BABSON STEWART IVORY INTERNATIONAL FUND INC, 485BPOS, 1998-10-23

BABSON STEWART IVORY INTERNATIONAL FUND INC
485BPOS, 1998-10-23

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No. _____ [ ]

Post-Effective Amendment No. 15 File No. 33-17762 [X]

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

Amendment No. 16 File No. 811-5386 [X]

BABSON-STEWART IVORY INTERNATIONAL FUND, INC.
- --------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

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

Registrant's Telephone Number, including Area Code (816)-751-5900

Larry D. Armel, President, BABSON-STEWART IVORY INTERNATIONAL FUND, INC.
700 Karnes Blvd., Kansas City, Missouri 64108-3306
- --------------------------------------------------------------
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: October 31, 1998

It is proposed that this filing become effective:

X On October 31, 1998, pursuant to paragraph (b) of Rule 485

Title of securities being registered:

Common Stock, $1.00 par value

Please address inquiries and communications to:
Martin A. Cramer
Babson-Stewart Ivory International Fund, Inc.
700 Karnes Blvd.
Kansas City, MO 64108-3306
Telephone: (816) 751-5900

and a carbon copy of all communications to:
Mark H. Plafker, Esq.
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Telephone: (215) 564-8000

<PAGE>

CROSS REFERENCE SHEET

Form N-1A Item Number Location in Prospectus

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Item 16. Investment Advisory and other . . . Management and Investment
Services Counsel; Shareholder
Services (Prospectus)

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

Item 18. Capital Stock and Other Securities . General Information;
Financial Statements

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

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

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

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

Item 23. Financial Statements . . . . . . . . (Incorporated by
reference)

<PAGE>
BABSON-
Stewart Ivory
International
FUND

Prospectus
October 31, 1998

A no-load mutual fund invested
primarily in equities of established
companies outside the United States.

BABSON FUNDS
Jones & Babson Distributors
A member of the Generali Group

PROSPECTUS
October 31, 1998

BABSON-STEWART IVORY
INTERNATIONAL FUND, INC.

Managed and Distributed By:
JONES & BABSON, INC.
Kansas City, Missouri

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

Investment Counsel:
BABSON-STEWART IVORY INTERNATIONAL
Cambridge, Massachusetts

INVESTMENT OBJECTIVE

A no-load diversified mutual fund that seeks 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. The Fund diversifies
its investments among various countries and a number of different
industries. (See "Investment Objective and Portfolio Management
Policy" on page 4 of this prospectus.) There is no guarantee that the
Fund's objective will be achieved. (For a discussion of special risk
considerations see page 5 of this prospectus.)

PURCHASE INFORMATION
Minimum Investment
Initial Purchase (unless Automatic Monthly) $ 2,500
Initial IRA and Uniform Transfers (Gifts)
to Minors Purchases (unless Automatic Monthly) $ 250
Subsequent Purchase (unless Automatic Monthly):
By Mail or Telephone Purchase (ACH) $ 100
By Wire $ 1,000
Automatic Monthly Purchases (ACH):
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 above.

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 calling
the Fund at the telephone numbers indicated above or by writing to the
address on the back cover.

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 2
Financial Highlights 3
Investment Objective and
Portfolio Management Policy 4
Risk Factors 5
Investment Restrictions 6
Performance Measures 6
How to Purchase Shares 7
Initial Investments 7
Investments Subsequent to Initial Investment 7
Telephone Investment Service 8
Automatic Monthly Investment Plan 8
How to Redeem Shares 8
Systematic Redemption Plan 10
How to Exchange Shares Between Funds 11
How Share Price is Determined 11
Officers and Directors 12
Management and Investment Counsel 12
Custodian 13
General Information and History 13
Dividends, Distributions and Their Taxation 14
Shareholder Services 14
Shareholder Inquiries 15

BABSON-STEWART IVORY INTERNATIONAL 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 Operating Expenses
(as a percentage of average net assets)
Management fees .95%
12b-1 fees None
Other expenses .21%
Total Fund operating expenses 1.16%

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 Years 5 Years 10 Years

$12 $37 $64 $141

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 June 30, 1998. 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-Stewart
Ivory International 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 Arthur Andersen LLP, independent public
accountants, appearing in the June 30, 1998, Annual Report to
Shareholders which is incorporated by reference into this prospectus.
The information for each of the five fiscal years from the period ended
June 30, 1989 to June 30, 1993 is not covered by the report of Arthur
Andersen LLP.

<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 19.53 $ 18.04 $ 15.96 $ 16.41 $ 13.97 $ 13.68 $ 11.65 $ 13.18 $ 10.77 $ 9.65
Income from investment operations:
Net investment income 0.08 0.07 0.07 0.16 0.05 0.11 0.13 0.13 0.05 0.06
Net gains (or losses) on securities
and foreign currency transactions
(both realized and unrealized) 1.07 1.70 2.85 0.23 3.01 0.30 2.03 (1.39) 2.46 1.41
Total from investment operations 1.15 1.77 2.92 0.39 3.06 0.41 2.16 (1.26) 2.51 1.47

Less distributions:
Dividends from net
investment income (0.07) (0.05) (0.08) (0.17) (0.04) (0.09) (0.13) (0.12) (0.04) (0.05)
Distributions from capital gains (0.96) (0.23) (0.65) (0.67) (0.58) (0.03) -* (0.15) (0.06) (0.30)
Distributions in excess of realized
capital gains - - (0.11) - - - - - - -
Total distributions (1.03) (0.28) (0.84) (0.84) (0.62) (0.12) (0.13) (0.27) (0.10) (0.35)
Net asset value, end of year $ 19.65 $ 19.53 $ 18.04 $ 15.96 $ 16.41 $ 13.97 $ 13.68 $ 11.65 $ 13.18 $ 10.77

Total return 6% 10% 19% 3% 22% 3% 19% (10)% 23% 15%

Ratios/Supplemental Data
Net assets, end of year (in millions) $ 104 $ 111 $ 80 $ 65 $ 47 $ 32 $ 18 $ 12 $ 11 $ 4
Ratio of expenses to average
net assets 1.16% 1.19% 1.26% 1.30% 1.32% 1.57% 1.58% 1.75% 1.75% 2.68%
Ratio of net investment income
to average net assets 0.37% 0.47% 0.44% 1.13% 0.34% 0.88% 1.16% 1.10% 0.36% 0.62%
Portfolio turnover rate 48% 40% 33% 37% 60% 49% 44% 52% 42% 40%
</TABLE>

*Capital gain distribution of .0003 not significant for per
share table.

INVESTMENT OBJECTIVE AND
PORTFOLIO MANAGEMENT POLICY

Babson-Stewart Ivory International Fund is a no-load open-end,
diversified management investment company, commonly known as a mutual
fund. The Fund seeks 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. The Fund will use the portfolio management policies
described below to generate a favorable total return consisting of
interest, dividend and other current income and appreciation in the
value of the Fund's portfolio securities by investing in equity
securities which offer good growth potential and in many cases pay
dividends. The Fund will look at such factors as the location of the
company's assets, personnel, sales and earnings, to determine whether a
company's primary business is carried on outside the United States. The
Fund diversifies its investments among various countries and a number of
different industries. There is no guarantee that the Fund's objective
will be achieved. Investments in international securities markets
involve risks in addition to those risks associated with investments in
the United States (see "Special Risk Considerations"). There-
fore, the Fund should be considered only as a means for international
diversification and not as a complete investment program. The Fund is
designed for long-term investors who are able to accept the risks of
international investing. 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 is designed to provide investors with a diversified
participation in international businesses. Over the years, some foreign
businesses have been especially successful in their particular
industries and some foreign stock markets have outperformed the American
markets. Foreign securities markets do not always move in parallel with
the U.S. securities markets, so investing in international secu-
rities can provide diversification advantages. Because the securities in
which the Fund invests trade primarily in foreign markets, any rise or
fall of the U.S. dollar in relation to foreign currencies will affect
their U.S. dollar value and thereby will affect the investment
performance of the Fund. A change in the value of any foreign currency
relative to the dollar will result in a corresponding change in the
dollar value of Fund assets denominated or traded in that currency.

