BABSON ENTERPRISE FUND II INC /MO/, 485BPOS, 1997-03-25

BABSON ENTERPRISE FUND II INC /MO/
485BPOS, 1997-03-25

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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. 8 File No. 33-39321 [x]

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

Amendment No. 9 File No. 811-6252 [X}

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

2440 Pershing Road, G-15, Kansas City, MO 64108
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code (816) 471-5200
______________

Larry D. Armel, President, BABSON ENTERPRISE FUND II, INC.
2440 Pershing Road, G-15, Kansas City, Missouri 64108
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering March 31, 1997

It is proposed that this filing become effective:

XOn March 31, 1997 pursuant to paragraph (b) of Rule 485

Registrant has registered an indefinite number or amount of securities
under the Securities Act of 1933 pursuant to Rule 24f-2 of the
Investment Company Act of 1940, and will file its required Rule 24f-2
Notice for the Registrant's fiscal year ended November 30, 1997, by
January 30, 1998.

Please address inquiries and a carbon copy of all
and communications to: communications to:
John G. Dyer, Esq. Mark H. Plafker, Esq.
Babson Enterprise Fund II, Inc. Stradley, Ronon, Stevens & Young
2440 Pershing Road, G-15 2600 One Commerce Square
Kansas City, MO 64108 Philadelphia, PA 19103-7098
Telephone: (816) 471-5200 Telephone: (215) 564-8024

<PAGE>

BABSON ENTERPRISE FUND II, INC.

CROSS REFERENCE SHEET

Form N-1A Item Number Location in Prospectus

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

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

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

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

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

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

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

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

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

<PAGE>

BABSON ENTERPRISE FUND II, INC.

CROSS REFERENCE SHEET (Continued)

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

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

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

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

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

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

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

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

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

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

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

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

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

Item 22. Calculation of Yield Quotations . . Not Applicable
of Money Market Fund

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

<PAGE>

BABSON
ENTERPRISE
FUND II

Prospectus
March 31, 1997

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

JONES & BABSON
MUTUAL FUNDS

PROSPECTUS
March 31, 1997

BABSON
ENTERPRISE
FUND II, INC.

Managed and Distributed By:
JONES & BABSON, INC.
2440 Pershing Road, Suite G-15
Kansas City, Missouri 64108

Toll-Free 1-800-4-BABSON
(1-800-422-2766)
In the Kansas City area 471-5200

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

INVESTMENT OBJECTIVE

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

PURCHASE INFORMATION
Minimum Investment

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

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

ADDITIONAL INFORMATION

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

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

TABLE OF CONTENTS Page

Fund Expenses 3
Financial Highlights 4
Investment Objective and Portfolio Management Policy 5
Repurchase Agreements 5
Risk Factors 6
Investment Restrictions 6
Performance Measures 7
How to Purchase Shares 8
Initial Investments 8
Investments Subsequent to Initial Investment 9
Telephone Investment Service 9
Automatic Monthly Investment Plan 10
How to Redeem Shares 10
Systematic Redemption Plan 12
How to Exchange Shares Between Funds 13
How Share Price is Determined 14
Officers and Directors 14
Management and Investment Counsel 14
General Information and History 16
Dividends, Distributions and Their Taxation 16
Shareholder Services 18
Shareholder Inquiries 19

BABSON ENTERPRISE FUND II, INC.
FUND EXPENSES

Shareholder Transaction Expenses

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

Annual Fund Operation Expenses
(as a percentage of average net assets)

Management fees 1.34%
12b-1 fees None
Other expenses .04%
Total Fund operating expenses 1.38%

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

1 Year 3 Year 5 Year 10 Year
$14 $44 $76 $166

The above information is provided in order to assist you in understanding the
various costs and expenses that a shareholder of the Fund will bear directly
or indirectly. The expenses set forth above are for the fiscal year ended
November 30, 1996. The example should not be considered a representation of
past or future expenses. Actual expenses may be greater or less than those
shown.

FINANCIAL HIGHLIGHTS

The following financial highlights for the period from August 5, 1991 (date of
initial public offering) to November 30, 1991, and each of the five years in
the period ended November 30, 1996, have been derived from audited financial
statements of Babson Enterprise Fund II, Inc. Such information for each of the
five years in the period ended November 30, 1996, should be read in
conjunction with the financial statements of the Fund and the report of Ernst
& Young LLP, independent auditors, appearing in the November 30, 1996, Annual
Report to Shareholders which is incorporated by reference in this prospectus.
The information for the period ended November 30, 1991, is not covered by the
report of Ernst & Young LLP.

