Inc., Scout Kansas
Tax-Exempt Bond Fund, Inc., Buffalo Balanced
Fund, Inc., Buffalo Equity Fund, Inc., Buffalo High
Yield Fund, Inc., Buffalo USA Global Fund, Inc.,
Buffalo Small Cap Fund, Inc.; Secretary and Assis-
tant Vice President, AFBA Five Star Fund, Inc.;
Secretary, Investors Mark Series Fund, Inc.

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

Roland W. Whitridge (60), Vice President-
Portfolio. Senior Vice President and Director,
David L. Babson & Co. Inc., One Memorial Drive,
Cambridge, Massachussetts 02142; Vice President-
Portfolio, Shadow Stock Fund, Inc.

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

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.

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

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

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

DIVIDENDS, DISTRIBUTIONS
AND THEIR TAXATION

Distributions

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

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

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

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

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

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

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

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

Information on the Tax Character of Distri-
butions. The Fund will inform you of the amount
and character of your distributions at the time they
are paid, and will advise you of the tax status for
federal income tax purposes of such distributions
shortly after the close of each calendar year. If you
have not held Fund shares for a full year, you may
have designated and distributed to you as ordinary
income or capital gain a percentage of income that is
not equal to the actual amount of such income
earned during the period of your investment in the
Fund.

Taxes

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

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

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

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

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

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

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

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

U.S. Government Obligations. Many states grant
tax-free status to dividends paid to you from interest
earned on direct obligations of the U.S. Government,
subject in some states to minimum investment
requirements that must be met by the Fund.
Investments in GNMA/FNMA securities, bankers'
acceptances, commercial paper and repurchase
agreements collateralized by U.S. Government
securities do not generally qualify for tax-free
treatment. At the end of each calendar year, the
Fund will provide you with the percentage of any
dividends paid that may qualify for tax-free
treatment on your personal income tax return. You
should consult with your own tax advisor to
determine the application of your state and local
laws to these distributions. Because the rules on
exclusion of this income are different for
corporations, corporate shareholders should consult
with their corporate tax advisors about whether any
of their distributions may be exempt from corporate
income or franchise taxes.

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

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

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

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

(2) the transaction is an applicable straddle;

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

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

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

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

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

CUSTODIAN

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

INDEPENDENT AUDITORS

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

Reports to shareholders will be published at least
semiannually.

OTHER JONES & BABSON FUNDS

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

EQUITY FUNDS

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

BABSON ENTERPRISE FUND, INC. was
organized in 1983, with the objective of long-term
growth of capital by investing in a diversified
portfolio of common stocks of smaller, faster-
growing companies with market capital of $15
million to $300 million at the time of purchase.
This Fund is intended to be an investment vehicle
for that part of an investor's capital which can
appropriately be exposed to above-average risk in
anticipation of greater rewards. This Fund is
currently closed to new shareholders.

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

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

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

FIXED INCOME FUNDS

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

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

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

BUFFALO FUNDS

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

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

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

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

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

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

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

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

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

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, 1997,
Annual Report to Shareholders are incorporated
herein by reference.