The Fund primarily invests in equity securities of seasoned companies
which are listed on foreign stock exchanges and which the investment
counsel considers to have attractive characteristics in terms of
profitability, growth and financial resources. "Seasoned" and
"established" companies are those companies which, in the opinion of
the investment counsel, are known for the quality and acceptance of
their products or services and for their ability to generate profits and
in many cases pay dividends. The Fund may invest in fixed-income
securities of foreign governments or companies when the investment
counsel believes that prevailing market, economic, political or currency
conditions warrant such investments. While most foreign securities are
not subject to standard credit ratings, the investment counsel intends
to select "investment grade" issues of foreign debt securities which
are comparable to a Baa or higher rating by Moody's Investors Service,
Inc. or a BBB or higher rating by Standard and Poor's Corporation, based
on available information, and taking into account liquidity and quality
issues. Securities rated BBB or Baa areconsidered to be medium grade and
may have speculative characteristics. From time to time the Fund may
purchase American Depository Receipts ("ADR's"), which repre-
sent foreign securities traded on U.S. exchanges or in the over-the-
counter market, European Depository Receipts ("EDR's") and
International Depository Receipts ("IDR's"), in bearer form, which are
designed for use in European and other securities markets. The Fund may
invest in securities which are not listed on an exchange. Generally, the
volume of trading in an unlisted common stock is less than the volume of
trading in a listed stock. This means that the degree of market
liquidity of some stocks in which the Fund invests may be relatively
limited. When the Fund disposes of such a stock it may have to offer the
shares at a discount from recent prices or sell the shares in small lots
over an extended period of time.

In order to expedite settlement of portfolio transactions and to
minimize currency value fluctuations, the Fund may purchase foreign
currencies and/or engage in forward foreign currency transactions. The
Fund will not engage in forward foreign currency exchange contracts for
speculative purposes. A forward foreign currency exchange contract
involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the
contract. These contracts may be bought or sold to protect the Fund, to
some degree, against a possible loss resulting from an adverse change in
the relationship between foreign currencies and the U.S. dollar. This
method of protecting the value of the Fund's investment securities
against a decline in the value of a currency does not eliminate
fluctuations in the underlying prices of the securities. It establishes
a rate of exchange which one can achieve at some future point in time.
Although such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, at the same time, they tend
to limit any potential gain which might result should the value of such
currency increase.

The Fund intends to diversify investments broadly among countries and
normally to have represented in the portfolio business activities of not
less than three foreign countries. Generally, the Fund does not intend
to invest more than 35% of its total assets in any one particular
country. However, the Fund may, at times, temporarily invest a
substantial portion of its assets in one or more of such countries if
economic and business conditions warrant such investments.

From time to time, the Fund may invest in companies located in
developing countries. A developing country is generally considered to be
a country which is in the initial stages of its industrialization cycle
with a low per capita gross national product. Compared to investment in
the United States and other developed countries, investing in the equity
and fixed income markets of developing countries involves exposure to
relatively unstable governments, economic structures that are generally
less mature and based on only a few industries and securities markets
which trade a small number of securities. Prices on securities exchanges
in developing countries tend to be more volatile than those in developed
countries. The Fund will not invest more than 20% of its total assets in
companies located in developing countries.

Under normal circumstances the Fund will invest at least 65% of its
assets in equity securities of foreign issuers. However, to meet the
liquidity needs of the Fund or when the Fund believes that investments
should be deployed in a temporary defensive posture because of economic
or market conditions, the Fund may invest all or a major portion of its
assets in short-term debt securities denominated in U.S. dollars,
including U.S. Treasury Bills and other securities of the U.S.
government and its agencies, bankers' acceptances and certificates of
deposit, meeting the quality ratings set forth under the heading
"Investment Objective and Poli-cies" in the "Statement of Additional
Information," as well as enter into repurchase agreements maturing in
seven days or less with U.S. banks and broker-dealers which are
collateralized by such securities. The Fund may also hold cash and time
deposits in foreign banks, denominated in any major foreign currency.

Repurchase agreements involve investments in debt se-
curities where the seller (broker-dealer or bank) agrees to repurchase
the securities from the Fund at cost plus an agreed-to interest rate
within a specified time. A risk of repurchase agreements is that if the
seller seeks the protection of the bankruptcy laws, the Fund's ability
to liquidate the security involved could be temporarily impaired, and it
subsequently might incur a loss if the value of the security declines or
if the other party to a repurchase agreement defaults on its obligation.
There is also the risk that the Fund may be delayed or prevented from
exercising its rights to dispose of the collateral.

RISK FACTORS

Special Risk Considerations

Investing in foreign securities involves special risk considerations
including those described herein which are not normally associated with
investing in United States securities. These considerations include:
changes in currency rates; exchange control regulations; costs incurred
in connection with conversions between various currencies (fees may also
be incurred when converting foreign investments to U.S. dollars);
availability of less financial information than comparable United States
companies; lack of uniform accounting, auditing and financial reporting
requirements; less liquidity and more volatility than securities listed
on the New York Stock Exchange due to substantially lower
trading volume; possibly lower sales prices in the event of forced
liquidation of securities in order to meet unantici-
pated cash requirements; fixed commissions on foreign stock exchanges
which are generally higher than negotiated commissions on United States
exchanges, in addition to less supervision and regulation of such
exchanges; additional custodial costs associated with maintaining
foreign portfolio securities; and the possibility of expropriation of
assets; confiscatory taxation; imposition of withholding of taxes prior
to payment of dividends or other distributions; political or social
instability; or diplomatic developments which could affect United States
investments in those countries. The Fund may invest in countries which
are known to experience delays in settlements. Under such
circumstances, the Fund pays for securities on the settlement date, even
though physical delivery of the securities to the Fund's custodian will
occur at a later date. The delay in settlement could result in losses to
the Fund when it is unable to sell portfolio securities because the
securities have not been delivered to the Fund.

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
one issuer, excluding obligations of the U.S. government, if more than
5% of the Fund's total assets would be invested in the securities of
such issuer, or the Fund would hold more than 10% of any class of
securities of such issuer; the Fund will not make any loan (the purchase
of a security subject to a repurchase agreement or the purchase of a
portion of an issue of publicly distributed debt securities is not
considered the making of a loan); and the Fund will not borrow or pledge
its credit under normal circumstances, except up to 10% of its total
assets (computed at the lower of fair market value or cost) for
temporary or emergency purposes, and not for the purpose of leveraging
its investments; and provided further that any borrowings shall have
asset coverage of at least 3 to 1. The Fund will not buy securities
while borrowings are outstanding. The full text of these restrictions
are set forth in the "Statement of Additional Information."

PERFORMANCE MEASURES

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

Total Return

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

Performance Comparisons

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

Performance rankings, recommendations, published editorial comments and
listings reported in Money, Barron's, Kiplinger's Personal Finance
Magazine, Financial World, Forbes, U.S. News & World Report, Business
Week, The Wall Street Journal, Investors Business Daily, USA Today and
Fortune 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. To complete a purchase order by
mail, wire or telephone, please provide the information detailed below.
For information or assistance 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 and
accepted 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 such institutions.

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 $2,500 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-Stewart Ivory International Fund, Inc.
P.O. Box 419757
Kansas City, MO 64141-6757

Initial investments - By wire. You may purchase shares of the Fund by
wiring the purchase price ($2,500 minimum) through the Federal Reserve
Bank to 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 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
/CTR/BNF=State Street Bank & Trust,
Babson-Stewart Ivory International
Fund, Inc./AC=987015-6105
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 may be delayed until the completed
application is received by the Fund.

INVESTMENTS SUBSEQUENT
TO INITIAL INVESTMENT

You may add to your Fund account at any time in amounts of $100 or more
if purchases are made by mail or telephone purchase, or $1,000 or more
if purchases are made by wire. Automatic monthly investments must be in
amounts of $50 or more.

Checks should be made payable to UMB Bank, n.a. and mailed to the Fund
at:

P.O. Box 419779
Kansas City, MO 64141-6779
Always identify your account number or include the detachable reminder
stub which accompanies each confirmation.