<TABLE>
<CAPTION>
For the period from
August 5, 1991
1996 1995 1994 1993 1992 to November 30, 1991**
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.19 $16.22 $16.92 $14.47 $12.07 $12.19

Income from investment operations:
Net investment income .115 .053 .020 (.019) (.020) .052
Net gains or losses on securities
(both realized and unrealized) 4.448 3.024 (.392) 2.501 2.455 (.172)
Total from investment operations 4.563 3.077 (.372) 2.482 2.435 (.120)

Less distributions:
Dividends from net investment income (.055) (.022) - - (.035) -
Distributions from capital gains (.948) (.085) (.328) (.032) - -
Total distributions (1.003) (.107) (.328) (.032) (.035) -

Net asset value, end of period $22.75 $19.19 $16.22 $16.92 $14.47 $12.07

Total return 25.04% 19.11% (2.32)% 17.19% 20.24% (0.98)%

Ratios/Supplemental Data
Net assets, end of year (in millions) $46 $40 $36 $29 $11 $3
Ratio of expenses to average net assets 1.38% 1.45% 1.50% 1.60% 1.83% 1.49%
Ratio of net investment income (loss)
to average net assets .55% .30% .14% (.14)% (.11)% .76%
Portfolio turnover rate 30% 15% 9% 18% 14% 13%
*Average commission paid per equity
share traded $.0514 - - - - -

<FN>
<F1>* Disclosure required for fiscal years beginning after September 1, 1995.

<F2>** The Fund was capitalized on April 17, 1991, with $366,705, representing
30,000 shares at a net asset value of $12.22 per share. Initial public
offering was made on August 5, 1991, at which time net asset value was
$12.19 per share. Ratios for this initial period of operation are
annualized.
</FN>
</TABLE>

INVESTMENT OBJECTIVE AND
PORTFOLIO MANAGEMENT POLICY

Babson Enterprise Fund II's investment objective is to seek long-term growth
of capital by investing principally in a diversified portfolio of common
stocks of smaller, faster-growing companies whose securities at the time of
purchase are considered by the investment adviser to be realistically valued
in the smaller company sector of the market. A stock will be considered to be
realistically valued if it is trading at a price which the investment adviser
believes is reasonable relative to its own past valuation history as well as
compared to a large universe of stocks as selected by the investment adviser,
based on one or more of the following comparisons:

1. price relative to earnings,

2. price relative to sales,

3. price relative to assets as measured by bookvalue.

The Fund is a diversified investment company and generally intends to invest
at least 65% of its total assets in stocks of smaller companies with market
capitalization of $250 million to $1 billion at the time of purchase and which
are listed on a national or regional exchange or over-the-counter with prices
quoted daily in the financial press. The Fund's management believes, however,
that there may be times when the shareholders' interests are best served by
investing temporarily in preferred stocks, bonds or other defensive issues.
Normally, however, the Fund will maintain at least 80% of the portfolio in
common stocks. There are no restrictions or guidelines regarding the
investment of Fund assets in shares listed on an exchange or traded over-the-
counter.

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

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

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

There is no assurance that the Fund's objective of long-term growth of capital
can be achieved. Portfolio turnover will be no more than is necessary to meet
the Fund's objectives. Under normal circumstances, it is anticipated that it
will not exceed 100%. For the fiscal years ended November 30, 1996, 1995 and
1994, the total dollar amount of brokerage commissions paid by the Fund and
the annual portfolio turnover rate were as follows:

Portfolio
Fiscal Brokerage Turnover
Year Commissions Rate

1996 $52,014 30%
1995 $24,631 15%
1994 $29,972 9%

REPURCHASE AGREEMENTS

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

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

RISK FACTORS

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

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

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

Risk Factors
Applicable To
Repurchase Agreements

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

INVESTMENT RESTRICTIONS

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

PERFORMANCE MEASURES

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

Total Return

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

Performance Comparisons

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

Performance rankings, recommendations, published editorial comments and
listings reported in Money, Barron's, Kiplinger's Personal Finance Magazine,
Financial World, Forbes, U.S. News & World Report, Business Week, The Wall
Street Journal, Investors Business Daily, USA Today, Fortune and Stanger's may
also be cited (if the Fund is listed in any such publication) or used for
comparison, as well as performance listings and rankings from Morningstar
Mutual Funds, Personal Finance, Income and Safety, The Mutual Fund Letter, No-
Load Fund Investor, United Mutual Fund Selector, No-Load Fund Analyst, No-Load
Fund X, Louis Rukeyser's Wall Street newsletter, Donoghue's Money Letter, CDA
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., 2440 Pershing Road, Suite G-15,
Kansas City, MO 64108. For information call toll free 1-800-4-BABSON (1-800-
422-2766), or in the Kansas City area 471-5200. If an investor wishes to
engage the services of any other broker to purchase (or redeem) shares of the
Fund, a fee may be charged by such broker. The Fund will not be responsible
for the consequences of delays including delays in the banking or Federal
Reserve wire systems.

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

The Fund may accept investments in kind of stocks on the Fund's buy list for
purchase of the Fund's shares. Acceptance of such stocks will be at the
discretion of the Manager and Investment Counsel based on judgments as to
whether, in each case, acceptance of stock will allow the Fund to acquire the
stock at no more than the net cost of acquiring it through normal channels,
and whether the stock has restrictions on its sale by the Fund under the
Securities Act of 1933. Fund shares purchased in exchange for stocks are
issued at net asset value.

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

INITIAL INVESTMENTS

Initial investments - By mail. You may open an account and make an investment
by completing and signing the application which accompanies this prospectus.
Make your check ($1,000 minimum unless your purchase is pursuant to an IRA or
the Uniform Transfers (Gifts) to Minors Act in which case the minimum initial
purchase is $250) payable to UMB Bank, n.a. Mail your application and check
to:

Babson Enterprise Fund II, Inc.
2440 Pershing Road, Suite G-15
Kansas City, Missouri 64108

Initial investments - By wire. You may purchase shares of the Fund by wiring
funds ($1,000 minimum) through the Federal Reserve Bank to the custodian, UMB
Bank, n.a. Prior to sending your money, you must call the Fund toll free 1-
800-4-BABSON (1-800-422-2766), or in the Kansas City area 471-5200 and provide
it with the identity of the registered account owner, the registered address,
the Social Security or Taxpayer Identification Number of the registered owner,
the amount being wired, the name and telephone number of the wiring bank and
the person to be contacted in connection with the order. You will then be
provided a Fund account number, after which you should instruct your bank to
wire the specified amount, along with the account number and the account
registration to:

UMB Bank, n.a.
Kansas City, Missouri, ABA #101000695
For Babson Enterprise Fund II, Inc./
AC=987036-6517
OBI=(Assigned Fund number and name in
which registered.)

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

INVESTMENTS SUBSEQUENT
TO INITIAL INVESTMENT

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

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

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

TELEPHONE INVESTMENT SERVICE

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

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

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

AUTOMATIC MONTHLY
INVESTMENT PLAN

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

HOW TO REDEEM SHARES

The Fund will redeem shares at the price (net asset value per share) next
computed after receipt of a redemption request in "good order." (See "How
Share Price is Determined.") Shares can be redeemed by written request or if
previously authorized by telephone toll free 1-800-4-BABSON (1-800-422-2766),
or in the Kansas City area 471-5200.

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

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

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

Requests which are subject to special conditions or which specify an effective
date other than as provided herein cannot be accepted. All redemption requests
must be transmitted to the Fund at 2440 Pershing Road, Suite G-15, Kansas
City, Missouri 64108. The Fund will redeem shares at the price (net asset
value per share) next computed after receipt of a redemption request in "good
order." (See "How Share Price is Determined.")

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

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

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

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

The right of redemption may be suspended or the date of payment postponed
beyond the normal three-day period when the New York Stock Exchange is closed
or under emergency circumstances as determined by the Securities and Exchange
Commission. Further, the Fund reserves the right to redeem its shares in kind
under certain circumstances. If shares are redeemed in kind, the shareholder
may incur brokerage costs when converting into cash. 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 471-5200, or by telegram to the Fund's
address. Telephone/telegraph redemption authorization signed by all registered
owners with signatures guaranteed must be on file with the Fund before you may
redeem by telephone or telegraph. Funds will be sent only to the address of
record. The signature guarantee requirement may be waived by the Fund if the
request for this redemption method is made at the same time the initial
application to purchase shares is submitted.

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

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

SYSTEMATIC REDEMPTION PLAN

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

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

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

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

HOW TO EXCHANGE SHARES
BETWEEN FUNDS

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

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

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

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

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

HOW SHARE PRICE IS DETERMINED

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

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

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

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

OFFICERS AND DIRECTORS

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

MANAGEMENT AND INVESTMENT COUNSEL

Jones & Babson, Inc. was founded in 1960. It organized the Fund in 1991, and
acts as its manager and principal underwriter. Pursuant to the current
Management Agreement, Jones & Babson, Inc. provides or pays the cost of all
management, supervisory and administrative services required in the normal
operation of the Fund. This includes investment management and supervision;
fees of the custodian, independent auditors and legal counsel; remuneration of
officers, directors and other personnel; rent; shareholder services, including
the maintenance of the shareholder accounting system and transfer agency; and
such other items as are incidental to corporate administration.

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

As a part of the Management Agreement, Jones & Babson, Inc. employs at its own
expense David L. Babson & Co. Inc. as its investment counsel to assist in the
investment advisory function. David L. Babson & Co. Inc. is an investment
counseling firm founded in 1940. It serves a broad variety of individual,
corporate and other institutional clients by maintaining an extensive research
and analytical staff. It has an experienced investment analysis and research
staff which eliminates the need for Jones & Babson, Inc. and the Fund to
maintain an extensive duplicate staff, with the consequent increase in the
cost of investment advisory service. The cost of the services of David L.
Babson & Co. Inc. is included in the fee of Jones & Babson, Inc. The
Management Agreement limits the liability of the manager and its investment
counsel, as well as their officers, directors and personnel, to acts or
omissions involving willful malfeasance, bad faith, gross negligence, or
reckless disregard of their duties. Peter C. Schliemann and Lance F. James
have been the co-managers of Babson Enterprise Fund II since its inception in
1991. Mr. Schliemann joined David L. Babson & Co. in 1979, and has 28 years of
investment management experience. Mr. James joined the Babson organization in
1986, and has 18 years of investment management experience.