Wire share purchases should include your account registration, your
account number and the name of 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. Debits to your
checking account would be processed through the Automatic Clearing House
(ACH). 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
followed, the Fund will not be liable for losses due to unauthorized or
fraudulent instructions. Such procedures may include, but are not
limited to requiring personal identification prior to acting upon in-
structions received by telephone, providing written confirmations of
such transactions, and/or tape recording of
telephone instructions.

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

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. Debits to your checking account would be processed through
the Automatic Clearing House (ACH). 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 concern-ing 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:

P.O. Box 419757
Kansas City, MO 64141-6757

The Fund will redeem shares at the price (net asset value per share)
next computed after receipt of a redemption request in "good order."
(See "How Share Price is Determined.")

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

Redemptions will not become effective until all documents in the form
required have been received. In the case of redemption requests made
within 15 days of the date of purchase, the Fund will delay transmission
of proceeds until such time as it is certain that unconditional payment
in federal funds has been collected for the purchase of shares being
redeemed or 15 days from the date of purchase, whichever occurs first.
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 in-stances where it appears reasonable to do so and will not
unduly affect the interests of other shareholders. Signature(s) must be
guaranteed by an "eligible guarantor institution" as defined in Rule
17Ad-15 under the Securities Exchange Act of 1934. Eligible guarantor
institutions include: (1) national or state banks, savings associations,
savings and loan associations, trust companies, savings banks,
industrial loan companies and credit unions; (2) national securities
exchanges, registered securities associations and clearing agencies; or
(3) securities broker/dealers which are members of a national securities
exchange or clearing agency or which have a minimum net capital of
$100,000. A notarized signature will not be sufficient for the request
to be in proper form.

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

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

Due to the high cost of maintaining smaller accounts, the Board of
Directors has authorized the Fund to close shareholder accounts where
their value falls below the current minimum initial investment
requirement at the time of initial purchase as a result of redemptions
and not as the result of market action, and remains below this level for
60 days after each such shareholder account is mailed a notice
of: (1) the Fund's intention to close the account, (2) the minimum
account size requirement, and (3) the date on which the account will be
closed if the minimum size requirement is not met. 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 redemptions by a corporation, it will also be necessary
to have an appropriate certified copy of resolutions on file with the
Fund before a redemption request will be considered in "good order."
In the case of certain institutions which have made satisfactory
redemption arrangements with the Fund, redemption orders may be
processed by facsimile or telephone transmission at net asset value per
share next effective after receipt by the Fund.

(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 normally
deducted from redemption proceeds, unless otherwise instructed. 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.

Further, the Fund reserves the right to redeem its shares in kind under
certain circumstances. 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
when converting the assets into 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. Additional details are
set forth in the "Statement of Additional Information."

SYSTEMATIC REDEMPTION PLAN

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

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

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

You may revoke or change your plan to redeem all of your remaining
shares at any time. Withdrawal payments will continue 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

For all accounts except Traditional and Roth IRAs, shareholders may
exchange Fund shares which have been held in an open account for 15 days
or more, and for which good payment has been received and accepted, for
identically registered shares of any other Babson or Buffalo Fund which
is authorized for sale in the state in which the investor is located,
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.

For Traditional and Roth IRAs, shareholders may exchange Fund shares
which have been held in an open account for 15 days or more, and for
which good payment has been received and accepted, for identically
registered shares of any other Babson Fund which is authorized for sale
in the state in which the investor is located, 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.

Automatic exchanges ($100 minimum) are also available for all accounts.
Once started, they continue monthly until all shares are exchanged or
until you terminate the Automatic Exchange authorization.

Effective at the close of business on January 31, 1992, the Directors of
the Babson Enterprise Fund, Inc. took action to limit the offering of
that Fund's shares. Babson Enterprise Fund will not accept any new
accounts, including IRAs and other retirement plans, until further
notice, nor will Babson Enterprise Fund accept transfers from
shareholders of other Babson Funds, who were not shareholders of record
of Babson Enterprise Fund at the close of business on January 31, 1992.
Investors may want to consider purchasing shares in Babson Enterprise
Fund II, Inc. as an alternative.

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

Exchanges by mail may be accomplished by a written request properly
signed by all registered owners identifying the account by name and
number, 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 a U.S. Exchange is valued at its last sale price
on the exchange on the date as of which assets are valued. Securities
listed on a foreign exchange are valued at the latest quoted sales price
available before the time when 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.

For the purposes of determining the Fund's net asset value per share,
all assets and liabilities initially expressed in foreign currencies
will be translated into U.S. dollars at the exchange rate in London last
quoted by a major bank. If such quotations are not available as of 4:00
P.M. (Eastern Time), the rate of exchange will be determined in
accordance with policies established 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., BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306, was founded in 1959. It organized the Fund in 1987, and acts
as its manager and principal underwriter. Pursuant to the current
Management Agreement, Jones & Babson, Inc. provides or pays the cost of
all management, supervisory and administrative services required in the
normal operation of the Fund. This includes investment management and
supervision; fees of the independent public accountants and legal
counsel; remu-neration of officers, directors and other personnel; rent;
shareholder services, including the maintenance of the shareholder
accounting system and transfer agency; and such other items as are
incidental to corporate administration.

Not considered normal operating expenses and therefore payable by the
Fund are fees for pricing services; custodian fees; taxes; interest;
fees and other charges of governments and their agencies, including the
cost of qualifying the Fund's shares for sale in any jurisdiction;
brokerage costs; dues; and all extraordinary costs and expenses
including but not limited to legal and accounting fees incurred in
anticipation of or arising out of litigation or administrative
proceedings to which the Fund, its officers or directors may be subject
or a party thereto.

As a part of the Management Agreement, Jones & Babson, Inc. employs at
its own expense Babson-Stewart Ivory International, a partnership formed
in 1987, by David L. Babson & Co. of Cambridge, Massachusetts and
Stewart Ivory & Company (International) Ltd., a wholly owned subsidiary
of Stewart Ivory (Holdings), Ltd., of Edinburgh, Scotland, as its
investment counsel to assist in the investment advisory function. David
L. Babson & Co. Inc. is an investment counseling firm founded in 1940.
It serves a broad variety of individual, corporate and other institu-
tional clients by maintaining an extensive research and analytical
staff. Stewart Ivory & Company (International) Ltd. and its predecessor
organizations have been managing investments internationally from
Edinburgh since 1873, when the first Scottish investment trust, The
Scottish American Investment Company, PLC, was formed. It remains a
client of the present day Stewart Ivory & Company Ltd. The partnership,
Babson-Stewart Ivory International, has an experienced investment
management 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 its
services 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. John G.L. Wright has been the
portfolio manager of Babson-Stewart Ivory International Fund since its
inception in 1988. He joined Stewart Fund Managers (which became
Stewart-Ivory) in 1971, and has 30 years of international 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. Jones & Babson, Inc. pays Babson-Stewart Ivory
International a fee of 475/1000 of one percent (.475%) of the average
daily total net assets. Both fees are computed daily and paid monthly.
The total expenses of the Fund for the fiscal year ended June 30, 1998,
amounted to 116/100 of one percent (1.16%) of the average net assets.

Certain officers and directors of the Fund are also officers or
directors or both of other Babson Funds, Jones & Babson, Inc., David L.
Babson & Co. Inc., Babson-Stewart Ivory International or Stewart Ivory
(Holdings) Ltd. or its subsidiaries.

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.

Stewart Ivory (Holdings) Ltd. is a closely held corporation and has
limitations in the ownership of its stock designed to maintain control
in those who are active in management.

The current Management Agreement between the Fund and Jones & Babson,
Inc., which includes the Investment Counsel Agreement between Jones &
Babson, Inc. and Babson-Stewart Ivory International, will continue in
effect until October 31, 1999, and will continue automatically for
successive annual periods ending each October 31 so long as such
continuance is specifically approved at least annually by the Board of
Directors of the Fund or by a vote of the 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. Each Agreement provides 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.

CUSTODIAN

State Street Bank and Trust Company of Boston, Mass-achusetts is the
custodian of the assets of the Fund. The names of the sub-custodians for
foreign securities and a description of how they were selected are set
forth under the heading "Custodian" in the "Statement of Additional
Information."