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

The annual fee charged by Jones & Babson, Inc. is higher than the fees of most
other investment advisers whose charges cover only investment advisory
services with all remaining operational expenses absorbed directly by the
Fund. Yet it compares favorably with these other advisers when all expenses to
Fund shareholders are taken into account. Jones & Babson, Inc. pays David L.
Babson & Co. Inc. a fee of 70/100 of one percent (.70%) of the first $30
million and 50/100 of 1% (.50%) of amounts in excess of $30 million of average
daily total net assets, which is computed daily and paid semimonthly. The
total expenses of the Fund for the fiscal year ended November 30, 1996,
amounted to 138/100 of one percent (1.38%) of the average net assets.

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

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

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

The current Management Agreement between the Fund and Jones & Babson, Inc.,
which includes the Investment Counsel Agreement between Jones & Babson, Inc.
and David L. Babson & Co. Inc., will continue in effect until October 31,
1997, and will continue automatically for successive annual periods ending
each October 31 so long as such continuance is specifically approved at least
annually by the Board of Directors of the Fund or by the vote of a majority of
the outstanding voting securities of the Fund, and, provided also that such
continuance is approved by the vote of a majority of the directors who are not
parties to the Agreements or interested persons of any such party at a meeting
held in person and called specifically for the purpose of evaluating and
voting on such approval. Both Agreements provide that either party may
terminate by giving the other 60 days written notice. The Agreements terminate
automatically if assigned by either party.

GENERAL INFORMATION AND HISTORY

The Fund, incorporated in Maryland on February 5, 1991, has a present
authorized capitalization of 10,000,000 shares of $1 par value common stock.
All shares are of the same class with like rights and privileges. Each full
and fractional share, when issued and outstanding, has: (1) equal voting
rights with respect to matters which affect the Fund, and (2) equal dividend,
distribution and redemption rights to the assets of the Fund. Shares when
issued are fully paid and non-assessable. The Fund may create other series of
stock but will not issue any senior securities. Shareholders do not have pre-
emptive or conversion rights.

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

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

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

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

DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION

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

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

Whether paid in cash or additional shares of the Fund, and regardless of the
length of time Fund shares have been owned by the shareholder, distributions
from long-term capital gains are taxable to shareholders as such, but are not
eligible for the dividends-received deduction for corporations. Shareholders
are notified annually by the Fund as to federal tax status of dividends and
distributions paid by the Fund. Such dividends and distributions may also be
subject to state and local taxes.

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

The Fund intends to declare and pay dividends and capital gains distributions
so as to avoid imposition of the federal excise tax. To do so, the Fund
expects to distribute during each calendar year an amount equal to: (1) 98%
of its calendar year ordinary income; (2) 98% of its capital gains net income
(the excess of short- and long-term capital gain over short- and long-term
capital loss) for the one-year period ending each November 30; and (3) 100%
of any undistributed ordinary or capital gain net income from the prior
calendar year. Dividends declared in October, November or December and made
payable to shareholders of record in such a month are deemed to have been
paid by the Fund and received by shareholders on December 31 of such year, so
long as the dividends are actually paid before February 1 of the following
year.

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

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

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

SHAREHOLDER SERVICES

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

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

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

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

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

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

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

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

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

Individual Retirement Accounts - Also available is an Individual Retirement
Account (IRA). The IRA uses the IRS model form of plan and provides an
excellent way to accumulate a retirement fund which will earn tax-deferred
dollars until withdrawn. An IRA may also be used to defer taxes on certain
distributions from employer-sponsored retirement plans. You may contribute up
to $2,000 of compensation each year ($4,000 if a spousal IRA is established),
some or all of which may be deductible. Consult your tax adviser concerning
the amount of the tax deduction, if any.

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

SHAREHOLDER INQUIRIES

Telephone inquiries may be made toll free to the Fund,
1-800-4-BABSON (1-800-422-2766), or in the Kansas
City area 471-5200.

Shareholders may address written inquiries to the
Fund at:

Babson Enterprise Fund II, Inc.
2440 Pershing Road, Suite G-15
Kansas City, MO 64108

INDEPENDENT AUDITORS

ERNST & YOUNG LLP
Kansas City, Missouri

LEGAL COUNSEL

STRADLEY, RONON, STEVENS & YOUNG
Philadelphia, Pennsylvania
JOHN G. DYER
Kansas City, Missouri

CUSTODIAN

UMB BANK, n.a.
Kansas City, Missouri

TRANSFER AGENT

JONES & BABSON, INC.
Kansas City, Missouri

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.