GENERAL INFORMATION AND HISTORY

The Fund, incorporated in Maryland on October 2, 1987, and has a present
authorized capitalization of 10,000,000 shares of $1 par value common
stock. All shares are of the same class with like rights and privileges.
Each full and fractional share, when issued and outstanding, has: (1)
equal voting rights with respect to matters which affect the Fund, and
(2) equal dividend, distribution and redemption rights to 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.
Sharehold-ers do not have pre-emptive or conversion rights.

Non-cumulative voting - These shares have noncumulative 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
public accountants; and (4) approval of a distribution plan. As a
result, the Fund does not intend to hold annual meetings.

The Fund may use "Babson-Stewart Ivory" in its name so long as Babson-
Stewart Ivory International, or an affiliate thereof, acts as its
investment counsel. Complete details with respect to the use of the name
are set out in the Management Agreement between the Fund and Jones &
Babson, Inc.

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

Dividends, Distributions and Their Taxation

The Fund pays dividends from net investment income semiannually, usually
in June and December. Dividend and capital gains distributions will be
automatically reinvested in additional shares of the Fund, unless the
shareholder has elected on the original application, or by written
instructions filed with the Fund, to have them paid in cash.

Distributions by the Fund are taxable as either ordinary income or
capital gains. Any capital gains distributed by the Fund are taxable as
long-term capital gains no matter how long you have owned your shares.
Distributions by a Fund of ordinary income or capital gains are taxable
whether you reinvest your distributions or receive them in cash. If you
purchase shares of the Fund shortly before a record date for a dividend
or capital gain distribution, a portion of such purchase may be returned
as a taxable distribution. Distributions by the Fund may also be subject
to state and local taxes.

The income received by the Fund is generally not expected to constitute
significant dividends from domestic (U.S.) sources, and therefore
distributions from the Fund generally will not be eligible for the
dividends-received deduction for corporations.

The Fund intends to receive investment income from sources within
foreign countries that may be subject to foreign income taxes withheld
at the source. Any foreign taxes paid by the Fund on its investments may
be passed through to you as a foreign tax credit. See the "Statement of
Additional Information" for additional information on how foreign taxes
paid by the Fund may affect you.

When you sell your shares, you may have a capital gain or loss. For tax
purposes, an exchange is the same as a sale. The tax rate on any gain
from the sale or exchange of your shares depends on how long you have
held your shares.

Fund distributions and gains from the sale or exchange of your shares
will generally be subject to state and local income tax. Non-U.S.
investors may be subject to U.S. withholding and estate tax.

The Fund is required to withhold 31% of reportable payments made to any
shareholder who fails to certify on their application that their Social
Security or Taxpayer Identification Number provided is correct and that
they are not subject to backup withholding.

The federal income tax status of all distributions will be reported to
shareholders each January as part of the annual statement of shareholder
transactions.

The tax discussion set forth above is included herein for general
information only. Prospective investors should consult their own tax
advisers with respect to the Federal, State, Local and Foreign 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 - Unless your account is a Traditional or Roth IRA,
you may exchange shares from your account in any of the Babson Funds for
shares to be held in an identically registered account in any other
Babson or Buffalo Fund, except Babson Enterprise Fund, Inc., according
to your instructions. If your account is a Traditional or Roth IRA, you
may exchange shares from your account in any of the Babson Funds for
shares to be held in an identically registered account in any other
Babson Fund, except Babson Enterprise Fund, according to your
instructions. The minimum amount is $100, and monthly exchanges will
continue until all shares have been exchanged or until you terminate the
Automatic Exchange authorization. A special authorization form will be
provided upon request.

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

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

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

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

Individual Retirement Accounts - Also available 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 deducible.
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:

Mailing Addresses
For Subsequent Purchases:
Babson-Stewart Ivory International Fund, Inc.
P.O. Box 419779
Kansas City, MO 64141-6779

For All Other Correspondence:
Babson-Stewart Ivory International Fund, Inc.
P.O. Box 419757
Kansas City, MO 64141-6757

Overnight Deliveries
Babson-Stewart Ivory International Fund, Inc.
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306

AUDITORS
ARTHUR ANDERSEN LLP
Kansas City, Missouri

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

CUSTODIAN
STATE STREET BANK AND TRUST COMPANY
Boston, Massachusetts

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

P.O. Box 419757
Kansas City, MO 64141-6757
816-751-5900

1-800-4-BABSON
(1-800-422-2766)
www.babsonfunds.com

JB3B 10/98

<PAGE>
PART B

BABSON-STEWART IVORY INTERNATIONAL FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION

October 31, 1998

This Statement is not a Prospectus but should be read in conjunction with
the Fund's current Prospectus dated October 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

Page
INVESTMENT OBJECTIVE AND POLICIES 1
PORTFOLIO TRANSACTIONS 3
INVESTMENT RESTRICTIONS 4
PERFORMANCE MEASURES 5
HOW THE FUND'S SHARES ARE DISTRIBUTED 7
HOW SHARE PURCHASES ARE HANDLED 8
REDEMPTION OF SHARES 8
SIGNATURE GUARANTEES 9
MANAGEMENT AND INVESTMENT COUNSEL 9
HOW SHARE PRICE IS DETERMINED 10
OFFICERS AND DIRECTORS 10
DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION 13
CUSTODIAN 14
INDEPENDENT PUBLIC ACCOUNTANTS 15
OTHER JONES & BABSON FUNDS 15
FINANCIAL STATEMENTS 17

JB64 10/98

INVESTMENT OBJECTIVE AND POLICIES

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

Although Babson-Stewart Ivory International Fund intends to invest its
assets primarily in equity securities, for liquidity purposes, or if, in
the judgment of the Investment Counsel, extremely abnormal conditions
persist in the markets for such securities, management retains the
authority to adopt a temporary defensive posture by investing in short-
term debt securities, including securities of the U.S. Government, its
agencies, authorities or instrumentalities (such as U.S. Treasury
obligations, which differ only in their interest rates, maturities and
times of issuance, and obligations issued or guaranteed by U.S.
government agencies or instrumentalities which are backed by the full
faith and credit of the U.S. Treasury or which are supported by the
right of the issuer to borrow from the U.S. Government), high quality
commercial paper, bankers' acceptances and repurchase agreements with
banks and brokers for U.S. government securities. Any repurchase
agreements entered into by the Fund will be fully collateralized and
marked-to-market daily.

Foreign Investments. Investors should recognize that investing in
foreign companies involves certain special considerations which are not
typically associated with investing in U.S. companies. Since the stocks
of foreign companies are frequently denominated in foreign currencies,
and since the Fund may temporarily hold uninvested reserves in bank
deposits in foreign currencies, the Fund will be affected favorably or
unfavorably by changes in currency rates and in exchange control
regulations, and may incur costs in connection with conversions between
various currencies. The investment policies of the Fund permit it to
enter into forward foreign currency exchange contracts in order to hedge
the Fund's holdings and commitments against changes in the level of
future currency rates. Such contracts involve an obligation to purchase
or sell a specific currency at a future date at a price set at the time
of the contract.

As foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards and practices comparable to
those applicable to domestic companies, there may be less publicly
available information about certain foreign companies than about
domestic companies. Securities of some foreign companies are generally
less liquid and more volatile than securities of comparable domestic
companies. There is generally less government supervision and
regulation of stock exchanges, brokers and listed companies than in the
U.S. In addition, with respect to certain foreign countries, there is
the possibility of expropriation or confiscatory taxation, political or
social instability, or diplomatic developments which could affect U.S.
investments in those countries.

Although the Fund will endeavor to achieve most favorable execution
costs in its portfolio transactions, fixed commissions on many foreign
stock exchanges are generally higher than negotiated commissions on U.
S. Exchanges. In addition, it is expected that the expenses of
custodian arrangements of the Fund's foreign securities will be somewhat
greater than the expenses for the custodian arrangements for handling
the Fund's securities of equal value.

Certain foreign governments levy withholding taxes against dividend and
interest income. Although in some countries a portion of these taxes
are recoverable, the nonrecovered portion of foreign withholding taxes
will reduce the income received from the companies comprising the Fund's
portfolio.