JONES & BABSON
MUTUAL FUNDS

2440 Pershing Road
Kansas City, MO 64108-2561
816-471-5200

1-800-4-BABSON
(1-800-422-2766)

http://www.jbfunds.com

<PAGE>

PART B

BABSON ENTERPRISE FUND II,
INC.

STATEMENT OF ADDITIONAL
INFORMATION

March 31, 1997

This Statement is not a prospectus but should be read in conjunction with
the Fund's current Prospectus dated March 31, 1997. To obtain the
Prospectus please call the Fund toll-free 1-800-4-BABSON (1-800-422-
2766), or in the Kansas City area 471-5200.

TABLE OF CONTENTS

Investment Objective and Policies 2
Portfolio Transactions 2
Investment Restrictions 3
Performance Measures 4
How the Fund's Shares are Distributed 4
How Share Purchases are Handled 4
Redemption of Shares 5
Signature Guarantees 5
Management and Investment Counsel 5
How Share Price is Determined 6
Officers and Directors 6
Custodian 8
Independent Auditors 9
Other Jones & Babson Funds 9
Financial Statements 10

INVESTMENT OBJECTIVE AND POLICIES

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

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

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

PORTFOLIO TRANSACTIONS

Decisions to buy and sell securities for the Fund
are made by Jones & Babson, Inc. pursuant to
recommendations by David L. Babson & Co. Inc.
Officers of the Fund and Jones & Babson, Inc. are
generally responsible for implementing or
supervising these decisions, including allocation of
portfolio brokerage and principal business as well as
the negotiation of commissions and/or the price of
the securities. In instances where securities are
purchased on a commission basis, the Fund will seek
competitive and reasonable commission rates based
on circumstances of the trade involved and to the
extent that they do not detract from the quality of the
execution.

The Fund, in purchasing and selling portfolio sec-
urities, will seek the best available combination of
execution and overall price (which shall include the
cost of the transaction) consistent with the
circumstances which exist at the time. The Fund
does not intend to solicit competitive bids on each
transaction.

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

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

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

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

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

INVESTMENT RESTRICTIONS

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

The Fund will not: (1) purchase the securities of
any one issuer, except the United States
Government, if immediately after and as a result of
such purchase (a) the value of the holdings of the
Fund in the securities of such issuer exceeds 5% of
the value of the Fund's total assets, or (b) the Fund
owns more than 10% of the outstanding voting
securities, or any other class of securities, of such
issuer; (2) engage in the purchase or sale of real
estate, commodities or futures contracts; (3)
underwrite the securities of other issuers; (4) make
loans to any of its officers, directors, or employees,
or to its manager, or general distributor, or officers
or directors thereof; (5) make loans to other persons,
except by the purchase of debt obligations which are
permitted under its investment policy; (6) invest in
companies for the purpose of exercising control of
management; (7) purchase securities on margin, or
sell securities short; (8) purchase shares of other
investment companies except in the open market at
ordinary broker's commission, but not in excess of
5% of the Fund's assets, or pursuant to a plan of
merger or consolidation; (9) invest in the aggregate
more than 5% of the value of its gross assets in the
securities of issuers (other than federal, state,
territorial, or local governments, or corporations, or
authorities established thereby), which, including
predecessors, have not had at least three years'
continuous operations nor invest 25% or more of the
Fund's total 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.

In addition to the fundamental investment
restrictions set out above, in order to comply with the
law or regulations of various states, the Fund will not
engage in the following practices: (1) invest in
securities which are not readily marketable or in
securities of foreign issuers which are not listed on a
recognized domestic or foreign securities exchange;
(2) write put or call options; (3) invest in oil, gas and
other mineral leases or arbitrage transactions; (4)
purchase or sell real estate (including limited
partnership interests, but excluding readily
marketable interests in real estate investment trusts
or readily marketable securities of companies which
invest in real estate); or (5) purchase securities of
issuers which the company is restricted from selling
to the public without registration under the
Securities Act of 1933, including Rule 144(a)
securities.

Certain states also require that the Fund's
investments in warrants, valued at the lower of cost
or market, may not exceed 5% of the value of the
Fund's net assets. Included within that amount, but
not to exceed 2% of the value of the Fund's net assets
may be warrants which are not listed on the New
York or American Stock Exchange. Warrants
acquired by the Fund in units or attached to
securities may be deemed to be without value for
purposes of this limitation.

PERFORMANCE MEASURES

Total Return

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

P(1+T)n = ERV

Where: P = a hypothetical initial payment
of $1000

T = average annual total return

n = number of years

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

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

For the one year 12/1/95-11/30/96 25.04%

For the five years 12/1/91-11/30/96 15.44%

From commencement of
operation to 11/30/96* 14.22%

__________________________________________
*The Fund commenced operation August 5, 1991.

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, 1997, and
which will continue automatically for successive
annual periods ending each October 31, if continued
at least annually by the Fund's Board of Directors,
including a majority of those Directors who are not
parties to such Agreements or interested persons of
any such party. It terminates automatically if
assigned by either party or upon 60 days written
notice by either party to the other.

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

HOW SHARE PURCHASES ARE HANDLED

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

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

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

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

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

REDEMPTION OF SHARES

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

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

SIGNATURE GUARANTEES

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

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

(1) a written request for redemption;

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

(3) all stock certificates tendered for redemption.

MANAGEMENT AND INVESTMENT
COUNSEL

As a part of the Management Agreement, Jones &
Babson, Inc. employs at its own expense David L.
Babson & Co. Inc., as its investment counsel. David
L. Babson & Co. Inc. was founded in 1940 as a
private investment research and counseling
organization. On June 30, 1995, David L. Babson &
Co. Inc. became a wholly-owned subsidiary of
Massachusetts Mutual Life Insurance Company.
David L. Babson & Co. Inc. serves individual,
corporate and other institutional clients. It
participates with Jones & Babson in the management
of nine Babson no-load mutual funds.

The aggregate management fees paid to Jones &
Babson, Inc. during the most recent fiscal year
ended November 30, 1996, and from which Jones &
Babson, Inc. paid all the Fund's expenses except
those payable directly by the Fund, were $591,557.
The annual fee charged by Jones & Babson, Inc.
covers all normal operating costs of the Fund.

David L. Babson & Co. Inc. has an experienced
investment analysis and research staff which
eliminates the need for Jones & Babson, Inc. and the
Fund to maintain an extensive duplicate staff, with
the consequent increase in the cost of investment
advisory service. The cost of the services of David
L. Babson & Co. Inc., is included in the services of
Jones & Babson, Inc. During the most recent fiscal
year ended November 30, 1996, Jones & Babson,
Inc. paid David L. Babson & Co. Inc. fees
amounting to $280,803.

HOW SHARE PRICE IS DETERMINED

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

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

OFFICERS AND DIRECTORS

The Fund is managed by Jones & Babson, Inc.
subject to the supervision and control of the Board of
Directors. The following table lists the Officers and
Directors of the Fund. Unless noted otherwise, the
address of each Officer and Director is 2440
Pershing Road, Suite G-15, Kansas City, Missouri
64108. Except as indicated, each has been an
employee of Jones & Babson, Inc. for more than five
years.

* Larry D. Armel, President and Director.
President and Director, Jones & Babson, Inc.,
David L. Babson Growth Fund, Inc., D.L. Babson
Money Market Fund, Inc., D.L. Babson Tax-Free
Income Fund, Inc., Babson Enterprise Fund, Inc.,
Babson Value Fund, Inc., Shadow Stock Fund,
Inc., Babson-Stewart Ivory International Fund,
Inc.; Scout Stock Fund, Inc., Scout Bond Fund,
Inc., Scout Money Market Fund, Inc., Scout Tax-
Free Money Market Fund, Inc., Scout Regional
Fund, Inc., Scout WorldWide Fund, Inc., Scout
Balanced Fund, Inc.; Buffalo Balanced Fund, Inc.,
Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global Fund, Inc.;
President and Trustee of D.L. Babson Bond Trust.

Francis C. Rood, Director.
Retired, 6429 West 92nd Street, Overland Park,
Kansas 66212. Formerly, Group Vice President-
Administration, Hallmark Cards, Inc.; Director,
David L. Babson Growth Fund, Inc., D.L. Babson
Money Market Fund, Inc., D.L. Babson Tax-Free
Income Fund, Inc., Babson Enterprise Fund, Inc.,
Babson 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.; Trustee of D.L. Babson
Bond Trust.

________________________________________

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

William H. Russell, Director.
Financial consultant, 645 West 67th Street, Kansas
City, Missouri 64113; Director, David L. Babson
Growth Fund, Inc., D.L. Babson Money Market
Fund, Inc., D.L. Babson Tax-Free Income Fund,
Inc., Babson Enterprise Fund, Inc., Babson Value
Fund, Inc., Shadow Stock Fund, Inc., Babson-
Stewart Ivory International Fund, Inc.; Buffalo
Balanced Fund, Inc., Buffalo Equity Fund, Inc.,
Buffalo High Yield Fund, Inc., Buffalo USA Global
Fund, Inc.; Trustee of D.L. Babson Bond Trust.

H. David Rybolt, Director.
Consultant, HDR Associates, P.O. Box 2468,
Shawnee Mission, Kansas 66202; Director, David L.
Babson Growth Fund, Inc., D.L. Babson Money
Market Fund, Inc., D.L. Babson Tax-Free Income
Fund, Inc., Babson Enterprise Fund, Inc., Babson
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.; Trustee of D.L. Babson Bond Trust.