Repurchase Agreements. The Fund may invest in repurchase agreements
with commercial banks, brokers or dealers either for defensive purposes
due to market conditions or to generate income from its excess cash
balances. A repurchase agreement is an agreement under which the Fund
acquires a money market instrument (generally a security issued by the
U.S. Government or an agency thereof, a banker's acceptance or a
certificate of deposit) from a commercial bank, broker or dealer,
subject to resale to the seller at an agreed upon price and date
(normally, the next business day). A repurchase agreement may be
considered a loan collateralized by securities. The resale price
reflects an agreed upon interest rate effective for the period the
instrument is held by the Fund and is unrelated to the interest rate on
the underlying instrument. In these transactions, the securities
acquired by the Fund (including accrued interest earned thereon) must
have a total value in excess of the value of the repurchase agreements
and are held by the Fund's custodian bank until repurchased. In
addition, the Fund's Board of Directors will monitor the Fund's
repurchase agreement transactions generally and will establish
guidelines and standards for review by the investment counsel of the
creditworthiness of any bank, broker or dealer party to a repurchase
agreement with the Fund. No more than an aggregate of 10% of the Fund's
assets, at the time of investment, will be invested in repurchase
agreements having maturities longer than seven days and securities
subject to legal or contractual restrictions on resale, or for which
there are no readily available market quotations.

The use of repurchase agreements involves certain risks. For example,
if the other party to the agreement defaults on its obligations to
repurchase the underlying securities at a time when the value of the
securities has declined, the Fund may incur a loss upon disposition of
them. If the seller becomes insolvent and subject to liquidation or
reorganization under the applicable bankruptcy or other laws, a
bankruptcy court may determine that the underlying security is
collateral for a loan by the Fund not within the control of the Fund and
therefore subject to sale by the trustee in bankruptcy. Finally, it is
possible that the Fund may not be able to substantiate its interest in
the underlying securities. While the Fund's management acknowledges
these risks, it is expected that they can be controlled through careful
monitoring procedures.

Foreign Currency Transactions. The value of the assets of the Fund as
measured in United States dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange
control regulations, and the Fund may incur costs in connection with
conversions between various currencies.

The Fund will conduct its foreign currency exchange transactions either
on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through the use of forward contracts to
purchase or sell foreign currencies. A forward foreign currency
exchange contract will involve an obligation by the Fund to purchase or
sell a specific amount of currency at a future date, which may be any
fixed number of days, from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. These contracts
are transferable in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers.
A forward contract generally has no deposit requirements, and no
commissions are charged at any stage for trades. Neither type of
foreign currency transaction will eliminate fluctuations in the prices
of the Fund's portfolio securities or prevent loss if the prices of such
securities should decline.

The Fund may enter into forward foreign currency exchange contracts only
under two circumstances. First, when the Fund enters into a contract
for the purchase or sale of a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the
security. The Fund will then enter into a forward contract for the
purchase or sale, for a fixed amount of dollars, of the amount of
foreign currency involved in the underlying securities transaction; in
this manner the Fund will be better able to protect itself against a
possible loss resulting from an adverse change in the relationship
between the U.S. dollar and the subject foreign currency during the
period between the date the securities are purchased or sold and the
date on which payment is made or received.

Second, when the Investment Counsel believes that the currency of a
particular foreign country may suffer a substantial decline against the
U.S. dollar, it may enter into a forward contract to sell, for a fixed
amount of dollars, the amount of foreign currency approximating the
value of some or all of the Fund's securities denominated in such
foreign currency. The precise matching of the forward contract amounts
and the value of the securities involved will not generally be possible
since the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of those
securities between the date the forward contract is entered into and the
date it matures. The projection of short-term currency market movement
is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. The Investment Counsel does not
intend to enter into such forward contracts under this second
circumstance on a regular or continuous basis. The Fund will also not
enter into such forward contracts or maintain a net exposure to such
contracts when the consummation of the contracts would obligate the Fund
to deliver an amount of foreign currency in excess of the value of the
Fund's securities or other assets denominated in that currency. The
Investment Counsel believes that it is important to have the flexibility
to enter into such forward contracts when it determines that to do so is
in the best interests of the Fund. The Fund's custodian bank segregates
cash or equity or debt securities in an amount not less than the value
of the Fund's total assets committed to forward foreign currency
exchange contracts entered into under this second type of transaction.
If the value of the securities segregated declines, additional cash or
securities is added so that the segregated amount is not less than the
amount of the Fund's commitments with respect to such contracts. Under
normal circumstances, the Fund expects that any appreciation
(depreciation) on such forward exchange contracts will be approximately
offset by the depreciation (appreciation) in translation of the
underlying foreign investment arising from fluctuations in foreign
currency exchange rates.

The Fund will recognize the unrealized appreciation or depreciation from
the fluctuation in a foreign currency forward contract as an increase or
decrease in the Fund's net assets on a daily basis, thereby providing an
appropriate measure of the Fund's financial position and changes in
financial position.

PORTFOLIO TRANSACTIONS

Fund transactions will be placed with a view to receiving the best price
and execution. The Fund does not intend to solicit competitive bids on
each transaction. The Investment Counsel will monitor the performance
of brokers which effect transactions for the Fund to check the rates of
commission being paid by the Fund to brokers to ascertain that they are
competitive with those charged by other brokers for similar services.
Transactions also may be placed with brokers who provide the Investment
Counsel with investment research, such as reports concerning individual
issuers, industries and general economic and financial trends and other
research services and the Investment Counsel may knowingly pay
commissions to such brokers that may be higher than another broker might
charge, if in good faith the Investment Counsel determines that the
commissions paid are reasonable in relation to the brokerage and
research services provided.

Although commissions paid on brokerage transactions executed on United
States exchanges are currently on a negotiated basis, commissions on
transactions executed on foreign exchanges are generally on a fixed
basis. The Investment Counsel endeavors to obtain the rate of such
commission in good faith so as to achieve, in its judgment, the most
favorable result available to the Fund under the circumstances of each
transaction.

When it appears to be in the best interest 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.

For the last three fiscal years ended on June 30 each year, the total
dollar amount of brokerage commissions paid by the Fund and the annual
portfolio turnover rates were as follows:

Portfolio
Fiscal Brokerage Turnover
Year Commissions Rate

1996 $ 119,296 33%
1997 $ 229,337 40%
1998 $ 268,815 48%

INVESTMENT RESTRICTIONS

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

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

Although not fundamental policies subject to shareholder vote, the Fund
may not engage in any of the following activities:

1. Invest directly in oil, gas, or other mineral exploration or
development programs;

2. Invest more than 5% of its total assets in securities which are
restricted as to future sale;

3. Invest more than 5% of its total assets in puts, calls, straddles,
spreads, and any combination thereof (the Fund will engage in options
transactions for hedging purposes only); and

4. Purchase warrants, valued at the lower of cost or market, in excess
of 5% of the value of the Fund's net assets. Included within that
amount, but not to exceed 2% of the value of the Fund's net assets,
may be warrants which are not listed on the New York or American
Stock Exchange. Warrants acquired by the Fund at any time in units
or attached to securities are not subject to this restriction.

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
years (or other) periods at the end of the 1, 5 or 10
years (or other) periods (or fractional portions
thereof).

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

For the one year 7/l/97-6/30/98 6.48%

For the five years 7/l/93-6/30/98 11.67%

For the ten years 7/1/88-6/30/98 10.56%

From commencement
of operation to 6/30/98* 9.61%
________________________________________________
*The Fund commenced operation on December 7, 1987.

In spite of the strong performance of the U.S. market over the past
year, long-term comparisons still show that rates of return in several
international markets have outperformed the U. S. market in past years.
Although past performance does not indicate future results, tables like
the one below may be used to illustrate the performance of various
national equity markets relative to that of the United States.

World Stock Market Values
June 30, 1998

[PIE CHART]

US 49.7
Canada 2.3
UK 10.7
France 4.6
Germany 5.5
Netherlands 2.8
Switzerland 3.8
Italy 2.2
Others 8.5

Source: Morgan Stanley Capital International

Average Annual Total Returns
1988-1997
(In U.S. Dollars)

[BAR CHART]

Belgium 15.9
Denmark 17.7
Germany 14.3
Hong Kong 19.1
Ireland 13.9
Netherlands 19.7
Sweden 18.3
Switzerland 19.3
US 18.4
UK 13.8

Source: The WM Company/MSCI

Weights in MSCI World Market
Capitalization Index June 30, 1998

Weight as Percentage of Index

Australia 1.1
Austria 0.2
Belgium 0.9
Canada 2.3
Denmark 0.5
Finland 0.5
France 4.6
Germany 5.5
Hong Kong 0.8
Ireland 0.2
Italy 2.2
Japan 9.9
Malaysia 0.2
Netherlands 2.8
New Zealand 0.1
Norway 0.3
Portugal 0.3
Singapore 0.3
Spain 1.6
Sweden 1.5
Switzerland 3.8
UK 10.7
US 49.7
100.0

Source: Morgan Stanley Capital International

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, 1999 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 of
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., Babson Value
Fund, Inc., Shadow Stock Fund, Inc., UMB Scout Stock Fund, Inc., UMB
Scout Bond Fund, Inc., UMB Scout Money Market Fund, Inc., UMB Scout Tax-
Free Money Market Fund, Inc., UMB Scout Regional Fund, Inc., UMB Scout
WorldWide Fund, Inc., UMB Scout Balanced Fund, Inc., UMB Scout Capital
Preservation Fund, Inc., UMB Scout Kansas Tax-Exempt Bond Fund, Inc.,
Buffalo Balanced Fund, Inc., Buffalo Equity Fund, Inc., Buffalo High
Yield Fund, Inc., Buffalo Small Cap Fund, Inc., Buffalo USA Global 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.

The Fund may authorize certain brokers or other institutions
(intermediaries) to accept, on the Fund's behalf, purchase, redemption
or exchange orders. These parties may also designate other
intermediaries to accept orders on the Fund's behalf. The Fund will be
deemed to have received a purchase, redemption or exchange order when an
authorized intermediary (or authorized designee), accepts the order.
All customer orders will be priced at the Fund's net asset value next
computed after such orders are accepted by an authorized intermediary
(or designee).

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. 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, State Street Bank and Trust Company of
Boston, Massachusetts.

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 l8f-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 Babson-Stewart Ivory International, a partnership formed
in 1987 by David L. Babson & Co. Inc. and Stewart Ivory & Company Ltd.,
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. participates with Jones & Babson, Inc. in the
management of nine Babson no-load mutual funds. Stewart Ivory & Company
Ltd. and its predecessor organizations have been managing investments
internationally since 1873.

Babson-Stewart Ivory International has an experienced investment
management 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 Babson-Stewart Ivory International is included in the
services of Jones & Babson, Inc.

The aggregate management fees paid to Jones & Babson, Inc. during the
three most recent fiscal years ended June 30, 1998, 1997 and 1996, from
which Jones & Babson, Inc. paid all the Fund's expenses except those
payable directly by the Fund were $995,338, $857,963 and $676,177,
respectively. The annual fee charged by Jones & Babson, Inc. covers all
normal operating costs of the Fund.

During the three most recent fiscal years ended June 30, 1998, 1997 and
1996, Jones & Babson, Inc. paid Babson-Stewart Ivory International fees
amounting to $497,669, $428,982 and $338,089, respectively.

HOW SHARE PRICE IS DETERMINED

The net asset value per share of the Fund's 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 for
days on which changes in the value of the 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 King, Jr. Day Third Monday 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

Trading in securities on European and Far Eastern securities exchanges
and over-the-counter markets is normally completed well before the close
of business on each business day in the U.S. (Eastern Time). In
addition, European and Far Eastern securities trading generally or in a
particular country or countries may not take place on all days on which
the Fund is open for business. Furthermore, trading takes place in
Japanese markets on certain Saturdays and in various foreign markets on
days which are not days on which the Fund is open for business and on
which the Fund's net asset value is not calculated.

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., Babson
Value Fund, Inc., Shadow Stock Fund, Inc., UMB Scout Stock Fund,
Inc., UMB Scout Bond Fund, Inc., UMB Scout Money Market Fund, Inc.,
UMB Scout Tax-Free Money Market Fund, Inc., UMB Scout Regional Fund,
Inc., UMB Scout WorldWide Fund, Inc., UMB Scout Balanced Fund, Inc.,
UMB Scout Capital Preservation Fund, Inc., UMB 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 (64), Director. Retired, 73-395 Agave Lane, Palm
Desert, California 92260-6653. Formerly Vice President of Finance,
Hallmark Cards, Inc.; Director, 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 Value Fund, Inc., Shadow
Stock Fund, Inc., David L. Babson Growth 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.

James T. Jensen (69), Director. Chief Executive Officer, Jensen
Associates, Inc., 892 Worcester Street, Suite 210, Wellesley,
Massachusetts 02482.

Richard J. Phelps (70), Director. Chairman, Phelps Industries, Inc.,
122 Quincy Shore Drive, Quincy, Massachusetts 02171. Trustee, The
DLB Fund Group; Director, Superior Pet Products (Aust.) Pty. Ltd. and
Superior Pet Products, Ltd. (England); Member, Board of Overseers,
Tufts University School of Veterinary Medicine and Dean's Council,
Harvard Graduate School of Education.

William H. Russell (75), Director. Financial Consultant, 645 West
67th Street, Kansas City, Missouri 64113; formerly, 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., Babson
Value Fund, Inc., Shadow Stock Fund, Inc., Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield Fund, Inc.,
Buffalo USA Global Fund, Inc., Buffalo Small Cap Fund, Inc.,
Investors Mark Series Fund, Inc.; Trustee, D.L. Babson Bond Trust.

P. Bradley Adams (38), 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., Babson Value Fund, Inc., Shadow Stock Fund, Inc., D.L.
Babson Bond Trust, UMB Scout Stock Fund, Inc., UMB Scout Bond Fund,
Inc., UMB Scout Money Market Fund, Inc., UMB Scout Tax-Free Money
Market Fund, Inc., UMB Scout Regional Fund, Inc., UMB Scout WorldWide
Fund, Inc., UMB Scout Balanced Fund, Inc., UMB Scout Capital
Preservation Fund, Inc., UMB 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.

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., Babson Value Fund, Inc., Shadow Stock Fund, Inc., D.L.
Babson Bond Trust, UMB Scout Stock Fund, Inc., UMB Scout Bond Fund,
Inc., UMB Scout Money Market Fund, Inc., UMB Scout Tax-Free Money
Market Fund, Inc., UMB Scout Regional Fund, Inc., UMB Scout WorldWide
Fund, Inc., UMB Scout Balanced Fund, Inc., UMB Scout Capital
Preservation Fund, Inc., UMB Scout Kansas Tax-Exempt Bond Fund, Inc.,
Buffalo Balanced Fund, Inc., Buffalo Equity Fund, Inc., Buffalo High
Yield Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo Small Cap
Fund, Inc.; Secretary and Assistant Vice President, AFBA Five Star
Fund, Inc.; Secretary, Investors Mark Series Fund, Inc.

Constance E. Martin (37), 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 Value Fund, Inc., Shadow Stock Fund, Inc., D.L.
Babson Bond Trust, UMB Scout Stock Fund, Inc., UMB Scout Bond Fund,
Inc., UMB Scout Money Market Fund, Inc., UMB Scout Tax-Free Money
Market Fund, Inc., UMB Scout Regional Fund, Inc., UMB Scout WorldWide
Fund, Inc., UMB Scout Balanced Fund, Inc., UMB Scout Capital
Preservation Fund, Inc., UMB 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.

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

Compensation Table
<TABLE>
<CAPTION>
Aggregate Pension or Retirement Estimated Total Compensation
Compensation Benefits Accrued As Annual Benefits From All Babson Funds
Name of Director From the Fund Part of Fund Expenses Upon Retirement Paid to Directors**
</CAPTION>
<S> <C> <C> <C> <C>
Larry D. Armel* -- -- -- --
Stephen W. Harris*** $3,375 -- -- $3,375
James T. Jensen $3,375 -- -- $3,375
Richard J. Phelps $3,250 -- -- $3,250
Francis C. Rood*** -- -- -- $7,125
William H. Russell $3,375 -- -- $7,375
</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. Harris, Jensen and Phelps for services as directors
of one Babson Fund, to Mr. Rood for services as a director of eight
Babson Funds and to Mr. Russell for services as a director of nine
Babson Funds during the fiscal year ended June 30, 1998.
Directors' fees are paid by the Funds' manager and not by the Funds
themselves.
***Mr. Harris resigned his position as a director, effective December
31, 1997 and was replaced by Francis C. Rood on July 30, 1998.