P. Bradley Adams, Vice President and Treasurer.
Vice President and Treasurer, Jones & Babson, Inc.,
David L. Babson Growth Fund, Inc., D.L. Babson
Money Market Fund, Inc., D.L. Babson Tax-Free
Income Fund, Inc., Babson Enterprise Fund, Inc.,
Babson Value Fund, Inc., Shadow Stock Fund, Inc.,
Babson-Stewart Ivory International Fund, Inc., D. L.
Babson Bond Trust; Scout Stock Fund, Inc., Scout
Bond Fund, Inc., Scout Money Market Fund, Inc.,
Scout Tax-Free Money Market Fund, Inc., Scout
Regional Fund, Inc., Scout WorldWide Fund, Inc.,
Scout Balanced Fund, Inc.; Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global Fund, Inc.

Elizabeth L. Allwood, Vice President and
Assistant Secretary.
Assistant Vice President and Assistant Secretary,
Jones & Babson, Inc. Vice President and Assistant
Secretary, 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 Value Fund, Inc., Babson-Stewart Ivory
International Fund, Inc., D.L. Babson Bond Trust,
Scout Stock Fund, Inc., Scout Bond Fund, Inc.,
Scout Money Market Fund, Inc., Scout Tax-Free
Money Market Fund, Inc., Scout Regional Fund,
Inc., Scout WorldWide Fund, Inc., Scout Balanced
Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund, Inc.,
Buffalo USA Global Fund, Inc.

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

Martin A. Cramer, Vice President and Secretary.
Vice President and Secretary, Jones & Babson, Inc.,
David L. Babson Growth Fund, Inc., D.L. Babson
Money Market Fund, Inc., D.L. Babson Tax-Free
Income Fund, Inc., Babson Enterprise Fund, Inc.,
Babson Value Fund, Inc., Shadow Stock Fund, Inc.,
Babson-Stewart Ivory International Fund, Inc., D.L.
Babson Bond Trust; Scout Stock Fund, Inc., Scout
Bond Fund, Inc., Scout Money Market Fund, Inc.,
Scout Tax-Free Money Market Fund, Inc., Scout
Regional Fund, Inc., Scout WorldWide Fund, Inc.,
Scout Balanced Fund, Inc.; Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global Fund, Inc.

Constance E. Martin, 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 Value Fund, Inc., Babson-Stewart Ivory
International Fund, Inc., D.L. Babson Bond Trust,
Scout Stock Fund, Inc., Scout Bond Fund, Inc.,
Scout Money Market Fund, Inc., Scout Tax-Free
Money Market Fund, Inc., Scout Regional Fund,
Inc., Scout WorldWide Fund, Inc., Scout Balanced
Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund, Inc.,
Buffalo USA Global Fund, Inc.

Lance F. James, Vice President-Portfolio.
Vice President, David L. Babson & Co. Inc., One
Memorial Drive, Cambridge, Massachusetts 02142.

Peter C. Schliemann, Vice President-Portfolio.
Senior Vice President and Director, David L. Babson
& Co. Inc., One Memorial Drive, Cambridge,
Massachusetts 02142; Vice President - Portfolio,
Babson Enterprise 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.

<TABLE>
<CAPTION>
COMPENSATION TABLE

Pension or Estimated Total
Aggregate Retirement Annual Compensation
Name of Compensation Benefits Accrued Benefits From All Babson
Director From each As Part of Fund Upon Funds Paid to
Fund Expenses Retirement Directors**
______________ ____________ ________________ __________ _____________
</CAPTION>
<S> <C> <C> <C> <C>
Larry D. Armel* -- -- -- --
Francis C. Rood $7,250 -- -- $7,250
William H. Russell $7,250 -- -- $7,500
H. David Rybolt $7,250 -- -- $7,250
</TABLE>
______________ ____________ ________________ ___________ _____________

* As an "interested director," Mr. Armel received no compensation for
his services as a director.
** The amounts reported in this column reflect the total compensation
paid to each director for his services as a director of nine Babson
Funds during the fiscal year ended June 30, 1996. Directors fees are
paid by the Funds' manager and not by the Funds themselves.

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

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

The Officers and Directors of the Fund as a group
own less than 1% of the Fund.

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

CUSTODIAN

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

INDEPENDENT AUDITORS

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

Reports to shareholders will be published at least
semiannually.

OTHER JONES & BABSON FUNDS

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

EQUITY FUNDS

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

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

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

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

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

FIXED INCOME FUNDS

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

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

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

BUFFALO FUNDS

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

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

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

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

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

A prospectus for any of the Funds may be obtained
from Jones & Babson, Inc., 2440 Pershing Road,
Suite G-15, Kansas City, Missouri 64108.
Jones & Babson, Inc. also sponsors seven mutual
funds which especially seek to provide services to
customers of affiliate banks of UMB Financial
Corporation. They are: Scout Stock Fund, Inc.,
Scout Bond Fund, Inc., Scout Money Market Fund,
Inc., Scout Tax-Free Money Market Fund, Inc.,
Scout Regional Fund, Inc., Scout WorldWide Fund,
Inc., and Scout Balanced Fund, Inc.