Messrs. Jensen, Phelps, Rood and Russell have no financial interest in,
nor are they affiliated with either Jones & Babson, Inc. or Babson-
Stewart Ivory International.

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

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

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

DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION

Distributions of Net Investment Income. The Fund receives income
generally in the form of dividends and interest on its investments.
This income, less expenses incurred in the operation of the Fund,
constitute 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 gain over net long-term capital loss 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.

Effect of Foreign Investments on Distributions. Most foreign exchange
gains realized on the sale of debt instruments are treated as ordinary
income by the Fund. Similarly, foreign exchange losses realized by the
Fund on the sale of debt instruments are generally treated as ordinary
losses by the Fund. These gains when distributed will be taxable to you
as ordinary dividends, and any losses will reduce the Fund's ordinary
income otherwise available for distribution to you. This treatment
could increase or reduce the Fund's ordinary income distributions to
you, and may cause some or all of the Fund's previously distributed
income to be classified as a return of capital.

The Fund may be subject to foreign withholding taxes on income from
certain of its foreign securities. If more than 50% of the Fund's total
assets at the end of the fiscal year are invested in securities of
foreign corporations, the Fund may elect to pass-through to you your pro
rata share of foreign taxes paid by the Fund. If this election is made,
the year-end statement you receive from the Fund will show more taxable
income than was actually distributed to you. However, you will be
entitled to either deduct your share of such taxes in computing your
taxable income or claim a foreign tax credit for such taxes against your
U.S. federal income tax. The Fund will provide you with the information
necessary to complete your individual income tax return if such election
is made.

Information on the Tax Character of Distributions. 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.

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 Code, has qualified as such for its most recent fiscal year and
intends to so qualify during the current fiscal year. As a regulated
investment company, the Fund generally pays no federal income tax on the
income and gains it distributes to you. The Board reserves the right
not to maintain the qualification of the Fund as a regulated investment
company if it determines 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.

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 October 31 (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 that
cause you to recognize a gain or loss. If you hold your shares as a
capital asset, the gain or loss that you realize will be capital gain or
loss. 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.

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.

Dividends-Received Deduction for Corporations. Because the Fund's
income is derived primarily from investments in foreign rather than
domestic U.S securities, no portion of its distributions will generally
be eligible for the corporate dividends-received deduction. None of the
dividends paid by the Fund for the most recent calendar year qualified
for such deduction, and it is anticipated that none of the current
year's dividends will so qualify.

Investment in Complex Securities. The Fund may invest in complex
securities. Such investments may be subject to numerous special and
complicated tax rules. These rules could affect whether gains and
losses recognized by the Fund are treated as ordinary income or capital
gain, accelerate the recognition of income to the Fund or defer the
Fund's ability to recognize losses, and, in limited cases, subject the
Fund to U.S. federal income tax on income from certain of its foreign
securities. In turn, these rules may affect the amount, timing or
character of the income distributed to you by the Fund.

CUSTODIAN

The Fund's assets are held for safekeeping by an independent custodian,
State Street Bank and Trust Company of Boston, Massachusetts and the
subcustodians set forth below. This means State Street Bank and Trust
Company, rather than the Fund, has possession of the Fund's cash and
securities. State Street Bank and Trust Company 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 Fund.

Pursuant to rules adopted under the 1940 Act, the Fund may maintain its
foreign securities and cash in the custody of certain eligible foreign
banks and securities depositories. Selection of these foreign custodial
institutions is made by the Board of Directors following a consideration
of a number of factors, including (but not limited to) the reliability
and financial stability of the institution; the ability of the
institution to perform capably custodial services for the Fund; the
reputation of the institution in its national market; the political and
economic stability of the country in which the institution is located;
and further risks of potential nationalization or expropriation of Fund
assets.

Sub-custodians: The sub-custodians may differ from time to time
depending upon the countries in which the Fund has invested. Currently
the subcustodians include: Citibank, N.A. (Argentina), Westpac Banking
Corporation (Australia), Erste Bank der Oesterreichischen Sparkassen AG
(Austria), British Bank of the Middle East (as delegate of The Hongkong
and Shanghai Banking Corporation Limited) (Bahrain), Standard Chartered
Bank (Bangladesh), Generale de Banque (Belgium), The Bank of Bermuda
Limited (Bermuda), Banco Boliviano Americano S.A. (Bolivia), Barclays
Bank of Botswana Limited (Botswana), Citibank, N.A. (Brazil), ING Bank
N.V. (Bulgaria), Canada Trustco Mortgage Company (Canada), Citibank,
N.A. (Chile), The Hongkong and Shanghai Banking Corporation Limited,
Shanghai and Shenzhen branches (People's Republic of China), Cititrust
Colombia S.A. Sociedad Fiduciaria (Colombia), Privredna Banka Zagreb
d.d. (Croatia), Barclays Bank Plc. Cyprus Offshore Banking Unit
(Cyprus), Ceskoslovenska Obchodni Banka, A.S. (Czech Republic), Den
Danske Bank (Denmark), Citibank, N.A. (Ecuador), National Bank of Egypt
(Egypt), Hansabank (Estonia), Merita Bank Limited (Finland), Banque
Paribas (France), Dresdner Bank AG (Germany), Barclays Bank of Ghana
Limited (Ghana), National Bank of Greece S.A. (Greece), Standard
Chartered Bank (Hong Kong), Citibank Budapest Rt. (Hungary), Icebank
Ltd. (Iceland), Deutsche Bank AG and The Hongkong and Shanghai Banking
Corporation Limited (India), Standard Chartered Bank (Indonesia), Bank
of Ireland (Ireland), Bank Hapoalim B.M. (Israel), Banque Paribas
(Italy), Societe Generale de Banques en Cote d'Ivoire (Ivory Coast),
Scotiabank Jamaica Trust and Merchant Bank Ltd. (Jamaica), The Daiwa
Bank, Limited and The Fuji Bank, Limited (Japan), British Bank of the
Middle East (as delegate of The Hongkong and Shanghai Banking
Corporation Limited) (Jordan), Barclays Bank of Kenya Limited (Kenya),
The Hongkong and Shanghai Banking Corporation Limited (Republic of
Korea), JSC Hansabank-Latvija (Latvia), British Bank of the Middle East
(as delegate of The Hongkong and Shanghai Banking Corporation Limited)
(Lebanon), Vilniaus Bankas AB (Lithuania), Standard Chartered Bank
Malaysia Berhad (Malaysia), The Hongkong and Shanghai Banking
Corporation Limited (Mauritius), Citibank Mexico, S.A. (Mexico), Banque
Commerciale du Maroc (Morocco), MeesPierson N.V. (The Netherlands), ANZ
Banking Group (New Zealand) Limited (New Zealand), Christiania Bank og
Kreditkasse (Norway), British Bank of the Middle East (as delegate of
The Hongkong and Shanghai Banking Corporation Limited) (Oman), Deutsche
Bank AG (Pakistan), Citibank, N.A. (Peru), Standard Chartered Bank
(Philippines), Citibank (Poland) S.A. and Bank Polska Kasa Opieki S.A.
(Poland), Banco Comercial Portugues (Portugal), ING Bank N.V. (Romania),
Credit Suisse First Boston AO, Moscow (as delegate of Credit Suisse
First Boston, Zurich) (Russia), The Development Bank of Singapore
Limited, (Singapore), Ceskoslovenska Obchodna Banka, A.S., (Slovak
Republic), Banka Creditanstalt d.d. (Slovenia), Standard Bank of South
Africa Limited (South Africa), Banco Santander, S.A. (Spain), The
Hongkong and Shanghai Banking Corporation Limited (Sri Lanka), Standard
Bank Swaziland Limited (Swaziland), Skandinaviska Enskilda Banken
(Sweden), UBS AG (Switzerland), Central Trust of China (Taiwan R.O.C.),
Standard Chartered Bank (Thailand), Republic Bank Limited (Trinidad &
Tobago), Banque International Arabe de Tunisie (Tunisia), Citibank, N.A.
and Ottoman Bank (Turkey), State Street Bank and Trust Company, London
branch, (United Kingdom), Citibank, N.A. (Uruguay), Citibank, N.A.
(Venezuela), Barclays Bank of Zambia Limited (Zambia), Barclays Bank of
Zimbabwe Limited (Zimbabwe), (The Euroclear System)/State Street London
Limited (Euroclear), (Cedel Bank, societe anonyme)/State Street London
Limited (Cedel, S.A.).

INDEPENDENT PUBLIC ACCOUNTANTS

The Fund's financial statements are audited annually by independent
public accountants approved by the directors each year, and in years in
which an annual meeting is held the directors may submit their selection
of independent public accountants to the shareholders for ratification.
Arthur Andersen LLP, 911 Main Street, Suite 1500, Kansas City, Missouri
64105, is the Fund's present independent public accountant.

Reports to shareholders will be published at least semiannually.

OTHER JONES & BABSON FUNDS

BABSON FUNDS. The Fund is one of nine no-load funds comprising the
Babson Mutual Fund Group. These funds are managed by Jones & Babson,
Inc. in association with investment counsels: Babson-Stewart Ivory
International, David L. Babson & Co. Inc. and Analytic Systems, Inc.
The other funds are:

Equity Funds

David L. Babson Growth Fund, Inc. was organized in 1959, 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.

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

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

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 Small Cap Fund, Inc. was organized in 1997, with the
objective of long-term capital growth by investment in equity
securities of small companies.

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.

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 UMB Scout Stock Fund, Inc., UMB Scout
Bond Fund, Inc., UMB Scout Money Market Fund, Inc., UMB Scout Tax-Free
Money Market Fund, Inc., UMB Scout Regional Fund, Inc., UMB Scout
WorldWide Fund, Inc., UMB Scout Balanced Fund, Inc., UMB Scout Capital
Preservation Fund, Inc. and UMB Scout Kansas Tax-Exempt Bond Fund, Inc.

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

FINANCIAL STATEMENTS

The audited financial statements of the Fund which are contained in the
June 30, 1998, Annual Report to Shareholders, are incorporated herein by
reference.

<PAGE>
PART C

OTHER INFORMATION

Item 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements

Included in Part A - Prospectus:

Per Share Capital and Income Changes

Included in Part B - Statement of Additional Information:

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

Included in Part C - Other Information:

Consents of Independent Public Accountants

(b) (1) Registrants's Articles of Incorporation*

(2) Form of Registrant's By-laws*

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

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

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

(b) Form of Investment Counsel Agreement
between Jones & Babson, Inc. and Babson-
Stewart Ivory International.

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

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

(8) Forms of Custodian Agreement between Registrant
and State Street Bank*

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

(10) Opinion and consent of counsel as to the legality
of the registrant's securities being registered.*

(11) (a) Powers of Attorney*

(b) Auditors Consent

(12) Not applicable.

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

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

(15) Not applicable.

(16) Schedule for computation of performance
quotations.*

(17) Financial Data Schedules for
Babson-Stewart Ivory International Fund, Inc.

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

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

NONE

Item 26. NUMBER OF HOLDERS OF SECURITIES.

The number of record holders of each class of securities of the
Registrants as of October 16, 1998, is as follows:

(1) (2)
Title of Class

Common Stock Number of Record Holders
$1.00 par value

Babson-Stewart Ivory
International Fund, Inc. 2,265

Item 27. INDEMNIFICATION.

Under the terms of the Maryland General Corporation Law and the
company's By-laws, the company shall indemnify any person who
was or is a director, officer, or employee of the company to
the maximum extent permitted by the Maryland General
Corporation Law; provided however, that any such
indemnification (unless ordered by a court) shall be made by
the company only as authorized in the specific case upon a
determination that indemnification of such persons is proper in
the circumstances. Such determination shall be made.

(i) by the Board of Directors by a majority vote of a quorum
which consists of the directors who are neither "interested
persons" of the company as defined in Section 2(a)(19) of the
1940 Act, nor parties to the proceedings, or

(ii) if the required quorum is not obtainable or if a quorum
of such directors so directs, by independent legal counsel in a
written opinion.

No indemnification will be provided by the company to any
director or officer of the company for any liability to the
company or shareholders to which he would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of duty.

Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.

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

The principal business of David L. Babson & Co. Inc. is
to provide investment counsel and advice to a wide variety of
clients.

Item 29. PRINCIPAL UNDERWRITERS.

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

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

Name and Position and Positions and
Principal Offices with Offices with
Business Address Underwriter Registrant

Stephen S. Soden Chairman and Director
700 Karnes Blvd. Director
Kansas City, MO 64108-3306

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

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

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

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

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

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

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

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

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

Item 30. LOCATION OF ACCOUNTS AND RECORDS.

Each account, book or other document required to be maintained by
Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to
31a-3) promulgated thereunder is in the physical possession of
Jones & Babson, Inc., at 700 Karnes Blvd., Kansas City, Missouri
64108-3306.

Item 31. MANAGEMENT SERVICES.

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

Item 32. UNDERTAKINGS.

Not Applicable.

EXHIBIT INDEX

11(b) Consent of Auditors

11(c) 485(b) Letter from Counsel

27 Financial Data Schedules

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
amendment to its registration statement to be signed on its behalf by the
undersigned, thereunto authorized, in the City of Kansas City, and State of
Missouri on the 19th day of October, 1998.

BABSON-STEWART IVORY INTERNATIONAL FUND, INC.

By /s/Larry D. Armel
Larry D. Armel

Pursuant to the requirements of the Securities Act of 1933, this
Post-effective Amendment 15/16 to the Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.

/s/Larry Armel President, October 19, 1998
Larry Armel Prinicpal Executive Officer,
and Director

/s/James T. Jensen* Director October 19, 1998
James T. Jensen

/s/Richard J. Phelps* Director October 19, 1998
Richard J. Phelps

/s/F.C. Rood* Director October 19, 1998
F.C. Rood

/s/William H. Russell* Director October 19, 1998
William H. Russell

/s/P. Bradley Adams Vice President and October 19, 1998
P. Bradley Adams Principal Financial
and Accounting Officer

*Signed pursuant to Power of
Attorney

By /s/Larry D. Armel
Larry D. Armel
Attorney-in-Fact

EX-99.B11(b)
ARTHUR ANDERSEN LLP

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference of our report dated July 28, 1998, included in the Babson-Stewart
Ivory International Fund, Inc.'s Annual Report for the year ended June 30,1998
(and all references to our Firm) included in or made a part of this Post-
effective Amendment No.15 to the Registration Statement File No. 33-17762
under the Securities Act of 1933 and Amendment No.16 to the Registration
Statement File No. 811-5386 under the Investment Company Act of 1940
on Form N-1A.

Arthur Andersen LLP

Kansas City, Missouri,
October 19, 1998

EX-99.B11(c)
Law Offices

Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000

October 19, 1998

FILED VIA EDGAR
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Attn: Filing Desk

Re: Babson-Stewart Ivory International Fund, Inc.
File Nos. 33-17762; 811-5386
Post-Effective Amendment No. 15; Amendment No. 16
CIK No. 823338

Dear Sir or Madam:

Included for filing via EDGAR is Post-Effective Amendment No. 15 to the
Registration Statement on Form N-1A for Babson-Stewart Ivory International
Fund, Inc. This post-effective amendment is being filed under Rule 485(b) for
the purpose of bring the Financial Statements and other information up-to-date,
and in conjunction therewith, making other appropriate non-material changes.
No material event requiring disclosure in the Prospectus has occurred since
the effective date of the most recent Post-Effective Amendment. The amendment
does not contain disclosures which would render it ineligible to become
effective pursuant to Rule 485(b). Questions related to this filing should
be directed to me at the number above.

Very truly yours,
/s/Michael P. O'Hare
Michael P. O'Hare

<ARTICLE> 6
<CIK> 0000823338
<NAME> BABSON-STEWART IVORY INTERNATIONAL FUND INC

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