FINANCIAL STATEMENTS

The audited financial statements of the Fund
which are contained in the November 30, 1996,
Annual Report to Shareholders are incorporated
herein by reference.

<PAGE>

PART C

OTHER INFORMATION

Item 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements:

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

Included in Part A - Prospectus:

Per Share Capital and Income Changes

Included in Part B - Statement of Additional
Information:

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

Included in Part C - Other Information:

Consent of Independent Public Accountants

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

*(2) Registrant's By-laws

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

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

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

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

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

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

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

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

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

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

(12) Not applicable.

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

(14) Not applicable.

(15) Not applicable.

*(16) Schedule for computation of performance
quotations.

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

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

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

NONE

Item 26. NUMBER OF HOLDERS OF SECURITIES.

The number of record holders of each class of
securities of the Registrant as of March 14, 1997, is
as follows:

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

Common Stock
$1.00 par value 3,723

Item 27. INDEMNIFICATION.

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

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

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

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

Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.

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

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

Item 29. PRINCIPAL UNDERWRITERS.

(a) Jones & Babson, Inc., the only principal
underwriter of the Registrant, also acts as
principal underwriter for the David L. Babson
Growth Fund, Inc., D.L. Babson Money Market Fund,
Inc., D.L. Babson Tax-Free Income Fund, Inc., D.L.
Babson Bond Trust, Babson Value Fund, Inc., Shadow
Stock Fund, Inc., Babson-Stewart Ivory
International Fund, Inc., UMB Stock Fund, Inc.,
UMB Bond Fund, Inc., UMB Money Market Fund, Inc.
and UMB Tax-Free Money Market Fund, Inc. and UMB
Qualified Dividend Fund, Inc.

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

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

Stephen S. Soden Chairman None
BMA Tower and Director
One Penn Valley Park
Kansas City, MO 64141

Larry D. Armel President and President and
Three Crown Center Director Director
2440 Pershing Road
Kansas City, MO 64108

Giorgio Balzer Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141

Robert T. Rakich Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141

Edward S. Ritter Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141

Robert N. Sawyer Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141

Vernon W. Voorhees Director None
BMA Tower
One Penn Valley Park
Kansas City, MO 64141

P. Bradley Adams Vice President Vice President
Three Crown Center and Treasurer and Treasurer
2440 Pershing Road, G-15
Kanasas City, Missouri 64108

Michael A Brummel Vice President Vice President
Three Crown Center
2440 Pershing Road, G-15
Kanasas City, Missouri 64108

Martin A. Cramer Vice President Vice President
Three Crown Center and Secretary and Secretary
2440 Pershing Road, G-15
Kanasas City, Missouri 64108

Elizabeth L. Allwood Asst. Vice Vice President
Three Crown Center President & Asst. Secretary
2440 Pershing Road, G-15 Asst Secretary
Kanasas City, Missouri 64108

Constance E. Martin Asst. Vice Vice President
Three Crown Center President
2440 Pershing Road, G-15
Kanasas City, Missouri 64108

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

Item 30. LOCATION_OF_ACCOUNTS_AND_RECORDS.

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

Item 31. MANAGEMENT_SERVICES.

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

Item 32. UNDERTAKINGS.

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

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has duly
caused this registration statement to be signed on its behalf by
the undersigned, thereunto authorized, in the City of Kansas
City, and State of Missouri on the 14th day of March, 1997.

BABSON ENTERPRISE FUND II, INC.
_______________________________________
(Registrant)

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

Pursuant to the requirements of the Securities Act of 1933,
this Post-effective Amendment #8 to the Registration Statement
has been signed below by the following persons in the capacities
and on the date indicated.

Larry D. Armel President, March 14, 1997
Larry D. Armel Principal Executive
Officer, and Director

H. David Rybolt Director March 14, 1997
H. David Rybolt*

William H. Russell Director March 14, 1997
William H. Russell*

Francis C. Rood Director March 14, 1997
Francis C. Rood*

P. Bradley Adams Treasurer and March 14, 1997
P. Bradley Adams Principal Financial
and Accounting Officer

*Signed pursuant to Power of Attorney

By Larry D. Armel
Attorney-in Fact

REPRESENTATIONS OF COUNSEL

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

John G. Dyer Attorney March 14, 1997
John G. Dyer

Consent of Independent Auditors

We consent to the references to our firm under the captions "Financial
Highlights" and "Independent Auditors" and to the incorporation by reference
of our report dated December 27, 1996 in this post-effective amendment to the
Registration Statement (Form N-1A) and related Prospectus of Babson Enterprise
Fund II, Inc. filed with the Securities and Exchange Commission under the
Securities Act of 1933.

Ernst & Young LLP
Ernst & Y9ung LLP

Kansas City, Missouri
March 13, 1997

<ARTICLE> 6

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